In this issue, race and aspirations for a new working class, tariffs' impact on U.S. manufacturing and a inequality and the Silicon Valley Community Foundation.
If you have not watched it, you may want to take a deep breath before viewing this twenty-two minute Vice News documentary of what happened in Charlottesville, Va. last week when hate groups descended on the town to protest the removal of a confederate statue.
The racially tinged violence and the ouster of White House political strategist Steve Bannon highlight a long-simmering tension between racism and shared economic prosperity. In the the American Prospect, labor reporter Richard Kuttner discussed Bannon's views on taking on China and reshaping American politics to create a party based on "economic nationalism" while at the same time attempting to paper over his roll in riling up white nationalism in America. Buzzfeed editor Ben Smith offered this analysis of the exchange: "Bannon might be forgiven by being puzzled that liberals who spent their careers fighting the class war would let a little thing like white nationalism get in their way. But this is where class-based movements in American politics have always washed up. For race has trumped class."
Salon's Reihan Salam says that when we tease apart Bannon's comments two visions of the future of the Republican Party begin to emerge one is a party focused solely on white identity and the other is a new coalition built on the middle:
This version of Republicanism—the Grand Middle Party—would build on a longer-term development, which is that while Democrats increasingly represent affluent college-educated professionals and the non-white working class, Republicans are increasingly the party of the white middle class. A Grand Middle Party would build on this white middle-class base by incorporating a larger number of Latino, Asian, and black middle-class voters.
To do this, however, Republicans would have to embrace a radically different approach to domestic policy. A Grand Middle Party would be more skeptical of mass less-skilled immigration than a Grand Reagan Party. Unlike the Grand White Party, however, it would couch its skepticism in terms of its commitment to helping Americans of all colors and creeds, including lawful working-class immigrants and their children. The goal of a Grand Middle Party immigration policy would be to recruit skilled immigrants who can help shrink America’s poverty problem by paying the taxes we need to finance schools and social programs.Instead of fighting for tax cuts on the rich, a Grand Middle Party would take a more populist approach. One idea would be to exempt most middle-income families from federal income taxes and replace the lost revenue with a broad-based consumption tax, like those used in Canada and Australia. While a Grand Middle Party would fight measures such as an unconditional basic income that have gained favor on the left, it would embrace work-friendly programs like wage insurance, subsidized apprenticeships and summer jobs, and paid-leave benefits for working mothers, the latter of which is an idea backed by Donald Trump of all people.
Over at Barron's, Gene Epstein looks at a new book by Joan C. Williams on why the Democrats may have lost the white working-class vote:
White Working Class should be read by every mopey, whining, delusional Democrat still trying to figure out how the forecasters got the presidential election so wrong. They got it wrong because they forgot the central animating principle of U.S. politics: It’s always the economy, stupid...The author takes on every tired, knee-jerk complaint that the elites register about the white working class and tosses it back in their faces. Why don’t those crackers get the hell out of Podunk and move to the big city? Because they like it where they live. Why don’t they go to some fancy college? Because they don’t want to spend the rest of their lives paying off their student loans. Why don’t they throw in the towel and take crummy service jobs like everybody else? Because they don’t want to work at McDonald’s. But thanks for asking.
Working-class people view work as a means to an end, not an end in itself. And working-class people do not think there’s anything heroic about making a living by designing apps or shorting Valeant.
Meanwhile in TIME, Williams herself argues we need to redefine what working class means noting that "middle class" is judged by a large gulf of income ($22k to more than $200k) which is one source of confusion but another source is cultural:
In our definition of the missing middle, we included American households with high incomes but no college graduate. Why? Because while class is highly correlated with income, it’s expressed through cultural differences of which graduating from college is the single most important example. Americans who graduate from college typically live very different lives than those who don’t. College grads typically become professionals, and professionals tend to have what sociologists call “entrepreneurial networks”: broad national networks of acquaintances who help them get jobs and do deals. Non-elites, in contrast, typically live their lives in tight, rooted “clique networks” of people who have known each other forever and help each other out with everything from babysitting to house repairs...
The final reason class becomes confusing is that different groups use the same terms differently. The professional-managerial elite typically calls itself “upper-middle class” and those in the middle “working class.” The missing middle calls itself “middle-class” and elites “rich.” Sometimes — especially on the left — “working class” is used as a euphemism for the poor. No wonder Americans are confused.
The events of Charlottesville included a tepid rebuke of the violence by the president upset many in the nation including members of Trump's manufacturing council and led to it being disbanded after several high-profile resignations. Business Insider catalogued the remarks of CEOs who left, many of who said they were taking a stand against hate and intolerance.
The loss of the council may not stop some of the administration's plans to bolster manufacturing in the country with policies such as proposed tariffs on steel and other goods from countries ranging from China and Mexico to Germany. Bloomberg's Nick Leiber takes a look at bike manufacturing and argues that the sector would see job losses:
If the president follows through with an across-the-board tariff on all imports, Kamler said it will undermine his business, making it prohibitively expensive to supply the South Carolina factory.
