BY JOEL KOTKIN
More than at any other time in recent memory, American politics now are centered on class and the declining prospects of the middle class. This is no longer just an issue for longtime leftists or Democratic or right-wing propagandists. It’s a reality so large that even the most detached and self-satisfied Republicans must acknowledge it.
The Left’s new superstar, New York City Mayor Bill de Blasio, identifies inequality as “the dominant issue in our public discourse” but similar assessments have recently been coming from such unlikely sources as GOP Senate Majority Leader Mitch McConnell, Jeb Bush and even Mitt Romney.
So, if populism will become a dominant theme in the next election, what form will it take? Populism itself is more a sentiment than a program; it reflects people’s deep-seated fears about the future and a festering resentment of the seemingly unassailable power of financial and other corporate elites.
But the ways of addressing these concerns are often contradictory and almost impossible to agree upon. Right now, we see three distinct types of populism. Two variants, that of the Obama administration and its critics further on the left, share an allegiance to Democratic Party orthodoxy on issues such as climate change, racial redress, feminism and other social issues.
The third – and, as of now, least-coherent – variant could be described as constitutional conservatism, one that seeks to improve middle-class prospects by reducing federal regulations and taxes and by decentralizing power away from the Washington leviathan.
Do it like Davos
Only in the bizarre world of contemporary “progressivism” could the words “Davos Populism” appear together. Yet, as we saw recently at the Davos Conference, the agenda of the gentry Left – epitomized by the 1,700 private jets that brought attendees to the Swiss event – has merged with that of our current “populist in chief,” Barack Obama. The people burning fuel on private jets generally focus more on issues such as climate change, but even the most jaded grandee has been forced to acknowledge that inequality has become too big an issue to ignore.
This includes people like Google Chairman Eric Schmidt, who was selected, among other things, to help lead a recent Democratic “post-mortem” project after the party’s disastrous 2014 election. The progressive blog Daily Kos noted “the inherently problematic nature of putting the chairman of a tech monopoly in a task force designed to figure out how to connect with the economic concerns of middle-class and working-class voters.”
This odd blending of gentry and populistic posturing seems a logical product of the long-standing linkage between mainstream Democrats and their big-money core corporate base of venture capitalists, Wall Street financiers and Hollywood. Their embrace of populism adds to Obama’s lack of credibility on this issue. Analyst Zachary Karabell notes that the president spent his first six years “focused either on the needs of the very poor (the uninsured) or the very rich (Wall Street’s banks, which were nursed back to health).”
With little chance of getting his program through the GOP-dominated Congress, the current effort seems opportunistic and even disingenuous. “Six years ago, middle-class economics might have been the basis of policies,” Karabell observes, “now it is the basis for political positioning.”
At the same time, the real target of Davos populists is not themselves, of course. Instead, the effort is to further burden Obama’s version of Josef Stalin’s harsh treatment of Kulaks, the early Soviet Union’s successful but hardly ultrarich peasant class. Megan McArdle aptly describes Obama’s proposal – abandoned this past week – to tax college savings accounts to pay for subsidized college as “a plan to redistribute money from the upper middle class to the lower middle class.”
Similar proposals, such as taxing the appreciation of inherited houses, as Glenn Reynolds notes, follow a very similar script.
Davos populism may not end with Obama. Hillary Clinton’s campaign strategy seems to involve tapping the oligarchs for enough support to “shock and awe” potential competitors into surrender. It’s dubious that she, anymore than President Obama, will go after the more nefarious ways the ultrarich avoid taxes, such as the bogus protections of “carried interest,” a device that allows hedge fund managers to claim lower capital gains tax rates for what normally might be thought of as ordinary income.
Similarly, Obamacare hardly affects the rich, who can buy any medical care they want. However, as a Brookings Institution report suggests, the health care law transfers wealth and benefits from those earning close to the median income and somewhat above (notably, groups like Main Street businesspeople) to the benefit of the bottom fifth of earners. This strategy could work to swell Democratic Party allegiance among the expanding new proletariat, including many people once solidly ensconced in the middle class.
