Who Are the X Percent?

In Budget Politics, Democratic Governance, Economics, Financial Crisis, History and Politics, Inequality, Occupy Wall Street, OWS, Political Ideology, Politics, Politics of Policy, Poverty, Public Policy, Regulation, Social Democracy, Social Policy, Taxes, Welfare State on November 21, 2011 at 12:41 pm

 

 

 

 

 

 

 

 

 

Introduction:

The emergence of Occupy Wall Street (OWS) has, if nothing else, has led to a welcome shift in political discourse away from conflicts over what kind of austerity policy to pursue and towards important questions of inequality. Unsurprisingly, this rhetoric has revolved around demography and identity:

Who are the 99%? Who is the 1%? What the hell is the 53%? And what do these labels mean when it comes to popular and other forms of political legitimacy, or arguments about political economy? Read on for some answers.

The 53%:

Before I get to Occupy Wall Street’s ubiquitous claim that “We Are the 99%,” let’s first take a look at its opposite. In response to OWS’ mantra, conservatives attempted to retaliate by claiming the label of “the 53%” – referring to the 53% of Americans who owe a positive sum on their income taxes, as opposed to the “lucky duckies” who don’t earn enough to have to pay. In a sense, the 53% is an old form of conservative class politics – it’s the same logic that spearheaded Richard Nixon’s career, the “taxpayer’s revolt” in the 1970s, the Gingrich Revolution, and the rise of Sarah Palin and Joe the Plumber. Instead of openly posing as the defenders of corporate capitalism, conservatives pivot to portray themselves as the working class, not the left-wing view of workers as militant and organized, but rather the stoic, deferential object of “Donner Party conservatism.” Crucially, the 53% are presented as receiving no government benefits and oppressed by progressive taxation that goes to fund the idle poor (of color) and their liberal elite allies.

Part of the reason why the “53%” failed to catch on is that it’s become obsolete. As we saw with Erick Erickson’ contribution to the oeuvre (or the charming financiers who like dropping McDonalds job applications from their office buildings), the 53% identity relies on being the person who is “subsidizing you so you can hang out on Wall Street and complain” – but given the dismantling of the American welfare state over the last thirty years, virtually no one down at Z Park can actually get subsidies from the 53 percent. 70% of Occupy Wall Streeters work and precious few of the 13% who are unemployed can actually access the social insurance they have contributed to, let alone any form of welfare benefit.

Another reason why the 53% label flopped is that it reveals the limits of this conservative model. The 53% is linked to an implicit call to raise taxes on the 47% so that they have some “skin in the game.” In previous years, conservatives were able to elide the tension between their desire for tax cuts and America’s undying love for social insurance – now they’re trapped because they’ve run out of discretionary spending to cut and their Tea Party base relies on Social Security and Medicare benefits.

The only option therefore is to increase taxes on the 47%. The problem is that it’s horrible politics; it backfired splendidly when John McCain tried to frame tax cuts for the middle class as welfare, and it will continue to backfire. To begin with, the income tax liabilities of the 47% aren’t erased by fancy accounting and off-shore accounts – they’re zeroed out by the standard deduction and credits like the EITC and Child Tax benefits, benefits which many more than 50% of householders rely on. Forcing the 47% to put “skin in the game” will mean that the taxes of the 53% will go up – and that provokes a quick backlash. Finally, the reality is that 73% of the 53% who do pay income taxes owe more in payroll taxes, which limits how much they actually care about that tax.

Finally, the sheer distribution of income is against it: half of American workers earn less than $26,363.55 a year, which is why their income tax liability is zeroed out. The more conservatives try to push the income tax to the center of politics, the more public attention will focus on incomes – and that plays directly into the hands of OWS.

The 99%:

The 99% is a great label, but one that I think everyone, OWS participants, supporters, and observers, could think more deeply about. If the 53% label is an attempt to focus attention on taxes, the 99% is a marker that seeks to orient public discourse around the distribution of income, wealth, and the gains that different classes have experienced in the last forty and especially the last 10 years. In pointing to the indisputable fact that the 1% scoop up an increasing and disproportionate share of the nation’s resources at a time when the vast majority are experiencing economic decline, OWS is not merely educating the public about vital statistics but seeking to establish “maximal solidarity.” Everyone who is part of the 99%, OWS argues, shares a common interest and identity. This too has its historical roots, namely in the broad labor republican ideology of the 19th century that claimed that “all who labor by hand or brain” were part of the same producing class who shared a common foe in the “parasite class.”

However, the 99% concept isn’t without its flaws.

On one level, I think OWS needs to address how larger forces, like the decline of unions, the weakening of labor demand by employers, changes in international trade, and so forth fit in with its narrative about the financial crisis and the political power of financial capital. However, that’s a topic for another day.

