Time to Deliver: The Transformation to Come

Last week, I wrote [1]: "After a transformational election and at the beginning of a transformational presidency, progressives need to remember: the real transformation hasn't happened yet." The truth is, there will be a transformation. The question is what kind of transformation.

A few days later, when congressional Republicans rolled out their "budget," I wrote:

Now, [Republicans'] "Road to Recovery" shows that the party has reached a dead end, and inadvertently (or perhaps intentionally) told Americans the truth: When it comes meeting the challenges America faces, and relieving the increasing economic pain visited upon our families and communities, they have no ideas.

The question is what their arrival at this dead end signifies. Are they just out of gas? Or have they — and we — finally arrived at the destination they had in mind all along?

After all, thirty years of their best thinking, and policy making paved the road we traveled to get here.

But where's "here"?

The headlines — and the statistics they report with such a stead drumbeat that we may already be growing inured to them and their implications — are familiar by now.

"Here" is where the unemployment rate is likely 9.5% [2].

"Here" is where job prospects are the lowest in 27 years [3].

"Here" is where the unemployed are forced to take lower paying jobs in order to survive [4].

"Here" is where consumer prices continue to rise [5].

"Here" is where wages have remained stagnant for more than a decade [6], despite rising productivity.

"Here" is where the rising cost of college [7] has widened the higher education gap and slowed upward mobility [8].

"Here" is where 1 in 5 mortgages are "under water" [9].

"Here" is where one in nine homes stand vacant [10].

"Here" is where those hit hardest by the economic downturn have gotten no help [11]; where food stamp enrollment has jumped to a record 31.8 million [12].

"Here" is where more Americans are facing "food insecurity," [13] formerly known as "hunger."

"Here" is where tent cities are rising and 1 in 50 children are facing homelessness [14].

"Here" is where the richest have gotten far richer, as the richest one percent in 2006 earned the highest share of the nation's income [15] possibly since 1929.

"Here" is where the richest 400 Americans nearly doubled their share of all the income earned in the United States.

"Here" is where in 2007 the top one percent owned 35% of the world's wealth and the top 0.001 percent held one fifth [16].

"Here" is where income inequality has increased sharply since 2000 [17], placing the United States between Mexico and Turkey based on its rate of inequality.

"Here" is where the previous decade's progress in reversing poverty have been erased in this one [18], and poverty has become more concentrated.

"Here" is the destination some conservatives had in mind all along. Almost exactly a year ago, I wrote [19]:

Anti-unionization, deregulation, and increased outsourcing are all hallmarks of contemporary conservatism. So, at least we know who to thank for our current situation. But that's the unspoken message of conservative economic philosophy in a globalized economy: the only way Americans can "compete in a global economy" as envisioned and delivered by conservatism is to accept a lower standard of living. As low as the market demands. How low? Read up on working and living standards in just about any country you can find on any label on just about anything in your own house.

If, in your closet or cupboard, you find something made or manufactured in Indonesia [20], It might interest you that for some conservatives the ultimate goal is to make the U.S. more like Indonesia [21].

AMY GOODMAN: What should we understand right now, Michael Parenti?

MICHAEL PARENTI: Well, we should understand that the problem we're facing is one which has to do with equity and fairness, that when the foundation gets consumed, the apex gets bloated, it's going to collapse. And that’s just what’s happened. We had eight years of a president telling us that the economy was doing very well, and for his guys, it was doing very well. But in those eight years, wages remained flat or actually declined. And what we had here is so much money and nowhere to put it anymore. But that's because there were no people below able to consume and buy the things they were supposed to buy. The assumption was that the housing market would just continue to go up and up and up, so you can do all these finaglings, but there weren’t enough people to buy these new houses. You had, in 2006, five people doing the work. By 2007, four workers were doing the work that it took five to do in 2006. That was a 20 percent increase in productivity, but there wasn’t any 20 percent or ten or five or three percent increase in income to those workers. People are just working harder and harder for less and less.

