Decline and fall: how American society unravelled

  • The Guardian, Wednesday 19 June 2013 12.47 EDT
Ruined home in Youngstown, Ohio

Youngstown, Ohio, was once a thriving steel centre. Now, the industry has all gone and the city is full of abandoned homes and businesses. Photograph: Brian Snyder/Reuters

In or around 1978, America’s character changed. For almost half a century, the United States had been a relatively egalitarian, secure, middle-class democracy, with structures in place that supported the aspirations of ordinary people. You might call it the period of the Roosevelt Republic. Wars, strikes, racial tensions and youth rebellion all roiled national life, but a basic deal among Americans still held, in belief if not always in fact: work hard, follow the rules, educate your children, and you will be rewarded, not just with a decent life and the prospect of a better one for your kids, but with recognition from society, a place at the table.

This unwritten contract came with a series of riders and clauses that left large numbers of Americans – black people and other minorities, women, gay people – out, or only halfway in. But the country had the tools to correct its own flaws, and it used them: healthy democratic institutions such as Congress, courts, churches, schools, news organisations, business-labour partnerships. The civil rights movement of the 1960s was a nonviolent mass uprising led by black southerners, but it drew essential support from all of these institutions, which recognised the moral and legal justice of its claims, or, at the very least, the need for social peace. The Roosevelt Republic had plenty of injustice, but it also had the power of self-correction.

Americans were no less greedy, ignorant, selfish and violent then than they are today, and no more generous, fair-minded and idealistic. But the institutions of American democracy, stronger than the excesses of individuals, were usually able to contain and channel them to more useful ends. Human nature does not change, but social structures can, and they did.

At the time, the late 1970s felt like shapeless, dreary, forgettable years. Jimmy Carter was in the White House, preaching austerity and public-spiritedness, and hardly anyone was listening. The hideous term “stagflation”, which combined the normally opposed economic phenomena of stagnation and inflation, perfectly captured the doldrums of that moment. It is only with the hindsight of a full generation that we can see how many things were beginning to shift across the American landscape, sending the country spinning into a new era.

In Youngstown, Ohio, the steel mills that had been the city’s foundation for a century closed, one after another, with breathtaking speed, taking 50,000 jobs from a small industrial river valley, leaving nothing to replace them. In Cupertino, California, the Apple Computer Company released the first popular personal computer, the Apple II. Across California, voters passed Proposition 13, launching a tax revolt that began the erosion of public funding for what had been the country’s best school system. In Washington, corporations organised themselves into a powerful lobby that spent millions of dollars to defeat the kind of labour and consumer bills they had once accepted as part of the social contract. Newt Gingrich came to Congress as a conservative Republican with the singular ambition to tear it down and build his own and his party’s power on the rubble. On Wall Street, Salomon Brothers pioneered a new financial product called mortgage-backed securities, and then became the first investment bank to go public.

A steelworker in Youngstown, Ohio

A steelworker in Youngstown, Ohio, in 1947. Under the old deal, his hard work was to be rewarded. Photograph: Willard R. Culver/National Geographic/Corbis The large currents of the past generation – deindustrialisation, the flattening of average wages, the financialisation of the economy, income inequality, the growth of information technology, the flood of money into Washington, the rise of the political right – all had their origins in the late 70s. The US became more entrepreneurial and less bureaucratic, more individualistic and less communitarian, more free and less equal, more tolerant and less fair. Banking and technology, concentrated on the coasts, turned into engines of wealth, replacing the world of stuff with the world of bits, but without creating broad prosperity, while the heartland hollowed out. The institutions that had been the foundation of middle-class democracy, from public schools and secure jobs to flourishing newspapers and functioning legislatures, were set on the course of a long decline. It as a period that I call the Unwinding.

In one view, the Unwinding is just a return to the normal state of American life. By this deterministic analysis, the US has always been a wide-open, free-wheeling country, with a high tolerance for big winners and big losers as the price of equal opportunity in a dynamic society. If the US brand of capitalism has rougher edges than that of other democracies, it is worth the trade-off for growth and mobility. There is nothing unusual about the six surviving heirs to the Walmart fortune possessing between them the same wealth as the bottom 42% of Americans – that’s the country’s default setting. Mark Zuckerberg and Bill Gates are the reincarnation of Henry Ford and Andrew Carnegie, Steven Cohen is another JP Morgan, Jay-Z is Jay Gatsby.

The rules and regulations of the Roosevelt Republic were aberrations brought on by accidents of history – depression, world war, the cold war – that induced Americans to surrender a degree of freedom in exchange for security. There would have been no Glass-Steagall Act, separating commercial from investment banking, without the bank failures of 1933; no great middle-class boom if the US economy had not been the only one left standing after the second world war; no bargain between business, labour and government without a shared sense of national interest in the face of foreign enemies; no social solidarity without the door to immigrants remaining closed through the middle of the century.

Once American pre-eminence was challenged by international competitors, and the economy hit rough seas in the 70s, and the sense of existential threat from abroad subsided, the deal was off. Globalisation, technology and immigration hurried the Unwinding along, as inexorable as winds and tides. It is sentimental at best, if not ahistorical, to imagine that the social contract could ever have survived – like wanting to hang on to a world of nuclear families and manual typewriters.

This deterministic view is undeniable but incomplete. What it leaves out of the picture is human choice. A fuller explanation of the Unwinding takes into account these large historical influences, but also the way they were exploited by US elites – the leaders of the institutions that have fallen into disrepair. America’s postwar responsibilities demanded co-operation between the two parties in Congress, and when the cold war waned, the co-operation was bound to diminish with it. But there was nothing historically determined about the poisonous atmosphere and demonising language that Gingrich and other conservative ideologues spread through US politics. These tactics served their narrow, short-term interests, and when the Gingrich revolution brought Republicans to power in Congress, the tactics were affirmed. Gingrich is now a has-been, but Washington today is as much his city as anyone’s.

