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Apathy and anger The backlash against US capitalism
January 13, 2012 7:25 pm Caught between apathy and anger By Edward Luce
As Americans steadily lose trust in their system, demographics are likely to play a bigger political role than class
If the campaign rhetoric is any guide, the US is in the throes of a Marxist change in consciousness. In spite of belonging to a party that draws much of its cash from Wall Street, rival Republican contenders for the presidential nomination have ripped into Mitt Romney’s past as a private equity executive. Without any help from the left, the former chief executive of Bain Capital stands accused of being “a vulture”, “looting”, “greed” and “profiting from other people’s misery”. If it carries on like this, the Democrats will have nothing left to say when it comes to the general election.
Is the US seeing a backlash against capitalism? A visit to any of the country’s now 50,000 or so storage houses – places where people rent space to keep their surplus belongings – gives an eerie sense of a country in a continual flux of insecurity. These centres, which according to industry data have grown roughly tenfold since the 1980s, hold frequent auctions of the belongings of those who have failed to pay the rent. In recent years, such auctions have exploded. “We call it the five Ds – Debt, Divorce, Displacement, Death and Disinterest [uninterest],” says the branch manager at ezStorage, one of the chain groups, in Glen Burnie, near Baltimore. “If we’re auctioning your unit, then you’re going to be one of those Ds.”
There is nothing, however, in the atomised discomfort of middle-class America that would suggest a revolution in the making. People do talk about a new age of populism. Perhaps “age of transition” would be more accurate – although to what is not yet clear. Earlier periods of economic turmoil, most notably during the robber baron decades of the late-19th and early-20th century, did turn populist. Then, like now, both parties tended to go to the same sources for money. In Mark Twain’s novel The Gilded Age, the deepest well of election finance was the railroad capitalists. Today it is Wall Street. Then, as today, was a period of electoral volatility – the last time Congress changed party control as often as it has in the past six years was in the last two decades of the 19th century.
Both eras were also driven by disruptive technologies that upended settled patterns of work and pushed the winners into stratospheric new levels of wealth: what the internet and financial globalisation has done for the net worth of America’s superclass since the 1990s finds its closest parallel in the income effects the railway, electricity and the internal combustion engine had 100 years ago. The vast concentrations of wealth in the economy in turn produced growing inequalities of influence in the political arena. Mark Hanna, the late-19th century electoral manager, famously said: “The three most important things in American politics are money, money and I forget what the other one is.” Rahm Emanuel, the mayor of Chicago and former White House chief of staff, said much the same thing in 2006 when he helped engineer the Democratic party’s handsomely bankrolled midterm congressional victory.
So much for the parallels. The differences between now and then are also instructive. Unlike the “progressive era”, today’s America is shaped as much by apathy as it is by anger. The early 1900s were characterised by the “prairie populism” of the small farmer and the rise of an organised working class. They tended to meet around the small town “cracker barrel” and in the industrial workplace. Today’s squeezed middle classes share no obvious gathering place. They are economically diffuse and geographically scattered. “The largest squeezed group today are people with high-school diplomas working in the service sector,” says Michael Lind, author of a forthcoming economic history of America. “Most of them are living in the suburbs and watching TV.” When the politicians appear, they tend to switch channel.
The two exceptions are the Tea Party and Occupy Wall Street. Taken at face value, the Tea Party represents a rebellion against the nexus between bankers and Washington. It first began to stir during the $700bn Wall Street bail-out in October 2008 – a package Congress enacted only on its second vote. On closer inspection, however, the Tea Party is driven as much by demography as ideology. Surveys of Tea Party supporters show an overwhelmingly white and middle-aged or elderly support base. Their biggest flare-up came during the angry town hall protests against President Barack Obama’s healthcare reform in August 2009. Instead of opposing government in general, the protesters claimed Mr Obama’s reform would rob from Medicare to fund healthcare reform – transferring federal dollars from retired people to working-age Americans. “Keep government hands off my Medicare!” was the totemic – if oxymoronic – slogan of the moment.
A recent survey of Tea Party supporters showed that more than three quarters wanted to leave untouched Medicare and Social Security, the public pension system – the largest items in the federal budget. When Paul Ryan, the House budget chairman, unveiled a fiscal road map last year that would have rapidly slashed Medicare’s largesse, fellow Republicans rapidly distanced themselves from his plan. Newt Gingrich, the Republican former speaker of the House of Representatives and now improbable anticapitalist rival to Mr Romney, attacked the Ryan plan as “rightwing social engineering”.
Polls explain the direction of Mr Gingrich’s apparent tangent. “If you study public opinion, Americans are deeply ambivalent,” says Lawrence Jacobs, author of Class War? What Americans Really Think About Economic Inequality. “They hate government in the abstract. But they love government programmes that benefit them in particular.”
The Tea Party’s demography also helps to explain why the only cut the Republican-controlled Congress has so far pushed through is a freeze on the so-called “domestic non-defence discretionary budget”. This excludes the far costlier Medicare and Social Security programmes but targets education, infrastructure, research and development, and other items that matter to the younger generations.
Eschewing an ideological lens, Ronald Brownstein, editor of the National Journal, a Washington weekly, says we have entered a new political age of “grey versus brown” – an increasingly elderly “Anglo” Republican party is squaring off against a youthful rainbow coalition of other races supporting the Democrats. The era of grey-haired Smith against twenty-something Sanchez perfectly mapped Mr Obama’s 2008 strategy, where he exploited America’s changing make-up to win the traditionally Republican states of Virginia and North Carolina.
