Neoliberalism Is Driving Dem Party Defections, Not Progressive Dissent

This post examines the correlation between the economic conditions of the average American, the growing concentration of wealth among the 1/10th of 1% and the both major political parties’ embrace of neoliberal policies. 

Economic Policy Institute produced the graphic at left. It shows that in the aftermath of World War II through the early 1970s, workers got paid more as the economy grew. Median hourly compensation rose in tandem with productivity (the amount of economic output workers could produce per hour). But note what happens in the mid-70’s. Recall that in the post on Tuesday, we noted that the decline in Democratic control of State legislatures and Senate and House seats began to decline steadily in the late 70s. The premise of the piece was that this Democratic Party defection corresponded with the adoption of neoliberal policies that contributed to an extraordinary accumulation of wealth.

In short, while the economy grew, the only people benefiting from it were the wealthy. As I thought about this chart, I thought of how people in the Rust Belt experience this disparity on a daily basis, working two jobs to earn 50% of what they used to earn in one, fretting about their dwindling savings as they grow closer and closer to an age when continuing to work will be less and less realistic. And then I think of the messaging from Trump and his promise to ‘make America great again,’ against the Democratic Party decision to not visit the Rust Belt toward the end of the campaign and to adopt the message “we don’t need to make America great again; it is already great.” I can almost hear the voices from Rust Belt folks:   “Great for whom?” The chart below answers that question.

Notice the two peak periods where the 0.1% of the population received the greatest proportion of the wealth. In 1928 just before the great depression and in 2008 just before the collapse of the finance industry. Whereas in 1928 it took 8 decades for the 0.1% to reach 12% of total income, the one-tenth of one percent took just four years to recoup their losses after the cratering of the economy in 2008. Also notice again that the 0.1% had perhaps their best stretch in US history beginning in 1993 during the Clinton administration and the Democratic Party’s full-throttled embrace of neoliberalism.Click here for more charts from the Economic Policy Institute.

Since the Clinton era, Democrats have been effective architects of policies that increase the wealth and power of those on the top of the economic pyramid.

From an article published by Counterpunch written before the mid-term elections in 2015: “Yet it’s the historical contradiction Democrats are trapped in that explains how and why Bill Clinton and Obama pursued a neoliberal agenda that dashed the hopes of their supporters, resulting in the biggest midterm losses in Congress of any president in the modern era. It also explains why the Democrats will likely lose the U.S. Senate in November 2014.”

Counterpunch goes on: “Bill Clinton campaigned as a “New Democrat”: tough on crime, fiscally responsible, and stern with welfare recipients. Clinton effectively fulfilled the Reagan Revolution by gutting welfare, passing NAFTA, deregulating telecommunications and the finance sector, and ramping up government spying, policing, and immigrant detention. Clinton could grant the right-wing’s wish list because the Democratic base was conditioned to supporting any deal no matter how bad because the Republicans would supposedly be worse. Yet Clinton needed Republicans to pass NAFTA because the Democrats controlled Congress. He threw millions of poor women and children off welfare to shore up his right flank in advance of the 1996 election.”

In another Counterpunch : “Democrats offer a bit more funding, miniscule compared to military spending and corporate welfare, for food stamps, homelessness, and energy assistance. But the commitment to neoliberalism leaves the programs vulnerable. Obama readily cut tens of billions of dollars in social welfare to appease Republicans complaining about a $17.9 billion national debt.” Naomi Klein described this minuscule support for social welfare as ‘a few solar panels here and a few more childcare slots there.’ In both 1996 and again with Obama, we find the Democrats trying to ‘shore up strength’ with policies that play to the most conservative wing of the Democratic Party. And while the slogans of the Party remain centered on change we can believe in or putting people first, as the charts above depict, the policies promoted by these Presidents and the Democratic Party significantly eroded the economic and social well-being of the majority.

Finally, one last excerpt related to Obama and his legacy:  “That will shape his legacy: the real unemployment rate is still at 12 percent, and since 2008, 5.5 million more Americans live in poverty and the median household income has declined 4.6 percent. Corporate profits are at their highest level since record-keeping began in 1929, the effective corporate tax rate is lower than any point since Hoover was president, and workers are taking home the smallest share of national income in 65 years.”  Click here to read an utterly fascinating analysis.

Over the last two weeks, Retake has examined Democratic policies, alliances, and priorities in the context of both the well-being of the American people and their identification with and support for the Democratic Party. If the Democratic Party is to reverse the trend of election losses leading to decreasing representation in state and national legislatures, it seems clear that  adjustments to the message, alliances and policy priorities need to occur. Retake wants to be part of the conversation about how this might be achieved and with Rep. Ben Ray Lujan so well-placed within national Democratic leadership, we need to explore how we can work together to move the Party. The conversation will begin at our Town Hall on Saturday, August 19th from 3-5pm at the Center for Progress & Justice, 1420 Cerrillos. The Town Hall will be focused on an open conversation with Richard Ellenberg and how progressives can most effective impact the direction of the Party. Click here for details and to RSVP on Facebook or email us at For a description of what we are planning for the Town Hall, click here.