Each bicycle made in Kent’s South Carolina factory has about 40 parts, all imported from Asia. In his search for domestic suppliers, Kamler has talked to dozens of U.S.-based companies but hasn’t found any with competitive prices—even without costs such as shipping and warehousing. He might end up making the parts himself.
In the Atlantic last month, Annie Lowrey reports that experts say an ensuing trade war would have a negative affect on all major economies and may not work as intended to help the U.S. manufacturing base:
It is true that American steel producers would benefit from higher prices, and steel stocks are already up considerably on the prospect. But there are far more manufacturing workers in industries buying steel than selling it, businesses that would suffer from higher input costs. This is not modeling or speculation. Back in 2002, President George W. Bush put tariffs of up to 30 percent on steel imports from around the world, causing domestic prices to spike. That led to about 200,000 people losing their jobs in manufacturing, one analysis found—more than were working in the entire steel industry. Every state experienced job losses, with Ohio, Michigan, and Pennsylvania among the worst-hit.
Thus, manufacturing businesses outside the steel industry are lobbying against the Trump tariffs too. “Inevitably, the imposition of across-the-board higher tariffs or other restrictions on imports of steel into the United States would only widen the existing price gap by increasing the price of U.S. steel and thus the cost of U.S.-built vehicles,” the Detroit car makers wrote in a letter to Commerce. So are economists.
You might be interested in this report from the Century Foundation on why U.S. manufacturing jobs are worth saving: "The report takes a deep dive into regional data on the current and future role of manufacturing to the economic recovery of communities across the country. It takes a hard look at the quality of manufacturing jobs today, and the major workforce challenges facing a manufacturing revival." Meanwhile the administration's pull out from the Trans-Pacific Partnership may be locking out U.S. agriculture from some Asian markets reports Politico.
Over at RealClearPolitics, Stephen Lusk looks at the decline of big labor unions:
As more people transition to the technology sector and industrial plants become increasingly automated, workers may no longer be seeing enough value in unionization to justify the costs. Membership in the UAW costs between $500 and $600 annually, which could pay for an entire month’s rent in Canton — or citiessuch as Arlington, Texas and Tucson, Arizona — as Americans for Prosperity’s Russ Latino points out. Even those who opt to remain members are not completely happy. A 2016 poll found that 57 percent of Americans, including past and present union members, believe that labor leaders are out of touch and represent them poorly. Is it any surprise that so many people are choosing to be free agents?...As Big Labor’s power, funding, and influence dwindles, workers across the nation are realizing they are better off without unions and that high-level labor executives do not generally have the worker’s best interest at heart.
The initiative is grounded in the premise that a paternalistic conceit has hindered the development of poor families, perpetuated negative beliefs about them across society and led to systems of service that wealthier people would never choose for themselves. By contrast, Lim Miller’s organization provides no services or advice directly. What it offers are a structure and a platform within which families can strengthen their social networks, along with small payments for tracking their own behaviors and reporting them on a monthly basis. With these assets, they can discover what works for themselves and their peers, share or emulate their successes and assist one another.
To date, the initiative has worked with more than 2,000 families in 10 cities across the country — from the Bay Area to Boston, from Detroit to New Orleans. The families report surprising gains in income, educational attainment and mutual assistance. They have advanced homegrown solutions for child care, transportation, nutrition and entertainment, and assistance for seniors, housing and education. Their local lending circles have circulated nearly $2 million.
In the Atlantic, Matt Thompson interviews Heron's Clara Miller discusses why grantmaking is just a small portion of what foundations could be doing if they invested their endowments for mission:
I think that if we limit the focus to philanthropy, then we’re losing out. Then we’re not being accountable. Because the system is the system. The system is the entire economy and the government included, which is a huge part of the economy, right? And if we’re not engaging as a player in that system then we’re not going to get to the underlying problems that are really hurting people. And if we see our job as a grant-making bureaucracy as opposed to as something that’s there to try to change the system, we’ll really never get there.
It doesn’t mean that some local grants aren’t phenomenal and wonderful and important. Giving is a way of life. It’s not something that lives in these big boxes, that only wealthy people do, for heaven’s sake. Less-wealthy people give far more as a percentage of their income, and engage in philanthropic acts every day. So I think it’s about all of us.
Over at the Stanford Social Innovation Review, Marc Gunter looks at the work of the Silicon Valley Community Foundation given the region's widening economic inequality:
[T]he SVCF has enabled its donors to give to whatever charities they want—more than half of its grants leave the San Francisco Bay Area, and many that remain go to global institutions such as Stanford University—local community-based organizations and advocates for the poor feel neglected. Some social critics argue that the influx of wealth to Silicon Valley has made life harder for working-class and middle-class people, and that the rich are thereby obligated to mitigate some of the damage they have caused.
That is debatable. But there is no doubt that the region’s wealth disparities are stark. You will not find Silicon Valley on a map—it is more of an idea than a place—but let us define it for our purposes as two counties, San Mateo and Santa Clara, that are south of San Francisco and home to technology giants Apple, Google, and Facebook. About 2.7 million people live in the two counties; they include 76,000 millionaires, and about 12,600 households have investable assets of at least $5 million, according to Joint Venture Silicon Valley, a research group. More than 1,100 private foundations, with combined assets of $31.6 billion, operate in the two counties.