Mexico’s Most Critical Problems are Also Our Own

August 15, 2010

By Paul Crist

 Mexico’s once growing middle class is under attack from above and below, and the stress is showing up in the shrinking numbers who can claim middle class status.  This trend predates the current economic crisis, but has been greatly exacerbated by it.  Middle class Mexicans face a political and economic system stacked in favor of the super-rich above them, while from below they face kidnappings and robbery by desperate and angry criminal poor.

Predation from Above:

Despite modest progress, entrenched crony capitalism where bribery is the rule and who-you-know counts for more than knowledge, hard work or risk-taking, remains the order of the day in Mexico.  Leaders from across the spectrum of Mexican politics must accept the majority of blame, although there is culpability north of the Mexican border as well. 

Progress toward political transparency and economic liberalism has been incremental in some areas, nonexistent in others.  Privatization of formerly government-controlled industries have enriched a handful of wealthy and politically connected Mexicans, as well as a fair number of politicians.  As a popular Mexican saying goes “un político pobre es un pobre político,” (“A poor politician is a poor politician”).

Mexican consumers pay higher prices for a lower quality of service and reduced availabil­ity of goods.  The state-corporatist system of price supports, subsidies, and special-interest tax exemptions gives an unfair advantage to wealthy and well-connected businessmen while restricting competition and obstructing eco­nomic growth.  Of course, the most critical result of anticompetitive policies for Mexican workers is a severe shortage of jobs.  

Examples of anticompetitive practices and opaque deal making between political elites and powerful monopoly rent-seekers are ubiquitous.

When the government of President Carlos Salinas privatized Telmex, the Mexican telephone giant, a group of investors led by Carlos Slim (who was among Salinas’ inner circle) arranged a sweetheart deal under which payment took place over the course of several years, using money earned by the telephone company, post privatization.  Just prior to privatizing Telmex, Salinas approved regulations that protected Telmex’s long distance monopoly, thus vastly increasing the value to the buyer.  Yet, Slim paid a mere $1.7 billion for the nationwide telephone system. 

Salinas was later found to have enormous bank accounts in tax havens around the world.  Since then, more than a few politicians have benefited financially thanks to a “close personal relationship” with Mr.  Slim.  Telmex still controls 85% of the fixed-line telephone market and Telcel, the wireless carrier also owned by Slim controls 77% of the cellular market.  While middle class Mexicans pay the highest telecommunications charges in the Americas, Carlos Slim has become the second richest man on earth.[see note 1]

In television and radio, Televisa and TV Azteca maintain a duopoly, thanks to both firms having been granted free access to publicly owned broadcast spectrum.  A 2006 Television and Radio law designed to preserve limits to market entry was found to be largely unconstitutional by the Mexican Supreme Court in 2007, but congress has failed to follow through with required legislation addressing the anticompetitive aspects of the 2006 law.  Consequently, the Televisa/TV Azteca duopoly continues to dominate the Mexican television market in 2010. 

Such extreme concentration of broadcast media significantly limits freedom of expression and the diversity of opinions that much of the public has access to.  It can also lead to chicanery and collusion between politicians and media executives.  Ties between Televisa and Enrique Peña Nieto, the PRI governor of the State of Mexico who most consider to be the frontrunner for the 2012 presidential elections, have come to light through journalist Jenaro Villamil’s book, “If I Were President.”   Peña Nieto used state funds to pay Televisa to expand his publicity and boost his popularity and image. 

Mexico is not a country where press constraints are obvious.  Diversity of opinion in print media is strong (though it should be noted that the majority of Mexicans get their news from television); and the government does not actively censor.  However, this freedom is both thin and increasingly fragile. Violence against journalists has increased self-censorship in all media sectors.  Weaknesses of the legal regime, both in terms of libel & defamation laws and the level of criminal impunity are serious challenges.  Freedom of expression relies on journalistic courage rather than affirmative protections.  

Domination by broadcasters Televisa and TV Azteca has strangled the development of a broadcast sector with the capacity to provide balanced, comprehensive monitoring and reporting.  One ought to also ask if the programming on both networks, comprised mainly of mindless sitcoms, crime and natural disaster reporting, and entertainment “news,” is intentionally designed to keep the viewing population docile, entertained, and uninformed on issues that might lead to demands for real political change that so threatens elite privilege.

