By Daron Acemoglu
The outcome of the US presidential election was more of a Democratic loss than a triumph for US president-elect Donald Trump. The Democrats lost not because US President Joe Biden stayed in the race too long, and not because US Vice President Kamala Harris is unqualified, but because they have been losing workers and failed to win them back.
The party ceased to be a home for American workers long ago, owing to its support for digital disruption, globalization, large immigrant inflows and “woke” ideas. Nowadays, those most likely to vote for Democrats are the highly educated, not manual workers. In the US, as elsewhere, democracy would suffer if the center left does not become more pro-worker.
While the Democrats did win some previous elections with support from Silicon Valley, minorities, portions of organized labor and the professional class in large cities, this was never sustainable. Such a coalition is alienating to workers and the middle class in much of the country, especially in smaller cities and the South. The problem was already obvious after 2016, which is part of the reason why Biden adopted a pro-worker industrial strategy in 2020.
The Biden economy did deliver for the working class by creating jobs and strengthening the US industrial base. Wages at the bottom rose rapidly, and policies started moving a little toward the views of American workers on immigration, protectionism, support for unions and public investment. However, the party establishment — especially the highly educated activists concentrated in prosperous coastal cities — never internalized workers’ cultural and economic concerns. Instead, Democrats often seemed to be lecturing or scolding them.
Here is my own test for understanding the relationship between the Democrats and American workers: If a member of the Democratic elite is stranded in an unfamiliar city, would he prefer to spend the next four hours talking to a Midwestern American worker with a high-school diploma, or to a professional with a postgraduate education from Mexico, China or Indonesia? Whenever I pose this question to colleagues and friends, they all assume it is the latter.
With her emphasis on the middle class and patriotism, Harris initially seemed ready to address this problem. If credible, a true effort to win back workers might well have won the election. However, by the end, the campaign had centered around the issues that mattered most to the base. The biggest attempt to broaden the coalition came from using Liz Cheney (a Republican former congresswoman who has been banished from her party) to appeal to suburban women on the issue of abortion. Reproductive freedom might be a critical issue, but it was never going to win over the working class, certainly not working-class men.
On the economy, Democrats can talk about opportunity and jobs until they turn blue, but unless they distance themselves from the tech and global business elite, such messaging would not translate into a real pro-worker agenda — and workers would see right through it. With even Silicon Valley starting to leave the Democrats (ironically), there is no better time to change course.
However, a redirection would be difficult now that Trump and US vice president-elect JD Vance’s Republican Party has become the main home for workers — especially those in manufacturing and smaller cities — and now that Democratic elites are so culturally disconnected from workers and much of the middle class.
The great tragedy is that while Biden’s agenda had subtly started paying off for workers (proving that globalization and rising inequality are not just blind forces of nature), the next administration’s policies would almost certainly support plutocrats. High tariffs on imports from China would not bring back jobs that have left the country, and they certainly would not help keep inflation in check. While Biden’s COVID-19 pandemic-era policies (coming on top of Trump’s own stimulus measures) did fuel inflation, the US Federal Reserve managed to restore price stability. However, if Trump pressures the Fed for more rate cuts (to boost his own popularity), inflation could return.
Moreover, Trump’s championing of the cryptocurrency sector would probably allow for more scams and bubbles, while doing nothing for American workers or consumers. His promised tax cuts would primarily help corporations and the stock market, with any resulting increase in investment going largely toward the tech sector and automation.
More broadly, the next four years of technology policy could turn out to be a disaster for workers. While Biden issued a major executive order on artificial intelligence (AI), this was merely a first step. If not regulated properly, AI would not only wreak havoc on many industries, but would also lead to pervasive manipulation of consumers and citizens (just look at social media), and its true potential as a tool that can help workers would go unrealized. By supporting large companies and venture capitalists in Silicon Valley, the Trump administration would fuel the trend toward labor-replacing automation.
Trump’s threat to US institutions also poses a big risk for workers. It is no secret that he would further weaken democratic norms, introduce uncertainty into policymaking, deepen polarization, and undermine trust in institutions such as the courts and the US Department of Justice (which he would try to weaponize). This behavior would not lead immediately to economic collapse, and it might even encourage some investment by his favored companies (including the fossil fuel industry) in the short run. However, in the medium term (say, 10 years or so), weaker institutions and loss of public trust in the courts would take a toll on investment and efficiency.
Such institutional weaknesses are always economically costly, and they could prove truly disastrous in an economy that depends on innovation and complex, advanced technologies, which require greater contractual support, trust between parties and confidence in the rule of law. Without expert-led regulation, much of the economy — from healthcare and education to online business and consumer services — would be awash in snake oil, rather than high-quality products.
If the economy can no longer foster innovation and productivity growth, wages would stagnate. Yet even in the face of such adverse outcomes, many workers would not return to the Democrats unless the party truly takes their interests on board. That means not only adopting policies that support workers’ incomes, but also speaking their language, however foreign it might be to the coastal elites who have run the party aground.
Daron Acemoglu, a 2024 Nobel laureate in economics and institute professor of economics at the Massachusetts Institute of Technology (MIT), is coauthor (with Simon Johnson) of Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity.
Copyright: Project Syndicate
