Democrats Reap What They Sowed

[dropcap]A[/dropcap]s Democrats scramble to explain their rout in Tuesday’s mid-term elections their most likely course forward is to drop any pretense of opposition and join Republicans to pass the corrupt corporate-state policies that in some measure explain why they were just booted from office. President Obama has already engaged the Republican leadership to pass ‘trade’ agreements that undermine civil governance. His public equivocation regarding the Keystone XL pipeline while openly endorsing methane releasing, groundwater contaminating, ‘fracking’ (hydraulic fracturing) suggests that bi-partisan support for end-times environmental policies will be the order of the day. And getting congressional sign-off for renewed war in Iraq and Syria is a step toward making them permanent.

The national Democrats’ claim that voters want for Washington to ‘work together’ is wholly self-serving given the history of the President and Congress cooperating on big issues like the Wall Street bailouts; wars for oil company, arms manufacturer and ‘outsourced’ military interests, domestic surveillance and the aforementioned ‘trade’ agreements. Mr. Obama’s ‘Grand Bargain’ to cut Social Security and Medicare benefits in exchange for restructuring the corporate tax code leaves two years to complete the job that he committed himself to before entering office. And the Republican pretense of opposition was always by degree, never absolute.

Graph (1) above: the ongoing conceit by the rich that ‘the economy’ is a system of natural distribution finds more plausible explanation in the trillions in public largesse transferred directly to Wall Street in bailouts, subsidies and guarantees from the Federal government, in the monetary policies of the Federal Reserve that have so boosted the prices of financial assets owned overwhelmingly by the rich and in the abandonment of any pretense that national Democrats care whether the rest of us live or die. Of note is how many more zeros follow the wealth of the 0.01% (left scale) than that of the 90% (right scale). Source: Emmanuel Saez.

The complaint / apologia amongst losing Democrats that Mr. Obama is ‘personally’ unpopular ignores that he was elected President twice in difficult circumstances. He entered office with Democrats holding both houses of Congress, with finance capitalism and the neo-liberal paradigm in tatters and with a mandate from the citizenry that elected him to chart a different course. Once it became clear that he was surrounding himself with the same self-serving neo-liberal demagogues and finance industry hacks that had led the Democrats’ hard-right turn in the Clinton administration, the path was set. And Democrats in Congress and state and local government willingly fell in line behind the very same ideology and political economy that created the catastrophe that Mr. Obama ‘inherited.’

The carefully placed fantasy entering the 2012 elections was that once Mr. Obama was relieved of the burden of running for office again the U.S. would enter a liberal renaissance. What we got in fact was sequential lies in defense of NSA spying, U.S. wars and chaos across North Africa and the Middle East, continuation of the (George W) Bush ‘unitary’ Presidency and an economic ‘recovery’ that left the rich richer and everyone else not so much. Nuclear weapons that were reduced by prior Republican administrations are being restored by Mr. Obama at a cost of one trillion dollars. And aggregating environmental crisis found Mr. Obama undermining environmental regulations while publicly misrepresenting his actions.

Graph (2) above: after collapsing in the waning days of the (George W) Bush administration the proportion of the civilian population that is currently employed has barely budged since Mr. Obama took office. The inference is slightly cluttered by an aging work-age population. But the ratio declined in every recession (gray areas) since 1945. And it collapsed outright in the recession of 2007 – 2009. Demographic issues aside, this illustrates a collapse of the U.S. labor market that has been left substantially unaddressed since Mr. Obama entered office. Source: St. Louis Fed.

With Democrats now grappling to explain their electoral rout the most straightforward explanation, that they were elected and failed to govern, is nowhere to be found. In their favor, missing from modern capitalist political economy is any necessary relation between constituent service and governing. Both Democrats and Republicans serve their constituencies, largely the same one. They do so directly by providing privileges and protections and indirectly by posing constituent interests as those of the electorate. Mr. Obama sold the Wall Street bailouts to a massively dispossessed people as essential to ‘the economy.’ And officialdom sold economic ‘recovery’ through irrelevant statistics, rising stock prices and new subprime loans. However, as election results suggest, the electorate begs to differ.

Graph (3) above: a general sense still exists amongst the public that the economy is weak but the extent of ongoing misery has been obscured by irrelevant economic indicators, rising financial asset prices and happy talk from economists invested in the status quo. Demographers can argue that the aging population obscures the ‘true’ civilian participation rate (Graph (1) above), but when combined with the Average Duration of Unemployment (above), a picture of ongoing labor market crisis becomes evident. The data in the graph runs through September, 2014. Five years into economic ‘recovery’ the average bout of unemployment lasts longer than unemployment insurance benefits do and is well above the peaks of other recessions. Source: St. Louis Fed.

The appearance of political paradox over passage of ‘liberal’ ballot measures like raising the minimum wage, restricting fracking and legalizing pot whilst electing conservative Republicans poses difference where voters apparently see none. Despite nominal support by national Democrats for a higher minimum wage, they have been wholly ineffectual when it comes to actually realizing one. And President Obama actively supports fracking, labor and environment crushing trade agreements and Wall Street’s strategies of immiseration. While Republicans tend to be more the direct tools of the corporate-state, they are also more straightforward about it reducing the hypocrisy factor.

The Democrat strategy of hiding behind cultural issues like gay marriage and reproductive rights requires economic stability that their neo-liberal economic policies make unlikely. The need for a minimum wage is evidence of market failure— there is no relation between the economic value that low-wage workers create and what they are paid. And objection to fracking is de facto evidence of economic taking by fracking companies. If people were adequately compensated for the harms caused by fracking they wouldn’t object to it. (This is an economic tautology. There are plenty of reasons to oppose fracking that can’t be compensated). Given that we all want to live indoors and drink clean water a fair argument can be made that economic issues precede cultural issues amongst the newly immiserated. Election results appear to concur.

Graph (4) above: the claim of officialdom that the economy has recovered leaves out that it recovered for the very rich alone. For the great majority of citizens incomes and wealth fell dramatically in 2008 and have yet to recover. The combination of debt-based consumption, declining incomes and wealth and a weak labor market makes Great Depression style debt deflation a reality for most Americans. The failure of Obama administration mortgage relief programs to reduce principal balances leaves reduced incomes to repay them. While payments may be lower, principal balances are being repaid in more valuable dollars due to reduced incomes and wealth. Source: St. Louis Fed.

President Obama and a Democratic Congress were elected six years ago in repudiation of the neo-liberal and neo-conservative policies that produced the worst economic crisis since the Great Depression. But neo-liberalism is so deeply embedded in Western political economy and in the worldview of official Washington (and London and Brussels) that not even crisis and political necessity can dislodge it. Even astute Republicans know that they are incapable of transformative change in present circumstance. They are bound by an ideology that is a proven failure and the residual economic catastrophe of bi-partisan origin that isn’t going away. Two years from now Republicans will be scratching their heads wondering why they are as despised politically as Democrats are today.

What will be entertaining, if not exactly pleasant to live through, is to see just how low the remaining Democrats will go. National Democrats, including Mr. Obama, are by degree proponents of the very worst that the Republicans have to offer. On the other side is how far people are willing to be pushed. A good bet is that the ‘Grand Bargain,’ cutting Social Security, Medicare and corporate tax rates, approval of the Keystone XL pipeline and near permanent wars across the Middle East are done deals. Gloating that the Democrats got their hats handed to them is misguided. What is needed is a functioning politics. And that will only come from outside of the existing political order.

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Rob Urie is an artist and political economist. His book Zen Economics is forthcoming.