Dodge Bless America

After our discussion on responsible spending this week I started to think about the relationship between public and private commercial sectors. We came to the conclusion that programs that promote responsible spending rarely turn up. And more rarely do they originate from within the federal or state levels of government. The claim that citizens are identified as consumers, or agents to carry out macro and microeconomic goals is certainly very plausible, especially in times of uncertainty or recession. But I argue that the trend from within the government is slowly shifting to policy that promotes more responsible spending from the individual, while still embracing consumerism as one of many tools that work in conjunction toward economic recovery.
While we may not see the Ad Council air commercials that are targeted at responsible spending, there is very specific legislation and policy that actually inhibits some of the worst types of ‘irresponsible spending”. For example, federal legislation actually raised the threshold that financial institutions must meet to qualify someone for a mortgage. There is specific legislation that can be tied to this policy…plus federal monetary policy had previously been aimed at raising interest rates, which actually slows growth but ensures more stable and financially sound growth.
Commercial entities have been free-riders since the 1950s in terms of piggy-backing off the patriotic connotations associated with spending. We talked a lot about car companies in class so I wanted to give an example from another commercial sector. The only one I could think of was the Brett Farve Wrangler commercial that referenced American “Value” in a heap of denim…so I went back to the drawing board with cars.
The Dodge (Challenger) commercial of 2010 is the perfect example.
http://www.youtube.com/watch?v=Ezk0e1VL80o
In one very emotional minute, it conveys American strength and freedom through a throwback car model. One of the most recent comments on the video says “Dodge Bless America”. If the federal government has told us that spending is patriotic, private companies have figured out that it is profitable to tell us which brands and products are more patriotic. I’m not saying this clears all charges pending against the government with responsible spending. But the symbiotic relationship that private entities have picked up exacerbates the effects and makes it harder for a fresh look on responsible spending to become indoctrinated.

Consumers as Citizens

In class we discussed consumers as citizens but I don't think it is a condition that makes good citizens. Everyone is obligated by necessity to consume goods no matter their financial situation. Of course others consume more than others but as Laura said in class"no one can opt out from being a consumer". This is the case for all Americans. There is no other way but to consume goods whether you like it or not unless you are self-sustainable.

The other problematic view about consumption is that many people believe that the government is trying to "seduce" and "encourage" the public to spend more if they want to be good citizens. I don't believe that the government is being malicious but instead is being very pervasive. They are very subtle about the way they offer incentives. This does not mean that they are forcing the public to spend more but to make spending a little cheaper. Nowadays many people are suffering from heavy debt and therefore the government is trying to help them out by offering these incentives. Consuming goods is not a condition for being a good citizen but it is a necessity that we all face. We have to spend to survive and live a decent life.

Income Inequality and the Economy

One moment that struck me in Lizabeth Cohen’s talk at the Miller Center was her three images of the pies and the different classes’ portions of it. The argument was that everyone can improve if the pie simply grows in size. Even if the percentage of the pie that the upper class received was slightly smaller, they would still be better off because the pie doubled in size. This policy was espoused by the government and there seemed to be a movement towards equality. In her article, Cohen states that “between 1941 and 1944, family income rose by over 24 per cent in constant dollars, with the lowest fifth gaining three times more than the highest fifth, essentially doubling the size of the middle class” (p210). Everyone clearly benefited. Indeed, the so-called Consumer’s Republic “stood for an elaborate ideal of economic abundance and democratic political freedom, both equitably distributed” (p214) and lasted from the 1940s until the 1970s. The United States was extremely prosperous during this period and there was tremendous growth.

Reading about this time period made me think of an editorial by Nicholas Kristof in the New York Times. In it, he describes how the “richest 1 percent of Americans now take home almost 24 percent of income” which is a rather striking amount. What makes it especially alarming is that it is “up from almost 9 percent in 1976”. In fact, “from 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent.” We have therefore been moving towards a more unequal society for quite some time. I would argue that the results have not necessarily been positive especially in this recession (though perhaps my viewpoint has been affected by the incredibly depressing Peck article. I particularly like how Peck ends the article by pointing out some possible positive outcomes before crushing them and basically saying that nothing good will come of this recession).

