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Friday, August 29, 2014

4 Calamities Destroying America's Economy Being Ignored by Elites


Calamities Destroying America's Economy Being Ignored by Elites

Our leaders are blind to these drivers of economic decline.

August 27, 2014 

The world’s current economic and political structures are proving incapable of fixing the global crisis of poverty, unemployment, and dislocation from a viable way of life for the majority of the world’s population. Why? Let us begin with one present-day example: Larry Summers, former Secretary of the Treasury and also former chair of the Board of Economic Advisors, recently was the principal guest of the national radio broadcast “On Point.” The topic of the hour-long dialogue was growing “inequality.”
Summers posited that we are in an oddly slow recovery. He gave some reasons for the slowness but maintained that the measures instigated by the government (the Federal Reserve pumping funds into the economy, and the like) were fundamentally correct, and that with patience and persistence the recovery would solve the problems we have.
This basically is the position of Obama and importantly, by no means only his. Every government in every country subscribes essentially to this same apostolic faith.  That faith is pathetic and even grotesquely mistaken. It ignores the four “Tsunami” causes for the globally increasing inequality:
1. Automation: The number of jobs that have been automated out of existence in the last 30 years is astronomical. Any effort to enumerate them would be silly. Useful, on the contrary, are perhaps a few hints of the kinds of automation that are still in the future, but nonetheless just around the corner. Observe what is happening in retail –  Amazon.com, and more generally in the service sector, in banks and offices; but beyond that consider the near future of robotics, and close to that the potential of self-driving cars, and of course the galloping field of fabricators. Automation so far has only been the first breeze of an approaching hurricane.
2. A second colossal cause is globalization. Despite the nonstop discussion of that topic its basic significance is still largely misunderstood. That factory work is outsourced to lower wage countries is a belittling phrase; more accurate is the contrast between the former monopoly of a very few colonial powers and the now prevailing condition where all countries everywhere — even the Central African Republic and Borneo and Mongolia — are indevelopment.  In other words, in all countries people are looking for jobs. Thus the supply of labor has burst through all bounds! This in turn means that the value of unskilled work has plummeted beyond human sustainability much less economic growth. 
3.  Environmental degradation is growing. The depletion of natural resources is directly caused by fruitless efforts to stem unemployment.  Unemployment threatens to grow continuously and the only response we have so far marshaled is economic growth, which self-evidently is coupled to the depletion of our resources.
4. The fourth mega-force that escalates inequality everywhere is the industrialization of farming. Throughout the millennia of the Agricultural epoch approximately 75% of the population lived and worked on farms. That percentage only started to gallop away from this ratio when farming became mechanized. However, in the brief period of less than 200 years a breathtaking transformation has taken place. Worldwide 70% of farmers have been driven from their work and their land.  In country after country the percentage of people still working and living on farms has thundered downwards so that it is now in some countries only about 4%. On some continents that human migration is still in its headlong tilt: but as villages die, the former farmers do not find work; they are absorbed in slums and sink down in the morass of extreme poverty, violence, crime, prostitution and drugs.
The really foul and grotesque dimension of this lies in its cognitive segregation, for the worldwide migration away from the farms is hardly mentioned when the deficit of jobs and the rise of inequality are discussed. In sheer numbers, this is obviously the most gargantuan cause.
It is stunning that there are whole shelves of books about the job-problem, but the reality of the loss of working on farms has rarely been included in the workforce calculations. In essence it means that 75% of the total working population have been cut off from their work and that the need to find re-employment for that huge number is part of the monster-problem that we are failing to even identify let alone solve.
If one adds these four Tsunamis together —automation, globalization, destruction of natural resources and the industrialization of farming — then it becomes obvious that the remedies now applied — stimulation of the economy, raising the minimum wage, more education and the rest — are laughably inadequate. It also becomes evident that we are emphatically not in a recovery, somnambulant or otherwise.
None of these causes are “circular,” or as it is sometimes expressed cyclical, which recoveries by definition are. All four are linear: automation, globalization, destruction of the environment and the migration away from the land will grow, far beyond where they are now, and will multiply. The inequality will become even more monstrous and more dangerous than it is now. The contrast between slums and the palaces of the superrich is already surreal and fantastic, but it will grow further and beyond our worst imaginings. The faith that we are in a circular turning wheel situation, and that automatically, obedient to the laws of economics, we move towards equilibrium, is totally unfounded.  It is just a misguided medieval superstition.
We are not turning in a circle; on the contrary we are undergoing a gigantic linear transformation that is as all changing as the shift from agriculture to industrialization.
*   *  *
Why is this a gigantic linear transformation? Because there is no circling back to a former “better” time.  The mega-factors listed have produced an enormous rift or a bifurcation. It is a split between the 20%, Oasis people (the rich) and the 80%, Desert people (the poor.)  Other groups have of course a greater liking for describing the division as between 1% and 99% but that seems too exaggerated.
New Work New Culture is a new way of looking at and actualizing how people can live in peace and prosperity, working together to provide what is needed not just for survival but for joyous fulfillment.  People of good will must stop looking back, yearning for the good old days. 
New Work New Culture gives us a roadmap to take on the task to articulate a ladder that defines a practical, performable sequence of steps in detail that is realistic and manageable. By doing so we will not just alleviate the four Tsunami Calamities but give life to a rise, an ascent that has become possible with the technology that we now have.
 (Frithjof Bergmann is a retired Professor of Philosophy from the University of Michigan.  He has been writing, teaching and organizing for the ideas of New Work for more than 3 decades.  He has authored many works, including On Being Free (1977).  He is a principal organizer of the New Work New Culture conference in Detroit, Michigan from October 18-20. #NWNC2014)

