The Trump rump and the new economy

Alittle over a year ago, Amazon invited cities and states to offer bids for a proposed second headquarters. This set off a mad scramble over who would gain the dubious privilege of paying large subsidies in return for worsened traffic congestion and higher housing prices. (Answer: New York and greater DC.)

But not everyone was in the running. From the beginning, Amazon specified that it would put the new facility only in a Democratic congressional district.

Okay, that’s not literally what Amazon said. It only limited the competition to “metropolitan areas with more than 1 million people” and “urban or suburban locations with the potential to attract and retain strong technical talent”. But in the next Congress the great majority of locations meeting those criteria will, in fact, be represented by Democrats.

Over the past generation, America’s regions have experienced a profound economic divergence. Rich metropolitan areas have gotten even richer, attracting ever more of the nation’s fastest growing industries. Meanwhile, small towns and rural areas have been bypassed, forming a sort of economic rump left behind by the knowledge economy.

Amazon’s headquarters criteria perfectly illustrate the forces behind that divergence. Businesses in the new economy want access to large pools of highly educated workers, which can be found only in big, rich metropolitan areas.

In other words, there’s a cumulative, self-reinforcing process at work that is, in effect, dividing America into two economies. And this economic division is reflected in political division. In 2016, of course, the parts of America that are being left behind voted heavily for Donald Trump. News organisations responded with many profiles of rural Trump supporters sitting in diners.

But this was, it turns out, fighting the last war. Trumpism turned America’s lagging regions solid red, but the backlash against Trumpism has turned its growing regions solid blue. Some of the reporters interviewing guys in diners should have been talking to college-educated women in places like California’s Orange County, a former ultraconservative stronghold that, come January, will be represented in Congress entirely by Democrats.

Why have lagging regions turned right while successful regions turned left? It doesn’t seem to be about economic self-interest. True, Mr Trump promised to bring back traditional jobs in manufacturing and coal mining — but that promise was never credible. And the orthodox Republican policy agenda of cutting taxes and shrinking social programmes actually hurts lagging regions, which depend a lot on things like food stamps and disability payments, much more than it hurts successful areas.

Furthermore, there is little if any support in voting data for the notion that “economic anxiety” drove people to vote for Mr Trump. As documented in Identity Politics, an important new book analysing the 2016 election, what distinguished Trump voters wasn’t financial hardship but “attitudes related to race and ethnicity”.

Yet these attitudes aren’t divorced from economic change. Even if they’re personally doing well, many voters in lagging regions have a sense of grievance, a feeling that they’re being disrespected by the glittering elites of superstar cities, which all too easily turns into racial antagonism. Conversely, however, the transformation of the GOP into a white nationalist party alienates voters in those big, successful metropolitan areas.

We can and should do a lot to improve the lives of Americans in lagging regions. We can guarantee access to health care and raise their incomes with wage subsidies and other policies. But restoring these regions’ dynamism is much harder, because it means swimming against a powerful economic tide.

And the sense of being left behind can make people angry even if their material needs are taken care of. That is what we see, for example, in the former East Germany: Despite huge financial aid from the west, “Ossis” feel aggrieved by what they see as second-class status, and have given many of their votes to extreme right-wing parties.

So the bitter division we see in America — the ugliness infecting our politics — may have deep economic roots, and there may be no practical way to make it go away. But the ugliness doesn’t have to win. Most rural white voters still support Trumpism, but they aren’t a majority, and in the midterms a significant number of those voters also broke with that agenda.

America, then, is a divided nation, and is likely to stay that way for a while. But the better angels of our nature can still prevail.

Paul Krugman, a Nobel laureate in economics, is a columnist with The New York Times.