The rise of extreme conservatism in the form of the Tea Party

The rise of extreme conservatism in the form of the Tea Party has further pushed the U.S. to the right. The Tea Party-led movement, apparently targeting the budget deficit and national debt level, is taking away the social and health services of lower-income Americans.

The U.S. is preaching democracy in the Middle East and the rest of the world, though very selectively, while the social basis of democratic rule is being eroded rapidly at home by extremist groups like the Tea Party. The widening gap between rich and poor is undermining the middle classes, which were the basis of a fairly good democratic system. Many countries like Pakistan, broadly following the U.S. economic model, with entirely different dynamics, are witnessing a similar phenomenon. Down the road, the prevailing or conceived superiority of the American democratic order may not remain attractive even to its present adherents.

Common Americans are swallowing the bitter pill of unprecedented high prices of basic necessities while the corporate sector is reporting the highest profits in the last many decades. Consequently, investors with surplus capital or who are operatives of the corporate sector are harvesting rich profits. This is probably the first so-called economic recovery in the U.S. where unemployment has not declined and the business sector’s gain is amazingly robust. Consequently, the top 10 percent of the U.S. population is accumulating most of the national wealth.

On the other hand, the price level of essential necessities has increased fourfold within the last five or 10 years while the income of the average American has either stagnated or declined even in relative terms. It was very rare that housewives would talk about the increasing prices of the items of daily use, but now this has become a very common topic of conversation. Most longtime Pakistani-American shoppers have been saying that the U.S. has become just like Pakistan, where prices go up regularly and never go back down.

The U.S. media blames oil prices for inflationary pressures. However, when oil prices significantly went down, the prices of essential goods did not follow suit. It used to be a common phenomenon in the U.S. that prices of certain goods would shoot up in certain seasons or during natural disasters and then go down to their previous level. But now that long-term trend has ended and prices go only one way, and that is upward.

If we compare the rising prices against accelerated corporate profits, only then can we grasp the real story. Probably, the rising prices are translated into higher profits because, after all, the profit is the difference between the cost and the selling price. The U.S. corporate sector has been reducing its costs by outsourcing production and services to other countries and by squeezing the wages and benefits of the workforce at home. However, the gains of lower costs are not transferred to the consumers. On the contrary, through price hikes, the profit margins are further boosted. What is happening in the U.S. is also termed as wealth transfer in economics.

Partially, President Barack Obama was elected to reverse such a negative trend. First of all, he continued with the Reagan/Thatcher economic model by bailing out the financial sector through taxpayers’ money. He halfheartedly pushed the universal health bill and the Congress passed legislation that was originally proposed by Republican opponents of this bill. Whatever little things Obama did for lifting the common Americans did not go very far, and now they are being reversed by the extreme right-wing groups.

The rise of extreme conservatism in the form of the Tea Party has further pushed the U.S. to the right, which was already far off to the right as compared to even European conservative parties. The Tea Party-led movement, apparently targeting the budget deficit and national debt level, is leading the path to taking away the social and health services of lower income Americans. This conservative movement is least bothered about the simultaneous rise of corporate profits and prices of essential goods. The rising influence of Tea Party-type groups indicates that the American economic system is no longer capable of correcting its excesses. The middle class of the U.S., not seeing any job growth along with rising prices of necessities, will go further downhill and, eventually, the present democratic system will be substantially subverted. It is already transformed into a democracy of the rich, by the rich, for the rich.

It is hard to view Pakistan in the same context because of lack of information about the profits of the business sector. However, one trend is identical. Just like the U.S., the rich have been getting richer and the poor are becoming poorer in addition to the terrorism and all other socio-economic ills. The U.S. may remain concerned about the issue of terrorism but, given its own economic trends, the widening gap between the rich and the poor in Pakistan is not going to be part of the agenda of the superpower and its subsidiaries like the IMF International Monetary Fund and the World Bank. In this backdrop, U.S.-type democracy may prove to be an illusion for the common people of the Middle East.

By Dr. Manzoor Ejaz, Pakistan Post, 14 July 2011.