Friday, August 22, 2014

The Rebel Economist’s Notebook (Installments 1 and 2)

The Rebel Economist’s Notebook

Installment One: Organizing Insurrection
“Economics students are in rebellion.”

In May of this year, you could find a version of that headline splashed across the pages of newspapers and other publications in over 18 countries across the globe. That month, a global network of econ students calling ourselves the International Student Initiative for Pluralism in Economics (ISIPE) released our open letter calling for an overhaul of economics education and research. Overall, it was a very diplomatic call for change — demanding a simple widening of the range of schools of thought, methodology and interdisciplinary options offered in the standard econ curriculum. But the headlines read “rebellion!” Why?

Some students might shy away from the rebel label, but given what we’re up against, it’s a fitting one. The world of mainstream economics is a monolithic empire of thought if ever there was one. Any whisper of dissent against its fundamental tenets is bound to incur a crackdown from the thought police, who invariably brand us as misguided, and seek to tame our revolutionary fury with mild reforms.

To be a rebel in such a world is a badge of intellectual valor. It’s a mark of allegiance to free-inquiry. It’s a label we need to embrace and encourage others to embrace. But as economics students from Harvard to Sydney have found out, against the power of empire, rebellions can easily fizzle out.

So how do we build the power and resilience needed to challenge the orthodoxy, dislodge its high priests, topple their ivory towers, and bring reality back into the economics classroom? Speaking out in class is a start. Putting up provocative posters is a start. Issuing manifestos is another step forward. But to overcome the power of the thought police we have to get organized. Individual actions may help stir the waters of rebellion, but to transform our discontent into a relentless, transformative tide requires long-term strategic thinking and collaboration.

Thankfully, for the would be revolutionaries among us, there are some strategic precedents and organizing models to draw upon.

ISIPE provides a great case in point. Where past flare-ups of student discontent were relatively isolated, and insular, ISIPE now provides rebel economists with aglobal support network to share ideas, best practices, inspirational stories and other resources to keep our insurrections going and growing. Moreover, within the ISIPE community there are dozens of national-level student networks whose experiences can yield lessons for those of us working to launch national networks of our own, as in the United States.

If you’re a budding rebel economist, hopefully you’re wondering: How do I build a student group, get it active on my campus and get connected to the growing global movement? As another school year approaches, this blog series will explore exactly those questions in several more installments over the coming weeks. Drawing on the experiences of ISIPE, national networks, and other campus organizing models, I hope to shed some light on everything from how to recruit your classmates, to how to plan a campaign and keep your rebellion rolling for the long haul. Tune back in for tips on how to turn on the heat needed to beat the thought police and transform our the economic student rebellion into a full on revolution.
eith Harrington

The Rebel Economist’s Notebook

Installment Two: Strength in Numbers

Imagine yourself in an introductory macroeconomics class.

