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Monday, February 27, 2012

“Trickled On” Economics


One thing about an election year, particularly this one, is that it reveals the fallacy that humanity has somehow emerged from “mere animal conditions.” We may have comfortable homes, climate-control, exo-skeletons (known as automobiles) to allow us to move about rapidly and move objects many times our own weight, etc. But beavers, ants, and foxes have these things. One thing that humans have the capacity for, if they strive to use it, is being able to see life from another’s viewpoint – we have the capacity for compassion. If anything would allow us to rise from a “mere animal condition,” it is this compassion. But under the capitalist model, currently the dominant paradigm in the world, the priority is put on expropriating land and labor in order for a small group to accumulate wealth they did not produce. In our deluded national narrative, these people are said to be “job creators.” In fact, their access to wealth and power has allowed them to create a sort of neo-feudal system that can be aptly called, “Trickled-On Economics.”

In this dominant paradigm headed by Big Capital, compassion is highly discouraged. There is a tendency among the politicians, managers, and overseers of capitalist institutions to live like there is no tomorrow and pretend like there was no yesterday. After all, the working class – those who actually produce wealth – can be depended upon for a source of insurance in the event the gaming schemes of Big Capital fail. This attitude of borrow now (“leverage” if you are rich), worry later, unlike the wealth itself, has trickled down, or should I say “trickled on” the general public.

The so-called “debt crisis” currently providing rationale for cutting social programs was created by capitalists manipulating the housing and financial markets for short-term profit, a scheme that crashed the global economy. While they were doing that, working class people struggled with a steady decline in income resulting from off-shoring American manufacturing, union sell-outs, and outright union-busting. To make up for this decline, they were handed credit cards, deregulated during the Reagan years, and usurious lending became the order of the day. In addition, instead of providing education for its citizens as some social welfare states of western and northern Europe have done, the student loan industry was created, with student loan giant Sallie Mae becoming a for-profit corporation by 1995. As if this was not enough (it never is), for-profit health care, starring Big Pharma, has become ensconced in Congress, K-Street, and Wall Street. Also, moving in from the desert is a dust devil known as the for-profit prison system. Examples of profiteering from others’ misfortune, or indeed manufacturing misfortune for profit, (note: I do not even broach the war profiteering game in this essay), has no limit in the capitalist paradigm.

With the declining share of wealth enjoyed by the working class, it was logically reasoned that higher education was a way out of mind-numbing, dead-end jobs and into a better life. Both federally-insured and private loans for education skyrocketed. For some, this better life came to pass, for others it became a trap and in some cases a death-trap. Student loans do not have bankruptcy protection, and the collection agency can seize your home, your social security, your disability income – pretty much anything they want to seize. There are numerous horror stories out there, including many suicides. Indeed, as Alan Collinge has written in his book The Student Loan Scam, defaulted loans are more lucrative than those not in default because assets can be seized.

Credit card debt, which now ranks behind student loans in consumer debt as of the summer of 2010, is the result of falling wages and job loss. By 2012, there were well over a half billion credit cards in use in the U.S. alone. That is double the total population of the country. Bankruptcies were down in 2011; with a mere 1.37 million filings in the U.S. (it was 1.55 in 2010). Many bankruptcies were brought about by medical bills contracted in a system that preys on the sick.

A compassionate set of policies that would address these issues would not include taking billions of dollars in tax revenue from the working class and handing it over to Wall Street bankers to cover their failed schemes and scams as has been done more than once since 2008. In this paradigm of the Bean-counter, we can hand $700 billion at a pop over to criminals in suits, but we cannot help struggling college graduates or families stranded without gainful employment.

It is not hard to see that the issue is systemic. Capitalism has no built-in moral code other than maximizing profits. Whatever morality exists is brought to the table by individuals, but the system itself does not reward compassion; indeed, ruthlessness and cruelty are central features of the game. Capital has been engaged in a long-term struggle to deprive people of access to the resources they need to build a good life for themselves. It creates an environment that allows a small group or even one person to live extremely well on the backs of those whose access to resources they control. Once people become separated from the resources that they need to live, they must re-acquire them on terms favorable to the capitalist. In some cases, the result is modern-day slavery. The separation of people from the resource base is a central theme in the human history of the world and at the heart of our systemic problem today.

This system has led to the abuse of the non-human resources, as well. Humans and their resources are, ultimately, not separate at all. Labor is the interaction of humans with the non-human world and the results are often very beautiful, profound, poignant, moving, powerful, and on and on – in a word: art. Forcing human beings to interact with resources on terms favorable to the Capitalist is hardly emerging from “mere animal conditions.” It results in environmental degradation of both human and non-human. Degrading and dangerous sweatshops, mines, oil rigs, etc., have increased because of deregulation and defunding of safety oversight. Environmental oversight has been rolled back, defunded, or ignored. These underscore the systemic nature of the dual expropriation of labor and resources for the sake of the wealth accumulation of a very few.

From mountain-top mining to clear-cutting rainforests, the systemic unsustainable use of resources creates an oppositional relationship between humans and their environment. “Man vs. Nature” is a conflict drilled into our heads from an early age, but it is this term “Versus” that needs to be questioned and studied. A political economic system in which compassion features predominately would institutionalize such introspection. We have examples from our past. Agriculture, for instance, traditionally employed the concept of “husbandry.” Farms were once places where abundance was possible for all species involved and sustaining this human and non-human natural order was the priority. Under capitalism, agriculture has industrialized and cold, hard numbers dominate decision-making processes.

Under a more humane system, labor would be an extension of the production of nature; indeed, human labor is an expression of nature. But its usurpation by a few is like the felling of the forests, the leveling of mountains, the making of war, or the building of sweatshops: we trade our humanity – our compassion – for the sake of accumulation by an ambitious and even sociopathic few. If we are serious about emerging from a “mere animal condition,” we need to “think outside the box,” and box is the capitalist paradigm.

Doug Harvey

Doug Harvey is a historian and musician teaching, writing, and performing in the Kansas City area. He can be contacted at dharvey@ku.edu

How Financial Crisis, Economic Inequality, Social Media, and More Brought Revolutions in 2011--and Changed Us Forever


How Financial Crisis, Economic Inequality, Social Media, and More Brought Revolutions in 2011--and Changed Us Forever

Journalist Paul Mason covered the uprisings of 2011 as they occurred. His new book "Why It's Kicking Off Everywhere," explains why they all happened at once.

We're at an inflection point in history, a shift not just in our politics but our consciousness, says Paul Mason, BBC Newsnight economics editor, author and journalist.

From Madrid to Madison, Tahrir Square to Syntagma Square, London student occupations to Occupy Wall Street, Mason has covered the uprisings of 2011, and he found some surprising similarities everywhere. Those similarities are the subject of his new book, Why It's Kicking Off Everywhere (Verso), which combines economic analysis, first-hand reporting, and a theoretical understanding of technology, sociology and history into a potent explanation of why 2011 was the year of the protester.

AlterNet caught up with Mason in New York to talk about the book, the ongoing economic crisis, and what's next for the young revolutionaries of 2011.

Sarah Jaffe: Tell us what's happening in Greece; you just returned from a reporting trip there.

Paul Mason: The bailout they did Monday night, I think, is designed to do two things: to put off the inevitable moment of Greek default, and to save the rest of Europe from the impact. That doesn't mean that Greece isn't going to slide very quickly into a social crisis—rather, it's already in a social crisis. In the book I document what it's like for the youth who are waking up to the sound of helicopters, moving homes every two or three days; it's like being in the French resistance.

Now for the workers it's going to get much worse. People have a misconception that it's all about the public sector, but for the Greek bailout to work, private sector wages have to fall 15 to 20 percent. The minimum wage has been slashed by 20 percent.

On my last reporting trip I went to a clinic that's run by the Greek equivalent of Doctors Without Borders. It's aimed at migrants who've fallen through their social security network, and have no healthcare. Now it's swamped by Greeks who've also fallen through the network.

