Stagnant wages are a problem. Trump is the solution.

Since the 1990s, the share of national income going to working- and middle-class Americans has been dropping.  For most of the post-WWII period, wage-earners captured 64% of the Gross Domestic Product (GDP).  At the beginning of the 21st century, however, things started to change for the worse.  In 2017, wages and salaries accounted for just 43% of the GDP.  This is the lowest level since 1929. 

See the interactive graph of the Federal Reserve Bank of St. Louis. 

I trust we can all agree that this is a bad situation.  It's indicative of the hollowing out of the American middle class.  Irrespective of what the intellectuals and pundits may say or think, the middle class, not they, is the bedrock of America.   

Numerous factors have contributed to this trend, but the elephant in the room is globalization.

Globalization brought China into the picture.  This communist country was admitted into the World Trade Organization in 2001 under the guidance of Bill Clinton.  After successfully undergoing a vetting process for entry and promising to be an upstanding trading partner, mercantilist China began to immediately ignore the rules and dared anyone to stop it.  Neither Bill Clinton nor George Bush did, nor did Barack Obama.  In fact, none of these presidents even tried, so enamored were they of globalization.  So it was that China built itself up on stolen U.S. technology and a whole host of unfair and illegal trading practices.  In the process, the U.S. lost millions of jobs and suffered trillions of dollars in accumulated trade deficits.  This did not trouble the elite in this country, as it wasn't their jobs or income that suffered. 

The North American Free Trade Agreement (NAFTA) was just as bad.  In 1992, Ross Perot was right on the money when he said NAFTA would result in a "great sucking sound" of American jobs and factories going south to Mexico.  That has happened.  Again, thank you, Bill Clinton.

There's an unsavory aspect of NAFTA that I didn't notice until reading Sundance.  He writes:

As a consequence of NAFTA not being a trading block, it has been exploited exclusively for access to the U.S. market.  Over the past 30 years Canada and Mexico have structured their manufacturing economy based on unlimited access to the U.S. market.  Mexico and Canada assemble foreign products shipped to them as parts, then send the finished products into the U.S. market.  Hence Canada and Mexico demand high content of cheap foreign parts in any internal NAFTA agreement.  There is zero benefit to the U.S. worker.

In other words, NAFTA gives China a back door into the U.S. market through Canada and Mexico.  The U.S. could place tariffs and other restrictions on China, but China can evade them by exploiting NAFTA in that way.  And China does.  This is not a loophole in NAFTA; it's a feature of the treaty.  Why is a feature such as this in NAFTA in the first place?  It's because the specific intent of the Uniparty was to build up China and Mexico, with the thought that the damage to the American middle class was worth the price. 

So the percentage of GDP that goes to workers' wages has been falling.  What is the liberal solution?  Take William Galston, house liberal of the Wall Street Journal and senior fellow at the left-wing  Brookings Institute.  His prescription is an increase in the Earned Income Tax Credit (EITC) and for the government to subsidize the wage of low- and middle-income workers.  To pay for this welfare – and it is a form of welfare – Galston calls for tax increases for higher income brackets.  Typical big-government liberal approach, no?

Like so many liberal schemes, Galston's addresses the symptoms rather than the root cause.  Globalization, or more specifically labor arbitrage, is the problem.  Labor arbitrage is relocating factories and jobs to low-cost countries like China and Mexico while at the same time allowing large-scale immigration to take place.  This has been allowed to happen since 2001.  Labor arbitrage greatly increased the domestic supply of labor while at the same time decreased the demand for it.  What else can wages then do but stagnate, if not sink?  Corporate profits rise, the Democrat voter rolls increase, and the average American gets screwed. 

Fortunately, we now have a president in the form of Donald Trump who is tackling this problem head on.  He's curtailing immigration and renegotiating lopsided trade deals like NAFTA and confronting mercantilist China directly.  All this is having a positive effect on lower- and middle-class income and the employment number. 

There are beneficial spillover affects from increases in middle-class wages and employment.  Take the opioid epidemic, for example.  The National Safety Council says over 42,000 Americans died from an opioid overdose in 2016 alone.  This is a staggering number of people, and it doesn't tell the full story.  Fox News reported that there may have been over 70,000 more opioid related deaths unaccounted for since 1999.

These statistics are just for deaths.  For everyone who terminally ODed, there are many others addicts who don't.  But while alive, they are a drag on society through things like failure to keep a job, broken families, rehab costs, high suicide rates, child illegitimacy, and crime.

There are numerous causes behind opioid addiction, and one surely has been the disappearance of lower- and middle-class job opportunities.  Remember, globalization has resulted in the loss of millions of jobs.  When men can't find gainful employment, they fall into despair.  Bad things follow. 

I'm not saying MAGA will solve the addiction problem and the pathologies associated with it.  But brother, it will sure dent it and provide a foundation upon which other actions can be more effective. 

It is amazing, what Trump has done in just a year and a half.  And this is with the entire establishment against him.  Imagine what could be accomplished if Trump's own party were behind his MAGA agenda...or if the Democrats were a normal opposition party instead of the hate-filled, nihilistic entity of the left they have degraded into.

