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Such a Bargain!

Obama’s Middle Class Problem

by GEOFFREY McDONALD

Obama is scandalized that the American dream – the mythical notion that hard work gets you ahead – is not panning out for a lot of people. He is incensed that America is currently not in the position to create jobs that are both globally competitive and provide a decent wage. Something has obviously gone wrong in the world. He does not put the blame for low wages on the businesses that pay these wages – to the contrary, he praises “job creators” like Amazon in a recent appearance at a fulfillment center in Chattanooga. The pauperization of so many Americans is a public problem, no matter how beneficial it may be for successful businesses like Amazon or the revived American auto industry. Obama sees the “long erosion of middle class security” as a sign that new policies are needed to promote growth and enable workers to carry out the duties that a successful nation can expect of them. Correctly interpreted, this can only be seen as a threat.

Who is the “Middle Class”?

“Middle class” does not designate any specific group with identifiable interests. It means those who fall anywhere within the middle of the income range. They stand between two other classes: the lazy poor and the idle rich. It is not an economic category, but a moral one: they are the hard working Americans who have a right to earn something. They pay into the government’s coffers rather than burdening it with their need to be kept alive. That’s why they deserve the respect of the society: they contribute by working hard and getting by. They are living symbols of a successful way of life. That’s also why “middle class” is such a popular self-description: one is not in the bottom layer, but a good, decent individual who makes a modest income, pays taxes and gets what he or she deserves. It is the fulfillment of the working class dream of social mobility. Obama sees this disappearing:

“In the period after World War II, a growing middle class was the engine of our prosperity. Whether you owned a company, or swept its floors, or worked anywhere in between, this country offered you a basic bargain – a sense that your hard work would be rewarded with fair wages and decent benefits, the chance to buy a home, to save for retirement, and most of all, a chance to hand down a better life for your kids.” (Galesburg, Ill., 7/24/13)

“Middle class” is broadly inclusive: both workers and capitalists fit in it comfortably. Or to be more precise: it demarcates the good capitalists, those ones who seek to enrich themselves not for their own selfish interest but for the benefit of the nation, from the greedy, parasitical capitalists who ruin it. Obama is fed up with the latter, who shirk their (imaginary) duty to create jobs and “stash their money abroad and pay little or nothing at all” in taxes. The same distinction applies to workers: a worker who works for his own wage is productive for the whole society because he makes a contribution with his hard work. Those who do not see working for the enrichment of others as an opportunity are un-American. But fortunately for the Commander in Chief, he is not faced with such elements in the form of a fighting labor movement, and he intends to keep it that way.

Obama’s Discontent

Obama presents himself as the spokesman for the discontent in the country:

Nearly all the income gains of the past 10 years have continued to flow to the top 1 percent. The average CEO has gotten a raise of nearly 40 percent since 2009. The average American earns less than he or she did in 1999. And companies continue to hold back on hiring those who’ve been out of work for some time.” (ibid.)

In denouncing inequality, Obama’s concern is not that there are poorer and poorer people in America. Rather, their poverty is economically useless and a potential danger to the state. Something is wrong if a worker has to work three or four jobs and still can’t survive without public assistance. His minimum requirement is that a worker should be able to support him or herself on a paycheck without being a burden on the state, financial or otherwise. More importantly, a worker should contribute to national economic growth: hard work, and spending the income that it earns, is essential for a strong economy. This is what Obama means by “a growing middle class is the engine of our prosperity.”

What Obama is interested in is not people working per se, but working profitably. Furthermore, this work should pay off not only for the companies, but for the state. By calling for “good jobs that pay decent wages,” he aims to set a profitability standard for companies doing business on American soil. Those that can only compete on the basis of third world wages are free to relocate elsewhere. From the state’s point of view, no matter how profitable these companies may be, they are not creating the incomes and tax base that will restore America’s undisputed leadership of the world economy. By contrast, profitable companies that combine higher wages with higher capital productivity, advanced technologies and innovative products broaden the base of America’s power and reach. These companies have a monopolistic status on the world market – which doesn’t mean they also don’t keep wages as low as possible – and undergird the value of the dollar.