Their border with Turkey has become completely porous, it's a freeway in for migrants from all over the world. I met some of them clustered in an abandoned factory; it looked like a scene out of Modern Warfare 3. One of the guys there said something to me that stuck in my head. He said, “This is not Europe, I've lived in Europe, this is not Europe, this is Asia, police can kick you, the population hate us.”

At the bottom rungs of society you're seeing already breakdown. Every time there's a big demonstration, you're seeing very rapid recourse to policing tactics that completely break up the peaceful part of the demo. At best maybe there are 4,000, 5,000 hardline anarchist demonstrators in Athens. There were probably a quarter of a million on the streets the night before the parliamentary vote; they didn't even get a chance to assemble.

The IMF and EU and political class of Greece signed off on seven bailouts and two rescue plans. Nothing worked. And every opinion poll that comes out has the far left having 43 percent of the vote. Even quite sensible journalists look at it and they're in denial. They don't want to see this 43 percent but it's not by any means a joke or an accident. The stage is now set for an election which probably won't return a viable government.

The left can't govern—the Communists don't want to collaborate with anybody; they're the most moderate of the three left parties, the other two used to be together and they split. They don't want to form a government, and also they're frightened because what do you do? You still have to impose the austerity, so it's a no-win situation for everybody.

The amazing thing to see is the resilience of people, the resilience of these young kids who've never had jobs.

SJ: Economic issues are at the heart of the uprising in Greece, but in some of these other places you cover in the book, mainstream commentators don't seem to want to admit the economic issues at the heart of the fight—Egypt, for example.

PM: One thing that has to be said, and I say it in the book, is that the left for 20 years has subscribed to what an English commentator, Mark Fisher, calls capitalist realism.

That is, Tony Blair and Gordon Brown, their model of social justice was tax the rich bankers, deregulate banking, and then channel the money to poor blue-collar communities where there will never be adequate work again, the factories aren't coming back, you might work for the state or for a charity but you're never going to work for a decent factory.

This was very win-win. You, the politician, get to hobnob with the bankers because you're deregulating them. Meanwhile your mass base, the workers, you're delivering to them. That's over. What is also over is an era where organized labor is just quiescent.

What has changed is that the collapse of the economic model, the collapse of the narrative of neoliberalism, the collapse of the “recreate-reality” Karl Rove doctrine, means that a space is opened up where the left has to redefine itself towards the emerging events. It's caused a huge crisis for social democracy in Europe and I would argue is probably the root of the crisis inside the various Occupy and Occupy-like movements as well. In Britain UK Uncut is probably the most successful example of a spontaneous horizontal movement, and it completely entered a crisis as soon as it had to define itself against extreme anarcho-violence, and hasn't done anything since.

SJ: You pointed out that the Wisconsin uprising was an economic fight firmly located within the culture wars.

PM: As a journalist working primarily outside of the USA, I would say one of the most stunning things to me is how little Americans understand the severity of this culture war thing going on.

Sometimes traveling through America it's not hard to see two nations. This doesn't matter if you've got strong institutions. What happened in American politics in the 1850s was the institutions could no longer contain it. And one of the organizers of the right-wing protest outside the Pittsburgh G-20 in 2009, a radical right-wing Republican, he told me “My fear is, a lot of the people I talk to basically would like to lock their gates, get a dog and load their gun for the final showdown.”

I'm not saying the country's getting into civil war, but unless the institutions—the media, Congress, the judiciary, the intelligentsia, can hold it together—what then happens is, as America has to confront these massive exogenous shocks, there's no consensus about how to deal with them.

SJ: What's been interesting is that watching Occupy happen, as that went on you could watch the bottom sort of fall out of the Tea Party narrative. When Occupy happened, one of the first things these kids did was reach out to the unions. Everybody's talking about the Democratic party needing to win back the white working-class -- maybe they'll finally figure out how to do that by reconnecting with labor.

PM: When we use the term “white working-class,” we're talking about people who've been left behind by education; the gap has opened up between low-skilled labor and everything else. But even if you're in that demographic, if you happen to work for a local government, whether it's the city of New York or the city of Leeds in England, you're in a situation where there is equal rights legislation in action, your client group will be multiethnic, you're in contact with lots of people who are in unions.

But if you're not--and this is the minority, but we shouldn't let this minority demographic define what we mean by working class—then you are left to be prey of solutions that are essentially nationalist, localist, you spend your entire life grieving for a lifestyle that is gone because the new lifestyle is worse.

It makes it very hard to talk about a “working-class” solution to things. Some of the movements that are the most successful, the networked horizontal types of organization, allow you to actually say there's space for difference. The new labor movement might have to be a space where difference exists. What I mean by that is where the sort of lifestyle and values of the traditional white workers can exist in a bit alongside the values of the salariat. Because if they don't, you more or less are abandoning the former to the right.

But at the end of the day the one thing that determines what people vote about is their stomach. All these issues that mesmerize people, abortion, gay marriage—at the end of the day, Roosevelt built a coalition overcoming the opposition of people like Father Coughlin, overcoming the right wing of his own party because he was able to understand a way of articulating the demands of people who were not progressive, because he put food into their stomachs.

The real people that Steinbeck wrote about were not progressive. I went last year and interviewed lots of modern-day Oklahoma farmers and for the simple reason that the Right wants to cut their subsidies, they are part of an alliance that wants a big state. In a way the challenge for the American center and left is to work out how to galvanize everything.

I do think that we're likely to see quite a large part of the networked protest people flip into a pro-Obama position. The beauty of modern political activism is you can do a lot of things parallel, a lot of contradictory things.

SJ: I wonder, because then we go back to what you call in the book “the graduates with no future.” There's a lot of kids who were on the Obama campaign in 2008 who are now out of school, they have a heck of a lot of student debt, they don't have a job or if they do they don't have the job they thought they'd have, and they're pissed. They're not going to go out and do the same kind of work for Obama that they did in 2008. They will probably grudgingly vote. But do they flip when they get jobs? Do they remember?

PM: Two texts really struck me when I was writing the book. One was that University of California-Santa Cruz “Communique from an Absent Future” -- not only how eloquent it was, but what you just described—did we do a degree to get a job writing hearts in cappuccino foam? But when it was written people thought it was an exaggeration, because in 2009 people thought the recovery was happening. Instead we got this stagnation and double-dip and uber-crisis in Europe, and then we had the Arab Spring, and now we're getting the Nigerian spring. That language doesn't look so apocalyptic.

Because even if you get a job the story has to be, how am I better in 30 years time? Where does my healthcare come from, where does my pension come from, where does my rising asset wealth come from? None of that is possible because of the overhanging debt, we're due for a decade more of deleveraging. Even if we get a recovery in America that's not completely jobless, the jobs on offer will be low-paid, they will be insecure.

So the strategic question for the West is, do we want to race to the bottom, meet China halfway? In some American states it already feels “third world,” the infrastructure is crumbling, the rule of law is tenuous, you've got attempts at defiance of federal legislation. But if the answer is no, we want a distinctive lifestyle that rewards the skills and education of people, globalization has got to be radically reconfigured.

Increasingly you're getting people to come clean about what the neoliberal answer is. Tidjane Thiam, who is the head of a big global insurer called Prudential, he said we just abolish minimum wage in Europe. You might get growth but it's growth on the backs of penury for the young.

So what's the alternative?

SJ: That's where we get back to the lack of any leadership among the liberal to social democratic parties. We didn't expect global financial meltdown and we weren't expecting, in 2011, to be talking about revolutions and uprisings across the world, but it seems that leaders didn't either.

PM: Let's just for a minute go back to the Arab Spring, because a lot of people object to me speaking about the Arab Spring in the same sentence as a bunch of student demonstrations.

First off, the detonator is often the same, it's the graduate without a future. Secondly, social media is not a causal thing, but social media is a great weapon if you are facing a decrepit dictatorship or, as in America, a media that doesn't want to take issues of social justice seriously. Social media allows you to swarm around it, you can swarm at them or you can swarm around and organize yourself.

I think one has to acknowledge the specificity and the bravery of the Egyptian and Tunisian and Libyan youth. I always argue that maybe, it's because the Egyptians could see an achievable goal. There are a lot of people around the world who can't see an achievable goal. Greece is a good example.