Not surprisingly, after six years of minimal income gains and numerous tax increases, the middle class – Americans making roughly $60,000 to $90,000 – remains far less sympathetic to Obama’s policies than either the rich or the poor. Yet none of this likely affects the Davos attendees, like billionaire real estate investor Jeff Greene, who said, to fight climate change, Americans need to “live a smaller existence.” This, coming from a man with five houses, including a Beverly Hills estate listed at $195 million, does not constitute an ideal populist program.
The New Old Left
Despite their affection for Barack Obama, many old-style leftists are dismayed by the real economic record of this “progressive” administration. Full employment, notes progressive commentator Dean Baker, remains a “distant vision,” with the number of jobs fully 5 million below prerecession projections.
Worse yet, the old-style progressives are rightfully disgusted by the most unequal recovery in modern American history, with 95 percent of all benefits flowing to the top 1 percent. Compared with Obamanomics, the widely disdained “trickle down” Reagan-Clinton eras sent over half their expansion benefits to the 99 percent. Even the miserable George W. Bush performance of 25 percent seems positively socialistic in comparison.
With Obama slouching toward lame-duck status, outspoken ideological progressives, such as Vermont Sen. Bernie Sanders and Massachusetts Sen. Elizabeth Warren, have begun to make their objections known, most notably in blocking recent Treasury appointments. Like Obama, they may want to tax the Kulaks to the hilt, but at least they also seem willing to empty the purses of the Davos Democrats. This gives them populist street cred that the Davos Democrats simply can’t generate.
But the new Old Left has a problem with what should be its base: the working class. As Democrats have become more concentrated along the East and West coasts, they have become a biregional, urbancentric party whose cultural and environmental agenda is more in sync with the oligarchs of Davos and Wall Street than middle-class, Main Street businesses.
The commitment of the new Old Left to party orthodoxy likely means it will have trouble expanding beyond its current base of public employees, academics, minority activists and other political zealots.
Unlike the sometimes-raucous Tea Party, the rising Republican Party establishment tends to be as pro-Wall Street as ever. Most party leaders denounce any attempt, for example, to raise capital gains tax rates to levels paid by middle- and working-class taxpayers on their incomes.
Yet, there is also a growing gap between Main Street conservatives, including the Tea Party, and a GOP-oriented corporate community that increasingly embraces the Davos Democrats’ notion of rule by our “betters.” In contrast to the Davos and Old Left populists, the constitutionalists generally oppose elaborate redistributionist schemes, such as Obamacare.
But unlike the rigidly pro-Wall Street mainstream GOP, the populists also oppose benefits for crony capitalists. Perhaps the most intriguing tax proposals, for example, are those from former Michigan Rep. Dave Camp, who called for a graduated “flat tax” that would reduce the enormous advantage that capital gains now gives the Davos crowd and their minions.
Like their Old Left counterparts, however, the constitutional populists also carry some troublesome baggage, notably on issues like immigration and gay marriage. Increasingly, Main Street is populated by immigrants, minorities and, sometimes, gays. Whatever their economic interests, many within these cohorts may feel more directly threatened by deeply conservative social policies than the confiscatory and redistributionist agenda of the Democrats. Take away this part of the policy orthodoxy, and the GOP could win friends in many unexpected places.
Over the coming years, party factions that can form a convincing and broad-based populist agenda will have an advantage. Any party that believes, as some Democratic shills now say, that things are “pretty awesome” misses broad-based public sentiment, which remains very negative about the state of the country and the economy. Growing inequality, reduced opportunity – particularly for the new generation – will remain the defining issue of our time. It is time for the political class, in both parties, to confront this reality.
Joel Kotkin is the R.C. Hobbs Fellow in Urban Studies at Chapman University in Orange and the executive director of the Houston-based Center for Opportunity Urbanism (www.opportunityurbanism.org).
His most recent book is “The New Class Conflict” (Telos Publishing: 2014).