More Jobs, A Stronger Economy and a Threat to Institutions
A hundred and sixty-one thousand new jobs were created in October, the unemployment rate fell to 4.9 per cent, and wages grew faster than at any point since the financial crisis. Combined with last week’s report of strong G.D.P. growth, this is evidence that our economy is healthy and growing—and that growth is being reasonably widely shared. While this doesn’t mean that America’s growth is as robust as we might wish, or that we don’t face deep challenges, these numbers are incompatible with a view that America is in a profound economic crisis. Yet many people believe it is.
.. Every four years, Republicans argue that they, alone, can help the economy grow, while Democrats argue that they will make sure that economic growth doesn’t just help the rich.
.. Growth is actually notably higher during Democratic Administrations. The graph of economic performance since the Second World War shows growth averaging 4.33 per cent a year under Democratic Presidencies, while growing at 2.54 per cent under Republican ones.
.. Kevin Hassett, of the American Enterprise Institute, who advised every Republican Presidential candidate between 2000 and 2012, sees the cause and effect differently: American voters choose Democrats when they believe the economy is about to take off, because they want the government to spend a lot of money; then, when Democrats damage the economy and things turn south, voters choose Republicans to sort out the mess.
.. What matters most are those things that endure for decades and centuries: democracy, rule of law, a civilian-led military, political stability, and freedom of speech and movement. America is a rich country not because of what the Democrats or the Republicans did separately. It is successful because of those things that the parties share, national values and institutions.
.. Institutions are significant to economists, who have come to see that countries become prosperous not because they have bounteous natural resources or an educated population or the most advanced technology but because they have good institutions.
.. The societies with the most robust systems for forcing the powerful to accommodate some of the needs of the powerless became wealthier and more peaceful. Good rules persuaded people with ambition and ideas to invest in the future, trusting that stability and rule of law would protect them. Most nations without institutions to check the worst impulses of the rich and powerful stay stuck in poverty and dysfunction.
.. This explains why America’s quadrennial fights over tax rates and government spending are meaningful in the short term and to many individuals, but, over a longer arc, it’s the institutions we’ve built and respect that allow for a trajectory of growth.
.. No economist, save one, supports Donald J. Trump’s stated economic plans, but an even larger concern is that, were he elected, Trump would attack the very institutions that have provided our economic stability. In his campaign, Trump has shown outright contempt for courts, free speech, international treaties, and many other pillars of the American way of life.
.. Sulla, a wealthy and powerful élitist, was able to take advantage of anger among the less privileged to suggest that existing societal rules were keeping Rome from reclaiming its greatness. He steadily eroded custom, by, for example, encouraging soldiers to pledge allegiance to him rather than to the state, and to suggest that the Senate was sclerotic and corrupt.
.. Robinson said that it’s easy to imagine a President Trump refusing to heed our own highest court, which, as President Andrew Jackson observed, has no way, other than respect of institutions, to enforce its decisions. No one knows what Trump would do as President, but, based on his statements on the campaign trail, it’s possible to imagine a nation where people have less confidence in the courts, the military, and their rights to free speech and assembly. When this happens, history tells us, people stop dreaming about what they could have if they invest in education, new businesses, and new ideas. They focus, instead, on taking from others and holding tightly to what they’ve already amassed. Those societies, without the institutions that protect us from our worst impulses, become poorer, uglier, more violent. That is how nations fail.