Credit crunch and race: The sub-prime mortgage problem is politically complicated by the fact that 80% of these loans were made to minorities (33% to Hispanics and about 50% to African-Americans). A goal shared by both political parties has been to increase home ownership in minority communities – to help create community stability and facilitate the accumulation of assets – to expand the reach of the ‘American dream’. In the subprime crisis, there were both deceptive and predatory practices by mortgage lenders and exaggerated incomes on mortgage applications. Now, social issues complicate the development of mortgage market solutions, which may not mix well when race has been thought to be an issue in the primary elections leading up to the nominating conventions.
Economic growth and union money versus members’ votes: Unions have pledged considerable funding to the Democrats but in recent elections, many of the rank and file often voted the other way. Several unionised states in the mid-west are key battlegrounds but these states have suffered from increased unemployment and reduced incomes. Meanwhile, largely non-union states in other regions have enjoyed growth, including a larger share of FDI.
Oklahoma, in 2001, became a ‘right to work’ state. In the 1990s it trailed behind in income growth and 25- to 34-year-old population growth; after 2001, income has grown at twice the rate of the unionised states and it is one of the leaders in 25- to 34-year-old growth as young people vote with their feet. Confronting minority mortgage foreclosures and unionisation’s impact on economic prosperity are issues going deeper than day-to-day skirmishes. How they are addressed may reveal significantly different world views.
Daniel Malachuk works with business and government leaders on global direct investment strategies. He has advised many of the world’s leading companies and served in the public sector as director of White House operations.