It was impossible for Youngstown’s steel companies to withstand global competition and local disinvestment, but there was nothing inevitable about the aftermath – an unmanaged free-for-all in which unemployed workers were left to fend for themselves, while corporate raiders bought the idle hulks of the mills with debt in the form of junk bonds and stripped out the remaining value. It may have been inevitable that the constraints imposed on US banks by the Glass-Steagall Act of 1933 would start to slip off in the era of global finance. But it was a political choice on the part of Congress and President Bill Clinton to deregulate Wall Street so thoroughly that nothing stood between the big banks and the destruction of the economy.

Occupy Wall Street protester

One of the 99%: an Occupy Wall Street protester in Union Square, New York, in 2011. Photograph: Spencer Platt/Getty Images Much has been written about the effects of globalisation during the past generation. Much less has been said about the change in social norms that accompanied it. American elites took the vast transformation of the economy as a signal to rewrite the rules that used to govern their behaviour: a senator only resorting to the filibuster on rare occasions; a CEO limiting his salary to only 40 times what his average employees made instead of 800 times; a giant corporation paying its share of taxes instead of inventing creative ways to pay next to zero. There will always be isolated lawbreakers in high places; what destroys morale below is the systematic corner-cutting, the rule-bending, the self-dealing.

Earlier this year, Al Gore made $100m (£64m) in a single month by selling Current TV to al-Jazeera for $70m and cashing in his shares of Apple stock for $30m. Never mind that al-Jazeera is owned by the government of Qatar, whose oil exports and views of women and minorities make a mockery of the ideas that Gore propounds in a book or film every other year. Never mind that his Apple stock came with his position on the company’s board, a gift to a former presidential contender. Gore used to be a patrician politician whose career seemed inspired by the ideal of public service. Today – not unlike Tony Blair – he has traded on a life in politics to join the rarefied class of the global super-rich.

It is no wonder that more and more Americans believe the game is rigged. It is no wonder that they buy houses they cannot afford and then walk away from the mortgage when they can no longer pay. Once the social contract is shredded, once the deal is off, only suckers still play by the rules.

George Packer’s The Unwinding is published by Faber & Faber at £20

Atheist libertarians pose as skeptics — except when it comes to free markets and the nature of corporate power

The atheist libertarian lie: Ayn Rand, income inequality and the fantasy of the “free market”

The atheist libertarian lie: Ayn Rand, income inequality and the fantasy of the "free market"
Rand Paul, Ayn Rand, Richard Dawkins (Credit: AP/Timothy D. Easley/Reuters/Chris Keane)

Why atheists are disproportionately drawn to libertarianism is a question that many liberal atheists have trouble grasping.  To believe that markets operate and exist in a state of nature is, in itself, to believe in the supernatural. The very thing atheists have spent their lives fleeing from.

According to the American Values Survey, a mere 7 percent of Americans identify as “consistently libertarian.” Compared to the general population, libertarians are significantly more likely to be white (94 percent), young (62 percent under 50) and male (68 percent). You know, almost identical to the demographic makeup of atheists – white (95 percent), young (65 percent under 50) and male (67 percent). So there’s your first clue.

Your second clue is that atheist libertarians are skeptical of government authority in the same way they’re skeptical of religion. In their mind, the state and the pope are interchangeable, which partly explains the libertarian atheist’s guttural gag reflex to what they perceive as government interference with the natural order of things, especially “free markets.”

Robert Reich says that one of the most deceptive ideas embraced by the Ayn Rand-inspired libertarian movement is that the free market is natural, and exists outside and beyond government. In other words, the “free market” is a constructed supernatural myth.

There is much to cover here, but a jumping-off point is the fact that corporations are a government construct, and that fact alone refutes any case for economic libertarianism. Corporations, which are designed to protect shareholders insofar as mitigating risk beyond the amount of their investment, are created and maintained only via government action.  “Statutes, passed by the government, allow for the creation of corporations, and anyone wishing to form one must fill out the necessary government paperwork and utilize the apparatus of the state in numerous ways. Thus, the corporate entity is by definition a government-created obstruction to the free marketplace, so the entire concept should be appalling to libertarians,” says David Niose, an atheist and legal director of the American Humanist Association.

In the 18th century, Adam Smith, the granddaddy of American free-market capitalism, wrote his economic tome “The Wealth of Nations.” But his book has as much relevance to modern mega-corporation hyper-capitalism today as the Old Testament has to morality in the 21st century.

Reich says rules that define the playing field of today’s capitalism don’t exist in nature; they are human creations. Governments don’t “intrude” on free markets; governments organize and maintain them. Markets aren’t “free” of rules; the rules define them. “In reality, the ‘free market’ is a bunch of rules about 1) what can be owned and traded (the genome? slaves? nuclear materials? babies? votes?); 2) on what terms (equal access to the Internet? the right to organize unions? corporate monopolies? the length of patent protections?); 3) under what conditions (poisonous drugs? unsafe foods? deceptive Ponzi schemes? uninsured derivatives? dangerous workplaces?); 4) what’s private and what’s public (police? roads? clean air and clean water? healthcare? good schools? parks and playgrounds?); 5) how to pay for what (taxes, user fees, individual pricing?). And so on.”

Atheists are skeptics, but atheist libertarians evidently check their skepticism at the door when it comes to corporate power and the self-regulatory willingness of corporations to act in the interests of the common good. In the mind of an atheist libertarian, both religion and government is bad, but corporations are saintly. On what planet, where? Corporations exist for one purpose only: to derive maximum profit for their shareholders. “The corporation’s legally defined mandate is to pursue, relentlessly and without exception, its own self-interest, regardless of the often harmful consequences it might cause others,” writes Joel Bakan, author of “The Corporation: The Pathological Pursuit of Profit and Power.”

Corporations pollute, lie, steal, oppress, manipulate and deceive, all in the name of maximizing profit. Corporations have no interest for the common good. You really believe Big Tobacco wouldn’t sell cigarettes to 10-year-olds if government didn’t prohibit it? Do you really think Big Oil wouldn’t discharge more poisons and environmentally harmful waste into the atmosphere if government regulations didn’t restrict it? Do you really believe Wal-Mart wouldn’t pay its workers less than the current minimum wage if the federal government didn’t prohibit it? If you answered yes to any of the above, you may be an atheist libertarian in desperate need of Jesus.

