America’s Burgeoning Class War Could Spell Opportunity For GOP

Last week’s disappointing job reports, with unemployment rising above 9%, only reinforced an emerging reality that few politicians, in either party, are ready to address. American society is becoming feudalized, with increasingly impregnable walls between the classes. This is ironic for a nation largely defined by its opportunity for upward mobility and fluid class structure.

According to the latest data, the current unemployment rate is the highest it has been so deep into a recovery since the 1940s.  Even more troubling, over 6 million Americans have been unemployed for more than six months — the largest number since the feds have begun tracking this number decades ago.

That’s not the worst of it.  The pool of “missing workers” — those who are unemployed but are not counted as such — has soared to over 4.4 million. And under the first African-American president the employment rate for black men now sits at a record low since the government started measuring the statistic four decades ago.

This recovery has been particularly parlous to the middle class, of all races. Despite the massive stimulus, small businesses — the traditional engines of job growth and upward mobility — have barely gotten off the matt. Indeed, according to a recent National Federation of Independent Business survey, they are now more likely to reduce payrolls than expand them.

Many blue-collar and middle-class Americans are becoming increasingly pessimistic about the future and their children’s chances for achieving their level of well-being. Middle-age college graduates, who supported Obama previously, increasingly have shifted from the administration.  Even the young seem to have lost their once fervent enthusiasm. After all, they are seeing their prospects dim dramatically.

Overall disapproval of President Obama’s economic policies now stands at 57% and will likely grow due to the latest job numbers.  And while the middle and working classes have seen their prospects worsen, the very rich have enjoyed a huge boom.

Of course, no one in a capitalist country should begrudge the earned wealth of the rich.  But there must be some sense that the prospect of greater prosperity extends beyond the privileged. The policies of Fed chief Ben Bernanke and Treasury Secretary Tim Geithner have done little for the small businesses on Main Street while enriching the owners and managers of financial companies by showering them with cheap money and implicit government guarantees for their survival. Top pay for CEOs of financial companies, including those bailed out by the taxpayers, has soared.  The rise in stock prices has benefited the wealthiest 1% of the population, which owns some 40% of equities and 60% of financial securities.

The consequences will be profound — socially and politically.  For one thing, the president, despite his occasional barbs against “the rich,” has turned out something of a faux populist. If a George Bush recovery was as bad as this one, we would never hear the end of it from the “progressives” who still cling to Obama.

Of course, not all the blame belongs to the White House. The formerly Democrat-controlled Congress largely ignored the middle class’ concerns over the economy and jobs. Instead they focused on health care — which, according to the Pew Foundation survey, ranks as only a middling concern among voters — and climate change, which ranked dead last among the top 20 issues for the electorate.

Even with the Main Street economy grasping for air, Congress chose to impose new regulations and taxes on the entrepreneurial class. Meanwhile Washington has given huge government support to often marginal green ventures such as Tesla, which is building $80,000 plus electric cars. Such assistance was not extended to the struggling garment-maker or semiconductor plant forced to compete globally largely on their own.

Of course Democrats resort to stirring up class resentments, but their credibility is thin. After all it’s New York Sen. Charles Schumer, not some fat-cat Republican, who remains the financial industry’s designated hitter on the Hill. Instead of chastising the big financial institutions, the administration has largely coddled them. Despite the obvious abuses behind the financial crisis, there have been virtually no prosecutions against what Theodore Roosevelt once identified as “the malefactors of great wealth.”

This has created a class divide large enough to propel a Republican sweep next year. Some Republicans, like former Bush aide Ryan Streeter, understand this opportunity. Streeter argues for the GOP to become more economically populist approach.  He calls for an “aspiration agenda” based on policies to spark private sector economic growth and a wide range of entrepreneurial ventures. To succeed, the GOP needs a viable alternative to middle and working class voters who are losing faith in Obama-style crony capitalism but who do not want to replace it with policies focused on enhancing the bottom-lines of the top 1% of the population.

Yet at a time when people are worried primarily about paying their bills and prospects for their children, many Republicans seem determined to campaign on social fundamentalism, something that is already distressingly evident in the Iowa primary race. This may have worked in the past, in generally more prosperous times. Right now what sane person thinks gay marriage is the biggest issue facing the nation?

Neither right-wing ideology nor mindless support for corporate needs constitute a winning strategy in a nation plagued by a sense that the system works only for the rich and well-connected.  Only by focusing on working and middle class concerns can the GOP permanently separate the people from the party which pretends to represent them.

This piece originally appeared at Forbes.com.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

Official White House Photo by Pete Souza