Brian Lee Crowley

Don’t look at unemployment, but rather employment to understand Donald Trump

In what turned out, alas, to be my last regular column for the Globe’s ROB, I point out that unemployment statistics hide more than they reveal. What tell us a lot more are the data for the shae of the population in paid work or looking for work, know as the labour force participation rate. Focusing on this number tells you lots about politics, the state of the economy, and even some of the roots of Donald Trump’s presidential victory. You can read the unedited text below or online here.

 

What do we know about the people who Donald Trump turned into such a potent political force in the last election?  US unemployment is well below five percent; surely there was no objective basis for the economic insecurities that drove the “basket of deplorables” to vote for the Republican candidate.

Consider, though, that one of the best places to seek insight is not the unemployment rate, but the “labour-force participation” or LFP. The LFP shows the share of working age people who have jobs or are actively seeking jobs in the US. In other words it is also a pretty good measure of how many people have left the workforce because they are discouraged and feel there are no opportunities for them. What do we know about them?

Trump’s election coincides with the US LFP rate hitting its lowest level in more than 30 years. The state-by-state figures  provide even more insight into Donald Trump’s political resonance.

Nine out of 10 states with the lowest LFP rates voted for him. Of the five states that went from Blue to Red in 2016, three – Florida, Michigan and Ohio – experienced a drop in their participation rate relative to 2012, meaning a smaller share of people worked and were looking for work compared to four years earlier. The other two states had no increase in the share of people working despite several years of modest economic growth.

By contrast, the years of Bill Clinton’s presidency coincided with a high LFP rate, a time when workers were prepared to give Bill “I feel your pain” Clinton the benefit of the doubt about how trade would improve Americans’ standard of living and those harmed would not be left behind. No more. That good will is gone.

New research from the centre-right American Enterprise Institute think tank shows that millions of American men are jobless and have given up looking. The share of men 20 and older without paid work is nearly 32 percent. That bears repeating: basically a third of all men in America who are over 20 have no paid employment. Two economists at the centre-left Brookings Institution have now added that the LFP rate of prime-age women has stagnated and also declined. People collecting disability benefit has increased markedly.

This doesn’t just affect their job prospects. Other research, including by a Nobel laureate, shows that the life expectancy and health of these displaced and discouraged workers has gone into a tailspin thanks largely to illnesses related to drug and alcohol abuse and other “lifestyle” factors. As one analyst said, these people are dying of despair, with over half a million needless deaths being attributed to bleak job prospects.

So looking solely at the unemployment rate causes us to lose sight entirely of a major part of the population. This segment is not just constituted of men–and now increasingly women–left behind by economic change. It also includes their parents, friends, and colleagues, who see these people they care about left on the shelf and are angered that opportunities for them seem so few and far between. This starts to be a significant part of the population—and the electorate.

It is no answer to say that these people have misdiagnosed their plight when they follow Trump in seeing trade and immigration as the cause of their problems. Yes, the problem is far more down to automation and other productivity-enhancements, meaning that manufacturing requires fewer and fewer poorly-educated, relatively low-skilled workers. Yes, Trump is wrong when he says that America doesn’t make things anymore and needs to return to this economic vocation. The truth is that America has never made more things than it does today. It just doesn’t require many workers to do so.

But the fact that the diagnosis is incorrect misses the key point about Trump’s voters – they vote for him chiefly because they feel he is the only political leader who doesn’t simply dismiss their fears and anxieties as misguided and ill-informed and doesn’t tell them condescendingly that their problems will disappear if only they get a university degree or if the government institutes a guaranteed annual income and basically writes them off as contributing members of society.

A pervasive feeling has taken hold in many parts of American society that ordinary people are being made to pay the price of the ideals of the elites. Free trade is one such ideal, one in which I happen to believe, but also one whose highly-concentrated destructive effects are undeniable and frequently easier to identify than its widely-dispersed benefits. That is why free trade can only be sustained when the winners use the extra wealth created to compensate the losers – something we, like the Americans, have done poorly and unimaginatively.

Brian Lee Crowley (twitter.com/brianleecrowley) is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.

 

 

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The conflict between elites and ordinary people that brought us Trump and Brexit has Canada in its sights

There is no wall protecting Canada from the populist tidal wave that washed Donald Trump to the presidency in the United States, as I argue in a new Macdonald-Laurier Institute commentary based on a talk I gave in Vancouver to the local chapter of NAIOP.

The phenomena that delivered a stunning election result in the United States and a surprise vote to leave the European Union in Britain are – despite what some observers think – also happening here in Canada. I single out three areas where this conflict is already coming into the open: labour markets, immigration and housing prices.

The Brexit vote last June and the recent election of a populist and anti-establishment American president are perhaps only the opening chapters of a new era of friction and even confrontation between the opinions of the Davos-inspired elites who have been in charge for decades, and those of the man and woman on the street.

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We need a productivity revolution right about now

For my October 16th ROB column in the Globe and Mail I wrote about why Canadians in particular need a productivity revolution, where we are most likely to find it, and why our early experiences in these fields will be disappointing but we must persevere.