Obama’s concern for the “the disappearing middle class” is really code for the international position of the U.S. His message to his crisis-battered citizens is that these two things – their need to make a living and the global supremacy of American power – are really one and the same.

Ends and Means

Because he is in power, Obama sees America as basically on the right track, but a lot of work remains to be done. He goes through a check-list of items in his program which follow the sequence: some jobs, then more jobs; first profit, then better incomes – as if these were items in a communal pot that simply need to be procured one after the other. It erases their real relationship by acting as if high profits and low wages are a contradiction, when in fact the one is predicated on the other. However, he leaves no confusion about the order of priority.

What Obama wants from the middle class and what the people who consider themselves middle class – or aspire to be – are two different things. The middle class is interested in improving their own standard of living through earning an income. The state wants the middle class to contribute to the wealth of the nation – that is, to the private enrichment of those who make profits. This reflects the fundamentally different meaning of “jobs” for capitalists and workers, both of whom are dependent on work as their source of income. For workers, the fact that they are dependent on wages doesn’t mean they are guaranteed a job; their need for work is economically meaningless unless they can find someone who is willing to pay them. The criteria for job creation is profitability; that means workers can only earn wages and maintain themselves when their work increases someone else’s wealth. This has consequences for wages: for employers, wages are always too high; the lowest wage possible is best for them. That’s why workers are neither guaranteed work even though they need it, or are able to live on their wages if they find work. They are always are a cost factor on the employer’s balance sheet and a deduction from their goal of making a profit. The source of income for the one (workers) is a cost factor for the source of income for the other (capitalists).

Obama’s fundamental lie is that his strategy is meant to help people who are struggling. Rather, their hardships are his lever for making demands: if you want to meet your needs, there are conditions that have to be fulfilled. First, sufficient growth and then – maybe, just maybe – you will be useful again to business and the state. The worker is interested in a better life, but in order to get a better life he or she must first accept all kinds of hardships. The worker sacrifices the end for the means. This is nothing less than his and her patriotic duty.

The Art of Politics

All presidents follow the same logic: they equate the problems of the people with the problems of the nation. They frame their concern with the state of the nation as a concern about the problems of the people. This equation is clear in the one direction. Obama says that by addressing the state’s concerns, he is also – at the same time, with the same programs – solving the people’s problems. Creating jobs, facilitating economic growth, investing in education, etc., is not only a way forward for the US, but is also supposed to be good for the people. Their individual concerns are subsumed under national issues. This way of talking about national problems is not only readily accepted by the people as a way to think about what is making their lives so difficult – “yes, we do need to reduce the deficit, don´t we?” –  but it also really does become their problem in practice, in the sense that they have to step up and carry out the solutions for these national problems that are imposed on them.

This equation works in the other direction, too: Obama addresses the concerns of the impoverished population and transforms them into national problems. The difference, however, is that the troubles of the disappearing middle class are solely their own – as Obama puts it: “we expect people to be self-reliant. Nobody is going to do something for you.” The problems of ordinary people are in and of themselves not problems for the state, but serve as indicators that things in America aren’t going the way they should. Unemployment, high debt, low income, and all the other problems of hard working Americans are evidence of a problem on a different level: with the state of the nation in its global ambitions.

What’s In It For you?

When the president talks about inequality, low wages and unemployment, this is not an official interest in people’s well-being. Obama sees low wages as a hindrance to the working class functioning as it should for the wealth of the nation. It’s the same criteria when business lays off workers: an unemployed person signals an unused resource, a missed opportunity for profit-making. If too many people are out of work, that represents a deficit in growth. For the state, it’s a gap in tax revenue and a liability in foreign competition. More and more poor people, a working class in poverty and distress – that’s hardly a reliable basis for renewing America’s power. So Obama pitches his program as a “grand bargain for the middle class”: a productive collaboration between the poor and the rich on a whole new level. One side gets a life full of hard work and insecurity, the other profit. One thing is clear: he won’t accept “no” for an answer.

Geoffrey McDonald is an editor of  Ruthless Criticism.