2024-11-22 10:50:46
Humanity has a variety of short-term problems and long-term problems. The latter are typically harder to address, because the harms manifest so slowly. By the time things get severe enough to cause a popular outcry, the underlying causes may have become entrenched. Unlike the proverbial frog in a boiling pot of water, it’s hard for humanity to just jump out once things get hot enough.
The long-term problem that people usually talk about is climate change, and that’s certainly worth worrying about. Fortunately, with the advent of cheap green energy, we now have the means to address that problem. But there’s another challenge that’s slowly creeping up on the human race, which we don’t have a good answer to: population aging and decline.
The U.S. used to be an outlier in terms of fertility rates. But since 2008, its rate has fallen by almost a quarter — due largely to shrinking fertility among Hispanic Americans — and now stands well below the rate of 2.1 required for long-term population stability:
Because of this, the optimistic population projections of earlier decades have abruptly evaporated:
Large-scale immigration is now the only way that the U.S. can sustain its population over the long term:
But after the next two or three decades, where will the immigrants come from? The whole world is experiencing the same trend. Over the last decade, Asia — where the bulk of the human population currently lives — has seen a big decline in fertility, while Latin America has seen continued declines. Both are now below the replacement rate:
Religion has proven no barrier to this. The most devoutly Islamic countries of the Middle East, North Africa, and Central Asia have all seen huge fertility declines.
Africa is the last bastion of above-replacement fertility on planet Earth. But even there, fertility is falling faster than anyone expected, dropping to 4.1:
Some forecasters even predict that the continent’s population will peak in less than four decades. Even if the rest of the world is willing to take in very large numbers of African immigrants (doubtful given recent political shifts), Africa is not going to ride to humanity’s demographic rescue for very long.
And to make things worse, the trend toward lower fertility rates doesn’t seem to have any bottom. In past decades, many demographers assumed that family size would fall to around 1.4 to 1.6 children and then stay there indefinitely, or even recover a bit. But in recent years, fertility in China and South Korea has crashed to levels once thought to be unimaginably low:
As things stand today, no one on the entire planet knows how to stop this trend.
In response to the looming global shrinkage of the human race, some people choose to simply shrug their shoulders and say things like “I’m fine with a less crowded country”. But this is like responding to climate change by saying you enjoy warm weather. There are plenty of reasons why an aging, shrinking population is a threat to the living standards that we currently, and to ignore these is simply to bury your head in the sand.
2024-11-20 16:41:21
My own election post-mortem pieces focused less on the question of “why Trump won”, and more on the question of what his victory implies for the Democrats going forward. But the question of why Trump won is an interesting and important one! My friend Dhaaruni Sreenivas had some thoughts on why Trump managed to attract so many Latino and Asian voters this time out. Racial depolarization was one of the most important trends this year, and it pays to think about it carefully — not just in terms of what it implies for future elections, but what it says about how Americans define themselves as a nation.
Dhaaruni is a data scientist who used to work for the Democratic political consultancy Jones Mandel. She has also worked for Representative Suzan DelBene, and volunteered on a number of political campaigns.
Since November 5, there have been many post-mortems written about Kamala Harris losing the presidency in addition to Senate Democrats losing the chamber, and House Democrats failing to regain a majority. While there are some bright spots for Democrats in the results1, there are also blaring alarm bells for Democrats, most of all the rightward shifts of non-white working class2 voters, who have long been the backbone of the Democratic Party.
Generally speaking, individuals and groups change their political affiliation or allegiance due to policy disagreements or values dissonance, and both of these factors encompass prioritization. For instance, there are many former Republicans who are now voting Democrat because they disagree with their party’s shift towards immigration restrictionism or just take major issue with Donald Trump’s character. However, in the case of Asian and Hispanic voters, their shift right is about policy disagreements with Democrats AND perceived values dissonance, which means that Democrats will not be able to win them back solely with superficial messaging changes.
To quote Simon van Zuylen-Wood in New York Magazine:
“If Trump’s victory was not in fact a reflection of voter sentiment, it became less important to court or win back his voters. Through the resistance years and into the COVID era, liberal institutions from universities to media organizations to nonprofits cathartically swung left, which bred further denial about what voters cared about and were experiencing. A partial catalog of progressive denialism, listed in no particular order: that alienating left-wing positions or rhetoric were confined to college campuses; that the externalities of pandemic shutdowns, such as grade-school learning loss, were overblown; that the rapid adoption of new gender orthodoxies, especially in settings involving children, was not a popular concern; that the “defund the police” movement would be embraced by communities of color; that inflation was overstated; that the pandemic crime wave was exaggerated; that concerns over urban disorder represented a moral panic; that Latinos would welcome loosened border restrictions. Thanks to these and other issues, the gap continued to widen not just between liberals and conservatives but between the highly educated elite and the moderate rank and file of the Democratic Party.”
In 2016, Hillary Clinton received 37% of white voters and Joe Biden did worse than Clinton with Hispanic voters (in some states, markedly so) but received 41% of white voters, gaining the most with moderate and conservative white men, which is why he ultimately won and she ultimately lost. Kamala Harris’ final tallies with voters are yet to be determined since the final Congressional races in California are still being tabulated, but based on exit polls and current results, the Associated Press has determined that Harris received 43% of white voters, more than Clinton and slightly more than Biden.
However, in addition to losing all seven swing states3 and subsequently the electoral college, Harris also lost the popular vote to Donald Trump, who lost it to Clinton in 2016 despite winning the electoral college. The primary difference between Harris’ losing coalition and Biden’s winning coalition ultimately wasn’t her margin with white voters, or Black voters4, it was due to her losing double digits of support with Hispanic voters, both male and female, and to a lesser degree, double digits of support with Asian men, even while improving with Asian women.
While final results for the election have not yet been determined and exit polls aren’t a perfect metric (although they’re generally directionally correct), as Jed Kolko writes in Slow Boring, we have the final vote counts on the county level. Moreover, the American Communities Project, which groups counties based on a variety of factors including income, race/ethnicity, religion etc., confirmed that Trump improved the most in majority Hispanic, Native, and Urban counties. Lastly, we also have access to the vote counts for individual precincts in large cities, many of which are defacto racially segregated, and show clear signs of Asian and Hispanic voters cratering rightwards.