But suddenly those Greek youth are, far from saying it's all over when the bailout goes through, they're saying it's all going to begin, we're going to achieve something. A lot of the time they're forced into the horizontalist style of politics by the sheer lack of reaction of official politics. The strength of horizontalism doesn't just derive from the fact that it's a good idea: it's the only option.

The really frightening thing—I'm 52, I remember the collapse of Keynesianism, state capitalist economics. I remember the end of the miners' strike, miners who'd literally been on strike for a year, the next time I saw one of them he was in a pinstriped suit and had become a financial adviser. Though they didn't like it, there was a story. The old story is over, the new story is selfishness, financial capitalism.

What is the story now? Can you tell me what the story is that capitalism has to offer in the developed world other than a race to the bottom on wages? Because if it is only that, we're probably facing a bigger ideological crisis than the 1930s, because at least in the 30s there was an alternative.

Now both intellectually and policy-wise, we're four years into the crisis and there's very little.

SJ: And then we get back to capitalist realism, which maybe you can elaborate on a bit for those who haven't read Mark Fisher?

PM: Fisher borrowed the phrase from Frederic Jameson, “It is easier to imagine the end of the world than it is to imagine the end of capitalism.”

What does that statement imply? What it implies is an acceptance of of neoliberalism's extreme proposition, which is that the free market is a steady end-state of capitalism.

A lot of the left just basically accepted that, because once Stalinism had collapsed and lost its allure, they couldn't see a way of organizing society that would be more coherent than the free market.

When I observe the left, I still think that's the job of work they would need to do. It's no accident that the only coherent and holistic model on offer to America right now in the election is the Ron Paul model. He's clear on what it would mean—a return to 19th-century-style capitalism, boom and bust, poverty. Where's the left's equivalent to that? Where's the left's statement of what it is?

Equally, if you read The Coming Insurrection, you begin to think that for this generation there might be a third pill, and the third pill is do it yourself. Don't worry about the state level, find each other, create communes, create little islands of civilization within the jungle. That is in fact what early social democracy and early anarchism did a hundred years ago.

As I say in the book, a lot of the horizontalist left would be quite happy to live despite capitalism. The problem is capitalism is quite capable of completely falling apart as you stand there at the sidelines. Certainly in Greece, what is the space for autonomy now, if a massive clash at the level of the state is about to happen?

While people have overcome the psychological paralysis they had during the capitalist realist phase, it's very difficult to see a holistic answer coming forward. There's a fear of engaging with the real and the possible because for so long people think that means putting on a suit and tie, or greenwashing corporations. The fear of compromise is huge.

Yet as a labor historian I know that the entire story of labor in the last 150 years has been the inadequacy of the local and partial solution. Because if the progressive part of society doesn't impose it, the reactionary part of society can impose it, because it always inhabits the world of the power, the structure, the hierarchy, the Nietzschean world.

I keep saying to people, if we did flip into a reactionary nationalist racist world, it would be a much bigger flip this time than occurred between the 20s and 30s. This coffee bar couldn't exist under fascism. The relationships between people, the public discussion, couldn't exist. But it took five years for Berlin to go from a gay nightclub heaven to a book-burning fascist paradise. Berlin was the liberal center of Europe. Don't imagine that the cultural ties would stop it happening. Economics is all.

SJ: But you also say, “Don't presume that nothing is different this time.” And the thing that is different is this technology, that is connecting people on different continents.

PM: When I speak about my thesis, I boil it down to three things. One is the collapse of the economic narrative. Two is the availability of networked technology and network kinds of thinking by people, networked protest, circumventing of mainstream media, horizontalist activism, but the third thing, and I would say a lot of my audience switch off when I say this, we're talking about different types of people.

Who knows whether there's anything neurological, but certainly behaviorally, people are exhibiting a greater propensity to behave in a networked way. Manuel Castells, who did one of the few mass studies on this, does say that the more you use the Internet, the more inclined toward autonomous and progressive personal ideas and behaviors you become.

If that's true, it means that the human material for regimented, reactionary movements, like Stalinism, like fascism, is going to be much harder to assemble. The second thing is that all progressive projects have to take into account the fact that everything today is about herding the individualized people.

I'm a union rep at work, I have led a strike, I have been on the picket line, I have been put in the right-wing press for being on a picket line, but 90 percent of my union activity has dealt with what I call the “me agenda.” Don't mess with me, don't bully me, don't sexually harass me, don't deny me this promotion; as soon as these issues come up, knock-knock on the door, “Can I join the union?”

What people expect unions to do is to defend their individual rights and occasionally they'll in return do something collective. We're past mourning that situation. One has to kind of celebrate it because to me the root of all progressive politics--I would argue that it's even the root of Marxism--is the liberation of the human individual, before it's about class, before it's about power, before it's about anything. If the individual is more confident, has greater ties, can hold in their minds levels of knowledge that it would take one person a lifetime to assemble for ten minutes, work with it, and scrap it and work with something else, if that's the new real, that's surely good.

But it brings its own challenges. This young woman said to me, “Fuck politics, why don't we just vote on Twitter, every day? On everything? Why not just give everybody an account and then poll them?”

To me it sounds vaguely outlandish, to most politicos it would sound crazy, but she wasn't being mischievous, she actually meant it.

I would keep going back to this human individual thing. Virginia Woolf famously wrote “On or about December 1910, human character changed.” She was absolutely right to spot an inflection point. When the masses became exposed to mass consumption, cinema, holidays, unified information that everybody could get at the same time, their behavior did change.

The people who made the Russian Revolution in 1917 were very different people than the cigar makers in Chicago in 1870. The 1870s labor movement used to have this obsession with egotism. They thought the young generation were egotists because they consumed, they had extramarital sex—there was a big boom in relationships in the 1910s.

It's easy to recognize the 1910 thing now because all TV dramas about the Progressive era, the Edwardian era, the Belle Epoque, always contain a young middle-class woman who's been empowered. They never say what's empowered her. We've got the contraceptive pill—she had basic access to some form of contraceptive knowledge.

SJ: That's why they're trying to take it away now, why we're having a huge fight over it in American politics right now.

PM: In the book, I quote from the story of the French Revolution, how the young graduate without a future, essentially, is a revolutionary in waiting. To make them a revolutionary, all the barriers that would normally civilize such people as they get jobs and get older, need to crumble and fall away.

What neoliberalism did for 20 years was destroy the barriers. Feminism partly collapsed because a lot of women could solve some of their social problems on the terrain of a very rip-roaring booming individualist capitalism. When you don't use muscles, they atrophy. The muscle of fighting for basic things like reproductive rights atrophied.

I was brought up in the 1970s, among manual workers who popular culture believes to be sexist. I find modern culture pervaded by anti-woman, violent oppressive images that would've shocked these so-called sexist male manual workers. We are living in a world that is glorifying violence against women, in a way that the so-called reactionary middle-20th-century never did. That paradox explains why you've got the seeming respectability of positions on women's rights that we thought we'd sorted out.

Because while people were solving their own problems individually, society created this. We're in a situation where the fight for women's reproductive and general basic rights are going to have to be done, and the intellectual apparatus is gone.

This is why the behavior in the movements has become a problem. A lot of the anarchists and autonomous people I've interviewed talk about the problem of “manarchism.” I remember left organizations and also unions in the 1970s expelling men who could bring factories on strike, leaders, over domestic violence issues, and they did so at the snap of your fingers because they understood something that I think the modern movements have let go to the back burner: that you can judge the character of any social movement by what its attitude is to women's emancipation.

SJ: I've been quite impressed as well by the internal debate within Occupy Wall Street about how to deal with crises like rape, like violence. They were and are working on mechanisms to deal with these problems within the movement.

PM: I think that all movements have to deal with and in the end compromise with society as it is. All mass movements have that issue, it's never black and white. Even in Tahrir Square, I think you've seen the movement evolve a response. At first there was almost no response; a few brave feminist women would call out people who attacked them on Tahrir, but you then have to move into the organizations of people who think it's OK to attack, and who are those? They're Islamist organizations. There the debate is suddenly on a very different terrain, you're in a world of compromise.

