We are living in a depression – that's why Trump took the White House

Since 1975, the fruits of economic growth have disproportionately been taken by the
few. Donald Trump tapped into the quiet simmering anger of the many.

Words matter. The process of understanding why Donald Trump is now heading for the White
House starts with the correct description of what has happened in the eight years since Barack
Obama became president. [...]

The turning point for the average American worker came in the mid-1970s because for the
first 30 years after the second world war the gains from rising prosperity were evenly shared.

But this trend was broken around the time of Watergate and the end of the Vietnam war.
Since 1975, productivity in the US has more than doubled, but average hourly compensation
has increased by only 50%. The fruits of growth have been captured by the few, not the many.

This tendency was especially pronounced in the years immediately after 2008, when lower
interest rates and quantitative easing fed through into rising asset prices rather than into higher
wages. Between 2009-2012, more than 90% of US growth went to the richest 1%, which
included the financiers who had caused the crisis in the first place. It is not just that workers
have been struggling to get a decent pay rise. Jobs have become harder to find in the last
decade, with many Americans dropping out of the labour market altogether. [...]

As in the UK, the outlook for working people in the US has improved over the past couple of
years because the collapse of energy prices has led to lower inflation and higher real incomes.
But it has not been enough to counter the feeling that the system is rigged.

Torsten Bell, director of the Resolution Foundation, provided a useful breakdown of voting
patterns in last Tuesday’s presidential election. Taken at face value, the results seem to show
that Hillary Clinton did well among those voters on the lowest incomes. She led 53%-41%
among those earning less than $30,000 a year and by 51%-42% among those earning between
$30,000 and $50,000.

But these statistics are misleading. There was actually a 16-point net swing to the Republicans
between the 2012 and 2016 elections among those earning less than $30,000 a year and a 6-
point swing among those earning $30,000 to $50,000. By contrast, there was a swing to
the Democrats among those on higher incomes, and this was particularly pronounced among
those earning more than $100,000 a year.

One interpretation of these numbers would be that Americans on average or below average
incomes voted for Barack Obama in 2008 and 2012 because they expected fundamental
change from which they would benefit. They were still waiting for the change to come in
2016 and thought Trump was more likely to provide it than Clinton. The better off supported
Clinton as the candidate of the status quo. For Wall Street and Silicon Valley she was the
safer choice. As in other western countries, the party ostensibly of the left had nothing to say
that its traditional base wanted to hear. [...]