In the following piece, I’ll be focusing on rightward shifts among Asian and Hispanic5 voters that were seen in the 2024 election, why the results came about, and where the Democratic Party goes from here.
Kamala Harris is the the first Black woman to be on the presidential ticket, but she is also the first Asian-American since her mother, Shamayla Gopalan, is from Chennai, India. However, despite her heritage, Harris received the lowest percentage received by a Democrat in 40 years, losing 7 points of support compared to Joe Biden’s exit polls in 2020. Why did this happen?
According to AAPI Data, a research project by UC Berkeley, Asian American and Pacific Islander voters make up between 3-12% of the electorate in Arizona, Georgia, Nevada, North Carolina and Pennsylvania, all of which Kamala Harris lost. However, these shifts weren’t just witnessed in swing states; they showed up in safe blue states and districts. For instance, Grace Meng won re-election in New York’s 6th Congressional District with 60.3% of the vote, but in the same district, Kamala Harris received 51.8% of the vote, with Meng outrunning Harris by over 8%.
While New York isn’t currently a swing state, the demographics within the state and the city itself that cratered right, including Asian Americans, are indicative of larger nationwide shifts. Trump either won outright or made significant gains in several parts of the New York metro area that are home to large Asian American populations, such as Flushing, Bensonhurst, and Sunset Park, which are predominantly Chinese-American. Parts of the Jackson Heights neighborhood in Queens, where 16.2% of the population is South Asian and 7.2% is Indian, also shifted towards Trump despite Harris’ Indian heritage.
However, these trends weren’t just witnessed in NYC. As per the Chicago Board of Elections, the Dallas County Elections Department, the Fort Bend County Elections Administrator, as well as the NYC Election Atlas, Asian majority precincts shifted 15-30 points right.
Karthick Ramakrishnan, founder of AAPI Data, believes that Trump’s improvement with Asian Americans is due to inflation and the economy, and stated, “He [Trump] succeeded in creating an impression that the economy was doing horribly.” This sentiment is echoed by Trip Yang, a professional Democratic strategist, who said that the perception that the Republican Party is stronger on the economy remains prevalent with Asian American voters.
However, when Asian American voters were explicitly asked why they voted for Republicans, their answers were more divergent.
In the Bay Area, Oakland Mayor Sheng Thao and Alameda County District Attorney Pamela Price were recalled on November 5, due in part to the overwhelming opposition against them from Asian American voters. In the wake of COVID-19, hate crimes against Asian Americans skyrocketed, with volunteer patrols rising up to combat them. Russell Jeong, a professor at San Francisco State University, said, “If you are a victim of crime, and your family is a victim of crime, then that’s probably the most visceral ‘in your face’ election issue to address, because you don’t want your family in danger.” In essence, Asian American voters felt hung out to dry by local governments, and the party in charge of those governments was the Democratic Party.
But, crime isn’t the only issue that is causing Asian Americans to shift right. Many Asian Americans, who prize academic achievement, are angry at the Democratic Party’s opposition to “educational excellence” as Matt Yglesias puts it. While the Biden-Harris administration never endorsed attempts by local and state Democrats to get rid of advanced math classes or gifted programs, national Democrats rarely if ever publicly condemned those initiatives. Moreover, these attempts by local Democrats to crack down on merit-based admissions at magnet schools and make it impossible for public school children in San Francisco public schools to take algebra in the 8th grade, had statewide and national implications.
In 2020, California, which is 15% Asian, attempted to enact a statewide ballot proposition that would have restored race-conscious admissions at public universities, and in government hiring and contracting. While Joe Biden won the state by 29% over Donald Trump, the proposition underran Biden with all racial demographics; however, while 78% of Black voters supported it (compared to the 93% of Black voters in the state who voted for Biden), only 39% of Asian voters supported it even while backing Biden by 63%.
In New York City, concerns about the fate of a citywide standardized test that echoed national concerns that college admissions discriminated against Asian college applicants via affirmative action (concerns that aren’t unfounded) caused Asian Americans to outrightly start voting Republican, trends which continued in 2024. While affirmative action was ultimately overturned in 2023 by the Supreme Court, Asian American voters aren’t likely to quickly forget the context in which the initial lawsuit against elite colleges came about. One such manifestation of this discrimination was a leaked “joke memo” from an associate director of admissions at Harvard University that parodied the admissions officer downplaying an Asian American applicant’s achievements. The memo read,
“While he was California’s Class AAA Player of the Year with an offer from the Rams, we just don’t need a 132 pound defensive lineman. [...] I have to discount the Nobel Peace Prize he received. . . . After all, they gave one to Martin Luther King, too. No doubt just another example of giving preference to minorities.”
In essence, the memo dismissed the fictional applicant as “just another AA CJer”, Harvard admissions shorthand for an Asian American applicant who intends to study biology and pursue a medical career.
The crux of Asian Americans’ rightward shift is about policy disagreements with Democrats and a fundamental disagreement on values and priorities. Asian American voters are angry that crimes against their elders are not being prosecuted by local Democrats, and that issue can theoretically be addressed through more tough on crime policies. However, to many Asian Americans, the issue of crime is indicative of the Democratic Party not valuing their safety. Similarly, for many Asian families, education and academic excellence has been a primary tool of class mobility, and since they see the Democratic Party as an affront to those values, they vote against the party.
In 2002, John Judis and Ruy Teixeria wrote The Emerging Democratic Majority, which detailed how, so long as Democrats held their margins with white working class voters, a “browning” America so to speak, demographic changes due to immigration and older voters dying out, the Democratic Party would have a solid electoral advantage.