The young people who've done the last two years worth of activism, they find compromise hard to negotiate. To get into your head the reason you're making the compromise is not because you like what you're compromising with, but in order to mobilize the resources to do what has to be done you have to have a lot of diversity of people, whether it's street people in Occupy, Islamists in Tahrir Square—life is hard to do all on your own.

The politics of social oppression, of women, oppressed minorities, gays, have a particular plight in modern society in general, that is important and often is a key to understanding where you're going to go—I don't call that identity politics. When it becomes identity politics is when you're on a losing streak. While you're discussing your identity politics, the Right has won the election.

SJ: And so what next?

PM: The amazing possibilities that the situation globally offers arise from the mismatch between the general pissed-off-ness of people about a world in which the rich just get richer and they don't, and the absence of alternatives coming from those in power.

Even though the crisis today isn't as bad as the 1930s, what is worse is the absence of any kind of an answer, other than more of the same but a little bit less. That is what makes it so volatile, and so what is next is quite clear. Greece, social breakdown. Crisis in Italy, Spain.

I do wonder how long the American poor will go on passively accepting their role. I think the fact that so many people have been put in jail--when you meet the urban poor in America, you meet so many passive men, why? Not because they're not angry, because inside they're teeming with anger, but they know the minute they raise their voice they're back inside. But maybe America will be lucky and the jobs coming back will get to a point of preventing another Watts riot situation.

Because there haven't been any, it's been remarkable. I think if there was another Watts it wouldn't just be black people, it would be all the people who just feel they've just got no stake in the situation. I think there's a big IF hanging over the American situation.

Sarah Jaffe is an associate editor at AlterNet, a rabblerouser and frequent Twitterer. You can follow her at @seasonothebitch.

Sunday, February 26, 2012

Why Less Isn’t Always More

The Sunday Review


Why Less Isn’t Always More

Richard Glover/View

Inside London's Rosmead House, designed by the minimalist architect John Pawson.

AUSTERITY is an appealing word. It feels good to say: spacious and articulate, lingual and incisive. Echoing through the debate about our continuing global financial crisis, it connotes a self-evident truth — one that is entirely unearned by its actual etymological or economical denotations.

Etymologically, “austerity” is a dispiriting word, descending from an Old French term for harshness and cruelty — and ultimately, perhaps unsurprisingly, from a Greek word describing bitterness so brutal it dries out the very tongue, on its way to breaking the heart.

Economically, austerity — which the Germans, among others, are intent on forcing upon their southern brethren — can sound like a good idea, but might actually exacerbate the conditions it ostensibly ameliorates. One day, we might look back on cuts in public services and infrastructure during a downturn with the same disbelief with which today’s doctors recall the medieval medicine of deliberately cutting and bleeding the sick.

And yet austerity, the beautiful word alone, is simply irresistible. It feels decadent and vulgar to ask one’s government, or oneself, not to be austere.

Why? To start, there’s a hint of ethical propriety: it feels righteous to contemplate tightening the belt, cutting the fat, putting the house in order (especially when it’s someone else’s belt, fat and house). Although the management of an economy is entirely different from the kitchen-table budgeting to which it is reductively compared, it feels vaguely virtuous to imagine avoiding borrowing and lending altogether — even as our current system of capital depends on those very practices.

But there’s more. It may be that the real associative power of austerity as a word is not ethical, but aesthetic. Austerity is, above all, a thing of beauty.

In art and design, and especially in architecture, austerity means modernism and minimalism: the concept, famously advanced by the architect Ludwig Mies van der Rohe, that “less is more.” Some of this expresses the obligation of any good designer to honor an economy of means, to acknowledge that architecture, like governance, is primarily the art of spending other people’s money. But most of it is a little more mysterious.

Not just any “less” is the right “more.” A minimal design must be progressively reduced and refined to its essential and sometimes surprising causes and effects, just as a divinely immanent David was discovered by Michelangelo inside an unpromising block of stone. All else is decoration, deception and distraction. Thus because some cuts are figuratively as well as literally incisive, any cut can seem wise: austere art is smart art. It’s an architecture of revealed order and selective filtering and pattern recognition.

The aesthetic austerity that results requires and rewards our inclination to look and think: wander long enough around Mies’s glassy Farnsworth House of 1950, and you see crystallized in every simple and delicately floating surface the bones of every good house ever made — a severe and serene dream of comfort and clarity, refuge and prospect. At least in theory.

In architecture, this kind of theory dates from at least the Austrian modernist Adolf Loos and his 1908 essay “Ornament and Crime,” in which he didn’t exactly say that the former was the latter, but did observe that, “If I want to eat a piece of gingerbread I will choose one that is completely plain.” To him, “it tastes better this way.”

When the plain architecture advanced by Loos had become an increasingly mainstream taste, this aesthetic austerity was easy to conflate with the no-nonsense mood of emerging economic and political crises — prompting the editors of The Architect and Building News to comment in 1931 that “this phase of austerity is sure to pass eventually,” but “something of the impress of this sensation of aesthetic restraint will remain, because it is sympathetic to any age preoccupied, as is the present one, with very serious problems requiring strong sobriety of thought and action.”

Such austerity, though, is as much glamorous as solemn. As an aesthetic category, it’s strangely aspirational. It can become a mode of luxury, even excess. The difference between a minimalist room and an under-furnished room is freedom of choice.

Today’s minimalism conjures a life of such intangible ease that the mere creature comforts of visibly abundant stuff are transcended. It makes a near ethical virtue out of an aesthetic practice of refusal (perhaps extending, disconcertingly, to notions of physical aesthetics in which obesity is associated with poverty and to be too rich is to be too thin). While Mies and his contemporaries introduced their skinny-framed, flat-roofed, white-walled architecture in the context of prototype public housing, they perfected it in deluxe retreats like the Farnsworth House.

Today’s most celebrated Minimalist architect, John Pawson, counts among his clients both poverty-sworn monks and the fashion designer Calvin Klein, whose own designs specialize in enabling you to pay much more for the right much less. Pawson’s work happens to be beautiful and kind; its proportions are the natural ratios that you find in shells and flowers. It gives you room to breathe. And yet it’s subject to elegant deceits.

A building of few details would seem to be a building of few secrets. But austerity in architecture connotes a visual and functional transparency that it completely fails to provide. Any seamless-seeming building is full of complex joints and junctions, fixes and fudges that make a thousand parts look like a single monolithic, sculptural whole. To look as if you left everything out, you have to sneak everything in. What seems spartan is usually, invisibly, baroque.

In today’s architecture, in which labor is generally expensive and materials cheap, there is a tendency to slap stuff over stuff until it all lines up or looks finished — whether the resulting form amounts to something you’d call minimal or colonial or anything in between.

Consider the strip of baseboard that usually hides the irregular gap between the base of a plaster wall and the edge of a floor. Recently I was considering some details for a house, and had the bright idea of eliminating that baseboard in favor of a simple beautiful linear gap — which would look great if every other piece of carpentry in the house were aligned as perfectly as a Shaker barn.

I told the contractor about my idea. He gave me that long, legendary look somewhere between contempt and compassion, to which architects are often subjected by builders: the look that means, “Yeah, that’s gonna end up costing somebody.”

As in architecture, so in public life — and, one has to suspect, public policy. Those who, consciously or not, exploit the aesthetics of austerity as a way of framing a debate on public ethics may discover, too, a hidden cost.

Thomas De Monchaux is an adjunct professor of architecture at Columbia, who is at work on a book about style.

Thursday, February 23, 2012

Our Occupied Economy

Are We Happy Yet?

Occupied Economy

A brief history of the first corporate century.