The topic is economic growth — mainstream macro’s holiest of holies — and your professor is singing its praises. In the midst of his psalm, you raise your hand and ask a very reasonable question about the feasibility of endless growth on a finite planet. In return for this blasphemy, he shuts you down with a diatribe on efficiency, substitutability and the environmental Kuznets curve. You’re unsure how to respond, other students nod and take notes or derisively smirk at you, and the lecture moves on.
This is the indoctrination process at work. The process of molding your mind to the mainstream dogma, getting you to toe the line, narrow your thinking, swallow your questions. To be an effective rebel economist — to subvert the dead-end status quo and revolutionize economics education—means learning how to resist this process. And as I discussed in the introductory installment of this blog series, a successful resistance begins with organization.

Getting organized means, first and foremost, building a moral and intellectual support network among your classmates. From the above illustration, it’s easy to see why this needs to be done. Being a rebel economist is hard to tackle alone. For starters, it involves challenging your professors — the putative experts, the very people who grade your work and hold your career prospects in their hands. Without a support network, you can quickly find yourself isolated and alienated as a disruptive contrarian with a head full of half-baked notions. That shouldn’t stop you from speaking truth to power, but to be an effective agent of change, you need to ensure you’re not the only student who keeps raising her hand to challenge the dogma.

There is no single blueprint for building solidarity among your classmates. If you’re aware of other potential rebel economists in your midst, then the first step could be as simple as inviting them to a meeting to share experiences and frustrations with the curriculum, and to talk a little treason. Such meetings can also double as extracurricular opportunities to hone your chops in pluralist economic thought through the sharing and discussion of pluralist readings, or through critical analysis of the orthodoxy and its flaws. As those within the International Student Initiative for Pluralism in Economics (ISIPE) community have learned, student-led reading groups are not only a useful way to supplement curricular deficiencies, but also help build the intellectual arsenal you’ll need to take on the thought police.

If you find yourself in a staunchly mainstream department, you may need to get more creative to draw your rebel comrades out of hiding. The trick here is to open their eyes to pluralist alternatives, and instill a sense of outrage at the extreme narrowness of your curriculum. For instance, you might organize a “rethinking economics” or pluralist teach-in wherein guest speakers from inside or outside the department give workshops on subjects not included in the mainstream curriculum, such as ecological, Marxian or feminist economics. Or you could go big, and expand the teach-in into a multi-day seminar or conference. Make it exciting, but don’t take it for granted that your classmates will show up. Put up posters, pass around sign up sheets, chalk the sidewalk — whatever it takes to pack the room and swell the ranks of your potential recruits.

But no matter what you do to grab your fellow students’ attention, once you have it, make sure you’re ready to redirect it towards a compelling plan of action. A successful insurrection requires more than a compelling vision of change; it needs a practical plan to achieve it. Unfortunately, it’s all too easy, and especially in the world of academia, to get bogged down in the world of deliberation — spinning your wheels with endless discussions and seminars — and never gain traction in the world of action. To help you avoid that, in my next notebook entry, I’ll turn to the crucial question of planning with a brief overview of goal-setting and campaign-strategizing tips for rebel economists. Watch this space.
Keith Harrington

The Dirty Little Secret of How CEOs Enrich Themselves at Your Expense


comments_image 66 COMMENTS

Stock buybacks take money from your pocket and put it into the hands of corporate titans. 

