The Parallel Parliament

by Glen Pearson

Tag: middle class

Middle-Out

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“AMERICA’S PREMIER SELF-LOATHING PLUTOCRAT“ – no kidding, that’s what they call Nick Hanauer. He’s been in these blog posts before, where we spoke of his criticizing his peers for robbing the wealth of the United States instead of investing in productivity.

He’s now at it again, only this time championing a $15 minimum wage south of the border. Again, his peers and the corporate elite are irate with his position, and small business owners aren’t wild about it either, but his rationale, and the way he publicizes it, is carrying some momentum. In fact, the way he sees it, it’s not the labour leader or minimum wage employee who’s the best face of the effort, but his own. His rationale? “A guy like me – a very successful capitalist – is the best face for the message of reforming capitalism, right? I’m the one who can say, ‘It doesn’t have to be that way.’“

Hanaeur made his billions primarily through shrewd investments in businesses like Amazon, but somewhere along the way he came to understand that a wealth that is moving ever-upward would result in a nation spinning ever-downward. He puts it plainly:

“The other side thinks that growth produces a thriving middle class. That’s wrong and backwards. When they say (his peers) that the better profits are, the better it will be for everybody, I’m the one who can say ‘That’s a lie.’ A thriving middle class is the source of growth in a technological, capitalist economy.  Investing in the middle class is the most pro-business thing you can do.”

He finds politicians uninspiring and his fellow plutocrats unimaginative. And so he set about to battle for the $15 minimum in the public arena, and its picking up steam. It began when he made a presentation on the subject to the Democracy Alliance in 2012. What was ironic wasn’t just that he was a plutocrat, but that, while labour leaders were promoting a $10 minimum wage, Hanaeur came in $5 higher. Soon enough striking fast-food workers across the country rallied to his call. When he centered his efforts shortly afterwards in Sea Tac, Washington, that community became the country’s first $15 an hour minimum wage community. Soon enough Seattle followed, as did Los Angeles and San Francisco. Now the concept is under serious consideration in many states and cities across America.

We have all heard the arguments from the other side, about how raising minimum wage will put downward pressure on business and result in increasing job loss, but Hanaeur counters that it will lead to more jobs for the simple reason that workers will have more money and create demand for more products and services. He calls it “a positive feedback loop of prosperity.” Some supporting economists call it “middle-out economics.”

This odd notion that if poor people start doing better it’s bad for the economy is increasingly wearing thin, and the way that the next generation is taking to the message of Bernie Sanders on this point is likely a sign that the time for change in financial policy is now possible. “Trickle down” is slowly yielding to “middle-out.”

The fact that Hanaeur’s efforts are building increasing support from capitalists and economists means that the old divide between labour and business is slowly dissolving, leaving the field open for a new kind of economic policy based on the engine of average people with a bit of capital to spend. In a political season like no other that America has witnessed, “middle-out” just might stand a chance.

Two-Fold Shame

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IT CAUGHT A LARGE NUMBER OF AMERICANS off-guard, but there it was, on record, and an abrupt turnaround from a few years earlier.

Although Mitt Romney dropped out of the race to be the Republican presidential nominee last week, he had nevertheless raised eyebrows when claiming that his interest in entering the contest was based on a deep desire to address poverty and income inequality. A subject that barely reached the surface in his last presidential run against Obama, the plight of the marginalized was now front and centre. Moreover, he announced his concern for another group as well.

“It’s a tragedy, a human tragedy, that the middle class in this country by and large doesn’t believe that the future will be better than the past. We haven’t seen rising incomes over decades. The rich have gotten richer, income equality has gotten worse and there are more people in poverty than ever before under this president.”

And there it is – “this president.” This wasn’t really about poverty, but about using a popular belief – poverty and the stagnation of the middle class – in order to leverage some political advantage over the Democrats – the Democrats have used similar tactics. It has become a convenient Republican ploy to gain back the White House. Their favourite candidate of the moment, Jeb Bush (George W.’s brother), has recently concluded that, “while the last eight years have been pretty good ones for top-earners, they’ve been a lost decade for the rest of America.” Add to the list of those leading Republicans making such pronouncements Rick Santorum and Rand Paul and it becomes clear that the party will attempt to steal a page from the Democratic messaging and seek to become champions for the poor and middle class.

It must be, in part, because so much has changed since the last campaign. It has now become clear that the majority of Americans have endorsed the income inequality argument and Republicans will seek to tap into it. But what about just three years ago when Romney declared, “I’m not concerned about the very poor. We have a safety net there?” Or when he flipped that statement and said, “I am not concerned about the very rich, they’re doing just fine?”

There are many other such declarations from not all that long ago, but it was Romney’s support of the Paul Ryan budget that would bring about draconian cuts to the poor that truly revealed his hand.

