Income inequality, wage stagnation and a new Democratic Party

With the entry of former Maryland Gov. Martin O’Malley and shortly, that of former Rhode Island Gov. Lincoln Chafee into the Democratic Party presidential fray, it is essentially guaranteed that the election pitch will center around income inequality, campaign finance and the overwhelming influence that moneyed interests have in American politics. The Republicans will play catch-up as they sort out the tangle of candidates, but the outcome will be business as usual unless the progressive agenda speaks coherently to a cautious American consumer.

{mosads}While foreign policy and perpetual war, business-friendly trade deals, immigration, individual liberties, domestic spying, metadata collection and social wedge issues may have a place, this is one election where economics is central. There are several reasons: American workers have not had an increase in wages (adjusted for inflation) for 40 years; the consequences from the Citizens United decision have now made it quite clear that the super-rich believe they can buy candidates and their propaganda henchman can scam voters into believing in them and that has annoyed much of the public; investigative journalism has widened out through social networking sufficiently to bypass corporate owned “institutional” or mainstream media so as to focus on core issues and not the sound bites that now count as news coverage; and consumers have shown clear signs that they can and will discipline themselves through their purchasing habits, a clear indication that they are paying attention to the economics of insecurity.

The issue of wage stagnation has not yet been characterized as much more than income inequality. The widening gap between the wealthy elites and the average worker has become and will be a repeated theme in the election because Sen. Bernie Sanders (I-Vt.), O’Malley, Chafee and Sen. Elizabeth Warren (D-Mass.) have enough of the center stage to keep the theme reverberating throughout the campaign. Their persistence has already forced Hillary Clinton over to the left on these issues. While her conviction may simply be convenient and temporary, much like her Republican counterparts, the proof of traction will not be known unless and until a coterie of Democratic legislators are elected to support needed legislation.

Since most congressional elections favor the business-friendly incumbents, Democrats have to find a way to reach beyond their core constituents to speak to those affected in terms that resonate. The economic issues articulated by the Democratic candidates have the potential for doing so.

The key will be for Democratic campaigners to address the anxiety and insecurity that 80 percent of the electorate lives by, using words that effectively communicate the cause of those feelings. You will know if they are doing it if you hear them roll out the fact that less than 5 percent of productivity gains in business have been passed on to workers as wages increases for the past 35 years because of employer and shareholder greed; that job insecurity is specifically related to business-friendly, free-market, “trickle down,” right-to-work legislation that has unhinged substantially all the benefits and worker protection amassed in the post-World War II period; that votes are “bought” by the over 50,000 business lobbyists in Washington; that it was a Democratic president who permitted interest rates to become unhinged and rise to the level of usury; that Republicans and Democratic legislators have diminished support for low-cost higher education; or that both Democrats, but mostly Republicans, have worked to dilute, diminish or reduce the benefits of universal healthcare and Social Security.

Democratic campaigners have made the case for the differences in income but have not yet generated a connection to the causes or cures for mainstream America. They have not started to demand loyalty oaths from congressional candidates who run on promises and vote on convenience. They do not speak in the language or cadence that connects with all but a few.

The Americans they have to connect to speak in terms of “freedom,” “liberty,” “national security,” “government giveaways,” “crooked politicians,” “terrorist threats” and “traditional life and values.” As Joe Bageant suggests in his book, Deer Hunting With Jesus, Republican strategists have understood that there are “four cornerstones of the American political psyche … (1) emotion substituted for thought, (2) fear, (3) ignorance, and (4) propaganda.” As for the Democrats, his contention is that they don’t “have any message at all.”

One thing that is said about Sanders is that he has the best chance of connecting with diehard Republicans because he has been consistent and trustworthy in pressing for the average worker and, as E.J. Dionne of The Washington Post says, “the sort of stuff he has in mind is potentially quite popular.” He speaks to the issue of worker welfare and he has the record to prove it. Since the overwhelming majority of Republicans fall into that category, it is reasonable to expect that should he or his counterparts resonate with all of the “average wage earners” in the electorate, there might actually be a political sea change.

But Sanders is dismissed as a socialist and therefore his phasing needs an overhaul. Examples, instead of speaking of “millionaires and billionaires controlling government,” he could be saying “You lose your freedom if you can’t support your family.” Or, “What kind of liberty is it when you work a full week but can’t afford to live?” “How is it a government giveaway if everyone benefits from the taxes they pay?” “You can’t feel safe in your job if corporations just bought your congressman’s vote.”

The “slow growth” recovery from the 2008 to 2009 recession has resulted in no wage growth for the average worker. The consumer has been very cautious in resuming spending patterns that would support higher growth levels. Even though consumers have been eating out more regularly, buying too many pick-up trucks and purchasing existing homes, the savings rate is over 5 percent, which is a significant increase from the negative numbers of pre-recession years. Consumers may not realize the sobering effect that their behavior has on policymakers, but it literally keeps them awake at night because their lives can’t quite return to the easy money of the past. If Democrats can target that caution, address the emotion of its causes and phrase their concern for all Americans, not just the elites, we might just have a whole new ballgame.

Russell is managing director of Cove Hill Advisory Services.