The Politics of the Shift of Economic Risk

What happens when interest group politics gets out of control? Well, we’re witnessing it, are we not faithful readers! Ironically, the most interesting analysis of what we’re observing is arguably provided by a contemporaneous reading of and reflection on the messages of two books that I have written about previously in this space. Those books are “The Process of Government: A Study of Social Pressures” by Arthur Fisher Bentley published over 100 years ago (1908) by The University of Chicago Press and “The Great Risk Shift” by Yale Political Science Professor, Jacob S. Hacker.

As Nicholas Lemann, a “critic-at-large” for The New Yorker magazine has pointed out, “The Process of Government” is a “hedgehog” of a book. Its point can be stated quite simply: “All politics and all government are the results of the activities of groups.” What has changed dramatically in the last few years is the nature of the groups, who are now much more visibly and audibly dominating our politics. Those groups include the “Tea Party” organizations and other groups whose tactics and goals are very different from the organizations that helped create them by financing their organization and growth.

These groups have as their goal the acceleration of the process of shifting economic risk described by Professor Jacob S. Hacker in his book as follows: “Over the last generation… we have witnessed a massive transfer of economic risk from the broad structures of insurance, including those sponsored by the corporate sector as well as by government to the fragile balance sheets of American families.” Hacker in 2008 then cited as evidence of the shift he described in his book with clear opprobrium a litany of deteriorating economic symptoms which plague the “recovery” we continue to wish for but so far don’t see in 2011. Those symptoms or more accurately the consequences of “America’s sweeping transformation away from an all-in-the-same boat philosophy of shared risk toward a go-it-alone vision of personal responsibility include the growing volatility of family and individual incomes, escalating bankruptcies and foreclosure rates, the collapse of defined-benefit governmental and corporate pensions and the attempt to abolish the recently legislated mandate to provide health insurance to all Americans. These trends are spun positively to the conservative base based on the need to balance the budget, economic philosophy and freedom of choice. These themes resound even more affectively in 2011 than they did in 2008.

These trends are spun quite differently by Professor Hacker in his book. In fact, they are presented in almost apocryphal terms. They are, however, welcomed in the Tea Party circles and by other groups and organizations whose birth during the Obama Administration was at least partially occasioned by the arguably reasonable political perception of such respected organizations as the U.S. Chamber Of Commerce, The Business Roundtable, and the National Association of Manufacturers that a political rebalancing was necessary in light of the politics and policies of President Obama and all Democratic Congress during the first two years of his administration. The legislative products of those years included universally mandated health insurance (Obamacare), the “Stimulus”, which notwithstanding their recent rhetorical protests was embraced by most of large corporate America particularly when it served to bail out their members whose snail-mail addresses are “Wall Street, New York, New York”.

The Dodd-Frank Financial Regulation Bill was the last piece of comprehensive legislation aimed at the root causes of the recession which may be officially over but is still being felt by most Americans. This recession and the legislative attempts to escape it simply highlight the unmistakable fact that the shifting of economic risk has been successfully undertaken. Dodd-Frank was and is not so much an attempt to shift risk back to the corporate sector as it is to reduce it quantatively by regulating it.

To say all of this was unwelcome in corporate headquarters and by extension their political stepchildren in the conservative base is an understatement. In fact, it is not an exaggeration to suggest as Washington Post Op-Ed Financial Columnist, Steven Pearlstein has that it precipitated a “jihad against all regulation, all taxes, and all government” not by corporate America itself, but by right wing zealots inadvertently created and financed by them.
How and why did this happen? More importantly, how did the Chamber of Commerce, The Business Roundtable, and The National Association of Manufacturers and their individual and corporate members lose control of their own political progeny and their agenda so completely? Finally, what should “WE” do about rebalancing the allocation of political common sense, economic growth and fairness (risk) on both sides of the aisle? We’ll attempt to answer those questions in future columns. In the meantime, let us remember that Winston Churchhill optimistically and uncategoricaly stated- “You can always depend on the Americans to do the right thing after they try everything else”. Well we’re in the process of “trying everything else” so we’ve got time to try to figure out what the “right thing to do is”.

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