The Significance of the US Presidential Election
A Needed Reinstatement of Evidence-based Economic Policies

Akihiko Yasui
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  • Supporters of President Trump have serious concerns about the livelihoods of future generations.
  • These concerns reflect the lack of inter-generational mobility. If economic policies do not provide answers, support will likely grow for more exclusionary policies.
  • Both the US and Japan need to address voters' concerns by reinstating evidence-based economic policies.

A reinstatement of evidence-based economic policies is needed more than ever, now that President Trump has assumed office. Should economic policies not answer the concerns of voters, support will likely grow for protectionism and other exclusionary policies. This is an issue facing not only the US but Japan as well.

Supporters of President Trump are seriously concerned about the livelihoods of future generations. A public opinion survey conducted by the Pew Research Center showed that nearly 70% of Trump supporters believe that "the future of the next generation of Americans will be worse compared with life today."

Worth noting are the communities in which President Trump's supporters live. A Gallop poll has revealed that those communities most positively disposed toward President Trump are also areas in which there is little likelihood that children will be able to move up to a higher income bracket than their parents. This is not to say that Trump supporters are necessarily economically impoverished, but they do find it difficult in view of their day-to-day circumstances to foresee a bright future for the younger generations.

At the very heart of the American Dream is the idea that, no matter how poor their background, the next generation can enjoy even better lives than the current one if they are just willing to put in the effort. Whether intended or not, President Trump's slogan of "Make America Great Again" may have sought to tug at the heartstrings of voters who have lost confidence in this dream.

Considering the US' future in terms of this American Dream, it is clear that efforts to address the entrenchment of disparities (lack of mobility) will be essential. In the US children tend to remain in the same income brackets as their parents, resulting in the lack of relative mobility between generations.. Recent research has even made clear that children have a hard time surpassing their parents in terms of absolute mobility measured using real income levels.

This lack of mobility means that voters' worries about effort not being rewarded have in fact become a reality. Unless economic policies can answer these concerns, opposition to globalism and immigration and support for other exclusionary policies will inevitably rise.

Economic policies firmly based on evidence are what are needed. Research capable of offering insights into the lack of mobility is already underway. The degree to which income brackets are unchanging between parents and their children differs significantly by region within the US. Analysis of the correlation between the social environments in which children are raised and the degree to which income brackets become fixed between generations shows this entrenchment is lower in areas where social bonds are strong, such as those where the poor do not live in isolation and those with high rates of participation in community activities.

As symbolized by the term "alternative facts," the very concept of truth that should serve as the foundation in formulating policy is beginning to become a bit shaky in the US under the Trump administration. The concerns of the electorate must be addressed through evidence-based economic policies before it is too late.

The voters who put President Trump into office are not worried just about economic issues, but it is a fact that economic policies have not offered satisfactory answers to the issues of widening income disparities and low growth that plague developed countries. Economic policies have long appeared to have stalled out in Japan, confronted by such structural issues as a declining birthrate and an aging population. Evidence-based economic policies needed to be reinstated in both the US and in Japan.

AKIHIKO YASUI is Head of Research Department - Europe and the Americas, Mizuho Research Institute. He is managing economics, politics and policy researches about Europe and Americas. He has expertise in wide range of U.S. issues, including economy, fiscal policy, public management and politics, among others. Before assigned to current position in 2014, he was Head of Research Department - Public Policy. He served at Embassy of Japan in U.S. as a Special Assistant to Economic Minister (1997-2000) and at New York office of Mizuho Research Institute(2000-2003, 2007-2012 as Director). He is the author of many books, including "United States in the Age of Few Choices (Nikkei Publishing, 2011, in Japanese)". He received his bachelor of Law from Tokyo University.

The views expressed in this piece are the author's own and should not be attributed to The Association of Japanese Institutes of Strategic Studies.