Trickle-Down Economics Led To The Rise Of Trump By Undermining Our Democracy

08/22/2016 11:48 am ET | Updated Aug 22, 2016

There are many potential explanations behind how Donald Trump -- a man who frequently shows disregard towards the basic rights of religious and ethnic minorities, who threatens to use government power to attack the free press, who boasts that he would kill and torture possibly innocent people, and who expresses veneration toward Vladimir Putin -- emerged as the Republican Party's presumptive presidential nominee. Stagnant wages have caused real pain, which was until recently ignored by too many politicians. Changing demographics have stoked nativist sentiment, creating a base of voters receptive to Trump's anti-immigrant, anti-Muslim rhetoric. Political polarization has exacerbated citizen frustrations, pushing some voters to a candidate deemed as being "outside the establishment."

But underlying the rise of Trump is another cause entirely of our own making: trickle-down economics, the economic philosophy of tax cuts for the rich and little regulation of business. Trickle-down created Trump by weakening the middle class, fostering distrust of others, and undermining the competency of government.

Before the trickle-down experiment, from the end of World War II until the early 1970s, the economy worked well for most Americans, and the American middle class was the envy of the world. Incomes for the middle class and the working class increased more quickly than those of the rich, and inequality fell sharply. As workers became more productive, their wages rose. A lifestyle that was once only attainable for the rich became standard for most, though too many people -- particularly communities of color and women -- were excluded from these gains.

But now, thanks to the failed experiment of trickle-down economics, middle-class America has come undone. Wages for the typical worker today are about the same as they were in the 1970s, despite rising costs for core middle class goods like housing, healthcare, and higher education. Economic inequality has risen sharply and is now approaching Gilded Era heights. Debt for the typical household has more than doubled in recent decades, and almost half of all Americans could not cover an unexpected expense of $400 without borrowing or selling something.

Trickle down has polarized the country into rich and poor. And now, many middle-class whites who are hurting because of trickle-down economics have become receptive to Trump's message -- a message that purports that solving America's problems requires authoritarian power and a rejection of immigrants and the larger world to "Make America Great Again."

To be sure, trickle down policies are not the only cause of the middle class's struggles -- technology and globalization also play a contributing role. But other countries exposed to these same economic forces -- such as Canada, Sweden, and Australia -- charted a different public policy course, one that promoted inclusive prosperity. These countries did not see inequality rise to anywhere near the United States' levels and their middle classes experienced significant wage gains over the last few decades.

The fact remains that our three decade experiment with trickle-down caused the financial crash and Great Recession by deregulating financial markets and driving the deep indebtedness of the middle class, pushing an already weakened middle class to the brink.

Enter Trump, seizing the terrain that trickle-down created.

The Decline of Trust and Government Competency

With the decline of the middle class has come the undoing of the major foundations of democracy -- equality, trust, and competency. The soil is infertile for tyrants when the middle class is strong, when people think their fellow citizens share similar values and that government is solving problems. But trickle-down undid these bulwarks of democracy and created the conditions for an authoritarian leader to emerge. Now the middle class is hollowed out, other citizens are viewed as untrustworthy, and government is seen as weak and corrupt.

Trust in others is the grease that keeps society functioning reasonably smoothly. It is necessary for people to do business with one another and for government to operate efficiently. Although the U.S. had significant sources of social conflict in the middle part of the last century -- from civil rights to the Vietnam War -- at the time, most Americans thought that other people shared similar values and could be trusted. Indeed, the United States was among the most trusting countries in the world.

But today, less than one-third of Americans think others can be trusted, and the United States is now less trusting than most other advanced countries. The blame for this erosion of trust goes directly to trickle-down economics -- specifically, the rising levels of inequality it has helped create. Eric Uslaner, a political scientist at the University of Maryland, finds that inequality is the "chief determinant" of whether we trust others. When inequality is high, people pull apart, share fewer experiences, and think they have less in common with others, which undermines trust. Other countries with sharp increases in racial and ethnic diversity, but with low levels of inequality -- such as Denmark and Sweden--have maintained relatively high levels of trust.

And then there is the eroded capability of government. In the middle part of the last century, government was seen as capable of responding to the challenges of the day. The United States put a man on the moon, built an interstate highway system, made the world safer for democracy, and delivered rising standards of living for most Americans. Not surprisingly, most people thought government officials worked for the public interest. In contrast, most Americans today think government officials are "crooked." Roads, bridges, and schools are literally crumbling, and government hardly seems capable of solving simple challenges, let alone complicated ones.

Trickle-down waged a frontal assault on government, calling it the source of problems, demonizing public employees, privatizing basic government functions, and cutting taxes to starve it of revenues. But trickle-down's indirect impacts have perhaps been even more damaging: High inequality has not only fueled political polarization and gridlock, but has also changed power dynamics so that politicians have become far more responsive to the rich than the middle and working class. Indeed, studies by political scientists Martin Gilens and Larry Bartels show that elected officials are now quite responsive to the preferences of the rich, but largely indifferent to the desires of the majority of the public.

Trump has capitalized on these conditions by scapegoating communities of color -- Latinos in particular -- and projecting an aura of power unconstrained by democratic norms.

Demagogues need a target of blame, and communities of color make a convenient one -- especially because trickle-down policies have also led to America losing much of its social cohesion. But the fact is most everyone has been harmed by trickle down, not just Trump's core constituency of white males. Indeed, the typical net worth for whites is more than ten times that of blacks and Hispanics, a discrepancy that has increased in recent years.

More of the Same

Compounding the immediate problem that Trump poses is the enduring threat a Trump presidency would represent -- including Trump's economic platform.

If elected President, Trump would likely continue pursuing trickle-down policies, further weakening the societal underpinnings necessary for a functioning democracy. While Trump talks more favorably about workers than other trickle-down politicians and rejects some of the ideology's orthodoxy by, for example, opposing existing trade deals, the core of his agenda is still trickle-down tax cuts for the rich and deregulation of business. Indeed, Trump has pledged to dismantle banking regulations, and one of the few policies he has spelled out in detail is his tax plan to cut taxes for the rich by far more than George W. Bush.

Even if Trump is not elected president, trickle-down has created conditions that almost ensure there will be another version of him in the future. Until we firmly reject trickle-down economics and steer a more inclusive economic course, a new demagogue will try to exploit the same societal divisions fueled by extreme inequality. This is a moment when anyone who cares about the American experiment needs to speak up and oppose these dangerous policies.

David Madland is the author of Hollowed Out: Why The Economy Doesn't Work Without a Strong Middle Class, and a Senior Fellow at the Center for American Progress Action Fund.