That awkward pause that inevitably follows asking a libertarian how it is that unrestricted corporate power, particularly for Big Oil, helps solve our existential crisis, climate change, is always enjoyable. “Corporations will harm you, or even kill you, if it is profitable to do so and they can get away with it … recall the infamous case of the Ford Pinto, where in the 1970s the automaker did a cost-benefit analysis and decided not to remedy a defective gas tank design because doing so would be more expensive than simply allowing the inevitable deaths and injuries to occur and then paying the anticipated settlements,” warns Niose.

In the 1970s, consumer protection advocate Ralph Nader became famous for helping protect car owners from the unsafe practices of the auto industry. Corporate America, in turn, went out of its way in a coordinated effort, led by U.S. Supreme Court Justice Lewis Powell, to destroy Nader. The documentary “Unreasonable Man” demonstrates how corporate CEOs of America’s biggest corporations had Nader followed in an attempt to discredit and blackmail him. General Motors went so far as to send an attractive lady to his local supermarket in an effort to meet him, and seduce him. That’s how much corporate America was fearful of having to implement pesky and costly measures designed to protect the well-being of their customers.

Today America is facing its greatest moral crisis since the civil rights movement, and its greatest economic crisis since the Great Depression: income inequality. Now, income inequality doesn’t happen by accident. It happens by the political choices a country makes. Today America is the most income unequal among all developed nations, and we find ourselves here today not because of government regulation or interference, but a lack thereof. The past three decades have seen our political class become totally beholden to the armies of corporate lobbyists who fund the political campaigns of our elected officials. Today the bottom 99 percent of income earners has no influence on domestic policy whatsoever.

The unilateral control that Wall Street and mega-corporations have over economic policy is now extreme, and our corporate overlords have seen to the greatest transfer of wealth from the middle class to the rich in U.S. history, while corporations contribute their lowest share of total federal tax revenue ever. The destruction of labor; serf-level minimum wage; and the deregulation, monopolization and privatization of public assets have pushed us deeper into becoming a winner-takes-all society.

In effect, America virtually exists as a libertarian state, certainly when compared to liberal democracies found in Western Europe, Canada and Australia. In these countries, there’s a sense of “we are all in this together,” but here the romantic idealism of the rugged individual allows corporate influence of the political class to gut public safety nets, eradicate collective bargaining, strip regulatory control of our banks, water, skies and our food.

By every measure, Australians, Scandinavians, Canadians, Germans and the Dutch are happier and more economically secure. The U.N. World Development Fund, the U.N. World Happiness Index and the Social Progress Index contain the empirical evidence atheist libertarians  should seek, and the results are conclusive: People are happier, healthier and more socially mobile where the size of the state is bigger, and taxes and regulations on corporations are greater. You know, the opposite of the libertarian dream that would turn America into a deeper nightmare.

CJ Werleman is the author of “Crucifying America” and “God Hates You. Hate Him Back.” You can follow him on Twitter:  @cjwerleman

Sick of This Market-Driven World? You Should Be

These days, being a deviant from the prevailing wisdom is something to be proud of.

Photo Credit: Zhangyang13576997233/

To be at peace with a troubled world: this is not a reasonable aim. It can be achieved only through a disavowal of what surrounds you. To be at peace with yourself within a troubled world: that, by contrast, is an honourable aspiration. This column is for those who feel at odds with life. It calls on you not to be ashamed.

I was prompted to write it by a remarkable book, just published in English, by a Belgian professor of psychoanalysis, Paul Verhaeghe. What About Me? The Struggle for Identity in a Market-Based Society is one of those books that, by making connections between apparently distinct phenomena, permits sudden new insights into what is happening to us and why.

We are social animals, Verhaeghe argues, and our identities are shaped by the norms and values we absorb from other people. Every society defines and shapes its own normality – and its own abnormality – according to dominant narratives, and seeks either to make people comply or to exclude them if they don’t.

Today the dominant narrative is that of market fundamentalism, widely known in Europe as neoliberalism. The story it tells is that the market can resolve almost all social, economic and political problems. The less the state regulates and taxes us, the better off we will be. Public services should be privatised, public spending should be cut, and business should be freed from social control. In countries such as the UK and the US, this story has shaped our norms and values for around 35 years: since Thatcher and Reagan came to power. It is rapidly colonising the rest of the world.

Verhaeghe points out that neoliberalism draws on the ancient Greek idea that our ethics are innate (and governed by a state of nature it calls the market) and on the Christian idea that humankind is inherently selfish and acquisitive. Rather than seeking to suppress these characteristics, neoliberalism celebrates them: it claims that unrestricted competition, driven by self-interest, leads to innovation and economic growth, enhancing the welfare of all.

At the heart of this story is the notion of merit. Untrammelled competition rewards people who have talent, work hard, and innovate. It breaks down hierarchies and creates a world of opportunity and mobility.

The reality is rather different. Even at the beginning of the process, when markets are first deregulated, we do not start with equal opportunities. Some people are a long way down the track before the starting gun is fired. This is how the Russian oligarchs managed to acquire such wealth when the Soviet Union broke up. They weren’t, on the whole, the most talented, hardworking or innovative people, but those with the fewest scruples, the most thugs, and the best contacts – often in the KGB.

Even when outcomes are based on talent and hard work, they don’t stay that way for long. Once the first generation of liberated entrepreneurs has made its money, the initial meritocracy is replaced by a new elite, which insulates its children from competition by inheritance and the best education money can buy. Where market fundamentalism has been most fiercely applied – in countries like the US and UK – social mobility has greatly declined.

If neoliberalism was anything other than a self-serving con, whose gurus and thinktanks were financed from the beginning by some of the world’s richest people (the US multimillionaires Coors, Olin, Scaife, Pew and others), its apostles would have demanded, as a precondition for a society based on merit, that no one should start life with the unfair advantage of inherited wealth or economically determined education. But they never believed in their own doctrine. Enterprise, as a result, quickly gave way to rent.

All this is ignored, and success or failure in the market economy are ascribed solely to the efforts of the individual. The rich are the new righteous; the poor are the new deviants, who have failed both economically and morally and are now classified as social parasites.

The market was meant to emancipate us, offering autonomy and freedom. Instead it has delivered atomisation and loneliness.

