The Reagan Democrats’ discontent

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Corporate America’s attack on unions has been a kind of two-fer. Workers rights to fair wages and working conditions deteriorate and union efforts to get out the vote are weakened. Fortunately, what remains of the union movement is fighting back by trying to mobilize voters, especially the white…
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Corporate America’s attack on unions has been a kind of two-fer. Workers rights to fair wages and working conditions deteriorate and union efforts to get out the vote are weakened. Fortunately, what remains of the union movement is fighting back by trying to mobilize voters, especially the white working class, often called the Reagan Democrats. This election may turn on how well the Obama campaign speaks to the discontent of these voters.

Regaining white working class votes requires more attention to how those votes were lost. William Connolly, author of “Capitalism and Christianity, American Style,” explains Democratic defections in part as a consequence of the long-term income decline. This decline has played out in a context of historic racial antagonisms. Many marginalized rural and high school-educated whites also share a sense that they have been left out of political movements redressing historic or emerging patterns of discrimination. They do not view government as working for them. In addition, lacking challenging and rewarding jobs, many found in personal consumption some chance for satisfaction and self-respect. He concludes: “Each reverberates with the others, until ‘income decline’ becomes linked to the other three in a way that transmutes it into a demand for tax reduction.”

Republicans also have long been successful at displacing working class anxiety and frustration through race- or gender-based “wedge issues.” Democrats inadvertently aided this strategy. Though properly attacking historic racial and gender injustices, they increasingly neglected weakening unions and offered marginalized workers only the distant prospect of jobs in a new high-tech economy. Hence the Democrats became the elitist “latte liberals.”

This divisive strategy may not work this time, especially if the Obama campaign harps on the economic injustices staring the electorate in the face. The factors to which Connolly alludes also are closely connected to the rise of a debt economy. Decreasing incomes could in some circumstances be an occasion for the electorate to move leftward, but at least two compensatory mechanisms besides racial scapegoating were in play.

Though median wages on an hourly basis have been essentially stagnant for a generation, workers have worked longer hours – at least during parts of the business cycle when the economy was growing. More family members entered the work force. But most importantly, workers and their families were encouraged to go into debt not only through deceptive credit card ads and teaser practices but also by low interest rates. Alan Greenspan did not perceive or would not acknowledge bubbles in stocks or houses.

The whole corporate order benefited (temporarily) from a debt economy. Low wages can occasion recessions if the wealthy don’t spend most of their income. Increasing levels of debt, however, can cushion the effect of low wages, allowing poorly paid workers to participate in the American dream, thereby blunting radical impulses. And for the wealthy, who can only spend so much on multiple houses, shadow banking and leveraged finance create extraordinary investment opportunities. The real economy, even with debt financing the bottom two thirds, has remained persistently sluggish.

Debt has another more subtle function. It becomes the modern form of indentured servitude. An individual in debt can’t cut back on work, especially if the terms of the debt suddenly get worse. (And in an unregulated and oligopolistic credit market, that can happen quickly.) Workers are locked into long working hours – often at lousy jobs. Compensatory consumption becomes more entrenched. Having sacrificed so much family and leisure time to pay for consumption, other interests cannot develop. Many workers also become even more bitter toward those “elitists” who challenge current consumer trends.

Of course overwhelming debt is now the 800-pound gorilla in the living room. The pyramid scheme has crashed. Demonizing Barack Obama as a terrorist may not resonate. Americans are overwhelmed with debt in an economy where their jobs and pensions become ever more tenuous even as Bush et al. bail out the banks.

In this last week, Obama must intensify his appeal to working-class voters across racial and lifestyle divides by emphasizing a modern New Deal. His administration would foster new green jobs and buy troubled mortgages at a discount. The banks won’t gain windfall profits. He can help homeowners and get a more sustainable – less debt encumbered – economic engine going.

John Buell is a political economist who lives in Southwest Harbor. Readers may reach him at jbuell@acadia.net.


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