- 24 May 2005 01:58
#644630
http://www.iht.com/bin/print_ipub.php?f ... balist.php
Roger Cohen
SATURDAY, MAY 21, 2005
NEW YORK Perhaps the only working class that China's Communist president, Hu Jintao, is still assisting is the American.
I am not referring to the flood of cheap Chinese products that are keeping prices down, although that helps the average household. I refer to Hu's policy of using what is widely regarded as an undervalued Chinese yuan to buy United States Treasury securities and so help keep American interest rates down.
The United States is awash in debt. Median household debt has risen to more than $100,000 from less than $60,000 in 1990 even as median incomes have increased only slightly. Much of the debt is held by workers ramping up their loans on one credit card after another, or obtaining dubious mortgages in a bid to secure some fraction of the heady lifestyle of an upper class that keeps getting richer.
As Bob Davis of The Wall Street Journal pointed out in a recent article, the amount owed by U.S. households with at least one credit card rose to $9,205 in 2003, an increase of almost 25 percent from five years earlier. This increase has occurred as the gap between rich and poor has continued to widen and the visibility of coveted luxury goods on television and the Internet has continued to grow.
Some laud the democratization of credit, seeing its availability to wider swaths of the American population as broadening opportunity; some criticize it as the ruthless seduction by financial institutions of working people who will one day face bankruptcy because they will be unable to pay credit-card bills and mortgages.
But this much is clear: The spread of debt is one of the more significant social phenomena in the United States today, allowing the less well-off to spend more than they have and so assuage feelings of being left behind by the conspicuous rich.
As long as interest rates do not rise steeply, this social process will continue to function. Hence Hu's heft on Main Street.
But what are the politics of debt? You might be forgiven for thinking that rank-and-file Americans seeing their wages eroded by international competition as executive compensation rises, and facing burgeoning credit-card bills, would be inclined to vote for the Democratic Party, which has traditionally represented the have-nots.
But of course you'd be wrong.
Perhaps the single most significant U.S. political phenomenon of the past two decades has been the process that has seen working-class and middle-class Americans with constant or declining incomes identify more with God, the armed forces and the Republican Party than with the Democrats.
They have tended, with the conspicuous exception of African-Americans, to be less moved by the strain on their finances than by three other "Fs" - faith, family and freedom - as successfully promoted by Republicans.
Thomas Frank, the author and political analyst, calls these average working people who seem to be voting against economic logic "backlash conservatives."
In an article in the New York Review of Books, Frank commented: "The backlash narrative is more powerful than mere facts. According to its central mythology, conservatives are always hardworking patriots who love their country and are persecuted for it, while liberals, who are either high-born weaklings or eggheads hypnotized by some fancy idea, are always ready to sell their nation out."
This narrative, in which the defining characteristic of liberalism becomes what Frank calls "deracinated upper-classness," has proved effective. It was precisely as a "high-born weakling" that Karl Rove, the brilliant political strategist of President George Bush, portrayed the Democratic candidate John Kerry. Bush carried the white working-class vote by a clear margin.
So America today presents the picture of a country with wide swaths of its citizens drifting economically, using ever-increasing debt as a means to cushion the blow, but convinced that the Democratic Party has parted company with them by embracing values - same-sex marriage, abortion, secularism - that are unacceptable, not only in their eyes, but also in God's.
In this vision of things, it does not matter that Bush spends his time tightening bankruptcy laws to favor the very credit-card companies that are offering loans that may prove unpayable. It matters that Bush is seen as rooted, patriotic, a real man, and, for some, a divine agent in the White House.
The Republicans' success in purveying this message is striking. But there is nothing very new in people confronted by economic difficulties turning to God, patriotism and the armed forces.
Militant American nationalism - the kind that dismisses most Europeans as wimps, the United Nations as a fatuous talk-shop and all liberals as idiots - is suffused with a pumped-up, feel-good factor common to all nationalisms. Its social roots are probably not that different, either.
Which brings us back to Hu. Could the Chinese leader do what the Democrats have failed to do - get more ordinary Americans to focus squarely on their economic situation and conclude that it may be better to vote for a party that might just act in their interests?
The U.S. Treasury, alarmed at those spiraling Chinese imports, and under growing protectionist pressure, has now urged Hu to revalue the yuan. If Hu obliges, those U.S. Treasury securities might well look less attractive because, measured in a stronger yuan, their value would decline.
If China then reduces its purchases of Treasury bills, and other Asian central banks follow suit, one thing is certain: Interest rates will rise and Joe Six-Pack, from Kansas to Nebraska, will be hurting a lot more when credit-card bills arrive. If the pain is sharp enough, a political alternative - the Democrats - may look more attractive.
We live in a wondrous world. It could just be that a Chinese Communist, leading a society hell-bent on capitalism, and prodded by a Republican administration, ends up helping what still passes for the left in America by driving the economic reality of personal debt home to the point where "moral values" become secondary
Roger Cohen
SATURDAY, MAY 21, 2005
NEW YORK Perhaps the only working class that China's Communist president, Hu Jintao, is still assisting is the American.