Predation and anticompetitive policies are not, however, limited to business and political elites.  Even those who profess to be the protectors of Mexico’s working and middle classes are in fact economic predators and parasites amassing wealth and power at the expense of those they claim to represent.

Predation from Labor Leaders and Labor Market Rigidity:

Jobs creation and upward economic mobility in Mexico is also held back by what might be called a “labor elite.”  Mexico’s powerful unions have had a vice-like grip on the labor sector since the 1930’s, yet have done little to improve working conditions and safety, wages, or labor productivity.  Of the 178 countries covered in the World Bank’s “Doing Business 2008” report, Mexico ranks 134th with regard to employment.  Hiring employees is problematic, and there are rigidities throughout the employment system.  Firing anyone is extremely difficult and costly.

There are sectors where unionized employees have fared well.  Public sector employees enjoy excellent health benefits through a separate public healthcare system that is widely regarded as superior to the systems available to the general public.  They also receive generous pensions, and have substantial job security.  These benefits have not, of course, fostered productivity, accountability, or efficiency among public-sector workers, and they have done little to ingratiate government workers with ordinary citizens who resent not having similar benefits.   PEMEX (the state-owned petroleum company) employees are similarly well cared for by Latin America’s richest labor organization.  But for most workers and the economy as a whole, the benefits have been very limited.  Instead, the nine large, hierarchically organized unions exist mainly to benefit union leaders.  They have fostered an adversarial relationship between business owners, workers, and union leaders, while accomplishing little to benefit workers and nothing to foster worker productivity that would justify wage increases.  The result has been long-term insufficient jobs creation.

Union dues in Mexico are paid directly by employers, and in most companies, unionization is required by law.  For employers, this is galling, and for workers, who are mostly unaware that their employers pay substantial union dues “on their behalf,” there is no sense of “ownership” to union membership.  There is no financial transparency, and union leaders are rightly held in very low esteem among business managers.  Corruption in the unions is as legendary as it is in the labor arbitration courts that pass predictable and punitive judgments (and large awards that go mostly to attorneys and into union coffers) for employee dismissals.

The immense political power of the National Educational Workers’ Union (a teachers’ union with about 650,000 members and the largest labor union in Latin America), or the oil workers’ union (the richest in Latin America), or the social security employees’ union (which has thwarted any attempt at pension or health reform for years) remains largely unchecked. Independent or locally organized unions are very rare in Mexico because the politically powerful oligopoly of nine large unions have a complex web of legal protections working in their favor.  Even a weak attempt at reform­ing the labor market by the Vicente Fox administration- which avoided sensitive measures, such as linking wage increases to productivity increases-was rejected.   

Economic stagnation that has resulted from a multiplicity of structural distortions and rigidities in the economy has impeded jobs creation, forced 40 per­cent of Mexico’s workers into the informal sector, and increased out-migration pressure. 

Out-Migration Pressures and Reliance on Remittances:

One result of insufficient economic growth and job creation has been increased pressure for migration to the U.S., which has greatly increased tensions between Mexico and the U.S., particularly along the border. According to Inter-American Development Bank (IADB) statistics, Mexico’s economy is heavily dependent on the more than $24 billion in remittances that Mexican migrant workers in the U.S. send home each year. These remittances equal about one third of the total wage earnings in the formal sector of the Mexican economy and 10 percent of Mexico’s exports.   Many observers believe the actual measure of annual remittances would be even larger if it measured the flows through other channels, like the unknown quantity of cash that migrants bring with them when they make visits back home, as well as money sent via the Internet and cash smuggled in by criminals. These channels are not reflected accurately in the official statistics.

The remittances that Mexican workers in the U.S. send home to their families are spent mostly on goods and services. If a portion of this money could be drawn into investments to start small and medium-sized businesses in Mexico, and if those investments could be made in the context of a reformed domestic economic environment, the resulting economic stimulation and job growth would reduce out-migration pressures significantly. This could be achieved if Mexico’s federal and state governments adopted pro-growth economic policies centering on job creation, robust free-market com­petition, monopoly-breaking privatization of public-sector enterprises, and anti-corruption measures.