The workplace has been overwhelmed by a mad, Kafkaesque infrastructure of assessments, monitoring, measuring, surveillance and audits, centrally directed and rigidly planned, whose purpose is to reward the winners and punish the losers. It destroys autonomy, enterprise, innovation and loyalty, and breeds frustration, envy and fear. Through a magnificent paradox, it has led to the revival of a grand old Soviet tradition known in Russian as tufta. It means falsification of statistics to meet the diktats of unaccountable power.

The same forces afflict those who can’t find work. They must now contend, alongside the other humiliations of unemployment, with a whole new level of snooping and monitoring. All this, Verhaeghe points out, is fundamental to the neoliberal model, which everywhere insists on comparison, evaluation and quantification. We find ourselves technically free but powerless. Whether in work or out of work, we must live by the same rules or perish. All the major political parties promote them, so we have no political power either. In the name of autonomy and freedom we have ended up controlled by a grinding, faceless bureaucracy.

These shifts have been accompanied, Verhaeghe writes, by a spectacular rise in certain psychiatric conditions: self-harm, eating disorders, depression and personality disorders.

Of the personality disorders, the most common are performance anxiety and social phobia: both of which reflect a fear of other people, who are perceived as both evaluators and competitors – the only roles for society that market fundamentalism admits. Depression and loneliness plague us.

The infantilising diktats of the workplace destroy our self-respect. Those who end up at the bottom of the pile are assailed by guilt and shame. The self-attribution fallacy cuts both ways: just as we congratulate ourselves for our success, we blame ourselves for our failure, even if we have little to do with it.

So, if you don’t fit in, if you feel at odds with the world, if your identity is troubled and frayed, if you feel lost and ashamed – it could be because you have retained the human values you were supposed to have discarded. You are a deviant. Be proud.

George Monbiot is the author Heat: How to Stop the Planet from Burning. Read more of his writings at This article originally appeared in the Guardian.

What the Family Dollar Merger Says About American Capitalism

The store’s deal with Dollar Tree is a boon to executives, but it will probably hurt employees.

Jim Young/Reuters

The French economist Thomas Piketty could not have dreamed up a better illustration of the problematic and growing income inequality in the US than the Family Dollar-Dollar Tree combination.

Let’s start with the backdrop: Essentially, the lower-income Americans that are the target customers of dollar stores have gotten too poor to buy anything other than food (a vivid illustration of Piketty’s point about income inequality). That has depressed margins and profits at these discount retailers.
The fact that these poor Americans—and the retailers that serve them—are doing so badly attracted the attention of some of the richest and best-connected investors in the world. Funds associated with the activist investors Nelson Peltz and Carl Icahn have snapped up significant chunks of Family Dollar in recent months—as has the hedge fund manager John Paulson.
And they have been pushing for a sale. Which makes sense, from their point of view: Combined, they stand to earn hundreds of millions on the deal, at least on paper. (Again, the fact that financiers have done well on the deal, even as low-income folks struggle, squares with Piketty’s view that large fortunes tend to grow faster than overall income, resulting in mounting piles of capital owned by the wealthy.)
Other people that stand to earn a tidy sum on the merger? Well, Family Dollar’s CEO Howard Levine owns roughly eight percent of the shares outstanding, so the deal price would land him with paper gains of about $130 million.
But it’d be a stretch to say Levine deserves it. The entire reason the company was pushed to sell by the activist investors was because its numbers under Levine haven’t been great. The fact that a CEO at the helm of a struggling company is able to harvest such a rich payout is quite in keeping with Piketty’s contention that outsized pay packages for corporate executives—even when there is less-than-clear evidence that they’re deserved—are key drivers of US inequality.
On top of that, as if to emphasize the points about the growing importance of inheritance that Piketty makes in his book Capital in the Twenty-First Century, Levine is the son of the firm’s founder, Leon Levine. (We put in a request to Family Dollar asking for comment, but haven’t heard back.)
It’s not even clear that the merger will lead to a healthier retailer in the long run. It’s being financed by roughly $9.5 billion in borrowings. The debt used to finance the deal could result in a credit rating cut for Family Dollar, which is already flirting with junk status, Bloomberg notes. In other words, Family Dollar could be in worse financial shape after the deal, not better.
So what’s next for the company? A wave of cost-cutting, aimed at helping the combined dollar-store giant take advantage of the significant synergies and efficiencies that the deal creates. While the companies have said they don’t plan on closing stores, cost-cutting waves usually aren’t great for employees.
In short, this deal—prompted by the hardship of low-income customers—leaves a few well-connected investors, executives, and the bankers who arranged the deal much better off, as the finances of the business, its customers, and, perhaps, its employees languish.

Who talks like FDR but acts like Ayn Rand? Easy: Silicon Valley’s wealthiest and most powerful people

Tech’s toxic political culture: The stealth libertarianism of Silicon Valley bigwigs

Tech's toxic political culture: The stealth libertarianism of Silicon Valley bigwigs
Ayn Rand, Marc Andreessen, Franklin D. Roosevelt (Credit: AP/Reuters/Fred Prouser/Salon)

Marc Andreessen is a major architect of our current technologically mediated reality. As the leader of the team that created the Mosaic Web browser in the early ’90s and as co-founder of Netscape, Andreessen, possibly more than any single other person, helped make the Internet accessible to the masses.

In his second act as a Silicon Valley venture capitalist, Andreessen has hardly slackened the pace. The portfolio of companies with investments from his VC firm, Andreessen Horowitz, is a roll-call for tech “disruption.” (Included on the list: Airbnb, Lyft, Box, Oculus VR, Imgur, Pinterest, RapGenius, Skype and, of course, Twitter and Facebook.) Social media, the “sharing” economy, Bitcoin — Andreessen’s dollars are fueling all of it.

So when the man tweets, people listen.

And, good grief, right now the man is tweeting. Since Jan. 1, when Andreessen decided to aggressively reengage with Twitter after staying mostly silent for years, @pmarca has been pumping out so many tweets that one wonders how he finds time to attend to his normal business.