And the goal really — the goal is really to bring America to a closer resemblance to Indonesia. The goal is to avoid Denmark and get Indonesia. I mean, they say things like that. In 1978, a number of these financiers came out and said, "This country is just heading for a social democracy, and we don't want that." I mean, they used the term "social democracy." They're aware of these things. A few months ago in The New Yorker, there was an article about how Republicans had a loss for issues, and one of them said, "Well, the reason we're at a loss is because we've accomplished all we wanted to. We've destroyed the social democracy." And that's their goal.

In The Shock Doctrine: The Rise of Disaster Capitalism [22], Naomi Klein writes about how Indonesia among other countries were introduced to globalization via a free-market fundamentalist makeover — called "the Asian Miracle" — by the IMF, which demanded that in order to receive much needed loans countries make deep budget cuts, leading to mass layoffs and the absence of services at a time when citizens were reeling from the shock of their sudden introduction to poverty and hunger. In Indonesia, workers who could afford to buy fish and rice were reduced almost overnight to surviving on rice alone. Basic services — formerly public enterprises — were privatized, and prices quickly rose above the what the newly jobless and poverty stricken could afford. In some countries, laws against massive layoffs were repealed so that foreign corporations about to take over the privatized industries could slash overhead as much as they wanted. In others, minimum wage requirements were repealed, making it more difficult for those who did have jobs to sustain themselves.

Sound familiar yet?

From the conservative insistence of cutting budgets — and, by extension, social services at the exact moment when more people need them — to their desire to see the auto worker unions weakened, auto workers paid far less, and the auto industry — the largest remnant of an all-but-dead manufacturing sector — finally dead so that foreign auto companies (that pay far less and offer far fewer benefits) can move in to employ a population sufficiently softened up to accept almost any work, at any wage, and under any conditions (because it's at least a step above living in a tent, or dancing topless) the conservative program bears a close resemblance to the "shock" treatment Klein describes.

That's not to say that the current crisis was entirely planned or purposely caused. But the consequences of conservative economic policies are coming together now to create a transformational moment for those whose ideal vision is an America much more like Indonesia, or any other country sufficiently shocked into submission by the free-market fundamentalists.

The multiple "shocks," as Klien calls them, serve a purpose.

And if you listen to them now, I mean, it's fascinating and outrageous. They're talking about doing nothing, just putting a cap on all spending, that the market is in a stage of correction. They use terms like "correction" or "adjustment." They don’t mind recessions. Recessions are fine. It allows them to buy up smaller companies at bargain prices. It disciplines labor. It humiliates and beats back people. And this, I think, is what we're facing. And I'm infuriated by the Republicans in the Congress and the way they're going at this. The only passion they show is to protect the tax cuts for the super rich. That seems to be the only interest they have.

What's being all but destroyed, is the social contract [23] and the concept of a common good. It's among those contracts that the crisis has made rewritable [24] It's also that which Josh Marshall describes [25] as a set of "social bargains that explain why it is that the overwhelming number of people are content with the fact that some people make $45,000 a year and other people make $45,000,000 a year." But that's not all that's being destroyed. What was left of that contract after being whittled away for the last few decades, was worn way even further by privations (mentioned above) endured by citizens who have watched hundreds of billions of dollars being handed over, with few if any strings attached, to the very corporate entities who helped cause the current crisis and profited handsomely in the process.

All that's needed is a little more time, and that's what conservatives in Congress and the media are doing: running out the clock, and betting that if nothing is done to relieve Americans' current economic pain, the effect of all the previous shocks — whether delivered by chance or design — will set in, and with it resignation.

Signs indicate, we're nearly there now. Despite all the ink spilled over "populist anger," little has — or probably will — come of the outrage that flared up in the last few weeks, and that has flamed up with every report of corporate excess or another bailout disbursement.

