That Fight is Ours Too…

Politics in the United States is not the obvious place to look for inspiration at the moment however Senator Elizabeth Warren’s book “This Fight is Our Fight: The Battle to Save Working People” is like a shaft of light in  a dark cave. Ms Warren is the senior US senator for Massachusetts and a Democrat. Her book provides an analysis of how the US has been transformed over the past four decades from a nation characterised by a stable and growing middle class optimistic about its future to a society riven with insecurity and fear.

She is a genuine patriot, particularly proud of the amazing growth of the middle class in the states following the Great Depression driven by FD Roosevelt’s government which took on the multi-millionaires of the time. Promoting trade unions, breaking monopolistic practices, regulating competition, investing in education for all and creating a nascent welfare state.

Warren BookAll of this meant that over the period from 1935 to 1980 some 70% of all the income growth went to the bottom 90% of the population and 30% went to the top 10%. It meant that an enormous middle class was created whose experience was of steady employment, with good pensions to look forward to and a faith their children would be able to build on the foundations they had laid and gain a better future through education and their own efforts.

Do not think Ms Warren looks back through rose tinted spectacles however, at “the good old days”. Her personal experience as a child of how precarious existence could be when her father had a heart attack and could not work prevents that. When her mother became the only breadwinner in the house and got a minimum wage job at Sears things were tight, however, in the mid 1960’s, that one minimum wage kept a family of three afloat paying the mortgage and keeping food on the table.

It is not that everything back then was perfect, it was just that there was a sense the arc of history was bending in the right direction. Since then however the arc of history has been pushed in a different direction. Whilst the cost of living has increased significantly the value of the minimum wage has plummeted in real terms and the idea that a single minimum wage, could keep a family of three afloat is laughable. The current Federal minimum being $7.25 although in many states higher rates are paid up to $15 (£9) per hour. Worse, median wages have stagnated so that over a thirty year period working Americans have seen virtually no real increase in their pay. Why is this?

One of the reasons is that in the period since 1980 to 2015 the income growth of the country mentioned above got shared out differently. The amount received by the bottom 90% was a large round number – zero. And for those who struggle with maths this means the top 10% have taken 100% of the growth. How could that happen?

Well not by accident. Back in those crazy communist days of the 1960’s the 10% started to become discontent with the mere 30% of the wealth they received. This discontent was channelled in 1971 by a confidential memo written by a corporate lawyer named Lewis Powell which was essentially a call to the rich to transform themselves in to the rich and powerful.

To do this they were encouraged to invest their wealth in gaining control of the political agenda. Whilst this included funding supportive politicians in increasingly costly election campaigns it was more insidiously about capturing the realm of ideas. To do this they should fund research, think tanks, media shows, anything which promoted their ideas. Ideas which could be boiled down to low taxes for the rich and an ever reduced role for the state in the provision of services, regulation and, worst of all, transfer payments.

Ms Warren draws on her own experience and that of a number of individuals to illustrate what that process has done to people and their life chances. She talks about Gina, the woman whose family income has halved over the past 20 years from $70k to $35k. “No crisis. No Accident. No tale of woe. Juts the grinding wear and tear of an economy that doesn’t work for families like Gina’s”

She talks about Kai a young woman who worked hard through school and wanted to work in design. She paid to go to a private University but after the first year could not afford the fees so decided to return to her home state and complete her degree there only to find the credits from the Private University were not recognised so had to repeat a year. The upshot is she now has $90k of the $1.4 trillion US student loan debt and is repaying it out of her job as a waitress.

Finally, Michael who worked hard at his job at DHL for 16 years securing a house with  a mortgage and what he though was a solid middle class life ahead. Then 2008, DHL eliminated 14,900 jobs including Michael’s. He then got a call asking if he wanted his old job back. Not his full time job with benefits though, a part time job with no guaranteed hours and no benefits. He had to take on two jobs but even then he could not pay the penalous mortgage he had been mis-sold so lost his home.

Even then he did not give up but just kept on eking out jobs here and there until he got work in a Nabisco factory putting the cream in Oreos. Just when he thought he was getting back on his feet the factory was closed and production relocated to Mexico.

The real life stories of individuals trying to live up to the myth that hard work is all that is needed to secure a reasonable living are heartbreaking. They translate debates about trade deals, de-regulation and labour rights into a increasingly depressing reality for millions of American. As “the economy” and Wall Street does well and the stock market booms the 90% get left further and further behind.

Ms Warren is under no illusion about the implications for working people of a Trump presidency backed by a Republican Congress. However she draws strength from the millions of Americans who want to stand up against bigotry, for a fairer economy and most of all for Democracy. Her battle for Democracy has implications far beyond the States. Democracy there has been infected most by the “greenback virus” but it is happening in many other places including the UK where election expense rules are starting to be challenged by being ignored. We have a common interest in Ms Warrens fight.

