Friday, November 12, 2010

The working class -- who will win their votes?

Can Conservatives win the Working Class?

Here is a fascinating look at the last election and how the Democrats lost the working class vote. It talks about what it takes to win their vote (even while it notes the conservatives didn’t win their vote, but the liberals lost it). I highly recommend you read it.

Olsen notes, however, that there is A RUNNING CIVIL WAR AMONG PROGRESSIVES over how to advance their goal. Liberal progressives (the "wine set") have "lofty ambitions" for transforming America right now while moderate progressives (the "beer set") want to work more modestly and slowly. (EJ Dionne has written the liberal argument in The Washington Post; Evan Bayh makes the moderate's case in The New York Times.) The two groups don't have fundamentally different goals (for example, Bayh calls universal health care a "noble aspiration"), but they do have very different attitudes. LIBERALS ARE IMPATIENT AND WILLING TO ACT WITHOUT PUBLIC SUPPORT IF THEY HAVE THE POLITICAL POWER; moderates believe in accommodating and working on public opinion before advancing. Bill Clinton was a moderate (at least after 1994); Barack Obama is a liberal.

SECOND, CONSERVATIVES NEED TO UNDERSTAND WHEN AND WHY PROGRESSIVES CRASH POLITICALLY, as they did on Tuesday. Olsen shows that since the Democrats have become the party of the progressives, they have suffered big defeats four times after holding both the White House and Congress with "large supermajorities": 1965-1966; 1977-1980, 1993-1994; and 2009-2010. Each time, it was the loss of working class voters (including independents) that ruined them, as we saw in the Midwest this election. (Both Ron Brownstein and David Brooks have recently made the same argument.) Such voters deserted the Democrats in reaction against the policies and attitudes of liberal progressives (something the Blue Dogs have been warning about for a while).


1. hope for the future

2. fear of the present

3. pride in their lives

4. anger at being disrespected

5. belief in public order

6. patriotism

7. fear of rapid change.

He explains these at some length (it is really worth reading), but for now it is enough to note that in some of these habits the working class is aligned with conservatives (hope for the future, pride in their lives, patriotism), in some with progressives (fear of the present), and in other habits they are aligned with conservatives or progressives depending on the policy. For example, Olsen argues, working class people like the police (conservative) and public education (progressive); and they do not like ObamaCare and privatizing Social Security for the same reason (fear of rapid change).

THIRD, OLSEN ARGUES THAT CONSERVATIVES NEED TO UNDERSTAND WHAT IT MEANS WHEN WORKING CLASS VOTERS ABANDON THE DEMOCRATIC PARTY (as they did in this election). As many people have said, conservatives shouldn't over interpret their mandate like the liberals did in 2008. On November 2 WORKING CLASS PEOPLE DID NOT SO MUCH VOTE PRO-CONSERVATIVE AS ANTI-LIBERAL. This means that conservatives need to win these voters over to their principles if they want to begin to really make limited government conservatism the center of gravity in American politics.

Here, according to Olsen, is where conservatives run into a problem. To win working class voters, conservatives need to understand and respect their "Seven Habits" when running for office and when advancing policies. According to Olsen, Ronald Reagan was great at doing both (hence Reagan Democrats). George W. Bush also did a good job in 2000 and especially 2004.

2010 a banner year for conservatives

The election last week was a victory for the American people. Government has been put on notice that it needs to reform it evil ways and swear off demon “statism.”

As he promised it would be, BARACK OBAMA'S PRESIDENCY HAS BEEN TRANSFORMATIVE, BUT NOT AS HE INTENDED. Whether it lasts two or six more years, it is an exhausted volcano because its biggest consequence may already have happened: It has resuscitated the right, making 2010 conservatism's best year in 30 years - since the election of Ronald Reagan.

Republican gains were partly a result of the "shock-and-awe statism" (Indiana Gov. Mitch Daniels's phrase) of the health-care legislation passed in March. Seven months later, a federal judge in Florida, hearing arguments about the constitutionality of penalizing Americans who do not purchase health insurance, was bemused.

Lawyers defending the legislation said that the fee noncompliant Americans would be forced to pay is really just a tax. But during congressional debate on the legislation, Democrats adamantly denied it was a tax. So, in a rehearsal of an argument that will be heard by the Supreme Court, the judge said:

"CONGRESS SHOULD NOT BE PERMITTED TO SECURE AND CAST POLITICALLY DIFFICULT VOTES on controversial legislation by deliberately calling something one thing, after which the defenders of that legislation take an 'Alice-in-Wonderland' tack and argue in court that Congress really meant something else entirely, thereby circumventing the safeguard that exists to keep their broad power in check."

This year, two attempts to radically expand government supervision of Americans' behavior collapsed. One concerned regulating the political process, the other regulating the planet's climate.

How to grow the economy

We’ve had two years of the Liberal Democrats trying to bring us out of the economic crisis we’ve been in using Keynes and his Demand Side economics. Perhaps it time to go back to Supply side.

Since its cyclical zenith in December 2007, U.S. ECONOMIC PRODUCTION HAS BEEN ON ITS WORST TRAJECTORY SINCE THE GREAT DEPRESSION. Massive stimulus spending and unprecedented monetary easing haven't helped, and yet the Obama administration and the Federal Reserve still cling to the book of Keynes. It's an approach ill-suited to solving the growth problem that the United States has today.

The solution can be found in THE PRICE THEORY SECTION OF ANY ECONOMICS TEXTBOOK. It's basic supply and demand. Employment is low because the incentives for workers to work are too small, and the incentives not to work too high. Workers' net wages are down, so the supply of labor is limited. Meanwhile, demand for labor is also down since EMPLOYERS CONSIDER THE COSTS OF EMPLOYING NEW WORKERS—WAGES, HEALTH CARE AND MORE—TO BE GREATER TODAY THAN THE BENEFITS.

Firms choose whether to hire based on the total cost of employing workers, including all federal, state and local income taxes; all payroll, sales and property taxes; regulatory costs; record-keeping costs; the costs of maintaining health and safety standards; and the costs of insurance for health care, class action lawsuits, and workers compensation. In addition, gross wages are often inflated by the power of unions and legislative restrictions such as "buy American" provisions and the minimum wage. Gross wages also include all future benefits to workers in the form of retirement plans

The problem is that the government has driven a massive wedge between the wages paid by firms and the wages received by workers. To make work and employment attractive again, this government wedge has to shrink. This can happen over the next two years, even with a Democratic majority in the Senate and President Obama in the White House, through the following measures:

1) THE FULL EXTENSION OF THE BUSH TAX CUTS. The Republican-controlled House of Representatives can write legislation extending all the tax cuts in perpetuity. Of particular importance for employment is keeping the highest personal income tax rate at 35%, the capital gains tax rate at 15% and the dividend tax rate at 15%, while eliminating the estate tax permanently. If the Senate blocks this legislation or Mr. Obama refuses to sign it, House Republicans should hold firm and let voters decide in 2012. (My guess is that he'll sign it or have his veto overridden.)

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