Trump, the job creator?

When economic times are good, the President claims and  gets credit from a majority of the voters. When the economy is bad, the voters take it out on the President. The credit or punishment a President gets may be undeserved either way.

The economy is very complicated and is a result of trends caused by Congress, the Federal Reserve, international trade and previous Presidential administrations.

For almost 20 years, the American economy has been deteriorating on a grass roots level. While productivity has risen well, wages are not sharing in the wealth that workers create. There are many reasons for this:

  • Skyrocketing technology is eliminating jobs. Output per worker is up substantially so less workers are needed for the same level of output or even for higher levels of output. With less demand for workers, employers can get them cheaper. It even gets to a point where workers aren’t needed at all. Call for help or information and you will get automated menus where there used to be people. You can now get customer service often by talking to a voice understanding device or enter digital information. There still are some humans around at the end of phone lines. You get the point.

  • After World War two, the U.S. had the strongest economy in the world. We had superior capital, technology and education. We were largely self contained. General Motors, Ford and Chrysler made the only cars sold in America!  Capital and technology spread to poorer countries where labor was almost free compared to American costs. Competition from these manufacturers put American manufacturers out of business. Or they moved production overseas or outsourced the jobs piecemeal.

  • Foreign labor is also cheaper because of standards. Without unions or labor laws to protect them, workers are forced to work in cheap unhealthy conditions. Without environmental standards, overseas manufacturers can dump raw pollution into the waters and air making their products cost far less.  The price tag on a foreign made product does not reflect the other true costs.

These are powerful forces and trade agreements can make them worse. Donald Trump capitalized on these forces to make money on them. But during the presidential campaign, he was against others doing what he was doing. After 6 months in office there is no sign Trump has accomplished anything much to reverse these forces including with his own overseas enterprises. In fact, his attempts to reverse Carrier from moving jobs to Mexico has failed. Ford is moving its Focus manufacturing to China.  For the details.

The job picture should continue to improve and Trump will claim credit for it, but these are really longer term trends from the Obama years.