If this book is a kite being flown to test support for a 2020 campaign run it gets my vote. Ms Warren comes across as intelligent, incisive, authentic but most of all humane. If voters want a choice of opposites in the 2020 election she would provide it.

 

Elizabeth Warren. This Fight is Our Fight: The Battle to Save Working People. Harper Collins. 2017.

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Trumping Democracy

Right now in Washington DC there is a battle in progress for the soul of American democracy. An increasingly embattled President Trump is making comments and exploring actions which, if followed through, would undermine one of the pillars of any democratic society, respect for the rule of law and the independent administration of justice.

The President gave an interview to The New York Times earlier this week in which he criticised the Attorney General Jeff Sessions, the Deputy Attorney General Rod Rosenstein, both of whom he appointed, and threatened to sack Special Counsel Robert Mueller who is investigating the links between the Trump presidential campaign and Russia.

In relation to the Attorney General, his sin was that he recused himself from anything to do with the investigation into the Trump campaign’s links with Russia. As head of  the Department of Justice his recusal from anything to do with the investigation was inevitable given his previous role as a top advisor to Mr Trump’s campaign. Who could not understand this…? President Trump. He argued if Mr Sessions had told him he would recuse himself from the Russia investigation he would not have appointed him to the post of Attorney General.  The only inference you can draw from this is the President wanted someone as head of the Department of Justice who would do his bidding, thus transforming the rule of law into the rule of the Executive!

In normal circumstances the kind of comments made by the President would have led to the automatic resignation of the Attorney General. It is testament to how far we are from normal times that two days later and their has been no resignation. The President can, however, fire the Attorney General and he may do just that in order to clear the way for him to get at Robert Mueller who is appointed by and sackable by… the  head of the Department of Justice, or when he has recused himself from issues Russia, his Deputy Rod Rosenstein.

Mr Mueller’s sin is that he is investigating the links between the Trump campaign and Russia’s attack on the 2016 election focused on securing a Trump win. But worse than this it is thought he may have extended his investigation into the Trump family finances including those of the President. If this is the case is it this just a prurient desire on the part of Mr Mueller to know about the business dealings of a billionaire? Or is it perhaps, given the increasing evidence of Trump/Russia links, that it is a reasonable suspicion there may be some material business connection here which creates a security risk for the United States.

Will President Trump sack Attorney General Sessions? Who knows, but it is far from inconceivable, which is where it should be. Would he then go on and get a more compliant Attorney General to sack Robert Mueller? One suspects there is little point in taking all the heat that would arise from the former without going on and doing the latter.

The architecture of government established by the founding fathers with its separation of powers and the norms of democratic behaviour evolved over 200 years are currently wrestling with a President who is using all the power and authority accrued to his office over generations to destroy the very foundations upon which it stands. The bureaucrats in the front line of this battle should be recognised for the vital job they are doing.  There should be no misunderstanding  about the gravity of the situation. The fact Trump is a buffoon and a boor should not distract from his naked exploitation of power in office for personal interest.

President Trump and his family seem incapable of seeing any distinction between their interests and those of the office of President. What’s good for Trump is good for the USA might be their credo. It seems they are genuinely incapable of seeing the issues and conflicts their behaviour generates. The recent revelations about Trump Junior and his meeting with Russian lawyer Veselnitskaya is typical of what has happened throughout the past 6 months. A meeting initially described as with four or five people about the process of adoption becomes, over time, a meeting about Russian hacked data of Hilary Clinton’s, with 6 then 7 and now 8 people. One a “former” agent of Russian Military Intelligence.  Another suspected of having links with Russian intelligence and one with self confessed links to Yuri Chaika, the Supreme Russian Prosecuter.

Perhaps, if President Trump does start to scythe through the Justice department, the partisan anchors within the Republican party will start to be pulled up and the Legislative arm of the government would at last take action against what, it is increasingly clear, is a rogue President. If they do not then there is a genuine threat to democracy in the United States and that is a matter of global concern.

 

Why is Trump so popular?

Ok maybe his star is waning. Maybe he has crossed one norm that alienates him from the majority in the United States, commitment to the democratic process. However it cannot be denied that, for a bombastic, demagogue who has cornered the market on phobes, (Zeno, Homo, Islama etc.) and has all the charm of a lounge iguana, Trump has tapped into a genuine and substantial vein of discontent.

The 2016 election may well come to be seen as a portent of things to come. Two years ago the idea that an avowed socialist would give Mrs Clinton such a run for her money in the Democratic primaries would have been laughed at. Similarly, who thought Donald Trump could become the Republican nominee, and what is more, run Mrs Clinton a tight race despite a whole number of increasingly outrageous comments.

