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Sunday, 27 July 2014

'Middle-Out' Economics - » The Australian Independent Media Network

'Middle-Out' Economics - » The Australian Independent Media Network

‘Middle-Out’ Economics

Here it is. Here is the wealth inequality narrative progressives have been searching for. Yesterday I wrote about rich wankers and a couple of helpful commenters contributed the following two articles on the subject of wealth inequality:

‘Middle-Out’ Economics: Why the Right’s Supply-Side Dogma Is Wrong

The Pitchforks Are Coming… For Us Plutocrats

Both articles are written and co-written by Nick Hanauer
– a member of the 0.01% wealthiest people in the world thanks to his
foresight in investing early in Amazon. Hanauer is arguing for a
progressive narrative to replace the right’s reliance on ‘trickle down
economics’. I would suggest reading both articles, as I really believe
Hanauer is spot on. Hanuaer’s 2012 TED talk is also worth watching.

I am currently studying political narrative and framing and through
this research, I have become interested in George Lakoff’s work in
trying to convince the US Democrats to be smarter about the language
they use to argue against Republican and Tea Party policies which widen
the gap between rich and poor. Policies like tax breaks for the rich,
using the incorrect excuse that the rich are job creators. And policies
that aim to make the government smaller and more ineffective in stemming
capitalist greed. Hanauer argues that there is no empirical evidence
that tax breaks for the rich create jobs. He also argues that the best
way to reduce the size of government is to reduce welfare payments by
expanding the size of the middle class. Someone needs to show Joe Hockey
this suggestion. People don’t want to be on welfare and would
support a government who supports them to be trained and prepared for
meaningful, well paid work. This is simple, yet powerful stuff.

The crux of Hanauer’s narrative is that middle class spending creates
demand in the economy and in turn, creates jobs. As Hanauer explains,
from his own experience as a member of the ultra-rich American
community, he might earn 3,000 times more than the average worker, but
there is no way he consumes, or buys, 3,000 times more than the average
worker. His excess money goes into his own savings and investments,
which help him to get even richer, widening the gap between his wealth
and everyone else’s. Hardly any of Hanauer’s wealth influences the
wealth of the middle-class in his community and contributes to job
creation. As he simply says, if Walmart employees can’t afford to be
Walmart consumers, who is going to ensure the long term
sustainability of Walmart’s business model? His arguments are not social
ones, although of course they do affect social policies. His arguments
are economic. The loss of America’s middle class means the loss of their
consumer base.

Here are Hanauer’s suggestions as to how ‘Middle-Out’ economics can become a thing as published in The Atlantic:

  • First, relentlessly frame the choice as a choice.
    It’s trickle-down and middle-out economics. Not “top-down.” Not “the
    old ways that got us into this mess.” Trickle-down vs. middle-out. If we
    don’t have the courage to name our alternative, and repeat it
    relentlessly, we haven’t given people a clear choice. We will never
    displace trickle-down ideas if we don’t provide a clear, concise, and
    compelling alternative. Neither term has inherent force; it’s only in
    the contrast that we win.

  • Second, propagate the one pivotal meme at the heart of this entire effort:
    that rich businesspeople don’t create jobs; middle-class customers do.
    To put it another way, the right’s claim that rich businesspeople are
    job creators is the critical vulnerability deep in the heart of the
    Death Star; if we can target our ammunition to obliterate that single
    claim, the entire Death Star of right-wing ideology will implode and
    disintegrate. Why? Because without that claim, there is no way for the
    trickle-down camp to justify the absurd preferential treatment in the
    tax code and the regulatory regime for the rich and for large
    corporations. Without that claim, trickle-down economics reduces nakedly
    to a rent-seeking, self-serving agenda by the very rich to extract
    wealth from the poor and middle class. In short, we need to pick a fight
    with the right about the origins of prosperity in a capitalist society.
    Middle-out economics will prevail.

  • Third, make every economic issue an example of middle-out economics. The
    Ryan budget fails not because it is unfair or heartless or draconian.
    It fails because it perpetuates trickle-down thinking and cripples the
    ability of the middle class to generate national prosperity. Entitlement
    reform is not about the virtue or vice of running deficits. It is about
    whether we create enough security for middle-class consumers and
    workers to participate in the economy. The Affordable Care Act is not
    about the byzantine bureaucracy of health-care delivery. It’s about
    whether the middle class can dedicate its purchasing power to productive
    economic activity instead. And so on with sequestration, fiscal
    stimulus, and tax reform.

  • Fourth, recommit to capitalism — in a truer and more effective form.
    Middle-out economic policies aren’t just good because they benefit the
    middle class or the poor in the near term. They are great for the United
    States as a whole in the long term because they drive prosperity for
    all, including the rich. Our agenda is to make capitalism be all it can
    be for all of us.

  • Fifth, take this case to the people in the form of story. The
    argument we make here is a conceptual one. But the delivery device for
    that argument has to be narrative. Perhaps unfortunately, the last 30
    years provide a very simple narrative arc — the tale we told at the very
    start of this article. That kind of storytelling must become second
    nature to progressives. Indeed, on all these fronts, progressives need
    dozens of complementary and simultaneous efforts to turn middle-out
    economics and the job-creator meme into products — media stories,
    policies, bumper stickers, viral videos, school curricula.

The fifth point is the one that most interests me and my study into
political communication and narrative. The left need a new narrative.
And ‘Middle-Out’ provides this narrative. As I have previously written,
wealth inequality needs to be at the heart of the left’s new narrative.
Hanauer’s suggestions provide the left with a way to make this happen.

John Oliver’s recent segment about wealth inequality
was both hilarious and depressing. It revealed to me that President
Obama knows that he needs a wealth inequality narrative, but so far
hasn’t been able to find one. Oliver quotes from this article
which explains that when Obama’s historian, Robert Dallek, asked the
President during a round table discussion what his administration needed
help with, Obama’s response was:

“What you could do for me is to help me find a way to
discuss the issue of inequality in our society without being accused of
class warfare.”

I believe Hanauer is offering a possible solution to Obama’s problem.
Coupled with Senator Elizabeth Warren’s ‘You did not build this on your
own’, the Hanauer ‘middle-out not trickle-down’ narrative adds another
layer of concrete to this concept. The genius of Hanauer’s argument is
that you can’t be accused of class warfare when the advice you are
giving helps every class. Every class benefits from a strong,
productive, wealthy-enough-to-consume middle class. ‘Middle Out’
economics is the narrative Obama, and all progressives, have been
searching for. Is the Australian Labor Party listening?

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