Opinion

Chrystia Freeland

Obama and the 99 percent

By Chrystia Freeland
December 8, 2011

All the doubting Thomases who wondered whether Occupy Wall Street would have lasting political impact got their answer this week in Osawatomie, Kansas. That’s where President Barack Obama traveled to deliver a speech that is being billed as the mission statement for his 2012 re-election campaign.

The president chose that town of fewer than 5,000 people, 50 miles, or 80 kilometers, southwest of Kansas City, for its historical resonance — it is where Theodore Roosevelt journeyed just over a century earlier to give his seminal “New Nationalism” address.

But Zuccotti Park in New York, the informal epicenter of the leaderless Occupy Wall Street movement, served as an equally important, albeit less explicit, inspiration. The movement’s accomplishment is to have legitimized discussion of rising income inequality in the United States — Obama described it as “the defining issue of our time.” That is a landmark declaration.

For one thing, in recent decades the participants in the national political discourse have been queasy about addressing issues of class and distribution directly. One of the intellectual victories of the Reagan Revolution was to make it feel practically un-American to talk about how the pie was divided. The culturally acceptable, win-win question to ask was how to make that pie grow.

Obama’s speech represents an important shift for another reason, too. As recently as this summer, when the headline battle was over the debt ceiling, the issue driving the political debate was government spending and how to cut it.

But today, thanks in great part to Occupy Wall Street (to which the president alluded directly just once), talking explicitly about the 1 percent and the 99 percent is not just O.K., it seems to be a way a man presiding over an economy with 8.6 percent unemployment thinks he can be re-elected.

The speech was written for the campaign trail, in direct and sometimes emotive language, but one of its most impressive qualities was its honesty and sophistication. The surge in income inequality, particularly between those at the very top and everyone else, is driven by a complicated and connected set of causes that are being fiercely dissected and debated in the growing academic literature.

On the left, the preferred culprit is political — the argument that the 1 percent have amassed their fortunes by capturing the political process and thereby securing lower taxes and more favorable, generally weaker, regulation.

Obama did not shy away from those factors, but his core explanation was politically less convenient and intellectually more persuasive. As the president sees it, the big drivers are the twin revolutions reshaping the world economy — globalization and new technology: “Over the last few decades, huge advances in technology have allowed businesses to do more with less, and made it easier for them to set up shop and hire workers anywhere in the world.”

He compared the creative destruction of today’s economic transformation with the Industrial Revolution. The “massive inequality and exploitation” of that transformation spurred Roosevelt to action, just as income inequality today should be at the top of the national agenda.

Framing the woes of the 99 percent as the consequence of a massive — and broadly positive — economic transformation was a brave political choice. Pinning it all on the banksters, as they were called by the left during the Great Depression, would make for more powerful rhetoric and delight the Democratic base. Moreover, the potential downside of alienating Wall Street is something this White House has done already.

But Obama’s speech understated two facts that follow from his chosen explanation, and unless the president is able to confront them, his administration’s response to the problem he so accurately defined will fall short.

The first is the grim economic reality that the hollowing out of the U.S. middle class will be very hard to reverse. One reason the bankster explanation is so appealing (unless, of course, you are one of them) is that it has a simple remedy — raise taxes and tighten regulation. But if you believe, as Obama does, that a larger and largely welcome economic transition is also at work, figuring out how to rescue its victims becomes a more daunting challenge.

To understand the scale of the problems the Western middle class faces, consider how it looked to a few Indian business leaders I recently spoke to in Mumbai.

“You know, historically, economic activities tend to migrate because people who don’t have it have a lot more urge to have it, they’re willing to work harder for less money, and that’s part of life, O.K.?” B.N. Kalyani, the chairman of Bharat Forge, India’s largest exporter of motor parts, told me. “You had your golden period, now, hopefully, we’ll have ours.”

S. Gopalakrishnan, the co-chairman of Infosys, the pioneering Indian outsourcing company, told me bluntly that the per capita consumption of the Western middle class would have to decline as the developed and developing worlds “meet somewhere in the middle.”