For a while, this theory seemed correct since Barack Obama achieved historical margins among non-white voters but also retained enough white, non-college voters, especially in the Midwest, to comfortably win two terms. After 2012, Republicans were reeling from Mitt Romney’s loss to Barack Obama, and wrote an “autopsy” for their party so they were able to reconvene and defeat the Democratic Party in the next presidential election. In this postmortem, Republican consultants postulated that their party should liberalize on immigration so they did better with non-white voters, and should work to appeal to young people, among other recommendations.
However, in 2015, Donald Trump came down that escalator and on “build the wall” and “Mexicans are rapists”, propelled himself into the White House in 2016, on the votes of non-college white voters who pulled the lever for him over Hillary Clinton. The “Emerging Democratic Majority” was halfway gone, since despite Clinton running up the margins with non-white voters, she cratered with the white working class, and ultimately lost the election.
In a recent episode of his podcast for the New York Times, Ezra Klein discusses the 2024 election as the end of the Obama Coalition, the combination of voting blocs, primarily non-white voters, young voters, and white voters without a college education, that propelled Obama to victory in 2008 and 2012. While Clinton almost matched Barack Obama’s numbers with Hispanic voters, in 2020 and especially in 2024, even after family separation during his first term, his governance during COVID in 2020, and virulently racist 2024 campaign, Trump improved with both Hispanic men and Hispanic women6, receiving a slightly higher percentage of the vote than George W. Bush in 2004, and once again, becoming president of the United States.
Senator-elect Ruben Gallego (D-AZ), a Hispanic Marine veteran, ran 8 points ahead of Kamala Harris in 2024, and won his race against Kari Lake due in part to his outreach and messaging to Hispanic men. Gallego held watch parties for boxing matches, attended Cinco de Mayo events, meeting the voters where they were ideologically and literally. Moreover, Gallego ran sharply to the center on immigration, with his first Spanish-language ad of the 2024 cycle focusing on border security since Latinos in Arizona, as Gallego put it, saw refugees pouring into the country as “chaos”. More damningly, Gallego explicitly stated, "We didn't actually speak about immigration reform [during the campaign] because we know that the Latino voter just doesn't believe it anymore."7
In other words, the Republicans’ autopsy of their 2012 loss was wrong (they didn’t need to moderate on immigration to win over Hispanic voters), and also, the Emerging Democratic Majority as a whole has been pretty solidly discredited. (which Ruy Teixeria himself has been warning about for years). The Democratic Party has become toxic to white working class voters and moreover, and is bleeding non-white, and in particular Hispanic, voters who had voted for Democrats for decades prior, due to many of the social positions the party holds (or is perceived to hold).
That said, the Latino shift rightwards isn’t just solely due to immigration and in fact, was arguably driven primarily by economic concerns, which could have served as a Trojan horse for many others. In 2023, Blueprint discovered that Latino voters cared most about lower prices and least about “creating more jobs”, which they considered Biden’s priority over lower inflation.
When asked why he and his community voted for Trump in 2024, Samuel Negron, a state constable and member of the large Puerto Rican community in the city of Allentown, Pennsylvania, answered, "It's simple, really. We liked the way things were four years ago.” He went on to say that the shift was primarily economic, since prices of groceries, of housing, of goods and services, had substantially increased in the last few years. These price increases are due to global inflation patterns, and even though inflation is now cooling, prices are slower to come down, and many Latino voters didn’t believe that Biden and then Harris, were adequately addressing their concerns and empathizing with their struggles.
Moreover, some Hispanic voters also believe the Democratic party is out of line with their values. Arturo Laguna, a Mexican-American first-time voter in Arizona said, "The three biggest things of importance are family values, being pro-life and religion. I don't feel like Kamala represents those values."
Like with Asian voters, the path to winning over Hispanic voters both is and isn’t the economy (stupid). In order to improve on 2024 margins with Hispanic voters, Democrats have to not only make policy changes but somehow have to figure out how to align the party’s values with those of the voters we’ve lost, which is much easier said than done.
Kamala Harris didn’t lose the 2024 election due to slippage with white voters that voted for Biden in 2020. Harris lost due to slippage with non-white voters who’d previously voted for Democrats, which isn’t even entirely her fault as a candidate since based on anecdotes and data, the result was baked in long before Biden dropped out of the presidential race in July 2024.
If the Democratic Party wants to win, it must reach out to the voters it has lost to Republicans and understand why they shifted right. While there’s a very high chance that Republicans will mess up the country (again) and Democrats will regain Congressional majorities and/or the presidency due to thermostatic politics and negative polarization, the reality is that Trump won in 2024, and moreover, Harris, and the Democratic Party, lost.
Unlike 2016, Trump didn’t just squeak by in the electoral college, he didn’t lose the popular vote by almost 5 million like in 2020; he turned out hundreds of thousands, if not millions of voters that voted only for him while leaving down-ballot races blank, flipped a substantial amount of Biden 2020 voters, and won a record percentage of non-white voters for a Republican. The sooner the Democratic Party can accept these facts without bending over backwards to prove the loss isn’t actually an indictment of them, the sooner it can recalibrate for the next two years, and beyond.
Tammy Baldwin, Elissa Slotkin, Jacky Rosen, and Ruben Gallego all won their Senate races while Trump won their states on the presidential level.
In this piece, I am using “working class” and “non-college” interchangeably. While some non-college voters are wealthier than college-educated voters, on average, college educated individuals have a higher lifetime income than those without a college education.
Michigan, Wisconsin, Pennsylvania, North Carolina, Georgia, Nevada, and Arizona
Despite pre-election postmortems indicating that Black men were drifting towards Trump, due to increased turnout among Black women, Harris still ultimately received 83% of the Black vote, within spitting distance of Joe Biden’s 84% in 2020, despite Black men shifting 5 points rightwards.
I’ll be using Latino and Hispanic interchangeably since all Hispanics are Latino but all Latinos are not Hispanic since Haitians for one speak French instead of Spanish.
Unsurprisingly, activist groups are taking issue with data showing Hispanics shifting rightwards (understandably given the 2024 election results have discredited their whole thesis of politics) but I see no substantial evidence that their claims are correct.