Photo Credit: Shutterstock.com
Everyone from Warren Buffett to Robert Reich is talking about a favorite Wall Street trick called stock buybacks. But what are they and what do they mean to you?
William Lazonick is a leading expert on the history of the American business corporation. A professor of economics at the University of Massachusetts Lowell, where he directs the Center for Industrial Competitiveness, he has long been watching a trend that has only recently been attracting media attention and forcing many to reassess the nasty form of capitalism that has been unleashed on us in recent decades.
In an email interview with Lazonick, I asked him about how the widespread and little-understood obsession with stock buybacks among American executives is driving inequality and pushing prosperity further away from everyone except those at the very top. (Lazonick's in-depth exploration of this topic is available in thecurrent issue of theHarvard Business Review.)
His answers are a clarion call for changing the way America does business.
Lynn Parramore: You’ve been studying stock buybacks over the last 30 years. What exactly are they and why are you so interested in them?
William Lazonick: Let me start by answering the second part of your question first (in part because if I had just been studying stock buybacks over the past 30 years, I would be bored out of my mind by now).
In the mid-1980s, I was at Harvard Business School (HBS), working with the Business History Group led by the preeminent business historian Alfred D. Chandler, Jr.  Previously I had spent 14 years as a graduate student and faculty member in the Harvard Economics Department where the main focus of my work was, as it remains, the role of business enterprise in the development of the economy. In working closely with Chandler, who in 1977 had published his pathbreaking book The Visible Hand: The Managerial Revolution in American Business, I learned five crucial lessons about my subject.
1) From the last decades of the 19th century, the growth of major business corporations drove the development of the U.S. economy.
2) Professional salaried managers controlled resource allocation in these business corporations, and hence their decisions determined the direction and intensity of corporate investment strategies. 
3) The key investments that these executives made were in organizational structures made up of employees who had the abilities and incentives to engage in collective and cumulative learning.
4) The financial foundation for making these long-lived investments in organizational capabilities was after-tax earnings retained out of profits.
5) Public shareholders who received a portion of after-tax profits in the form of dividends were rentiers who had nothing to do with the investment strategies and organizational structures that would determine the success, or possibly the failure, of these companies.
By the mid-1980s, I was already a longstanding critic of the conventional theory that argues the "invisible hand” of markets will allocate resources to their most efficient uses in the economy. Rather, in line with Chandler’s notion of the "visible hand,” employment opportunities and standards of living depend on the resource-allocation decisions of executives who run large business corporations.
Based on 2007 data (the most recently collected), 1,925 companies in the United States that employed 5,000 or more people represented just 32-thousandths of one percent of all companies, but had 33 percent of all business employees, 37 percent of all business payrolls, and 43 percent of all business revenues. How the executives in control of these very large corporations allocate resources has a profound impact on how the economy performs.
In 1991, based largely on papers I presented at the HBS Business History Seminar over a six-year period, I published a book, Business Organization and the Myth of the Market Economy, in which I drew out the implications of the Chandlerian perspective (informed also by economists such as Marx, Marshall, Schumpeter, and Penrose) for a theory of how managerial capitalism can support stable and equitable economic growth.
Meanwhile, at HBS in the last half of the 1980s, I witnessed first-hand how free-market ideology became dominant in the teaching of MBAs. Legitimized by a new ideology that for the sake of economic efficiency corporations should be run to “maximize shareholder value” (MSV), a breed of Chicago-trained economists known as agency theorists argued that U.S. corporations should disgorge their cash flow to shareholders, not only in the traditional form of dividends, which reward shareholders for continuing to hold their stock, but also in the form of stock buybacks, which, by manipulating the company’s stock price, reward “shareholders” for selling their stock. Agency theorists argued that incumbent managers could be induced to disgorge corporate cash to shareholders either by the stick of a hostile takeover or the carrot of stock-based executive compensation.