A Bleak Outlook for Workers in the Absence of Structural and Political Reform:

Anticompetitive policies have provided enormous benefits for the elites who control the monopolies, oligopolies, state-owned firms, unions, and the levers of political power.  The few examples described here barely scratch the surface of a corrupt legal system and political economy that is firmly under the influence of the super-rich.  Despite antitrust laws and a government agency  tasked with combating anti-competitive market behavior, monopolies, duopolies and oligopolies continue with impunity in gasoline, electricity, fixed-line and cellular telephone services, telecommunications, television & radio, airports, construction, food production, and much more.

Recent reports from AT Kearney, Transparency International, the World Eco­nomic Forum and the Organization for Economic Cooperation and Development (OECD) have detailed the decline in Mexico’s attractiveness as an investment destination in the face of competition elsewhere, especially from Asia.

Without reform, consumers will continue to pay higher prices for inferior goods and services, while wealth and political power will continue to accrue increasingly upward.  Economic growth and job creation will continue to be inhibited while domestic and global competitiveness will decline still further.  Economic freedom and mobility, already a distant dream for most Mexicans, will worsen in an oligopolistic system that preys on the middle class, while the poor have almost no chance to move into the ranks of the middle class.

According to the “2010 Index of Economic Freedom,” published by the Wall Street Journal and the conservative Heritage Foundation, Mexico ranks #41 of 179 ranked countries, among the lowest of all OECD member countries.[see note 2]  One OECD report estimated that Mexico could capture at least $30 billion more in foreign direct investment if competitiveness were improved.[see note 3]

A massive informal economy, once the purview of low-wage earners and estimated to constitute 40% of total GDP, is the way many middle class Mexicans make do today.  Many are slipping back into poverty after years of gains.  Tax receipts, already meager relative to economic activity, and urgently needed to improve public infrastructure, are falling. 

Among the 30 wealthiest OECD countries, Mexico’s total tax burden, at 21.1% of GDP in 2008, was at the bottom.  That figure has fallen to an estimated 17.3% in the first half of 2010, despite pro-cyclical tax increases pushed through the Mexican Congress by President Felipe Calderón.  The clearest explanation for the declining tax burden relative to GDP is a growing informal sector and declining administrative capacity to combat rampant tax evasion.

There are multiple detrimental effects from insufficient tax receipts and a growing informal (tax-evading) sector.  Budget constraints make it impossible for Mexico to make needed infrastructure investments in transportation, communications, education, public security & health, and capacity building of government bureaucracies.  Without adequate public investment, Mexico’s ability to compete globally will continue to lag, and future economic growth will be stunted. 

Workers who drop out of the formal sector no longer contribute to a strained social security safety net, and also lose access to significant portions of that safety net.  As safety net coverage declines along with formal-sector employment, consumption demand may decrease disproportionately to (already declining) household wages, as families are forced to save for potential economic setbacks such as an unexpected illness.  In addition, increased mortality and morbidity can be expected, increased crime is likely, and poverty rates will grow.  As these phenomena continue, public frustration, anger, and distrust promote increasing class enmity and social breakdown. 

Economists estimate that Mexico’s economy needs to grow by nearly 7% per year to keep pace with labor-force growth.  Over the past decade, growth has averaged only 3%.  The result is a growing underclass of young people with two obvious alternatives:  Crime, including drug cartels and other forms of criminal entrepreneurship; or heading north of the border in search of opportunity, despite the risks to life and health.  Millions of young people are classified as “NiNis” (Ni trabajan, ni estudian…they neither work nor study).  The NiNi phenomenon represents a very serious problem for Mexican society.

None of this constitutes a recipe for moving Mexico into the ranks of highly productive first world consumer economies.  Optimism in the 1970’s and 1980’s has been replaced by cynicism and frustration for a majority of Mexicans. 

The long term threat posed by lack of upward mobility and increasing downward mobility exceeds the threat of violence that Mexico is currently battling.  Indeed, the current violence is in large measure a symptom of socioeconomic trends of the past decade.

The risk for Mexico, and for the U.S., is that Mexicans could turn to anti-Americanism, protectionism, and authoritarianism unless the economic trend is reversed. 

