By Daron ACEMOGLU
The outcome of the US presidential election was more of a Democratic loss than a triumph for Donald Trump. The Democrats lost not because US President Joe Biden stayed in the race too long, and not because Kamala Harris is unqualified, but because they have been losing workers and failed to win them back.
The party ceased to be a home for American workers long ago, owing to its support for digital disruption, globalization, large immigrant inflows, and “woke” ideas. Nowadays, those most likely to vote for Democrats are the highly educated, not manual workers. In the United States, as elsewhere, democracy will suffer if the center left does not become more pro-worker.
While the Democrats did win some previous elections with support from Silicon Valley, minorities, portions of organized labor, and the professional class in large cities, this was never sustainable.
Such a coalition is alienating to workers and the middle class in much of the country, especially in smaller cities and the South. The problem was already obvious after 2016, which is part of the reason why Biden adopted a pro-worker industrial strategy in 2020.
The Biden economy did deliver for the working class by creating jobs and strengthening the US industrial base. Wages at the bottom rose rapidly, and policies started moving a little toward the views of American workers on immigration, protectionism, support for unions, and public investment. But the party establishment – especially the highly educated activists concentrated in prosperous coastal cities – never internalized workers’ cultural and economic concerns. Instead, Democrats often seemed to be lecturing or scolding them.
Here is my own test for understanding the relationship between the Democrats and American workers: If a member of the Democratic elite is stranded in an unfamiliar city, would he prefer to spend the next four hours talking to a Midwestern American worker with a high-school diploma, or to a professional with a postgraduate education from Mexico, China, or Indonesia? Whenever I pose this question to colleagues and friends, they all assume it’s the latter.
With her emphasis on the middle class and patriotism, Harris initially seemed ready to address this problem. If credible, a true effort to win back workers may well have won the election. But by the end, the campaign had centered around the issues that mattered most to the base.
The biggest attempt to broaden the coalition came from using Liz Cheney (a Republican former congresswoman who has been banished from her party) to appeal to suburban women on the issue of abortion. Reproductive freedom may be a critical issue, but it was never going to win over the working class, certainly not working-class men.
On the economy, Democrats can talk about opportunity and jobs until they turn blue, but unless they distance themselves from the tech and global business elite, such messaging will not translate into a real pro-worker agenda – and workers will see right through it. With even Silicon Valley starting to leave the Democrats (ironically), there is no better time to change course.
But a redirection will be difficult now that Trump and J.D. Vance’s Republican Party has become the main home for workers – especially those in manufacturing and smaller cities – and now that Democratic elites are so culturally disconnected from workers and much of the middle class.
The great tragedy is that while Biden’s agenda had subtly started paying off for workers (proving that globalization and rising inequality are not just blind forces of nature), the next administration’s policies will almost certainly support plutocrats.
High tariffs on imports from China will not bring back jobs that have left the country, and they certainly won’t help keep inflation in check. While Biden’s pandemic-era policies (coming on top of Trump’s own stimulus measures) did fuel inflation, the US Federal Reserve managed to restore price stability. But if Trump pressures the Fed for more rate cuts (to boost his own popularity), inflation could return.
Moreover, Trump’s championing of the crypto sector will probably allow for more scams and bubbles, while doing nothing for American workers or consumers. His promised tax cuts will primarily help corporations and the stock market, with any resulting increase in investment going largely toward the tech sector and automation.
More broadly, the next four years of technology policy could turn out to be a disaster for workers. While Biden issued a major executive order on AI, this was merely a first step. If not regulated properly, AI will not only wreak havoc on many industries; it will also lead to pervasive manipulation of consumers and citizens (just look at social media), and its true potential as a tool that can help workers will go unrealized. By supporting large companies and venture capitalists in Silicon Valley, the Trump administration will fuel the trend toward labor-replacing automation.
Trump’s threat to US institutions also poses a big risk for workers. It is no secret that he will further weaken democratic norms, introduce uncertainty into policymaking, deepen polarization, and undermine trust in institutions like the courts and the Department of Justice (which he will try to weaponize).
This behavior will not lead immediately to economic collapse, and it may even encourage some investment by his favored companies (including the fossil-fuel industry) in the short run. But in the medium term (say, ten years or so), weaker institutions and loss of public trust in the courts will take a toll on investment and efficiency.
Such institutional weaknesses are always economically costly, and they could prove truly disastrous in an economy that depends on innovation and complex, advanced technologies, which require greater contractual support, trust between parties, and confidence in the rule of law. Without expert-led regulation, much of the economy – from health care and education to online business and consumer services – will be awash in snake oil, rather than high-quality products.
If the economy can no longer foster innovation and productivity growth, wages will stagnate. Yet even in the face of such adverse outcomes, many workers will not return to the Democrats unless the party truly takes their interests on board. That means not only adopting policies that support workers’ incomes, but also speaking their language, however foreign it may be to the coastal elites who have run the party aground.
Daron Acemoglu, a 2024 Nobel laureate in economics and Institute Professor of Economics at MIT, is co-author (with Simon Johnson) of Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity (PublicAffairs, 2023).
Copyright: Project Syndicate, 2024.
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