Interestingly, in the linked CBS article, the (white, female) reporter editorializes Gallego saying the Latino voter doesn’t believe in immigration reform anymore, and adds “Meaning, Latino voters don't believe Washington will actually pass a massive immigration reform bill in the near future”, which is a completely different statement, and indicative of a total disparity between how white voters and Latino voters view immigration.
2024-11-19 15:31:48
In January 2017, I was at a house party in Berkeley. People were discussing why Hillary Clinton had lost to Donald Trump, and one woman — a law student at the University of California — declared that it was because Clinton had ignored the “working class”. I asked her to describe someone in the working class. She imagined a “sex worker” who had a bunch of student loans and a humanities degree that she wasn’t able to use.
This episode really stuck in my mind because of how surprising her response was. I had expected her to describe a unionized auto worker or steelworker or a stereotypical Midwestern guy in a hard hat, and I was prepared to expound on how little of the U.S. private-sector workforce is actually unionized, and how few Americans now work in manufacturing. I was utterly unprepared for her to instead describe someone from her own educated progressive social circles. And yet there it was. To this law student, the “working class” was simply those of her friends who were most down on their luck.
I think about that conversation whenever I hear people talk about how Democrats need to shift from identity politics to class politics. For example, here’s how Bernie Sanders responded to Kamala Harris’ loss to Donald Trump the other night:
Sen. Bernie Sanders…said Democrats lost the 2024 presidential election because they relied too much on talking about race, gender and sexual orientation…Sanders…said Vice President Harris didn’t spend enough time talking about how to help working-class Americans by raising the minimum wage and lowering the cost of health care…
“What were they going to do to address the fact that so many people in America are struggling? Does it have anything to do with the greed of corporate America? The fact that you have a billionaire class that wants it all, they want to own the political system? Does anybody really talk about the degree to which the people on top own this country and want more and more and couldn’t give a damn about ordinary Americans?” he asked.
A lot of Dems and progressives must feel tempted right now to just substitute this kind of class politics for the failed identity politics of the past decade. After all, everyone who remembers 2016 must wonder if Bernie, with his more race-neutral class-focused populism, might have won against Trump. And everyone knows that Dems won lower-income voters and less-educated voters until recently, so it seems like class politics might be able to win them back.
I just don’t think this is going to work.
Yes, I also wonder if Bernie might have beat Trump in 2016. And yes, I think focusing on economic issues — especially ones where Dems have the advantage, like minimum wages and health care — is good. I don’t think it’s sufficient — Biden did a huge amount of pro-worker policy and handed out lots of benefits to lower-income people, and lower-earning voters still abandoned Harris en masse. In a rich country like ours, cultural and social issues often take precedence over pocketbook concerns. But yes, economic appeals are fine and good.
But I think that class politics of the type Bernie is pushing is extremely hard to pull off in America. And I think the discussion I had with that Berkeley law student back in 2017 shows why. Americans simply lack a clear idea of who the “working class” actually is.
If you don’t believe me, look at a poll. It’s common knowledge that most Americans consider themselves “middle class”, but did you know that most Americans also consider themselves “working class”? Check out this poll from earlier this year:
It’s kind of wild that 51% of college-educated Republicans, and 59% of upper-income Republicans, call themselves “working class”. And though the numbers for Democrats are lower, they’re still substantial. Americans just really like thinking of themselves as “working class”, no matter how much money they earn or what degrees they have hanging on their wall.
I could speculate on why this is the case. For many Republicans these days, being “working class” probably just means not identifying with the progressive culture that most highly educated Americans adhere to. Even if you’re rich and have a college degree, you might feel a sense of cultural solidarity with lower-income non-college voters who are turned off or confused by words like “heteronormative” or “cisgender” or “cultural appropriation”. For high-earning or highly-educated Democrats, calling themselves “working class” might simply be a way of saying that they earn their income by working, rather than by collecting passive income from stocks or real estate.
I also suspect that Americans feel that their society is a highly mobile one. John Steinbeck is often (mis)quoted as saying that “socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.” But the flip side of this is that a lot of rich Americans see themselves as recently exalted proletarians. A billionaire might think back to his modest childhood home and think that he’s working class because those were his roots.1
In fact, America is a pretty mobile society. Over the last decade, a lot of commentators, and a few economists, have claimed that the American dream is dead, but the numbers don’t really bear it out. Most lower-income Americans do end up earning more than their parents:
Incomes at the top are especially volatile, and have become more so in recent years. In fact, some research back in 2016 found that 11% of Americans will reach the top 1% at some point in their careers. Across the generations, rags-to-riches stories, and riches-to-rags stories, are not uncommon.
Mobility — including both opportunity and risk/volatility — probably tends to erode the sense of being in a particular socioeconomic class. Before the Industrial Revolution, you had a discrete agricultural class — farmers whose families had always been farmers, and whose children were going to be farmers too. And you had other classes, like artisans or the nobility, who also tended to pass on their occupations, incomes, and social status to their kids. In a post-industrial society, there’s simply a lot less intergenerational persistence.
Of course, the industrial age did famously have the proletarian class — urban factory workers. But in America, that broad grouping has been disappearing, year after year. The vast bulk of the U.S. workforce no longer works in manufacturing2:
In the modern day, Americans’ jobs have simply fragmented too much to form a cohesive class. Service occupations are all over the place — cashiers and baristas, sales assistants and servers, customer service reps and personal trainers, sommeliers and receptionists, medical assistants and warehouse workers, etc. Their jobs don’t necessarily have much in common — probably not enough to form a class-conscious proletariat like in the industrial age.
Another thing that defined the American “working class” in the mid 20th century was unionization. But private-sector unionization has declined to almost nothing in America:
As you might expect, the fall-off in private-sector unionization, coupled with still-high public-sector unionization, means that union workers are now a lot more educated than they used to be. Farber et al. (2018) show that in the postwar period, union workers in America tended to be significantly less educated than other workers, but that this is no longer true.
Just to give you one example, I was a union worker! As a grad student teaching economics classes at the University of Michigan, I was in a union, the GEO. I even went on strike with that union, much like the people in the photo at the top of this post.3 But despite this experience, I never felt I was part of the same social class as the unionized factory workers of the 1950s. Far from it.