Carl Safina , 18 Feb 2012

Occupied Economy


This morning I was pulling poison ivy. It looked like I was up against the withering prospect of pulling more than a hundred individual plants. But I found that if I dug my gloved finger to the root and gently tugged, I could trace it through other roots and stems in my neglected garden, then fairly easily zip out whole tracts of the stuff. Without pulling a single individual plant, tugging up the root dislodged all the ones I could see and a lot that I hadn’t seen in the tangle of vegetation. When I was a teen I yearned to travel America to see “how other people live.” Now, basically, you can see how they live from wherever you happen to be. The same advertising, the same chain stores, and the same TV, radio and print conglomerates have largely replaced America with the same repeating road-stop strip mall, from sea to shining sea. Everyone’s head throbs with the same songs, and young people “relate to” the same handful of company logos and media characters. Corporate “news” reports on how the actual people who play fictional characters are faring in their reproduction and rehab. As I was freeing my American garden from toxic infestations, my mind drifted to the image of the chain stores along a highway, each strip mall a sprig of leaves, connected by an unseen cable of root. I imagined that I was driving cross-country on a big interstate highway, pulling up chain stores as I went along, helping free up a land strangling in a rash of sameness.

Modern corporations were essentially illegal at the founding of the United States (the colonists had had enough of British corporations). In the new country, corporations could form, raise public capital, and share profits with stockholders only for specified activities that benefited the public, such as constructing roads or canals. Corporate licenses were temporary. Corporations were forbidden from attempting to influence elections, lawmaking, public policy, or civil life. Imagine.

But from the beginning, corporate-minded men chafed for power, prompting Thomas Jefferson to write in 1816, “I hope we shall … crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.”

For the first century after the American Revolution, legislators maintained control of the corporate chartering process. Then they essentially lost it as a series of court decisions established corporate “rights” and corporate “personhood.” These laws have been catastrophic for democracy, with planetary implications.

Corporate globalization has been called “the most fundamental redesign of social, economic, and political arrangements since the Industrial Revolution.” Corporations have swept real economic and political power away from governments. Of the hundred wealthiest countries and corporations listed together, more than half are corporations. ExxonMobil is richer than 180 countries – and there are only about 195 countries. Without the responsibilities or costs of nationhood, corporations can innovate and produce at unprecedented speed and scale. Yet they can also undertake acts of enormous environmental destruction and report a profit.

The behavior of corporations arises from their wide freedom of action and their limited liability for harms caused. Further, shareholders “own” and profit by the corporation, but “limited liability” means shareholders can lose no more than the money invested; they aren’t held responsible for anything the corporation does. If they were, stockholders might know what companies they “own” and why. They might demand corporate responsibility. They might invest more carefully. But because they’re not, they don’t.

Further, if a corporation can make a larger profit by wrecking a community, the law says it must. Perhaps the most famous case in corporate law was decided in the Supreme Court of Michigan in 1919 when Henry Ford got sued by the Dodge brothers (yes, those Dodge brothers). Ford wanted to plow profits back into the company and its employees. “My ambition is to employ still more men,” the New York Times quoted Ford as saying, “to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and homes. To do this we are putting the greatest share of our profits back in the business.” The judges posed a short question: What is a corporation for? The judges answered themselves by saying corporations are “primarily for the profit of the stockholders.” Not for the benefit of employees or community. Corporate managers – regardless of personal scruples or desire to “do good” – are forced to always put profits first.


The profit-maximization imperative creates continuous pressure to dump waste in the public commons and to shift the resulting costs to the public through subsidies, tax-funded pollution cleanups, and such. Where dumping waste is illegal, corporations may be fined for violations. Such fines often become “a cost of doing business,” while shareholders know that corporations never get sent to jail, and that some are “too big (to be allowed) to fail.” To the extent that governmental regulations get annoying, corporate appetites engulf those too, backing and basically installing cooperative elected officials, then coercing the removal of regulatory “barriers” (formerly: “public protections”).

However, we can envision how a more public-minded government might deal with risk-prone corporations. In Wold War II, the US government seized control of certain German companies inside the United States. Obviously, it wouldn’t do to have German chemical plants on American soil while we were engulfed in war with Germany. The companies were not destroyed, just controlled by the government for a while; some still exist. When U.S. automakers got into serious trouble and went into bankruptcy in 2009, the federal government stepped in to control management for a while. These weren’t punitive moves exactly, but one can imagine ways in which corporations acting as bad citizens might have to do some time with, say, their stocks frozen – no trading, maybe – while a government of the people does a little potty training with the executives.

In real life as we know it, the profit-maximization imperative means that any company seeking to act responsibly incurs a competitive disadvantage. The implications are generally a cascade of catastrophes because essentially all the money in the world is thus under pressure to act irresponsibly. Any other impulse must buck that tide.

The corporations’ central tenet of faith, their object of worship, their grail and their gruel: growth. Growth fueled by continually unearthing new resources and cheaper labor. Growth fed by raising and fattening new consumers. Growth had historically resulted from technical progress and growing population. It became a central pursuit of government policy mainly after World War II.

But Planet Earth cannot grow. Not any faster than it accumulates stardust, anyway. If the economy “grows” while resources like water, forest, and fish are being depleted, it’s not growth: it’s just blowing more bubbles. Yet because our economic system shows unconditional love for growth, it doesn’t ring alarm bells over bubbles. But count on this: the bigger the bubble, the worse the burst.

The first corporate century, the 20th, was a period of explosive growth. Despite as many as 150 million human beings killed in warfare between 1900 and Y2K, the world population quadrupled. Energy use increased sixteen-fold. The fish catch – which peaked in the late 1980s – increased thirty-fold. The sheer amount of stuff used annually flies in flocks of zeros that defy comprehension: 275,000,000 tons of meat, 370,000,000 tons of paper product, et cetera. Incredibly, of all the earthly materials that human hands have ever transformed, fully half of that material transformation has occurred since World War II.

“It is impossible for the world economy to grow its way out of poverty and environmental degradation,” writes the resource-minded economist Herman Daly, because the economy is a “subsystem of the earth ecosystem, which is finite, non-growing and materially closed.”

And economists think the solution to our problems is more growth? We’ve been terribly misled. But more development – that’s a different proposition. “Grow” means to increase in size by adding. "Develop" means to realize potentials, to make better.

Because the world is pretty much fully tapped, growth now threatens development. In a postgrowth world, we’d measure things like community and satisfaction. We’d replace the feverish tail chase of the material with life, liberty, and the pursuit of happiness. Those come from development, not from growth. Let’s not confuse the two.

During challenging ocean conditions, certain sea jellies “de-grow.” They don’t just lose fat or slim down; they actually lose cells and simplify structures. When times are good, they regrow. Because they are adding new cells and regrowing structures (not just replumping), they are actually rejuvenated – younger than they were. On the other end of the scale, Edward Abbey long ago observed that growth for the sake of continuous growth is the strategy of cancer. Knowing what we now know, it appears that the world can’t produce enough to grow our way out of poverty. But we could certainly shrink our way out.

Carl Safina is a MacArthur fellow and host of the PBS television show Saving the Ocean. This essay originally appeared in his book The View From Lazy Point.

Wednesday, February 15, 2012

Why I Like the President's Budget

Rolling Stone


POSTED: By Jared Bernstein

us budget books
The 2013 Federal Budget arrives at the Canon House office building in Washington, DC.
Chris Maddaloni/CQ Roll Call

The chin music is in full chorus re the president's budget release: It’s a political document! It's campaign rhetoric! It’s dead on arrival! It fails to tackle [fill in your favorite problem]!

In fact, it’s a smart piece of work. Just put aside the incredulity – and the fact that, no, it it's not going to be enacted (more on that below) – and let’s step back and look at this thing.

This budget is a balancing act, in a couple of different ways. It balances both stimulus and deficit reduction, and it balances tax increases and spending cuts. All four of those are needed.

In the short term, we need more stimulus. The recovery is unquestionably picking up, but it’s far from off to the races. The president’s budget invests in infrastructure, including fixing schools along with the more traditional stuff, like roads and railways. Importantly, there’s relief for states in the form of preserving jobs for teachers, police, and other state workers. Remember, states have to balance their budgets, and that means when they’re strapped, like they are now, they cut public services and public servants.

And yes, I admit it: that means spending and a larger budget deficit. But given the still weak economy – the private sector is not fully up and running – the question right now isn’t "how much do you reduce the deficit this year?" It’s “are we doing enough to help boost the fledgling recovery?"

