May 5, 2008

Class Warfare

Growing up, I was thrust into a world that was very unfamiliar to me. I was the son of two working class parents, living from paycheque to paycheque, attending Lower Canada College…

Given that I was politically oriented from a very early age, I always found it was very interesting to live in one world during the day, and heading home to a different one at night. One way to really understand class is to experience two different ones on a daily basis like I did for 7 years.

Being (somewhat) educated, I am able to listen to politicians and find faults in their arguments pretty easily. I’ve gotten pretty good at tearing people down.

However, I know when an idea is going to be popular. My extreme distaste for populism stems from politicians taking advantage of a large group of people who simply don’t know better. I disliked John Edwards because I believed he was a person with a 400$ haircut trying to take advantage of average working class Americans. Some may call that snobbery. How do I know what is best for people? In our own way, we all judge others for political decisions they make because we feel we are more intelligent than they are. Where is the balance?

My father is a janitor at a shopping mall at the corner of Frontenac and Ontario streets in the Hochelaga district of Montreal. I spent many days there as a kid, even working there one summer as a stockboy as my classmates were in Europe or on a beach somewhere. Those who know Montreal well know the area. It is poor; filled with people who are the victims of bad decisions or have made bad decisions themselves.

The memory that stayed with me the most from that summer was on the first day of August, the manager of the store where I worked asked me to go deposit a cheque at the Caisse Populaire in the mall. As I strolled around the corner, I saw a line of at least 200 people waiting at the bank. I couldn’t believe my eyes. My dad sees me there shell-shocked and comes over to me laughing. “Tony, it is the first of the month, not everybody lives like your friends at school. Hurry up and go earn your money.”

Later that day, I was at the depanneur in the strip mall on my lunch break, buying my dad cigarettes (I was 14 lol). I had a conversation with the owner of the depanneur, who was grinning from ear to ear. He explained to me that the first of the month was like Christmas in the place. “Nothing beats being the guy selling the cigarettes next to a Caisse Pop when people get their welfare checks.” I think I am still somewhat traumatized by that lazy summer August day. I didn’t learn the value of a dollar that day; I earned the value of an earned dollar.

I wanted to take that story to remind people why nobody in Indiana or North Carolina is listening to economists in their ivory towers right now surrounding the gas tax holiday issue. Will giving Americans a break on the gas tax in the United States bring down the cost of oil? Of course it won’t. When we looked at policy to bring down the cost of gas, we found there was no short term solution, that 70$ for a barrel of oil would continue going up in the short term and that alternate sources of energy, including ethanol, which is causing a global food shortage, would bring down the cost of a barrel of crude oil.

Also, you can use coal to make oil at the cost of 55 dollars a barrel, at a huge detriment to the environment. If the US moved to do that immediately, the price of gasoline could fall almost a dollar a gallon by the end of the decade. Using coal to make oil would also be another short term solution, but long term, for the sake of the environment, we need to waste less energy, and produce more renewable energy. When oil was at 70$ a barrel this didn’t seem worth it. When oil is 115$ dollars a barrel, it may be time to consider it as a temporary option.

The only thing a government can directly control in the short-term is the gas tax, and in Canada’s case, the GST on the gas tax. Eliminating either is not a long-term solution. However, a holiday on the tax at the expense of the oil companies, who are taking in billions, is not impossible.

I know it sounds like Robin Hood taking from the rich and giving to the poor, but basically what Clinton is saying to the American people is: “Okay, I can give you a little break this summer and make the oil companies pay for gouging consumers. However, if we want this to stop, we have to get serious on alternate sources of fuel.” There has never been a better opportunity to get the American people onside with alternate sources of energy than now, as they are paying record prices for gas.

So to all those economists, yes it is only 30 dollars. However, those are 30 earned dollars to those people. So while economists drink a 7 dollar latte, a working family in Indiana can afford to buy that extra loaf of bread, or rent that movie to entertain the kids because they can’t afford to take them out. Never tell anybody what their dollar is worth to them.