Mexico is our second largest export market, and our close neighbor with whom we share a 2,000 mile border.  U.S. security and economic interests are enormously affected by what ensues in Mexico.  A democratic and economically vibrant Mexico would send fewer poor northward, and buy more of our goods and services.  Far fewer of Mexico’s young people would be drawn to organized criminal activity if there were viable alternatives in the formal job market.  A political turn toward authoritarianism and anti-Americanism on our southern border would pose serious security risks for the U.S. 

What Is To Be Done?

First, U.S. and Mexican media need to provide better and fairer reporting and analysis on economic and other issues relating to Mexico.  And U.S. policy makers need to pay much closer attention to what is happening south of the border.  That attention must go well beyond the headlines of drug cartel violence.  Presidents Calderón and Obama are certainly aware of the tremendous growth opportunities being missed, and the increasing vulnerability to competition from Asia.  Both leaders could do much more to educate their constituents about what is needed from both sides of the border.

Key challenges that Mexico must confront include improvements in the administrative capability of the tax authorities and greater decentralization of taxing authority; further energy sector reforms (a huge obstacle, given Constitutional limitations on private participation. But both Brazil and China could serve as examples of how private investment may be leveraged in publicly owned energy firms); a large, sustained, and predictable commitment to infrastructure investment in highways, communications, education, and public health (private-sector participation will be required in infrastructure development, but transparency in contracting and management will be essential); Private-sector monopolies and duopolies should be broken up (enforcement of existing anti-trust laws would be a start, but more effective legislation is also needed); increased enforcement of intellectual property rights laws is needed; elimination of distortionary price controls, and subsidies would improve competition, encourage foreign direct investment, and lead to lower prices and greater consumer choice;

There is much that the U.S government and the U.S. private sector could do to support these difficult reforms in Mexico.  Bilateral assistance that co-funds key infrastructure projects would help to create jobs in Mexico while building the infrastructure needed for greater competitiveness.  Technical assistance could lead to improvements in the educational system, agricultural production, and government regulation and institutional capacity. With reform, private investment will follow, which will further consolidate gains.

U.S. assistance to Mexico should not be considered, and must not be sold as, a handout to our southern neighbor.  The U.S. has vital short term and long term security and economic interests in helping Mexico to join the ranks of wealthy, stable, and competitive producing and consuming countries.  While most of the heavy lifting must be done by Mexico, the U.S. has an important and beneficial role to play.

The problems that Mexico faces are also our own.

NOTES:

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[1] To be fair, Carlos Slim’s wealth is not entirely from the telephone systems he controls.  The political rents he has earned over the years from Telmex and Telcel have financed a tremendous diversification of his holdings.  He owns a string of industrial and retailing firms; is the largest tenant in Mexico’s shopping malls; is the second-largest shareholder of television giant Televisa; and has enormous holdings in the U.S. and Latin America, including a $250 million stake in the New York Times.  At $60 billion, his for­tune amounts to 6.3 percent of Mex­ico’s annual economic output.  If Bill Gates owned a similar chunk of the U.S., he would be worth $784 billion.

[2] Economic freedom is defined as the right to control one’s own labor and property.  In economically free societies, individuals are free to work, produce, consume, and invest as they please, with that freedom protected by, and unconstrained by, the state.

[3] Sauvant, Karl P., Wolfgang A. Maschek, and Geraldine McAllister. Foreign Direct Investment by Emerging Market Multinational Enterprises: The Impact of the Financial Crisis and Recession and the Challenges Ahead. OECD. Dec. 2009.

Economic Discontent and Conservatives’ Secret Weapon to Win the Class War

Paul Crist

August 13, 2010

Framing the Issue: Class War

The white-hot anger on the “Tea Party” political right and the frustration on the political left largely spring from the same fundamental problem: A generation of increasing economic inequality, job insecurity, loss of privilege, and a once optimistic middle class that is under attack and demoralized. Political and mainstream corporate news media leaders avoid the term, but what we are confronting is class warfare in America. 

The conflict is essentially between the owners of capital, and the owners of labor.  The battle lines are less clear than in the past, but this is not the first time in our national history that we’ve been here.  In the late 19^th and early 20^th century, there was only a small middle class relative to the population.  The period from 1940 to the 1960’s saw a tremendous growth of a middle class that, while their principal asset remains labor, also holds some capital assets (home equity, stock ownership, and retirement funds) that they fiercely desire to protect.  That has helped society’s true economic elites to enlist a substantial subset of the middle class to espouse a capitalist ideology that is largely in opposition to their real economic interests. 