I was one of the first academic critics of MSV. It is an ideology that argues for the allocation of corporate cash to those economic actors, public shareholders, who matter least to economic performance. I realized that MSV was not actually an ideology of public shareholders, either as individuals or institutional investors (for example, pension funds). Rather it quite quickly became an ideology of top corporate executives. If, as has certainly been the case since the 1980s, the companies that they control face new competitive challenges, they can just lay off thousands of long-serving employees, use corporate cash to manipulate their companies’ stock prices through stock buybacks, and join the top 0.1% of the richest households with their ample stock-based pay. It is a corporate allocation regime I call “downsize-and-distribute.” 
That, in a nutshell, is what my article in the current issue of Harvard Business Review is all about.
What exactly are stock buybacks? As I explain in the HBR article, some stock buybacks, done as tender offers, can actually reinforce the control over resource allocation of executives who want to “retain-and-reinvest.” They retain corporate earnings, and reinvest in the productive capabilities of the companies that they control. Warren Buffett used tender offers in this way in the 1980s to take complete control of the insurance company Geico, which has been a key business for financing the growth of Buffett’s conglomerate Berkshire Hathaway (of which Geico became a wholly owned subsidiary in 1996). “Retain-and-reinvest” is what enabled large numbers of Americans (especially white males) who had secure career employment with corporations in the post-World War II decades to enjoy higher standards of living.
But that era of relatively stable and equitable economic growth is now gone, and the trillions of dollars that corporations have spent over the last three decades on open-market repurchases, which constitute at least 90 percent of stock buybacks, reflect the dominance of a “downsize-and-distribute” corporate allocation regime that is largely responsible for the concentration of income at the top and the disappearance of middle-class employment opportunities. Open-market repurchases have one, and only one, purpose: to manipulate a company’s stock price. And, with ample stock-based pay through which they can realize gains from a volatile stock market, prime beneficiaries of this mode of corporate resource allocation are the top executives who make the decisions to do buybacks, often on the scale of hundreds of millions of dollars per day when it suits their purpose to give their company’s stock price a manipulative boost.
LP: How do stock buybacks enrich CEOs at the expense of workers?
WL: On its Executive Paywatch website, the AFL-CIO charts the average pay of CEOs of major U.S. corporations to the average American worker, and for recent years has come up with a ratio of about 350:1. Actually, if executive pay is measured properly, the ratio is around 900:1. Even at 100:1, however, it would be way out of whack in cross-national and historical comparison. But a focus on the CEO:worker pay ratio misses the point. It is not the amount of pay CEOs rake in that causes untold harm to workers. It is how they get that high pay that is the major problem.
Let’s say (hypothetically) that by doing a billion dollars in open-market repurchases over several days, a CEO can boost his or her stock-based pay by $50,000 annually. It’s the billion dollars of buybacks that cost workers pay increases, career opportunities, and maybe even their jobs. The extra $50,000 in stock-based pay to the CEO is just an outcome, and redistributing some of that income to workers after the fact of corporate resource allocation will not restore the career employment opportunities that they have lost.
In my research, I provide lots of examples of ways in which a downsize-and-distribute corporate resource allocation regime characterized by massive stock buybacks hurts most Americans not just as workers but also as taxpayers. As a case in point, it is well known that in the United States, the price of pharmaceutical drugs is at least twice as high as anywhere else in the world. From time to time, this discrepancy has become an issue in Congress, with the drug companies responding that the profits from the higher drug prices enable them to do more drug R&D in the United States. Yet, even after paying dividends, it is not unusual for a major drug company to spend 50-100% of its profits on buybacks. To make matters worse, through the National Institutes of Health, American taxpayers provide critical R&D inputs to drug companies to the tune of $30 billion per annum. In effect, as both consumers and taxpayers, ordinary working households pay high drug prices so that corporate executives can do massive buybacks that serve to pump up their own pay.
LP: Take the case of a company like Apple. How do its stock buybacks impact ordinary Americans?
WL: In its history as a publicly listed company going back to 1980, Apple did a lot of buybacks from 1986 through 1993, and then got into major financial difficulty. When Steve Jobs returned to the company in 1997, he eschewed buybacks and dividends, and the rest is history. Since April 2013, under CEO Tim Cook, Apple has put in place two buyback programs totaling $90 billion, and through June 2014, in just over a year, the company has repurchased $51 billion. Nevertheless, Apple remains a highly profitable company, with $164 billion in cash and securities at the end of June 2014. So why not “return” some of these billions to public shareholders? Here’s why not:
