The Trump victory is Brexit on steroids. Back in June, I wrote that the two key takeaways from the British vote to leave the European Union were “stop the world, I want to get off” (for the why) and “uncertainty about everything” (regarding consequences.)

The Washington Post’s “5-Minute Fix” boss Chris Cillizza, my go-to source on the American election, nailed both on Donald Trump very early on Wednesday morning.

On the electorate’s mood: “Trump played on the deep alienation and anxiety coursing through the country. Globalism, immigration, a growing chasm between the haves and the have nots, a rejection of political correctness in all its forms.”

Pivoting to prospects for the Trump administration: “How Trump happened…can be understood and analyzed. What Trump will do as president is a far more difficult question to answer.”

Let me take a crack at both “how it happened” and “what he will do.” And a bit of what he “should do.”

How It Happened

My bottom line on how Trump happened is that it is not primarily about what was unique in 2016 (Trump’s tweets, Hillary Clinton’s emails, why the polls got it so wrong, etc.). Rather, there are structural forces with much deeper roots at play, that finally erupted in 2016.

The single demographic to explain the election are white men. Trump beat Clinton 63%-31% among this group.

But did you know that, in a (very) losing cause in 2012, Mitt Romney won only 1 percentage point less (62%) of the white male vote than Trump? Or that the last Democrat to win the white male vote was LBJ in 1968.

Flip it around. With all the misogyny charges against him, no surprise Trump lost the female vote to the first major party woman candidate for president, Hillary Clinton—but only by 12 points, 42%-54%. Romney lost the female vote to Barack Obama by 11 points (44%-55%). The last Republican to win among women was George H.W. Bush in 1988.

The same story basically plays out on racial and ethnic groups—big Democrat advantages in 2016, but those were on top of big Democrat wins over the past couple of decades.

What about income inequality? We tend to think of it as a recent phenomenon (the rise of the “one percenters” after the 2008 financial crisis.) But did you know that income inequality has been rising steadily in the U.S. since the mid 1980s, with the biggest jump under Bill Clinton in the second half of the 1990s?

So how different really is the Trump win?

The main geographic shock on Tuesday night was Trump’s capture of the manufacturing rust belt in the Midwest. As an electoral outcome, this was “new.” The last Republican to win Wisconsin was Ronald Reagan in 1984 and the last to win Pennsylvania was Bush four years later.

But American manufacturing employment peaked 37 years ago (in 1979), began its rapid decline in 2000, and has actually increased since 2010. The Midwest has been rusting for decades.

In sum, 2016 was an election about deeply structural “demographic dislocation,” as my friend Howard Marks put it in his excellent pre-election blog, dislocation both socially (towards a “majority minority” America) and economically (the decline of stable well-paying jobs with good benefits for less skilled workers).

Trump’s unique candidacy catalyzed this. His temperament, so vilified among his critics, seems to have been his secret weapon among his supporters (a la Peter Finch’s character in the movie Network “I’m mad as hell, and I’m not going to take this anymore.”)

But my larger point is this: Trump surfed into the White House riding a big political/social/economic wave that has been building out to sea for decades. That wave finally crashed to shore on Tuesday night, baring for all to see the gaping and vituperative divides in America on so many dimensions.

But the path ahead can’t only be about dealing with the social and political symptoms of structural change, though a return to civility and decency on our streets and in public life would clearly help.

The path forward must also be about changing the structural pathways. This is where the “what will Trump do?” comes in.

What Will He Do?

One of my all-time favorite Doonesbury cartoon themes was to joke about Ted Kennedy when he ran for president in 1980: “A verb, Senator, we need a verb.” None was forthcoming, just lots of evocative nouns and flowery adjectives.

Sound familiar? Trump has been very short on “verbs” (“doing words,” policy details) because he read the electorate right—emotions mattered; clear policies and causal logic didn’t. Clinton signaled competence and experience, but it didn’t excite enough of her voters. Trump signaled anger and outrage, and this turned long time non-voters into Trump voters.

