Column: Troubled times

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SummaryThe world over, economies are suffering because of poor politics

The linkage between economics and politics is an eternal subject for debate. Engels was left with the job of interpreting Marx as he became an oracle after his death. In Marx’s work, there is a constant interplay of the economic and the political, as his three pamphlets on France will show. But Engels was like a Father of the Church asked to give his imprimatur to all and sundry schemes of revolution. So, he said while economics and politics interplay dynamically, the economic is in the last analysis dominant.

That ‘in the last analysis’ proved to be the get out clause. But even in these post-Marxist days, there is a temptation to assign political problems an economic rationale. Three examples may suffice.

The logjam in American politics—the Tea Party and the split among the Republicans, the weakness of the Obama Presidency both in domestic and in foreign policy are not just accidents. The American economy has had a deep recession. It got away with a weak welfare state all the years of prosperity but now the inadequacy of the welfare provision is obvious just when the country can least afford to make it more generous.

The longer run dynamic has been the flatlining of wages. The first twenty-five years after the war were the best for American workers when a family could have just one working adult, usually the man. His wage packet could afford the family a car, many durables and a house. This was normally manufacturing job where strong unions made annual real wage increases routine. When the Oil Shock came in 1973, the American economy, like most other Western economies, began to de-industrialise as manufacturing moved to Asia where labour was cheaper. There were jobs in services but for manual unskilled or semi-skilled workers the wage was way below that in manufacturing.

Families adjusted by two adults working but even that was not enough as wages stopped rising. Soon families had to borrow. When credit became cheap in the 1990s, families borrowed to the hilt. After 2008, the credit shrank and families find themselves with mortgage foreclosed and money tight. They resent this. White families believe in the American dream and blame the government for their woes.

The Tea Party reflects this voting bloc but, of course, they are financed by the very-rich who want to dismantle the welfare state and have lower taxes. The black and Hispanic workers have always

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