Quora Question: What Trump and Clinton Supporters Misunderstand About Each Other

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Answer from Simon Yoo, Venture Capitalist, Founder and Managing Partner of Green Visor Capital:

What do Trump supporters and Clinton supporters misunderstand about each other? The short answer is a lot. The issues underlying the results of the recent election are far more complex than either side want to recognize. It’s also why the results caught many, myself included, by surprise. Lost in the discourse and din over the outsized personalities of the presidential candidates was the opportunity to have a substantive national debate over policy. The complexity of the debate that needs to happen is not to be underestimated—and it certainly does not adhere neatly to the limit of 140 characters. Thus, I ask that you bear with me—as it is my hope that what follows gives the readers here some food for thought regardless of your political party.

A little over twenty years ago, I felt great pride for having been admitted into Cornell University’s MBA program. During the summer holiday before the program began, I went to a few social events with recent alums, faculty, and future classmates. It was clear that the incoming class was going to be filled with seriously intense, accomplished and motivated students from all walks of life. Everyone I met that was tied to the program, it seemed, had graduated from an Ivy League school or other top tier research university. Some even had multiple advanced degrees. I was one of the few members of the incoming class of 220 with a liberal arts education, and the only graduate of Kenyon College—a small liberal arts school located in my native Midwest. In short, I was intimidated. I had this uneasy feeling only once before—when I entered Kenyon in the fall of 1987 as the first in my family to attend college in the US.

There’s nothing like fear to focus the mind. In my case, the fear of failure was paramount. So I worked hard over the summer to learn as much as I could even before classes started. One of the books I read that summer was called “The Winner Take All Society,” by Robert Frank and Philip Cook. The former, as luck would have it, would be one of my future professors at Cornell. At the time, I felt the book’s narrative was provocative, but ultimately that the conclusions therein were somewhat far fetched. Written in 1995, Frank and Cook wrote:

During the last two decades, the top one percent of U.S. earners captured more than 40 percent of the country’s total earnings growth, one of the largest shifts any society has endured without a revolution or military defeat.

They argued what drove this result were “winner-take-all markets.” I found it hard to fathom that free markets could distort incomes so wildly, but the thrust of their argument went even further. They noted that even just small differences in performance/ability would give rise to enormous disparity in outcomes—primarily reflected in income inequality. As examples, they cited that this trend was already demonstrated, and had been for quite some time, in two industries: sports and entertainment. Their conclusion: the asymmetry in outcomes would become pervasive across not some, but all industries and professions.

Their punchline, in retrospect, seems to have, if anything, understated the outcome they had predicted, which is summarized here:

… in addition to the growing gap between rich and poor, we see important professions like teaching and engineering in aching need of more talent. This relentless emphasis on coming out on top … has molded our discourse in ways that many find deeply troubling.

Fast forward another ten years. My friend and I, both of us from humble beginnings, were able to play an early morning round of golf at one of our favorite spots on earth. It was just the two of us on the course chasing a golf ball in futility, but enjoying a warm tropic breeze and sunshine at dawn.

While we lamented the state of our games, the conversation became, for whatever reason, more serious. As we marveled at the views and celebrated what our hard work had enabled, we also wondered out loud: “what’s next?” Not far from our minds was that many of our friends and family from back home could not even begin to imagine where where we stood that day—was it all because of hard work? No. Luck played no small role in our success, as did the help of countless others. We chatted the rest of the round about how Income Disparity was not sustainable. We both agreed that we need to do and give more to the causes dear to us. In my case, that included setting up a scholarship fund to help enable first-generation Americans that wanted to attend my alma mater—the school that had given so much to me.

A couple of years later, the 2008 Financial Crisis unfolded, and with it the world was thrown into chaos. The world didn’t collapse into a second Great Depression as many of the smartest on our planet feared, but we came awfully close.

It’s hard to imagine that it’s been nearly a decade since the Global Financial Crisis came to an end because the events of those days were so harrowing. Many, my family included, were deeply impacted by the events of 2008 and 2009. While we were hit hard by the crisis, we were among the lucky ones because we were able to move forward. Some families, however, have not been afforded that opportunity.

Jumping ahead to 2014, an unlikely book sat atop the bestseller lists. “Capital in the Twenty-First Century,” which was written—by all things—a French economist, Thomas Piketty. The book was the result of research conducted more than a decade before. Back in 2001, two French economists, of which Piketty was one, and the other, Emmanuel Saez, had published—with little fanfare at the time — a research paper titled “Income Inequality in The United States, 1913–1998.”

