Thursday, March 23, 2006

The Downwardly Mobile Conservative

Commentary by Martin Kelly
April 14, 2004

Who pays the president? The taxpayer, of course. The President of the United States is handsomely rewarded to protect the taxpayers’ interests, and right now, he’s failing. As well as failing to fulfil his primary obligation of securing the borders against illegal immigration, he is failing to ensure that the American taxpayer has the secure environment necessary in order for them to continue to pay tax, fostering instead an atmosphere that cherishes profit before opportunity, as opposed to the conservative ideal of viewing them as equals. In so doing, he is creating a demographic that has the capacity to turn round and bite him on the backside come November.

Yuppies? Forget them, their Thatcher’s Children. Dinkies (Double Income, No Kids)? Self-obsessed liberals. Nimbies (Not in my back Yard)? Yuppies who stayed rich long enough to buy a big house. Welcome to the era of the DMC – the Downwardly Mobile Conservative.

The free marketeers had a few sweaty weeks recently, after the publication of the February job creation figures. They have been crowing in self-validation after March, thinking they’ve scored a home run against the forces of reaction and protectionism. They would be mightily wrong.

On Sunday April 4, Roger Bootle, Economics Correspondent of the Sunday Telegraph gazed at the guts of American employment statistics, and didn’t like what he saw. Bootle went back more than a few months, charting the levels of job creation in every recovery since 1945. The average level of new job creation in every recovery between 1945 and 1982 was 6.3%. The average level in 1991 was 2%. However, the level of new job creation since the 2001 recovery has been minus 0.2%. As Bootle puts it, over the course this has not been a jobless recovery. It has been a job loss recovery.

The principal explanation that Bootle provides for this situation is that the productivity of the American workforce has increased massively over the same period, he says because of the investment made in IT in the 1990’s. Outsourcing plays a part –also, interest rates will probably need to rise. However, the one thing that he does not factor into his view on productivity is that people are now working harder, for longer, for lower real rates of pay than at any time in history. You can invest as much in IT as you like. However, software doesn’t vote.

The nuclear option of all discourse on conservative economics is, ‘There’s no such thing as a free lunch’. Neither, on the other hand, is there free taxes. These must be earned in the form of wages and then levied at rates deemed necessary by the peoples’ representatives. But, just as the liberals view ‘The State’ as being the perfect expression of civil authority, so too do the free-marketeers view ‘the market’ as being the sole determinant of all that is best for government. They are as rigidly ideological as Stalinists. As Pat Buchanan said recently in an article called Suicide by Free Trade, the market is their god, and he’s right.

But the people caught in the middle of this cosmic struggle are the DMC’s. Conservatism is the property of all, not the simple possession of whoever sits in the Oval Office. Such is the detachment of the free market establishment from the working man and woman, and so ideological are they, that they forget that the working class are some of the most socially conservative people you will find. If you want an advocate for the wearing of school uniform and corporal punishment, you’ll find them working on a production line. Ditto for immigration control, restriction of abortion rights, support for the death penalty, whatever. Archie Bunker and his English father Alf Garnett were crude liberal caricatures of the backbone of productive society. However, the free marketeers do not see these people as fellow citizens whose contribution to economic activity is as vital as their own. Instead, they are viewed merely as ‘labour costs’, untermensch almost, to be expunged from the balance sheet in favour of the option that brings the highest return at the earliest opportunity.

While the going was good in the ‘80’s many in the middle classes would not have worried so much about the loss of manufacturing jobs overseas. These would have been unpleasant things that happened to other people somewhere. However, the advent of outsourcing now means that everyone is subject to the same lack of security. Lack of security means that people can’t plan conservatively – the disparity between prices and wages is so high in the UK that the only way in which people are entitled to enjoy the fruit of their labour is through consumer credit. It’s easy for free market economics professors to proclaim the virtue of delayed gratification, however the people they’re proclaiming to delayed their gratification while they were at college, they delayed while they were establishing families and careers and in their 30’s if they find that they’re working 80 hours a week, 40 of which are for The Man, nobody should be criticised for putting a plasma TV on their MasterCard. In an economy that needs consumption for its very survival, conservatives shouldn’t grudge other conservatives some of the limited independence that consumer credit can bring.

Social mobility is the key to a healthy economy, as it’s the proof of a balance between businesses operating at a healthy level of profit and the existence of opportunity for new business and job creation, with all the positive benefits they bring. As people move up, others take their place, continuing the cycle. But if housing is so expensive that people who work hard through their own efforts can’t get on the ladder, or you study for years and find that your expectations are crushed at the end of it, that balance is lost, and the people who would otherwise be able to make or take opportunity get frozen out. Static wages, rising prices and loss of security – these are the classic signposts on the road of Downward Mobility. Been to college? Go to hell. The DMC’s are a large and growing group for whom there is now less opportunity than at any time in American history, if Roger Bootle is correct. In November, unless some steps are taken very soon to address their concerns, they may just decide not to support their natural base, the Republicans. On April 2, Bruce Bartlett commented on Townhall that, according to a firm called Global Insight the economy has lost ‘only 104,000 jobs’ due to IT outsourcing last year. As a committed free-marketeer Mr. Bartlett might find that, come November, the figure might just be ‘only’ 104,000 and one.

I’ve never been to New York City, but I can quote Emma Lazarus. Somehow, I don’t think outsourcing was what she had in mind.