The World Why'd Webb?

Of all the things Senator Webb could have said in response to the president's SotU address, Iraq was an expected topic but the economy had a few people asking "Why that?" The NYTimes' David Leonhardt asked and could not find simple and clear answers but quotes various observers to the effect that indeed, as Webb asserts, the health of corporate bottom lines means less and less to working Americans when much of the profits shown are owed to increasing amounts of cheap offshore labor going into the products.

Ten years ago already, when the congress was in the grips of the Gingrich-lead contract on America, the often and widely repeated slogan that liberals were guilty of financially reckless "tax and spend" policies was known to be not merely wrong but quite the opposite of the numbers. In a word it was a lie then. The big spenders were the Conservatives up until 97 and in the intervening decade, the Bush borrowing binge has made the claim a yet more pale lie.

Why is that so? Why wouldn't a liberal congress continue or enhance a spending binge if it is aware of Senator Webb's concerns and reads the NYTimes? I am not a particularly well informed political commenter nor schooled at all in economics but I have an intuition: the liberals know who pays the taxes that get spent. Its the wage earners. We who live off of earned money have no place to hide from the IRS. The conservatives get their votes from the likes of NewsMax readership: people who quake in dread of some mysterious "them" who want to steal from trust funds and savings by hiding behind the tax man. Owning a pile of money is so different from hoping to earn a pile of money that it nearly creates two distinct species of political animal.

I grew up in a household where the democratic party and most of the candidates it offered were reviled. And "union" was a dirty word. A full accounting of how I wound up on this side of the Blogosphere would be a ridiculously long post and I have left many attempts at it in the "draft" state, you should be grateful. But just let me share one thing I have noted along my way: the association of organized labor with the politics of the Democratic party was once strong, weakened exactly during the peak years [see the NYTimes excellent chart in the linked article] of real, inflation adjusted, wage income. And now that wages are whittled away labor, though a wan shadow of its former self, has at least rediscovered were its political heart should be. How would I, well paid old engineer who never worked any place where an organizer could set foot, even know this? Simple. When vested money wants advice and its advisers lay out the "enemies list" I treat that list, [which is the conservative adviser's mistake], as the honor roll of liberal forces. Don't ask who your allies are, just check your enemy's target list. One John Browne offers an investment advice column to NooseMax readers. The following is from a recent article:

In our opinion, any further reductions in the prices of residential real estate will prove to be damaging to consumer confidence and therefore to aggregate demand of U.S. consumers.

This will hurt forecasted corporate earnings in certain sectors, raising today’s market average PE ratios to “expensive” levels.

Compounding the real estate crisis, is the bankruptcy-threatening situation facing Ford, one of America’s industrial icons and former blue-chip companies.

General Motors, once the largest company in the world, also faces serious financial problems.

To some extent, both of these giants have been brought low by the unions and their demands for wages and benefits (including pensions and health care) that were increasingly unsupportable by the long-term competitive positions of their products. (In the early 1970s, I was working with Morgan Stanley & Co. and saw first hand how union pressure caused managements to cave.)

Even if his other advice is sound, would you want to live in a country where capital was safe and workers, though no longer guaranteed much of anything in exchange for their work except their wages, were held to blame for all ills? Are you a worker or are you capital? Who votes, capital or workers. Two species of political animal, I tell you.

And let me give you a little more motive to read the Leonhardt article: Back in August he took a look at how the economy was going to work for Republicans in the then-upcoming election. He got it right.

---

I will not give new smacks the courtesy of an actual link. I take their newsletters just to keep in touch with what the lower half of the old rich people are hearing and fearing. And compared to most of my readers, I AM old and rich...its url is newsmax[dot]com if you must satisfy your morbid curiosity.