Commentary: Economic issues top of voters’ minds in US mid-term election

Commentary: Economic issues top of voters’ minds in US mid-term election

The US mid-term election marks a culture shift for business and politics, says the Financial Times’ Rana Foroohar.

LONDON: This week, Americans will head to the polls to vote in the most important mid-term elections in recent memory.

The big question is whether we will see the predicted “blue wave” of angry Democrats take back control of the House of Representatives. If they do, pundits will proclaim the end of the Trump era.

READ: Remember, Americans like divided government, a commentary

A SPLIT

In fact, it will only be the next stage of a challenge for Democrats, who remain split between old establishment figures such as Nancy Pelosi, who could become the first House speaker in six decades to regain her position, and progressives, including Elizabeth Warren, Bernie Sanders and their younger acolytes such as Alexandria Ocasio-Cortez.

It is a split that reflects a serious sin of the Democratic party: Failure to stand up to corporate interests. Since the 1990s, progressives have too often simply nipped and tucked Republican ideas about trade or capital markets or healthcare to make them a bit kinder and gentler.

At other times, they have crafted policies that have backfired — economically and politically — such as allowing the creation of “too big to fail” banks and the rise of dominant platform technology companies.

No wonder too many liberals continue to focus on identity issues rather than new ideas to bolster the middle class. It is easier.

UNDER PRESSURE TO REDEFINE PURPOSE

The challenge for Democrats beyond the mid-terms is not unlike the challenge for many companies. They are all under pressure to define their purpose and posture at a time when trust in capitalism and liberal democracy has fallen.

Companies, like liberals, are finding it much easier to speak out about social wrongs, real or perceived, than to correct economic ones. Every corporate leader I know is struggling to address issues like gun control, LGBT rights, racism, and #MeToo.

Much of this is driven by a young, progressive customer base and workforce — witness Google’s global staff walkout last week, to protest its handling of sexism in the workplace.

FILE PHOTO: An illuminated Google logo is seen in Zurich
An illuminated Google logo is seen inside an office building in Zurich September 5, 2018. (File photo: REUTERS/Arnd WIegmann)

CHANGE BUSINESS MODELS

Of course, it is much easier to stage a walkout over social issues than to change business models that reward mostly the top of the socio-economic ladder. Just look at the demise of Sears, a company whose assets were stripped to pay investors while Steven Mnuchin, the Treasury secretary, sat on the board.

Between 2005 and 2012, Sears spent US$6 billion on stock buybacks, even though it generated only US$1.8 billion in operating cash. This is a company that, in its glory days, was proud to share 10 per cent of its profits with its workers.

Amazon, the new Sears, has increased the minimum wage for its workers to US$15 an hour after Mr Sanders put pressure on them. But it also stopped awarding share options to warehouse staff. I’m guessing founder Jeff Bezos came out ahead on that deal.

ECONOMIC ISSUES REMAIN TOP OF MIND

Even as politicians and businesses focus on identity, economic issues remain top of most voters’ minds. Out of pocket spending on healthcare increased 8.5 per cent last year, four times faster than inflation, and polls show that that issue is much more important to most Americans than which gender uses which bathroom.

Some people will vote against Republicans on Tuesday (Nov 6) based on righteous fury about President Donald Trump’s handling of last year’s racist and violent protests in Charlottesville, his administration’s treatment of immigrant children, or his general misogyny.

But if you dig deeper, the longer-term disputes have to do with economics.

The biggest political divide in the US is between working-class white men who vote Republican and college-educated female Democrats. I believe this is less about gender and more about an economy in which two-thirds of the decently paid jobs being created require at least two years of college.

Democrats are doing well anywhere that is within 20 minutes of a Whole Foods (an upscale grocery store, owned by Amazon, that even my prosperous neighbours call “Whole Paycheque”). Mr Trump, meanwhile, won 76 per cent of counties with a Cracker Barrel, a chain restaurant that specialises in US$10 country fried steak and nostalgia.

US shooting
A general view of a Cracker Barrel in Kalamazoo, Michigan. (File photo: AFP)

BRING PEOPLE TOGETHER

It never ceases to amaze me that a man I consider the most venal and rapacious president in history has managed to sell desperate people in the poorest parts of the US on the idea that he is their saviour. 

But his pitch is hollow, and his policies, including the use of corporate tax cuts to create a false sugar high of growth, are tapped out. This is an opportunity but also a challenge for Democrats.

If they want to secure their future, they need to offer a new economic platform that works for the vast swaths of the country that eat iceberg lettuce, not rocket. They will have to convince both corporate executives and the corporate wing of their own party to get on board.

Most Americans, liberal and conservative, are united in their definition of what constitutes “just” business behaviour — they believe it is about spreading the wealth, and improving worker pay and treatment.

It would be wise for both politicians and business to focus on those ideas that bring people together, rather than those that drive them apart.

© 2018 The Financial Times Ltd. All rights reserved.

Source: Financial Times/sl

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