Their approach was an inventive one. They used data—publicly available from income tax receipts—that enabled two unique analyses. First, they gave their readers a detailed portrait of what they called the “economic stratosphere”—i.e., a glimpse into the segment of the population we now call “the 1 percent.” Second, they gave us the historical context for the emergence of the divide in wealth that had been going on for decades, which they argued was always hiding in plain sight. To quote Paul Krugman of the New York Times:

The picture that emerged was startling to those who still clung to the notion of America as a middle-class society, or who thought of rising inequality as mainly a tale of divergence between blue-collar workers and a fairly broad elite, like college-educated workers. Mr. Piketty and Mr. Saez showed that the actual story of rising inequality since 1980 or so was dominated not by the modestly rising salaries of skilled workers but by gigantic gains at the very top—a doubling of inflation-adjusted income for the top 1 percent, a quadrupling for the top 0.1 percent, and so on. They also showed that these surging top incomes had more or less reversed earlier movements toward equality, that the concentration of income in the hands of a small minority was back to ‘Great Gatsby’ levels... It was a landmark piece of research that has had a major impact, not just on economics, but on political science too, for the fall and rise of the 1 percent turns out to be closely correlated with the fall and rise of political polarization. (Note: the emphasis added here is mine.)

My friends on the right may object to Krugman’s assessment as simply an attempt to tar the legacy of Reagan, and to promote a more liberal agenda among policymakers. But let’s keep an open mind.

To the above, let me add one more important consideration: the role of technology and the disruptive forces now in play, which have caught many leaders of industry and government off guard. I raise this last point, because the issues at hand—that is, the disruption to traditional companies/industries, and with them the overall global economy — is not a question of Red vs. Blue states, or Republicans vs. Democrats. No, it’s not the case at all. The speed at which we will continue to see change—that is, disruption—in the world that we once thought of as familiar is only accelerating. Simply put, we are in unchartered waters now, and it is deeply unsettling for many.

As some of you already know, my colleagues and I, who are based in San Francisco and New York, invest in technology startups. We started only in late 2013. We believe that we are living in a time of breathtaking progress in digital technologies, among them: handheld computing, cloud-based offerings, software that utilizes artificial intelligence and machine learning, big data analytics, and new hyper-connected global networks. We back entrepreneurs that use technology to improve on the status quo, in general, and in the financial services industry, in particular. In short, we view our role as to help startup founders solve substantive issues in financial services.

Many of the technologies powering change today are certainly not new ones; enterprises, including governments, have been using computers for more than fifty years. We may forget that Time magazine declared the personal computer its “Machine of the Year” back in 1982. But just as it took several generations to improve upon the invention of the steam engine so that it could be put to commercial use (it eventually powered the Industrial Revolution of 17th and 18th centuries), time was necessary to refine the digital engines of the 21st century. Equally important, the falling cost of these technologies has enabled proliferation to take place on a global scale fueling a level of entrepreneurship across the globe on a scale never before seen.

Over the last two decades, the digitization of content and services has also upended the long standing competitive order within the areas of personal and enterprise computing, consumer electronics, cinema, publishing, music, retail commerce, social media, telecommunications, legal, logistics, travel, lodging and transportation, just to name a few. It seems, governments are also to be disrupted and we should take notice to understand the root causes.

And this brings me to the central point that I’d like to raise for those still reading to consider. Some parts of our economy have been better at adapting to the new forces at work than others, but these areas that have managed the transition well are in the minority. The great lie of not only this election, but the last several that preceded it, is that the jobs lost in recent decades by our country can be brought back if only the party not in power can be put in control. However, neither party can reverse this trend. Protectionism/nationalism/nativism (you choose the label) will only exacerbate the issues at hand. Yes, some of these jobs have been outsourced and we can slow down the shipping of jobs overseas. But more to the point, many of these jobs have altogether have been, or soon will be, replaced by technology.

In order to revitalize our economy, entirely new industries have to be created. The race to create these industries—and the jobs that accompany them—is now on, and it is joined by a great number of countries around the world. It is a high stakes game that can only be won by the systematic repositioning of labor, education, capital, and, most importantly, policies to meet these trends and to do so head on. To the winner(s) go the fruits of growth and prosperity of the 21st century. To the also rans—a much less hopeful future.