Even if you had the lion heart of a Roosevelt, that is not a political platform you would want to run on.

The second consequence of the president’s chosen explanation is political. As is his wont, Obama took great pains to unite rather than divide: “Those aren’t Democratic or Republican values; 1 percent values or 99 percent values. They’re American values, and we have to reclaim them.”

But it might not be quite that easy. As Obama explained, some people are benefiting greatly from the transformation of the world economy — he shared the jaw-dropping facts that the average annual income of the top one-hundredth of the 1 percent is $27 million, and that the typical C.E.O. makes 110 times more than his typical worker. The president wants to believe that “all will benefit” from the vision of America he articulated. But if the problem you are trying to fix is a winner-take-all society, it may take more than rousing rhetoric to persuade the winners to back your plan.

Comments
27 comments so far | RSS Comments RSS

Obama’s populism will ring completely hollow to voters in 2012. They won’t be fooled again by extravagant oratory, given his pathetic track record of helping mostly the 1% and his corporate benefactors.

This is not to say that republican charlatans have anything to offer, either. There is a reason Con-gress has an approval rating of 9%.

The OWS movement will take more than one election cycle to change the debate and politics. But it will. The public is finally beginning to realize that the two-party system is a choice between Tweedledum and Tweedledee and there ain’t a dime’s bit of difference between the two.

Posted by upstater | Report as abusive
 

“-some people are benefiting greatly from the transformation of the world economy-”
Yup, and Obama is one of them. Not that any of the “republican” puppets seem any better. The “Federal” Reserve needs auditing; congress needs term-limits; and the whole G needs oversight, so there’s no more secretive , manipulative black projects like F&F. The government is in the control of sociopathic war mongering gangsters…

Posted by ascetic43 | Report as abusive
 

Nice. I also agree that Americans don’t have the drive anymore. We aren’t united in this country, and can’t focus our efforts. Sheds some light on the inherent weakness in American politics and the free-market economy. But these are weaknesses we’ll have to deal with, we don’t have better options on the table, and it’s a sustainable path for perhaps centuries to come.

I don’t believe we are becoming a winner take all society. Its hard for us to imagine a way out of this mess. I’m always worrying about Iran and what the world might look like in ten years but I think the speed of our technology will change the way we think faster than we can condemn each other. We have smart people out there making incredible changes in science and communications technology everyday. Its now possible for a 24 year old former Marine (yes im plugging myself) to read posts from a favorite editor Chrystia Freeland, and actually respond i.e.

I do agree with what you are doing when you wish to provide a contrast to Bloomberg. David Cay Johnston is another fav of mine and the two of you together is awesome. I’ve been working on building an informative digital media-outlet for individuals around my age. Thanks to the internet and social media, our voices are louder than we think.

It’s not a hard stretch to imagine this country jumping off a cliff, but I guess i’m an optimist. Even if optimism is naive, the future is mine for the taking anyways so whatever.

Vin Martinez.

Posted by noresiduals | Report as abusive
 

Chrystia,
The portion of the President’s speech that seems so persuasive to you (“globalization and new technology”)This Friedmanesque high sounding “intellectual” analysis is actually the weakest portion to defend empirically. The present 8.6% unemployment has very little if anything to do with globalization or technology ,it has to do with lack of demand in the US economy and hence a reluctance on the part of business to hire.

I commend to you Saez and Piketty:

“The reduction in taxes at the top since 2001 has mechanically exacerbated the discrepancy in disposable income between the rich and the rest of us. Thus, it is obvious that the progressive income tax should be the central element of the debate when thinking about what to do about the increase in inequality.”

The critique you ascribe to the “left” is thus supported by the research of two outstanding scholars. Can you please present (if you can find it) research by scholars of equal academic distinction for what you have termed the “intellectually more persuasive” part of the President’s argument. i.e. that globalization and new technology play an important party in the new inequality. Especially since we know who comprise the top 1%: Finance execs, corporate CEOs, Hollywood types,lawyers and doctors.