On June 1, Andreessen took his game to a new level. In what seems to be a major bid to establish himself as Silicon Valley’s premier public intellectual, Andreessen has deployed Twitter to deliver a unified theory of tech utopia.

In seven different multi-part tweet streams, adding up to a total of almost 100 tweets, Andreessen argues that we shouldn’t bother our heads about the prospect that robots will steal all our jobs.  Technological innovation will end poverty, solve bottlenecks in education and healthcare, and usher in an era of ubiquitous affluence in which all our basic needs are taken care of. We will occupy our time engaged in the creative pursuits of our heart’s desire.

So how do we get there? Easy! All we have to do is just get out of Silicon Valley’s way. (Andreessen is never specific about exactly what he means by this, but it’s easy to guess: Don’t burden tech’s disruptive firms with the safety, health and insurance regulations that the old economy must abide by.)

Oh, and one other little thing: Make sure that we have a social welfare safety net robust enough to take care of the people who fall though the cracks (or are eaten by robots).

The full collection of tweets marks an impressive achievement — a manifesto, you might even call it, although Andreessen has been quick to distinguish his techno-capitalist-created utopia from any kind of Marxist paradise. But there’s a hole in his argument big enough to steer a $500 million round of Series A financing right through. Getting out of the way of Silicon Valley and ensuring a strong safety net add up to a political paradox. Because Silicon Valley doesn’t want to pay for the safety net.

* * *

How Thomas Piketty and Elizabeth Warren demolished the conventional wisdom on debt

Those who fall into debt are shamed for spending irresponsibly. But the truth of the matter is much more alarming

How Thomas Piketty and Elizabeth Warren demolished the conventional wisdom on debt

Elizabeth Warren, Thomas Piketty (Credit: Reuters/Joshua Roberts/Charles Platiau)

In a 2006 “Saturday Night Live” sketch, Chris Parnell sums up the conventional wisdom about credit card debt:

“Did you know millions of Americans live with debt they can not control? That’s why I’ve developed this unique new program for managing your debt. It’s called, Don’t Buy Stuff You Can’t Afford.”

According to the prevailing story, debt is caused by lavish and irresponsible spending by poor and middle-class families. But like much “conventional wisdom,” an increasing amount of evidence belies this point. In fact, the decline of saving and the rise of debt was an almost inevitable consequence of families trying to scrape by in the face of rising inequality. This is the corollary of French economist Thomas Piketty’s now-famous observation: While capital is increasingly concentrated at the top, it turns out that debt is becoming concentrated at the bottom.

In the same “SNL” bit, Amy Poehler says, “There’s a whole section in here about buying expensive things using money you save.” This supposedly common-sense observation is mirrored elsewhere. The American Institute of CPAs runs an advertising campaign urging people to “Feed the Pig.” One such ad depicts a responsible couple studiously saving for a house, while another eats lobster, receives massages and then complains about “never having enough to put away.” Underlying both the real commercial and the satirical one is the idea that those who aren’t saving could do so, but are instead spending the money. But the evidence for this story is weak.

A more compelling story is that inequality has made it harder for households at the middle and bottom to save.  In fact, the decline in savings has coincide with a rise in income inequality (see chart). There is evidence that these trends are connected.

American households falling in the bottom third of income growth from 1999 to 2007 accounted for a full half of the decline in the overall saving rate over the same period,according to the IMF. Meanwhile, a 2012 Demos study finds that “40 percent of households used credit cards to pay for basic living expenses such as rent or mortgage bills, groceries, utilities, or insurance, in the past year because they did not have enough money in their checking or savings account.” Another 2012 study finds that “regions or periods with higher inequality are characterized not only by a more unequal distribution of saving rates but also by lower saving rates for most of the income distribution.”

One of the myths of the right has been that if the rich have more money, they’ll save and invest more as a result, thereby stimulating the economy. That is, more inequality will lead to more national saving. In fact, the data shows that inequality just concentrates wealth in the hands of the few. It also points to the important possibility that the increase in income inequality is what drove the savings rate down to begin with, by also increasing disparities in wealth.

Wealth serves as a buffer for an income shock, like losing a job or a medical emergency; it also constitutes a family’s retirement income and the means for funding children’s education. However, the rise in income inequality has been coupled with a rise in wealth inequality, meaning that wealth is increasingly concentrated in the hands of the few. Recently, Emmanuel Saez and Gabriel Zucman have shown the increase of wealth inequality in the United States (source).

This rising wealth inequality means that American households don’t have anything to fall back on in the case of a bout of unemployment or a health crisis. (One study finds that 62 percent of bankruptcies are medical-related.)

In a recent study, Amy Traub, a senior policy analyst at Demos, sought to test whether those with credit card debt were the profligates portrayed by popular culture. She used a national survey of 1,997 households to create two groups indistinguishable in terms of income, race, age, marital status and rate of homeownership. The only difference? One group had credit card debt, the other group didn’t. Traub finds that the households without debt had more assets, and fell back on them when dealing with unexpected expenses. She finds “little evidence” that “households with credit card debt are less responsible in their spending habits than households that do not have accumulated debt.” Instead, she finds that unemployment, children, lack of education, lack of health insurance and negative home equity correlate strongly with high levels of debt.

In their famous book on the subject, “The Two-Income Trap,” Elizabeth Warren andAmelia Warren Tyagi argue that slowing income growth, not overspending, is what’s driving families into debt. In an essay on Boston Review they write that,

There is no evidence of any ‘epidemic’ of overspending—certainly nothing that could explain a 255 percent increase in the foreclosure rate, a 430 percent increase in the bankruptcy rolls, and a 570 percent increase in credit-card debt.

The Warrens point to the increasing cost of education and housing. A 2000 study performed in Fresno, California, found that the most important determinant of neighborhood housing prices was school quality. The strongest evidence that the Warrens cite is that between 1984 and 2001 housing prices for those with one or more children increased at three times the rate of those without children. As families have tried to provide for the education for their children, they have increasingly been squeezed by high housing costs.