The furor over the AIG bonuses (bonuses that were $53 billion more than we thought [26]) effectively ended with the 90% tax bill (whether or not anyone thought it was a good idea) quietly tabled in the Senate. [27] . Previous attempts to address placate the anger of not-yet-bailed out taxpayers who nonetheless foot the bill for the bailout met a similar fate [28], ending up de-fanged or drowned in the bathtub quietly killed.

Even wealthy tax cheats will get a break, with a huge reduction in penalties [29], if they come forward voluntarily, after hiding upwards of $13 trillion in what would be taxable income [30]. (Herein lies the problem with an economic policy consisting of little more than massive tax breaks for the wealthy [31]; there's no way to ensure that what would have been tax revenues will be invested into anything that would create jobs, or put back into the economy.)

Yet, national protests across the country this month drew only small crows of protestors [32], far short of the 10,000 forecasted by organizers. Despite much-reported death threats, the tour bus for the "Lifestyles of the Rich and Infamous" (I prefer something like "Lifestyles of the Rich and Blameless"), delivered to the driveways of AIG's executives, some incredibly polite activists [33]. They chatted with the security guard at the home of one AIG employee, read a letter a letter they wished to deliver to the executive (who refused to come outside), placed it in the mailbox when they couldn't, and quietly drove away.

We've seen nothing like the rising anger in Europe [34]. Sure, Americans protested outside the homes of AIG executives, but — despite death threats and one Senator's nostalgia for harakiri [35] — we saw no vandalism, like that visited upon the home and car of former Royal Bank of Scotland chief executive Fred Goodwin [36], by Europeans who were upset over his ₤700,000 ($1,006,935.26) pension and ₤1.8 million ($2,590,047.25), after RBS lost 91% of its value in slightly less than two years [37] under his leadership. RBS was save only when the UK government took a 68% stake in the bank [38]. And Goodwin firmly refused to give up his pension [39], even though his "leadership of RBS" caused pension funds to lose millions [40].

Sure, the workers at Republic Windows & Doors staged a sit-in [41] that eventually won them a $1.75 million deal that included two months of salary and benefits. They became "a symbol of the plight of employees put out of work at a time when banks and financial institutions have been receiving federal bailouts," by locking themselves in the factory for six days. They did not, however, take their manager hostage as workers at a 3M factory in France did [42], due to anger over layoffs, only to release him two days later [43], as negotiations with the company continued.

It's not that Americans aren't as angry as Europeans. Indeed the anonymous email claiming credit for the vandalism against Goodwin could have been written by any American worker experiencing the worst of the downturn.

The author of an e-mail message sent anonymously to a local newspaper Wednesday claimed responsibility for the damage and said: "We are angry that rich people, like him, are paying themselves a huge amount of money and living in luxury while ordinary people are made unemployed, destitute and homeless."

(Of course, this isn't intended to condone such actions or advocate for similar action here or anywhere else.)

Americans are plenty angry [44], and justifiably so.

Americans aren't mad at the bonuses in and of themselves. Americans are angry about the bonuses because they are angry about the recession. Because they are angry at Wall Street. Because they are angry at the bailout. The specific anger at the bonuses is just a vehicle for other, broader anger right now. To not recognize this is an extraordinary level of tone-deafness. There is a direct, obvious connection between anger over the bonuses and people being worried about their jobs.

As much as many political observers like to think otherwise, people are not dumb. Right now, Americans can quickly draw a connection between their economic condition and people on Wall Street getting rich.

But, as journalist Matt Taibbi writes, not nearly angry enough [45]. And that may be the most significant sign of the danger we face.

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

They are not angry enough, because — though the course of treatment took a litte longer for Americans — the shock therapy has worked frighteningly well [46].

The texture of discontent (or lack thereof) can say a lot about a nation, and that Americans today are less likely to rebel may not be an entirely positive sign.