Posted by MHB | Report as abusive
 

The problem with Obama is he is a “salesman” who will tell any customer anything at any time to clinch the deal, but he doesn’t understand how “customer service” is supposed to work when the “deal” isn’t delivered and the “customer” calls wanting to know where the merchandise is.

Posted by Gordon2352 | Report as abusive
 

“As the president sees it, the big drivers are the twin revolutions reshaping the world economy — globalization and new technology: “Over the last few decades, huge advances in technology have allowed businesses to do more with less, and made it easier for them to set up shop and hire workers anywhere in the world.”
What total crap. As if these things could happen by themselves, without people behind them. Who benefited from these? Governments refused to manage those two for the benefit of the 1%. It is called corruption. You can also frame it in another way: the corruption moves faster than governments, or to put in yet another way: greed is faster than ability to control it.
Another con job.

Posted by contrarianview | Report as abusive
 

Chrystia, your ending sentence hits the nail on the head.

But you neglected to mention that the Fed is still amassing, as we speak, a gigantic balance sheet of garbage debt instruments it has bought from the wealthy who made terrible investment decisions, somewhat characterized by the MF Global and its CEO, former Goldman Sachs head, Jon Corzine.

These immensely wealthy “captains of industry,” routinely have their losses socialized when the Fed buys up their worthless investments, making them whole again.

Their story, their lie, is that they are helping society by “lubricating the wheels of commerce”, when in fact they are plundering society on a colossal scale, with the Fed as their agent.

And Obama encourages the Fed in this giant crime in the hopes that the economy can limp along without collapse until he’s elected.

Your last sentence says it right, Chrystia. And Obama is not the man to fight them. He is not a fighter. He longs to be part of their circle. I regret that I ever voted for him.

Posted by AdamSmith | Report as abusive
 

Would be nice, for a change, not to read Freeland’s continued cheerleading of the U.S. president, but perhaps a more studied overview of what this man has and has not done for the U.S. The speech by Obama was again, like all of this other ones, another campaign stop and more salesmanlike talk. Time for Reuters to really cover this president and cut the fluff. It’s tiresome and, in reality, bad journalism.

Posted by WhatsNext2 | Report as abusive
 

The real issue is whether the interests of the bottom 90% of the population outweigh the interests of the top 10%. Pure and simple.

And the question that needs asking is whether the 90% can tolerate the involvement of the top 10% in Government, the Courts, and Public life in general. So far it looks very much as if the voices of Power (the “Establishment”) are asking the opposite question, which is whether they must tolerate questioning and meddling by the 90%. Such behavior indicates that allowing them to exercise power at all is very, very foolish. They are proving themselves undesirable neighbors to the vast majority of Americans.

Posted by txgadfly | Report as abusive
 

I don’t normally read you ’cause I think that you have a sad personal philosophy, but I was really curious as to your political lean.
People who don’t fear God, have a tendency to bend toward
communism.

Obama and Obama-ites have the answer toward how to fix things.
This answer is not acceptable in a democratic society.

Looking at the last three years, the American way of life as a democratic nation has been under constant siege from the behaviorist within.
People/voters should take special notice of Obama’s speeches because the words
are revealing of what makes this man tick—and it isn’t democratic.

Posted by limapie | Report as abusive
 

my father was a classic middle classman – good machinist, learned how to manage a gas station, was a great mechnanic. none of these trades are promoted or are allowed from a training perspective. None of the high schools have metal shop, wood shop, auto shop any more, the unions have forced them out of the school system. I was discussing this with a colleague the other evening and learned that Europe does a much better job of promoting these skills and trades in their social and economic system, you don’t have to earn a college degree to make it big apparently. This is resonating with me. i live in the bay area of California with kids in high school and all they are offered are the arts, no trade or skills training in school. i agree with Obama even though i didn’t and won’t vote for him that the globalization and technology evolutions have rocked our world here in the US but i would hope we could listen from other countries as opposed to telling them how the cow ate the cabbage.

