Nissan and their suppliers employ about 30,000 people in the English city of Sunderland. Before the Brexit vote in June 2016, voters were warned about likely economic damage from a “Leave” campaign victory. The “Yes” vote won and 61.3% of Sunderland’s voters joined the winning side.
The negotiations over the EU-U.K. breakup, including import tariffs, have yet to begin, but goods produced in Great Britain will most likely cost more when sold in EU countries. That is bad for Nissan’s Sunderland operations and probably bad for the residents of the city since many could find themselves unemployed or underemployed. Hoping to prevent large job losses, the U.K. government has pledged to help Nissan “remain competitive,” but at this point, no one knows exactly what that means. Because of the vote to leave the EU, which was supported by more than 60% of their voters, Sunderland will likely end up with higher unemployment, lower average wages, and higher government spending to help mitigate the likely tariffs Nissan will face.
And then there’s the U.S. presidential election. Democratic strategists were baffled when 77 of the 100 poorest and more government-dependent counties in the country voted for Mitt Romney in 2012. The results from the 2016 presidential election show that they haven’t figured it out yet. Shouldn’t people who receive a lot in government benefits vote for those lawmakers who support such programs? For about three-quarters of people in the poorest communities, the answer is no.
Karl Marx is known for his quote about religion being the opiate of the masses. Marx believed that religion acted in a similar manner to how opium affects an injured person. Religion can provide some immediate relief and present pleasant images of the future for those who suffer, but it can also lull people into a willingness to accept the status quo: capitalism and the cruel treatment of all but the fortunate few. For Marx, religion was a tool used by the fortunate to keep the masses in their unpleasant place.
Don’t get me wrong. I am a capitalist, but one who believes in social safety net programs to ensure that the disadvantaged do not fall through the cracks. The wonderful thing about the post-World War II United States is that economic growth allowed for the formation of a strong middle class and social safety net programs helped those in need. There was minimal income inequality and the country thrived. When a system is out of balance, on the other hand, it tends to lead to exactly what Marx was warning about: abuse of the less fortunate by the rich and powerful – the cruelty of capitalism.
This situation of high income and wealth inequality, and attacks on social safety net programs are brought to you by – – – us, the voters. We vote in the lawmakers who make the changes to help the rich and powerful at the expense of the less fortunate, and we often vote against our own self-interests in the process. We may be single-issue voters and vote for someone who will work to cut our benefits because he or she is also the one who claims to protect our guns or unborn fetuses better. In many cases, we vote for whom our pastor told us to because we don’t want to piss off God. There’s that opiate of the masses thing again.
The U.S. tax system has gotten out of whack over the past couple decades. Individual income tax rates were quite high prior to Ronald Reagan’s presidency, and substantial rate cuts were made during his term. A combination of a less burdensome tax structure and the “peace dividend” that followed the collapse of the Soviet Union led to an economic boon during President Clinton’s term, and a budget surplus was achieved during Clinton’s final year.
The tax cuts enacted during the first two years of the G.W. Bush presidency, however, were costly. Republicans wanted to reduce taxes on the wealthy to stimulate the economy – a strategy that data show does not work since the wealthy save the money until the economy shows signs of improvement on its own. In order to sell that tax cut to Congress, they had to reduce individual income tax rates at all levels. As a result, federal revenue was greatly reduced and contrary to promises, spending increased leading to high budget deficits as a percentage of gross domestic product (GDP). The Great Recession followed a few years later, federal revenue dropped more, the deficits increased substantially, and nothing could be done to fix the income tax system because you simply cannot raise tax rates on the poor and middle class during a recession without making it worse.
Congressional Republicans wanted to make the Bush tax cuts permanent, but President Obama held out for a rate increase on top earners. Contrary to Republican predictions, raising tax rates on the wealthy did not send the economy into another recession and Obama has overseen one of the longest economic expansions in history.
But we now have a tax code in which about half of Americans do not pay individual income taxes. GDP per capita is one of the best gauges of the wealth of a state’s residents. The average GDP per capital in the U.S. is $49,844. President-elect Trump has proposed cutting taxes on the wealthy and presumably cutting social safety net programs to pay for it (his plans are not very clear yet). Should such a tax and benefit cut happen, people from states with per capita GDP that is below the national average will likely suffer.
So who voted for whom? Mr. Trump won thirty states plus one of the four electors from Maine with an average per capita GDP of $44,963 (9.8% below the national average). Ms. Clinton won nineteen states plus the District of Columbia and three of the four electors from Maine with an average per capita GDP of $58,008 (16.4% above the national average).
Based on this metric, Mr. Trump’s average voter pays little or no income tax and receives above average levels of government assistance while Ms. Clinton’s average voter pays substantial amounts of income tax and receives below average levels of government assistance. In both cases, the average voter chose the candidate who promised to harm them financially.
It makes you wonder about us voters, doesn’t it?