That is the glaring mistake Obama and his Obamaniacs are making by calling this a scheme and not giving it serious thought. When people say things like “that is only 30$, pennies a day”, they sound elitist, because they are saying these people do not need the money, and that oil companies should just pocket the 8 billion dollars.

To be fair, Obama also said he would tax windfall profits and use the money to invest in renewable energy. Probably a wise thing to do in the long term. However, people are struggling now. They need relief now. The American spirit can only take these people so far. Telling them there is nothing we can do about this for the next 10-15 years is lying to their faces Barack, there is only things you do not want to do.

This is the very difficult lesson Hillary and Bill Clinton are teaching Obama as they barnstorm through small-town Indiana and North Carolina.

When Obama says these people do not need that money, he sounds like a guy who went to Lower Canada College, telling everybody that he knows better than them, that he knows what to do with their money. What working-class Americans are responding back is that after hearing Obama tell them that their earned money isn’t useful to them, his change is something they can do without…

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30 Commentaires:

Blogger Cicely a dit...

There is a difference between a principled populist approach and pandering. Clinton is pandering and polling suggests that folks know it. Obama is not elitist he simply refuses to talk to adult voters as if they were children. He tells them the difficult truth. I support Obama but don't consider myself an Obamaniac. He is a politician not a messiah and (as he repeats consistently) he will work hard to fulfill his promises but he isn't perfect and he cannot simply make it all happen by fiat. As a woman I wish I could support Hills, but she just isn't the right woman for the job. I am happy that she's run (if not how she has run) because I do think that, even if she looses, she has opened the door to future female candidates. Nancy Pelosi perhaps?

5/05/2008 3:05 PM  
Blogger Antonio a dit...

it would be pandering is she suggested the holiday would be permanent, because it is not sustainable.

At the end of the day, she put her ear to the ground and got the pulse of the people, which is what any politician should.

Telling people "yes we can" and running on such policy pillars as "hope" is far more populist than proposing an admittedly short-term solution to a problem.

All the polling suggests is that with the entire media and economists putting down the plan, there is still 40% support for it. It means the idea has more resilience than anybody gave it credit for.

5/05/2008 3:44 PM  
Blogger Cicely a dit...

I assume that you have been following the primaries enough to know that Obama has not simply been peddling a meta-message of hope. He has had a plethora of strong policy positions on energy, the war, greening the economy, etc. The meta-message however is crucial because the US has to break free of the hyper-partisanship in order to actually make change. Obama is right, the only way that is possible is if the President with the bully pulpit is able to talk over congress to the people and be the 'cheer leader' for real change. I doubt I have to remind you that it was Bill Clinton who said if you have a candidate that is offering hope and one that is offering fear, go with hope every time. Bill Clinton tried the meta-message in the first time out of the gate and one. No one was more disappointed that he wasn't able to translate the goodwill from his first campaign into real legislative change. I would argue that the reason for that is that the Clinton's are not real progressives. They are DLCers - they don't want real change they want power (reminds me of the LPC here). I should have realized when they held copious numbers of inaugural galas (13 in all if I remember right). The Clinton's wanted to be king and queen of the US not Prez and first lady. Talk about elitism!

5/05/2008 3:58 PM  
Blogger Peter Loewen a dit...

Temporary or permanent the proposal will do nothing to change the price of gas. Fact.

I liked the beginning of your post, btw. It was a great insight into you.

5/05/2008 8:17 PM  
Blogger jacilyn a dit...

I have noticed that anything benefiting the working class is "pandering".

But the Clintons have always derived their power from knowing and understanding ordinary people. And they know their people. I love Hillary for understanding our needs even though it's clear the Democratic party really wants to abandon us.

The gas tax (whether it goes through or not) is a promise. It is a reminder. Life was better for us under the Clintons.

And by the way my family stands to save more than thirty bucks. A great many working class individuals have to do a lot more driving than average for the sake of their jobs.

And apparently thirty dollars means a lot more to me than it does to people who can afford lattes. To hear the Obama fans dissing on thirty bucks is the best negative campaign ad Hillary Clinton could have bought.