Perhaps Mitt Romney has gone through some kind of genuine conversion, but the coincidence of this occurring just as the Republican nominee race is heating up is too important to ignore. It could be that we have arrived at a point in time whereby poverty is being acknowledged by political parties at the same time as they refuse to land on solid policies that would eradicate it.

This is especially true when talking about the eroding middle class. The three main political parties in Canada have now latched on to it as a growing theme for the upcoming national election, but the proof of the seriousness of those beliefs will only emerge if the political establishments are prepared to confront the runaway wealth of Canada’s elite and if they are dedicated to working with the larger companies to invest more in Canadians communities and the workers themselves.

The will to tackle poverty and economic inequality has been a struggle for every generation to undertake. Will we do it this time? It is when riches themselves come under suspicion that the opportunity exists to work back to some kind of balance. It is as Confucius noted, “In a country well-governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of.”  We are now confronting both at the same time.

 

 

 

 

 

No Need For Persuasion

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JUST WHEN YOU THINK NATIONAL POLITICS appears firmly cemented into the realm of hyper-partisan and unimaginative policies comes along a candidate who causes us to think different. Sometimes the effect of such a presence is profound, as I discovered over the holidays reading U. S. Senator Elizabeth Warren’s gritty, A Fighting Chance. The New York Times describes the book as, “a potent mix of memoir and policy,” as indeed it is. Her presence in the political dimension is energizing enough to spend more than one post on her influence. She’s rapidly becoming the most captivating political personality in years.

Yes, Warren is a Democrat, and, yes, she comes from the progressive spectrum. But she is best described as a populist, as seen in the massive movement of middle-class citizens who have found in her practical reasoning and delightful courage a cause for hope. Tired of elitist politics, millions have come to see her as the best choice for president over people like Hillary Clinton or any Republican candidate. And because of that very reality she has become dangerous to the establishment on the Left and Right of the political spectrum.

Put simply, she has successfully launched a new wave involving millions of citizens who are buying into an agenda for political and economic change. It’s important to note that Warren didn’t woo people into such a decision; they were already there, energized and increasingly angry. It’s foolish to think that these people needed convincing and were mere kindling for Warren’s fiery rhetoric.  They lived through a number of decades which saw billions of dollars poured into politics and trillions into a globalized financial system with little to show for it in their own personal progress. So convincing them wasn’t necessary. They are savvy enough to know when the game is fixed, frustrated enough to feel they can’t prevail over an unjust economic order, but just furious enough to stay in the arena and fight back. And Elizabeth Warren has assisted them in understanding their potential for change. Whereas Obama’s early calls for change had been more of a social phenomenon, Warren’s clearly comes from a desire for equity and economic justice.

But the reality is that she has won over so many people specifically because she credits the average person with being smart enough to know something is wrong and human enough to demand change. In drawing a direct link between economic justice and financial reform she has located the sweet spot of middle-class angst.

To give us just a fleeting sense of her outlook, here’s a brief portion of her recent speech to the New Populism Conference last May:

“From tax policy to retirement security, the voices of hard-working groups get drowned out by powerful industries and well-financed front groups. The game is rigged by powerful interests – against the rest of us. If Wall Street can borrow money at 0.75% interest, why can’t we? Our college kids are getting crushed by student loan debt. We need to rebuild our roads and bridges and upgrade our power grids. We need more investment in research. But instead of building a future, this country is bleeding billions of dollars in tax loopholes and subsidies that go to the wealthy and profitable corporations. For big corporations, trade agreement time is like Christmas morning. They can get special gifts they could never pass through Congress out in the public. Because it’s a trade deal, the negotiations are secret and the big corporations can do their work behind closed doors. The game is rigged. The rich and the powerful have lobbyists, and lawyers, and plenty of friends in Congress. Everyone else, not so much. Now we can whine about it. We can whimper. Or we can fight back. Me? I’m fighting back.”

Words like these have been uttered before, but not usually by someone so high up the political ladder and who has effectively galvanized millions of people behind the message. Yes, she’s dangerous – not merely because of her rhetoric, but because of the movement she is assisting to create. Just in time for national elections looming north and south of the 49th parallel has come a voice that counts more on people like us than her own influence. It’s a start. But it’s not the finish.  It might by the early days of the new year, but the old fight continues.

Magpie Economics

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LEADING ECONOMICS WRITER FOR THE Guardian newspaper, Aditya Chakrabortty, likes to talk about “magpie economics” – the kind of financial and economic discipline that takes into account, history, politics, philosophy, and social good.  His problem has become that he has run out of examples.  One of his sober conclusions puts it this way:

How do elites remain in charge? If the tale of the economists is any guide, by clearing out the opposition and then blocking their ears to reality. The result is the one we’re all paying for.”

And indeed we are paying.  There is justification in placing blame on the corporate giants, the meddling CEOs, unregulated globalization, and the financial barons, but at some point we have to come to terms with the reality that if you desire to take as many riches as you can out of the world without giving any of it back, then democracy is just the ticket for you. It many fashions, modern democracy has paved the way for a rigorous inequality.