Asset price bubbles during the past several decades helped to strengthen the ideology of wealth acquisition through capital ownership among middle and working classes, but the bursting of the housing price bubble and consequent financial crisis has been a major blow to the middle class psyche.  The current crisis has brought longstanding economic anxieties to a boil, and is largely behind the intense fear, anger, and frustration we are now experiencing as a society.  

Conservative middle class voters have long voted based on their aspirations, rather than their reality.  They have internalized an ideology that wealth and financial success equates to being “good people.” Like most of the working and middle class, those on the right aspire to the “American dream.”  But for conservatives, the wealthy “deserve” what they have, because they have worked hard, overcome obstacles, and demonstrate independence and self-reliance. Of course, they see those qualities in themselves and so have an ingrained expectation of achieving the wealth and success that they are “entitled to” as “good people.”

These myths about wealth, success, and the American dream are woven into the fabric of American culture and taught to successive generations. In this worldview, taxes “unjustly” take away wealth legitimately and “independently” earned, to give to the society’s “undeserving” and dependent.  Government regulation is an unreasonable obstacle to an individual’s “right” to acquire wealth and achieve the American dream.  There are myriad fallacies inherent in these American myths, of course.  Not least, the notion that wealth is acquired “independently” is absurd on its face.  Without the social order imposed by government, without the security, national infrastructure, education, and public health supported by government, acquisition of wealth would be impossible. Increasingly limited government hindered by successive rounds of tax cutting leads to an inability to maintain the building blocks of a social order where wealth can be created. 

A conservative economic philosophy that demands ever lower taxes and ever smaller, less potent government, focused narrowly on national security, the administration of justice (essentially punishment), and promotion of the “unfettered” conduct of business makes it much less likely that Tea Party conservatives will achieve the wealth and self reliance to which they aspire.

There is incontrovertible evidence that it was the strength of government that created the middle class between 1940 and 1960.  It was during this period that the middle class expanded rapidly, thanks to the introduction of a social safety net, and government regulation of business practices, and protections for workers, the environment, and consumers.  It was during this period that educational opportunity expanded; progress was made on civil liberties and equal treatment; public service was considered to be honorable and a privilege.  Government support for workers’ right to organize and bargain collectively with the owners of capital significantly promoted an economy that benefited a large proportion of the population.  In other words, the middle class was built thanks to traditional progressive values dominating American politics and policy.  And it is government’s growing impotence that has allowed the middle class, the bedrock of American prosperity, to be nearly destroyed in recent decades. 

Tea Party conservatives believe they are overtaxed, because they’ve been told they are by economic elites. But the US government budget, at 15% of GDP, is lower than it has been since the early 1940’s, at the beginning of the period when the middle class was created.  The government budget as a percent of GDP is the lowest of any wealthy country.  While we could debate the fairness of the tax system, whether it ought to be more or less progressive, etc., the gross numbers hardly indicate an overtaxed American populace.

The right thinks government is corrupt and does nothing well.  In fact, it is corrupt. But it is corrupt because we’ve allowed the owners of capital, conservative corporate interests, to have an outsize influence.  Those interests are not aligned with the interests of middle class workers whose principal asset is their labor. Government doesn’t do a lot of things well because we’ve gutted it, privatized it, and turned it over to particular interests over the last three decades.  Agency and regulatory budgets have been steadily slashed; and functions that ought not to be subject to the profit-making motive (e.g., environmental protection and regulatory oversight, worker protection oversight, even national defense and security) have been shifted to profit-focused private contractors.  The effect of outsize influence for the owners of capital has skewed US trade and industrial policies in ways that have devastated working families who grew up believing in the American dream.

That dream can be revived, but until we reverse the course of the past thirty years, it will not be.  Unfortunately, the right remains wedded to the ideology of supply-side, capital-dominated economics that is essentially the same as that which prevailed just prior to the Great Depression.  To change that allegiance, the left must make some fundamental changes in the way we communicate our ideas, beliefs, and strategies.

The Secret Weapon of Conservatives: How ordinary working Americans become devoted to an ideology that is opposed to their own economic interests.