This inequality does matter as it affects the economy but more importantly to this class, it would affect government attentiveness and responsiveness. The Bartels article describes how the government is much more likely to listen to the high income voters than low income voters. If we are concentrating wealth into the hands of a few, then presumably fewer people will have a voice in the government. I imagine that the one percent that controls 24 percent of the income would have some extra money to donate to campaigns and influence politics. Regardless, if wealth is more evenly distributed, then politicians will be forced to listen to all people, or at least a larger percentage. I think this is much healthier for a democracy and ultimately leads to better policies and results. However, it does not seem likely that there will be a change to this income inequality in the near future; simply look at the huge Wall Street profits or the Bush tax cuts for the richest 1 percent. Still, it might be a good idea to think about how to narrow the gap between the richest and the poorest citizens.

Equality in the political representation

The readings for this week were really interesting for me, as a student coming from France, a « socialist country ».

Bartels explains in the first part of his text that the low middle class opinion is not represented by their senators:« views of the constituents in the upper third of the income distribution received about 50% more weight than those in the middle third”. Why? The most common assumption is that they don't vote and participate, so politics don't have to listen to them. For me this is really unfair, because the system is built in order to prevent them from participating and after we blame them for non participating. Indeed, the elite shaped the system so that you are more likely to participate if you have more money. In one of the first discussion class, we focused on money, time and civil skills as factors of participation in democracy. Nearly all of us agreed on the fact that money was the most important determinant to participate in democracy. In a system based on money (participation in campaigns..) how can we blame the low middle class if they don't participate?

Bartels suggests at the end of his essay that these people should non the less continue to vote. On the one hand a vote is a voice of course, so they must vote because it is the better way for them to express their opinion. On the other hand, the problem is that if they elect a candidate who doesn't promote their ideas when he is elected, can they really do something in order to punish him? If they voted for the democrats, they could vote for the Republican, but maybe it will be worst...

As a conclusion, I think that the low middle class in this biased system has not enough weight, and no means to change that.

While reading the article of the Financial Times, I was thinking about the differences between the U.S. and France, a « socialist country ». I think that in France, even if low middle class are still under-represented, they have more weight than in the US. In my opinion, it is not the social system that allow the low middle class to have more weight in democracy, but the political system. First, as France has a pluri-party system, if the middle class vote for a candidate that only listens to their voice when he is running for office and forget them when he is in office, they can “punish” him at the next elections by voting for another candidate (maybe from a smaller party). Moreover, as the campaigns are financed by the state, having money doesn't really matter if you want to help during the campaigns. The most important to participate seems to have time, but once again this is linked with the economic situation: if you have a good job you can afford to have time...at the end, we face the same problems.

"It's the economy, stupid"

I’d have to echo a few of the other comments previously posted and say this is one of the more depressing series of articles we’ve read thus far. (First because of the Atlantic article is not very encouraging for 4th years entering the job market and adulthood at that.) Further, linking together the principle points made by each author, from Bartels who summons some empirical evidence for the unresponsiveness of politicians to the lower (and middle) classes and then from the other authors who demonstrate the growing economic disparities in this country and its consequences, the ultimate conclusion is not a hopeful one. In a later chapter Bartels cynically refers to a “debilitating feedback cycle linking the economic and political realms” suggesting that as disparities continue to grow, political policies will increasingly reflect the interests of fewer Americans while reinforcing the existing disparities. Thus not only did this week’s articles paint a sorry picture of America today as we slowly make our way out of the Great Recession, but also of the America of the future. So much for the American Dream.

And in the midst of this Great Recession and a recent election that centered largely on the economy, the articles were especially timely. So much so, that who to blame and how to fix the economy, the joblessness, the country, etc. was a lively, if hotly debated, topic at my Thanksgiving dinner table. Everyday citizens, politicians and economists alike all seem to have an opinion. The Reagan Era, the Clinton Era, the wars, NAFTA, China, lack of innovation, unions, Wall Street, the sub-prime mortgage market, under-regulation – some complex amalgamation of all these circumstances, each compounding the other, is likely to blame.