5/05/2008 8:39 PM  
Blogger Woman at Mile 0 a dit...

Bunch of hooey. Country talking about taking a holiday from a gas tax when they are trillions of dollars in debt and their roads and bridges are crumbling around their ears. I think Hillary...like McCain doesn't think Americans are very bright and can understand the depth of the problems. Oh look a shiny thing over there!

5/05/2008 9:16 PM  
Blogger Antonio a dit...

I felt I had to give a little background as to why I understand the difference between populism (a la Dumont) and truly understanding the population's needs.

The only way to lower the cost of gas is to lower the cost of oil. Increase the supply of energy and people wont need as much oil. period.

But peter, we know that policy wasnt about oil or gas. It was about telling voters she would be there to help them now, and later on. Some people pounce on that immediately. But, sometimes, people need to see authenticity for what it is.

The beating Hillary has taken has made her so much stronger.

5/05/2008 9:55 PM  
Blogger Peter Loewen a dit...

Sorry, Jacilyn, but cutting the gas tax will do nothing to help you. It's just economic illiteracy to suggest otherwise.

Now, you may want to believe it will, and Hillary may love that you are willing to believe it will. But it won't. So think what that says about her: she's willing to push a policy every good economist, nay, every person who understands supply and demand knows won't actually help you, as long as you think it will help you. If that's not pushing false hope I don't know what is.

And, Anthony, if it's only about letting people know that you're on their side and that you are looking out for them, they why doesn't she just say it, rather than suggesting such a ridiculous policy?

This isn't authenticity. It's pandering to tell people what they want to hear. Imagine if we conducted other aspects of our lives this way, as though you would tell a blind man that there were no cars coming down the street because he wants to and needs to believe it's true.

5/05/2008 10:07 PM  
Blogger jacilyn a dit...

The Democratic party has long stood for things that economists hate: minimum wage laws, child labor laws, safety workplace regulations, overtime laws, lunch breaks.

Economists can and do describe child slavery as "a nation's comparative advantage".

Economists want a model that allows six people to own ninety percent of the world and the rest to live as slaves. What good is that to me?

Not that I see what Clinton is doing as being about economics at all, just as it's obviously not about energy policy. It's about relief for the working class, and I take this gas tax to be largely symbolic (though I repeat: those who keep dissing on thirty bucks, or keep insisting that twenty cents a gallon is insignificant, are really emphasizing the gap between how comfortably out of touch some people are - and how poor so many other people have become).

Why should an economist approve of what Clinton is doing, when politics and economics are natural checks and balances on each other?

It's about recognizing poverty as an issue. It's about acknowledging the fact that the middle class is disappearing and the working class has sunk into poverty while those who can afford to ignore what is going on, slurp down their overpriced lattes and talk about how cool they are for having the candidate that looks just so good, mmmm!

It's about restoring trust and alleviating anxiety. You may not realize it, but trust really is the key to whether the economy is expanding or collapsing.

5/06/2008 12:14 AM  
Blogger Peter Loewen a dit...

Jacilyn, I think you should probably brush up a little bit. First, economists don't hate minimum wage laws, child labour laws, or any of the other things you've suggested. And the fact that some nations are advantaged by unfair labour laws and that this is recognized by economists does not mean that they believe it is morally right. Now leaving aside your offensive slagging of an entire profession, let's get down to the bones of your argument. You think that what policy is about is doing things which are symbolically important even if they are empirically meaningless. Fine. But recognize that you wouldn't reward that kind of behaviour anywhere else in life. You wouldn't congratulate a doctor for telling a patient a sugar pill will make them better. And you wouldn't thank a snake oil salesman for recognizing your need for a balm, however useless the one he gives you.

I don't doubt that Hillary has lots of policies which will help the poor. And this is to be applauded. But don't applaud such a ridiculous and useless one as this. It is not going to help anyone, the poor especially.

5/06/2008 6:55 AM  
Blogger Mark a dit...

"...sounds like a guy who went to Lower Canada College, telling everybody that he knows better than them, that he knows what to do with their money"

Indeed.