Except for $97 million that Apple raised in its IPO in 1980, public shareholders have never invested in the company. So why should the company “return” money to non-investors? Apple’s investors have been taxpayers through government expenditure on science and technology and workers through their involvement in organizational learning. The public pressure on Apple to disgorge its cash to shareholders has come from corporate predators (aka hedge fund activists) such as David Einhorn and Carl Icahn who have taken big stakes in Apple’s shares, but have never made any contributions whatsoever to Apple’s competitive success. They are value extractors, not value creators. The gains they can extract as Apple does massive buybacks to manipulate the price of its shares will flow into a financial system in which those funds will be mobilized to extract even more value from Apple and other companies in which the financiers played no roles in productive investment.
From this perspective, Apple is part of a productive economy that in large part through stock buybacks has permitted the growth of a financial economy that, as we saw in the Great Financial Crisis, systemically reaps where it has not sown. And whatever Apple’s past and current success in selling its innovative products, its CEO and board are supporting the further financialization of the U.S. economy. 
In the 1980s when a corporate raider such as Icahn went after a company’s assets, it was called a hostile takeover. We don’t hear the word “hostile” that much anymore because a CEO such as Apple’s Tim Cook, with $209 million from the vesting of stock awards in 2012-2013 alone, is not at all hostile to the wolves of Wall Street. They have joined together in the financialized feeding frenzy.
So that’s one big problem exemplified by Apple. Corporate executives have become self-centered and greedy – some have called them sociopathic – with apparently no interest in or understanding of the roles of taxpayers and workers in making their successful companies possible. Drunk on the ideology of MSV, they fail to see the relation between economy and society, and the central role of the business corporation in shaping that relation. I am doubtful whether such financialized corporate executives can have much of a vision about the innovative future of the companies that they head, let alone a vision of the path to sustainable prosperity of the society in which they are privileged and powerful participants.
As for all of the ways that Apple as a business enterprise could use its cash hoard rather than fuel the financialized economy with buybacks, let’s save that for another interview.
LP: You mention that stock buybacks took off with deregulation in the 1980s, particularly the SEC’s adoption of Rule 10b-18. How do we put this genie back in the bottle?
WL: As shown in research that I have done with Ken Jacobson, in 1981, with President Reagan’s appointment of Wall Street banker John Shad to head the SEC, this government agency was transformed from a regulator to promoter of the stock market. Shad, like the Chicago economists who influenced his thinking, really believed that a more unregulated stock market would be a more “efficient” stock market, mobilizing that nation’s savings for corporate capital formation.
Today, the SEC remains captive to this erroneous view of the world. A fundamental role of the stock market for business enterprises in the United States has been to permit private-equity investors to exit their investments in companies, not to bring in fresh capital to finance new investments in productive capabilities. SEC Rule 10b-18, passed under the radar in November 1982, encouraged companies to do large-scale buybacks to support their stock prices, and effectively legalized stock-price manipulation. As a result of buybacks, over the past decade net equity issues of U.S. stock markets have averaged minus $376 billion per year. Companies fund the stock markets; the stock markets do not fund companies.
How do we get the SEC to actually regulate manipulation and fraud, as is its mandate? I suggest that we start with a massive re-education of the economics profession on the relation between business organizations and stock markets in a successful economy. The intellectual and ideological issues involved go far beyond the particular use of stock buybacks as tools of value extraction.
LP: If we can’t curb buybacks, where are we headed?
WL: The current commitment of corporate executives to MSV, and their liberal use of buybacks to achieve that objective, can only serve to reinforce the orientation of U.S. business to “downsize-and-distribute.” The concentration of income among the 0.1% of richest households, among whom top corporate executives are by far the most numerous single group, will increase, while the 30-year-old erosion of U.S. middle-class employment opportunities will escalate as “retain-and-reinvest” companies in other parts of the world out-innovate their U.S competitors.
It is not that difficult to see where the United States is headed once we understand how, over the past three decades, we have gotten to where we are. More employment instability, more income inequity, and a gradual but perceptible decline in innovative capability. Sorry for the pessimism. I am by nature an optimist!
Lynn Parramore is an AlterNet senior editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of "Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture." She received her Ph.D. in English and cultural theory from NYU. She is the director of AlterNet's New Economic Dialogue Project. Follow her on Twitter @LynnParramore.

