Democrats Vulnerable on the Left

Eric Lipton has a decent frontpage story this morning on how the infernal machine that is Washington D.C. works. "Fight Over Minimum Wage Illustrates Web of Industry Ties" details the work of pro-corporate Employment Policies Institute in generating research saying that increasing the minimum wage kills jobs and raises prices.

Employment Policies Institute is funded by right-wing foundations as well as the restaurant and retail industry; it is run by a guy named Howard Berman out the office of his public relations firm:

The sign at the entrance is for Berman and Company, as the Employment Policies Institute has no employees of its own. Mr. Berman’s for-profit advertising firm, instead, “bills” the nonprofit institute for the services his employees provide to the institute. This arrangement effectively means that the nonprofit is a moneymaking venture for Mr. Berman, whose advertising firm was paid $1.1 million by the institute in 2012, according to its tax returns, or 44 percent of its total budget, with most of the rest of the money used to buy advertisements.

The Employment Policies Institute's commissioned research has come under fire:

But some questions have been raised about the institute-funded work. Saul D. Hoffman, a professor of economics at University of Delaware, examined the employment data Mr. Sabia used for a 2012 paper funded in part by the institute. Mr. Hoffman concluded that the narrow cut of data Mr. Sabia picked was perhaps unintentionally skewed, and once corrected, it would have showed that the 2004 increase in New York State’s minimum wage had no negative impact on employment — the opposite of the conclusion the institute had proclaimed in its news releases.

Raising the minimum wage is a vital issue for the Democrats. It is basically the only thing they have to offer voters. Obama's approval rating has taken a nosedive, as Mike Whitney points out in an excellent piece, "The American Dream is Dead," that appeared over the weekend on the Counterpunch web site:

Obama has done nothing to help working people. He hasn’t lifted a damn finger, which is why “58 percent of Americans disapprove of his stewardship of the economy” (Wall Street Journal/NBC News and Quinnipiac University) It’s also why 78 percent said of respondents in a recent Wall Street Journal/NBC News poll said they think the country is “on the wrong track.” And it’s also why Obama’s personal performance ratings have slipped below those of George Bush in the fifth year of his presidency. Obama has been a disaster and everyone knows it. The impact of his misrule with be felt for years to come. Just take a look at this comment by University of Michigan economist Richard Curtain who explains the dramatic change he’s seen in consumer behavior due to the policies that were put in place following the Great Financial Crisis (GFC). The quote is from an analytic piece titled “Consumer Behavior Adapts to Fundamental Changes in Expectations” Economic Outlook Conference November 21, 2013:

“I have been reporting on the economic implications of the latest twists and turns in consumer expectations at this conference for nearly four decades. From the heights of expansions to the depths of recessions, consumers had never deserted their bedrock belief that the economy would produce ever increasing levels of affluence. The Great Recession, unlike any other downturn in the past half century, has not only tarnished the American Dream, but has prompted some fundamental changes in consumer expectations and behavior.” (“Consumer Behavior Adapts to Fundamental Changes in Expectations” Economic Outlook Conference November 21, 2013, University of Michigan)

How do you like that? After 40 years of watching this stuff, Curtin says he’s noticed a “fundamental change” in the “bedrock belief that the economy would produce ever increasing levels of affluence.” 

This is quite profound, I think, with far-reaching implications for the economy. The pessimism that Obama (and Congress) have generated through their policies have dampened expectations and changed people’s views about the future. Most people no longer expect their wages to increase or their financial situation to improve. For a growing number of people, the American dream is dead. This is already having an effect on personal consumption, household spending and economic growth. It’s also effecting the way people view the government, and what we think of ourselves as a nation. As Curtin notes:

(The) “deeply rooted uncertainty about future economic conditions…has been sustained by the growing recognition that no federal policy has yet emerged that will restore long term economic prosperity anytime soon for the majority of consumers. Optimism about long term job and income prospects are essential for maintaining high levels of economic motivation. Too few consumers have regained that optimism.”