Antonio, did the fourteen year old at the bank ever wonder why all of those people were in line at the same bank? Do you think they drove there?

If you're going to cite "class warfare" and people in line to cash welfare cheques as your argument for lower gas taxes, then maybe you ought to have thought about how many of them own and drive cars.

You probably should have used another class for your parable.

5/06/2008 8:46 AM  
Blogger Antonio a dit...

mark, I told the example of the bank line to demonstrate the other extreme of the spectrum. The working class person in the story is my father, not the people lining up for a welfare check.

People have a hard time understanding the demographic Obama is having a hard time connecting to. It is the people with jobs, in some cases, good jobs, who with the current state of the economy, simply cannot make ends meet.

Also, his building is attached to an apartment complex. Most of the people in that line live in that building.

Also Peter, economists throught the past couple of decades, many monetarists emphasized inflation was far more important than unemployment, causing numerous jobs to disappear at the cost of keeping inflation very low.

You cant tell me that some people would disagree with that. I would rather have 3% inflation and 4% unemployment than 7% unemployment and 1.5% inflation.

its classic keynes vs friedman. Many economists frankly dont really give a shit about the people, just the economy. Some say that is their job. Others think they should be a little more compassionate.

5/06/2008 9:11 AM  
Blogger Yvan St-Pierre a dit...

If I may add my grain of salt, away from the political implications per se, the economic dilemma here is not an all-or-nothing type of choice, of whether we help the people or not. What is clear is that, whatever the amount of money, some of the tax rebate will end up in the pockets of the consumers, some will turn into additional profits for the oil companies (I don't know, by the way, how Antonio gets the idea that it would be "at their expense"), but all of it will have to be financed by the government, either through a larger deficit or spending cuts. So the economic problem is really whether the additional gift of taxpayers to oil companies will amount to helping people through lower tax prices, or hurting them more through raising the probabilities of foreclosures and layoffs, as a consequence of the government tying its own hands even further.

I guess many people are like good old Harry Truman. They want one-arm economists, so they don't ever have to choose between the problems on the one hand and those on the other. It's ok. We've gotten used to it.

5/06/2008 11:26 AM  
Blogger Yvan St-Pierre a dit...

Oops. In my last comment, I meant lower "gas" prices, not lower "tax" prices. Sorry for the confusion. There's certainly enough of that already.

5/06/2008 11:56 AM  
Blogger calgarygrit a dit...

Maybe it's good politics, but it's an incredibly dumb proposal - both in theory and in practice.

5/06/2008 2:34 PM  
Blogger Antonio a dit...

I think people missed the point of my post.

Obama's mistake was telling these people their money was pennies and better off in the hands of the government.

Undeniable.

The blue collar voter in my story is my father. He is not rich like my school friends. He is not waiting in line for a government handout like those in the caisse pop line.

He earned the money himself, and to have someone tell him it is merely pennies, without proposing any other alternative, is just plain bad.

Second, Yvan clearly did not read the Clinton proposal. Hillary is taking 8 billion of the 40 billion dollar profit of the oil companies to pay for the holiday, so it is at the expense of the oil company.

5/07/2008 1:21 AM  
Blogger Yvan St-Pierre a dit...

Antonio, you're right. I did not read the details of the Clinton proposal, nor those of her proposed freeze on interest rates or renegociating NAFTA. All these things must be just for show, otherwise a Clinton presidency would be even more of a historical joke than W's.

Now, tell me Antonio, how is she proposing to transfer that money from the oil companies to the consumer? With price freezes and the resulting shortages? Good grief... this might be even worse than I thought!

5/07/2008 8:21 AM  
Blogger Antonio a dit...

Yvan, the fact that you continue attacking a plan you know nothing about is startling, then attack other policies you also clearly have not read, damages your credibility even more.

Freezing interest rates on mortgages is not unheard of. Did you know you can ask for a fixed rate mortgage at the bank even here in Canada? WOW. It gives people security. Not a terrible idea at all. What has Obama proposed to help people feel financially secure about the housing crisis?

