Xenophobia and the economy

Xenophobia and isolationism are spreading in America. When Democrats jump onto China bashing, they miss the real causes of the recession, and worse, legitimize us-vs.-them thinking.

Deep economic crises are fodder for demagogues who channel economic fear into a politics of resentment against “them.” In the 1930s it was foreign traders (mainly Europeans), immigrants, and Jews. Now it’s foreign traders (mainly the Chinese), immigrants, and Muslims.

Why do you suppose a half-dozen states are now considering (or have recently enacted) measures to end multicultural studies, bar children of undocumented workers from public schools, and allowed racial profiling? Every survey shows fewer undocumented workers in America now than three years ago.

How do you account for the outbreak of Islamophobia — fully nine years after 9/11? Why the clamor over a Muslim center near Ground Zero? Why do 18 percent of Americans believe President Obama wasn’t born in the United States, that he is a secret Muslim?

How do you explain the surging animosity toward foreign trade, particularly toward China? Candidates for midterm elections are running tens of millions of dollars of ads attacking their opponents for being too sympathetic to China.

Republicans have a long history of turning fears into resentments that animate voters. (Remember Willy Horton? Senator Joe McCarthy?) For years, Fox News, yell radio, and other outlets of the Republican right have built followings on hatefulness.

Now that the Great Jobs Recession continues, they have more fertile ground. Glenn Beck, Sarah Palin, and Newt Gingrich are given megaphones by Fox News to bash immigrants and Muslims and to question the President’s patriotism.

Yet Democrats are entering the same terrain when they blame China. According to the New York Times, House speaker Nancy Pelosi has been encouraging Democratic candidates to go after China, after internal polls showed voters increasingly willing to blame China for our problems and strongly in favor of eliminating tax breaks for companies that do business in China.

Democrats must know high unemployment in America has little or nothing to do with China. Yes, China should allow the yuan to rise further against the dollar. But China’s under-valued currency isn’t the reason we’ve lost 15 million jobs since the end of 2007. No, the tax code shouldn’t reward companies for relocating jobs there. But this tax break is barely relevant to the situation we’re in.

Our jobs crisis is due to the collapse of demand in the U.S. after the housing bubble burst. No longer able to borrow against the rising value of their homes, the vast American middle and working class can no longer spend enough to keep the economy going.

If Democrats (or Republicans, for that matter) want to blame something, blame America’s record level of inequality – an almost unprecedented concentration of income and wealth at the top, and a smaller proportion for the vast middle.

The evidence is all around us. It’s no mere coincidence that 1928 and 2007 marked historical high-water points for shares of national income going to the top 1 percent. Today’s median wage is now 5 percent lower than it was at the start of the decade, taking inflation into account, while top earners are doing better than ever. The core assets of most Americans are their homes, whose values are now 20 to 40 percent below what they were three years ago, while the key assets of America’s wealthy are shares of stocks and bonds, whose values have declined far less. The official rate of unemployment is 4.4 percent for college graduates but 10 percent for those with only high school degrees and almost 15 percent for high school dropouts.

I’m not suggesting Democrats blame the rich for their success. Most came by their high earnings and wealth honestly. And surely a vibrant economy requires that entrepreneurs be rewarded for hard work and valuable insight.

But Democrats should admit America’s economic structure has become dangerously unbalanced — more unbalanced than it’s been in 80 years — and the imbalance is making it difficult if not impossible for the nation to emerge from recession. For these reasons, Democrats should recommit themselves and the nation to redressing that balance.

Are the Democrats so dependent on the campaign contributions from the wealthy they dare not speak of this? Or worried about being labeled “class warriors?” by the right? Or convinced by their pollsters that everyone in the vast middle assumes they’ll be rich some day and therefore can’t abide the truth?

Or convinced that bashing China is so much more effective?

China bashing doesn’t educate the public about what’s truly at stake and what must be done in the years ahead. Worse: It reinforces the politics of resentment, and further legitimizes other forms of isolationism and xenophobia.

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