Seamanship Quotation

“In political activity, then, men sail a boundless and bottomless sea; there is neither harbour for shelter nor floor for anchorage, neither starting-place nor appointed destination.”
— from Michael Oakeshott's
Political Education” (1951)

Wednesday, June 15, 2011

Has American capitalism abandoned the middle class?

Sometimes a factoid or two illuminates.

Chrystia Freeland, writer at large for Reuters, brought a few to bear on the seeming lethargy of the political system toward high unemployment and the seeming preoccupation of the voices of business for cutting deficits rather than pursuing domestic economic growth. Don’t they know they need the middle class?

In the new global economy, Freeland reports, big business may, in fact, be able to thrive without mass affluence in America: 

“Perhaps U.S. business is learning to get by just fine, thank you, without middle-class U.S. consumers. And while that may be good news for chief executives and shareholders, it could be the beginning of a new and socially wrenching political logic that leaves the great American middle behind.
Wall Street, which is paid for smarts, not sentiment, has this figured out. In a newspaper interview earlier this month, Robert C. Doll, chief equity strategist at BlackRock, the largest money manager in the world, pointed out that the fortunes of U.S. companies and the fortunes of the country as a whole were diverging: ‘The U.S. stock market and the U.S. economy are increasingly different animals.’”

The factoids: since the Great Recession, leading newspapers have published more than three times more stories on the federal budget than on unemployment; the Dow is up 85%; and, according to investment strategist Robert Doll, 70% of the future incremental earnings of S&P 500 companies will come from outside the United States.

Are economic policy and public attitudes being distorted by these hard men and their hard Wall Street facts? Is American national policy tied to the Fortune 500 and now being towed off shore? Old Tories and socialists have long worried about multinational capitalism and its cosmopolitan (rather than mainstream American) loyalties. Freeland adds fuel to their concerns. However, no one should wait for a change of heart in Manhattan or a radical turning away from big business to solve today’s dangerous economic malaise.

Neither capitalists nor busy city editors are very good at complex economic issues. Once the recession bottomed out and high unemployment became chronic, their eyes turned to the next big thing on the move—souring deficits and debt. It may be shameful and short-sighted, but news about broken families and high school dropouts can’t compete with warnings about state and national bankruptcy.

It wouldn’t hurt if Robert Doll temporized his macho vision of booming US multinationals partying off the shore of a stagnant American middle-class America. The notion that global capitalism will thrive, with or without a prosperous outward-looking America (upholding the rules of open trade and its currency, protecting sea lanes, and helping keep the peace) is both parasitical and naive.

In any event, there are lots of other reasons to be optimistic or pessimistic about the competence of American governing institutions. Business leaders can have some influence in bolstering sound thinking and warning people away from the extremes. However, historically these leaders have hardly been essential; some wise and very foolish things by Democrats and Republicans have been undertaken largely without their help.

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