Identity politics and subprime loans
Published in the Ottawa Citizen, February 16, 2008
Secretary of State Condoleezza Rice declined early calls to seek the Republican nomination for president of the United States despite having the competence and character for the job. The integrity of a preacher's daughter that cautioned against exploitation of her race or gender for political purposes was likely one factor in her decision.
In the Democratic nomination race, the triumph of identity politics is being wildly celebrated, as if black or female presidential nominees are something new. Yet in 1872 the Equal Rights Party nominated a woman named Victoria Woodhull for president and a black running mate, Frederick Douglass.
Of course those were genuinely transformative times in which people saw themselves not as victims but as powerful actors in a political landscape where much needed to be done. A Civil War that ended seven years earlier had abolished slavery and now the matter of citizenship and suffrage for both women and blacks had to be addressed. And though Woodhull would largely disappear from history in a cloud of controversy, Douglass (who never acknowledged his vice-presidential nomination) has endured as America's greatest black orator with a high record of achievement. Inspiring blacks to fight for the Union cause, he then became a successful advocate for amendments to the U.S. Constitution that recognized blacks as citizens with the right to vote.
So what does the triumph of identity politics, which has been worming its way through the western world for several years, mean for Canadians?
One result is already to hand. The subprime mortgage crisis that married irresponsible lending and immigration practices, political correctness (an outgrowth of identity politics) and financial illiteracy, and that is now foreclosing on more than two million American homes, has had global repercussions. It was the subprime crisis that sent our pension plans careening through the stock markets recently while, this week, it reached a bank in Germany where taxpayers there will likely have to bail it out. In Canada, it has decimated the softwood lumber industry.
Already reeling from a high dollar and the pine beetle scourge, dozens of Canadian mills have closed and thousands of jobs have been lost since the collapse of the U.S. housing market, a third of which usually consumes Canadian softwood lumber. In British Columbia where half of Canada's softwood lumber is produced, B.C. NDP Leader Carole James recently revealed 12 mills have closed and 2,900 jobs have been lost in the last four months alone.
Subprime mortgages are loans advanced at higher interest rates to people with poor credit histories. Americans are debating the costs and causes of the meltdown but many politicians, such as Congresswoman Stephanie Tubbs Jones, blame predatory lending practices. According to one study she cites in an article posted on The Hill, 55 per cent of these loans went to blacks (with 17 per cent to whites and Asians) while Adriana Garcia, in a year-old article for Reuters, writes that 40 per cent went to Hispanics. Numbering some 42 million, they comprise 15 per cent of the population and 80 per cent of America's 12 to 15 million illegal immigrants. A map in this month's Atlantic Monthly showing foreclosures concentrated mostly in America's southeast and southwest suggests these figures aren't far wrong.
But borrower perpetrated fraud is another possibility and the financial illiteracy of people with other literacy problems is clearly a given. Many mortgagees, it is claimed, didn't know what they were signing. One blogger blames political pandering -- the government's refusal to enforce immigration laws, and pressure on lenders to stop "redlining," a practice where lenders limit or deny minorities loans.
So systemic a failing in the U.S. financial services sector is a clear challenge to conventional thinking on economies predicated on housing starts and automobile sales which, in turn, are predicated on capricious population growth -- even given the strong regulatory controls so clearly absent here.
As for America's next president, the challenge of that other great black orator, Martin Luther King, remains. When will (minorities) be judged by a quality of character that's capable of following the same rules as everyone else? The subprime mortgage crisis is a costly reminder that, in the game of identity politics, everyone loses -- unless you are seeking the Democratic nomination for president of the United States.
MARGRET KOPALA’s column on western perspectives appears every other week.