An opportunity lost
Who would have thought that this year's presidential campaign might turn out to be more of a referendum on John Kerry than on George W. Bush? Who would have thought the campaign would be focusing more on the Vietnam War than on the Iraq war? Who would have thought Kerry would base so much of his convention appeal on four months of service in Vietnam and still be unable to respond to questions raised by swift boat vets known for years to have been angered by his criticisms of the war they fought together? Who would have thought that Kerry, vulnerable to the charge of flip-flopping, would suggest that he would have supported the war even if he knew then what he knows now about weapons of mass destruction, and then reverse himself by echoing Howard Dean, saying that the war in Iraq is "the wrong war, in the wrong place, at the wrong time"? Who would have thought that Kerry would fail to develop the obvious signature grand theme that might have been an election winner: the economic squeeze on the middle class?
Anxiety among middle- and working-class families today encompasses not just blue-collar workers but white-collar workers in the service and technology sectors. Yes, there are more two-income families, but they have less discretionary income today and less savings potential than a single-income family of a generation ago. These are people who work for $65,000 or less--roughly 80 percent of our working population. They see themselves falling further and further behind no matter how hard they work. Mostly, they blame the new global marketplace that has exposed them to cheap labor from countries like China and India. Outsourcing has become emblematic of the economic anxiety among the middle class, but offshoring isn't the problem. Productivity is.
On the brink. Productivity has grown right through the downturn and into the incipient recovery. A 1 percent increase in productivity eliminates the need for about 1.3 million jobs. Of the 2.7 million jobs lost over the past three years, a million were lost within 90 days after 9/11, and only 300,000 resulted from outsourcing. In 1990, America had 169,000 steelworkers. Eleven years later, that number had been cut nearly in half--but those workers produced 17 percent more steel. The long-term trend for manufacturing employment has been downhill for at least 25 years, and it won't be going back up again. This is true not only for America but for the world's 20 largest economies. We lost 11 percent of our manufacturing jobs; the Japanese lost 15 percent; Brazil lost 20 percent. Even China lost 15 percent. Why? Higher productivity.
That's why so many Americans have lost jobs and now live with the daily fear that one layoff or one medical emergency in the family may drive them into bankruptcy. Fact: This year, more Americans will file for bankruptcy than suffer a heart attack, be diagnosed with cancer, or file for divorce. To this anxiety, add resentment. Figure in the widening gap between the incomes of middle- and working-class families and those of the wealthy and higher reaches of management, and you can understand the rising tide of populist anger at the Bush administration's perceived favoritism. According to J. P. Morgan Chase, the top one fifth of households, by income, got roughly three quarters of the benefits of last year's Bush tax cuts and approximately half of the 2001 tax cuts. For the bottom 20 percent of households, the combined Bush tax cuts yielded an extra $250 apiece; the middle 20 percent received $1,090; the top 1 percent, whose annual incomes averaged $1.2 million, garnered $78,460.
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