Exactly. “No federal policy” has been put in place to “restore long term economic prosperity.”

That’s the whole ball o’ wax, right there. The pols have done nothing. 

The pessimism we now see everywhere, can be traced back to government policy. All the blame goes to Obama and Congress. They’re the ones who ended the American Dream. They killed it.

Not only is the loss of faith in Obama, an electoral avatar, potentially ruinous for Dems in the near term, but so too are the rumblings of socialism. Here is how Robert McChesney describes it in "Sharp Turn Left for Media Reform" (a must-read) in the latest issue of Monthly Review:

U.S. capitalism is in the midst of what Paul Krugman refers to as another great depression. Unemployment remains very high, corporations are sitting on some $1.7 trillion they are not investing in new plants and equipment, and downward pressures on wages are extreme, particularly for the young and the working class. This is part of a long-term problem of secular stagnation for monopoly-finance capitalism, as John Bellamy Foster and I write about in The Endless Crisis. Stagnation, combined with political corruption, means that poverty rates have returned to levels not seen for nearly a century in the United States, and inequality is trending towards that found in Malaysia or the Philippines, with Western Europe and Japan in its rearview mirror. Nothing in the range of current debates on economic policy proposes anything that will change this dynamic. For the bulk of the population, the future is grim. 

The political-economic situation in the United States is therefore unstable and ultimately untenable. When one factors in the environmental crisis, this becomes an even more calamitous and desperate period. What is striking is that all the paeans to the genius of the market, which remain commonplace in policy or academic debates on communication from the respectable left to the right, now increasingly smell like month-old fish left out on a table. While the news has yet to hit the corrupt elites in Washington, academia, or the mainstream news media, it is increasingly understood by a beleaguered citizenry. It is also understood by Pope Francis, who delivered a condemnation of capitalism, and capitalist media, in November 2013 that was unsparing and radical. “No one else,” the journalist Robert Scheer wrote, “has put it as powerfully and succinctly.” 

What is taking place is little short of a sea change. As John Nichols notes, “Thirty-nine percent of Americans surveyed for a November 2012 Gallup poll said they had a positive image of socialism. In a 2011 Pew survey, 49 percent of Americans under 30 said they felt positive about socialism, while just 46 percent felt positive about capitalism. Among African-Americans, 55 percent had a positive reaction to socialism, versus 41 percent to capitalism. Among Latinos, it was 44 percent for socialism, 32 percent for capitalism.” This is especially notable since few Americans have ever heard anything positive about socialism; it would be like a survey in the Soviet Union in 1955 asking people to compare the merits of capitalism versus communism. What Americans do know today from firsthand experience is that really existing capitalism, to employ the vernacular, sucks. In 2013 the “socialist alternative” candidate Kshama Sawant won a citywide election for the Seattle City Council, over a liberal Democrat opponent in a two-person race. A decade ago a radical like Sawant—who called for using eminent domain to take over abandoned factories and have workers “take over the factories”—would have been unlikely to nudge 1 or 2 percent of the vote.

I supported Sawant, with my vote and by making campaign contributions. Post-election she is doing the right thing. Sawant is keeping her supporters mobilized. The goal is to realize her campaign goal of a $15/hr. minimum wage in Seattle. She has set up 15now.org. Saturday a big organizing rally is to be held.

If Sawant is successful, watch out.

My read is that Democrats are far more vulnerable than they will acknowledge. With liberal/progressive voters finally experiencing their "morning after" moment with Obama and more bad news likely on the way -- Keystone XL, continuing Congressional gridlock, war in the Middle East and a collapse of Israeli-Palestinian negotiations, a new Cold War with Russia, more embarrassing revelations from Snowden and details about what is on the Trans-Pacific Partnership bargaining table -- the Democratic Party could be looking at something far worse than Nader 2000 in the next couple of years.