Today’s anger comes from nearly two decades of economic stagnation
The level of anger that Americans have toward each other was on clear national display during the Peter Strzok testimony late last week. It showed a level of anger toward the opposing view that is dangerous to the success of the country. It is easy to wonder whether this anger will ever subside.
Democrats and Republicans actually hollered at each other and even asked if the opposition had taken their medication that day. This division in Congress has been present for many years, but not with this level of hostility. Historically we civilly called the differences “gridlock.”
This level of anger had to have been building for many years in order to reach the intensity level seen today. It seems that the divisive anger started building during the end of President Bush’s term. Back then, those who opposed President Bush’s foreign policy became upset and openly hostile.
In 2008, President Obama was elected president. At the time, there were indeed deep divisions between the parties, including both the population and the Congress. In fact, President Obama said he would work to narrow the divide and unite all Americans.
It didn’t work out that way. Over time, the divide widened and the anger grew. And based on the performance by Congress during the Strzok hearings, the level is extremely high today.
While each side will blame the other for both the division and the anger, it is interesting to note how the level of anger and the length of economic stagnation are related. It has been nearly two decades since America experienced economic prosperity; that is growth of more than 4% annually.
Americans haven’t even experienced normal growth of at least 3% annually since 2005. That is the longest period of economic stagnation in U.S. history. As the stagnation lasted longer, the anger seemed to grow deeper.
Lack of strong economic growth for long time periods will lead to a frustrated and then angry population who is generally quick to blame someone else for its woes. That kind of thinking leads to deep divisions and more intense anger.
Slow growth simply means that the economy is not producing much new output. For the last ten years, growth has averaged just about 2% annually. If population growth was about 1% annually, that doesn’t leave much extra left over for other Americans.
The highest income-earners are always first to get the output. The middle class gets what is left, and then the lower class ends up with little to nothing, in an economy where economic growth barely exceeds the population growth.
Then the argument addressing income inequality begins, as the rich seem to grow richer while the middle and lower classes fall behind. The lower class blames the upper class for its woes. The real problem is that there is just not enough new output being produced. It certainly is not the upper class’s fault that the lower classes does not have the opportunity to earn more.
Economic growth of at least 3% annually will help relieve the population’s anger. Strong annual economic growth of at least 4% will return economic prosperity so there is opportunity for all well prepared Americans. The increased output will provide more to all income classes.
Fortunately, President Trump sees this. His top economic policy priority is to increase economic growth. The slow growth of the past decade is mostly a result of the prior administration. Growth was not a top priority for President Obama.
His top goal was to cure perceived social injustices. Obama concentrated on social programs that burdened the economy and hindered growth. Obama added hundreds of new regulations designed to achieve social equity, but which put a burden on economic growth.
Once Trump was sworn into office, he quickly removed the burdensome and counterproductive regulations. Since he did that, economic growth has been about 3%.
Growth for the current quarter, which ended on June 30, will be announced by the government on July 27. Based on the data received so far, it looks as though economic growth will have accelerated to at least 4% and perhaps much higher.
As the full effect of the tax cuts are felt later this year, it is likely that the 4% rate or higher will continue for the next year or so. After President Reagan had Congress pass a similar tax cut in 1982, economic growth skyrocketed to 7.5% in 1984. That growth rate is possible in the next year or so.
While it may seem that there is no end in sight for the anger and division present today, economic growth will change all of that. Americans will again feel how good economic prosperity is. This will provide opportunity, reduce anger, narrow political divisions, and put Americans into a more consolatory mood.
Then we should be civil enough to debate differences in a healthy manner, which is absolutely necessary for a democracy (actually a constitutional republic) to survive.
Michael Busler, Ph.D. is a public policy analyst and a professor of finance at Stockton University, where he teaches undergraduate and graduate courses in finance and economics. He has written op-ed columns in major newspapers for more than 35 years. @mbusler www.facebook.com/fundingdemocracy