Thursday, September 9, 2010

Henninger on class war

Daniel Henninger's column in today's WSJ questions the idea he attributes to Pres. Obama that "the 'well-off and well-connected' economic factions in the U.S. have done something explicit to shaft the middle class." He thinks that the President should instead be "getting everyone, from top to bottom, believing they are on the same national team."

The problem is that there is plenty of evidence to suggest that the President is right about this. Look for example at the current campaign being waged by the Chamber of Commerce and advanced vigorously by the Grand Rapids Press to pass a "right to work" law in Michigan. Look at the attempts by the Mott company to cut wages for its workers at its applesauce plant just because of high unemployment in the region. Look at the conservative program of shifting tax burdens away from the affluent, like Reagan cutting income taxes while increasing payroll taxes, or Engler cutting property taxes and raising sales taxes, or Bush junior abolishing the estate tax. Look at the rates of wage increases over the last 30 years for executives and for hourly non-supervisory workers. Look at the enthusiasm for cutting the pay of teachers and other government workers. Look at the data on income inequality in the U.S. over the same period.

Of course, Henninger and his ilk speak out of both sides of their mouth about this. When he wants to woo middle-class folks to his political program, we're all on the same team. When he wants to reduce capital-gains taxes or cut wages for working folks, it's all about market forces and competitiveness and looking out for your own interests.

The tell-tale language in today's piece is this: "Our economy has been free-riding on corporate training programs for years...." This is part of the myth that businesses operate training programs, open stores and factories, invest in technology, and "create jobs" out of the goodness of their heart, and not because it's profitable to do so. It also betrays the sense of entitlement, bred by decades of corporate welfare programs, that insists that government should pay a big share of businesses' costs because of the social good businesses do. The social problems they create we're supposed to let slide.

If indeed we are all on the same national team, then business leaders and their apologists in the media need to start talking and acting that way. First of all, economic growth has to be for everybody. Productivity gains should show up as higher real wages. Executive pay should not increase at a faster rate than anybody else' pay. Cutting the pay of your employees or the government's employees should not count as a virtue. Corporate leaders also need to own up to their mistakes and misjudgments, and recognize that sometimes government regulation is the best way for them to be accountable for the consequences of their decisions.

If that happens, we can get past class warfare. The war that's on now was declared by the leadership on the business side. For the war to end, they need to accept the terms of the peace.