In solidarity,

Paul & Roxanne


Categories: Democratic Party Reform, Economic justice

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7 replies

  1. A more detailed analysis of the potential causes of growth in income inequality in the U.S. and a number of policy ideas that might be used to reverse this trend can be found in the paper by MIT Professors Kochan and Bunker: ‘Employment Relations and Growing Income Inequality: Causes and Potential Options for its Reversal’

    One thing that tends to be neglected in these analyses is the fact that globalization (which appears as one of the drivers in the within-country growth in income inequality) has led to a global reduction in income inequality, due to rapid increases in incomes in developing countries such as India and China. Although there have been increasing income disparities in these countries (e.g. outsized growth by the 1%) even greater gains in percentage terms have been achieved by both the “emerging global middle class” which includes more than one third of the world population, but also by the bottom third of the global income distribution. For details see the World Bank study: ‘Global Income Inequality by the Numbers: In History and Now 2009’

    This leads one facing an awkward social justice question (similar to those encountered in some immigration issues): Can we only maintain or increase living standards for the lower and middle classes in rich countries by disadvantaging those living in developing countries (many of whom are poorer as a direct consequence of historical exploitation by western industrial countries)?

    Another issue that is neglected is that progressive policies which increase regulatory burdens and make labor markets less flexible can sometimes lead to negative social consequences including: Low growth rates, loss of economic competitiveness (leading to the destruction of various industries in a country), high unemployment and labor participation rates by some groups (particular younger workers) and the growth of low wage and benefit temporary labor markets. These policy issues and their social and economic impact on a variety of European countries over time are discussed in some detail in Lisbon Council study: ‘Economic Growth in the European Union’

    It should be noted that politicians and parties with a conservative or ‘neoliberal’ policy agenda have often found their success in countries experiencing the (at least perceived) negative economic and social consequences of more progressive policies. Particular examples include the elections of Ronald Reagan and Margret Thatcher in the early 1980’s after the economic malaise of the 1970’s, and the election of governments pursuing more conservative policies (in particular tax reductions and labor market liberalizations) in Sweden in the early 1990’s (led by Carl Bildt) in Australia in the mid-1990’s (Howard) as well as in Germany in the mid-2000’s (Merkel) all after periods of economic stagnation under governments with more progressive policies.

  2. To be honest, I do not think that there is any scientific, that is measurable, basis for most of the assertions, or theories (?) presented on economic analyses done by mainstream economists today. I do not mean to say that they are totally untrue but I believe that today’s Economics is not a field that can be able to demonstrate that their theories about life and/or the market and globalization, for example, match reality. Of course there are some aspects of commerce that lend themselves to mathematical analysis and verification but not the issues we are talking about here like the reasons for the existence of poverty, globalization, the reasons for income inequality and market behavior. In my opinion the ‘equations’ used by Economists to explain what is happening to us, to Americans, to that 80-99 percent, today, seem to be incomplete. Nobody seems to include in them the externalization of cost, that is, environmental destruction/poisoning, the replacement of a portion of the workforce by robots/computers/machines, the enormous power of the elites and their corporations together with the accompanying disempowerment of the rest of us, the fact that globalization has historically been driven by by those who have enough money and power to make such decisions, like the Pharaohs and priests of the past and the plutocrats of today as well as the opposite, the fact that most of us will choose to have a well developed. as in evolved, local and regional economy that provide well for everybody’s needs with enough surplus for commerce with other regions. Many contend that humanity does not need to have constant economic growth to satisfy all our needs and a fair amount of everybody’s wants. Also, globalization is nothing new. Historically, all empires conquests and colonization of adjacent and far off lands meant the empire’s increased globalization of its sphere of influence/power over other peoples/nations/environments’. But, the above is mostly opinion so I would like to refer you to the work of David Korten because he not only gives a critique of our present neoliberal economic model but he also presents us with an alternative. I forgot to mention that I have never seen a mainstream economic analysis that includes ethics, morality or/and moral and ethical principles. so, here is a reference :
    I apologize for the length of this comment and also want to thank Paul because your articles stimulate debate and, I speak for myself here, tickle our brains. chau

  3. I forgot to mention the military-industrial-banking system as one more variable left out of the mainstream economists’ analysis. We, down here, have no say on how our taxes are distributed (Which means that there is no democracy here.) The military industrial complex gets about 600 billion dollars from our taxes, remember that the richer one is the less taxes he/she pays, while our public educational system gets just 60 billion dollars. (?)

  4. I just want to stress that I prefer not to enter anymore into this type of dialogue/discussion. I believe that by doing so we are wasting precious time since the ecocide that began about 7 thousand years ago continues unabated and it has been vastly i proved thanks to increases in human population and technology.

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