I am not referring to the flood of cheap Chinese products that are keeping prices down, although that helps the average household. I refer to Hu's policy of using what is widely regarded as an undervalued Chinese yuan to buy United States Treasury securities and so help keep American interest rates down.
The United States is awash in debt. Median household debt has risen to more than $100,000 from less than $60,000 in 1990 even as median incomes have increased only slightly. Much of the debt is held by workers ramping up their loans on one credit card after another, or obtaining dubious mortgages in a bid to secure some fraction of the heady lifestyle of an upper class that keeps getting richer.
As Bob Davis of The Wall Street Journal pointed out in a recent article, the amount owed by U.S. households with at least one credit card rose to $9,205 in 2003, an increase of almost 25 percent from five years earlier. This increase has occurred as the gap between rich and poor has continued to widen and the visibility of coveted luxury goods on television and the Internet has continued to grow.
Some laud the democratization of credit, seeing its availability to wider swaths of the American population as broadening opportunity; some criticize it as the ruthless seduction by financial institutions of working people who will one day face bankruptcy because they will be unable to pay credit-card bills and mortgages.
But this much is clear: The spread of debt is one of the more significant social phenomena in the United States today, allowing the less well-off to spend more than they have and so assuage feelings of being left behind by the conspicuous rich.
As long as interest rates do not rise steeply, this social process will continue to function. Hence Hu's heft on Main Street.
But what are the politics of debt? You might be forgiven for thinking that rank-and-file Americans seeing their wages eroded by international competition as executive compensation rises, and facing burgeoning credit-card bills, would be inclined to vote for the Democratic Party, which has traditionally represented the have-nots.
But of course you'd be wrong.
Perhaps the single most significant U.S. political phenomenon of the past two decades has been the process that has seen working-class and middle-class Americans with constant or declining incomes identify more with God, the armed forces and the Republican Party than with the Democrats.
They have tended, with the conspicuous exception of African-Americans, to be less moved by the strain on their finances than by three other "Fs" - faith, family and freedom - as successfully promoted by Republicans.
Thomas Frank, the author and political analyst, calls these average working people who seem to be voting against economic logic "backlash conservatives."
In an article in the New York Review of Books, Frank commented: "The backlash narrative is more powerful than mere facts. According to its central mythology, conservatives are always hardworking patriots who love their country and are persecuted for it, while liberals, who are either high-born weaklings or eggheads hypnotized by some fancy idea, are always ready to sell their nation out."
This narrative, in which the defining characteristic of liberalism becomes what Frank calls "deracinated upper-classness," has proved effective. It was precisely as a "high-born weakling" that Karl Rove, the brilliant political strategist of President George Bush, portrayed the Democratic candidate John Kerry. Bush carried the white working-class vote by a clear margin.
So America today presents the picture of a country with wide swaths of its citizens drifting economically, using ever-increasing debt as a means to cushion the blow, but convinced that the Democratic Party has parted company with them by embracing values - same-sex marriage, abortion, secularism - that are unacceptable, not only in their eyes, but also in God's.
In this vision of things, it does not matter that Bush spends his time tightening bankruptcy laws to favor the very credit-card companies that are offering loans that may prove unpayable. It matters that Bush is seen as rooted, patriotic, a real man, and, for some, a divine agent in the White House.
The Republicans' success in purveying this message is striking. But there is nothing very new in people confronted by economic difficulties turning to God, patriotism and the armed forces.
Militant American nationalism - the kind that dismisses most Europeans as wimps, the United Nations as a fatuous talk-shop and all liberals as idiots - is suffused with a pumped-up, feel-good factor common to all nationalisms. Its social roots are probably not that different, either.
Which brings us back to Hu. Could the Chinese leader do what the Democrats have failed to do - get more ordinary Americans to focus squarely on their economic situation and conclude that it may be better to vote for a party that might just act in their interests?
The U.S. Treasury, alarmed at those spiraling Chinese imports, and under growing protectionist pressure, has now urged Hu to revalue the yuan. If Hu obliges, those U.S. Treasury securities might well look less attractive because, measured in a stronger yuan, their value would decline.
If China then reduces its purchases of Treasury bills, and other Asian central banks follow suit, one thing is certain: Interest rates will rise and Joe Six-Pack, from Kansas to Nebraska, will be hurting a lot more when credit-card bills arrive. If the pain is sharp enough, a political alternative - the Democrats - may look more attractive.
We live in a wondrous world. It could just be that a Chinese Communist, leading a society hell-bent on capitalism, and prodded by a Republican administration, ends up helping what still passes for the left in America by driving the economic reality of personal debt home to the point where "moral values" become secondary
Economic left right: -8,75
Libertarian/authoritarian:-4,98
Libertarian/authoritarian:-4,98
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