Of course, once we’re back on track, economy-wise, that’s when we need to bring down the deficit, and the president’s budget does that, with over $4 trillion in spending cuts and tax increases. Spending cuts account for 60% of the savings, tax increases for the other 40%.

That, of course, is where you hit the partisan wall, especially given that the $1.5 trillion in new tax revenues come exclusively from the 3% of households with incomes above $250,000. And to tell you the truth, I get the difficulty some people have with that. Ultimately, it won’t make sense to restrict tax policy like this, based in part on a campaign pledge made by the President years ago.

But for now, the middle class remains squeezed by the slog out of the great recession, while corporate profitability is soaring and corporate tax liabilities are very low. Some gazillionaires with asset-based incomes really are paying 15% tax rates while people with paychecks pay twice that rate. So it’s fair for the president to start by adding some progressivity back into the code.

For the record, I don’t love all the spending cuts—I think the budget cuts too deeply into so-called domestic discretionary spending, things like help paying for heating oil for low-income households, job training, Head Start—the sort of things you’d want to expand in an economy with too much inequality and too little mobility. Also, I don’t like the $50 billion in cuts to Medicaid, which can’t really spare a dollar as far as I can tell, without hurting poor beneficiaries.

But like I said, it’s a balancing act, and we’re not going anywhere without compromise. Which is to say, we’re not going anywhere.

Back to reality: when partisans say this budget is DOA, they mean it. Clearly, the president did not craft this document with an eye to what Republicans would agree to. Why would he? Some of their most influential members have made it clear they won’t agree to anything he proposes; others have pledged to never, ever raise a tax.

But that doesn’t render this document meaningless—not in the least. Nor does it make it a “campaign document” in some dismissive sense.

In fact, it’s another example of the starkly different visions of the two sides right now—the YOYOs (you’re-on-your-own) and the WITTs (we’re-in-this-together).

The former, led by Wisconsin Republican Paul Ryan, will soon announce their own budget, replete with much deeper spending cuts and no new revenues. In fact, cuts to programs for the poor will pay for the tax cuts for the wealthy. The WITTs take the approach described above, balancing stimulus and deficit reduction, tax increases and spending cuts, along with some attention to the fact that this economy has yet to achieve escape velocity from the great recession and needs yet another jolt from the fiscal booster rockets.

Such differences matter a great deal. Anyone who tells you otherwise is either a dangerous cynic or someone wants you to look over there while they steal your government.

You can email me at info@jaredbernsteinblog.com. I look forward to your feedback.

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities. From 2009 to 2011, he was the Chief Economist and Economic Adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team.

Read more: http://www.rollingstone.com/politics/blogs/national-affairs/why-i-like-the-presidents-budget-20120214#ixzz1mUPanO7D

Sunday, February 12, 2012

America’s failed promise of equal opportunity

Salon Home


The 99 Percent Plan

Sunday, Feb 12, 2012 10:00 AM EST

America’s failed promise of equal opportunity

To achieve a truly fair society, we need to look to Lincoln, not Jefferson


The 99 Percent Plan is a joint Roosevelt Institute-Salon series that explores how progressives can shape a new vision for the economy. This is the second essay in the series.

Americans are increasingly aware that the ideal of equal opportunity is a false promise, but neither party really seems to get it.

Republicans barely admit the problem exists, or if they do, they think tax cuts are the answer. All facts point in the opposite direction. Despite various tax cuts over the past 30 years, not only have income and wealth inequality dramatically increased, but the ability of individuals to rise out of their own class has declined. Social stagnation is increasingly the norm, with poverty rates the highest in 15 years, real wage gains worse even than during the decade of the Great Depression, average earnings barely above what they were 50 years ago, and more than 80 percent of the income growth of the past 25 years going to the top 1 percent. In fact, since 1983, the bottom 40 percent of households have seen real declines in their income and the same goes for the bottom 60 percent when it comes to wealth. We know what the economic status quo does: It redistributes upwards.

Alex Gourevitch is a postdoctoral research associate at Brown University's Political Theory Project. He also co-authors the blog The Current Moment. More Alex Gourevitch

Aziz Rana teaches law at Cornell University and is the author of "The Two Faces of American Freedom," recently published by Harvard University Press. He writes on American constitutional development, with a particular interest in issues of citizenship, immigration and national security. More Aziz Rana

Saturday, February 11, 2012

Economic Lessons from the Wizard of Oz


Web of Debt Thumbnail


Ellen Hodgson Brown

"The great Oz has spoken! Pay no attention to that man behind the curtain! I am the great and powerful Wizard of Oz!"

In refreshing contrast to the impenetrable writings of economists, the classic fairytale The Wizard of Oz has delighted young and old for over a century. It was first published by L. Frank Baum as The Wonderful Wizard of Oz in 1900. In 1939, it was made into a hit Hollywood movie starring Judy Garland, and later it was made into the popular stage play The Wiz. Few of the millions who have enjoyed this charming tale have suspected that its imagery was drawn from that most obscure and tedious of subjects, banking and finance. Fewer still have suspected that the real-life folk heroes who inspired its plot may have had the answer to the financial crisis facing the country today!

The economic allusions in Baum's tale were first observed in 1964 by a schoolteacher named Henry Littlefield, who called the story "a parable on Populism," referring to the People's Party movement challenging the banking monopoly in the late nineteenth century.1 Other analysts later picked up the theme. Economist Hugh Rockoff, writing in the Journal of Political Economy in 1990, called the story a "monetary allegory."2 Professor Tim Ziaukas, writing in 1998, stated:

"The Wizard of Oz" . . . was written at a time when American society was consumed by the debate over the "financial question," that is, the creation and circulation of money. . . . The characters of "The Wizard of Oz" represented those deeply involved in the debate: the Scarecrow as the farmers, the Tin Woodman as the industrial workers, the Lion as silver advocate William Jennings Bryan and Dorothy as the archetypal American girl.3

The Germans established the national fairytale tradition with Grimm's Fairy Tales, a collection of popular folklore gathered by the Brothers Grimm specifically to reflect German populist traditions and national values.4 Baum's tale did the same thing for the American populist (or people's) tradition. The Wizard of Oz has been called "the first truly American fairytale."5 It was all about people power, manifesting your dreams, finding what you wanted in your own backyard. According to Littlefield, the march of Dorothy and her friends to the Emerald City to petition the Wizard of Oz for help was patterned after the 1894 march from Ohio to Washington of an "Industrial Army" led by Jacob Coxey, urging Congress to return to the Greenback system initiated by Abraham Lincoln. The march of Coxey's Army on Washington began a long tradition of people taking to the streets in peaceful protest when there seemed no other way to voice their appeals. As Lawrence Goodwin, author of The Populist Moment, described the nineteenth century movement to change the money system:

[T]here was once a time in history when people acted. . . . [F]armers were trapped in debt. They were the most oppressed of Americans, they experimented with cooperative purchasing and marketing, they tried to find their own way out of the strangle hold of debt to merchants, but none of this could work if they couldn't get capital. So they had to turn to politics, and they had to organize themselves into a party. . . . [T]he populists didn't just organize a political party, they made a movement. They had picnics and parties and newsletters and classes and courses, and they taught themselves, and they taught each other, and they became a group of people with a sense of purpose, a group of people with courage, a group of people with dignity.6

Like the Populists, Dorothy and her troop discovered that they had the power to solve their own problems and achieve their own dreams. The Scarecrow in search of a brain, the Tin Man in search of a heart, the Lion in search of courage actually had what they wanted all along. When the Wizard's false magic proved powerless, the Wicked Witch was vanquished by a defenseless young girl and her little dog. When the Wizard disappeared in his hot air balloon, the unlettered Scarecrow took over as leader of Oz.

The Wizard of Oz came to embody the American dream and the American national spirit. In the United States, the land of abundance, all you had to do was to realize your potential and manifest it. That was one of the tale's morals, but it also contained a darker one, a message for which its imagery has become a familiar metaphor: that there are invisible puppeteers pulling the strings of the puppets we see on the stage, in a show that is largely illusion.

