The Myth of the Rising Tide

On the night of last week’s midterm elections, the Institute of Politics down on Kennedy Street was not a pleasant place to be if you were a Democrat. Sure, the atmosphere was fun—balloons, Coke, crowds, and conference calls with political operatives, and so forth—but during a night when the Senate was supposed to flip solidly to the GOP, the result was even more decisive than anticipated.

Though the Harvard Republicans occupied a couple of booths at most—and maybe were one eighth of the attendees—they cheered as loudly as the Dems, which was oddly symbolic of political discourse at Harvard. And they had plenty to cheer about. How did Kay Hagan, a popular Democrat, lose to Thom Tillis in North Carolina? Who’s Larry Hogan, and how’d he win the governorship of deep-blue Maryland? Who, on earth, is Scott Milne, and how’d he come out of nowhere to force the gubernatorial race in progressive Vermont into a runoff of sorts? And, by the way, so much for Colorado being a blue state.

While a student, it’s often difficult to understand the political mood of a nation. (I have no idea what the archetypal American worker is thinking about, as I’m not a member of the workforce and I don’t leave Cambridge.) But the unanimous word among the punditocracy is that voters are angry, angry about the economy. And, this in and of itself is befuddling because, in abstract, the economy seems healthy and vital.

Overall, the unemployment rate is down to a very normal 5.8 percent. Under President Reagan, by contrast, the unemployment rate never dropped below 6.5 percent until 1988, his last year. And in states like Virginia and Vermont, where popular Democratic incubents came within a razor’s edge of going down in epic upsets, the employment picture is downright rosy.

As for the economy overall, pure throughput is booming. American GDP rose by an annualized 4.6 percent and 3.5 percent in the previous two quarters, beating predictions. And Wall Street, by the way, is through the roof.

Yet, we can’t get around the fact that Americans are feeling economically choked—a full 70 percent of voters were economically dissatisfied at the exit polls. So what’s the deal?

Basically, it comes down to two figures. Corporate profits are at a record high, amounting, after taxes, to nearly 11 percent of total GDP, the largest proportion since the 1940s, while real median personal income has actually shrunk—by over $4,000—since 2007. The portion of income going to the labor force, to get a bit jargon-y, is also at rock bottom.

Hand-in-hand with the growing prosperity of the corporation has been the growing prosperity of the uber-rich. The growth in the household income of the highest percentile rocketed up 20 percent in 2012 alone, and 95 percent of all income gains since 2009 have gone to the so-called “one percent.” By contrast, this portion was only 45 percent during the economic expansion of the ‘90s.

So, on the whole, the economy is growing quickly, and all the gains are accruing to the actors—corporations and their overseers—who more or less caused thenonsensical, leveraged-up financial mess of 2008-9, which in turn caused the current economic malaise that plagues us.

It’d be unfair for me to claim to know with certainty the reasons for this divergence. But most experts, including those at the Federal Reserve, put the blame largely on the decline of organized labor, and the country’s loophole-laden tax structure. One should also put blame on financial deregulation, which ignited this latest economic turndown in the first place.

Unfortunately, the politicians who’ve enabled all the policies that have led to the accrual of wealth to very rich humans and nonhuman entities altogether, i.e. corporations, and those who opposed or severely watered down common sense measures like Dodd-Frank, are the ones benefiting from the broken world they’ve created.

So, yes, the GOP won this time around. But if the new Congress can’t come up with a new, positive vision for addressing our economic woes, this victory may well be pyrrhic come 2016.

A rising tide, it turns out, does not float all boats.

J. Gram Slattery ’15, a Crimson editorial writer, is a joint English and social studies concentrator in Kirkland House. His column usually appears on alternate Wednesdays. Follow him on Twitter @G_Slattery.