Dana’s blog

Way back in the early days of the campaign when John Edwards was giving his extremely populist speeches and going on his “poverty tour” I remember thinking about his message and wondering if it would resonate. Now with Hillary and Obama trying to woo Ohio voters, there’s been a resurgence in populist rhetoric. Barack is criticizing Hillary for her support of NAFTA and both candidates are criticizing free trade.

According to an article I read today, Ohio and Michigan have lost 90,000 jobs due to NAFTA and many people there blame free trade for the decline of Midwest manufacturing jobs. Therefore, it makes good sense as a political strategy for Obama and Hillary to use this rhetoric… It also prompted me to think about a few questions I’ve had floating in my mind:

Will the US ever develop a “critical mass” of people disillusioned with their economic position and globalization that we end up with a president like John Edwards?
Various countries across Latin America and much of the developing world have large parts of the population that are in such poverty and without “hope” that they elect leaders who bring about redistribution and populist economic policies ultimately to the detriment of the country. I like to think of this situation as one where a populist leader has the ability to “turn-off” the spigot of globalization if it’s benefits don’t get distributed evenly enough. If a country fails to distribute evenly enough the benefits of globalization and economic liberalization and leaves a sizable enough proportion of the population in poverty and without hopes of advancement, it becomes easy for populist candidates to come into power.

Daniel Ortega of Nicaragua and Hugo Chavez of Venezuela as examples of such leaders. Both countries have a large percentage of people who do not believe they have good prospects in their economies. Moreover, they see globalization as something that either works against them or does not help them at all. They can become impatient and then elect a populist leader who wins on the promise of giving them tangible benefits (be it more schools, improved medical care, or job creation). These candidates may succeed in transferring assets to the electorate that votes for them, but oftentimes it will come at the expense of populist programs that undermine the country’s commitment to liberal economic policies, trade, etc. In developing countries, international investors harbor fears of expropriations, they get spooked, and as a result foreign investment plummets.

Using Venezuela as an example, Chavez DID succeed in building more schools and getting healthcare to some of the poorest Venezuelans. At the same time, Chavez’s policies have destroyed the country’s industry to the point that basic food commodities such as eggs and milk can’t be bought legally. Domestic producers, to avoid price controls, put their available quantities on the black market. The rest of the black market goods come from neighboring Colombia. After an increase in Chavez’s populist actions foreign investment is now lower than it’s been in a long-time, reversing a previous trend of increasing investment.

Economic inequalities give impetus to populist leaders who can use redistributive platforms as a way to gain election. Ultimately, society as a whole may be worse off as the majority of gains to the poor come at the expense of bankrupting the middle class, defying the rule of law, and destabilizing the investment environment or liberal trade policies.

The United States, unlike Nicaragua and Venezuela, does not have a large enough fraction living under $5/day that they’ve become restless and willing to elect someone who will throw away its institutions. Nevertheless, there is an increasing feeling among many academics that the “middle class” in America is disappearing and that “ordinary workers” can’t pay for healthcare and college tuition or for their own retirement. More and more people fear – especially given the current economic environment – that America’s standard of living may stagnate or even decline. The declining middle class, though suffering only from a “relative poverty”, may come to resemble the people of Venezuela who see the status quo as doing nothing for them and may opt to elect populist leaders that will ultimately harm the US as a whole.

When I first thought about John Edwards, I remember thinking, “nah, not this time around… but in 20 years if things go as they will, he could very easily become our President.” Now it seems that the populist messages may actually hold the key to this years presidential election – unfortunately for John Edwards, he won’t be the one able to ride them to the presidency.

For all the rhetoric, I don’t think that Obama or Hillary will take actions that will be comparatively detrimental to the US economy. That brings me to my next current question which is…

Is Obama becoming more like a status quo candidate? where did his core-”Washington outsider” credentials go?

First, it’s important to say that I still think Obama is the best candidate by far and that I have volunteered, donated, and will continue to do so until he’s in the White House. That said, in light of all this populism, I criticize him on several points. He’s not “telling the American people what they need to hear” when he cuddles up so close to the iconic “displaced factory worker”. What people in Ohio need to really hear is that the days of $40/hr jobs to do basic assembly in America are gone. Of course, that’s a very harsh reality. There’s news that unionized Ford workers are receiving over $100,000 in buyouts… unless these jobs go overseas, it will simply be impossible for “American” car companies to continue to compete. I put quotes on “American” because some of the Big-4 are actually selling more cars abroad than here in the states… in addition, were it not for the “American” labor costs, they’d actually be profitable.

My final Obama disappointment is that today there was an article about how unions have plowed millions of dollars into Obama’s campaign in the form of PAID canvassers, commercial advertisements, etc. In fact, one of the unions used to support Edwards before they started supporting Obama. Obama once criticized Edwards for accepting this same support that the union now showers on him. To be fair, the campaign states that they would prefer that the union members get involved directly, rather than through the union… but with such a tight race, I’m sure he’s happy for all the support he can get.

Piecing it all together… Populist rhetoric is helping to win this election. Obama’s populist rhetoric, which stands contrary to his rhetoric of “telling the American people what they need to hear”, pays off handsomely as he gets their support. Let’s just hope that if Obama wins, he won’t follow through on all of his populist rhetoric in a way that hurts the economy.

*Note on my blogging: Next time, I’ll try not to be lazy and to include links. That’ll probably make my blog much more interesting as people can follow along with what I’m talking about.

This blog is my first foray into blogging.

I’m still uncertain how my blog will break down along the following lines:

• intelligent commentary that a general reader could find interesting versus a journal that is only useful/interesting to me
• topical vs. general - the difference being driven by how large a percentage of my posts fit into how few topics
• posts written in english vs spanish

That isn’t even to mention tone or anything stylistic considerations. Will i write a bunch of boring posts with bullet lists that could just as easily be powerpoint presentations? Will i write stream-of-consciousness-style? or will i use the “old school” building blocks of sentences and paragraphs? I have yet to develop my blogging identity, but welcome anyone to watch as this project progresses.

P.S. Kudos to Sean Harper for telling me about WordPress and sharing his blog which finally provided me with the impetus to start my own.

—–
Dana