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Donald Trump’s economic crankery

Donald Trump isn’t just a bombastic windbag. He’s an economic crank, most obviously in his claim that America has weakened itself by allowing manufacturing to go to China. He promises to make America great again by “beating” China and bring those jobs back. The only problem with that is that the jobs that have gone to China and elsewhere are not the great “value-added” jobs of economic mythology, but the low value-added assembly jobs that America has abandoned because, well, there are more valuable things for Americans to do and the unemployment rate today is 5.3 percent, or essentially full employment. Read the full analysis in my column for Economy Lab in today’s Globe and Mail (7th August, 2015).

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Labour shortages ahead, no matter what the “experts” say

In today’s column for the Economy Lab feature of the Globe and Mail‘s Report on Business, I report on my encounter with the massive complacency of the “expert chattering classes” when confronted with the evidence about the labour shortages Canada will face in a few short years. Yes, we will adjust, but skillful adjustment takes thought and foresight. It is amazing how much effort is required to make the inevitable happen!

Those of you with (reasonably) long memories will remember I reviewed the data on all this extensively in my book Fearful Symmetry. Everything I foresaw there is coming to pass….

I was also interviewed about this column by BNN. You can see the interview by clicking on the link.

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More than education at stake in Ottawa-First Nations pact

In my latest column for the Globe’s ROB I make the case that the newly announced agreement between Ottawa and the First Nations over education could do more than advance the cause of Aboriginal education, as vital as that is. It could also be the key to strengthening the leadership of National Chief Shawn Atleo and the influence of the new generation of Aboriginal leaders looking to turn newly- recognised rights into genuine economic opportunities.

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The Sage of Chicago on Fearful Symmetry

Donald Coxe, Chairman, Coxe Advisors LLC, and Strategy Advisor, BMO Capital Markets, is a well-known and influential global investment strategist, based in Chicago but closely allied with BMO, giving him a high profile in Canada in particular.

Coxe does a regular conference call to brief clients and others about his view of where markets are going. In his call of February 5th, in honour of the Olympics, he gave a strongly Canadian spin to the discussion, focusing on the many reasons why Canada did so well in the recession and why its economic future is relatively bright. To introduce the discussion he spent some time talking about Fearful Symmetry and how it helps people to get a good grasp of the unique circumstances that await Canada as the coming labour shortages and demographic change really start to bite.

His commentary is on-line and available until the next one is posted on February 19th.

Here is a short excerpt:

 

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Jeffrey Simpson reviews Fearful Symmetry

Fearful Symmetry in the Halifax Herald

This review first appeared in the Halifax Herald on January 3. It is no longer available online so I’m reproducing it here.

Socialist policies will be history, Crowley predicts

By JEFFREY SIMPSON

BRIAN Lee Crowley predicts that Canada is on the cusp of a profound economic and cultural change that will take the country back to its ideological roots, even if they are unfamiliar to many citizens.

Crowley, the well-known conservative thinker who founded the Atlantic Institute for Market Studies, makes a compelling argument in his recently published book, Fearful Symmetry: The Fall and Rise of Canada’s Founding Values, that the last five decades spent as a nation with socialist leanings has been merely an aberration. Read more

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CanadianImmigrant.ca discovers Fearful Symmetry

CanadianImmigrant.ca posted a review of Fearful Symmetry by George Abraham that shows that *somebody* at least is paying attention to what the book has to say about immigrants, a vital part of Canada’s future.

The review, available here, draws attention to the fact that most commentators in Canada are reluctant to tell it like it is in any politically sensitive areas:

Brian Lee Crowley strikes me as an unlikely Canadian. In his just-published book, Fearful Symmetry: The Fall and Rise of Canada’s Founding Values, he not only debunks many myths about this country, but does it directly and without pulling any punches. Evidently, Crowley is not given to political correctness — that quintessential Canadian value — and does not mind offending a few people, particularly those in Quebec.

But this reviewer, unlike many others, also recognises that I am not out to single out Quebec. There are lots of people who are benefiting from the ill-advised policies of the last 50 years, policies instituted in large part to accommodate the Boomer rush into the workforce plus the rise of Quebec nationalism. On the other hand, it is not often recognised that those poor policies harm the most vulnerable in our society, including immigrants:

To sum up, in Crowley’s reckoning, immigrants who are down on their luck and have been ejected from the workforce during this recession will benefit from the looming labour shortages. But even then they will be hobbled by what the writer rightly calls a “scandal” unworthy of Canada, the non-recognition of immigrant qualifications. He calls it like it is: “Theirs is a transparent effort to protect not the interests of supposedly vulnerable and ignorant consumers but rather the interests of those already exercising these professions in Canada.”

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Labour Force’s Fearful Symmetry at a glance

 

We decided not to include many of the graphics in Fearful Symmetry, in part because of the technical difficulties in doing so, and in part because books with lots of graphs, charts and tables are, my publisher assures me, very unpopular with the reading public. They look like work rather than fun. That doesn’t mean, however, that we can’t make them available to you. From time to time I will publish some of them here on the blog. Here is one of my favourites: it shows in a very powerful way the turning point in the labour supply as we go from the Boomer-era of unemployment to the labour shortages of the post-Boomer period. This draws on some fine work by Roger Sauvé, Labour Crunch to 2021: National and Provincial Labour Force Projections, (Summerstown, Ont.: People Patterns Consulting, March 2007), amended with updated Finance projections.

Labour Force




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Brian Lee Crowley