San Francisco is Getting Richer, Pennsylvania is Getting Poorer, and Donald Trump is President-Elect Because of It

Alexandra F. Baldwin

It went largely ignored by the mainstream media, but we had an election in the United States last week in which Donald Trump won the Presidency. The result was, based on polling immediately before the election, at least somewhat surprising. Hillary Clinton owned a 2-4 point lead in most national polls, and FiveThirtyEight.com pegged her chances of winning at about 70%. That is not nearly the resounding favorite that coverage of the election would have you believe (polls, do, after all, have a margin of ERROR), but Trump’s win was unquestionably a surprise to most observers.

In the macro sense, though, the result is quite stunning. Trump is wholly unqualified and unfit for the office. He can’t form complete sentences. He lies about everything he can think of, even things that don’t require lying. His understanding of economics is juvenile, and his grasp of geopolitics is even worse. He seems pretty cool with the LGBT community, but he seems to hate women and brown people. He mocked veterans and the disabled during the campaign. He made a reference to the size of his genitalia during a Presidential debate. He is, in the most generous reading, the most detestable human being to hold this office since at least Andrew Jackson.

Somehow, though, on November 8, more than sixty million Americans walked into a voting booth and registered their wish that this sociopathic baboon be President. And Bob help us all now. The result sent the pundit class into a free-for-all. How could they possibly explain something which seems to be so incredibly inexplicable? The theories began flying immediately

The obvious first accused culprit was racism. The liberal but generally sane(ish) Van Jones called it a “whitelash,” and given Trump’s incendiary remarks about Mexican immigrants and his propensity to refer to “the Blacks,” this seems like it makes some sense. And to be sure, Trump clearly has the support of white supremacists across the country in a more visible way than any other major candidate that I remember. The KKK didn’t endorse Trump in a genius bit of reverse psychology just to help Hillary (if they did, we would have heard about it in an email from John Podesta…zing!).

Racism can’t explain the entire result, though. As much as Trump fed into and off of overt distrust/dislike of darker-skinned people, the results on Election Day didn’t really show that to be the dominant factor in the result. He did worse among white people than Mitt Romney did (59% to 58%) and he did better among other races. We might dismiss his over-performance among African Americans as a result of the absence of an African American candidate this year, but Hispanic voter totals are harder to dismiss. In 2012, Obama won Hispanics 71-27. In 2016, Hillary Clinton won Hispanics 65-29. Either Hispanic voters were not turned off by Trump in the way that pundits thought they would be, or their general views of Hillary Clinton were less favorable than assumed. The same goes for Asian and “Other” ethnicities.

Trump won this election, mostly, by getting about a million people in Ohio, Pennsylvania, Michigan and Wisconsin to flip from voting Democrat in 2008 and 2012 to voting Republican this year. In other words, his increased support (over Romney’s totals) came from people who voted for Barack Obama twice. It is hard to chalk that up exclusively to racism. Of all states that might be categorized as swing states, Trump’s only pattern-breaking loss came in the whitest of those states: New Hampshire.

After the racism cries, we started to hear about misogyny. America, we heard from the Amanda Marcottes and Jill Filipovics of the world, is just not ready to elect a woman. But again, Trump did only the slightest bit better among men than Romney did (53% to 52%) and a similarly small amount worse among women (44% to 42%). Meanwhile, Hillary Clinton actually did worse among women than Barack Obama did four years ago (55% to 54%) and her margin over Trump was similar to Obama’s as well (+12 for Clinton, +11 for Obama, +13 for Obama in 2008). Is there some built-in electoral preference for a man over a woman? Almost certainly, but it is hard to pin this result on that, either.

