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October 13, 2005

could manufacturing back the Democrats?

It is a truth universally acknowledged that a party without possession of Congress or the White House must be in need of some rich donors. I wish this weren't true; for two years, I worked for Common Cause, advocating campaign finance reform. But private money still runs campaigns, and so the question is, on whom will the Democrats depend for funding in 2008?

Hollywood and trial lawyers, among the Democrats' most important sources in recent cycles, are problematic sources. Many Americans believe that we live in an overly litigious society with a coarse popular culture. It is a liability to be bankrolled by lawyers and movie moguls, even if one believes that lawsuits sometimes promote justice and that movies are covered by the First Amendment. As for unions, they can't give much hard money, and their independent funds should be used to pursue their own agendas, not the Democrats'. Above all, labor should use its money for organizing in the private sector.

Would it be possible for Democrats to enlist the financial help of some major manufacturing firms? This idea may seem naive, but donors have realigned before, and right now industry has extraordinary reasons to rethink its support for the profligate GOP. First, Democrats could boldly propose to cut the costs of manufacturing by providing universal health care. If General Motors spends $1,500 per car on health insurance, then health care reform would cause an enormous redistribution of wealth from taxpayers to manufacturing companies and their customers. That reform should also benefit most Americans, because we would pay less in health-related taxes than we do today for insurance premiums and deductibles.

Second, Democrats could pledge to cut the annual deficit (in part by raising taxes), which would help to keep interest rates relatively low and reduce the percentage of corporate taxes that are wasted on debt service. Third, I suspect that manufacturers want better educational outcomes and would support paying for them (although I'm not sure whether their leaders find Democrats or Republicans more credible on education).

But aren't progressive Democrats and big manufacturing companies natural enemies? All else being equal, a firm has a fiduciary responsibility to minimize the costs of labor, whereas Democrats have traditionally wanted to maximize labor's return. Therefore, Democrats and corporations are traditional opponents on matters like the minimal wage, unionization, and outsourcing. However, labor and capital are not in a zero-sum relationship. If the whole manufacturing sector is in decline, unions and firms both suffer. Companies can try to avoid the US job market by outsourcing, but that has its own costs and headaches. (Note that firms in the Nordic countries, which are highly competitive, don't have to outsource, because their workers are well educated and healthy.) If average American wages go up, that's good for manufacturing, as long as profits rise as well. Especially under the present circumstances, when manufacturing is taking a beating and issues like health care seem to be a big part of the problem, it should be possible to achieve win-win solutions for labor and capital. Both benefit if workers have good educations and health insurance provided by the state.

Environmental protection is another traditional area of conflict. Business people (even if they happen to like nature) must try to externalize the environmental costs of manufacturing--for example, by letting smoke into the atmosphere and trying not to pay for it. Although they may suffer if they degrade the ozone layer, so does everyone else; and they capture all the profit. A cost-benefit calculation--which they have a fiduciary duty to conduct--will tell them to pollute and to oppose regulations. Democrats (along with some Republicans) have tried for many decades to force business to internalize the costs of pollution and other environmental damage.

So the environment is a point of conflict, and it would very bad if Democrats got so cozy with manufacturing that they abandoned their greenish heritage. But environmental protection is subject to negotiation; it is not a matter of clashing absolute principles. The costs of preventing x amount of pollution can be divided between taxpayers and businesses in various proportions. And there is some money to be made in cleaning up the environment.

Congressional Democrats could start quietly courting manufacturing industries right now. I suspect that they would have to shelve vague and meaningless party platforms like the one on Nancy Pelosi's website (via the Decembrist) and start developing a contract with real costs and real benefits. It would have to encompass tax increases and spending cuts if it were also to include universal health insurance and investments in education.

There are clear dangers to this strategy, above all that industry could acquire too much leverage over the Democratic Party. However, let me suggest that relying on Hollywood, trial lawyers, and (yes) unions isn't a pure strategy either, nor has it been a very effective one.

Posted by peterlevine at October 13, 2005 01:27 PM

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