Economy Stuck in Low Gear Fuels Sanders, Trump, and Cruz

The economy is stuck in low gear—good-paying jobs remain scarce and the middle class is shrinking.

Friday, the Labor Department is expected to report the economy added 210,000 jobs in March— in line with recent months but hardly enough to push up wages.

When family incomes were rising during the Reagan era, employment advanced at twice the rate accomplished by President Obama, because the Gipper’s recovery notched 4.6 percent annual GDP growth whereas Obama’s only 2.1 percent.

Going forward, most forecasters don’t expect much improvement.

At all levels of government, social engineers promoting free trade and creeping statism have built a world of diminished expectations.

Trade with China has decimated American manufacturing and is responsible for a significant loss of high-paying factory jobs.

Beijing cynically undervalues its currency, subsidizes production, and throws up big barriers to competitive U.S. exports. Americans get cheap coffee makers but also lots of unemployment and debts to pay off by selling prized assets.

Manufacturing finances a good deal of U.S. industrial R&D, and trade deficits slice off enough of that spending—and hammer down adult labor force participation— to account for a significant share of the growth gap between the Reagan and Obama eras.

Prime age men, who once worked in those gritty factories, are now offered free health care, food stamps, bogus disability benefits and other government incentives to opt out of working, while increasingly women take full-time but temporary jobs in health care and other parts of the burgeoning service economy.  Those “gigs” increasingly require sophisticated skills but offer lower wages, fewer benefits, and much less job security than permanent employment.

Sadly, too many men and women don’t qualify for those temp-jobs, thanks to the liberals that run America’s largely government-subsidized and regulated educational establishment.

Four in ten college graduates lack the critical thinking and reasoning skills required for entry level professional or managerial positions, and only about 40 percent of high school graduates are prepared to do college work in the first place.

Big cities are the creative hubs for the new service economy supported by continuous breakthroughs in digital technology, medicine, and the like. However, too many workers are stranded in smaller towns that once supported factories, because state and local governments have imposed land use regulations and employment licensing  that push up apartment rents and make worker relocation and jobs creation more expensive and often too difficult to accomplish.

Similarly, urban planners have happily promoted policies to relocate the working poor to suburban jurisdictions—out of sight for the liberal youth culture that dominates the new service economy but where transportation to employment opportunities are prohibitively costly and cumbersome.

Bernie Sanders—an avowed socialist—and Donald Trump and Ted Cruz—easily among the most polarizing personalities to run for president in recent memory—have accomplished so much traction, because Hillary Clinton, Jeb Bush, and the other establishment Republicans so fantastically represent more of the same failed policies.

The Clintons are against free trade when seeking the presidency but are among its most ardent supporters once inside the Oval Office—Bill campaigned against NAFTA but pushed it through Congress once he was elected, and he negotiated the terribly flawed deal to admit China into the WTO. And Hillary remains a champion of incremental statism—she campaigns on a platform of more government benefits and business regulations to keep happy her base of government-dependent minorities and middle-aged feminists.

Establishment GOP candidates are for free trade all the time but for rolling back government only when running for office. George W. Bush imposed an onerous regulatory apparatus on public schools through No Child Left Behind and added the prescription drug program to Medicare.

It’s the kind of duplicity and dysfunction that made the Roman Empire what it is today—a constant focus of veneration for its glories but now extinct.

Peter Morici is an economist and business professor at the University of Maryland, and a national columnist. He tweets @pmorici1.