Does Trump Triumph Signal the End of the New Gilded Age?

In last week's Sunday New York Times, a top story above the fold, In New Age of Privilege, Not all Are in Same Boat, trumpeted the new Gilded Age. "That segment of the population," says the former CEO of Norwegian Cruise Lines of their über elite passengers, "wants to be surrounded by people with similar characteristics." He was referring to The Haven, the exclusive section of the company's newest ship Norwegian Escape, where NCL's wealthiest passengers travel in a world of their own and have little, if any, contact with the rest of the ship. Further on, the article tells us, Delta Airlines picks up its highest end customers in a Porsche to ferry them to their connecting flights in Atlanta and New York.

In the Silicon Valley, Tech visionary and billionaire Peter Thiel is part of a libertarian crowd that harbors similar escapist fantasies. Thiel imagines building floating cities in the ocean, just for the elite of the tech world. It sounds eerily like The Haven, a place where he and his friends--and their billions and billions of dollars--could escape from the oppression and drudgery of life in America. "An opt-in society," Thiel has suggested, "ultimately outside the US, run by technology."

Juxtaposed against those images of the new era of American wealth is the rise of Donald Trump. Trump's success in trampling sixteen challengers to the Republican nomination on a platform of economic nationalism has turned the GOP on its head. Four years ago, with his makers vs. takers rhetoric and his disdain for the less affluent, Republican Presidential candidate Mitt Romney ran unabashedly as the candidate of the billionaire class. This time around, determined to control the election outcome in the wake of Romney's loss four years earlier, a cohort of billionaire major donors committed over a billion dollars to make sure that they put a President into the White House that would support their interests.

But from the moment Donald Trump descended down the escalator at Trump Tower to face the media and announce his candidacy, it was apparent that this year was not going to go according to plan. It was one thing to see young voters in the Democratic Party flock to the siren call of a democratic socialist--after all, that is what young voters have done for generations--but it was something else again to see middle-aged, white Republicans, suburban and rural alike, flocking to the banner of Trumpian economic resentments.

From the perspective of an increasing number of Americans of both political parties, the economic system is rigged. Globalization has pitted American workers in a wage competition death match with lower paid workers across the world, suppressing domestic wages while boosting corporate profits to historically high levels. New technologies that offered the prospect of increasing labor productivity and wages have instead proven to exacerbate the problem as traditional industries have been disrupted and jobs lost. Instead of increasing wages, in a globally competitive labor environment where capital is mobile and abundant, the application of new technologies has facilitated the out-migration of jobs and enhanced the return on capital, further exacerbating the concentration of income and wealth.

The titans of the Silicon Valley are ecstatic about their vision of the tech-enabled world that lies just beyond the horizon. Advanced robotics, artificial intelligence, 3D printers and biotechnology offer a future that will accelerate the disruption of service and manufacturing industries alike. It is a future, in their minds, that reduces the need for mundane work and increases the opportunities for unconstrained creativity. Yet looming behind this utopian vision lies the inevitability of the continued elimination of existing jobs and pressure on real wages for the average American worker, accelerating the stratification of incomes and wealth. According to the Federal Reserve Bank, 47% of Americans could not come up with $400, in cash or from credit cards, in an emergency. For that half of America, no glowing vision of the future could make up for the prospect of losing the source of livelihood they now have.

Pressed to respond to the neo-Luddite fears of a future that will only worsen the economic pressures that have been steadily encroaching on American middle class incomes, tech guru Marc Andreessen argues the opposite. Technology will solve any environmental crisis created by economic growth, and the steady economic growth in countries from Asia to South America, and increasingly to Africa, attests to the absolute good created by the combination of exploding technological innovation and economic globalization. He offers neither sympathy nor a solution for the adverse economic impacts of the combination of technology and globalization on those employed in sectors of the economy that have been or inevitably will be disrupted and destroyed, but rather sees the benefits that those forces have provided to society as a whole.

Arguments against fears about the continued adverse impacts of technology and globalization tend to focus on positive aggregate data and trends, as Andreessen suggests, while the people who show up at Trump rallies are individuals whose own lives and families have been adversely affected by economic pressures and job losses. Trends don't vote while individuals do, and there lies the rub for those who envision a future of greater freedom and creativity--but fewer jobs. For the nerds in the Silicon Valley, the future glows like a shining city on a hill. "We have this theory of nerd nation," Andreessen commented, "of forty or fifty million people all over the world who believe that other nerds have more in common with them than the people in their own country."

The problem for the billionaires of the Silicon Valley--as for their brethren on Wall Street--is that they are dependent on a legal infrastructure that extends protections to intellectual property, supports the aggregation of consumer data for little or no compensation by private companies and provides a supportive regulatory regime--to say nothing of the backbone of the Internet itself, a publicly build, publicly funded asset that upon which private fortunes have been built. Then there is the reality that many, if not most, Silicon Valley fortunes represent the present value of future advertising revenues selling stuff to the rest of us. That is to say that, like the rise of China, the prospects of dot-com, data mining and other tech enterprises depend upon a continued robust American consumer market.

In other words, while the leaders of the tech world--like those vacationing in the rarified quarters aboard The Haven--might long for some far away place free of politics and other intrusions into their world, their fortunes have been built with the support of and they remain dependent upon the government and people they disdain, and the rise of Trump is a further indication that the democratic society that has offered them unbounded opportunities and in which they have prospered is filled with people who right now believe that they and their families are not part of that bright future and will never live in that shining city on the hill.

This year's election looms to be different from prior years. This week, Donald Trump all but secured the Republican nomination, assuring that the economic resentments that used to be largely confined to parts of the Democratic Party are going to be central to the message of the Republican candidate as well. The argument that American support for free trade and globalization, augmented by the technology revolution, has produced the greatest good for the greatest number--and only incidentally for the wealthiest Americans--is increasingly falling on deaf ears. The resentments expressed by voters who support Donald Trump, as well as Bernie Sanders, may be misplaced--as Marc Andreessen suggests--but the practical reality is that in a democracy a disaffected majority has every right to upend the status quo, even if they don't actually have a better solution in mind.