Finally, we heard about the disaffected rural, middle and lower class white voters in economically struggling areas (like those four states we mentioned above). They are, the theory goes, upset over the damage that free trade has done to their key industries and over the disappearance of their economic security. They are mad as heck at the politicians that they have seen administer the collapse of their way of life, and they decided to support a guy who yelled about the things that bother them. They don’t really need to harbor any delusions about Donald Trump (the quintessential silver-spooned, New York insider) holding any sincere concern for their plight, they just have to accept him as a vessel for their discontent.

And this, to me, seems like the ideological wave that the media, politicians, and observers on the coasts willfully missed. The presence of the alt-right in Trump’s campaign was heavily covered. The double standards in the way we view men and women were, likewise, analyzed at length. But beyond some cursory acknowledgment, there was little in the way of deep understanding of the anger that left-behind areas feel at the moving-forward areas.

This is not the first election in which economic issues have held sway. Bill Clinton famously swept into office in 1992 on a wave of discontent with George Bush that was summed up succinctly as “It’s the Economy, Stupid.” Ronald Reagan rode a bad economy, rampant inflation and Jimmy Carter’s “National Malaise” into office in 1980. The thing about this election, though, is that the economy, by standard macro measures, is not that bad.

Manufacturing volumes are up. Inflation is almost impossibly low, and money is cheap and easy to find. Asset prices have climbed steadily since President Obama took office, and aggregate household and Non-Profit wealth has (per the Fed) grown at about 8% per year, from $54T to $89T. The employment situation isn’t quite as good as the unemployment rate would imply – it is skewed by an underutilized workforce – but it’s not objectively terrible, and the improvement has been obvious and measurable. Personal incomes have begun to rise after years of stagnation (or shrinkage). GDP growth has bounced around the 2% mark for nearly seven years now. These are not the kinds of data that we throw parties over, but they also don’t indicate the kind of performance that tends to lead to populist revolts.

Those, of course, are averages of the entire nation, and every average hides some variance. We have heard quite a bit about the growing wealth inequality in America, but I think we have missed the geographic portion of that phenomenon and how it relates to this election. Quite frankly, just as the gap between rich and poor Americans is growing, so is the gap between rich and poor places in America.

{Warning: lots of numbers coming up, and they all come from the Federal Reserve}

I live in Boston, and frankly, it has been a good eight years for the region. GDP growth, across the metro area, has measured closer to 4% annually during the last seven years, and while the Fed doesn’t break out household wealth regionally, it is clear that the total wealth of the region has grown faster than the 8% we have seen nationally. Not only did our homes retain their value during the Great Recession, but they have grown subsequently faster than average.

As the asset prices mentioned above have increased, so have the fees generated by Boston’s asset management industry. The Biotech industry, centered in Cambridge, has ridden one long wave of growth and wealth creation for nearly the last 20 years. Boston’s hospitals and schools continue to grow and create even more wealth, and the high-tech industry remains healthy and growing. There is an inescapable building boom adding commercial, retail and residential space all over the city, and improving homes in the suburbs at remarkably fast rates. The reclamation of “bad” parts of the city into nicer neighborhoods continues steadily.

The story in New York is pretty similar, although the industries are slightly different and the scope larger. Growth has been north of 3.5% annually and wealth, driven by both financial assets (supported by that cheap money we mentioned) and a torrid real estate market, has outpaced the national average. The story in San Francisco is even more dramatic, where the tech industry has driven GDP growth of nearly 4.5% per year and gains in personal wealth of a larger magnitude than any other place in the country.  

Washington, D.C., a city of very little actual industry beyond government, hasn’t enjoyed quite the growth that these other cities have, but at nearly 3%, it has still outpaced the nation as a whole. Chicago? A little over 3%. Seattle? Another tech-heavy economy churning out growth of about 4%. All of which is a lot of data that says the same thing: economically, things on the coasts are really good.

It would make sense, then, that Trump, running as the challenger to the incumbent party, would struggle in these places. And indeed he did. He consistently underperformed Romney along the Northeast and Pacific coasts, losing them by larger margins across the board.

This brings us back to the law of averages.