Oil companies make profit for 2008. Clinton taxes windfall profit of oil companies totalling 8 billion dollars. (remember profit of the oil companies was 40 billion in 07)

Government takes 8 billion less in, receives 8 billion from oil companies...voila, not complicated at all.

Like i said, not the best policy, but it proposing SOMETHING, Obama is talking about "change" and "hope" but in the short-term, he is choosing to offer nothing to voters with regards to the high cost of gas.

Its either that or convert coal to oil. The only two ways to affect the cost of gasoline and one is at a severe detriment to the environment.

Yvan, you attack things you admittedly have not read up on...expect to be shot down rather quickly

5/07/2008 9:25 AM  
Blogger Antonio a dit...

policy you think is for "show" is actually substantive ideas directly affecting those blue-collar voters that Obama, despite his impressive win yesterday, still could not wrest away from Hillary Clinton.

Obama won because he brought his strong demographics out in NC and close in IN, to the point where turnout in Gary Indiana was 85-95%.
He can win in november if he does the same thing. However, Kerry won much less of these voters in 2004 than Gore did in PA similarly in OH.

The other demo Obama is having trouble with Latinos, also had a problem with Kerry, handing an easy victory to GWB in the state, after Gore had (in theory) almost won the state in 2000.

He gave a FANTASTIC speech last night. It was really good. I just think that people in November might not vote for speeches, but vote on policy.

5/07/2008 9:31 AM  
Blogger Yvan St-Pierre a dit...

Antonio,

A year ago Clinton was certainly my number one choice for US president (as if my opinion mattered anyway), but she's been losing me ever since the absurd NAFTA stunt for Iowa because she's becoming worse than Obama with peddling false hopes. That's for my own irrelevant political preferences.

As economics go, however, I think I understand a little how supply and demand works, and I know that government, unless it starts playing with prices and create surpluses and shortages, cannot decide who will shoulder the tax burden between companies and consumers. Consumers decide. They will either pay the tax, or they will buy less gas.

What you describe just means the price of gas will not change one iota. Actually it will rise a bit, because some accountants will have to be paid somewhere to switch numbers for one part of the spreadsheet to another. Period.

As to freezing the interest rates, what are you talking about? Aren't fixed rates more expensive? Security is ok, but it has a price. Forcing everyone to pay it means that the credit crunch will get even worse and that there will be even more foreclosures, bankruptcies and layoffs. Great policy indeed...

Sorry, but I do think that you are trying to have a cake and it eat too, here.

5/07/2008 10:46 AM  
Blogger Antonio a dit...

fixed rates are usually more expensive, but if you freeze the rates, the banks take a chance at the current rates. It is a lot of government for US standards, but it is an idea.

This is the same scenario as the Liberal Leadership race where 2 candidates would put out policy, and the 2 others would simply react making sure they slammed people for controversial stuff (dion rejecting a carbon tax, rae being for the nation in Quebec, and ambiguous outside Quebec).

Obama did not propose any alternatives, only attacked Clinton.

Same with Obama's health insurance plan. It does not cover everybody, so it is just making it more affordable, which for many people is nto an option, and will probably still have to declare bankruptcy if they get too sick.

As for the cost of gas, it is directly related to the cost of oil, not decided by the oil companies, but by the world market. Either you put an end to speculation by flooding the market with coal-produced oil, or you can offer small relief by making the oil companies pay the gas tax.

Where is Obama's idea

PS: Hope doesnt count...

5/07/2008 3:09 PM  
Blogger Yvan St-Pierre a dit...

Hey, I ain't defending Obama. I'm discussing economics, not political marketing.

Markets determine prices based on consumers' willingness to pay. No government scheme can alter this, short of the government setting the prices itself. You just can't get around that, however sweet the rhetoric. Clinton, Obama or McCain can promise affordable trips to Jupiter, as far as I care, and it will be just as credible as this thing.

And banks will make it a lot harder getting loans when it's the only option to secure their own profits. I'm not sure what is going on, Antonio, I thought you were generally more realistic than that.

