Mind the GapDonald Trump’s rise explained by need for economic revolution
Establishment politicians have ignored and failed to confront undeniable and visible economic failures
Brexit taught me not to pretend that anyone can predict how a Trump or Clinton victory would impact the markets. Although a Trump victory would be improbable and unpredictable it more importantly represents an enormous impact. Voter frustration finally finds a revolutionary symbol for the current problems plaguing the US economy. And, Hong Kong could see a mirror reflection of its own problems.
Stagnant income for average workers persist despite strong productivity increases; job creation is weaker than in previous economic recoveries; new jobs are concentrated in lower wage and shorter term positions; and an increase of wealth in the top percentiles of society have led to record levels of rising income inequality. It appears that fundamental rather than cyclical changes in the economy are demanding political realignment.
Peter Temin, former head of MIT’s economics department observed that the US economy should no longer be measured as a single structure, but as a “dual economy”. In fact, two mutually exclusive economic sectors unhealthily coexist within one country. A daunting socioeconomic gap separates its citizenry.
The dual economy framework was first described in the last century to explain the uneven development of emerging economies. A small and modern commercial sector used technology and capital to create exports and wealth by manufacturing products or extracting natural resources.
Unfortunately, the rest of the country fell behind and struggled at a subsistence level. Today, this model also explains the decline and fragmentation of developed economies.