Plutonomy

One of my deepest frustrations with Obama is that he simply has no connection with everyday people. He seems unwilling or unable to get hold of popular measures and make them his own. In part I blame his technocratic attitude and experience, and in part I blame his team. Indeed the problem of his team is an ongoing sore: they are far too establishment and too wedded to the “system” to provide leadership for what is supposed to be the party protecting the working folks of America. Too many top Democrats are indistinguishable from their counterparts in the GOP.

Why is this?

Mike Konczal in his blog Rortybomb provides an eloquent answer.

They are plutocrats too. The Democrats are infected by what some analysts at Citibank infamously dubbed “plutonomy”.

This became a disturbing issue during the height of the banking crisis when the Obama administration fumbled finance reform, and too often caved into Wall Street group think. As a result the reform is tepid at best, and probably ineffective in the long run. But the problem is worse than that: the soft spot Obama has for big finance has not stopped the vituperative criticism he gets as being anti-business. Profits are at all time highs, yet the administration is seen as attacking capitalism. This is from its supporters. Goodness knows what its opponents think.

As Konczal so clearly illustrates this issue is based upon the connection between the Democrats and Wall Street. A connection that prevents the Democrats from being popular or pursuing legislation to restore balance in incomes and wealth. So they go halfway continually, and get attacked from both sides. The bank and health care reforms are both examples of this problem. Neither was radical from a progressive point of view, yet both were very radical from a right wing point of view. No one was happy with the outcome. It was a fudge.

Because of the role big money plays in proving funding and talent to the Democrats, the party has lost its touch. It is stuck in no man’s land. It talks one game and acts another. This is why the old adage about the US having one politics – capitalism – but two parties is so true. There is no genuine left of center party in the US. The elite tier of the Democrats is drawn from a cohort who fundamentally believe in the efficacies of free markets, in the need for untethered capitalism, and in the need to preserve rather than reform the “system”.

Even if that system damages the prospects and opportunities of the Democrats’ base of supporters.

This problem affects the Republicans too, but there the stress it causes is mitigated by the GOP not having to worry about inequality as a political or social issue. For them inequality is just fine. Individualism and free market magic are foremost in their minds. In a perverse twist of old time values the elite controls the commoner’s party, mainly because, I suspect, that party is more open to world influences and tolerant of variety. Republicans, in contrast, have always been avid supporters of “Little Americana” and thus opposed to nasty outside influences.

Buried in the Atlantic Monthly article Konczal quotes from, is an even more worrying material. The social divisions opening up in America are viewed with disdain or equanimity by those at the top. The new “global elite” feel energized by their ability to exploit worldwide business, and have reached a point where local problems, such as the high wages of the American middle class relative to the emerging middle class elsewhere, is seen in cynical business school terms. As one interviewee in the article says: tough. Maybe the American middle class needs to face up to reality and accept lower wages. Or, worse, if we create four middle class jobs in China, but lose one in the US, we are still ahead.

Just who is the “we” in this statement?

The elite.

This new elite thinks it is above what it sees as local, and therefore lesser, issues. It is based in places such as New York, London, Moscow, Hong Kong or Mumbai, and sees workers the world over as one big labor pool. Differential wages, and cultural matters are nuisances. Worse, they are seams of profit to exploit. It is convenient to this elite group for local politicians to adopt similar solutions to what are viewed by the elite as similar problems. Thus the wave of austerity sweeping the industrialized world. This is a homogenous solution to a set of heterogeneous problems. Those that suffer are the ordinary workers in those countries who are saddled with bailing out the errors of the elite. An elite unchastened by its errors, but determined to protect its wealth at all costs.

That the Democrats are associated and tainted by this elite is dispiriting. It hobbles their response. It weakens their moral claim to be representatives of the average citizen. This is a negation of its heritage. FDR was hardly a commoner, but his empathy was clear. The reason why Obama will never be FDR is that his empathy is with the elite and their system. For all the rhetoric. And for all the words, he cannot lead a popular movement. Thus when he mobilized an army of small donors to propel him into power he was not being true to his biases. It was a pragmatic response to the fact that the elite had already chosen Hilary Clinton as their candidate. When he won, the elite shifted to rein him in. They should never have worried: his choices of advisor have conformed to the elitist view.

The “system” comes first. The little people come second.

This is something the GOP has always argued. For the Democrats to follow suit presents us all with a big problem.

Who will represent the commoner?

Addendum:

As a supporter of free trade, or rather as someone who sees the value in increasing rather than diminishing trade, the idea of plutonomy is deeply disturbing, It seems to be a logical end point for globalization. I disagree. I see plutonomy not as a result of trade, but as a result of free movement of capital. The plutocrats are worldwide capitalists who seek to profit anywhere rather than simply in their home nations. Thus democratic efforts to rein them in are ineffective: they simply shift capital elsewhere. Plutocrats are a supranational community able to move freely about and neither attached nor loyal anywhere. This is distinct, I believe, from free trade, from which we all benefit. Will a backlash against the plutocratic elite undermine free trade? I hope not. But who knows? Movements like the Tea Party suggest otherwise.