Money in the Land of Oz

The 1890s were plagued by an economic depression that was nearly as severe as the Great Depression of the 1930s. The farmers lived like serfs to the bankers, having mortgaged their farms, their equipment, and sometimes even the seeds they needed for planting. They were charged so much by a railroad cartel for shipping their products to market that they could have more costs and debts than profits. The farmers were as ignorant as the Scarecrow of banking policies; while in the cities, unemployed factory workers were as frozen as the Tin Woodman from the lack of a free-flowing supply of money to "oil" the wheels of industry. In the early 1890s, unemployment had reached 20 percent. The crime rate soared, families were torn apart, racial tensions boiled. The nation was in chaos. Radical party politics thrived.

In every presidential election between 1872 and 1896, there was a third national party running on a platform of financial reform. Typically organized under the auspices of labor or farmer organizations, these were parties of the people rather than the banks. They included the Populist Party, the Greenback and Greenback Labor Parties, the Labor Reform Party, the Antimonopolist Party, and the Union Labor Party. They advocated expanding the national currency to meet the needs of trade, reform of the banking system, and democratic control of the financial system.7

Money reform advocates today tend to argue that the solution to the country's financial woes is to return to the "gold standard," which required that paper money be backed by a certain weight of gold bullion. But to the farmers and laborers who were suffering under its yoke in the 1890s, the gold standard was the problem. They had been there and done it and knew it didn't work. William Jennings Bryan called the bankers' private gold-based money a "cross of gold." There was simply not enough gold available to finance the needs of an expanding economy. The bankers made loans in notes backed by gold and required repayment in notes backed by gold; but the bankers controlled the gold, and its price was subject to manipulation by speculators. Gold's price had increased over the course of the century, while the prices laborers got for their wares had dropped. People short of gold had to borrow from the bankers, who periodically contracted the money supply by calling in loans and raising interest rates. The result was "tight" money – insufficient money to go around. Like in a game of musical chairs, the people who came up short wound up losing their homes to the banks.

The solution of Jacob Coxey and his Industrial Army of destitute unemployed men was to augment the money supply with government-issued United States Notes. Popularly called "Greenbacks," these federal dollars were first issued by President Lincoln when he was faced with usurious interest rates in the 1860s. Lincoln had foiled the bankers by funding the government with U.S. Notes that did not accrue interest and did not have to be paid back to the banks. The same sort of debt-free paper money had financed a long period of colonial abundance in the eighteenth century, until King George forbade the colonies from issuing their own currency. The money supply had then shrunk, precipitating a depression that led to the American Revolution.

To remedy the tight-money problem that resulted when the Greenbacks were halted after Lincoln's assassination, Coxey proposed that Congress should increase the money supply with a further $500 million in Greenbacks. This new money would be used to redeem the federal debt and to stimulate the economy by putting the unemployed to work on public projects.8 The bankers countered that allowing the government to issue money would be dangerously inflationary. What they failed to reveal was that their own paper banknotes were themselves highly inflationary, since the same gold was "lent" many times over, effectively counterfeiting it; and when the bankers lent their paper money to the government, the government wound up heavily in debt for something it could have created itself. But those facts were buried in confusing rhetoric, and the bankers' "gold standard" won the day.

The Silver Slippers: The Populist Solution
to the Money Question

The Greenback Party was later absorbed into the Populist Party, which took up the cause against tight money in the 1890s. Like the Greenbackers, the Populists argued that money should be issued by the government rather than by private banks. William Jennings Bryan, the Populists' loquacious leader, gave such a stirring speech at the Democratic convention that he won the Democratic nomination for President in 1896. Outgoing President Grover Cleveland was also a Democrat, but he was an agent of J. P. Morgan and the Wall Street banking interests. Cleveland favored money that was issued by the banks, and he backed the bankers' gold standard. Bryan was opposed to both. He argued in his winning nomination speech:

We say in our platform that we believe that the right to coin money and issue money is a function of government. . . . Those who are opposed to this proposition tell us that the issue of paper money is a function of the bank and that the government ought to go out of the banking business. I stand with Jefferson . . . and tell them, as he did, that the issue of money is a function of the government and that the banks should go out of the governing business. . . . [W]hen we have restored the money of the Constitution, all other necessary reforms will be possible, and . . . until that is done there is no reform that can be accomplished.

He concluded with these famous lines:

You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.9

Since the Greenbackers' push for government-issued paper money had failed, Bryan and the "Silverites" proposed solving the liquidity problem in another way. The money supply could be supplemented with coins made of silver, a precious metal that was cheaper and more readily available than gold. Silver was considered to be "the money of the Constitution" although the Constitution only referred to the "dollar," because the dollar was understood to be a reference to the Spanish milled silver dollar coin then in common use. The slogan of the Silverites was "16 to 1": 16 ounces of silver would be the monetary equivalent of 1 ounce of gold. Ounces is abbreviated oz, hence "Oz." The Wizard of the Gold Ounce (Oz) in Washington was identified by later commentators as Marcus Hanna, the power behind the Republican Party, who controlled the mechanisms of finance in the administration of President William McKinley.10 (Hanna was reportedly admired by Karl Rove, who followed the model as political adviser to President George Bush Jr.11)

Frank Baum, the journalist who turned the politics of his day into The Wonderful Wizard of Oz, marched with the Populist Party in support of Bryan in 1896. He is said to have had a deep distrust of big-city financiers. But when his dry goods business failed, he bought a Republican newspaper, which had to have a Republican message to retain its readership.12 That may have been why the Populist message was so deeply buried in symbolism in his famous fairytale. Like Lewis Carroll, who began his career writing uninspiring tracts about mathematics and politics and wound up satirizing Victorian society in Alice's Adventures in Wonderland, Baum was able to suggest in a children's story what he could not say in his editorials. His book contained many subtle allusions to the political and financial issues of the day. The story's inspirational message was evidently a product of the times as well. Commentators trace it to the theosophical movement, of which Baum was an active member.13 Newly-imported from India, it held that reality is a construct of the mind. What you want is already yours; you need only to believe it, to "realize" it or "make it real."

Looking at the plot of this familiar fairytale, then, through the lens of the contemporary movements that inspired it . . . .

An Allegory of Money, Politics
and Believing in Yourself

The story began on a barren Kansas farm, where Dorothy lived with a very sober aunt and uncle who "never laughed" (the 1890s depression that hit the farmers particularly hard). A cyclone came up, carrying Dorothy and the house into the magical world of Oz (the American dream that might have been). The house landed on the Wicked Witch of the East (the Wall Street bankers and their man Grover Cleveland), who had kept the Munchkins (the farmers and factory workers) in bondage for many years.

For killing the Wicked Witch, Dorothy was awarded magic silver slippers (the Populist silver solution to the money crisis) by the Good Witch of the North (the North was then a Populist stronghold). In the 1939 film, the silver slippers would be transformed into ruby slippers to show off the cinema's new technicolor abilities; but the monetary imagery Baum suggested was lost. The silver shoes had the magic power to solve Dorothy's dilemma, just as the Silverites thought that expanding the money supply with silver coins would solve the problems facing the farmers.

Dorothy wanted to get back to Kansas but was unaware of the power of the slippers on her feet, so she set out to the Emerald City to seek help from the Wizard of Oz (the apparently all-powerful President, whose strings were actually pulled by financiers concealed behind a curtain).

"The road to the City of Emeralds is paved with yellow brick," she was told, "so you cannot miss it." Baum's contemporary audience, wrote Professor Ziaukas, could not miss it either, as an allusion to the gold standard that was then a hot topic of debate.14 Like the Emerald City and the Great and Powerful Oz himself, the yellow brick road would turn out to be an illusion. In the end, what would carry Dorothy home were silver slippers.

On her journey down the yellow brick road, Dorothy was first joined by the Scarecrow in search of a brain (the naive but intelligent farmer kept in the dark about the government's financial policies), then by the Tin Woodman in search of a heart (the factory worker frozen by unemployment and dehumanized by mechanization). Littlefield commented:

The Tin Woodman . . . had been put under a spell by the Witch of the East. Once an independent and hard working human being, the Woodman found that each time he swung his axe it chopped off a different part of his body. Knowing no other trade he "worked harder than ever," for luckily in Oz tinsmiths can repair such things. Soon the Woodman was all tin. In this way Eastern witchcraft dehumanized a simple laborer so that the faster and better he worked the more quickly he became a kind of machine. Here is a Populist view of evil Eastern influences on honest labor which could hardly be more pointed.