Mr Obama is supported by large majorities of America’s black people, Hispanics and Asians. Fewer than 40 per cent of blue-collar whites now approve of him. That divide has grown stronger since 2008, even while voter “intensity”, or depth of support, has shifted back to working-class white people. This year, Mr Obama will hold his nominating convention in Charlotte, North Carolina, and home of a young and educated multi-ethnic population. The Republicans, meanwhile, have settled on the white retirement zone of Tampa, Florida. If there is a political war brewing, it will be between generations and ethnic groups rather than between classes.
According to the latest US Census, in 2010, white people will become a minority by 2040. The decennial survey also revealed that 46.5 per cent of Americans under the age of 18 were non-white – up from 39 per cent in 2000. Between those years, the number of white children shrank by 4m while the number of American children in total grew by 6m. This was almost all because of the growth in the Hispanic population. As the age of fiscal austerity begins to bite, the grey-brown divide is likely to become more political. “At some stage we are all going to realise that we only have about 80 per cent of the wealth we thought we had before 2008,” says Mr Lind. “When that happens, politics will get uglier as each group fights to defend its piece of the federal pie.”
In spite of last year’s battle over the debt ceiling, that moment of fiscal reckoning is yet to hit Washington. Mr Obama is doing his best to rekindle the enthusiasm that swept him to office in 2008, however. Some of the president’s rhetoric has been supplied by the Occupy protesters, who have helped to rebrand American politics as a fight between the richest 1 per cent and the rest.
However, unlike the Tea Party movement, the Occupy movement has no institutional apparatus. The former is Republican and rooted in towns. The latter is drawn more from the fringe of left activists, students and anarchists. They seem to be as unenthusiastic about Mr Obama as most Tea Partyers are about Mr Romney.
“It is a strange thing that at this moment we are likely to get two presidential candidates who completely lack any populist touch,” says Jacob Hacker, a political scientist at Yale University. “Yet both feel obliged to adopt the rhetoric of populism, however unnatural it might sound in their mouths.”
Early in his candidacy, Mr Romney launched an advertisement depicting the “invisible” middle class of Mr Obama’s America. In turn, allies of the president – and now Mr Romney’s Republican rivals – depict the former Massachusetts governor as a greedy plutocrat who speaks only for the elite. Both candidates’ super-political action committees, which can take unlimited donations but are not allowed to co-ordinate with the campaigns, are funded by wealthy donors, many of them from Wall Street. Both super-Pacs – the pro-Romney Restore Our Future and pro-Obama Priorities USA – are headed by former senior aides. The contrast between the populism of their messages and the source of their money is hidden in plain view. . . . Facing a disillusioned electorate, Mr Obama is spending a lot of time trying to enthuse his original support base. Among other “outreach” efforts, he is already meeting more Hispanic groups and talking about immigration reform (having largely avoided the subject in his first two years in office).
Meanwhile, Mr Romney will surely try his best to make America’s older voters forget that he embraced Mr Ryan’s fiscal road map last year. And he is proposing far deeper domestic spending cuts than the president. “Candidates often say that 2012 will be the most important election of our lifetimes,” says Mr Jacobs, the author. “But an Obama-Romney election could easily drain the passion from national politics – it is more likely to turn activists away.”
Whatever transpires in 2012 is unlikely to be populist – although it will often be packaged to sound as though it is. Some observers speculate about the disruptive possibility of a third-party candidacy. The likeliest would come from the gold-obsessed “Austrian” candidacy of Republican Ron Paul, who provides the closest echo to the rhetoric of Williams Jennings Bryan, the late-19th century populist. Others foresee a dirty general election campaign – a “war of the super-Pacs” – followed by a low turnout in November.
Yet America’s mood remains far too mercurial for clear-cut predictions. When an electorate conveys this degree of disaffection, it is prone to unexpected swings. “We seem to be living in an age of disenchantment with democracy,” says Mr Jacobs. “Trust in the system has almost entirely vanished.”
At one of the Republican debates last month, Mitt Romney extended his hand to Rick Perry and offered a large bet on an arcane subject of dispute. “Rick, I’ll tell you what, $10,000,” Mr Romney said to the Texas governor. Dumbfounded, Mr Perry said he was not in the “betting business”.
Mr Romney, whose personal wealth is estimated at $250m, may be headed for the Republican nomination as presidential candidate. But Democratic operatives believe he has already given them a trove of material they can use to reinforce the impression that he is out of touch with ordinary Americans.
The rhetorical dress rehearsals suggest a November election that will revolve around questions of privilege and opportunity – with Barack Obama calling for fairness and railing against inequality, while Mr Romney attacks the president’s support for a European-style “entitlement society”.
In any event, the two candidates will square off against the backdrop of the most acute income inequality in almost a century. Over the past 30 years, the top 1 per cent of Americans have seen their incomes grow by almost 300 per cent in real terms – and the top 0.1 per cent by an even greater proportion.
Median household income has, meanwhile, risen by a more modest 40 per cent, according to the Bureau of Labor Statistics – and much of that is inflated by many households having turned dual-income with the entry of women into the workforce. Male real median earnings have stayed flat.
Polls show a large majority of Americans believe their country is “going in the wrong direction” and resentment is evident against the titans of finance. Yet the widening disparity has not translated into a backlash against capitalism. There is little sign of a revolt against wealth itself if it is seen to have been earned fairly.
The prosperity of Lloyd Blankfein, the Goldman Sachs chief executive, attracts disapproval. But the late Steve Jobs, who worked his magic on Apple, is something of a folk hero.
Bracketing Mr Romney’s personal fortune with that of people such as Mr Blankfein will thus be one of the Obama campaign’s main objectives.
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"Apathy and anger" ain't gonna cut it, unless it is turned into action. At high unemployment rates, few U.S. citizens are actually getting off their couches and taking action. They are of course, expecting some other frustrated citizen (activists) to do the legwork for them.
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