It certainly doesn’t mean we have more love, patience or tolerance for one another. Indeed, it may mean just the opposite, that we tend not to trust one another and that we are more alienated from our neighbors than ever before. The lack of direct action could signal the weakening of a social contract that keeps people meaningfully invested in the fate of our country — which may, in turn, be hindering our ability to resolve this crisis.

...We may also have anger fatigue. Each day brings more layoffs and more news of taxpayer-financed corporate office renovations. Add to this the Iraq war, which is six years old this month, and a national debt that will likely rise by trillions. Such reports provoke fury but after some time, even the righteously indignant can tire and accept the outrageous as status quo.

Ultimately, however, what could keep the lid on unrest is the very issue that has pushed us toward the cliff: our high levels of personal and household debt. The average American owes about $9,000 on credit cards alone. Indebtedness redirects an individual’s energies inward: failing to pay the mortgage and college tuition can bring up feelings of anxiety, shame and a sense of personal failure.

Beyond blog posts, ranting in online forums, and emails to lawmakers (which have produced such obvious results as...) too many Americans may isolate themselves out of shame, and decline direct action out of fear. 

After all, if the steady drumbeat of layoffs has you worried that you're next, how likely are you to take time off to show up for a protest? The day the boss doesn't see your face may be the day he decides he doesn't need you. Lose your job, and you lose your health insurance. How are you going to pay for those medicines that keep your blood pressure, or some other condition under control? How are you going to get your kid's asthma treated. Beyond that, how are you going to continue to pay your mortgage? Not to mention payments for the car you need in order to get to work? And what about that credit card bill? (You know. The one with the newly increased interest rate you just found out about?)

You probably know people who've lost their jobs, and how they've fared since. You may even walk past the empty cubicles and barren desks of former coworkers on your way to your own, as you also remember the details of their departure. Without necessarily saying as much, your employer has probably sent a clear message: "You could be next. So, watch your step." [47]

In some cases, under the guise of "recession" pressure, [employers] may be waging a secret war against their own workers, using even the most innocuous transgressions of work-place rules as the trigger for firings -- and so, of course, putting the fear of god into those who remain. In this way, company payrolls are not only being reduced by mass layoffs, but workers are being squeezed for ever greater productivity in return for lower wages, worse hours, and less benefits. The weapon of choice is the specter of unemployment, a kind of death by a thousand (or a million) cuts.

Companies stand to gain a lot these days from such small-scale but decisive actions. After all, they reap a double benefit. Not only do they pare down the size of their payroll, often without needing -- as in Juanita's case -- to consent to unemployment compensation, but they also contribute to a climate of intensifying fear. Workers who remain on the job are now not only on edge about lay-offs or scaled-back hours, but also know that a late return from a bathroom or lunch break might mean being shown the door, becoming another member of the legions of unemployed -- now at 12.5 million and rising fast.

Nothing less than a revolution, as Taibbi put it, is underway.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

It has been for a while. And American workers have been isolated from one another, frightened out joining together in resistance by an long-standing anti-unionization campaign [48] (one, in fact, waged by the very banks those very workers are bailing out with their tax dollars [49]). That's why you're probably also certain your co-workers won't risk standing up for or with you. After all, there's a reason why there haven't been more events like the Republic Window & Door sit-in.

The problem is, if we don't see more Americans coming together in just that way, we may wake up to a transformed America alright [50], but not transformed in the way so many hoped when they voted on November 4th.

If Wall Street gets its way, the "reforms" may further consolidate power and ratify a corporate state--a grotesque hybrid that combines the worst aspects of socialism and capitalism. The reform ideas announced by Geithner would plant the seeds by creating a "systemic risk" regulator, presumably the Federal Reserve, to oversee the largest, most politically adept banks and financial firms that qualify as "too big to fail." Capitalism, with its inherent tendency toward monopoly, would have the means to monopolize democracy (see my recent Washington Post article.)

Another transformation has been set in motion [51], too, as William Greider points out.