The more relevant issue is that simply put, inequality is more than just about the very top and the very bottom – it exists throughout the spectrum. The top 9% and, to a lesser extent, the top 19% have experienced a different thirty years than the rest of us.

Source: Paul Krugman

Their privilege is different in scope and degree, but not in kind from that of the top 1%. Their gains have been more modest, and they certainly haven’t experienced the runaway growth of the top 1%, but they still have done better than everyone else below them – and that poses both political and policy problems for OWS. Politically, OWS will have to figure out if and how it can get the top 19%, many of whom identify with, aspire to be, and politically align with the top 1% (especially on issues of taxation and regulation) to choose a new form of political identity. This is not easy – many of these people, on the coasts, have been content to think of themselves as progressive, because they support liberal social politics and because they’ve voted Democratic, without having to embrace truly redistributive economic policy – the natural constituency of the Chuck Shumers and Chris Dodds.

In policy terms, if OWS wants to continue its “maximum solidarity” model, it will run into problems where reforms aimed at reducing inequality and redistributing wealth will pinch the top 19% along with the top 1%. Raising marginal income tax rates or capital gains taxes or making the payroll tax progressive may only hit the top 19% for a few thousand instead of a few hundred thousand, but it’s a big material hit nonetheless.

OWS could try to keep its finely-tuned focus on the top 1% – just like Obama did in setting his floor for tax increases at $250,000 a year (or the top 1.5%). But should it, if the cost is limiting the extent to which its ideas could actually reverse inequality in America?

Occupy Wall Street doesn’t need to jettison mass appeal to achieve genuine economic reform. In a democratic policy, one that takes votes on a majoritarian basis, a strong coalition can be forged from the 80% of Americans who genuinely have seen no advances in the last decade. But it will have to declare where it stands.

Conclusion:

OWS has been accused of not having a policy proposal – a solution to the problem of inequality. At the present, this charge is unwarranted. A protest movement doesn’t need policy memos, only a sense of right and wrong. However, a social movement that wants to not merely register discontent but to actually exercise power does need an agenda. A time will come when OWS will have to choose.

However, in formulating these ideas, OWS needs to really think about how it sees the world and draw its own conclusions about what needs to be done from its own understanding. Doing the hard work of policy learning not only ensures that its solution will flow logically from its narrative but also will help to identify potential pitfalls and problems before they crop up.

It’ll have to decide whether it is willing to lose the 19% to actually make a difference for the 80%.

  1. For Now I disagree with your conclusion, because “The claims of Occupy Wall Street may not be based on economics, or history, but this shouldn’t matter. After all, it has been shown that the nature of discourse on capital hill is counterintuitive to both of these things. In brief the ongoing dialogue constructed by our representative’s is currently immune to both the lessons of history, and economics. The vested interests of politicians have proven to be unassailable when put against the wisdom of greater minds. Indeed it is quite disappointing that the minds of legislators have done nothing, but seal off the introduction of sound economic policy. Fortunately the barriers to changing political discourse could break in the face of protest, and finally allow the ideas of public intellectuals to lay siege to the current nature of debate. The individuals in power have neglected simple truths, but their arrogance cannot persist against protests, which are currently shaping the world. In the end the catalyst for the implementation of Keynesian economics was World war two, and not simply the efforts of intellectuals. In other words policy makers may thumb their nose towards some basic principles, but they will eventually become more responsive to the tide of public sentiment. In the short run, the assault on the current nature of debate has been dealt a minor blow, but in the long run the weather will eventually improve, more people will come, and the movement will become better organized. The nature of politicians may be to ignore such lessons, but history has shown that forces outside of their control will eventually force them to think differently.”.

    Finally I would like to point out that the Occupy protests need to rely on broad ranging for support. For example my next post is about the Pullman Strike, and one of my sources is a book about eugene debs. The ability of Debs to create strikes that would encourage change at a national level was often because he coordinated the efforts of strikers with Law firms, Private Charities, Business’s, and so forth. In brief this movement could really benefit if it found a way to outreach to the untapped resources of human capital that exist in both higher and lower income brackets.

    • I think we agree that there’s a distinction between now and later.

      As for Debs, there was a limit to what he could do within the maximally broad coalition – so if Occupy Wall Street wants to be more radical than Obama in terms of inequality and redistribution, it’s something they’re going to have to tackle. Debs became a Socialist in the end, after all.

  2. I don’t have anything against obama, and even if his measures are too conservative for some on the left, they are not getting enough support on capital hill any way. Things are not going to change until republicans get out of office. The one great thing that the election of Obama has done is that it has changed the nature of debate, and opened the door for liberal policy. Remember when George Bush was president and privatizing social security was discussed frequently on capital hill?

  3. […] of the great weaknesses of Republican class politics is their blithe assumption that the entirety of the working class can lift themselves up by their […]

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