The most disturbing aspect of the presidential campaign is neither major party nominee has adequately focused on rekindling economic growth.
In this century, GDP has advanced a paltry 1.8 a year and annual family incomes have fallen nearly $1,400, whereas during the Reagan-Clinton era growth was 3.4 percent and incomes rose more than $7,500.
Trump blames trade and immigration. Those are important to get right, but other forces also must be harnessed for Americans to thrive in the global economy.
Hillary Clinton blames white men and corporations. Her whole campaign is premised on the notion that universities and corporate managers are handicapping America by conspiring against women and minorities, when the makeup of the student body at most campuses reveals a different story and businesses nowadays earnestly recruit and pay well women and minorities to avoid lawsuits.
The problems are more radical and paradoxical. Capital and energy – once scarce and expensive – are now abundant, and workers – still too expensive in America as compared to Asia – are becoming obsolete.
The digital economy based on more intellectual property – computer apps and artificial intelligence – and less on hard assets – industrial buildings and equipment – greatly reduces the amount of physical capital businesses need to make and create products.
Machinery is more versatile. Consider the range of objects a 3D printer can be programmed to make or tasks your smart phone can accomplish – as compared to the metal presses and desktops those replaced.
Google was launched with only $25 million in 1999 and grew into a $23 billion enterprise at its initial public offering five years later, but it took billions and decades for Henry Ford to create a company of similar value with global scope.
Digital growth is powered by electricity, not petroleum. Abundant natural gas and gradually cheaper solar and wind power will make this electricity, and oil prices will stay down.
Paradoxically, as life is made easier by telecommuting, Internet shopping and smart phones, the official GDP growth statistics are pulled down almost every quarter by weak business investments in commercial buildings and machinery.
Businesses do spend more on intellectual property – software and the like – but it hardly replaces what they have quit spending on machines and buildings to house them.
At the same time, jobs growth and wages are pushed down by ever smarter machines, such as automatic tellers at banks and checkers at drug stores, and the army of robots Amazon is deploying at fulfillment centers to replace clerks as online sales cannibalize brick and mortar commerce.
Now the economy is on the brink of an artificial intelligence revolution with the potential to replace 90 percent of all occupations as we know them, from carpenters to economics professors.
As a nation we simply fail to grasp the consequences.
Schools spend much more time teaching children about civil rights than computer coding.
International trade agreements focus most on how much governments tax and regulate foreign goods but hardly enough on industrial espionage. Amazon can protect its Web-based software from would-be pirates at IBM but not very well from Chinese hackers.
With factories in overabundance, trade agreements simply don’t address currency manipulation that permits Asians to sell everything they make at artificially discounted prices and shift the burdens of downsizing and unemployment onto American workers.
Both Trump and Clinton recognize the need to stand up to China, but fixing the economy only begins there. The endless obsession with political correctness in schools and the workplace – instead of the technologies that define a new era – is an important reason why Americans are not doing well these days.
To prosper, the bickering needs to end.
Peter Morici is a professor at the University of Maryland’s Robert H. Smith School of Business. He served as chief economist of the U.S. International Trade Commission from 1993-1995. He tweets @pmorici1.