A GlobeScan poll released today shows a "sharp drop in American enthusiasm" for the free market economy. Back in 2002, 80 percent of Americans polled either strongly agreed or somewhat agreed with this statement:
The free market system and free market economy is the best system on which to base the future of the world.
But in 2010, American support for free market capitalism dropped to 59 percent, just shy of the 54 percent average of the 25 countries polled. Support plummeted 15 points since 2009. The decline was led by American women and the U.S. working poor:
Americans with incomes below $20,000 were particularly likely to have lost faith in the free market over the past year, with their support dropping from 76 percent to 44 percent between 2009 and 2010. American women have also become much less positive, with 52 percent backing the free market in 2010, down from 73 percent in 2009.
"America is the last place we would have expected to see such a sharp drop in trust in the free enterprise system. This is not good news for business," GlobeScan Chairman Doug Miller said.
Americans are fed up.
This should come as no surprise. Americans have seen jobs freely flowing out of the U.S for decades and U.S. unemployment rate was 9.6 percent during 2010. Add to the dissatisfaction, increasing income inequities over the past decade thanks to the Bush tax cuts and the collapse of Wall Street and the capitalist system that brought about the Great Recession and the government bailouts for banks deemed 'too big to fail'.
"The poll suggest that American business is close to losing its social contract with average American families that has enabled it to prosper in the world. Inspired leadership will be needed to reverse this trend," Miller said.
Trends indicate that Americans have outlived their usefulness to the rich minority in the United States, Michael Lind wrote at Salon last July.
In every industrial democracy since the end of World War II, there has been a social contract between the few and the many. In return for receiving a disproportionate amount of the gains from economic growth in a capitalist economy, the rich paid a disproportionate percentage of the taxes needed for public goods and a safety net for the majority.
In North America and Europe, the economic elite agreed to this bargain because they needed ordinary people as consumers and soldiers. Without mass consumption, the factories in which the rich invested would grind to a halt. Without universal conscription in the world wars, and selective conscription during the Cold War, the U.S. and its allies might have failed to defeat totalitarian empires that would have created a world order hostile to a market economy.
Globalization has eliminated the first reason for the rich to continue supporting this bargain at the nation-state level, while the privatization of the military threatens the other rationale.
The off-shoring of industrial production means that many American investors and corporate managers no longer need an American workforce in order to prosper. They can enjoy their stream of profits from factories in China while shutting down factories in the U.S. And if Chinese workers have the impertinence to demand higher wages, American corporations can find low-wage labor in other countries.
In fact, the new GlobeScan poll shows U.S. support for the free market is now lower than it is in China, Brazil, and other "emerging economies". 67 percent of the Chinese and Brazilians polled believe the free market is the best system available and the support from Indians equals U.S. support at 59 percent.
The Western nation with the highest support for capitalism is Germany at 68 percent. Again this should not be a surprise, because the Germans have maintained the social contract that was once held in the U.S. Strong unions mean strong productivity, a report from the Economic Policy Institute showed. While union membership has declined in the U.S. since the late 1970s (about the time when manufacturing jobs started to be offshored), "most of the major continental European countries have maintained strong unions, and most of their employees are covered by collectively bargained contracts." 68 percent of German workers were represented as of 2007. For example, German workers have universal health care coverage, 44 paid sick days per year, and significantly better unemployment wage protection. Protecting German workers has contributed to Germany's trade surplus, which grew faster than expected in 2010.
Compare that to the United States, where there is private health care coverage, zero paid sick days required, and long term unemployment wage protection is a political hot potato tossed around in Congress. The Center for American Progress published this week a report documenting how "Unions Make the Middle Class".
Unions make the middle class strong by ensuring workers have a strong voice in both the market and in our democracy. When unions are strong they are able to ensure that workers are paid fair wages, receive the training they need to advance to the middle class, and are considered in corporate decision-making processes. Unions also promote political participation among all Americans, and help workers secure government policies that support the middle class, such as Social Security, family leave, and the minimum wage...
Without the counterbalance of workers united together in unions, the middle class withers because the economy and politics tend to be dominated by the rich and powerful, which in turn leads to an even greater flow of money in our economy to the top of income scale.
Union membership has been declining in the United States since the 1960s. Overall, American union membership is at about 12 percent of the total workforce and continues to decline. Today private-sector union members are less than 7 percent of the workforce, which is down from around 30 percent in the late 1960s, according to CAP. Public-sector union membership has remained comparatively stable from 37 percent in 1979 to 36 percent today. Republicans and their corporate backers have been been successful in eroding private-sector union membership over the past 40 years, and now are engaged in full-blown attack on public-sector union members. When unions are weakened, the middle class grows weaker.
The middle class weakened over the past several decades because the rich secured the lion’s share of the economy’s gains. The share of pretax income earned by the richest 1 percent of Americans more than doubled between 1974 and 2007, climbing to 18 percent from 8 percent. And for the richest of the rich—the top 0.1 percent—the gains have been even more astronomical—quadrupling over this period, rising to 12.3 percent of all income from 2.7 percent.
In contrast, incomes for most Americans have been nearly flat over this same time period, and median income after accounting for inflation actually fell for working-age households during the supposedly good economy in the recovery between 2001 and 2007. The importance of unions to the middle class is not just a historical phenomenon, but is relevant to our lives today. To be sure, not everything unions do benefits the broad middle class, but unions are critical to defending the middle class, and their resurgence is key to rebuilding the middle class.
Indeed, it is hard to imagine a middle-class society without a strong union movement.
"Inspired leadership," as Miller suggested, is needed to reverse this trend. When politicians attack unions, they're attacking the American middle class. Yet just last year, Republicans harnessed this dissatisfaction for historic gains in legislative seats not seen by their party since the 1920s across the nation and in Congress. The Republicans have not been idle. Instead of seeking bipartisan solutions as the Democrats did with their majorities, they are waging all-out war against the middle class and the unions that helped create them.
The Democratic Party failed to show to the majority of American voters in 2010 that its candidates protect the middle class. After getting mixed messages about health care, Social Security, jobs, and free trade from Democrats, some American voters wonder if there is any difference between the parties or if their vote even matters.
After decades of Americans just taking it the pocketbook in the name of globalization and life during the Great Recession, it may be that people in the United States are seeing the free market for the smoke and mirror show that it has been for the past 40 years. As the GlobeScan poll shows Americans are becoming increasingly dissatisfied with the free market system the ruling class keeps pushing. Americans who disagrees that the free market is best is now at 29 percent of those polled. Americans are tired of the trickle down and are deciding enough is enough. The Democratic Party would be served well to understand this.