The owners of capital have done a remarkable job of framing their messages in such a way that they are perceived as “ordinary people,” when in fact, they are anything but.  They used language brilliantly to frame the debate, taking advantage of widespread discontent following the Vietnam War and the economic stagnation of the 1970’s.  The left, conversely, has done a very poor job of framing the debate and developing winning language and messaging based on conceptual mental frameworks.

There are many examples.  George Lakoff, a linguistics professor at UC Berkeley, uses the example of the word “revolt” which implies or assumes a population that is being ruled unfairly. The word “revolt” creates mental images of people throwing off that unfair rule, which is perceived as a good thing.  

We hear the term “revolt” paired with “voter,” and ordinary Americans, who identify as “voters” see themselves as the oppressed people and the government as the oppressor.  If the voters revolt against government, then, everything will be good again.  This is the language that is behind the anti-incumbency mood in the current election cycle. If we “throw all the bums out,” and elect new leaders who are “not Washington insiders,” then things will get better.  Of course, it simply never turns out that way, and so every election, we hear new calls to again “throw the bums out.”

But what has the right done differently from the left?  Why have they done such a superior job of framing the political discourse?  In a word, the answer is money.  The right, the owners of capital, has invested billions of dollars researching language and idea messaging.  They have established conservative think tanks, and encouraged wealthy individuals to set up professorships.  They have invested in media outlets dedicated to disseminating conservative ideas.  Today there is an overwhelmingly conservative message dominating talk radio, cable news, print publications, and online information sources.

The investments of economic conservatives have created an “army of the right” that is constantly updating and honing the messages, reinforcing the conceptual frameworks, and ensuring that conservative ideas dominate the national political discourse, crowding out opposing ideas that are less well articulated.  As businessmen, the right understands the long-term value of investing and they have done an outstanding job of building the infrastructure necessary to preserve and defend their interests.

The left has a very different conceptual view of human nature and the human condition.  The left gives money to grassroots organizations and demand that it all go “to the cause.”  Those causes are about helping people in need, nurturing, and taking responsibility for others.  Money spent on administration, communications infrastructure, and career development for progressive leaders is a diversion of money that is intended to “help.”  This is a fundamentally different worldview from that of the right, who see “good” people as those who have already become wealthy, or at least self reliant.  The conservative worldview says that “helping” spoils people, gives them things they have not earned, and keeps them undisciplined and dependent.  This difference explains why conservatives have done better at dominating our political discourse and direction.

When one projects these divergent worldviews onto the nation, it is easy to see that taxes “take away” resources that have been earned by “good, disciplined, self reliant” people and give those resources to the “undisciplined and dependent” people who have not earned it.  Tax “relief” is how the right frames the debate about taxes, implying that taxes are an affliction that must be overcome.  To oppose tax “relief,” therefore, is to be the villain. To escape the demonization inherent in opposing well-articulated right-wing taxation and governance policies, Democrats have been forced to adopt the language of the right.  Because they are perceived as grudging followers of those policies, they have failed to avoid being called the villains.

In order to move the debate in ways that benefit workers, the owners of labor in our economy, we need to find a fundamentally different linguistic framework to talk about taxes and the role of government.  We need language that defines taxes as the price of being an American.  Taxes paid by previous generations are what made possible the infrastructure on which we rely now…the highways, the education system, the electric power grid, and the justice system…all of it.  Tea Party conservatives seem to view themselves as self reliant, but they are failing to recognize the enormous public and social infrastructure on which they rely and that makes their way of life possible.  We need to convince ordinary working Americans on the right that the infrastructure on which they depend must be maintained and enhanced in order for our way of life to be sustained or improved.

In fact, by not paying the taxes needed to maintain our national infrastructure, by not paying the dues for being an American, we are borrowing from the past and robbing from the future of our country.  Paying taxes should become an issue of patriotism, but instead, those who oppose taxes are now able to portray taxation as somehow unpatriotic.

Reframing the public discourse is a long-term project.  The right began investing in the infrastructure needed to frame public debate in the 1970’s.  By 1980, they had Ronald Reagan, who was able to use the infrastructure the right had developed and win the presidency.  The left needs to begin to invest in the same sorts of infrastructure that the right has been building for decades.  That won’t be an easy transition, based on the worldview of the left, but it must be done.

