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Reflections on the US election results

Summary:
From Peter Radford Let the dust settle. Absorb the information embedded in the results. Take a deep breath and avoid partisan primping. First: this election was insanely expensive.  Candidates seeking election to Federal office spent an estimated .9 billion.  Their state level counterparts spent a further .8 billion.   Second:  all that expenditure had little effect.  Sure, the House changed hands, but by the slimmest of margins, and for all the pre-election talk of various color waves the reality is that only 40 House seats were truly competitive — if by competitive we mean that the victory margin was  5% or less.  That means 90% of the election was decided before the starting gun. Third: elections have thus become a major industry that produces little change.  America is,

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from Peter Radford

Let the dust settle.

Absorb the information embedded in the results.

Take a deep breath and avoid partisan primping.

First: this election was insanely expensive.  Candidates seeking election to Federal office spent an estimated $8.9 billion.  Their state level counterparts spent a further $7.8 billion.  

Second:  all that expenditure had little effect.  Sure, the House changed hands, but by the slimmest of margins, and for all the pre-election talk of various color waves the reality is that only 40 House seats were truly competitive — if by competitive we mean that the victory margin was  5% or less.  That means 90% of the election was decided before the starting gun.

Third: elections have thus become a major industry that produces little change.  America is, as one or two observers are now saying, is ossified.  It’s ability to produce major shifts in policy is, for the present, non-existent.  Trench warfare dominates a more mobile and responsive version of politics. 

Fourth: and expanding our lens, the working class is now solidly Republican — over 50% of voters making less than $50,000 voted GOP.  How come?  Because the Democrats are a party of the educated class and are more deeply concerned with non-economic issues.  The Democrats have accepted the neoliberal rules and are now simply focused on siloed social and cultural issues.  Voters notice.  Voters vote.  The reason that elections are so close on after another is that either party has broad appeal.  

Fifth: let’s dig more deeply into the moribund nature of the Democrats.  They have held the White House for twenty of the past thirty-two years.  But the minimum wage, something that has direct day-to-day impact on what was once a Democratic voter base, is the same as it was years ago.  The minimum wage is a living, breathing,  emblem of how far away from its working class supporters the Democrats have moved.  The abandonment of workers implied in the willingness of Democrats to do the bidding of corporate America — who else benefits from stagnant wages? — is a major cause of both the rise of Trump and the inability of the Democrats to have breakthrough election results.

As the chart shows politicians of both parties have deliberately set out to impoverish low-wage workers since the Reagan revolution undermines the post-war social contract.  It is little wonder that low-wage workers have begun to abandon the Democrats.  Trump, for all his bombastic lunacy, at least recognized they exist.  And it’s no point in arguing that he then abandoned them.  He simply joins a long line that has more Democrats than Republicans in it.

Reflections on the US election results
Source: Economic Policy Institute

Sixth: adding insult to injury is the recent intervention by the White House in the railroad work and wage dispute.  Biden promotes himself as the most pro-labor president in decades.  Yet he is enforcing a settlement that fails, clearly, to accommodate worker demands.  Railroad workers will get precisely one — yes one — day per year of paid sick leave.  All they wanted was seven.  This is an industry that has cut its workforce by 30% in recent years, increasing profits by extraordinary amounts, and which imposes harsh work rules on its employees.  If ever there was a time to take a firm stand on behalf of workers this was it.  But no.  Biden gave in.  He gave in to an industry that routinely generates sufficient profits to splurge share buybacks on its shareholders.  Who’s side are the Democrats on?  Capital or labor?

Seventh: We all know the answer to that question.  It’s just uncomfortable admitting it.  Go back to the chart above.  Look at the two top lines.  They show what the minimum wage would have been under different circumstances.  What is worth pondering is the separation of those two top lines.  Had the minimum wage kept up with typical wages it would have been $11.62, not $7.25, per hour.  But think further.  Typical wages themselves had fallen way below the productivity related wage.  Had wages kept pace with productivity improvements — as the economics textbooks say they do — they would have been much higher, and the minimum wage would have been $19.33 per hour.  It takes no mathematical skill to realize that the difference b between $7.25 and $19.33 would have made a material difference in the lives of millions of workers.  Did Clinton realize this?  Did Obama?  Does Biden?  How Democrats can look at this chart and not feel embarrassed is hard to comprehend.  Again I ask: who benefits?  Capital or labor?  Where do Democrats stand?  Don’t ask. 

Eighth:  Of course the wage increases needed to keep wages in line with productivity improvements would have implied pressure on inflation.  One of the causes of the low inflation of the past few decades is not the cleverness of the Federal Reserve Board, but the deflationary impact of wage suppression.  And now what is the remedy being employed by the Fed as it attacks inflation?  What is the remedy being advocated by the  college educated legions of financial observers and analysts — many of whom have served dutifully in Democratic administrations?  Raise interest rates in order to induce unemployment and thus “relieve” pressure on wages.  In other words the policy is to impoverish workers by making some unemployed and warning the rest not to seek pay increases.  Who benefits?  Asset holders and corporate shareholders.  Workers are being targeted and are being asked to “take one for the team”.  Alternative policies to control inflation such as price controls are not even being discussed.  To discuss such a policy is heresy.  Even in the erstwhile party of the working class.  Why can’t shareholders “take open for the team”?  Don’t ask.  

So, let the dust settle.  If you’re Democrat you’re probably whooping it up.  You’re deep into explanations of the results that include protection of democracy, abortion, and the rejection of overt racism.  You’re probably not asking why the working class isn’t on your side anymore.  You might even be dismissing the worker voters who voted Republican as somehow “low bandwidth” or perhaps ill-informed.  

But that’s simple avoidance of the truth.  The Democrats, for all their language, are not the party of the working class.  For whatever reason, and surely money is prominent amongst the answers, the Democrats do not represent their old base.   And yet they rely on the unions for much of their electoral legwork.  At some point those unions have to ask why?  Why support a party that doesn’t reciprocate?

Building a broad coalition in order to win decisive electoral victories needs more work than simply making Harvard and Yale educated lawyers, doctors, accountants, or business leaders agree.  It needs more than hand-wringing over cultural inequities and ongoing biases.  It needs the rebuilding of that old alliance with workers.  You know, that two-thirds of the population you forgot about.  

So let the dust settle.  

But also absorb the information embedded in the result. 

Peter Radford
Peter Radford is publisher of The Radford Free Press, worked as an analyst for banks over fifteen years and has degrees from the London School of Economics and Harvard Business School.

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