This might be why when Joe Biden became the first sitting President to walk a picket line, the number of people who identified with his action was fairly small. The typical unionized worker is no longer a blue-collar swing voter who works on an assembly line, but a government employee who’s likely to vote for the Democrats already.
What about dividing the economy into people who work for a living and those who collect passive income? There’s certainly a lot of capital income out there, and rich people own most of the stocks. But our numbers for capital income are probably greatly exaggerated, because capital income gets taxed at a lower rate than labor income. Smith et al. (2019) find that most rich Americans get a lot of their income from working at their own pass-through businesses, but classify most of this as business income in order to pay a lower tax rate:
A primary source of top income is private “pass-through” business profit, which can include entrepreneurial labor income for tax reasons…Tax data linking 11 million firms to their owners show that top pass-through profit accrues to working age owners of closely held mid-market firms in skill-intensive industries. Passthrough profit falls by three-quarters after owner retirement or premature death. Classifying three-quarters of pass-through profit as human capital income, we find that the typical top earner derives most of her income from human capital, not financial capital.
(And yes, this means that the decline in labor’s share of income is probably significantly exaggerated. The story is probably more about labor income inequality than about passive capital owners taking a larger share.)
So almost all Americans are putting in a lot of hours on a day-to-day basis. Yes, some do backbreaking manual labor and some write emails. There is still a divide between blue-collar and white-collar work. But so many Americans now do white-collar work that we seem to have collectively decided that it too constitutes “real work” — that as long as you put in the hours, you’re working. And so there’s very little divide between workers and non-workers in America.
What about just defining “working class” by income? For all the talk of the working class vs. the professional class, there’s not actually a discrete divide between these groups in the data. It’s actually just a continuous distribution:
If there were multiple peaks in this distribution, you could identify them as discrete “classes”, but since there’s only one peak, the difference between the “classes” on this chart is just going to be a series of arbitrary cutoffs. As a commentator, you can just decide to call everyone in the bottom third of the distribution “working class”, everyone in the middle third “middle class”, and so on. But will people in those “classes” really feel any sense of solidarity with each other?
I doubt it. Suppose the cutoff between the “working class” and “middle class” on your chart is at $40,000. My bet is that someone making $39,000 will identify more closely with someone making $41,000 than with someone making $12,000. A continuous distribution just doesn’t lend itself to “classes”.
In fact, the only real class distinction in America that I think makes any sense is higher education. Whether you go to college makes a huge difference in your life — both in terms of future income and the kind of jobs available to you, and also in terms of health and other social outcomes. This is why I do think it makes sense to talk about an “educated professional class” in America:
But just because America’s educated professional class has a fairly unified culture doesn’t mean that the people who didn’t go to college have any kind of working-class solidarity or class consciousness. College is a powerful integrating institution — it instills a certain culture and certain attitudes in the people who go there, and it teaches them to behave like a single community. But the Americans who don’t go to college mostly don’t have anything like that, unless they join the military or are very religious. Instead, the non-college “class” is highly fragmented and isolated. We can call them “working class” if we want, but that doesn’t mean they’ll behave like one, or care when Bernie gives them a shoutout.
A postindustrial economy like America’s has a whole lot of workers, but no real working class. That’s why if Democrats want to win back lower-earning and non-college voters, I think they’ll have to appeal to them as Americans, rather than as one side of a class struggle. Bernie Sanders’ class politics may have felt like a refreshing alternative to racial identitarianism back in 2016, but they’re really something out of another age.
Therefore I think that while Democrats should definitely address pocketbook issues, the idea that lower-earning and non-college Americans can be motivated to rise up against the rich with some combination of pro-union policy, more health care subsidies, higher minimum wage, and fiery rhetoric against billionaires is probably fanciful. As much as people might like class war to be an easy off-the-shelf substitute for identity politics, it’s unlikely to be any more successful.
Even if his roots were actually middle- or upper-middle-class, he might see that living standard as “working class” in retrospect, because it’s so much lower than what he enjoys today.
Some of this decline is actually exaggerated by outsourcing. In earlier decades, manufacturing companies would also do a lot of their own business services — accounting, payroll, and so on. The employees who did those things were counted as manufacturing employees, because they worked for companies that were classified as manufacturing companies. Now, manufacturers largely outsource those functions to businesses that specialize in those services, so the people who do those services are no longer counted as “manufacturing” workers. Still, the number of people who actually work in factories has definitely declined enormously as a percent of the total workforce.
We ultimately succeeded in getting better health benefits and various other benefits that I now forget. I did think striking was a bit silly, since we were all going to have high-paying jobs in the future. But I did it anyway, because, well, it was fun, and I was in my 20s. I like to think I was a little more ironic and self-aware about my working-class LARPing than some of my fellow grad students.
2024-11-18 13:51:42
Trump is about to be back in the White House, so tariffs are back on the menu. Actually they never left — Biden slapped huge tariffs on a variety of Chinese products, including electric vehicles, chips, and other stuff. But Trump is contemplating tariffs that are far broader in scope — a 60% tariff on all Chinese-made products, and a 20% tariff on all imports from anywhere.
There’s a fundamental difference between targeted tariffs like Biden’s and blanket tariffs like Trump’s. I’m not sure whether Trump’s trade people, including Robert Lighthizer, are aware this difference or not, but it’s important. Like the fact that imports don’t subtract from GDP, it’s something that people who debate trade policy often seem not to understand. But that’s why you have me, your friendly neighborhood econ blogger, to explain it!
First, let’s talk about two different things you might want tariffs to accomplish.
One goal of tariffs is to reduce U.S. dependence on China — or on the outside world in general — in a specific set of critical industries. For example, if China makes all the batteries, they can just decide to cut you off whenever they want to — as China just did to America’s top drone manufacturer, Skydio. Drones are a key weapon of modern war — perhaps the key weapon. And many drones are battery-powered. So if the U.S. imports all its batteries from China, it sort of puts the U.S. at China’s mercy. Thus, we might want to use tariffs to make sure that China doesn’t make all our batteries.
