TRUMPING TRUTH
The U.S. is hardly a nation on the brink, contrary to what the Republican presidential candidate says.
Donald Trump is the most “down on America” candidate for the U.S. presidency in modern times.
As a matter of record, it’s important that Americans and the world know that Trump’s defeatist claims aren’t true.
The U.S. economy is a lot healthier than this year’s heated election rhetoric suggests.
Growth in jobs and personal income has been accelerating, not declining, over the past several years. The American economy has bounced back more strongly from the Great Recession than elsewhere, notably Europe and Japan.
Indeed, on key measures of economic performance, the U.S. has already recovered to the pre-recession peaks reached during the 2000s boom.
To be sure, the U.S. is bedevilled by economic challenges. Among these are a widening gap between rich and poor, or income inequality; by disparities in opportunity between men and women and between Caucasians and African-Americans and Hispanics; and by cybersecurity threats and intellectual property theft.
But those same challenges are faced by all mature industrial economies. And they are fixable problems, ones that, in the medium term, will continue to plague only those parts of the world that are chronic conflict zones. We need only the resolve to enact genuine solutions.
That is not on the cards in the U.S. this year, marked by a presidential campaign of fear, blame-seeking and resentment.
There is a venerable maxim among the world’s most successful investors: never bet against the U.S. It remains the case that America’s best days are ahead of it. And not only because of that country’s remarkable resilience.
In contrast to other major economies, the U.S. is not facing the “demographic time bomb” of a growing imbalance between its working-age population and retirees.
Demographics heavily favour the U.S. The above-average birth rates of the African-Americans and Hispanics who already make up one-quarter of the U.S. population ensure that America will continue to grow.
Not so America’s major competitors. The populations of Japan and Russia have begun to shrink — a phenomenon that will soon spread to Western Europe. In those regions, as well as China, the workingage population will become a steadily smaller part of the total population.
By contrast, the U.S. is forecast to add some 40 million new Americans between now and the mid-century. That practically guarantees that America will remain the greatest consumer economy of the 21st century.
Here are some of the “highlights” of Trump’s comments in last Monday’s first of three presidential debates:
“Our country’s in deep trouble . . . Our country is a mess . . . Look at Michigan and look at Ohio and look at all of these places where so many of their . . . jobs and their companies are just leaving . . . You look at what China is doing to our country . . . ”
As it happens, the economies of Michigan and Ohio have each been growing strongly in recent years, as they and other U.S. states (and Canada’s southern Ontario manufacturing base) make the transition from metal-bending jurisdictions to knowledge economies.
Here are some inconvenient facts for anyone who doubts the vitality of the U.S. economy:
The U.S. workforce is not shrinking, as certain political rhetoric would have it, but instead has grown almost 6 per cent since the depths of the greatest economic downturn since the Dirty Thirties. America’s enviably low jobless rate, at 4.9 per cent, has been cut more than 60 per cent since its 2009 peak during the Great Recession. (The jobless rate in Canada is 7.0 per cent.)
The U.S. ranks second on the Human Development Index for quality of life (Australia and Germany are tied for first), which means America outranks five of its peers in the G7 as one of the world’s best places to live.
On this all-important measure, America far outranks its main rivals for world domination — Russia (50th), China (90th) and India (130th). Trump whipping boy Mexico ranks 74th.
America’s per capita income — the chief measure of standard of living — is $51,486. Here, too, the U.S. outranks its G7 peers. And China’s per capita income is a mere $6,416. (All figures in U.S. dollars.)
U.S. manufacturing output has increased 28 per cent in the past decade, to a record $2.2 trillion. America has never been a more potent manufacturer than it is today.
America’s export revenues have soared 58 per cent in the past decade, to a record $1.9 trillion. The number for China is the same. But exports account for more than 17 per cent of the Chinese economy and less than 11 per cent of the U.S. economy.
America benefits from being the world’s biggest “internal” economy, in which most economic activity is Americans buying and selling among themselves.
By contrast, export-reliant countries such as Canada, China, Germany and Australia are hostages to volatile cycles in world commodity prices, as well as to political instability in their export markets.
In the past decade, U.S. productivity growth — which is typically modest among the biggest and most mature economies — has outpaced that of chief economic rivals Germany, Japan, U.K. and Australia, among other competitors.
Trump works to discredit the supposed free-spending ways of traditional politicians by citing America’s debt burden, which supposedly imperils the U.S. on every front. In fact, America’s government debt-to-GDP ratio of 104 per cent is roughly in line with that of Canada and the U.K., and far more manageable than that of Japan (229 per cent).
Finally, free-trade deals have benefited the U.S.
In the seven years following the ratification of NAFTA (“the worst deal ever,” said Trump this week), the U.S. created an unprecedented 23 million new jobs.
And a recent study by Third Way, a U.S. economic think tank that is neutral on trade, found that the U.S. has a total $85.5-billion trade surplus with the 17 countries with which it negotiated trade deals since 2000, contrasted with a total $3.7-billion deficit before those pacts were implemented.
Gabe Horwitz, Third Way’s vicepresident, economics, told the New Yorker earlier this month that he and his colleagues were “astounded by the outcome of this research. Even we were beginning to believe some of the propaganda against trade deals.”
Donald Trump has made a scapegoat of trade deals, among his other boogeymen.
It is a scapegoat for America’s decades-long failure to invest sufficiently in its own people, notably in education, health care and other “social infrastructure.”
And a scapegoat for the income inequality that denies millions of Americans the opportunity to succeed.
History will record that 2016 marked yet another U.S. episode of class warfare. And, sadly, yet another episode in which many of the victims of that warfare were gulled by a demagogue. dolive@thestar.ca