Working class heresy

The US has a problem with stagnating income. Real median income for US men has barely moved in 40 years. For white men in particular, this represents a new and confronting reality. Conventional wisdom suggests the response of rejecting free trade and immigration, and voting for Brexit, Trump and Hanson, is the revenge of these losers of globalisation.

While some still question whether that is actually true, there are suggestions that the answer to Trumpism is more redistribution to compensate those worse off.

Have we really considered what they are being compensated for? If we put aside politics for a moment, the devil’s advocate suggests there might be little economic or social justification for these transfers.

The striking thing about the US election is the rejection of the Democrats’ welfare compensation model. Part of Trump’s appeal is that he is effectively promising a return of a path to the middle class for the uneducated and unskilled (arguably this is the American dream).

Is it axiomatic that the return of this American dream would be positive? Is it even possible?

Left unsaid is that historically the path to middle class was largely open only to white men; primarily because their wages were held artificially high by a system of protection from external competition and the exclusion of women and minorities from many workplace opportunities.

Trump voters may lament that the country has gone off track since the 1950s, yet this effectively argues that the displacement of this system by three different factors — globalisation, mechanisation and increased participation from women and minorities — is a mistake.

It is impossible to separate their respective effects but it’s worth noting that while male income in the US has stagnated, both participation and median female incomes have increased over that same period. Asian men and women, and to a lesser extent Hispanic men and women, have all seen real median income gains over the last 16 years. Poverty has fallen substantially.

Even if globalisation is part of the problem, it’s highly doubtful reversing it would see the return of high demand for low-skilled, white male workers.

Advancement for women and minorities has long been fobbed off on the basis of ‘merit’, but the question not being considered is whether the absence of a path to middle class for unskilled white men is actually the end point of a meritorious system working as intended. If so, compensation will not fix the problem — only delay the reckoning.