By Prof. Daron Acemoglu
After four horrible, discombobulating years, many Americans want to believe that the United States is on the verge of a new beginning. Former Vice President Joe Biden appears to have squeaked past President Donald Trump in a hotly contested presidential election that doubled as a stress test for the instruments of American democracy.
All the same, this contentious election season should leave no one sanguine about the future. The autocratic, populist turn of the Trump presidency arose from deep fractures in U.S. politics and society, and Americans must understand and address these if they are to prevent similar forces from once again seizing the nation. The roots of Trumpism don’t begin or end with Trump or even with American politics—they are closely connected to economic and political currents affecting much of the world.
The United States was ripe for a populist movement by 2016, and it remains so today. Vast inequalities have opened in the last four decades between the highly educated and the rest and between capital and labor. As a result, median wages have been stagnant for about 40 years, and the real earnings of many groups, especially men with low education levels, have fallen precipitously. Men with less than a college degree, for example, earn significantly less today than their counterparts did in the 1970s. No serious discussion of the political ills that have befallen the United States can ignore these economic trends, which have afflicted the American middle class and contributed to the anger and frustration among some of the voters who turned to Trump.
The root causes of these inequalities have proved surprisingly difficult to pin down. The rise of new, “skill biased” wunder technologies, such as computers and artificial intelligence, has coincided with a period of singularly low growth in productivity, and analysts have not convincingly explained why these technologies have benefited capital owners rather than workers. Another frequently cited culprit—trade with China—is clearly a contributing factor, but Chinese imports really exploded only once inequality was already rising and American manufacturing was already on the decline. Moreover, European countries with similarly huge trade inflows from China do not show the same extent of inequality as the United States. Nor can deregulation and the demise of unions in the United States account for the disappearance of manufacturing and clerical jobs, for instance, as these losses are common across essentially all advanced economies.