Wednesday, August 20, 2014

Has America Become the Zip Code From Hell?



Hard times have found a new neighborhood. 

Photo Credit: kasyanovart / Shutterstock.com

For most of the 20th century, suburbia was the great imaginative engine driving the American Dream. A home in the ‘burbs was the place you could sit back in safety and security and watch the great capitalist parade roll by.
The urban world might be a realm of dirt, deviance, violence, and dense populations that could be vaporized by a Soviet nuclear missile, but the ‘burbs were a respite of order, regularity, health, and abundance; a Shangri-la of single-family dwellings where life’s twin demons of fear and uncertainty could gain no foothold.
Somehow, while everybody was grilling hotdogs, the demons slipped in. Then they kicked back and made themselves at home.  
Birth of a Suburban Nation
In the last half of the 19th century, ancient patterns of living got a violent shake-up. The walkable town receded into memory. Cities exploded in population, connected by railroads, dotted with skyscrapers — and plagued by slums. The bourgeois elite fled the harsh conditions of the new urban centers where their families felt threatened, and they sought refuge behind hedges both physical and mental.
We became a truly suburban nation in the postwar period. During the '50s, sitcoms like Leave It To Beaver offered models of ideal suburban mores from the new hearth of the American home, the television (Levittown, the original planned suburban community launched in 1947, provided pre-fab homes with a TV already installed). Life was but a white-bread-dipped-in-mayonnaise dream of sterilized sanctuary.
By the 1990s, half of all Americans called suburbia their home. The Eternal Sunshine of the Spotless Lawn was achieved. Or was it?
Certain counter-narratives challenged what lay behind the sleek façade and peered into the dark corners of split-level houses where dreams could become nightmares.  Storytellers dedicated an entire genre to suburban woes: trapped women who drowned their anxiety in Valium cocktails; bored, depressed teenagers getting smashed in the strip mall parking lot; seething racism; spiraling addiction; lethargic lives that made us fat — these streaks of ugliness marred the carefully composed picture of tree-lined streets and neat ranch ramblers.
Filmmakers and novelists probed the pain produced by those saccharine sitcom scripts, telling of broken families (The Ice Storm); sexual repression (Revolutionary Road, Pleasantville); career discontent (The Man in the Gray Flannel Suit); sexism and over-consumption (The Stepford Wives); moral hypocrisy (Peyton Place); depression (American Beauty), and some unfathomable monstrous horror that rises up to annihilate hypocritical homeowners and their spoiled children (Nightmare on Elm Street).
Many noticed that suburbia’s close connection to the American pursuit of status and material wealth had made it a locale for dreams unfulfilled.
Struggle in Paradise
Poverty always lurked in the suburban shadows, but until recently it was not spoken of in polite company. Now the struggle is impossible to ignore.
Over the last couple of decades, the ‘burbs have ceased to be the haven of upper-middle-class Americans. Immigrants have poured in, chasing construction jobs and domestic work. Families priced out of gentrified cities like San Francisco have flocked to the suburbs for cheaper housing. Once-prosperous residents who never thought they would know bankruptcy are caught in a strangling web of debt obligations. Unable to find once-plentiful manufacturing jobs, more and more suburban residents are relegated to crappy service work that strain budgets and obliterates living standards.
According to a new report by the Brookings Institution, there are now 16.5 million souls in suburban America eking out an existence below the poverty line, compared to only 13.5 million in cities. Poverty is becoming more concentrated, creating a new blot on the landscape, the suburban slum. The number of poor people living in the suburbs has skyrocketed by 65 percent in the past 14 years—growing twice as fast as urban areas.
The familiarity of the suburbs has turned unheimlich, to use Freud’s term for the uncanny, that queasy feeling you get when you notice that things are not in their proper place. Something that was supposed to be foreign — material want — has taken up residence. You can see it creeping slowly into the tangle of untended yards. Popping up in for-sale and foreclosure signs. Spreading in the scum that floats on neglected swimming pools. Weighing upon the slumped shoulders of the down-and-out who trudge along roads where once only sleek automobiles glided.
Crime stats show that in cities, homicides are down, but in the suburbs, killings are on the rise. From domestic violence and robberies gone bad to freak-out massacres and school shootings, suburbanites are finding themselves living in the midst of an ongoing murder-spree. In Atlanta, the violent-crime rate in the suburbs rose 23 percent between 2000 and 2008.
The downward plunge into mayhem is happening rapidly in metropolitan areas across the country, from Colorado Springs to Charlotte, N.C. Suburb-dwellers hit by the Great Recession, saddled by debt, socked by the housing bubble and the mortgage crisis, crushed by joblessness and underemployment are falling into an abyss of want, unable to get out.
Poverty is the new next-door neighbor, inching closer every day.