A second goal of tariffs is to reduce trade imbalances. The U.S. runs a very large trade deficit, and China runs a very large trade surplus. In fact, right now, all the countries in the world except the U.S. and China have largely balanced trade. China’s trade surplus accounts for the vast majority of all global trade surpluses, and America’s trade deficit accounts for the vast majority of global trade deficits:
A lot of countries have balanced trade because they run a trade deficit with China and a trade surplus with America. That doesn’t mean they’re buying stuff from China, slapping a new label on it, and selling it on to America. But what it does mean is that America is the world’s main “country that buys more than it sells”, while China is the world’s main “country that sells more than it buys”.
Many people want to reduce those imbalances. Some people believe (probably correctly) that these big trade deficits hurt U.S. manufacturing, because they rob American manufacturers of key markets overseas. Others believe that global trade imbalances lead to various other economic problems — for example, Michael Pettis, who believes imbalances drive inequality. Still others simply view trade deficits as a “loss” and trade surpluses as a “win”.1 Reducing America’s trade deficit was one of the major goals of Trump’s first term in office.
In fact, both broad tariffs and targeted tariffs have a very hard time reducing trade deficits. But targeted tariffs are capable of reducing U.S. dependencies in specific areas like batteries — in fact, they’re better than broad tariffs for this purpose. Let me explain.
There are actually two reasons that broad tariffs, like the ones Trump is proposing, have difficulty reducing trade deficits.
The first reason is exchange rate adjustment.
When you trade stuff internationally, you have to swap currencies. As anyone who has traveled overseas knows, to buy Chinese goods, you need yuan.2 So if you’re an American, you need to swap your dollars for yuan in order to buy stuff from China. The price at which dollars and yuan get swapped for each other is called the exchange rate.
When the U.S. puts tariffs on China, that reduces U.S. demand for Chinese goods. And that reduces U.S. demand for Chinese yuan, because when Americans don’t need to buy as much Chinese stuff, they don’t need as much yuan.
And when demand for yuan goes down, the price of yuan, in terms of dollars, goes down. This is just basic Econ 101, supply-and-demand stuff. The dollar appreciates in value and the yuan depreciates in value. This is called “exchange rate adjustment”.
Exchange rate adjustment partially cancels out the effect of the tariffs. When tariffs make the yuan get cheaper for Americans, that makes Chinese goods cheaper for American customers. And when tariffs make the dollar get more expensive for Chinese people, that makes American goods get more expensive for Chinese customers.
This doesn’t completely cancel out the effect of tariffs, but it partially cancels it out. It’s like if the government put taxes on pizza, pizza restaurants would cut their prices in response, in order to reduce the number of people who stop eating pizza.
Of course in the real world, there are more than just two currencies, and more than just two countries trading with each other. But if you look at the data, it’s not hard to see the impact of Trump’s tariffs on China in his first term. In this chart from Jeanne and Son (2023), the blue line is the price of the dollar, while the red line is the price of the yuan:
You can see that when Trump put tariffs on many Chinese goods, the dollar got stronger (in fact, it got stronger a little before the tariffs officially went into effect, because people knew the tariffs were about to go into effect), and the yuan got weaker. China’s tariffs were less impactful, partly because China buys relatively little from the U.S. in the first place. Jeanne and Son guess that “approximately 22 percent of the dollar appreciation and 65 percent of the renminbi depreciation observed in 2018-19 can be ascribed to the tariffs implemented by the US[.]”
Just how much does this exchange rate movement cancel out the effect of the tariffs? In theory, it’s possible for it to cancel out 100%! Exchange rates are pretty flexible — it’s actually pretty easy for everyone involved to say “OK, tariffs made Chinese goods more expensive in America, so we’ll just say that the Chinese currency costs fewer dollars now, so the actual price of Chinese goods for Americans is the same, so everyone in America can just keep buying exactly the same amount as before. Good job everyone, glad we got that sorted out.” And remember that we’re not dealing with a free market here — China’s government will probably intentionally depreciate the yuan in order to avoid losing market share in export markets.
In reality, exchange rates only cancel out part of the effect of tariffs. There’s a bunch of stuff that prevents exchange rates from fully adjusting to the new tax — if you put a billion percent tariffs on everything, you’d probably mostly get rid of all trade, and thus you’d eliminate all trade imbalances. So it’s really an empirical question as to how much exchange rates cancel out tariffs. Jeanne and Son use a somewhat plausible theoretical model to arrive at a number of 30-35%. That’s a substantial decrease already, and I actually think the true number is likely to be higher, especially where China is concerned3. If all of the yuan’s movement against the dollar during this time were due to Trump’s tariffs, it would mean that exchange rate adjustment canceled out around 75% of the tariffs’ effect!
And this is not even the only reason broad tariffs struggle to reduce trade imbalances! There’s at least one more. Broad tariffs also raise costs for American manufacturers, without increasing costs for Chinese manufacturers.
Consider the market for cars. Car companies use a lot of steel and aluminum to make cars. When steel and aluminum get more expensive in America, that raises costs for American car companies. That makes them less competitive, both in the domestic market and abroad.
So if the U.S. puts broad tariffs on everything we import, that will include steel and aluminum. GM and Ford and Tesla will be paying higher prices for steel and aluminum because of the tariffs, so they’ll have to raise the prices of their cars. But BYD and other Chinese car companies won’t have higher costs, because the tariff only applies in America. So the Chinese car companies will gain a competitive edge against the American car companies. That will make Chinese car imports cheaper and American car exports more expensive.
In fact, we have good evidence that this happens. Lake and Liu (2022) study the effects of Bush-era tariffs on steel and aluminum, and found that they hurt steel-consuming industries like the auto industry:
President Bush imposed safeguard tariffs on steel in early 2002…[W]e analyze the local labor market employment effects of these tariffs depending on the local labor market’s reliance on steel as an input and as part of local production. The tariffs did not boost local steel employment but substantially depressed local employment in steel-consuming industries for many years after Bush removed the tariffs. The tariffs also led to a persistent exit of steel-intensive manufacturing establishments, suggesting a role for plant-level fixed entry costs in translating the temporary shock into persistent outcomes.
