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"But if the cause be not good, the king himself hath a heavy reckoning to make, when all those legs and arms and heads, chopped off in battle, shall join together at the latter day and cry all 'We died at such a place;' some swearing, some crying for a surgeon, some upon their wives left poor behind them, some upon the debts they owe, some upon their children rawly left. I am afeard there are few die well that die in a battle; for how can they charitably dispose of any thing, when blood is their argument? Now, if these men do not die well, it will be a black matter for the king that led them to it; whom to disobey were against all proportion of subjection." (Henry V, Act V, Scene 4)

Saturday, November 11, 2006

Economic populism pays for Democrats

Economic populism pays for Democrats
By Edward Luce and Alim Remtulla in Washington
Financial Times
Updated: 12:42 a.m. CT Nov 11, 2006

Defeated Republicans have found solace in the fact that many of their victorious Democratic opponents are "social conservatives". They point to James Webb, who surprised everyone by winning the bitter and close Senate race in Virginia on Thursday, giving his party a majority of one in the upper house tom complement its decisive victory in the House of Representatives.

However, neither Mr Webb nor the majority of the Democratic freshmen who won elections this week can so easily be fitted into that category. Punching the air and holding up the dusty boots of his son who is serving in Iraq, Mr Webb told cheering supporters in Arlington that his election was as much a vote for economic fairness as it was for a change of course in Iraq.

Although Mr Webb supports the right to bear arms – a virtual necessity for anyone wanting to represent the Commonwealth of Virginia – the Vietnam veteran is pro-abortion and only lukewarm in his opposition to homosexual marriage.

One or two of his colleagues, including Bob Casey, the new senator for Pennsylvania, and Heath Shuler, a Democratic representative for North Carolina, are "pro-life" but the large majority of new Democrat lawmakers support the woman's right to choose.

More significantly a majority of the intake, including Mr Webb, are economic populists who are deeply suspicious of free trade and quick to blame China and other developing countries for the loss of US jobs. Some, such as Sherrod Brown, the new Democratic senator for the key Midwest state of Ohio, which has lost 200,000 manufacturing jobs since Mr Bush came to power, won the election virtually on that issue alone.

"We will focus on economic fairness in a country divided too much by class in an age of the internationalisation of American corporations," said Mr Webb in a victory rally speech that devoted more to the economy than all other themes combined. "At a time when profits are at a record high and wages are at a low, we will focus on bridging the class divide."

Labelled the "middle-class squeeze" by Democrats and "median wage stagnation" by economists, the incomes of median American households have barely shifted since George W. Bush was elected on a ticket of "compassionate conservatism" in 2000. However, in important parts of America, including large swathes of the Midwest and the north-east, which provided a majority of the Democratic gains, economic anxiety came a close second to the Iraq war in motivating voter turnout.

In a study of the election campaign, Robert Borosage, head of the liberal Campaign for a Fairer America, said there were more political advertisements "painting big oil [companies] and big pharma as threats than advertisements warning about bin Laden". According to Stan Greenberg, a Democratic pollster, 41 per cent of those who voted Democrat cited their disquiet over the Iraq war as their main reason for voting compared with 26 per cent on jobs and the economy. However, if the 23 per cent citing "corruption in Washington" is included, then domestic concerns trumped Iraq.

Democratic campaigns overwhelmingly linked middle-class economic anxieties to the Republican Congress's promiscuous use of tax breaks for large companies in exchange for campaign finance. "On the economy Democrats ran remarkably populist campaigns," said Mr Borosage. "Democrats linked corruption to economic woes, charging incumbents with being in the pockets of big oil and doing nothing about gas prices and being in the pockets of big pharma and doing nothing about drugs prices."

The most obvious economic consequence of the Democratic victory is that it will be virtually impossible for Mr Bush to renew his fast-track trade negotiating authority next year in order to revive the dormant Doha round of world trade talks. However, the administration's bilateral trade initiatives could run aground far more quickly.

Many leading Democrats, including Mr Brown and Mr Webb, campaigned for "fair trade" and "putting Americans first", which is code for including labour standards in bilateral trade agreements and being more critical of companies that "outsource" manufacturing jobs to China and service sector jobs to India. They are likely to be aggressive in pushing for tougher scrutiny of explicit and hidden tax breaks for large energy and pharmaceutical companies – known as "corporate welfare".

As the world focuses on the brewing debate over Iraq between the Bush administration and a Democratic Capitol Hill, the battle to define America's response to globalisation is also hotting up. "Both the Democrats and the Bush administration will want the other side to get the blame if their mutual promise of bipartisanship falls apart," said a senior Democratic strategist. "It could be over Iraq, it could be over the economy."
© The Financial Times Ltd 2006. "FT" and "Financial Times" are trademarks of the Financial Times.Copyright The Financial Times Ltd. All rights reserved.



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