Progressives need to focus on identity and ideas, and move away from marketing issues and policies they think will resonate with voters. And above all, they need to learn how to talk about identity and ideas in ways that ordinary Americans can understand.  It seems that when Democrats do talk about ideas and identity, they open themselves up to charges of elitism, East- and West-Coast intellectualism that is removed from the realities of working Americans.  That represents a failure of conceptual framing of our public discussion.  We live in a sound bite era, and Progressives have yet to figure out how to talk about ideas and identity in sound bites.  The right does this very well.  And that is why they win at the ballot box.

Linguistic Frameworks of the Right: Key to US Economic Decline

Paul Crist, August 13, 2010

The anger on the Tea Party right, and the frustration on the left, mostly emanate from the same economic phenomena.  The difference is that those on the right have been coopted to a set of beliefs that are actually in opposition to their own economic interests.  They vote their aspirations, rather than their reality.  But the ideas they support actually make it ever less likely that they will achieve the wealth and self reliance to which they aspire.

The right demands lower taxes and ever smaller, ever more impotent government, focused only on national security, administration of justice (essentially punishment), and promotion of the orderly but “unfettered” conduct of business.  There is, of course, the social conservative right, but there is evidence that that movement is beginning to lose steam, at least while the country is in the throes of a deep economic downturn.  So the focus here is on the phenomenon of economic conservatives, many aligned with the Tea Party movement, who are currently dominating our national political discourse.

There is incontrovertible evidence that it was the strength of government that created the middle class between 1940 and 1960.  It was during this period that the middle class expanded rapidly, thanks to the introduction of a social safety net and government regulation; expansion of educational opportunity; civil liberties and progress toward equal treatment; public service; and promotion of an economy that benefits a large proportion of the population.  In other words, the middle class was built thanks to traditional progressive values dominating American politics and policy.

And it is government’s growing impotence that has allowed the middle class, the bedrock of American prosperity, to be nearly destroyed in the last few decades.  The right believe they are overtaxed (because they’ve been told repeatedly that they are), but the US government budget, at 15% of GDP, is lower than it has been since the early 1940’s, at the beginning of the period when the middle class was created. And the government budget is also now the lowest of any wealthy country.  While we could debate the fairness of the tax system, whether it ought to be more or less progressive, etc., the gross numbers hardly indicate an overtaxed American populace.

The right thinks government is corrupt and does nothing well.  In fact, it is corrupt. But it is corrupt because we’ve allowed the owners of capital, conservative corporate interests, to have an outsize influence.  Those interests are not aligned with the interests of middle class workers whose principal asset is their labor. And government doesn’t do a lot of things well because we’ve gutted it, privatized it, and turned it over to particular interests over the last three decades.  Agency and regulatory budgets have been steadily slashed; and functions that ought not to be subject to the profit-making motive (e.g., environmental protection and regulatory oversight, worker protection oversight, even national defense and security) have been shifted to profit-focused private contractors.  The effect of outsize influence for the owners of capital has skewed US trade and industrial policies in ways that have devastated working families who grew up believing in the American dream.

That dream can be revived, but until we reverse the course of the past thirty years, it will not be.  Unfortunately, the right remains wedded to the ideology of supply-side, capital-dominated economics that is essentially the same as that which prevailed just prior to the Great Depression.  To change that allegiance, the left must make some fundamental changes in the way we communicate our ideas, beliefs, and strategies.

How did ordinary working Americans become so devoted to an ideology that is opposed to their own economic interests as the owners of labor? 

The owners of capital have done a remarkable job of framing their messages in such a way that they are perceived as “the people,” when in fact, they are anything but.  They used language brilliantly to frame the debate, taking advantage of widespread discontent following the Vietnam War and the economic stagnation of the 1970’s.  The left, conversely, has done a poor job of framing the debate and developing winning language and messaging based on conceptual frameworks.

There are many examples.  George Lakoff , a linguistics professor at UC Berkeley, uses the example of the word “revolt” which implies a population that is being ruled unfairly, or assumes that they are being ruled unfairly. And it creates mental images of people throwing off that unfair rule.  The idea of throwing off unfair rule is perceived as a good thing. 

