It’s the Economy, Stupid!

When Bill Clinton ran for President, James Carville famously posted a large sign in the campaign’s “war room.” The sign read: “It’s the economy, stupid!” Carville wanted to remind his candidate and those working for him to keep their focus where he felt it belonged– on the economy.

Fast forward to the escalating debates over American inequality, the diminishing numbers of people who can be categorized as middle class, and the widening gap between wealthy Americans and everyone else. As Ryan Cooper noted in a recent article in The Week, progressives arguing for measures to reduce that gap have forgotten Carville’s lesson, and in the process have neglected the most potent argument for those measures.

That argument is the economy.

As Cooper notes,

“A growing body of evidence suggests that inequality isn’t just an issue of fairness, but is actually hampering general prosperity. And that, in turn, ought to have enormous knock-on political effects.

 That inequality is choking growth is the conclusion of the new issue of the Washington Monthly, including articles by Heather Boushey, Mike Konczal, Alan Blinder, and Joe Stiglitz. It comes on the heels of several other studies, even one from the IMF, traditionally a very orthodox institution, that reach the same conclusion.”

Modern economic systems depend upon consumption. Many of us are less than enthusiastic about that undeniable fact, and there is certainly much to criticize in consumer culture. But in the system we inhabit, consumer demand is a critical element of economic health. When millions of people are making poverty wages, demand suffers.

When the great majority of people have very little disposable income, there is no mass market. No matter how entrepreneurial a given individual may be, s/he is unlikely to start a business—or get financing to start a business—if the success of that business will be dependent upon mass sales.

It’s not just new business starts, either; when consumers aren’t spending, existing businesses aren’t likely to invest and grow, and they are equally unlikely to be “job creators” hiring more workers.

When debates about growing inequality are framed as issues of fairness (compelling as some of us may find such arguments), we fail to deploy the most effective weapon at our disposal—the fact that the current policies intended to privilege supposed “makers” aren’t just harming those who are scorned as “takers.” They are actually harming us all, “makers” included, by depressing demand and retarding economic growth.

When I was in law school, by far the most valuable lesson I learned was “he who frames the issue wins the debate.”

Take the current debate over raising the minimum wage.

When we argue for raising the minimum wage only on fairness grounds, the typical response is that higher wages will depress job creation. Even though available evidence convincingly rebuts this, it is a widely accepted meme because it seems so self-evident; indeed, it would be true if all else were equal. (In real economic life, it turns out that all else isn’t equal–who knew?) If, however, we frame the argument for a higher minimum wage as an argument for a more robust economy benefitting everyone—an argument that has the added merit of being demonstrably true—we win.

As James Carville reminded us: It’s the economy, stupid!

 

 

7 thoughts on “It’s the Economy, Stupid!

  1. Remember Scrooge in Dickens’ “A Christmas Carol”? We are currently governed by the 1%; an entire herd of Scrooges who, rather than being ugly tempered about keeping all the money, are ROFLTheirAO. They would buy off the ghosts of Christmas past, present and especially the future and never miss a beat. It would take another total crash of the stock market to wake them up but, letting these sleeping dogs lie, will sink this country deeper and deeper into the mire. “It’s the economy, stupid” passed over the heads of voters who voted to take more from themselves and lose more bare-bones public assistance and health care is again in danger of ending.

    Today’s economy has many living with less than slaves during the early centuries of this country; they were provided with at least some very basic form of housing, clothing and food simply to keep them slaving to provide more money for Massa’. They voted to take control of the Senate and more control over the House; a large group of baboons is called a Congress – never more true than today and will get worse after January 1st. My paultry Social Security increase will be put to subsistance-level living again – unless they raise my Medicare payments which will keep me at my barely above povery level living status. I’m not asking for more for myself; I am fortunate to have barely enough to get by; millions in this country cannot even do that and will be in worse shape beginning in January 2015. They will continue blaming President Obama and the Democrats for their dire straits. That “trickle down” system has now put us at the bottom of the hill and we all know s#+t rolls downhill. I did a little grocery shopping on Friday; food prices soar weekly. Toilet paper is becoming a luxury because we must spend what we have on what foods we can afford; those who need medications to maintain health or to stay alive will be eating less and/or less healthy foods. We need a stronger Democratic party who is willing to seek Republicans with balls to work with them to stop the rape of America.

  2. Running a country, including its economy, is one of mankind’s toughest jobs. Like all tough jobs it requires of those who actually do it great preparation. Education, experience, cognition, common sense, organizational talent, personality, leadership, sensitivity, commitment, energy, time management, moral fortitude, the ability to learn from others.

    Our problem is that we rarely elect such people, combined with the fact that qualified people rarely choose politics as a career. Those who do run and we elect, we do so based on celebrity.

    Of all of the talents that exceptional statesmanship takes perhaps the most important is listening to both those with real problems and those with real solutions. We elect people who talk so much that they rarely listen to anybody and when they do it’s not a meeting of minds but a clash of cultures.

    Much of the stupidity demonstrated in political practice is eminently avoidable if we took advantage of what real experts know in their various fields of endeavor. But those with power to implement have to listen to those empowered by education and experience.

    Mass media is not made for listening. The center of listening in the world is academia where people are motivated to learn from those qualified to teach. Our democracy has so incorporated mass media into its being that there’s little difference between government and the Academy Awards. Those whose egoes ignore their substance trying to shine the brightest.

    Is mass media the death of democracy? Maybe.

  3. I looked over some data from the Census Bureau recently. It was from a Table of Total Money Income since 1967 to 2013 in adjusted dollars. In 1999 Household Median Income was $56,696, in 2013 it was $51,939.

    Like it or not we are a consumer spending driven economy. As I have said before virtually all the consumer goods I purchase are not made in the USA. Clothes, tennis shoes, boots, Cell Phones, Computers, are not made in the USA. The US Balance of Payments has been a deficit since 1975, that is we import more than we export. The last time our imports and exports with China were close was 1985, per US Census Bureau. Since then the deficit with China has increased to the point where it is not even close.

    Back in the 1970’s when I was taking Econ, and Banking Classes in College a nations manufacturing strength was a gold standard for economic health.

  4. The problem the democrats had this election cycle is that the people whose cause they allege to cahmpion have not been participants in what is possibly the greatest economy recovery in history. The recovery was engineered by Pres. and others who understood the principles of economics and made investments (over the objections of many republicans) to save some of the key US industries. Those who really control the economy have refused to raise wages even in the face of consistent and significant economic recovery. They have successfully defused the democratic message that the actions and policies of Obama and others have yanked the economy back from the edge of disaster, by starving the people who would vote for a continuance of those policies and successfully placing the blame on Obama.

    When are the democrats going to wake up and act like they have balls?

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