But governing is a completely different beast from campaigning. And the very first piece of evidence of this swing was Trump’s flawless teleprompter reading of his “unite the country” acceptance speech.

I actually think some of the things Trump will do are reasonably clear—and straight down the line conservative Republican. Cut corporate taxes. Try to repeal Obamacare. Make things tougher not easier for undocumented migrants. Try to unwind the Iran nuclear deal.

But Trump has not named, let alone taken on, the biggest challenge facing the U.S.

What He Should Do

If Trump wants to make America great again, he has to find a way to do two things at once: first, push the economic growth rate back to above 3% and keep it there from around 2% today, post “recovery” from the financial crisis; second, make sure that that growth is more inclusive, that is, ensuring that more people share in the benefits of growth.

Here is the scariest graph I have seen in a long time. It’s from the U.S. Census Bureau, and shows that stagnant incomes are a reality in America not only for the poor and the less skilled, but for people who would normally be considered rich (and probably have at least a college degree.) All the way up to the 95th percentile of the income distribution, real household income has been flat since 2000. That tells you what “GDP growth” means to the lives people live every day. (N.B.: There was a 5% upswing last year in average real disposable income in America—we can only hope that it is a new trend rather than a blip).


How do you increase growth? Our go to answers for the past 25 years have been technology and globalization. The problem with both is that while they have increased growth, they have also narrowed the portion of society that benefits from growth.

You can’t reverse technology change—despite all the populism out there, there has been no new Luddite movement. You probably can’t reverse globalization. And even if you could it would be a bad idea. “Made in America” is a great slogan, but just imagine how much more expensive most things we buy every day would be if they were all sourced and produced here.

Trump will probably go on an infrastructure binge as president (as would have Hillary Clinton). The political temptation is to focus on how many jobs can be created immediately by repairing roads and bridges and building railways and airports.

But the real focus of new infrastructure should be on increasing productivity for the long run. This might mean taking the lead on 5G or building out a national fiber optic network. Both would create jobs immediately. But their long run productivity—and hence growth—benefits would be more important.

Cutting corporate taxes is a good idea, so long as the cuts increase corporate investment in the highest growth parts of the economy. That means focusing tax policy on stimulating SMEs and fostering entrepreneurship and innovation, not across the board cuts.

Trade is good for growth, and good trade agreements help. Given the underlying economics of trade (it is natural that the US trades so much with Canada and Mexico), trying to repeal NAFTA would be a really bad idea.

Better to focus on stimulating trade across the Pacific between the NAFTA bloc and East Asia. The Trans Pacific Partnership is Barack Obama’s baby, the economic lead of his “pivot” to Asia. It was always more about geopolitics (showing Asia who is the region’s economic boss—the U.S. not China).

TPP is now stillborn. Even Hillary Clinton wasn’t going to support it. This gives Trump a great chance to show the world his negotiating skills — to create a truly trans-Pacific trade agreement that includes, rather than isolates, the world’s biggest trader.

So that is the growth agenda. Pretty conventional I would imagine.

But more growth without more inclusion just won’t work — for our economy as well as for politics and society. We need to generate good jobs for lots of people. That is the core of the American dream, a dream that is turning nightmare-ish for so many people.

I do think education and skills are essential to making growth more inclusive. We now know there are so many jobs in America that aren’t filled because employers can’t find people who can do the jobs. Not a shortage of good jobs, but a shortage of people qualified to do them well.

The best thing Trump could do for his electorate is to change that. I still stand by what I said on this topic a few months ago, that in order to combat the harm to employment opportunities caused by technology and globalization, America needs to invest in more education for the population.

Here’s a simple summary of the pivot from 2016 to 2017 and beyond. Stagnant incomes for most Americans are the bedrock on which the Trump campaign was built. He promised voters that he not only felt their pain and anger, but that he would also do something to reduce it.

The challenge is clear: to increase the growth rate and to make it more inclusive. That has to be the top priority for President Trump.