The final factor driving debt is unscrupulous practices by banking institutions.The CARD Act is saving Americans $12.6 billion a year by cutting back dodgy fees and other shady practices. But payday lenders can still prey on the poor. Traub finds that households with higher levels of credit card debt were more likely to have received financing from payday lenders. We need policies to give poor and middle-class workers more income and wealth. Increasing the minimum wage is a simple start. Incentivizing worker ownership and profit-sharing would also benefit workers. The government could give citizens a small basic income each year and it could also institute a “baby bond” policy, which would foster wealth building. On the other side, it needs to bust up concentrated and idle wealth by taxing it.

As Piketty notes in his interview with Matthew Yglesias, “My point is to increase wealth mobility and to increase access to wealth.” He aims to “reduce taxation of wealth for most people, but to increase it for those who already have a lot of wealth.” By spreading wealth to the middle class and poor, we could decrease the reliance on the “plastic safety net,” and create a strong and sustainable middle class.

Sean McElwee is a writer and researcher of public policy. His writing may be viewed at Follow him on Twitter at @seanmcelwee.

Our sad “Mad Men” revolution: How consumerism co-opted rebellion

Talking revolution with Lewis Lapham — and how capitalism manages to keep coming out on top


Our sad "Mad Men" revolution: How consumerism co-opted rebellion

(Credit: AMC)

Aspiring writers of my generation regarded — still regard — Lewis Lapham as the greatest essayist of our time. We tried to emulate everything from his glittering sentences to his rugged skepticism to his sartorial elegance.

For many years he was editor of Harper’s Magazine; today he runs Lapham’s Quarterly, which has just released a new issue on “Revolutions,” filled with historical writings on the subject in question. Back in March, Lewis asked me to join him in a public conversation at Book Court bookstore in Brooklyn to celebrate the launch of the issue; what follows is an edited transcript of the proceedings. Thanks to Book Court for making the recording available to us.


Lewis Lapham: As has been stated, we have no prepared script. The current issue of Lapham’s Quarterly talks about revolutions of various kinds — political, scientific, technological. My thought is that we are always in the midst of a revolution, which is the revolution that Karl Marx announced in 1848, which is the bourgeois revolution. Which is the constant change in the means of production and the reducing of all human meaning and endeavor to a money transaction. That’s his “cash nexus.” And that’s the revolution that’s been going on at an ever-increasing rate beginning in the… well, you can take it back to the early days of capitalism. But it really gets its start in the 19th century.

I’m 79 and I started in the newspaper business in 1957, when they still had hot type and copy paper and pencils, dial phones, and you were allowed to smoke in the City Room. The intel revolution has been going on for the last 50 years; large newspapers and magazines were all but wiped out in the 1960s by television. Then we come to the Internet and cable and so on and it keeps changing.

But the same thing has been happening in the realms of agriculture and finance, transportation, almost all means of bourgeois production and so the thought of political revolution becomes increasingly romantic, at least this is the argument of “Crowd Control,” introducing the current issue. Simone Weil regards the word “revolution” as a magic word which by all intents and purposes is meaningless. I have seen, over the course of my lifetime, revolutions practically every year somewhere in the world, whether it’s in North Africa, Ukraine, the Sudan, Hungary, Cuba. . . it’s a long list. And what usually happens is that one police force replaces another police force.

This issue of Lapham’s Quarterly has readings or remarks on revolution from people like Nicholas Carr, who to my mind is one of the best writers about the technological revolution, what (Marshall) McLuhan was talking about, and the consequences of the shift from print, first to television and then to the Internet. But we also have Shakespeare talking about it in the play “Coriolanus.” Martin Luther mounting his 95 objections to the Vatican; actually he didn’t post them on the church at Wittenberg, but he published them. And the consequence is the Reformation. You have Jefferson’s idea of revolution where he says every 20 years the tree of liberty needs to be refreshed with the blood of tyrants and patriots. What he had in mind was a cyclical phenomenon, like the revolutions of the stars. It was a form of environmental protection. The soil of politics grows despotism, but it also grows liberty. In certain seasons it comes forth with an orchard, in other seasons with a cesspool. The thing is to keep the balance of nature. We would think of that as a conservative notion.

But the American revolution is unique because the people that held power in America before the revolution are the same people that hold power in America after the revolution. By the time we come to the Declaration of Independence, we have had 100 years, half the 17th century and most of the 18th century, to construct our own political instruments of governance, whether it’s a church congregation or a town meeting or a municipal assembly throughout not only New England, but also Virginia and the Carolinas. So it’s not like the revolutions going on in Syria or Sudan or Tunisia or Egypt where you can overthrow the tyrants but then what do you do on the morning after?

Tom has written about this, although he may not know it, but he has, over the last 20 years?

A long time.

He had a wonderful book called “The Conquest of Cool.” And the way we deal with revolution in the United States is to turn it into a product. It’s sort of an advertisement for rebellious clothes. But nobody is particularly willing to go up against the military force of the state. I open my essay by saying there is a lot of talk about revolution. We know and understand and see in plain sight that our government is in the hands of the banks. That the war of the rich against the poor, the class conflict that’s going on . . . this is in the newspapers every day. The biggest growth industry in the United States is surveillance, and NSA, and everybody’s cell phone is a tracking device. These are means of crowd control.

The American government, which I would call the American oligarchy, is afraid of the American people. And God forbid, they should have too many dangerous ideas wandering around loose in the streets. Thus, we have I don’t know how many hundred thousand surveillance cameras on the streets of New York. That’s only going to get worse in my view, because as we get more and more people and more and more people reduced to food stamps and poverty and as the resources of the planet are finite and the American dream assumes infinite growth which is a contradiction in terms with a finite planet. The divisions between rich and poor are going to become more and more well-defined and heavily patrolled.

I suspect that if any genuinely revolutionary change takes place it will be forced upon us by a collapse of some kind in the system. That’s another form of revolution that you find across time where the civilization or the ancien regime falls apart of its own dead weight. And in the ruins, the phoenix of a new idea or a new thought or a new system of value takes its place. But that’s not something that can be organized by a committee or preached from a column in the New York Times, or even by a four-day conference about American values sponsored by the Rockefeller Foundation.

There’s an old axiom of Trotsky’s: “You may not be interested in war, but war is interested in you.” And you could say the same thing about revolution. So I don’t think we have to be concerned that we’re not parading around in the streets. It will come of its own accord sooner rather than later.

