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Monday, April 18, 2016

A Bleak Outlook on an Unequal America

April 18, 2016 6:30 am

Review — A bleak outlook on an unequal America

Review by Demetri Sevastopulo


The US economy has barely recovered from the financial crisis yet business titans are reaping huge pay packages as blue-collar workers struggle with stagnant wages. Deals such as the North American Free Trade Agreement have sent jobs overseas and chief executives argue that letting wages rise would damage the economy further.

This is not Donald Trump, the frontrunner for the Republican presidential nomination, accusing Washington and corporate America of colluding to create an environment where the US “does not win any more”. Nor is it Bernie Sanders telling New York millennials ahead of Tuesday’s Democratic primary that politicians have failed miserably to deal with the defining problem of the era: inequality.

The charges come from Thomas Frank, a “liberal” author whose book, Listen, Liberal, argues that Barack Obama came to office in 2009 promising “hope” but ended up following the path of Republican presidents and, more crucially, Bill Clinton by sacrificing the interests of blue-collar workers for those of educated elites.

Citing a study based on data from economists Thomas Piketty and Emmanuel Saez, Frank points out that from the middle of the Great Depression until 1980, ordinary Americans took home 70 per cent of the growth in US income. But between 1997 and recent years, that figure has plummeted to zero. To make the point more dramatically, he notes that six members of the family that controls Walmart have as much wealth as 40 per cent of the US population.

Frank castigates Mr Clinton, Mr Obama and the new generation of elites-focused Democrats for abandoning their base. His conclusion is the same message that has resonated with US voters, propelling Mr Trump’s rise and forcing Hillary Clinton into a battle with Mr Sanders, a self-described grumpy old man who is attracting throngs of young people to his rallies.

Starting with Mr Clinton, Frank writes, Democrats have tried to remodel the party so that it appears less anti-business. This has sparked a shift from caring about workers to putting a premium on the kind of education that creates a professional class able to spur innovation and ensure the US remains competitive.

While he has no problem with education, Frank blames Mr Clinton and Mr Obama for surrounding themselves with Ivy Leaguers with orthodox views, less concerned by inequality than by social issues that are not a priority for workers busy trying to pay the rent or fund their kids through university.

In an earlier book, What’s the Matter with Kansas, Frank argued that Republicans were adept at convincing voters to abandon their economic interests for social issues, such as abortion and gay marriage. Some critics have rebutted his argument, saying it was not supported by data. But the 2016 race suggests that many segments of the Republican base supporting Mr Trump are voting on economic issues, such as jobs and trade, rather than cultural ones.

In Listen, Liberal Frank slams Mr Clinton for passing Nafta; for pushing through a tough crime law in 1994 that resulted in rising incarceration rates, particularly for African-American men, and which Mrs Clinton now opposes; and for reforming welfare in a way that he says put a bigger burden on the poor. Mr Obama — displaying his deference to Wall Street’s highly educated and, in Frank’s view, overpaid elites — has failed to use the crisis to push for bold changes.

Applauding the president for some of his signature achievements, such as the Dodd-Frank financial reforms and the healthcare reforms, he argues that each was nevertheless a complicated effort to help ordinary people while guaranteeing protection for the banks and pharmaceutical companies that swamp Washington with lobbyists.

Many of Frank’s arguments are compelling. But one flaw is that he provides little data to support his thesis. Another is that he is too quick to dismiss politicians’ tendency to blame globalisation for limiting their ability to change the rules of the game. There is little discussion of the fact that the world is changing in ways that America cannot always control.

The conclusion is stark. Unless Democrats — and Republicans — tackle inequality, Americans will face a bleak future. “They will know to laugh at the old middle-class promise — retirement, pension, a better life than the previous generation had — because it is propaganda so transparent it sounds like something the Soviet Union used to put out.”

The writer is the FT’s Washington bureau chief

Listen, Liberal: Or, What Ever Happened to the Party of the People? by Thomas Frank, Metropolitan ($27)

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