Four Parties?

If you are frustrated by our traditional two-party system, just wait. Change may be coming sooner than you think. Take a good look at the two parties that have dominated American politics for more than a century. They have never been more fragmented.

The Democratic Party is divided: what I call “lace-curtain liberals” – the Tea Party calls them the educated elite – Obama is the quintessential example; and the Progressives, some (like me!) more radical than others. Trust me, those two groups have only one thing in common: relative levels of concern for those being left behind.

The Republicans have the Country Club set, exemplified by John Boehner, and then they have the lunatic libertarians, most of whom have embraced the Tea Party. The only thing they have in common is their determination to dethrone Obama.

One interesting aspect of this is that educated elite Democrats and Country Club Republicans have one common goal – the maintenance of “business as usual,” no matter the long-term consequences. And, of course, the Progressives and the Tea Party have one common belief – that the government does not now and has not for some time represented anything but money. It has become tiresomely repetitive to say that we have created a Plutocracy.

The context of this is gradually becoming more evident, though only Obama and his advisors seem fully aware of it. We are held hostage by stock and bond traders and the markets they manage. The motivation behind the various stimulus programs is to soothe the fragile nerves of those traders and their customers. When the dam broke a couple of years ago, the market dropped by 50% almost overnight, inundating the retirement hopes of most Americans. Now that defined pension plans are exclusive to public employees, the rest of us are using IRA's and other tax-deferred programs to supplement the niggardly (and possibly illusory) Social Security benefits.

The jury is still out on whether or not these stimuli will succeed in getting our economy out of the trough we're wallowing in now. The Republicans have decided that their best hope of regaining complete control of the government is to stonewall and keep the economy (and unemployment) at present levels or worse, so they can blame it on Obama. But, one thing is painfully evident – unemployment will stay at unconscionable levels for the foreseeable future. Worse yet, the markets obviously like it. There is an economic principle known as the Phillips Curve that explains why. It states quite simply that unemployment and wage inflation are inversely proportional. The logic behind this is not obscure – the longer people are unemployed the more likely they are to accept lousy jobs at lousy wages, with no benefits. The result is more “productivity” (one of the ugliest words in the language), which means more goods and services from fewer workers. Lower labor costs mean higher profits. Add automation and globalization and it's easy to see why the stock market keeps going up in the midst of the worst economic crisis since the Great Depression. Is that ugly enough for you?

So don't be surprised if we see four serious candidates for President in 2012, running on four different parties: Democrats, Progressives, Republicans and the Tea Party. Wonder what that will do to our nervous markets. If there is no electoral college majority the President will be chosen by the House of Representatives. There's no guarantee that they will be able to muster a majority in the House for anyone. Maybe that's the “apocalypse” predicted for the end of the Mayan calendar in December 2012. Stay tuned.