Amid the stresses of the dot-com bust and the Great Recession, it was only white Americans who turned increasingly to drugs, liquor and quietus.
.. Noting that religious practice has fallen faster recently among less-educated whites than among less-educated blacks and Hispanics, their paper argues that white social institutions, blue-collar as well as white-collar, have long reflected a “bourgeois moral logic” that binds employment, churchgoing, the nuclear family and upward mobility.
But in an era of stagnating wages, family breakdown, and social dislocation, this logic no longer seems to make as much sense.
.. The result is a mounting feeling of what the American Conservative’s Rod Dreher calls white “dispossession” — a sense of promises broken, a feeling that what you were supposed to have has been denied to you. (The Donald Trump phenomenon, Dreher notes, feeds off precisely this anxiety.)
Why the Rich Are So Much Richer
All this rent-seeking, Stiglitz argues, leaves certain industries, like finance and pharmaceuticals, and certain companies within those industries, with an outsized share of the rewards. And within those companies, the rewards tend to be concentrated as well, thanks to what Stiglitz calls “abuses of corporate governance that lead CEOs to take a disproportionate share of corporate profits” (another form of rent-seeking). In Stiglitz’s view of the economy, then, the people at the top are making so much because they’re in effect collecting a huge stack of rents.
.. This isn’t just bad in some abstract sense, Stiglitz suggests. It also hurts society and the economy. It erodes America’s “sense of identity, in which fair play, equality of opportunity, and a sense of community are so important.” It alienates people from the system. And it makes the rich, who are obviously politically influential, less likely to support government investment in public goods (like education and infrastructure) because those goods have little impact on their lives. (The one percent are, in fact, more likely than the general public to support cutting spending on things like schools and highways.)
.. More interestingly (and more contentiously), Stiglitz argues that inequality does serious damage to economic growth: the more unequal a country becomes, the slower it’s likely to grow. He argues that inequality hurts demand, because rich people consume less of their incomes. It leads to excessive debt, because people feel the need to borrow to make up for their stagnant incomes and keep up with the Joneses. And it promotes financial instability, as central banks try to make up for stagnant incomes by inflating bubbles, which eventually burst.
.. When we talk about the one percent, we’re talking about two groups of people above all: corporate executives and what are called “financial professionals” (these include people who work for banks and the like, but also money managers, financial advisers, and so on). These are the people that Piketty terms “supermanagers,” and he estimates that together they account for over half of the people in the one percent.
.. After all, companies with private owners—who have total control over how much to pay their executives—pay their CEOs absurd salaries, too.
.. So what’s really going on? Something much simpler: asset managers are just managing much more money than they used to, because there’s much more capital in the markets than there once was. As recently as 1990, hedge funds managed a total of $38.9 billion. Today, it’s closer to $3 trillion. Mutual funds in the US had $1.6 trillion in assets in 1992. Today, it’s more than $16 trillion. And that means that an asset manager today can get paid far better than an asset manager was twenty years ago, even without doing a better job.
.. More important, probably, has been the rise of ideological assumptions about the indispensability of CEOs, and changes in social norms that made it seem like executives should take whatever they could get.
The Republican Class War
A generation ago, Democrats lost five of six Presidential elections; in 1992, Bill Clinton, calling himself a New Democrat, ended the streak. Clinton didn’t repudiate the whole Democratic platform—government activism on behalf of ordinary Americans remained the Party’s core idea—but he adopted positions on issues like crime and welfare that were more closely aligned with the views of the majority, including some rank-and-file Democrats. The message, Wehner said, was as much symbolic as substantive: “ ‘We’re not a radical party; we’ve sanded off our rougher edges, and you can trust me.’ ”
.. The essays don’t upend Republican orthodoxy. They argue that government should intervene on behalf of poor and middle-income Americans, but in ways that apply market principles to public policy, taking power away from Washington and giving individuals more options. Some proposals are familiar: school choice, health-care savings accounts. Others are more daring—for example, having college education underwritten by private investors, then repaid over the next decade as a predetermined percentage of graduates’ earnings. A few ideas, such as a wage subsidy that would increase the pay of workers making less than forty thousand dollars a year, building on the Earned Income Tax Credit, could easily garner bipartisan support.
.. The reformocon project shows how extreme mainstream conservatism has become in its opposition to anything involving the state. The reformocons court right-wing censure simply by acknowledging that the middle class is under pressure, and that government has a role to play beyond cutting taxes.
.. To the reformocons’ dismay, Trump has commandeered their target audience and tainted their high-minded proposals.
.. More than anything, Trump supporters are defined by class: non-college-educated whites favor him at twice the rate of those with college degrees. Trump is attracting the very blue-collar Americans whom the reformocons were aiming to bind to the Republican Party.