5/07/2008 4:15 PM  
Blogger Antonio a dit...

it is not unreasonable to force banks o freeze rates on current mortgages for 5 years, especailly when the federal reserve is there to bail out the banks if necessary.

It is about giving people a sense of security

5/07/2008 8:11 PM  
Blogger Yvan St-Pierre a dit...

I truly respect your combativeness, Antonio, but you're just wrong. Banks don't plan on doing such bad business that they'll have to be bailed out. What they want is to maximize profits. For sure, competition turns this bailout perspective into them taking too much risk, but this is entirely irrelevant to the consequences of a rate freeze. A rate freeze is a price freeze on the credit market, hence theory predicts a shortage of credit.

How does it work in practice? Clinton gets in power, signals she's serious and then bank stocks fall (just because profits will go down), so that to stay in business, they have to give their own shareholders a... sense of security, and a credible one at that. This means concentrating on the higher quality loans, and forgetting about whole areas of less lucrative activities, which were only worthwhile when potential losses could be offset by raising mortgage rates. This also means less money for other businesses, less money for new mortgages, less money for personal loans, and all that ensues, i.e. more havoc for the blue-collar workers that this was supposed to help in the first place.

I don't know how this can really give people a sense of security, to be quite frank, but I sure as hell know that it shouldn't.

5/08/2008 8:47 AM  
Blogger Yvan St-Pierre a dit...

Sorry again, I shouldn't have written too hastily "to stay in business" in my last comment, because you'll falsely assume that I missed your point about bailouts (which has its own set of dire consequences, by the way).

What I meant is that banks want to remain competitive and attractive to potential investors by making as much money as possible, which is actually what makes "staying in business" a meaningful expression in the first place, hence the shorthand. But this surely, no bailout promise can help with.

5/08/2008 9:14 AM  
Blogger Antonio a dit...

as far as know yvan, the banks are losing more money now than they would if people who are overwhelmed had lower rates to pay on their mortgages

5/08/2008 6:13 PM  
Blogger Yvan St-Pierre a dit...

I don't want to argue just for the sake of arguing, Antonio, but I'm truly amazed at how political agendas can make people accept logically invalid arguments as long as the conclusion conforms to their wishes.

Here, the answer has 2 parts: first, it's not because it's been bad that it can't get worse, and if banks could make more money by dropping the rates, they wouldn't need Hillary's wonder plan in the first place.

Anyway, I guess we're getting to that place where all we've got left to do is to agree to disagree, and let the chips fall wherever. You have a good evening, my friend.

5/08/2008 7:49 PM  
Blogger Ben (The Tiger) a dit...

Turns out it didn't work out that way.

But if Obama sounds like a guy who went to LCC, well, that's because he did. That is, he went to one of the best prep schools in Hawai'i before he went to two Ivy League universities.

5/09/2008 10:02 PM  
Blogger J a dit...

God help us...Obama is bright enough to have gotten scholarships to prep schools and universities. I realize that American's think you have to have grown up eating dirt and attending one room schools with no indoor toilets to qualify as 'of the people' and therefore worthy of the presidency. Oh wait....only a handful of presidents would have qualified for the job. HRC's grandfather may have been a worker but by her generation her family was doing pretty good. Obama and his wife Michele's family had it tougher but they to have done well. That is indeed Obama's message. That he hopes to bring that kind of measured prosperity over generations. Honouring the work that creates wealth not just the wealth itself. To me, that is decidedly more respectful of working people than pretending you are 'one of the peeps'. I know that the beer photo ops are necessary and they both have done it but I do think HRC's narrative that he is elitist and the pandering on so many policy issues is just too much.

5/10/2008 11:13 AM  
Blogger Antonio a dit...

well, that remark did make him sound alot like a snob.

And please dont tell me what he said is true, because if it is, the left has many categories which fall into the same "bitter" category.

It is very common to dismiss people you disagree with as "bitter", but dont cry when people think youre a snob for saying it.

5/10/2008 12:47 PM  

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