“Sam’s Club Republicans”

What a bummer—you get passed over for VP, but then the party co-opts one of your very own phrases! Minnesota Governor Tim Pawlenty, who last week was seen as one of the top-two contenders for Republican VP, coined the term “Sam’s Club Republicans many years ago to describe working-class GOP voters. You can almost hear one of McCain’s people saying, “Ditch the guy, but keep his slogan!”

As we now know, Sarah Paling got the VP nod, not Mr. Pawlenty. Still, they were both considered because it was essential that the Republican VP nominee be able to appeal to working middle class voters, the so-called “Sam’s Club Republicans”. With the US experiencing a downturn and the political campaign heating up, you are going to hear a lot about the economy -- who has benefited and who has not, the reasons behind the current malaise and how we can get back to a more robust time. While each candidate or pundit will trot out numbers, they may not explain the whole story.

Here is what I can tell you: some people have made a lot of money over the past eight years, while others have not. There are a variety of reasons as to why that occurred and in fact, a “perfect storm” of events have conspired to create a new period of prosperity for some and a period of losing ground for many. This trend’s roots were formed as globalization took hold. From the time the Berlin Wall fell, the dynamics of the world’s economy entered a new phase. The mix of political transformation, technology and economic integration transformed the world and created unparalleled prosperity --- growth from 2002-2007 was the fastest since any time since the early 1970s.

Experts promised that everyone would win with worldwide economic progress. And in the end, it may be that on balance, the average citizen of the world will win. But averages are only averages and growth can be asymmetrical. The first beneficiaries of the process were low-wage workers in developing economies who entered the global economy initially through their involvement in export productions. By joining the global labor force, hundreds of millions in developing countries have escaped poverty. But if the masses in developing nations are gaining economic ground, it makes sense that some group is losing ground ---that group is the middle class in developed nations, like the US.

Sure consumers in developed nations enjoyed the fruits of globalization, like the decline in prices for many goods at Sam’s Club and the like. But as the world’s economy matures and emerging nations are less able to export dis-inflation, many Americans are finding that they are not in such great shape. Compounding this problem was the availability of easy credit during the housing boom, which allowed many to maintain a lifestyle that their incomes could not support. In a strange twist, at a time when the globe was growing and corporate profits soared, the middle-class lost ground, while those who already owned capital made great strides. The squeezed US middle feels isolated as never before, threatened by a rapidly changing dynamic and feeling left behind by the owners of capital. Their one option may be to turn to their elected officials for relief. The candidate that taps into this group will likely win the election in November.