Posted by lpar | Report as abusive
 

Meh. This article sounds like someone has spent too much time in front of a TV instead of actually looking at reality.

OWS did nothing much other than prove that we have an element in society that want to do no work and get everything for free.

If you want to tax others and not do your own work then you are being Un-American! Get out there and put a shovel to the ground and work! The problem here isn’t that some people are rich it’s that crying babies want everything and give NOTHING.

Posted by BioStudies | Report as abusive
 

In addition to the revolutions in globalization and technology (positive), our neglect of primary and secondary education and failure to live healthier lifestyles (negative) have contributed greatly to income inequality. Obama would do the country a favor by focusing more on these, but we all know that he’s better at tearing us down than building us up.

“As is his his won’t, Obama took great pains to unite rather than to divide.” Are you kidding me? The Real Good Talker has divided the world and our country at every turn. Witness his early Cairo speech — which pandered to the non-Western world and dissed the US — and his recent bashing of “millionaires and billionaires” (except at his many fund-raisers, of course).

I shudder to think about what another four years of this inexperienced, underperforming President would look like.

Posted by Anonymous | Report as abusive
 

there are so many things wrong with how the few supposedly accurately represent the concerns for the many. I constantly read how the issues are so complicated and it will take many more years of suffering for the masses inorder to, allow the few in power to fix the world depression and degradation the many suffer at the hands of the people in power. this planet is a co-op for all living on it. everything that the differnt government sale to the masses, that we so need, is deception. the governments are teaching us to live a life stlye which gives them pleasure and status, but which reeps the masses sorrow and suffering. jesus was asked is it lawful to pay taxes. before jesus answered the question, jesus asked that a coin be brought to him. then jesus investigated the coin. who’s name was on it, who’s face was on the coin. this is what jesus asked. the people answered that is was ceasar’s name and face on the coin, but was that really the name and face on the coin? the earth belongs to god and all with in the earth. therefore nothing belongs to ceasar, it belongs to god, and the kingdom of god belongs to the chikdern of god. thats not about religion, thats just the facts. if anyone of you has ever taken a piece of fruit from a tree, how much did the tree tell you you owed for that fruit? thats your true kingdom, thats the kingdom of god.

Posted by fiigtree1 | Report as abusive
 

by the way im not a scholar, i just a lowly wretch.

Posted by fiigtree1 | Report as abusive
 

Chrystia,
You wrote about the stateless ultra-rich (see also: “Richistan” by Robert Frank). They area stateless and thus are in a position to pit country against country in a bidding war to see who can give them work the cheapest. As many have acknowledged (even Seth Godin), the wealthy make their money by taking the value of the labor minus the pittance they pay their employee for that labor. The cheaper they are, the more of the value the ultra-rich get to keep for themselves.

That’s the way Capitalism as-we-know-it operates. The rich will continue to pit populations against one another in the proverbial “race to the bottom.” Globalizing technologies only help them. Several other things are being manipulated to give them an ever-increasing opportunities to exploit further, but I’ll skip my own conspiracy theories for now.

This isn’t a conspiracy theory, it’s just the ugly fact no one wants to own up to.

Posted by TheDagger | Report as abusive
 

If the Occupiers haven’t changed the way Congress does busy, why are Republicans running scared from recall votes in the applicable States?

The bottom-line being… we should not attempt to balance the budget on the backs of the lower classes while giving tax cuts to people that are not investing that money in a way that has created one job since the inception of said tax cuts.

I am sure though, that in all of your wisdom, you can’t bring yourself to consider what is factual on jobs and tax cuts meant to create jobs.

Posted by rodnacious1 | Report as abusive
 

“Time for Reuters to really cover this president and cut the fluff.”
Agree, but this is an expose compared to their coverage of BHO for the past few years.

Posted by thenix | Report as abusive
 

Oh please, who cares what Obama or any politician says. Obama, and the rest bend over backward to the banking industry. When one of them actually starts doing something, other than offering lip service to garner our votes, I’ll be interested.