The Eastern witchcraft that had caused the Woodman to chop off parts of his own body reflected the dark magic of the Wall Street bankers, whose "gold standard" allowed less money into the system than was collectively owed to the banks, causing the assets of the laboring classes to be systematically devoured by debt.

The fourth petitioner to join the march on Oz was the Lion in search of courage. According to Littlefield, he represented the orator Bryan himself, whose roar was mighty like the king of the forest but who lacked political power. Bryan was branded a coward by his opponents because he was a pacifist and anti-imperialist at a time of American expansion in Asia. The Lion became entranced and fell asleep in the Witch's poppy field, suggesting Bryan's tendency to get side-tracked with issues of American imperialism stemming from the Opium Wars. Since Bryan led the "Populist" or "People's" Party, the Lion also represented the people, collectively powerful but entranced and unaware of their strength.

In the Emerald City, the people were required to wear green-colored glasses attached by a gold buckle, suggesting green paper money shackled to the gold standard. To get to her room in the Emerald Palace, Dorothy had to go through 7 passages and up 3 flights of stairs, an allusion to the "Crime of '73," the congressional Act that changed the money system from bimetallism (paper notes backed by both gold and silver) to an exclusive gold standard. The Crime of '73 proved to all Populists that Congress and the bankers were in collusion.15

Dorothy and her troop presented their requests to the Wizard, who demanded that they first vanquish the Wicked Witch of the West, representing the McKinley/Rockefeller faction in Ohio (then considered a Western state). The financial powers of the day were the Morgan/Wall Street/Cleveland faction in the East (the Wicked Witch of the East) and this Rockefeller-backed contingent from Ohio, the state of McKinley, Hanna, and Rockefeller's Standard Oil cartel. Hanna was an industrialist who was a high school friend of John D. Rockefeller and had the financial backing of the oil giant.16

Dorothy and her friends learned that the Witch of the West had enslaved the Yellow Winkies and the Winged Monkeys (an allusion to the Chinese immigrants working on the Union-Pacific railroad, the native Americans banished from the northern woods, and the Filipinos denied independence by McKinley). Dorothy destroyed the Witch by melting her with a bucket of water, suggesting the rain that would reverse the drought, and the financial liquidity that the Populist solution would bring to the land. As one nineteenth century commentator put it, "Money and debt are as opposite in nature as fire and water; money extinguishes debt as water extinguishes fire."17

When Dorothy and her troop got lost in the forest, she was told to call the Winged Monkeys by using a Golden Cap she had found in the Witch's cupboard. When the Winged Monkeys came, their leader explained that they were once a free and happy people; but they were now "three times the slaves of the owner of the Golden Cap, whosoever he may be" (the bankers and their gold standard). When the Golden Cap fell into the hands of the Wicked Witch of the West, the Witch had made them enslave the Winkies and drive Oz himself from the Land of the West.

Dorothy used the power of the Cap to have her band of pilgrims flown to the Emerald City, where they discovered that the "Wizard" was only a smoke and mirrors illusion operated by a little man behind a curtain. A dispossessed Nebraska man himself, he admitted to being a "humbug" without real power. "One of my greatest fears was the Witches," he said, "for while I had no magical powers at all I soon found out that the Witches were really able to do wonderful things."

If the Wizard and his puppet were Marcus Hanna and William McKinley, who were the Witches they feared? Behind the Wall Street bankers were powerful British financiers, who funded the Confederates in the Civil War and had been trying to divide and conquer America economically for over a century. Patriotic Americans had regarded the British as the enemy ever since the American Revolution. McKinley was a protectionist who favored high tariffs to keep these marauding British free-traders out. When he was assassinated in 1901, no conspiracy was proved; but some suspicious commentators saw the invisible hand of British high finance at work.18

The Wizard lacked magical powers but was a very good psychologist, who showed the petitioners that they had the power to solve their own problems and manifest their own dreams. The Scarecrow just needed a paper diploma to realize he had a brain. For the Tin Woodman, it was a silk heart; for the Lion, an elixir for courage. The Wizard offered to take Dorothy back to Kansas in his hot air balloon, but the balloon took off before she could get on board. Dorothy and her friends then set out to find Glinda the Good Witch of the South, who they were told could help Dorothy find her way home.

On the way they faced various challenges, including a great spider that ate everything in its path and kept everyone unsafe as long as it was alive. The Lion (the Populist leader Bryan) welcomed this chance to test his new-found courage and prove he was indeed the King of Beasts. He decapitated the mighty spider with his paw, just as Bryan would have toppled the banking cartel if he had won the Presidency.

The group finally reached Glinda, who revealed that Dorothy too had the magic tokens she needed all along: the Silver Shoes on her feet would take her home. But first, said Glinda, Dorothy must give up the Golden Cap (the bankers' restrictive gold standard that had enslaved the people).

The moral also worked for the nation itself. The economy was deep in depression, but the country's farmlands were still fertile and its factories were ready to roll. Its entranced people merely lacked the paper tokens called "money" that would facilitate production and trade. The people had been deluded into a belief in scarcity by defining their wealth in terms of a scarce commodity, gold. The country's true wealth consisted of its goods and services, its resources and the creativity of its people. Like the Tin Woodman in need of oil, all it needed was a monetary medium that would allow this wealth to flow freely, circulating from the government to the people and back again, without being perpetually drained into the private coffers of the bankers.

Sequel to Oz

The Populists did not achieve their goals, but they did prove that a third party could influence national politics and generate legislation. Although Bryan the Lion failed to stop the bankers, Dorothy's prototype Jacob Coxey was still on the march. In a plot twist that would be considered contrived if it were fiction, he reappeared on the scene in the 1930s to run against Franklin D. Roosevelt for President, at a time when the "money question" had again become a burning issue. In one five-year period, over 2,000 schemes for monetary reform were advanced. Needless to say, Coxey lost the election; but he claimed that his Greenback proposal was the model for the "New Deal," Roosevelt's plan for putting the unemployed to work on government projects to pull the country out of the Depression. The difference was that Coxey's plan would have been funded with debt-free currency issued by the government, on Lincoln's Greenback model. Roosevelt funded the New Deal with borrowed money, indebting the country to a banking cartel that was surreptitiously creating the money out of thin air, just as the government itself would have been doing under Coxey's plan without accruing a crippling debt to the banks.

After World War II, the money question faded into obscurity. Today, writes British economist Michael Rowbotham, "The surest way to ruin a promising career in economics, whether professional or academic, is to venture into the 'cranks and crackpots' world of suggestions for reform of the financial system."19 Yet the claims of these cranks and crackpots have consistently proven to be correct. The U.S. debt burden has mushroomed out of control, until just the interest on the federal debt now threatens to be a greater tax burden than the taxpayers can afford. The gold standard precipitated the problem, but unbuckling the dollar from gold did not solve it. Rather, it caused worse financial ills. Expanding the money supply with increasing amounts of "easy" bank credit just put increasing amounts of money in the bankers' pockets, while consumers sank further into debt. The problem proved to be something more fundamental: it was in who extended the nation's credit. As long as the money supply was created as a debt owed back to private banks with interest, the nation's wealth would continue to be drained off into private vaults, leaving scarcity in its wake.

Today's monetary allegory goes something like this: the dollar is a national resource that belongs to the people. It was an original invention of the early American colonists, a new form of paper currency backed by the "full faith and credit" of the people. But a private banking cartel has taken over its issuance, turning debt into money and demanding that it be paid back with interest. Taxes and a crushing federal debt have been imposed by a financial ruling class that keeps the people entranced and enslaved. In the happy storybook ending to the tale, the power to create money is returned to the people, and abundance returns to the land. But before we get there, the Yellow Brick Road takes us through the twists and turns of history and the writings and insights of a wealth of key players. We're off to see the Wizard . . . .