To underscore this last point of the stakes of this contest, I bring your attention to a 2013 study conducted by Carl Benedikt Frey and Michael Osborne of Oxford University. They looked at the impact of technology on the U.S. economy and employment—namely the amount of jobs at risk—and they arrived at a stunning conclusion that you can read about here. According to their estimates, which we on our team take very seriously, about 47 percent of total U.S. employment is at risk in the next two decades.

They provide compelling data that implies: “…wages and educational attainment exhibit a strong negative relationship with an occupation’s probability of automation.” The non-elites, in other words, who have already been hardest hit by change will continue to be impacted, as the larger competitive forces at work continue to play out. However, to be clear here, it’s not just about blue collar jobs at risk, but also white collar ones as well in the years ahead.

So progressives and others may wonder, myself included, how the world could have missed the rise of Trumpism, and before it Brexit. After all, we’ve had steady and uninterrupted growth in our economy, and the capital markets have done well under the current administration for nearly 7 years.

The data underneath the improvements in our economy post financial crisis, however, pointed to the most recent election results all along—if we only had listened more carefully to those in Non-Coastal/Non-Urban America.

Note the chart below:

From the chart above, it’s clear that we now have two Americas. One that’s doing better (note I didn’t say “great”) in adapting to the new information age, and whose companies can go toe-to-toe with any set of competitors anywhere in the world. And a second America, one that is struggling to cope with the transition. By voting for Trump as POTUS, many wanted to throw a brick (some would say a molotov cocktail) into the window of the political establishment—including the progressive administration of the last 8 years to which a great many on this side of the divide had previously voted—to send an unequivocal message. That is, ignore me at your political peril. The second America just vented its frustrations for being ignored or overlooked, and the repercussions are reshaping the long standing geopolitical and economic order as we have known it.

Any reasonable person would agree that many vile things were said to get out the vote—and it may be very temping to vilify the forces that brought this POTUS-elect into power. But let’s not be fooled by the caricature of the “typical” supporter of the new administration. The base of support is far broader than many would have you believe.

Among white voters, Trump won an overwhelming share of those individuals without a college degree. This is of little surprise to all watching the run-up to the election. Trump’s margin of votes among whites without a college degree—a group that includes a substantial block that voted previously for Obama—is the largest among any candidate in exit polls since 1980. However, more telling is that among white college graduates, the group that many pundits argued was essential for a Clinton victory, Trump bested Clinton by a substantial 4-point margin (source: Behind Trump’s victory: Divisions by race, gender, education).

We should also make plain that it’s hard to argue for a sweeping mandate to adopt the policies of the Right. As of the time of this post, all would be wise to remember that Clinton won the popular vote by a margin of more than 2.0 million and counting. (source: Hillary Clinton on course to become second most popular presidential candidate in history) Only Obama has received more votes in a US presidential election than Clinton.

If we are truly going to become the country of our lofty ideals, we must forsake easy explanations that look to demean the genuine fears and anxieties of a large population of Americans. We must also work together to make more of our workforce and companies competitive in the new information age. The rapid transition underway in many economies, including our own, was not fully accounted for by policy or by the politicians that make them. This is in part because of the pace at which all of this is happening is almost unimaginable, and most policy makers, regardless of party affiliation, are not well briefed on the transition that is well underway. I’ve written about this before, intellectual arrogance is just as blinding as is hate and prejudice, which can take many forms as we now all know.

The work to be done to fix the issues at hand cannot be solved by one person, party, group or ideology. It will require new political partnerships, and an embrace of creativity and courage to devise entirely new policies that can meet the demands of a digital first world in a headfirst and unflinching way. We’re going to need all hands on deck to create an economy that serves all strata of America. Let’s start by working together and reaching across to those on both sides of the new divide. Without a robust and healthy middle class, my friends, it’s hard to see how our democracy survives and how the majority of us can prosper. If you have gotten this far—thanks for listening.

Additional sources:

The Economist explains: Thomas Piketty’s “Capital”, summarised in four paragraphs | The Economist
(Log In - New York Times)
The Winner Takes All…Sometimes

Edit: A thought provoking editorial in the WP, which echoes many of my sentiments above. I’m the Trump supporter pollsters missed

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