Editor’s Note: Mark Montgomery is the Donald L. Wilson Professor of Enterprise and Leadership and Professor of Economics at Grinnell College. The opinions expressed in this commentary are his own.
I’m a registered Democrat in Iowa, where I have taught economics for more than 40 years. About once a week, some Democratic candidate campaigning for the fast-approaching caucuses shows up at a coffee shop or restaurant in my little prairie town seeking the support of me and my neighbors. Every couple of days, I get a text or a phone call from the local staff of Bernie, Cory or Mayor Pete, asking who I will caucus for in February.
For me, all this attention from the Democrats conjures up some uncomfortable questions: Am I really a Democrat, or just pretending to be one? Can I, as an economist, focus on the things that I like about the Democratic hopefuls, and ignore the things that bother me?
Take Trump’s tariffs, for example. Why don’t the candidates all propose to scupper the tariffs? Trump’s trade war makes investors reluctant to invest because they create an uncertain business climate. As an economist, I know that shrinking investment is a recipe for recession. The new president could eliminate the tariffs on the first day on the job. Yet no one standing on the debate stage seemed eager to suggest this.
Why not? One reason is that labor unions traditionally favor protective tariffs since they want to boost American manufacturing, and Democrats traditionally avoid irritating labor unions. Unionized workers have tended to support the Democratic party.
The actual impact of tariffs is widely misunderstood by the general population. Trump calls the trade deficit with China a form of theft, and many Americans agree that China has been engaging in unfair trade practices. Economists, on the other hand, see it more like a gift — if China sends us shirts, shoes and semiconductors in exchange for money, which they then loan back to us by buying Treasury bills, why don’t we consider that a good deal? If the Chinese government were to stop buying up the dollars and loaning them to us, that would indeed help American producers, but it would impose higher prices of imports on American consumers.
Democratic candidates have failed to stress that the trade deficit is not inherently an economic problem. If I do, am I still a Democrat?
Another example is the minimum wage. What true Democrat would oppose the suggestion, now making the rounds, for a $15 federal minimum wage, as endorsed by Bernie Sanders, Elizabeth Warren and others?
A 2015 University of New Hampshire poll found that 85% of economists thought this increase would negatively affect youth employment as establishments, such as fast food restaurants, close down or increase automation in order to cut labor costs. And who, empirically, will this pay hike most likely affect? Young, African-American males, who are arguably the most economically marginalized members of our society. Nearly doubling the minimum wage is likely to leave them even more vulnerable as black males tend to be the first to be fired in an economic downturn. In the last 40 years, the unemployment rate among black teens has rarely been below 25% and never below 15%. Two of my three children are African-American males, so I am personally sensitive to how such a wage hike would effect this population.
A $15 minimum wage also penalizes small businesses. In the economists’ survey, about two-thirds of respondents thought establishments with fewer than 50 employees would have a harder time staying in business if the minimum wage was hiked.
More Markets & Economy Perspectives
Do my reservations on the minimum wage threaten my standing as a loyal Democrat? Can I go to the caucuses without feeling like a fraud?
There are other issues bothering me as well, such as all the proposals that require large expenditures, like free higher education, when the deficit is approaching one trillion dollars. Democrats are willing to raise taxes on the wealthy, but are they willing to also cut the defense budget or reduce farm subsidies?
You might say, however, there is a simple solution to my emotional conflict: admit that you’re a closet Republican and join the other party. I’ve thought of that, but there are several problems. First, and most obviously, how could I possibly support Trump? Secondly, even if I wanted to join the Republican Party, where would I find it? Protective tariffs and trillion-dollar deficits, are these the policies of real, or at least traditional, Republicans? Third, even when Republicans were being, you know, Republican, I would find it hard to join their ranks. I can’t abide that party’s casual acceptance of the plight of our society’s most vulnerable citizens: the poor, minorities, working families without health insurance. To say nothing of their apparent disregard for non-citizens: desperate migrants fleeing violence in their home countries.
So I’ll remain a Democrat. I’ll go to the caucuses, and I’ll stand in whichever corner of our high school gym that supports the candidate that least offends my personal and professional sensibilities. (I don’t know who that is yet.) But I’m sure I’ll feel a bit out of place.