Trickledown Fallout and Keynesian Economics

Re: More Wealth, More Jobs, but Not for Everyone: What Fuels the Backlash on Trade from the Sept. 28 New York Times. 

"Years of investment manias and financial machinations that powered the job market have lost potency, exposing longstanding downsides of trade that had previously been masked by illusive prosperity."

I've been thinking about this “illusive prosperity” for many years, since I heard Robert Reich on NPR—I want to say in the mid 2000s—talking about the fragility of economic growth built on 1) Real Estate 2) Consumer Debt and 3) Lower costs for goods, masking the lack of real wage growth since 1980. I would add to this the explosion of two-income households in the '80s and '90s, allowing for household income growth to rise even as individual wages stagnated.

John Maynard Keynes

Well now we're tapped out. The housing bubble burst and no one can get any more credit. Financial tricks and schemes have collapsed. Prices are as low as they can go (because of free trade) and there are no more adults to go to work in most American households.

So what do we do? Protectionism is not the answer as the domestic jobs lost to trade no longer exist. Tax cuts are a ridiculous fallacy exposed by the nonsense of Trumponomics (bolster the military, fix infrastructure and fund massive border projects... all while cutting taxes and balancing the budget!). Plus there's the matter of global warming, which, as seas rise, could create a national public investment need on par with the interstate highway system.

What worked before was​:​​ 1) Real investment by private industry in worker salaries and 2)​ a massive infusion of government cash into the national economy powered by World War II, the Cold War and all its indirect offshoots (NASA, widely dispersed military bases, the TVA and other energy projects, the ​highway system justified as a national security measure, etc). This is Keynesian economics—​public and private ​entities working in tandem.

Added 10/14/16:

Dante Chinni has been working on assignment for NBC news, reporting for months on economic decline in rural Monroe County, Ohio. As he said on The Diane Rehm Show on Oct. 12, "My thought about a lot of this is the private sector just can't save a place like this. It's going to have to be something else, just because there's not a lot of reason to invest if you’re a private sector company. But something, maybe, where the public sector could work to build institutions in the area that could help sustain the community again."