The shocking surge in suburban poverty has finally started to grab the attention of the media. What demographers, cultural historians, and social service advocates have known for some time is now national news. Those dreams of a bigger house, better schools, more opportunities…poof! For increasing numbers, they are gone.
Unlike poor people living in urban centers, suburbanites find few social services to help them get by. They are stranded in cul-de-sacs, without things like food relief, and in many cases, without access to public transit. Even if there’s a food pantry in your suburb, how are you going to get to it without a car? And even if there’s mass transit, how sustainable is your life when the only decent job is 90 minutes away?
Meanwhile, the elites of suburbia have responded by creating enclaves within enclaves in the form of gated communities, ensconcing themselves in sprawling, aesthetically-disturbed McMansions with gaping garages and horrific carbon footprints.  The real estate industry has built entire theme park-style villages where the woes of suburbia are to be excluded.
Revolt of the Used-to-Haves?
It seems that while everybody was cruising along, convinced that prosperity lay beyond the next rounded corner, the cultural practices and political forces that helped shape suburbia after the second World War changed dramatically. The modern suburb, birthed in the crucible of the Cold War and the can-do populist spirit of the New Deal, has lost its way in a new era of unhinged capitalism.
What we’re learning is that the most idealistic Western planning is no match for unregulated capitalism — a force which, like a herd of wild horses, tramples us if we do not control it. Since the 1980s, the fever for deregulation, privatization, shareholder value ideology, union-crushing, and globalization has been remaking American society into a place in which no one but the rich can keep those demons of fear and uncertainty at bay. And even the 1 percent will be needing a safe-room.
Because of these rapid changes, suburbs have become the key battleground in American politics today. Research shows that Democrats have the upper-hand in majority-minority suburbs, but in poor non-minority and distressed middle-class ‘burbs, voters tend to be evenly split between the two parties. Obviously, voters need to see a real difference between the programs the Democrats and Republicans are offering.
You might think that Democrats would seize the moment to provide something tangible to struggling suburbanites, just as the New Dealers under FDR brought electricity and sanitation improvements to distressed rural areas and thus sealed support for a new economic compact. Unfortunately, many of today’s Dems have their sights trained mostly on the rich areas, so-called “Super Zips” like the affluent suburbs of northern Virginia. But as FiveThirtyEight’s David Wasserman points out, that’s not going to win them elections in 2014. For that, Dems need to attract less affluent suburbanites with a few ideas that might actually benefit residents. This is not hard to do if you simply think of what's good for the vast majority of Americans instead of only what's desirable for the greedy rich and the financiers.
For example, expanding Social Security and Medicare would appeal to white suburban seniors. Jobs programs, higher minimum wages, and investment in public schools would help woo younger suburbanites who are faced with hard times ahead. Yet as Bob Moser has observed, many Dems, particularly in the South, where suburban poverty is off the charts, still run as Republican Lites, yammering about deficit reduction and race-to-the-bottom sweetheart deals to attract corporations who will do little for local populations. They fail to embrace the kinds of populist messages that might enliven these struggling constituencies.
If American politicians have little to offer hard-pressed suburbanites, will the residents come out from behind picket fences and rebel? Could we have the makings of a real political movement? A Revolt of the Used-to-Haves?
Hard to say. When Occupy was front and center, suburbanites in areas like Chicago were seen to pitch in, and protests in places like Walnut Creek, a suburb of San Francisco, showed that residents found some sympathy with the movement. On the other hand, politicians like Illinois Rep. Ed Sullivan Jr. (R-Mundelein), who called the Occupy protesters "un-American" and stoked fear by insisting that demonstrators were "raping and pillaging and beating people up and murdering” demonstrated that there is plenty of jingoism and displaced anxiety in the ‘burbs to be exploited by unscrupulous pols. As long as the fear can be directed outside the hedgerows, suburban populations can be kept docile and resigned to the shittiness of their fate.
Suburban dreams have been a part of our collective identity as long as any of us have been alive. But those dreams must change with reality, and it’s increasingly clear that suburbia is going to become the zip code from hell unless those who live in them decide they want a different outcome.
16.5 million is not a small number. Suburbanites of America, unite!
Lynn Parramore is an AlterNet senior editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of "Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture." She received her Ph.D. in English and cultural theory from NYU. She is the director of AlterNet's New Economic Dialogue Project. Follow her on Twitter @LynnParramore.