Elizabeth Drew’s essay in the current New York Review of Books expounds upon the consequences of America’s ever-shifting electorate. In 2012, roughly 130 million voters turned out, around 58 percent of those eligible. Two years earlier, in 2010, without the motivation of a presidential election to guide them, the electorate was barely 90 million; only 41 percent of eligible voters turned out. Two electorates, two years apart, one 30 percent smaller — and, of course, qualitatively different — than the other.
Drew’s essay deals with the ongoing effects of 2010’s smaller, whiter, older electorate. In a word, it gave the GOP power. But power of a certain kind, constrained by the limits of the House of Representatives. The power, then, was not to create but to obfuscate, deny, prevent. And these things it did, and is doing. In but one example, the House has voted to repeal the Affordable Care Act a whopping forty-one times. Even today, as I write this, GOP minority senators Ted Cruz, Mike Lee, and Marco Rubio threaten a government shutdown, or maybe even a sovereign debt default, unless an expansion of health insurance gets immediately repealed. Perhaps the forty-second attempt will be the charm.
But there is a bigger issue at stake here than partisan politics and Washington gamesmanship. Why is the GOP agenda dead-set against domestic-institution building? The historical foundations of America’s post-WWII middle-class consumer economy are advancements in health, education, science, welfare, infrastructure. In short, these are the institutions that have made US consumers prosper for decades now. The GOP is allegedly the party of growth, entrepreneurialism, and capitalism. But growth, entrepreneurialism, and capitalism need re-empowered consumers. Instead, the GOP stands against anything that uses institutions to redistribute economic power to consumers. The stance against the new healthcare law is one example; they are also anti-stimulus, anti-infrastructure, anti-jobs bill — basically, anti-domestic investment of any sort.
So what gives? Why this particular domestic agenda, and why now?
I will propose two explanations, focusing on the second. First, the GOP is temporarily standing flat against a wall due to the success of the Democratic Party, who deftly moved rightward during Clinton and haven’t looked back ever since. What is the GOP to do? The Democrats now own the middle. The GOP playbook has been to foment intensity on the right-wing, anti-government edge, which the party has successfully done. In this explanation, only if the Democrats move back leftward — by, say, nominating Elizabeth Warren? — will the GOP have the space to make inroads back towards the moderate, remotely pro-government middle.
A second possible explanation is the GOP is following the interests of its main clients — global economic corporations and investors — who are no longer interested in, or dependent upon, the American middle class, much less investing in the institutions designed to let the middle class prosper. At this time I want to discuss the second, more pessimistic case.
Small business owners at present face a daunting situation. First and foremost, due to economic degradation, there are fewer well-heeled consumers to go around. For domestic capitalist actors and entrepreneurs, the employment rate matters significantly. Employment means income, for both the workers and the businesses at which employed consumers spend their income. At the moment, the male employment rate — 64.2 percent — is basically the lowest on record. The percentage of the entire US population currently working sits at 58.6 percent, a number so low we have not seen it since before women entered the workforce in large numbers. The number fifty-eight is important in another way, too: that figure, reports the Financial Times, is the “share of US income that goes to workers as wages rather than to investors as profits and interest” (source). This is the lowest level on record, far below the post-war average of 63 percent — that’s $740 billion this year alone, enough for an extra $5,000 for every worker. People who could be consumers are not working, and those who are working, in the aggregate, earn less. It is no surprise, then, but still shocking, that the median household income today is less than it was in 1996, adjusted for inflation. Yes, that’s right: seventeen years of stagnancy for the US middle class.
A big part of the problem could be the global nature of advanced capitalism. This past March, a Bloomberg report found that U.S. companies hold more than $1.6 trillion outside the country as untaxed wealth. “You’re seeing more and more business go on overseas, because that’s where an increasing amount of the global purchasing power is,” said Matt Miller, described in the report as the director of public policy at the Business Roundtable, an association of chief executives at large companies that backs lower taxes on overseas profits (source).
As a result, it might be time to recognize that when the Paul Ryans of the Republican party call themselves pro-business, they are not wrong. But the businesses he considers his main clients are global business operators, who increasingly depend on economies and consumers in developing countries, and do not depend on consumers in the US. Paul Ryan’s clients, a global economic elite, have less and less need to invest in an American consumer class, who are temporarily tapped out anyway. Billions of untapped consumers abound in China, India, Brazil, and elsewhere.
Instead, the world we live in today is one in which global economic actors can be profitable without American consumers. Americans who are anchored to the domestic economy — like small businesses and local entrepreneurs — do not share this privilege. For example, one recent study found that for the six quarters following the official end of the recession (which was June 2009, half a year into the Obama administration) “corporate profits captured 88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1% of the growth in real national income” (source). While national income rose by $528 billion, $464 billion went to corporate profits and only $7 billion went to worker wages. Setting aside the recessionary effects, recovery itself was thus bent sharply toward global economic actors and away from domestic consumers.
The unanswered political question is why the GOP advocates economic policies that abandon US domestic capitalism. And going forward, will they continue to get away with it?