There have always been the economic elites in the past, but linked to their wealth was the concept of seeing themselves as part of the larger society.  But now many of our elite class no longer show interest in national communities anymore but are, in fact, far more interested in interacting with the globally “chosen” who move themselves around the globe almost as easily as they wire their money.

It is helpful to acknowledge that Canada and its varied communities owe huge portions of the their success to generations of wealthy individuals and families who nevertheless felt the obligation to support the development of the middle-class as a way of enriching and mobilizing the entire country.  Nowadays they’re hard to spot, almost as if to them Canada has become a way station for accumulating wealth and not a real physical place where people live and hope to work.  As the famous Canadian sage, George Grant, observed as early as the 1960s:  “They did not care about Canada.  No small country can depend for its existence on the loyalty of its capitalists.”  We are now getting a heavy dose of just exactly what he meant.  We now know the rest of the story.

And yet something new is brewing and magpie economics just might be waging a comeback.  There is an emerging awareness, even among Canadian business leaders, that elites have failed to live up to their obligations in even the most basic responsibilities of citizens.

Part of it is the escalating criticism leveled against capitalism itself worldwide.  It is increasingly viewed as an ATM for the fabulously rich as opposed to the great generator of wealth for the rest.

But there is more.  I recently had lunch with a well-known member of the Canadian business elite who feels that the capitalist advantage has been slanted towards the elite for long enough that it’s becoming clear that the damage being created to the nation as a whole is beginning to offset any real financial gains.  He’s right, and the public is increasingly catching on to it.  The system of modern capitalism itself is being increasingly blamed as a major cause for our environmental, social, and, yes, economic problems.  London, Ontario, the city in which I live, has suffered more than its share of economic fallout, enough that it consistently targets unfeeling and irresponsible companies as the primary culprit.  But we are not alone – across the country the legitimacy of the modern business model has reached its lowest point since the Great Depression of the 1930s.

Yet, despite such low esteem, the political class continues to tinker around the edges with economic reform in a fashion that sullies politicians and capitalists alike.  There is no future in this accommodation.  While political designs seek to cater to the ever-declining voting masses, companies continue to view value creation only as it relates to their shareholders and executives and which takes little account of customers or the very communities in which they operate.

And the tale only gets worse.  In a very real way, the present economic model functions upon natural resource waste, environmental degradation, community distress, and the expanding divide between the economic classes.  Another byproduct of the economy’s increasing inability to stave off our most pressing problems has been the citizen conclusion that none of the elites – financial, media, political – has the wherewithal to tackle our collective problems head-on.

Yet it might just be that important streams of capitalism itself are now lending themselves to more proactive responses designed to reverse its present decline.  If wealth is only for the wealthy, then the great link between democracy (value) and capitalism (wealth) has been irrevocably severed.

Some financial and corporate leaders are making moves are determined to keep that from happening and in the next few posts we’ll look at how they’re going about it – and not a moment too soon.  As author Edward Abbey put it no long ago: “Growth for the sake of growth is the ideology of the cancer cell.”

Who Says the Rich Create the Wealth?

Like many of you, I really get into TED talks – the series of brief videos that run the gamut of everything we find interesting in this world.  And more and more of these talks have been centering on the idea of income inequality and its effects on nations around the world.  It’s the old argument about the 1% and the rest, but with an increasing number of economists and researchers weighing in on how it destroys our capacity to grow and respond as citizens, companies, and nations.

Venture capitalist and millionaire entrepreneur, Nick Hanauer, wrote an op-ed for Bloomberg News that went hyper-viral.  It talked about how it’s not the wealthy that create jobs and prosperity but the delicate link between companies and their customers.  In other words, wealth is created through the symbiotic relationship between both these groups.  It created a sensation, and so the organizers of TED Talks asked him to make a presentation at one of their conferences.  He agreed and you can see the result by playing the video above. It’s only five minutes long but its impact has left a longer trail.

Hanauer’s presentation gained immediate popularity, bringing out the instinct, which millions share, that something is not right in our economic models.  But the video also brought on an increasing amount of detractors – primarily those of the 1% who didn’t like this exposure by one of their own.  The result?  TED Talks pulled the video.  Fortunately it’s still on YouTube.

Why was the video pulled?  Good question.  The official explanation was that it was too partisan, but some feel the elite put enough pressure on the organizers to get the video yanked.  Whatever the reason, it’s compelling stuff and belongs as part of the growing debate on income inequality and its steadily eroding effects on modern economies.  Hanauer’s belief that it’s actually the middle-class that creates wealth and jobs completely opposes the current paradigm, which maintains that it is the top-tier of wealth owners who make all the difference.  Regardless of whether you fully agree or not, it’s compelling stuff, well worth your attention and, hopefully, engagement.  It’s time to start fighting back, as only committed citizens in a free and democratic society can do.

 

 

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