President Trump’s new plan for large tariffs on steel and aluminum — and the sudden resignation of his “globalist” chief economic adviser, Gary Cohn — suggest that protectionism and economic nationalism are ascendant inside the Trump White House. Trump defends the tariffs by claiming he’s “protecting our workers” — that is, the “forgotten men and women” that Trump got elected by championing.
All of which should prompt renewed attention to the true nature of Trump’s economic agenda. Is it actually helping the forgotten men and women? And how far will it go in doing so over the remainder of Trump’s presidency?
A new analysis from the Brookings Institution suggests that the answers are: No, not yet. And probably not too far.
The new Brookings data — which was prepared at my request — also hints at a way for progressives and Democrats to take back from Trump his economic narrative about those forgotten men and women.
The new Brookings analysis underscores a basic truth about our politics in the Trump era: The areas of the country that continue to capture and drive the largest share of the nation’s prosperity, amid the digital and information revolution, are the ones that, generally speaking, did not support Trump for president. The areas of the country that supported Trump overwhelmingly are the ones that continue to get left behind economically — even with Trump in office.
Ron Brownstein has referred to this as “the prosperity paradox” of the Trump era, in which “the nation’s economic growth is being driven overwhelmingly by the places that are most resistant to him.”
The new Brookings data illustrates regional disparities in employment growth data, broken down by population density. In recent years, beginning in 2010, the largest metropolitan areas have pulled away from the smaller and non-metro areas in terms of percentage of employment growth. This trend continued largely unabated during Trump’s first year:
The Brookings analysis (which expands on an earlier paper) is based on data from the Bureau of Labor Statistics. It finds: From 2010 to 2017, the largest metro areas — those of 1 million or more people — experienced 16.7 percent employment growth. Metro areas with between 250,000 and 1 million experienced 11.6 percent employment growth.
But areas with fewer than 250,000 — small towns and cities — experienced a measly 0.4 percent employment growth, while non-metro areas — i.e., rural areas — experienced 4.4 percent employment growth.
The author of this analysis, Mark Muro, a senior fellow at Brookings who is an expert on regional economies, calls this phenomenon “territorial inequality.”
“The decade has been, on balance, lousy for small towns and rural areas, with job growth heavily tilted to big metros or larger mid-sized cities,” Muro told me. “Small towns and rural areas have been in trouble. The trend has largely continued.”
Regional economic disparities track the Clinton-Trump divide
This broad economic divergence tracks with regional voting patterns in the 2016 election. As an NPR analysis shows, Hillary Clinton won big in areas with more than 1 million people. Trump won, but just barely, in areas with 250,000 to 1 million people. And Trump won huge majorities in areas with fewer than 250,000 people and in rural areas — the areas that are being most dramatically left behind, even with Trump in office.
When you dig to the county level, the trend is even clearer. As Brownstein has also noted, Clinton won far fewer counties than Trump — she cleaned up in the more populous counties. But Clinton counties produced almost two-thirds of the country’s new jobs and nearly three-fourths of its economic growth in recent years.
There are important elements of truth about Trumpism
All of this points to the ways in which Trump’s economic narrative contains important elements of truth. There is a large economic divide in this country that does break down along regional lines. Large swaths of this country — the rural areas and smaller towns and cities — are being economically left behind.
The story that Trump allies like to tell is that those areas — and the people who live in them — have been abandoned by coastal and/or urban elites who are cleaning up in the globalizing, digitalizing economy. The elitists are smugly congratulating themselves for their open-mindedness in supporting immigration and in extolling the values of globalization, while shrugging even as those trends are shredding the lives of the forgotten Americans by subjecting them to debilitating labor market and foreign competition — reducing them to “carnage.” In short, those elites are capturing most of the gains yielded by the technological, economic and demographic march of time.
It is true that this march of time is leaving many “forgotten Americans” economically stranded. But as Brookings has shown elsewhere, this divide is being largely driven by the digitalization of the economy. And this, too, overlaps with the Clinton-Trump divide. Using Brookings data, Brownstein recently concluded:
Clinton won preponderant majorities in the communities where the highest share of workers perform jobs that require intensive use of computerized technology — most of them larger cities, many along the two coasts. Trump overwhelmed her in the mostly smaller interior places that haven’t attracted nearly as many well-paying, information-savvy jobs.
So the Trumpist narrative is right, in the sense that many of the yields of economic progress are being unevenly distributed along regional lines, and the non-urban areas are on the losing end.
But Trump has the wrong prescriptions
Much of Trump’s first year was consumed in embracing House Speaker Paul D. Ryan’s economic agenda. The effort to repeal Obamacare failed, but Trump has gone on a zealous deregulation spree, and Republicans did pass a massive permanent corporate tax cut on the grounds that it will spur investment and growth. Now, with the new tariffs, Trump is suddenly lurching back to his protectionist promises, slapping a veneer of Trumpism on the Orthodox Ryanism he has fully embraced.
But Muro of Brookings believes that there isn’t any particular reason to think that these tax cuts — or the new tariffs — will make a big dent in these regional disparities. For one thing, he argues, digitalization is having a profoundly polarizing effect on the economy. As he put it recently, this is producing “deep economic and technological long waves. And while we are in the midst of this long wave, we are not near the end of it.”
If this is right, then even boosted growth and investment don’t ensure that the yields will be adequately distributed to mitigate that trend.
Moreover, Trump’s tariffs are narrowly targeted toward the steel and aluminum industries, and many economists believe that more workers in other industries that use those materials will be hurt. What’s more, as Jim Tankersley points out, a trade war produced by tariffs could actually harm small metro areas — that rely heavily on exports — in states that went for Trump. The combination of job losses in other industries and trade war dislocations could also hurt the export-reliant Rust Belt — i.e., Trump country.
It is also hard to believe that deporting undocumented immigrants and cutting legal immigration would do that much to unwind these deep trends.
Progressives can take back the narrative
We constantly argue over what Democrats should or should not do politically to win back the non-college-educated whites who voted overwhelmingly for Trump. But one way to start would be with policy arguments — by addressing the core truths of Trumpism more effectively than Trump himself does.
Many progressive economists have, of course, been doing this for years. Some have suggested Democrats embrace a more aggressive approach to combating corporate concentration, on the grounds that this problem is fueling deep regional inequality in multiple ways. Others advocate for a much more robust welfare state and a social wealth fund that pays a basic income to all, to reduce inequality and liberate and insulate people from the shocks of capitalism.
Still others urge an acknowledgment that trade rules really are rigged and a response rooted in smarter exchange rate policies. Brookings has suggested a range of ideas for regionally targeted federal investments to address the territorial economic schism. Democrats can continue advocating massive public spending on infrastructure, funded by taxes on the rich, that could channel investment and job creation into lagging areas.
We don’t know how successful Trump’s presidency will be at lifting the areas of the country inhabited by his forgotten men and women. The recognition of these regional inequalities provides a framework for judging his success over time.
But it doesn’t seem likely that full-blown Orthodox Ryanism — combined with haphazard anti-“globalist” gestures, mass deportations and a monument to xenophobia in the form of a southern border wall — will do it. And that gives progressives an opening to speak to those Americans about these problems more effectively.