This first graph is by far the most important chart in explaining both the benefits and impact of globalization, free trade, and a changing economy to different constituencies. The greatest benefactors of the extension of the Bretton Woods System (free trade and globalization) following the end of the Cold War have been those who own capital and the poorest people in the world. Unfortunately, as money has moved from the Developed Economies to the Developing World in search of return and comparative advantage, the middle class in the United States and Europe have failed to benefit.

Harvard Business School

Many behavioral psychology studies have shown that even when your life is improving in absolute terms, you see very little psychological benefit when your life isn’t improving as quickly as your neighbor. Your absolute size of the pie is less important than your relative slice of the pie (Christian Elger and Armin Falk — University of Bonn). This is why inequality is so damaging to the national psyche. The video below shows one monkey becoming irate as his neighbor receives more for the same work. Humans are not monkeys, but we share similar psychological patterns.

Frans de Waal

Wage stagnation has resulted in many Americans feeling left out of the new economy. On real terms (inflation adjusted dollars), wages are back to where they were in 1996.

Federal Reserve

This is because a majority of the recent economic gains have gone to the owners of capital and the richest portion of our population.

Center on Budget and Policy Priorities

And the share of income going to the top 1% is similar to what the country saw in the “Roaring 20s.”

Inequality.org

This issue extends beyond the typical 1% vs. 99% that we’ve heard so much about. When you look at the staggering difference between an average income for a college educated American versus a non-college educated American, you can start to see the value of an education (and why Bernie Sanders and the DNC now support making college more affordable to give everyone a chance at success).

Pew Research

So, college educated Americans are doing a lot better than their non-college educated peers, and this gap is widening with our service economy. Additionally, remember, we rate ourselves against our peers. It’s no wonder that Donald Trump’s message of fear and despair is resonating so well with one particular demographic — non-college educated white people.

The Washington Post

These people, who are feeling left behind and relatively poor, are looking for a scapegoat. Trump is providing that through immigrants. He normally talks about the illegal immigrants that cross our borders and take low paying jobs, but 1) there’s not as many of them as he makes you think and 2) it’s more likely that white non-college educated men see the educated immigrants as a bigger threat. As shown above, a college education results in a much higher paying job, and college attainment rates are higher amongst immigrants than the rest of America. This is because our immigration policy has rightfully favored highly educated immigrants, since they add tremendous value to our economy. This is how Barack Obama’s father came to the country and how many of the most successful entrepreneurs in our technology sector are able to work and live in the United States.

Pew Research

United States Census Bureau

College attainment is way up, but it’s still less than immigrants — remember psychology teaches us that it’s all relative, not absolute.

Meanwhile, this issue was hidden for a couple decades during the debt boom, which allowed people to think that they were keeping up with their neighbors. Since 2007, however, debt has been very difficult to come by for most households. This is making it more difficult to buy a car, home, or pay an exorbitant credit card bill.

Federal Reserve

Once you add this data to the overall picture of a massive technological revolution in our economy (the internet), you’re facing a double whammy on the middle class. Carlota Perez demonstrates that technological changes follow very similar patterns with a significant amount of capital during the “frenzy” phase ending up in the hands of the small percentage of the economy who were poised to build and invest in the new technology.

Technological Revolutions and Financial Capital

After this phase, comes a “golden age” where the rest of the population typically benefits from the new technology. We are probably about to enter this phase, but it requires a retraining of the entire workforce to catchup to the small group of early winners. With computer science degrees at an all-time high, this reeducation is happening, but it takes time and the older generation of non-college educated men (i.e. strong Trump supporters) are probably too late.

This is why sentiment toward the future is so low. People are comparing themselves to their neighbors and feeling like they’re not getting their fair share.