Watching the nuances of the Presidential debate from Australia can seem quite comical at times.
A billionaire with a schoolyard temper (and comb over) dominating the Republican ticket, and an aging 74 year old anti-capitalist pitted against a former First Lady and secretary of State.
Are these the best candidates the US can muster? Would you trust them to run one of the world’s most powerful economies?
We are all familiar with the Australian Dream – the dream of owning your own home. But the United States of America has always been more ambitious than that. The American Dream was coined in James Truslow Adams’ book which was published between wars, during the Great Depression of the 1930’s. In it, he talks of a “dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”
Americans identified with this noble vision for self-actualisation, hope, and personal fulfilment. They either considered themselves part of a middle class, or at least aspired to be included in it. Everyone had a chance, everyone could have a go. Success was celebrated.
In 1970, the US was prosperous, and this wealth was shared with 62% of the population. Fast forward to today, and the middle class only represents 43% of the population.
In other words, the American middle class, which was once the majority of the population, is now fast becoming a minority. The rich appear to be getting richer and their wealth grows exponentially. Yet the middle class is shrinking, with their wealth falling by 25% since the start of this century – a mere 16 years.
More Americans are joining the ranks of the poor, losing benefits through corporate restructures, paying more for health care, working in lower paid jobs, and in some cases losing their 401k pensions. 1% of the US population now owns almost half of everything; the bottom 80% owns 7%.
Feeling disenfranchised? Well so do most Americans.
The growing divide goes a long way to explaining the current Presidential debate. Trump’s antics of name calling, finger pointing at Wall St (& political donors), and even lambasting the media are resonating. Democratic voters feel the same. They aren’t letting Hillary Clinton have a smooth run, instead listening to Bernie Sanders talk inequality[1].
Americans celebrate success, even if it isn’t theirs. That’s part of the Trump supporter’s secret. They see the billionaire, and believe he got there through his own hard work and skill. They believe there is hope for them to do the same.
They also believe he will know how to fix their spiralling descent out of the middle class. But can he?
Trump’s wealth is estimated to be between $2.9b and $4.1b (depending on who is publishing[2]), and he claims it is $10b. Trump has successfully managed to use his father’s connections and $40m inheritance (in 1974 from Fred Trump) in a variety of businesses and investments, and build on this wealth.
However it hasn’t always been smooth sailing, starting in 1991 with the sale of his yacht, the “Trump Princess”.
Some of his ventures – like his Casinos, were not a success. At different points in his career, he has been forced to file four Chapter 11 bankruptcy debt restructures. He has claimed that each of these have only hurt his banks, “high rollers and sharks”. He neglects to mention some of the finer detail like the 35% decrease in compensation for 1200 workers, and how he was trying to get $25m of property tax breaks in the process[3]. If you think of the full cycle of implications, Pension funds invest in debt securities, and were no doubt impacted too.
Aside from a massive national security related faux pas which is now the subject of an FBI investigation, Hillary Clinton is fielding fierce questions from Sanders on campaign contributions. Significant donors for the Clinton campaign have come from Pharma, Wall St, and the Koch family… and this is on top of her $250,000 minimum callout fee for speeches, which have reportedly netted her a cool $25m in the last 2 years. Wall St again dominates these payments, and Clinton talks of “Wall Street as a partner in securing the country’s economic future, not an enemy”.
The NY Times reports that many believe the economic system to be rigged, and Wall St is at fault. This makes Trump’s finger pointing even more real for Middle America. But Trump is not immune to the sweetheart deals and technicalities that have helped people “game” the system. There are no Chapter 11’s in the White House.
Vale the American Middle class.
[1] https://berniesanders.com/issues/income-and-wealth-inequality/
[2] https://www.washingtonpost.com/news/wonk/wp/2016/02/29/the-myth-and-the-reality-of-donald-trumps-business-empire/
[3] http://www.wsj.com/articles/trump-entertainment-files-chapter-11-turnaround-plan-1412195699