Something fundamental has been altered in American politics. Encouraged by Obama's message of hope, agitated by darkening economic prospects, many people have thrown off sullen passivity and are trying to reclaim their role as citizens. This disturbs the routines of Washington but has great potential for restoring a functioning democracy. Timely intervention by the people could save the country from some truly bad ideas now circulating in Washington and on Wall Street. Ideas that could lead to the creation of a corporate state, legitimized by government and financed by everyone else. Once people understand the concept, expect a lot more outrage.

People have nearly grasped that concept, but this "revolution of rising resignation" must first be defeated by the "revolution of rising expectations" I in the previous post [1]. To quote de Tocqueville again:

It is almost never when a state of things is the most detestable that it is smashed, but when, beginning to improve, it permits men to breathe, to reflect, to communicate their thoughts with each other, and to gauge by what they already have the extent of their rights and their grievances. The weight, although less heavy, seems then all the more unbearable.

~ Letter to Pierre Freslon, 23 September 1853 Selected Letters, p. 296 as cited in Toqueville's Road Map p. 103

Like the proverbial woman who didn't realize she was married to a drunk until he came home sober, only a significant change can move Americans who know — as New York State Attorney General Andrew Cuomo said of the AIG bonuses — "something is deeply wrong" [52]to the transformational conclusion that "it doesn't have to be this way." From health care to tax reform to job creation, and more, Obama's budget proposal offers progressive the best opportunity yet to give Americans real, tangible evidence that "it doesn't have to be this way." If we can accomplish that, as Greider wrote, "Once the people understand the concept, expect a lot more outrage."

And if that outrage is fueled not just by Americans' anger at their current condition, but also by knowledge that another, better way is possible, expect change. Expect transformation. But, as Sara said, don't expect to go back to how it was, if this transformation doesn't happen.

The important fact about this new era we find ourselves in is this: We can't ever go back to how it was. The world we've known since World War II is gone, and it's not ever coming back. Americans are in varying stages of accepting this reality -- but the sooner they do, the better off we'll be. There are vast structural changes (which, in themselves, are fodder for another post) that are profoundly re-shaping our entire reality, and which are not going away no matter how insistently our elites try to obfuscate or deny them. One way or another, now or later, we are going to be forced to address those shifts, and devise a new economy, new technologies, and new social priorities that will enable us to adapt to them.

The only real choice we have right now is whether we're going do this change the easy way -- thoughtfully, exercising our collective foresight to make clear-headed decisions that will ease us through a peaceful and relatively smooth transition; or whether we'll choose to go down hard by continuing to postpone dealing with it, building up the pressure until there's an inevitable explosion that utterly flattens us economically, environmentally, politically, and socially. That's the deal now. Face up to it while it's relatively cheap and easy; or face up to it later, when our options and resources will both be much fewer.

One transformation, the one Americans truly need, is waiting in the wings for the final push that will start it on the road to becoming a reality.

One transformation has been underway for a long time now, both here and all over the world. But it's been slower here, probably because the principle of the boiled frog [53] has applied, thus far.

They say that if you put a frog into a pot of boiling water,it will leap out right away to escape the danger.

But, if you put a frog in a kettle that is filled with water that is cool and pleasant,and then you gradually heat the kettle until it starts boiling,the frog will not become aware of the threat until it is too late.

The frog's survival instincts are geared towards detecting sudden changes.

This is a story that is used to illustrate how people might get themselves into terrible trouble.

This parable is often used to illustrate how humans have to be careful to watch slowly changing trends in the environment, not just the sudden changes. Its a warning to keep us paying attention not just to obvious threats but to more slowly developing ones.

For the past 30 years, everyday Americans have withstood ever increasing economic heat. Now that some are starting to complain about the temperature, we're nearing the moment when we can either make the great leap or sit still, convinced or convincing ourselves that the water is still fine. Either way, change is inevitable.

What's the temperature now? How much longer can we afford to wait?