Lake and Liu are looking at employment outcomes, but the same effect will apply to trade balances too. Across-the-board tariffs make U.S.-made cars and semiconductors and washing machines and refrigerators and farm equipment and robots more expensive, because they raise the cost of imported inputs like steel, aluminum, photoresist, batteries, and so on. But foreign-made products can still get cheap inputs, because they aren’t paying tariffs.
Making American manufacturers pay higher costs than their foreign rivals will obviously cancel out some additional portion of the effect of tariffs on trade balances.
So between these two effects, we can expect Trump’s big “tariffs on everything” to have a disappointingly small effect on the U.S. trade deficit — not zero effect, but less than Trump would like. This is what happened in Trump’s first term, when the U.S. trade deficit didn’t shrink at all4 despite his tariffs:
Now, Trump’s tariffs did have some effect in shifting U.S. deficits away from China, as I’ll discuss in the next section. But in terms of cutting the U.S.’ total trade deficit with the rest of the world, they were a total bust. And when we think about exchange rate appreciation and intermediate goods, it’s not hard to see why that was the result.
I don’t mean to suggest that tariffs are ineffectual — far from it. Targeted tariffs on specific imported products are actually very good at shifting demand away from those imports.
Suppose we put a 1000% tariff on Chinese-made computers. In 2022, the U.S. bought $51 billion worth of computers from China — about 9.4% of our total imports from China. Supposed we used tariffs to increase the price of Chinese computers by 10x. Americans would stop buying any computers from China, and would instead buy computers made in America, Mexico, and maybe Taiwan and Vietnam. In fact, Mexico, Taiwan, and Vietnam are currently our biggest foreign sources of computers besides China, and along with local American factories, they’re probably perfectly capable of ramping up production to meet our needs:
Now at this point you may say “Well, but the Mexican-made computers and the Vietnamese-made computers will have a bunch of Chinese chips and screens in them, so we’ll still be importing stuff from China.” And you’re absolutely right! America currently has no good way of assessing how many Chinese components are in the finished goods that we import. Similarly, if we taxed imports of Chinese batteries, we wouldn’t currently be able to apply those tariffs to Chinese-made batteries contained in Mexican-made cars or Vietnamese-made phones.
But suppose we improved our data so that we did know which parts came from where. Then we could use tariffs to completely eliminate Chinese manufacturers from our chip supply chain, or our battery supply chain, or whatever.
And targeted tariffs are much more effective than broad tariffs at accomplishing the goal of securing specific supply chains. One reason is that targeted tariffs don’t have nearly as big an effect on exchange rates as broad tariffs.
If you put a 1000% tariff on Chinese computers, that only affects 9.4% of the U.S. demand for Chinese goods. That’s not going to have a huge effect on exchange rates. U.S. demand for Chinese goods overall won’t fall much, but it will shift to other stuff — plastic, clothes, broadcasting equipment, machinery, or whatever. Whereas if you put a tariff on all Chinese goods — the plastics and the clothes and the broadcasting equipment and the machinery and everything else — the exchange rate will shift by much more, which will cancel out a big chunk of the impact on any specific imported good.
Also, targeted tariffs avoid the problem of intermediate goods that I talked about in the previous section. Yes, if you put a 1000% tariff on Chinese batteries, that will hurt American EV manufacturers. But if you think the battery supply chain is more strategic than the EV supply chain — maybe because batteries also go in drones — then maybe this is OK. Targeted tariffs are like a scalpel that allows you to slice out exactly the types of imports you don’t want, while leaving the less strategically important stuff intact.
So while targeted tariffs won’t reduce trade deficits, they’re very effective if your goal is to secure certain strategic supply chains. Fortunately, Robert Lighthizer is probably thinking about this, as evidenced by this passage from his book, No Trade is Free:
But this means that Trump’s 20% tariff on all imports from all countries would actually weaken the effect of his 60% tariffs on China! If we only tax Chinese imports, we can shift demand away from China to other countries. But if we tax imports from everywhere, the dollar will appreciate, which will cancel out some of the impact of the China tariffs.
So if what the U.S. wants is to reduce its bilateral trade deficit with China, it shouldn’t put tariffs on imports from other countries. Trump’s 20% across-the-board tariff idea wouldn’t reduce our trade deficit meaningfully, but it would make it harder to shift our supply chain out of China.
Anyway, that’s all well and good. But suppose we really do want to reduce the U.S. trade deficit. How do we do that? And how do we do it without kneecapping our own manufacturers?
I’ll write a lot more about this, but the short answer is to reduce trade deficits, you need to depreciate the U.S. dollar. Remember how a more expensive dollar makes U.S. exports uncompetitive while encouraging Americans to buy more foreign-made products? Well, if you’re going to reduce the trade deficit, you need to counteract that somehow.
Stephen Miran of Hudson Bay Capital has a good post explaining that the real problem here is the U.S. dollar’s status as the world’s reserve currency. Here, from X, is the upshot:
The truth is that the “strong dollar” is probably the root cause of America’s chronic, persistent trade deficits. U.S. leaders have a choice — a strong dollar, or a strong manufacturing and export sector. So far, we’ve always chosen the former. If Trump really wants to get rid of the U.S. trade deficit, he’s going to have to dump this long-standing policy. But that’s a topic for another day.
This attitude often goes by the name of “mercantilism”, though it’s a bit different from the original early modern European version.
Yuan is actually a nickname for China’s currency, the renminbi or RMB.
Personally, I suspect Jeanne and Son’s model is wrong when it comes to China, because it makes the assumption that China’s government policy has similar objectives to American government policy. In reality, Xi Jinping cares a LOT about making China dominant in global manufacturing markets, so he’ll probably respond to U.S. tariffs by making the Chinese currency depreciate. China controls its capital account, so it has the ability to do this if it wants — and often does.
