Land of the Free and Home of the Unconventional: Inequality and the Rise of Donald Trump

Land of the Free and Home of the Unconventional: Inequality and the Rise of Donald Trump

A real-estate mogul, a socialist and an Evangelical Christian walk into a polling booth. It sounds like the set-up to a punch line, but these are some of the diverse contenders to be the next President of the United States. So how did we get here?

Voting in the US is not mandatory as it is here in Australia. This creates a situation in which roughly only half of the eligible voting population vote. However, when there is a shock of some kind, more people are inclined to vote as they view the input as being more worthwhile. During the cold war period following WWII, the voter turnout was above 60%, as individuals reacted to the instability and turned out to the polls in droves to ensure their preferred candidate would represent them in this tumultuous time.

Today, the United States is in the grips of a shock of a different kind. Income inequality in the US has risen during the past several decades, with greater amounts of wealth being held by fewer and fewer people. Currently, the top 10% of earners in the US account for more than 45% of national income (figure 1). This creates real consequences for society, as income inequality can act as a signal of lack of income mobility and opportunity, a reflection of persistent disadvantage for particular segments of the society, as well as having implications for growth and macroeconomic stability. It can also influence the voting habits of individuals as they react to these negatives concerns.

This is a phenomenon seen during the current Presidential nomination primaries. Through the first 12 primaries of 2016, combined Republican turnout has been 17.3% of eligible voters – the highest of any year since at least 1980. Similarly, Democratic turnout so far is 11.7% – the highest since 1992, with the notable exception of the extraordinarily high turnout in 2008. So who votes, and who are they voting for?

Primarily, these voters are those who are disillusioned by the current state of politics in the US, in particular middle-class Americans. After four decades as an economic stalwart, middle-class Americans are no longer the majority. They’re down to 49.9 percent from 61 percent of the population in 1971, with the categorization of ‘poor’ growing to become the new norm. In absolute terms, more people have slid into society’s poorest class than have graduated to the upper-class tier. The working class expects a lot because they view the return on their output as being only a fraction of what they rightfully expect. It makes sense – it’s their work that’s produced so much and helped a struggling economy recuperate. But currently their work has been divorced from its value to the economy. As an election looms, neither party has figured out how to address this enormous economic value gap.

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While Democrats have delivered for many African American and Hispanic voters, through policies such as the Affordable Care Act (‘ObamaCare’), and on social issues such as gay marriage, many voters feel left out due to increasing pressures of income inequality. While certainly important reforms, they do little to help with the financial struggles facing the middle-class. Similarly, a large proportion of Republicans and unaffiliated voters think that the system is rigged to favour wealthy, moneyed interests at the expense of the middle class. Changes in the US economy have moved from hurting primarily working-class households to undermining middle-class households, leaving a sizeable contingent of voters who perceive both major parties as ignoring their interests.

So, with the Republican and Democrat ‘Institutions’ failing many Americans, who are the increased number of voters voting for? The evidence is clear: party outsiders. Donald Trump and Bernie Sanders have received an incredible surge in popularity in the polls, no longer seen as ‘fringe candidates’ but now genuine contenders. It’s also not surprising that both campaigns are resonating with voters in a way they haven’t in the recent past. Both men are speaking directly to households suffering economic insecurity, by rejecting corporate campaign donations and arguing that the US’s knee-jerk promotion of free trade and corporate investment overseas has shifted paying jobs abroad.

Of course, there are also significant differences in how Trump and Sanders address the middle-class resentment. Sanders promises to alleviate the burden of debt by introducing free college education and paid parental leave, while targeting income and wealth inequality through tax reform. Trump, meanwhile, is playing to the fears of many in the middle-class regarding immigration, crime and national security – all issues pertinent to middle-class values. Add in a splash of charisma and both men have the potential to be the next leader of the free world.

For the first time in decades, many Americans face the prospect that their children will have a poorer living standard than themselves; this is a sobering proposition – one that could spell the end of the ‘American Dream.’ Ultimately, Trump and Sanders have recognised this and have been able to mount successful campaigns in response. As a result rising inequality may also see the rise of Donald Trump.

Image: Matt A.J.