You Keep Using That Word, I Do Not Think It Means What You Think It Means

(I know DD said he was writing about this, but I definitely wanted to address this bit of business.)

Populism. That’s the word and that’s the word in the title of a piece that appeared in The Atlantic this week authored by Governor Jack Markell, called, Americans Need Jobs, Not Populism. In fairness, he may not have provided the title to this thing. But it is less an argument against populism than it is an argument for working class and middle class people to sit down and shut up about the very real squeeze we find ourselves in. It is an argument for his own political philosophy — privileging businesses over the people who are the consumers for these businesses — a philosophy that certainly wasn’t on display (IMO) when he first campaigned for Governor. In this, the Governor wants you to know that it is globalization that is the root of today’s economic issues. Which isn’t quite right.

Globalization is a by-product of a re-orientation of American economic policy that moved our economy from one that thrived from building stuff to one that is supposed to thrive by buying stuff. Approximately 70% of the current American economy depends upon Americans buying the junk of globalization. Moving from a manufacturing to a consumer economy should mean that governments are in the business of preserving working class and middle class spending power. Instead, it produces political leadership who finds that they need to partner with business owners and shareholders who provide little benefit to the taxpayers who are forced into supporting them. Many of the new jobs created are not ones that are family-sustaining. So that taxpayers are not only struggling to support their own families, but also have to contribute to supporting the families of working folks who don’t make enough to support their families. And they don’t make enough because that is the business model of these firms — low wages and let taxpayers make up the difference.

There is an alternate model for globalization and that is Germany. They still have a fairly robust manufacturing sector, but they focus on high-end, value-added manufacturing. The kind of creation that can still command a good working wage and can still produce a world-wide competitive product. There’s been some effort by the Obama Administration to increase manufacturing here, with some limited success, I think. There is no way that anyone will ever make a plastic fork here again, but there is little reason why we can’t produce high-end optics, specialty chemicals or – hey!- a world class transportation or energy system.

As for the finance sector, it’s too convenient to blame bankers and Wall Street for the fifteen years of stalled middle-class wages, sub-2 percent average U.S. GDP growth, and outsourcing of millions of middle-class jobs.

Actually, it’s not too convenient. Wall Street is very happy when labor is cut back and paid less. Because that means there is more money for shareholders and owners, right? They’ve been specifically undermining the working contract — ensuring that those who produce the best productivity in the world share in very little of the financial benefit of that productivity.

What would this economy look like if working class and middle class wages had increased along with the astonishing increases in productivity they’ve produced? We wouldn’t be having *this* conversation, that’s for certain. Because this is a conversation about scarce resources and Governor Markell wants you to know that the people with the most of these resources can’t be expected to participate in the economy in the way the rest of us do.

The bottom line is that private enterprise creates the primary condition for reducing poverty and want: economic growth. Governments don’t create jobs; however, government has an ability and responsibility to create a nurturing environment where business leaders and entrepreneurs want to locate and expand. What that means is that government has an active role in creating an economic environment that creates middle class success and prosperity.

Private enterprise powers economic growth when they are selling something that people want to buy. Governments are appropriately partnered with private industry when governments are in the business of buying new infrastructure, repairing old infrastructure and upgrading the services they offer to taxpayers. If Governments don’t create jobs, I wonder why the Governor is in no rush to privatize the police forces or even snow removal. Of course Governments create jobs and Governments should make sure that the people who do the vital work of keeping the state running are paid fairly (not having to get food stamps and housing support) and that their pension plans are funded. Saying that Governments don’t create jobs is a way of stating the obvious — that governments are never going a main engine of economic growth, but it also obviously ignores a government’s real role in helping to boost local economies.

But it is robust markets that power economic growth — working class and middle class people feeding their families, buying clothes and sports equipment for their kids, buying new cars, spending on medical care and vacations that power the economy. And the biggest risks in the economy are located in the homes of the people who spend their money. Not with the shareholders who are being relieved of their risks by governments.

And people get that. It is also why Elizabeth Warren’s messages are so resonant. You cannot face people who have seen their own taxes and fees go up, the price of goods go up, medical costs have soared and who are financially squeezed in many other ways while their wages largely stagnate and tell them that the best bet for growth is for them to backstop business risks. We already know that the largest of them get enough tax breaks to make it necessary to increase taxation to middle class taxpayers just so government budgets can balance. Governors like Jack Markell think that they can’t ask businesses and wealthy people to pay their fair share, so all Delaware taxpayers live with diminished services (how many potholes have you driven over lately?). Government support for “job creation” comes with little transparency — you never know how many jobs get created nor (more importantly) do you know how many of these jobs don’t need taxpayer support for these employees to be able to barely get by.

So how long are working class and middle class people supposed to ignore the fact that they are shouldering more and more of the burden because businesses can collude with governments to make sure that owners and shareholders are always making money? We’re spending money on getting jobs here because there isn’t much job growth anywhere — we have to steal them from other places. We’re not even in the business of the kind of wholesale improvement of the education system that would provide its own incentive for families to move here. The Port of Wilmington is a real asset that doesn’t seem to have any interest from the state in leveraging for more solid blue collar jobs. The state might be recovering from the crash, but you can’t come to Wilmington and make that recovery claim. The system *is* rigged, Governor. No one solves a structural problem like this without being able to name and define the problem. And this extended justification of your governing style points out that not one bit of the squeeze that most Delawareans find themselves living with has been addressed over the past 6 years. Populism isn’t your or the country’s problem, Governor. The problem is a lack of leadership in supporting the people that businesses need the most — working and middle class people with money to spend.