Wednesday, November 9, 2016

The Rust Belt and the Election

It's Manufacturing Stupid!

There will be a lot to say about the election from all kinds of pundits. On the left, many will blame the coverage of emailgate, Comey, the FBI, third party candidates, Bernie and Bernie bros, racism, xenophobia, misogyny, the electoral college and God knows what else. And certainly all of these things did play a role. But it was minor. The election was lost in the old Rust Belt, the decadent manufacturing center that has been hit hard by trade deals (as discussed here, really most of the decline happened after the entry of China in the WTO). Hillary lost Indiana (a given), Michigan (surprise again), Ohio (also not a surprise), Pennsylvania (a yuge surprise to me), and Wisconsin (another surprise). The blue wall that pollsters suggested almost guaranteed her victory was not there (more on that below).

And yes, as noted here, areas hit hard by the effects of trade with China went for Trump. Note that this is not the same as saying that working class voters went for Trump, an argument more akin to Thomas Frank's What is the Matter with Kansas. As shown below, people with the lowest levels of income voted for Hillary.
And in the higher levels of income Trump got a small edge. So people know that he is not one of them, and will not really work for the poor. The cleaning crew of the Vegas casinos didn't vote for Trump. But the working class in the areas affected by trade did, 'bigly.' As I noted in my posts on the election (here on his victory in the first debate, here on the need for a progressive ticket partner from the Rust Belt and here on the neglect of unions), trade matters, and he was more credible than her on trade issues (and that's why Bernie was a better candidate than her; btw, whether he would have won, of course, is mere speculation now).

I should add that I don't think we are in for a recession, at least not because a Trump administration would promote austerity. In fact, as discussed here, Republicans tend to increase spending and cut taxes, with regressive distributive impact, but if one believes in the 'new view' of fiscal policy (i.e. the old Keynesian idea that fiscal policy works), then he might actually preside over the acceleration of growth and the end of secular stagnation (I'm not that confident, but just saying). In fact, forget any discussion of government shutdown, and debt ceiling for the next four years. The size of debt and deficits will only be invoked to cut social spending, on health, education, welfare and for promoting the privatization of Social Security. Some sort of military Keynesianism is not out of question. And that should scare the left, since he can built a coalition that includes Christian fundamentalists (even the Mormon ended up voting for him, btw), the white working class in the Rust Belt, and the old racist right in the South. My hope is that, since his policies will not be able to bring back manufacturing to the US, and that he might produce more heat than light regarding trade (his party remains the main ally of Obama on TPP), that this might not take place.

Also, I think there will be a lot of effort to try to disguise the true economic causes of the loss. The fact that for many the last three decades have not been good, and that they feel abandoned by the Dems, and  particular their neoliberal wing led by the Clintons. This is not the end of the neoliberal side of the Democratic Party. It will take a long fight to bring them down (see the problems of Corbyn with the Blairites within Labour; on Brexit which has similarities with the current situation in the US go here).

One last thing, I should add that against my best instincts (as my son who remained very skeptical of pollsters and somewhat sure Trump would win scolded me later), and even though, if you check the posts above, I kept saying it was going to be closer than necessary, I sort of accepted that polls were more or less right. He could outperform in some states, but not in that many to win. This says something about the quality of polling (see this). Cell phones and the overwhelming increase of inane telemarketing calls has reduced the accuracy of political polling. I also think that this vindicates (even though he also got it wrong) Nate SIlver's methodology of weighing polls by their historical track record.

PS: By the way, in the last seven elections Republicans won the popular vote only once (2004). But Dems only won in four elections (1992, 1996, 2008, and 2012). That also suggests that the Republican coalition has limits, associated to demographic changes. But Dems still need the white working class in the old Rust Belt.


  1. "Pennsylvania (a yuge surprise to me)" . For me was a huge surprise, and I guess for you too, but not for selfcorrection app.

    1. nope, that was on purpose. like in the way both Trump and Bernie pronounce huge

  2. When I heard you on Rick Smith I thought you were very responsible about pointing out that the polls could be wrong. (Unlike the other blogs I follow.....)

    1. But not enough. I didn't imagine that they were that wrong. And that the low turnout could cost her the election.


Godley versus Tobin on Monetary Matters by Marc Lavoie

  The 4th Godley-Tobin Lecture given by Marc Lavoie, a co-author of Wynne Godley, and one of the leading Post Keynesian authors.