Apr 4, 2017
Working Class Americans Worry About Values As Much As Jobs
Elites tend to brush off the deep seated concerns believing only government handouts will do the trick
After the recent election and the ensuing battles over immigration, a Supreme Court Justice, and healthcare, we can truly say, “the American people have broken.”
Many were previously in denial about what was happening in our country, especially the mainstream media. We sit here now wondering about the future and looking for clues in new and alternative sources from fake news to Facebook news.
A recent book by professor Joel Kotkin, the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, called The New Class Conflict, will help us sort through the causes of our national malaise. It explores the new class struggle overtaking what FDR called the Forgotten American and the specter of a vanishing middle class.
What follows is taken from my interview (prior to the election) with professor Kotkin.
Jeff: You talk about America’s growing economic disaster scenario. What are the trigger points?
Professor Kotkin: That’s easy. Consumer companies — that implies everything from family restaurants to retail to homebuilding, the auto industry, and airlines — will be greatly impacted by a major secular phenomenon I call the “proletarianization” of the middle class.
This is already happening and will impact at least two-thirds of the middle class, and it’s going to have an enormous long-term effect both politically and economically. A middle class that is diminishing has less purchasing power. That means increased competition for the wallets of the top 5 to 10 percent means competition for that shrinking group is economically destructive.
What happens to lower income classes?
The lower income class is in dire distress. They are living in a modern day serfdom. They will never own property and they will be permanently dependent on government — and, of course, this is in line with our welfare and healthcare policies. Essentially, what we call the middle class and I call the ‘yeomanry’, and particularly, the more successful part, is essentially paying for other people’s healthcare.
How likely is it that one political party will demagogue this issue?
To shout, “the incredible shrinking middle class” is politically potent, but it resonates most resoundingly with that part of the middle class that has done extremely well — the clerisy, people working in universities or in the upper echelon of the bureaucracy, and the media.
Politically, they share a common view, which the great social historian Daniel Bell talked about. We now have a more complex, science-driven, knowledge-based economy, and there is a new power player. In pre-revolution France, it was called the first estate, the clergy. This is a new form of clergy — while not religious in the conventional sense, their embrace of certain environmental or social ideals is as authoritarian and self-righteous as the medieval Catholic Church.
The Clerisy is your term for America’s new elite class. What does that augur for the business class?
If more Americans believe that the future lies in government benefits because they can’t count on the economy, that’s going to have a huge effect. I think business has its head in the sand on this issue. People who believe the world is great because they are doing well fail to understand that politically speaking if the middle and even upper-middle class think that capitalism isn’t working as it did for previous generations there will be increased demands to have forced redistribution — and government will certainly take them at their word. This redistribution is metaphorically a form of legislated looting.
Who has lost the most ground?
The group that’s under the most stress is what you might call the private-sector middle class. In other words, the small-business person who has not done all that well during this recession.
We are waging a war against the very enterprise culture of our country and economy. What corporate America has forgotten is if you wipe out the small-business person, not only are you killing the consumer but you’re breaking the political alliance of those people who favor the free market system. There are a lot more people on the receiving end than there are those who would have to pay for it, and you create a political environment that is going to be very difficult for business and for productivity generally.
You also make the point that this will have an effect on the Baby Boomer and Millennial generations.
You have a cascading effect: an expanding generation of retiring boomers, some with guaranteed pensions that will never again exist. And then you have a young generation that can’t find full-time employment, can’t buy a house. So you’re going to have a poorer younger generation paying for a wealthier older generation, literally for decades or longer. That is obviously not sustainable.
There’s also a wishful thought that this new generation is less interested in material things or that they won’t need the kinds of houses boomers built. They’ll be happy to rent and take the bus to work. It is unlikely to be the case. But even if it were the reality is if you spend your entire life renting what happens when you turn 50 and your assets are one year of savings?
Does media coverage play a role?
There are media outlets that literally will not listen to anything that does not follow their party line.
As a parallel example, for instance, I think well over 90 percent of all Ivy League professor political contributions went to President Obama. Jonathan Chait, the liberal-slanted writer for New York magazine, made a very startling point — he calls this media paradigm “a vast left-wing conspiracy.”
We saw in Ferguson and Baltimore a broad racial divide. Is there an economic backstory here?
One objective fact is that African Americans, and particularly young African-American males, have very high levels of unemployment and alienation, and worse conditions under our first African-American president than even before the Great Society.
Another disconnect is that the administration has worked tirelessly in the political and media arena to keep African Americans, Hispanics, and, to some extent, Asians, in the Democratic fold without dealing with their difficult economic issues. For example, in California, the green legislation has been catastrophic for working-class Hispanics.
In your book, you contrast job creation in California to Houston, Texas.
It’s simply a matter of natural climate versus business climate. California is a unique case. The state has developed a model that works very well for a small group of people who have created tremendous prosperity in the coastal regions of California, which has the best weather of any major metropolitan area in the world.
Texas is more like the rest of America. The weather is not quite as good as California. The topography is not as exciting. But nonetheless, Toyota and Occidental are the most recent and best known of the California defectors, and just imagine all those good middle-class jobs and philanthropic activities that used to be in California that will now be in Texas.
What should business be doing differently?
Business must come up with a way of showing those laboring in the middle class that this system can work for them, and that means jobs, wages, and training so one can become financially independent.
As President Clinton used to say, “You work hard, play by the rules, you get ahead.” Otherwise, the corporate world is going to have to deal with a rash of legislative assaults.
Author’s Bio
Jeff Cunningham is an advocate for enlightened global leadership, which he calls the most valuable natural resource in the world.
He is a Professor at ASU’s Thunderbird School of Global Management and was the former publisher of Forbes Magazine.
He travels the globe in search of iconic leaders from Warren Buffett to Ambassador Nikki Haley in his role as creator and host of an interview series, IconicVoices.
His articles on leadership have been featured in the Arizona Republic, LinkedIn and Medium via JeffCunningham.com.
His career experience includes publisher of Forbes Magazine; CEO of a digital startup, Directorship Magazine and Directorship.com; CEO of Zip2 (founded by Elon Musk), Myway.com, and CareerTrack.com; venture general partner with Schroders. He serves as a trustee of the McCain Institute and previously as a trustee of CSIS and Middle East Institute, and as an advisor to the Nobel Peace Prize Committee.
He has also been a board director of 10 public companies.