Those are some of the ideas that are remarked upon in this issue of Lapham’s Quarterly. As we do in every issue, we bring all kinds of voices in time to open up different angles of that conversation. So together with Aristotle and Shakespeare, we have Robespierre and Simone Weil and Václav Havel and Albert Camus. It’s a joy to edit because you learn things.

My favorite thing in the whole issue is this image, “The Nouveau Riche Leads the People.” It’s a photo by a Chinese artist that features all the classic Communist signifiers, except the central figure is a guy in a shiny suit with all these gold bars. I love that.

You mentioned our cell phones spying on us. There’s a moment of enlightenment that happens when it dawns on you one day that this device you bought as an instrument of liberation is, in fact, an instrument of surveillance. That was a shocking moment for me, and I suspect a shocking moment for a lot of people. On the other hand, I probably shouldn’t complain — it fit right into what I had been writing for many years.

Let me take a step into the past. There have been other, lesser, bloodless revolutions in American life. They happen periodically from time to time. My favorite one is the Populists in 1890s. I’m from Kansas. And in the 1890s the farmers in Kansas were angry about various things; they had formed a farmers’ union and one day they basically voted out all of the senior Republican politicians in the state. Just threw these guys out. Ended all these career politicians’ careers. It was very shocking and the Populists rolled on and on, from state to state, and won this and that. Eventually, 30 years later, a bunch of the things they were demanding became policy.

Another moment in history that has always intrigued me is when the endless bourgeois revolution of creative destruction and planned obsolescence, of constant superficial change, when that revolution squares off against the political revolutions — the Populists, Franklin Delano Roosevelt — and that’s what we see in our own day. In this showdown of revolution against revolution, the capitalist revolution is basically batting 1.000 these days. It doesn’t matter that they discredit themselves again and again and again. Take the financial crisis in 2008, the worst situation imaginable, people are furious, and what happens? Literally, the capitalists — I’m speaking of that CNBC reporter standing on the floor of the Chicago Board of Trade — managed to make themselves the leaders of public anger against the banks. It was the most extraordinary thing. The Chicago Board of Trade. What was that character’s name? Rick Santelli, right? Remember this guy?

The founder of the Tea Party.

That’s right. And by God, they got out in front of it and led everybody off down the wrong path, this sort of disastrous result. But it goes way, way back. “The Conquest of Cool,” which you mentioned — but, say, (holding up a copy of the book) doesn’t it look familiar? Have you seen the new “Mad Men” advertisements? Anyhow, the book is about the advertising industry in the 1960s. I was fascinated by the ad biz because these were people who — you said “revolution” was a magic word. Well, these people figured that out and they grabbed it with both hands and made it into this sort of talismanic word of Madison Avenue during the 1960s. They called what they were doing the “Creative Revolution.” That was what was supposedly going on in those days on Madison Avenue. It was part of a larger revolution in the way capitalism works and the way capitalism thinks about itself. There was also a revolution in management theory. There was a revolution in the computer industry. Revolutions in media and in fashion. All of this stuff was going on at the same time. Post-industrialism is what was happening.

The word is being used today as an adjective, not as a noun. The idea of political revolution as a noun is not in very high standing. But to use “revolutionary” for a new cell phone app or a new shade of lipstick is, as you say, the context.

Yes, and there are hundreds and hundreds of examples. And it wasn’t just all nonsense. In a certain way of looking at it, these admen way back in the 1960s, the sort of revolution that they were pushing, they were successful at it. The idea that one brand obsoletes another brand, the sort of eternal planned obsolescence of consumerism, they were very successful at making this thing work. Now it can’t work forever. You can’t have a consumer society forever when, essentially, you’ve got JP Morgan and Goldman Sachs doing what they’re doing. The time will come when we can’t afford those cell phones anymore.

Well, what also happened was the idea of revolution is commodified in the ’60s in two ways: it’s sold as a deadly menace, which is a wonderful way of selling newspapers; and then it’s also sold as a private good, as a brand. Jefferson’s idea of revolution as a civic duty is the kind of idea that was in the mind, I think, early in the ’60s, of the people protesting for civil rights. The people sitting at lunch counters in Alabama, going to schools in Arkansas, being beaten by police, sometimes being killed. Martin Luther King is assassinated. But they don’t mean to overthrow the American government. It’s not like Robespierre. It’s not like the Communist Revolution. They don’t want to reset the clocks or tear down the Lincoln Memorial or destroy Grand Central Station. What they want to do is make the American Constitution live up to its word. It’s reformative in the same way that the Progressive Era is at the end of the 19th century with your friend William Allen White from Emporia, Kansas.

Yes, that’s right. You know about that guy. Nobody remembers him anymore.

I do. He was one of the great journalists of the period, together with Ida Tarbell and Ray Stannard Baker, who were part of McClure’s Magazine, and they were part of the group around Teddy Roosevelt. Roosevelt would confer with White or with Tarbell.

Most people don’t know that. Roosevelt would take the train to Emporia, Kansas. Spend the night at White’s house.

But they had the same object in view. They were trying to reform the laws. They were trying to pass the antitrust laws. They were trying to improve the health and safety of American meatpacking operations in Chicago and in Kansas City. And they succeeded. There was quite a lot of progressive legislation passed in the first 10 years of the 20th century.

But then the mood changed. We find ourselves in World War I. One of the quickest ways to suppress domestic dissent is to produce a foreign enemy and a foreign war. The whole, slow building of the national security state in America after 1950 is bankrolled by the Cold War and if you would make an objection to things that were amiss within America — if you would say “all is not right, all is not well in the American scheme of things” — the answer would be “well, would you rather live in Russia?” So you used the foreign enemy to accrue power to the state. That’s the same device employed by the Bush Administration with the War on Terror. The War on Terror was regime change, but it was regime change in the United States. In other words, you give more to scare the hell out of the American people to make them more obedient. You get in the habit of putting your arms up in the air when you go through airport security. Over time that instills a proper respect for men in uniform.