This is true as a percent of GDP, as shown in the chart. In dollar terms, the trade deficit actually got worse under Trump. In fact, these trade deficit numbers have some big problems — they don’t measure value-added trade, and some of the trade they do measure is basically faked for tax avoidance purposes. But no matter what measure we use, there’s no indication that Trump’s tariffs had any meaningful effect on the U.S. trade deficit.
2024-11-16 04:32:48
Note: I accidentally sent out an incomplete version of this post earlier today. This is the complete version.
Of all the posts that I’ve had to write, this one scares me the most. There’s a certain irrational feeling that to write about something makes it more real, and this is something that I wish was just a bad dream.
When I was growing up in the 1990s, liberalism — the idea that society should be based around the rights, freedoms, and dignity of individual human beings — was ascendant. Here in the U.S. and in other rich democratic nations, there was little question that we were more free, and our rights better protected, than at any point in our history. Every politician talked about freedom as the paramount value, and even if Republicans and Democrats had slightly different ideas about what that entailed, the differences of opinion were not too stark. Whether you were fighting for abortion rights, low taxes, gay marriage, or deregulation, it always helped to couch your arguments in terms of individual freedom.
Liberalism’s ascendance was global. Even though Russia was a chaotic basket case and China had cracked down on its people at Tiananmen Square, both countries were recognizably more liberal than they had been in ages past. International organizations agreed that freedom — freedom of speech, democracy, free enterprise, and so on — was advancing all over the world. And alongside the soft power of liberal ideals stood the hard power of the U.S.A., the world’s most powerful nation, which had won the Cold War and World War 2 in the name of liberal democracy.
What a difference a couple of decades make. Since around 2005, social and political freedoms have been eroding around the world:
If you don’t believe Freedom House, of course, you can look at any other number of data sources showing the same trend, though they disagree on exactly when it began. I wrote about it in a post back in 2021, and things have only gotten worse since then:
You can feel the decline of liberalism here in the United States. Very few leaders on either side of the aisle talk about freedom anymore.1 Progressives tend to couch their appeals in terms of justice, conservatives in terms of greatness. Americans still pay lip service to freedom of speech, but no one seems to really want it — Elon Musk has increased X’s censorship on behalf of foreign governments and suppressed content he doesn’t like, while Democratic leaders like Tim Walz and John Kerry have called for legal crackdowns on “hate speech” and “misinformation”.
Abortion was legal everywhere in America three years ago — now it’s illegal in thirteen states. DEI statements — essentially, professions of ideological conformity — are now mandatory at many universities. Even free enterprise is slowly becoming a casualty of the culture wars, with progressive antitrust crusaders shifting their focus from economic harms to corporate political power, and Republicans threatening retaliation against businesses that promote progressive values. (Of course, don’t even get me started on the Palestine movement and its fantasies of violent conquest and ethnic cleansing.)
And this is all before Trump Round 2. Francis Fukuyama, one of liberalism’s most ardent defenders, has a good rundown of how things could get much worse under a second Trump term. Obviously we’ll have to wait and see, but Trump’s disdain for democratic norms, his fixation on political vengeance and punishment, and his recruitment of new, more competent allies don’t exactly bode well.
Globally, the situation is even worse. The three most powerful countries in the world are China, the United States, and Russia, and there’s a case to be made — in fact, I made it a month ago — that with the election of Donald Trump, all three are now illiberal powers. While Trump’s stance toward democracy and individual freedoms within the U.S. have yet to be seen — his first term was pretty benign, except for the time he tried to overturn an election result and encouraged a violent attack on Congress — there’s little doubt that internationally, Trump and his allies are sympathetic to Russia’s campaign of imperial conquest.
The most recent illustration of this fact is Trump’s nomination of Tulsi Gabbard to be the Director of National Intelligence. Gabbard, a leftist-turned-rightist, is a vocal and active supporter of authoritarian regimes around the world — especially Russia and Syria. Tom Rogan of the Washington Examiner explains:
If you thought about the worst possible choice for director of National Intelligence, former Democratic-turned-Republican Hawaii Rep. Tulsi Gabbard would be high up there…On Russia, Gabbard opposed Trump’s removal from the Intermediate Nuclear Forces treaty in response to rampant Russian breaches of that treaty. She has blamed NATO and the U.S. for Russia’s invasion of Ukraine (again, to the celebration of both Russian and Chinese state media), has repeated Russian propaganda claims that the U.S. has set up secret bioweapons labs in that country, and has argued that the U.S. not Russia is wholly responsible for Putin’s nuclear brinkmanship…On Syria, Gabbard has gone far beyond Trump’s skepticism for continued U.S. military presence in the country. Regurgitating propaganda from Syrian President Bashar al Assad’s regime, she has blamed Trump for Syria’s challenges and expressed sympathy for Assad’s leadership.
In fact, the only foreign country that Tulsi has warned about is America’s liberal ally, Japan, which she has accused of militarism simply for rearming itself in the face of the increased Chinese and North Korean threat.
Whether Tulsi is or ever was actually working with the Russians, as some have alleged, isn’t clear. But the Russians themselves are very convinced that she is on their side:
This is the woman Trump has picked to oversee all of the U.S.’ intelligence agencies. It is hard to imagine her mounting a serious attempt to counter the considerably espionage attempts of China and Russia. And it’s hard to imagine America’s allies, especially the Five Eyes intelligence services, wanting to share intelligence with the U.S. when that would mean sharing it with someone who’s deeply sympathetic to the empires that threaten them. The end of Five Eyes would be devastating for America’s efforts to counter China’s unprecedented espionage campaign.
If that isn’t a clear enough sign of Trump’s attitude toward the global tide of illiberalism, imperialism, and conquest, just wait. More signs are coming.
What all this means is that liberalism — the dominant global ideology of my youth — is now an underground rebellion. If you believe that individual human freedom and dignity are paramount, you’re now facing a world that wants to crush your ideals and enslave you to the will of various authoritarians. In America, you’re watching powerlessly as Trump remakes the country’s institutions, while in Eurasia you’re warily eyeing the suddenly unchecked power of China and Russia.
How did we get here? How did it get this bad?