Image: Gage Skidmore via Flickr.

Since the 1990s, the share of national income going to working- and middle-class Americans has been dropping.  For most of the post-WWII period, wage-earners captured 64% of the Gross Domestic Product (GDP).  At the beginning of the 21st century, however, things started to change for the worse.  In 2017, wages and salaries accounted for just 43% of the GDP.  This is the lowest level since 1929. 

See the interactive graph of the Federal Reserve Bank of St. Louis. 

I trust we can all agree that this is a bad situation.  It's indicative of the hollowing out of the American middle class.  Irrespective of what the intellectuals and pundits may say or think, the middle class, not they, is the bedrock of America.   

Numerous factors have contributed to this trend, but the elephant in the room is globalization.

Globalization brought China into the picture.  This communist country was admitted into the World Trade Organization in 2001 under the guidance of Bill Clinton.  After successfully undergoing a vetting process for entry and promising to be an upstanding trading partner, mercantilist China began to immediately ignore the rules and dared anyone to stop it.  Neither Bill Clinton nor George Bush did, nor did Barack Obama.  In fact, none of these presidents even tried, so enamored were they of globalization.  So it was that China built itself up on stolen U.S. technology and a whole host of unfair and illegal trading practices.  In the process, the U.S. lost millions of jobs and suffered trillions of dollars in accumulated trade deficits.  This did not trouble the elite in this country, as it wasn't their jobs or income that suffered. 

The North American Free Trade Agreement (NAFTA) was just as bad.  In 1992, Ross Perot was right on the money when he said NAFTA would result in a "great sucking sound" of American jobs and factories going south to Mexico.  That has happened.  Again, thank you, Bill Clinton.

There's an unsavory aspect of NAFTA that I didn't notice until reading Sundance.  He writes:

As a consequence of NAFTA not being a trading block, it has been exploited exclusively for access to the U.S. market.  Over the past 30 years Canada and Mexico have structured their manufacturing economy based on unlimited access to the U.S. market.  Mexico and Canada assemble foreign products shipped to them as parts, then send the finished products into the U.S. market.  Hence Canada and Mexico demand high content of cheap foreign parts in any internal NAFTA agreement.  There is zero benefit to the U.S. worker.

In other words, NAFTA gives China a back door into the U.S. market through Canada and Mexico.  The U.S. could place tariffs and other restrictions on China, but China can evade them by exploiting NAFTA in that way.  And China does.  This is not a loophole in NAFTA; it's a feature of the treaty.  Why is a feature such as this in NAFTA in the first place?  It's because the specific intent of the Uniparty was to build up China and Mexico, with the thought that the damage to the American middle class was worth the price. 

So the percentage of GDP that goes to workers' wages has been falling.  What is the liberal solution?  Take William Galston, house liberal of the Wall Street Journal and senior fellow at the left-wing  Brookings Institute.  His prescription is an increase in the Earned Income Tax Credit (EITC) and for the government to subsidize the wage of low- and middle-income workers.  To pay for this welfare – and it is a form of welfare – Galston calls for tax increases for higher income brackets.  Typical big-government liberal approach, no?

Like so many liberal schemes, Galston's addresses the symptoms rather than the root cause.  Globalization, or more specifically labor arbitrage, is the problem.  Labor arbitrage is relocating factories and jobs to low-cost countries like China and Mexico while at the same time allowing large-scale immigration to take place.  This has been allowed to happen since 2001.  Labor arbitrage greatly increased the domestic supply of labor while at the same time decreased the demand for it.  What else can wages then do but stagnate, if not sink?  Corporate profits rise, the Democrat voter rolls increase, and the average American gets screwed. 

Fortunately, we now have a president in the form of Donald Trump who is tackling this problem head on.  He's curtailing immigration and renegotiating lopsided trade deals like NAFTA and confronting mercantilist China directly.  All this is having a positive effect on lower- and middle-class income and the employment number. 

There are beneficial spillover affects from increases in middle-class wages and employment.  Take the opioid epidemic, for example.  The National Safety Council says over 42,000 Americans died from an opioid overdose in 2016 alone.  This is a staggering number of people, and it doesn't tell the full story.  Fox News reported that there may have been over 70,000 more opioid related deaths unaccounted for since 1999.

These statistics are just for deaths.  For everyone who terminally ODed, there are many others addicts who don't.  But while alive, they are a drag on society through things like failure to keep a job, broken families, rehab costs, high suicide rates, child illegitimacy, and crime.

There are numerous causes behind opioid addiction, and one surely has been the disappearance of lower- and middle-class job opportunities.  Remember, globalization has resulted in the loss of millions of jobs.  When men can't find gainful employment, they fall into despair.  Bad things follow. 

I'm not saying MAGA will solve the addiction problem and the pathologies associated with it.  But brother, it will sure dent it and provide a foundation upon which other actions can be more effective. 

It is amazing, what Trump has done in just a year and a half.  And this is with the entire establishment against him.  Imagine what could be accomplished if Trump's own party were behind his MAGA agenda...or if the Democrats were a normal opposition party instead of the hate-filled, nihilistic entity of the left they have degraded into.

Image: Gage Skidmore via Flickr.