INCOME INEQUALITY AND POLITICS

Billmon has got a good post on income inequality in the U.S. and its potential impact on the political system. His basic claim is that middle class Americans are likely to become increasingly angry with rising economic inequality:

Economically, we may be entering a New Corporate Era, in which the winner takes the pot and the devil takes the hindmost, but politically, this is still a middle-class country. The Willy Lomans still expect their piece of the pie to grow, and they still tend to blame the government when it doesn't. That part of the old New Deal social contract remains very much in force.

But the steady rise in inequality -- driven by the social trends described above [check them out -- BEM] -- requires the U.S. economy to deliver progressively stronger growth in order to satisify those middle-class demands. Like Alice and the Red Queen, the system has to run faster just to stay in the same place.

Billmon thinks that the Republican attempt to destroy government and their faith in global corporate power have at least the potential to create a backlash, to the extent that the resulting policies help to create more inequality. (Democrats, at least since Clinton, don't add much to the mix other than job training.) One of the dangers is that an aroused and angry populace could engage in scapegoating against minorities and immigrants. Billmon points darkly to the rise of rightist, anti-immigrant parties in Europe, although he also notes that there the dominant focus of the discussion is how to maintain the social guarantees of established welfare policies in the face of contracting state budgets and increasing demands on the part of constituents. Here, the social guarantees were never established firmly and, for the most part, have been discarded.

One possible tack for Democrats is to point out that established redistributive policies -- such as farm subsidies -- are threatened by a focus on corporate freedom and open markets. These subsidies are, in essence, big-state welfare checks, but they produce a particularly American self-denial about the fact that they are, in fact, welfare. Far enough down the road, the ideologues in the Republican party -- the Grover Norquist, progressive-taxation-morally-equals-mass-murder-types -- are going to turn their guns toward farm subsidies in a more serious fashion than they already have. Unfortunately, they will be able to team up with liberal globalists who argue (rightly) that such subsidies harm farmers in poor countries and should be dismantled. The only people who will really lose will be American farmers who depend on subsidies to sustain their current, concretely lived and very real lives on this planet, in this country, at this point in time, whatever the implications are in the ideal world of rational resource allocation.

The corporate globalists in the Republican party have gotten it wrong and should be defeated, in my opinion. What needs to happen is that Democrats need to provide a politically and emotionally viable alternative to the stories promoted in the Republican party about individual opportunity, global American power, and the heroic work of corporations. There needs to be a positive story, not just an attack on inequality or on corporate power. Invocations of the New Deal would work for me, although it's also true that Republicans have invested a great deal of time in attacking the heritage of the New Deal, and they have some historical research to back them up (e.g., again, Grover Norquist's claim that unions have historically had racist motives, relying on the kind of work that David Bernstein has done on this score). The strategic invocation of racism has to ring hollow, ultimately, given the prominence of Dixiecrats in the contemporary Republican party and their willingness to attempt to inflame racial resentments in discussions of welfare, affirmative action, the war on drugs, and the war on terrorism. Nonetheless, the deeper point is that even though an idealized picture of the New Deal as a kind of raceless social compact cannot withstand professional scrutiny, such a picture does have the virtue of prefiguring what an attractive Democratic social vision might look like, if tempered with post-Civil Rights era racial realism. Perhaps.