In light of the points that Bartel raises about policies generally favoring wealthier Americans, I couldn’t help but think of the Bush Era tax cuts for the top 2% of income-earners. I wouldn't suggest that this policy is to blame for our current economic ills, but it seems a near-perfect example of a policy that directly favors the wealthiest Americans and is also, by and large, supported by the Republican party – also a trend Bartels verified. Since the tax cut is to expire at the end of the year, the lame-duck Congress is posed to debate and decide on its extension, a politically charged decision for those in Congress as well as the Obama administration. Purportedly, a majority of Americans favor extending tax cuts to the wealthiest two percent of Americans. I cannot think of a worse policy that better reflects The State We’re In: a sincere and seemingly widespread disillusionment about the wealth disparities in this nation the lack of political will to challenge those disparities. The argument goes that cutting this tax bracket a break will stimulate the economy (via the trickle-down effect) and thus is many ways also a reflection of the Democrat vs. Republican take on economic policy. But for the most part, this policy did not prove the to be the cure-all solution to our economic woes by stimulating the economy and creating jobs. Politics and economics aside though, it undoubtedly seems a policy whereby Congress is more responsive to higher income Americans than to lower income Americans.

Citizen = Consumer

Overall, the Peck reading was pretty depressing. It turns even more depressing, however, when combined with the Cohen video and reading. When trying to draw positive side-effects from the economic meltdown, Peck says that it may lead to "a necessary end to an era of reckless personal spending." This spending is, however, the very thing that Cohen argues has been the underpinning not only of the entire structure of our economy, but of our conception of citizenship as well. Cohen argues that in order to avoid post-war depression, concerted efforts were made to reorganize the economy based on an idea of "consumers as citizens" - the idea that someone who always strives to buy the next best thing is doing good for the nation as a whole. This conception of citizens now underwrites much of our economic existences and even our political pursuits.

Contemporary American conservatism is largely borne out of an idea that the market can organize society better than the government can. The conservative view of the market, however, is made up of two jointly all-powerful groups: producers who provide supply and consumers who each provide demand based on their own preferences and interests and, in aggregate, support the most efficient and beneficial expenditures of capital. This economic aspect of citizens as consumers is an aspect that has been largely overlooked, even in this class. As Cohen demonstrates, it is impossible to separate the conceptions of consumer and citizen while obtaining any full conception of either.

As a result of this tie between citizen and consumer, however, one of the main beneficial side-effects of the economic downturn turns out to simply be another bad omen of the economy's weakness and a sign that the problems with the economy may not be saved by simply enacting a stimulus or tax cut, but could require a full societal effort to refound our economy, and our society, on a radically different conception of the economic role of a citizen.

Shifting Citizen Consumerism

After reading Cohen's essays on the citizenship aspect of consumerism, the new event, "Small Business Saturday" came to mind. The event has a website, and is sponsored by (suspiciously) American Express: http://smallbusinesssaturday.com

The event was heavily publicized on Facebook, but surprisingly received little coverage elsewhere. The lack of publicity could indicate a lack of turnout, which further supports the hypothesis that consumers are becoming more global-minded and detached from their local communities. Nonetheless, here's one I found.

http://abcnews.go.com/Business/small-business-saturday-hopes-holiday-shopping-local/story?id=12255389

While Cohen documents the push to buy more goods in general during times of economic recession, it seems the push we're hearing now in this Great Recession is one differentiated on local v. national lines. Large, profitable, corporate chains are now seen as the enemy, where they once were seen as signs of American prosperity. As the two websites argue, though, local businesses are the backbone of American industry, thus making it our civic duty to support them.

If we take what Peck says about the decline in entrepreneurship in Generation Y, however--along with Luce's description of business foreclosures--if these small businesses fail to make their estimated end-of-year profits this year, they may be gone for good. These small, local businesses may fail and then there will be no new effort to replace them. Rather, the nationwide chain businesses, or even only-online stores, will grow to claim an even larger share of national profits in the coming years.

This growing inequality between local and national businesses has the potential to further exacerbate the problems we've already seen from a decline in civic engagement. When citizens fail to perceive themselves as residents of certain neighborhoods--their homes as merely houses (Cohen 219)--but rather as residents of a state or the nation at-large, community bonds are broken. One no longer has a responsibility to one's neighbors, and only relates to the government on a larger scale, potentially making local and state governments obsolete. These isolating effects do not lend themselves well to the collective spirit that is part of our democratic ideal.