Posted by Marla | Report as abusive
 

Obama has proven that to get elected he will tell everyone what they want to hear. Then, once elected he will do whatever HE wants. Sadly, this will probably work again and we’ll have to endure 4 more years of Socialist law making and clever excuses as to why our lives aren’t getting any better.

Posted by GLK | Report as abusive
 

GLK,
How is that different from *any* politician? Pfft.

Posted by TheDagger | Report as abusive
 

The only thing this article shows is your political leanings, hopes and suppositions. Why don’t you come out and say it: you secretly admire OWS (and I suspect despise the Tea Party).

And conflate the shiftless crowd, a few thousand at best in each city, into a movement that will help increase the taxes on the wealthy (now THAT is sexy to you hey).

I prefer to look at the facts. Here are some facts, not suppositions

• The top 1% of U.S. taxpayers pay 38% of all individual federal taxes. The top 10% pay 70% of all taxes, the top 25% pay 86%, and the top 50% pay 97%.

• That leaves the bottom 50% of all taxpayers paying only 3% of the total.

• About half of Americans pay no federal income tax, and almost 25% pay no federal taxes at all.

• The average federal income tax rate for the top 1% of Americans is 23% (and for the top half it’s 14%), while the average rate for the bottom half is 3%.

“. . . the effective federal tax rate, including payroll taxes, for the wealthiest 0.01 percent of earners fell to 31.5 percent in 2005, from 42.9 percent in 1979 [for a decline of 26.6%], according to data from the Congressional Budget Office. Over the same time, effective rates for taxpayers in the center of the range fell to 14.2 percent, a decrease of just 4 percentage points [or 22.0%].” (The New York Times, September 21, 2011)

The OWS will hardly be remembered in a year or two – even the Tea Party which was a far more formidable is now slowly fading.

Posted by eleno | Report as abusive
 

Years ago in Zimbabwe I remember when Mugabe and the other were running for election Mugabe promised everyone a free chicken if they voted for him.

Obama is simply keeping up the fine tradition. Promising goodies that he will not be able to deliver on.

At least Zim (then) could have afforded to give everyone a chicken. Only a half-wit would have not been able to see that the US could not afford Obama’s promises. But hey, it worked.

Look for more promises from our Dear Leader.

Posted by eleno | Report as abusive
 

Always busy laughing at those who want to characterize OWS as wanting things for free. So easy to be a sycophant to a billionaire versus actually understanding anything at all. Most of the OWS supporters actually work for a living and do understand what it means to work for a living and struggle through life, while the negative commenters never worked a day in their lives.

Used to roughneck, dig ditches, cut trees, build roofs, do construction and real manual labor for a living, so I find the people calling OWS nothing but lazy merely the sycophants and lackeys of do-nothing layabouts who are greedy “don’t tax me ” hacks. Get up and work for a living and struggle for a change – then talk to me about who is just sitting around wanting something for nothing. Bet you’ve never struggled to get by in your spoiled life.

Seriously, you need to go take a long look in the mirror. Have you ever struggled to get by, or did mommy and daddy give you every thing you ever wanted? If so, we know you’ll wind up in a ditch when you can’t figure something out or when they’re gone. You’re not smart enough to survive on your own for long.

Posted by GeorgeTirebiter | Report as abusive
 

If OWS were back 3,000 years ago, pilaite would be asking them by who’s authority do you heal and teach.

Posted by fiigtree1 | Report as abusive
 

Wealth distribution is a major problem and it must be addressed. If the middle class continues to shrink we will have longer, tougher recessions than we have ever known, increased poverty and ever reducing social programs. The middle class spends money and that makes businesses grow, without middle class spending all else doesn’t matter. Obama understands the BIG picture and while many of us are critical he is right! Following old economic, low tax practices, will ruin our country!

Posted by abkisa | Report as abusive
 

Think what you can do for your country, not what country can do for you. OWS just wants other people’s money, what a novel idea.

Posted by petrengeneer | Report as abusive
 

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