Businessweek Archives

Commentary: Gephardt Has A Great Program For The '30s


Government: COMMENTARY

COMMENTARY: GEPHARDT HAS A GREAT PROGRAM--FOR THE '30s

While a reelection-hungry President Clinton scrambles to shift the Democrats toward the right, House Minority Leader Richard A. Gephardt has begun to lay out his own vision for the troubled party. There's just one problem: The Missouri lawmaker has the wrong picture.

Gephardt's manifesto, outlined in July, says government economic policy should be aimed at "the line worker, the farmhand, the office clerk," who earn money through "sweat, toil, and tears" rather than "stock speculation, capital gains, and idle investment." On their behalf, he'd overhaul the tax code by abolishing most deductions, eliminating preferential rates for capital gains, and setting five rates ranging from 10% to 34%. Gephardt's blueprint is vintage Democratic rhetoric. But it misses fundamental changes in the U.S. economy.

"DOWN A DEAD END." Today, the biggest split in American society is not between bosses and workers but between the highly skilled--who are prospering--and the undereducated--who are not. Traditional Democrats enthusiastically support incentives to make education and job training accessible to more people. But these Democrats would abandon the newly skilled once they've harvested the fruits of their learning. Succeed and invest, and old-line Democrats drop you like a hot rock. "We're going down a dead end unless we're seen as the party that believes in upward mobility," says Senator Joseph I. Lieberman (D-Conn.), chairman of the centrist Democratic Leadership Council.

At least Gephardt is paying attention to folks who work for a living. Until recently, Democrats seemed more interested in the unemployed--one reason blue-collar voters have been ditching the party since 1968. But today's workforce has moved far from the factory floor, and many Democrats have yet to notice.

In 1973, operators, fabricators, and laborers--the heart of the old manufacturing shop--accounted for 21.4% of all workers. Today, they are 14.5%. Farm workers, who have been fading from the scene for generations, now make up only 1.7% of the workforce, half their share of two decades ago. By contrast, managerial and professional workers--including everyone from business executives to computer scientists--are now 27.4% of workers, up from 19.7% in 1973.

And those 34 million white-collar workers are among those changing the very face of capitalism. Today, 40 million investors own mutual-fund shares, eight times the number in 1977. Nearly 40 million workers participate in 401(k) and similar investment-centered retirement plans. Seven million are in stock-option plans. And 16.5 million individuals reported capital gains in 1992, three times the number in 1960. More than 40% of those investors were solidly middle class, earning $30,000 to $75,000 a year.

Many of today's workers are tied to their companies in other ways that differ from the old Industrial Age. Capital buys brainpower, not just equipment. Last June, when IBM plunked down $3.5 billion for Lotus Development Corp., it wasn't just buying computers and a handful of software products. Rather, it was purchasing the skill and vision of Lotus Notes architect Ray Ozzie and scores of other creative minds. Many in the new workforce, whose own compensation is often linked to the success of their companies, understand that their future is tied to the willingness of investors to take a chance on a good idea--and to earn a fair rate of aftertax return for that risk.

Most ominously for Democrats, better-educated workers vote. In 1994, more than 31% of all voters earned more than $50,000. Only 17% earned less than $25,000. The party shouldn't ignore blue-collar workers. But by focusing only on the stagnant pools of the labor markets, the Gephardtites are ceding to the GOP vast numbers of workers in growing sectors of the economy: computer programmers, health workers, and entrepreneurs.

Clinton appears to recognize this sea change, but can't seem to develop a policy that reflects it. Yet traditional Democrats are still transfixed by the vision in the rearview mirror. As long as they remain oblivious to the mind-boggling changes of the '90s, Gephardt & Co. may be headed for the same fate as those farmhands who so dominate their view of today's economy.By Howard Gleckman


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus