Benjamin M. Friedman
This year’s election is not about economics. The paramount question is whether a person exhibiting no qualification for the office—neither experience, nor preparation, nor personal character—is nonetheless to become president. Yet economics is at the heart of the matter. The reason Americans face this possibility is grounded in our country’s economic experience of the last decade and a half. And the challenge facing whoever wins will be largely economic as well.
No one would think to compare Donald Trump with William Jennings Bryan. But the economic conditions that propelled radical populism to prominence in the 1880s and early 1890s, and that led the Democrats to nominate Bryan for president on a populist platform in 1896, bear an eerie resemblance to what Americans have lived through thus far in the twenty-first century.
Then as now, two seemingly inexorable forces were at work: a protracted slowing in the country’s economic expansion, together with dramatically widening gaps between rich and poor. Following more than a decade of rapid growth after the Civil War, centered on huge investment in steel and railroads, the average US citizen in 1880 earned a then-impressive $6,300 in today’s dollars. But the industrial expansion slowed, the development of new croplands in Canada and Argentina and Australia caused agricultural prices to drop (a catastrophe for an agrarian economy such as the United States then was), and a series of financial crises punctuated what little growth there was. By 1895, the year before Bryan’s electrifying “Cross of Gold” speech accepting the Democratic Party’s nomination, the average American’s income had slipped to just $6,100. Meanwhile, the ever greater contrast between Gilded Age riches and spreading rural and urban poverty was readily apparent.
Turning to the current situation, the pace of America’s economic growth has slowed sharply in the past sixteen years. From the end of World War II to 2000, output per person had risen—irregularly, to be sure—at an average rate of 2.2 percent per year. Since 2000 the increase has averaged only 0.9 percent. Along the way, the gains from what growth there has been have mostly accrued to those already at the top of the income scale. With slower growth and widening inequality, between 2000 and 2014 (the latest year for which we have the relevant data) the income of families just at the midpoint of the US income distribution fell, from $69,700 to $66,600 in today’s dollars.
The outright decline was largely a consequence of the 2008–2009 financial crisis, but median family income showed approximately zero increase from 2000 to 2007, and again from 2009 to 2014. Most Americans weren’t getting ahead, and they knew it. Just within the past year,…
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