.. Last year, a Gallup poll found that forty-five per cent of Republicans think that the rich should pay more in taxes. Another poll, by the Pew Research Center, showed that more Republicans favor increased spending on Social Security, Medicare, education, and infrastructure than favor cutting those programs. Although government activism is anathema to conservative donors and Grover Norquist, it’s fine with a lot of Republicans making less than fifty thousand dollars a year.
.. Trump presents himself as a capitalist boss who won’t let capitalism tear apart the (white) social fabric.
.. The outlook of the Republican grass roots, and of many Party leaders, is what Richard Hofstadter, writing toward the end of the McCarthy era, called “pseudo-conservative,” because “its exponents, although they believe themselves to be conservatives and usually employ the rhetoric of conservatism, show signs of a serious and restless dissatisfaction with American life, traditions, and institutions.”
.. [Kasich] offered no policy proposals to help the middle class, besides balancing the federal budget and deregulating business.
.. A tall, athletic-looking man asked Kasich, “Doesn’t cleaning the system out start with changing our campaign-finance system, starting with overturning Citizens United?” He was referring to the 2010 Supreme Court ruling permitting unlimited campaign spending by independent groups.
Kasich’s tone was dismissive. “So you change the campaign-finance laws,” he said. “How will it work? Probably not all that great. ’Cause what it gets down to is what’s in your heart.” He went on, “I got bigger fish to fry.” He mentioned the budget, entitlements, defense spending. “These are really big things. You got to have priorities.”
.. “My ideal candidate would be somebody who has a lot of Donald Trump’s views but is more polished,” he said. The best alternative, he felt, was Rubio. When I pointed out that Rubio was a Washington insider, Lynch sighed. “That’s the pickle I’m in, and a lot of people are in,” he said. “No matter who gets elected, it’s just going to be more of the same.
.. In other words, the way to think about inequality is by looking down, not up. It’s not the wealth amassed at the top but, rather, the lack of “skills, values, and habits” at the bottom that accounts for the widening income gap. Oddly, Wehner’s essay barely mentions the economic struggles of the middle class. A close look at the three middle quintiles of income, where Americans with an education, a job, and a spouse can be found treading water or sinking, would have forced him to reconsider the notion that a lack of “social capital”—as opposed to just capital—explains the entire problem.
.. What kind of “national community” built on “mutual obligation” is possible when Americans have so little shared experience?
.. It’s no accident that we’re in the era of Citizens United. Such rulings give ordinary Americans the strong suspicion that the game is rigged. Democratic institutions no longer feel legitimate when they continue to produce blatantly unfair outcomes; it’s one of those insights that only an élite could miss.
.. The reformocons like to quote Lincoln, but not this memorable sentence: “Republicans are for both the man and the dollar, but in case of conflict the man before the dollar.”
.. Trump is as popular in Ohio as anywhere else,” John C. Green, a political scientist at the University of Akron, told me in September, in his office. The Presidential campaign felt far away—Ohio’s primary isn’t until next March—but the state remains key to the general election. “Part of it is that Trump’s an emblem of success, and the other part of it is he taps people’s anger,” Green said. “It’s not the same anger as a few years ago, when it was ‘Where are the jobs?’ Now it’s ‘Where’s our share of the American dream?’ ” Green, who does polling research on Ohio and American politics, went on, “A lot of white working-class votes are up for grabs in this election.
.. According to Policy Matters Ohio, since 2013 Kasich’s policies, including a higher sales tax and cigarette tax, have raised average annual taxes on the state’s poorest fifth by seventeen dollars, given middle-income people a ninety-four-dollar cut, and returned seventeen thousand dollars to members of the one per cent. “We’ve engineered a tax shift to lower- and middle-income Ohioans,” Schiller said. “And we’ve reduced over-all tax revenue.”
.. As long as Republicans cling to the warped logic of trickle-down economics, their efforts to help middle-class Americans will be largely rhetorical.
.. Baum found Trump’s insulting manner refreshing, calling it “a mirror of the way they treat us.”
.. Levin’s description of American life sounds appealing, but it does not reflect the reality of the steelworkers’ lives. The “massive, distant system of material provision” is their company, which is far more top-down than any federal bureaucracy. Nothing happens face to face; immediately felt needs go ignored; families don’t matter. There is no “common life” except for the workers’ desperate effort to stick together as they look ahead to weeks or months without pay—or, perhaps, a future without a job. Global competition is making these workers disposable, and so they are turning for insight and inspiration to Sanders, or Piketty, or Trump.
The Mystery of the Vanishing Pay Raise
Peter Cappelli, a professor at the Wharton School of Business, noted, for instance, that many retailers give managers bonuses based on whether they keep their labor budgets below a designated ceiling. “They’re punished to the extent they go over those budgets,” Professor Cappelli said. “If you’re a local manager and you’re thinking, ‘Should we bump up wages,’ it could really hit your bonus. Companies have done this in order to increase the incentive to hang tough on budgets, and it works.”