Great Stagnation: An Identity

In the article The Crisis of the Middle-Class America, Edward Luce states that many Americans have become pessimistic about their future especially about their children's future regarding the economy. The economy has been on the decline for these past years which slowly creates the stagnation of income. Many middle-class families find it hard to make ends meet to the point that "easy money has turned into debt".

The major problem of this economic "depression" is because of the access to cheap debt and financing which attract many Americans. This results in foreclosures and the possession of heavy debt. The Freeman's find it hard to believe that their current situation will never change regardless on how much they try. They have good jobs but this is not enough for them to step on the ladder and climb higher. They will always be part of the middle-class. The Great Stagnation "which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000 - the first ever instance where most Americans were worst off at the end of a cycle than at the start". The decline in income has had dramatic effects which has jeopardize financial stability and has caused the possession of heavy debt. This is what is happening to many families nowadays. The debt has skyrocketed that they do not know how long it will take to pay off.

The most saddening outcome of this economic downpour is that someone with an education can be seen working in different places just to make ends meet. Education seems to become a burden in the sense that going to college requires a lot of money and many people cannot afford to send their children off to college. America seems to be turning their dreams of economic prosperity into debt, instability, and fear. This new era of economic decline has caused many Americans to think about their current situation and face reality of foreclosure and bankruptcy but this is not to say that there is no hope. The creation of new jobs and opportunities for aid can help the American people get back up on their feet and face their current situations and make it better. The importance of technology can help the American people because it will create new jobs and make things easier on them. This is just a temporary face and will soon get better.

Innovation, the cure to the recession?

Don Peck argues in "How a New Jobless Era Will Transform America" that the key to economic growth is innovation. "Some laid-off employees become entrepreneurs, working on ideas that have been ignored by corporate bureaucracies, while sclerotic firms in declining industries fail, making way for nimbler enterprises." This is certainly not a new idea and seems intuitively correct, so one has to wonder how the Obama administration would respond to such an assertion. Many opponents to the bailouts of the auto industry cited such arguments. Get rid of the old and make room for the new, they said, but the Obama industry seems torn between saving the old while hoping to find room for the new.

The Obama administration, like many democratic administrations before it, has been heavily involved in attempting to regulate/spur the economy, but the actions the administration both appear to agree and disagree with the idea of innovation spurring the economy. Why then would the administration both advocate for new technologies, green energies, etc. while fighting tooth and nail to keep the struggling auto industry afloat? How can innovation happen without making room for such new technologies?

In order for this economy to recover, new jobs must be created, in order for new jobs to be created, new business, ventures, enterprises must be created. The best source of these new jobs: new technologies and green initiatives. Several news articles touted how impressed Obama was of Japan's technological advances at a recent trip to the country and he stated later how behind the United States was. I agree, Mr. President, we are behind, so out with the old, and in with the new.

Short-term loss for long-term gain

Both Peck and Luce attest to the stagnation of incomes within the middle class that has slowly separated any connection to the top third over the past 15-20 years. The real problems had been masked due to the availability of cheap debt and financing. But the Great Recession of 2008 unveiled the implications of a growing wealth disparity. Peck asserts that recessions tend to level the playing field. A man who once wore a suit to work in the morning now has to work the Saturday night shift at Walmart. Peck and Luce and Bartels believe in the reality of political consequences that result from these gaping economic wounds that linger despite a return to normalcy.

What I liked about the Bartels piece was the reference to not only primary income, but effective access to collective resources in determining actual representation (both ideological and responsiveness). But to me the fundamental problem lies again in both economic disparity and the lack of a relatively higher baseline infrastructure. And this is where his case study on Katrina fits in. Local authorities told residents to evacuate or write your SSN on your arm in permanent ink so that the body could be identified. But those without the access to individual and collective resources had no avenue for evacuation. Would a "city of utmost necessity" work? Bartels seems to think so with many caveats...especially America's insatiable appetite for luxury. Can the recent push nationwide for self-sustainability somehow advance or inhibit this dream? Peck discusses the fluid face of the American labor industry. How flexible is the American worker today?

"But however high the tide of economic forces may rise, we are not condemned to wait behind our levees for disaster to engulf us. Imperfect as they are, the processes and institutions of American democracy provide us with consequential choices". Peck and Luce say that higher natural unemployment may be the norm but political actions and consequences can alter social and cultural norms. Or will changed norms as a result of the recession have to expedite the political action we need to eliminate political equality?