There’s no doubt where Donald Trump is going campaign-wise. Race race race. Getting smoked by Fox News and Chris Wallace over the weekend obviously won’t shame him. He’ll just get worse and worse.
My bet is he’ll overplay the race card. I remember Lee Atwater once saying something like yes, you can get many white people to vote based on racial fear, but you have to be subtle about it because most white people don’t want to think of themselves as racist. Given where public opinion has settled since George Floyd’s murder, Trump’s all but overt racism might actually be a losing proposition.
But here’s another argument we know Trump will run on—that he was overseeing “the greatest economy that we've had in our history, the best,” as he put it last year, until the pandemic hit. And corollary to that, that once that virus “miracle” he keeps talking about finally happens, he’ll do it again.
Now, this argument might actually work. And Joe Biden and the Democrats have to counter it aggressively and say: No, this was not the strongest economy our country has ever known. It’s great if you’re in the top 10 percent, but for the other 90, it’s fair to terrible, and we Democrats will change that. For my money, there is no more important message Biden and the Democrats need to communicate between now and November.
Quick economic history lesson. Classical (Smith, Ricardo, etc.) and neoclassical (late 19th century) economics advocated a free market with little government intervention. Then the Depression happened, and people saw that markets could fail in a major way. Along comes John Maynard Keynes, who says the government has to intervene when the market fails, and FDR says Keynes is right, and voila, we get the TVA and the Hoover Dam and all kinds of things like that, plus Social Security, because the free market had left old people with nothing except whatever they’d managed to save.
Keynesianism reigned as the country’s (and the developed world’s) economic paradigm from the 1930s to the 1970s. And these, despite Trump’s aggro boasting, were our best years. They were not great for most women and African-Americans, which we’re still working on. But in general, jobs were stable, growth was high, unemployment was low, inflation wasn’t an issue. Taxes were high, especially for people at the top. Unionization was high. These last two things were not coincidences. They helped build the middle class and finance all kinds of public investment.
We were a much less unequal society. In the 1960s, a CEO made about 20 times the pay of his average employee, not the 300 times he does today. There’s a thing in economics called the Gini coefficient, which measures inequality. It’s like golf—lower scores are better. Our country’s best-ever Gini coefficient was 35, in 1968. Today it’s up near 50, which ranks us alongside countries like Angola and Colombia (the best scores, Belgium and the Nordics, are in the mid-20s).
So that was the golden economic age. Then came the crises of the 1970s—the OPEC mess of 1973, inflation, and wage stagnation. This opened the door for right-wing critics to say, “See? Keynes is failing you. What we need is less government, lower taxes, fewer regulations. Freedom!” They won the argument, Milton Friedman and his crew. And we’ve been living under their assumptions ever since. Bill Clinton and Barack Obama both did some progressive things—the extent to which they did and did not challenge Friedmanism is a huge running debate in my circles—but neither fundamentally undid the paradigm.
Look at this chart. It has two lines. The red line is the pre-tax national income held by the bottom 50 percent of earners, and the blue line shows the pre-tax national income owned by the top 1 percent. The red line was at its highest, and the blue line at its lowest, in the mid-’60s through the mid-’70s. This was good. Those were our best years. The lines both started moving in the wrong direction after—of course—1980, and by 2019, the portion of national income owned by the bottom half of the population was at its lowest ever (i.e., since the income tax was imposed in 1913).
This is not a healthy economy. I know the economy looked good before the plague. Unemployment was low, growth was… fine. But mostly, we are fooled, those of us who make decent livings, into thinking the economy is great because consumer choice exists as never before in human history, and we see these 80 brands of olive oils and huge TVs and amazing smart phones and cars loaded with innovations that would have been beyond imagining just a decade ago and we think: Life is good. And for a lot of people, it is good.
But it needs to be much better. The economist Heather Boushey noted to me last week a set of numbers showing that overall incomes went up 34 percent from the Great Recession through 2016, but “the bottom 50 percent of earners saw just 17 percent of that growth, while the top 10 percent saw 45 percent.” If you follow this stuff at all, you know that numbers like these just get worse and worse every year.
A crucial moment will come in this campaign during the debates, if there are any, when Trump uses that line about the greatest economy ever. That, to me, is the single biggest moment of this campaign that Biden needs to be ready for. And he needs to say, “No, Mr. President, it was not. Millions of people have hard lives. Minimum-wage workers haven’t gotten a federal raise in 11 years. Many people work two or more jobs. Wage theft is a major issue. We’ve had two economic calamities in the last 12 years—both entirely avoidable through either better regulation or better planning and swifter government intervention. Yes, things are fine for the top 10 percent. But if you make $45,000 or so, life isn’t so fine at all. And I will shift wealth from the people at the top, who’ve had a nearly 50-year party now, to the people who make $45,000.” Or something along those lines. And by the way, the median net compensation in this country in 2018 was a shockingly low $33,000. And remember: “Median” means that half the people are below that.
The pre-plague economy is the only substantive argument Trump has. If he’s going to have a chance to win, it will be because he’s convinced enough people to believe him on that. Biden needs to smack that down hard. If Biden wins that argument, Trump is toast.