As we already discussed, national economic performance is, on average, “meh.” It could be worse, and certainly, it could be better. We have also noted that Boston, Seattle, Washington, New York, Chicago and San Francisco are all growing at rates above the national average. In aggregate, those growth rates are nearly double the growth rate of the nation as a whole, produced from something on the order of a quarter of the country’s overall GDP. By definition, the other three-quarters of the country are doing worse than the “kinda meh” economic data above suggests.

The story actually gets even worse than that for the places that moved heavily towards Trump.  Let’s also now throw in Texas, which has grown at (more or less) 4% per year over the same period. I left Texas out originally because it is neither a naturally blue area electorally, nor is it a coastal region (despite, you know, its coast.) But the story is similar: vibrant industries, in this case, oil and gas, have driven broad and healthy economic growth and generated substantial wealth in the region. And guess what? Here, Clinton did better than Obama did four years ago, by quite a bit. Obama lost by 16 points, Clinton lost by 10. Romney got 57% of the vote, Trump got 53%. Texas, as you would expect in a state with a robust, performing economy, looked more favorably on the incumbent party than they may normally be inclined to.

If we revisit the electoral map now, maybe we have a new way of looking at it. Not only are the coasts naturally predisposed to vote blue, but they have really, really benefitted from the last eight years of Democratic administrations. When they do their own personal, unofficial “Am I better off?” inventory, the answer is a resounding “Yes!”  Further, all of the data they read agrees with this feeling. Growth is slow but consistent, wealth is being created rapidly, and people are going back to work. All of that data reinforces what they see and hear every day: things are good, and we are all getting ahead.

To the voters in the rural industrial states, however, the story is very different. Not only have they gotten poorer, but their long-term economic prospects are a lot worse. The economic truths that are obvious to the coastal denizens – that the coal industry was killed by fracking, not by Obama; that manufacturing jobs didn’t go to China, they went to robots; that we make more stuff than we have ever made, we just don’t employ as many people to do so – are just as obvious, but they are matters of life and happiness, not antiseptic academic realities. I can sit here and argue for days about how we are all better off because of free trade and generous immigration policies, and that globalization is a positive force for wealth, human rights and ultimately world peace, but the obvious and hard-to-refute counter to that from the disaffected middle is “That’s pretty easy for you to say.”

So, not only are those voters economically worse off than they were eight years ago, but it looks to all like they will be still worse in another eight. All the while, the people in New York and San Francisco just keep getting richer and richer. Those “coastal elites” control the media and the financial system, and they are unquestionably thriving in the global economy. They also, importantly, control the Federal government and determine its priorities. To the residents of the left-behind country, it looks like that Federal Government has thoroughly and completely forgotten about the people in large swaths of the industrial Midwest who are increasingly realizing that they need to make major changes before they find their place in the global economy.

Donald Trump then, as unlikely and irrational as it may seem, represents a convenient way to voice displeasure with those policy makers. It doesn’t matter that Trump personally stands for absolutely everything that the disaffected voters are raging against: inherited wealth; cozy relationships with policy makers and the sweetheart tax deals that go with them; tax avoidance; cheap-money-fueled asset appreciation. What matters is that he is willing to accuse policy makers of building a world that benefits the coasts at the expense of the middle. Sure, Donald Trump has been made rich by the coastal-favoring economic policies of the last thirty years. But, you know what? So have Hillary Clinton and everyone who will help her govern. At least Trump is willing to acknowledge it.

This was a truly bizarre election, with a stunning conclusion that we are having a hard time explaining fully. There are racist, xenophobic, nationalist and sexist factors in the outcome, for sure, and we should all be alarmed at the growing acceptance of rhetoric that would have been considered abhorrent a short while ago. However, it is much too easy, and obviously inaccurate, to claim that this election turned wholly on those factors.

​Maybe, just maybe, after all of these years, James Carville is still right: It’s The Economy, Stupid.