I suspect after the race if Trump loses there will be analysis to demonstrate that he was never going to win given the basic demographics of the States. Even if this is true there is no denying his popularity amongst a large swath of the American public. More, his radical agenda might have got even more traction, including amongst traditional Democratic supporters, if he were not such a bafoon.

Mrs Clinton made the mistake of consigning half Trumps supporters to the “basket of deplorables”. This was not just a tactical, PR mistake it was a theoretical error. Whilst I have every confidence some of his followers are thoroughly objectionable people, his popularity goes well beyond that small substratum of society. There is genuine depth to his support, a depth which has been generated by tectonic shifts in America’s political economy that have been happening over decades, perhaps half a century. Each year, a small, almost imperceptible, but definitely detrimental, change in the position of the American Middle Class, and specifically, blue-collar workers.

It is a process which Ryan Avent claims began sometime in the 1970’s and is not about the periodic cycle of economic boom and bust. It is a secular decline in the relative position of labour in the distribution of income and wealth. The post war era was a boom time for the vast bulk of the American population. Between 1947 and 1972 real wages in the US rose by between 2.5% and 3% per annum.

From the 1970’s however, the rate of increase of real pay declined to an average of less than 1%. Up to the 1970’s workers pay rose broadly in line with the increase in productivity. From the 1970’s onwards however productivity growth slowed. Pay however, faired even less well, between 2005 and 2014 productivity increased by about 1.4% per annum, about twice the rate of real pay increases.

Avent goes onto make the point that even the poor performance of mean average real wages does not capture the reality for many Americans. “Median wage growth, or growth in wages for the American in the middle of the distribution, did far worse. Indeed, since 2000 the real wage for the typical American has not risen at all. Looking further back does not much improve the picture either; since 1980 the median real wage is up by only about 4%. Not per year, but over the whole period. And if you then focus in just on the real wage of the median male worker, the duration of the stagnation extends back into the 1960’s”. (1)

The picture painted by Avent of stagnating incomes for the majority of the population has been well documented in a range of book over the past few years. Robert Stiglitz(2) , Hacker and Pierson(3) and, of course, Thomas Picketty(4) have screen-shot-2016-10-23-at-14-58-44all pointed to this phenomenon and its role in increasing the levels of inequality in America. Typical is the “U” shaped graph showing Income inequality in the United States 1910 – 2010 in Thomas Picketty’s book Capital in the 21st Century. This charts the high levels of inequality in the first 40 years of the 20th Century followed by the dramatic reduction in inequality from the period after the second world war, then an accelerating growth in inequality since the 1970’s to levels not seen since the late 1920’s.

Given this gradual but enormous change in the position of middle class America it should be no surprise that people are frustrated and angry. The frustration arises out of the narrative that says this process is an inevitable result of progress. Opposing it is a luddite response to the course of history and in due course a whole load of new jobs will come along to take up the slack. The problem is the new jobs that have come so far are low skilled, low paid and very precarious.

At the same time people can see corporate and financial leaders taking enormous salaries, many multiples those of their predecessors at a time when GDP growth is lower than it used to be. Worse the people that take these enormous salaries seem to be able to secure them through location rather than performance. Whatever the results of the company the salaries of those in the C suite go up.

Worse yet when exceptionally highly paid people in the finance industry bring the economy to its knees, costing thousands of jobs and homes they are bailed out by the very people whose lives have been devastated, the tax payers. The people who arrange these bailouts as public officials later move on to work in the very institutions that have been saved. In these circumstances you can understand why the ordinary American is highly cynical about the ability of the existing political system to bring about change in their favour. This is why Mrs Clinton is struggling. She is perceived as too close to the traditional political machine and worse, Wall Street.

America may have averted a tragedy if they avoid the election of Donald Trump but they should not think they have avoided a crisis. It is not going to be politics as usual even if Mrs Clinton secures the White House. Radical change is needed in the States. There are a number of systemic problems that need to be addressed which would involve a real shift in the distribution of power. If Mrs Clinton can achieve this she will go down as one of the great US Presidents. If she cannot, and I am not optimistic, America, and therefore the rest of the world, are in for a very challenging time.

 

 

 

 

(1) Ryan Avent The Wealth of Humans: Work and its absence in the Twenty First Century. Penguin Random House 2016

(2) Joseph P Stiglitz The Price on Inequality Allen Lane 2012

(3) JacobS Hacker & Paul Pierson Winner Take All Politics Simon and Schuster Paperbacks 2011

(4) Thomas Piketty Capital in the 21st Century Harvard University Press 2014