We hear the term “revolt” paired with “voter,” and ordinary Americans, who identify as “voters” see themselves as the oppressed people, and the government as the oppressor.  If the voters revolt against government, then, everything will be good again.  This is the language that is behind the anti-incumbency mood in the current election cycle. If we “throw all the bums out,” and elect new leaders who are “not Washington insiders,” then things will get better.  Of course, it simply never turns out that way, and so every election, we hear new calls to again “throw the bums out.”

But what has the right done differently from the left?  Why have they done such a superior job of framing the political discourse?  In a word, the answer is money.  The right, the owners of capital, has invested billions of dollars researching language and idea messaging.  They have established conservative think tanks, and encouraged wealthy individuals to set up professorships.  They have invested in media outlets dedicated to disseminating conservative ideas.  Today there is an overwhelmingly conservative message dominating talk radio, cable news, print publications, and online information sources.

The investments of economic conservatives have created an “army of the right” that is constantly updating and honing the messages, reinforcing the conceptual frameworks, and ensuring that conservative ideas dominate the national political discourse, crowding out opposing ideas that are less well articulated.  As businessmen, the right understands the long-term value of investing and they have done an outstanding job of building the infrastructure, of “marketing the message,” necessary to preserve and defend their interests.

The left has a very different conceptual view of human nature and the human condition.  The left gives money to grassroots organizations and demand that it all go “to the cause.”  Those causes are about helping people in need, nurturing, and taking responsibility for others.  Money spent on administration, communications infrastructure, and career development for progressive leaders is a diversion of money that is intended to “help.”  This is a fundamentally different worldview from that of the right, who see “good” people as those whose discipline and personal responsibility have already allowed them to become wealthy, or at least self reliant.  The conservative worldview says that “helping” spoils people, gives them things they have not earned, and keeps them undisciplined and dependent.  This conceptual difference, as framed by the right, explains why conservatives have done better at dominating our political discourse and direction.

When one projects these divergent worldviews onto the nation, it is easy to see that taxes “take away” resources that have been earned by “good, disciplined, self reliant” people and give those resources to the “undisciplined and dependent” people who have not earned it.  Tax “relief” is how the right frames the debate about taxes, implying that taxes are an affliction that must be overcome.  To oppose tax relief, therefore, is to be a villain, even unpatriotic. Consequently, Democrats have been forced to adopt language of the right, and by doing so, policies must follow.

In order to move the debate in ways that benefit workers, the owners of labor in our economy, we need to find a fundamentally different linguistic framework to talk about taxes and the role of government.  We need language that defines taxes as the price of being a patriotic American.  Taxes paid by previous generations are what made possible the infrastructure on which we rely now…the highways, the education system, the electric power grid, and the justice system…all of it.  Tea Party conservatives seem to view themselves as self reliant, but they are failing to recognize the enormous public and social infrastructure on which they rely and that makes their way of life possible.  We need to convince ordinary Americans on the right that the infrastructure on which they depend must be maintained and enhanced in order for our way of life to be sustained or improved. 

In fact, by not paying the taxes needed to maintain our national infrastructure, by not paying the dues for being an American, we are borrowing from the past and robbing from the future of our country.  Paying taxes should become an issue of patriotism, but instead, those who oppose taxes are now able to portray taxation as somehow unpatriotic.

Reframing the public discourse is a long-term project.  The right began investing in the infrastructure needed to frame public debate in the 1970’s.  By 1980, they had Ronald Reagan, who was able to use the infrastructure the right had developed and win the presidency.  The left needs to begin to invest in the same sorts of infrastructure that the right has been building for decades.  That won’t be an easy transition, based on the worldview of the left, but it must be done.

Progressive Democrats need to focus on identity and ideas, and move away from marketing issues they think will resonate with voters. And above all, they need to learn how to talk about identity and ideas in ways that ordinary Americans can understand.  It seems that when Democrats do talk about ideas and identity, they open themselves up to charges of elitism, East- and West-Coast intellectualism that is removed from the realities of working Americans.  That is a failure of conceptual framing of our public discussion.  We live in a sound bite era, and Progressives have yet to figure out how to talk about ideas and identity in sound bites.  The right does this very well.  And that is why they win at the ballot box.