You know, one of the most ironic turns in the story of the lifestyle revolution of the ’60s, I don’t know if you’re aware of this, Lewis, but there are cities all over America now that are investing heavily, both of their own money and with foundation money — public-private partnerships — in the idea of planned bohemias. You know about this? (Laughs) Potemkin bohemias, fake bohemias that a given city will set up. They will hire some consultant in coolness. And he’ll come and tell them how to make a neighborhood “cool.” And the reason why you would want to make a neighborhood cool? Why do you want to do that? Well, of course, in order to attract and retain top corporate talent. Get Boeing or some other big corporation to move to your town, because it’s got all these hipsters in it. We used to joke at The Baffler Magazine, “Boeing moved to Chicago because we were there.” Everything that Mayor Daley was claiming credit for. No. We were doing it. We’re the ones who were responsible. Because my friends and I were so goddamn cool in those days. By the way, this fake bohemia thing really happens. People waste tons of money on it.

I was there at the death of the Beat Generation in San Francisco in 1959. I was a reporter for the San Francisco Examiner. A Hearst paper. And the Beat Generation had pretty well departed. Kerouac was on the road somewhere. Ken Kesey had gone north to Seattle and I’m not sure where Ginsberg was. But he wasn’t in town. And the idea of the Beat Generation had begun to gather some press. Tourist buses were now going into North Beach. The last holdout was a bar called Cassandra’s that had a swinging door like a Western saloon, sawdust on the floor, people playing chess at the tables, everybody very hip, very cool, very rebellious. Boys had beards. Girls were dressed in exotic costume. The music on the jukebox was the Modern Jazz Quartet, Thelonious Monk, Charlie Parker.

I happened to be there. I didn’t get the weekends off and I had a Tuesday off. So I’m in Cassandra’s on a Tuesday afternoon. Swinging doors swing open and it’s a Hollywood producer. Dreadful looking person, gold chain, white shirt, paunch, slicked back hair. “People! People!” He demands attention. Nobody moves. Nobody turns around. There’s a barking dog in the bar. And he starts his talk. He says, “This is the coolest place in San Francisco and we’re going to make a movie.” This is going to be the second unit. It’s a movie with Leslie Caron and it’s a movie based on one of Kerouac’s books. I can’t remember which one. Still, nobody moves. Nobody even turns around. Nobody looks at him. Make the move on the chess board and appreciate the changes being rung in the key of C-minor by Monk. And the guy keeps talking. He says, “Now! People! I want you all. I want you all as extras. Right here. Just as you are. It’s $50 a day.” Still nobody turns around. Money. And then he says, “But: this is a movie that’s going out into America, into the heartland of America. This is going to be seen in Kansas, and therefore I want all you boys… one of you can keep the beard. But the rest of you, I want you home and back in an hour and I want you wearing khaki pants, blue button-down shirts. And the girls, I want you in tweed skirts. You know, cheerleader-type skirts, with white blouse, hair in a ponytail. One of you can still look dark and sullen.” This is a movie for Americans, he’s explaining. And there’s a terrible, terrible silence. And then comes the even more terrible sound of a scraping of chairs. And the entire place emptied out and they were back in an hour, clean-shaven, white blouse, bobby socks. And that was the end of the Beat Generation.

Well, I have nothing to say after that.

It’s a variation on your story.

That’s fantastic. You saw that?

I saw that. I was there. I can say I was there.

But the idea is that a democratic society is interested in equality. That’s the way we deal with each other in a democratic society. That’s the way you deal with people 90 percent of your day. That’s the way you deal with people you know, that’s the way you deal with people you help across the street. The munificence, the generosity of the American spirit, of the democratic spirit, is in plain sight all day, every day.

A capitalist economy is not interested in equality. I mean, the whole idea of a capitalist economy is buy cheap and sell dear. Equality is an utterly alien notion to a bank. And the people who drew up the American Constitution tried to find a way of balancing those two impulses or whatever you want to call it — motions of the spirit and the heart — and the balance has fallen way out of line so that we now have, pretty much, a country being run by the monied interests. This has happened in history. Aristotle talks about it. The same thing. I can’t remember the exact sequence, but at some point an oligarchy becomes so stupid and self-serving that it’s like cheese and it turns rancid in the sun. And that’s what we have now. That’s what they had in the Ukraine. That’s what they had in Russia after coming down under the dispensation of Mr. Yeltsin. That’s what happened in the end to the ancien regime in France. It will happen here. But it’s not going to happen by the storming of the Bastille or a march on the Pentagon.

You know, it’s funny that you mention this. You’re right. Of course it will happen eventually. I’ve been writing about inequality a lot lately. And I’m fascinated not just by the inequality debate, but by the words that we use for it. You’ve been writing about this for, what, 30 years?


Do you remember Kevin Phillips? “The Politics of Rich and Poor.” This book came out in 1990. Tom Edsall wrote a book about it in the ’80s. Barbara Ehrenreich was writing about it in the 1980s. Now we’ve all just now discovered it here in the last couple of years. And the economists have got a new think tank in Washington, D.C., to contemplate inequality and that kind of thing. But, I remember, you wrote the introduction to an anthology I edited back in the ’90s about the New Gilded Age (“Commodify Your Dissent”). Right? That was in 1997 that we were talking about that. And inequality just goes on and on, from one crisis to the next. And nothing changes.

No. And it keeps getting harder to keep the bubble in the air. It’s getting more and more expensive and we are now dependent on a constant shuffling of the cards, one bubble after another. And the finance sector, what they call “FIRE” — finance, insurance, real estate — is a parasite on the host. The host is the real American economy, much of which as you now know has been outsourced in one way or another, or entrusted to machines. You have the parasite eating the brains out of the host. That is the kind of bubble-prosperity finance that we’ve been going through four or five times in the last 20 years. Each time the ice gets thinner and the debt gets higher. Soon we will probably — not tomorrow, but not far off if we keep going — we will lose the privilege of the dollar as the world’s reserve currency. If that happens…

Oh that’s not going to happen, Lewis, come on now… (Laughs).

(Laughs) I know.

That’s what the idea was with the Euro. That was their effort to take the dollar down, but they botched it. They botched it so badly.

But we’re capable of botching it too.

That’s right. More than capable.

Audience question: Isn’t the lesson of the last 20 or 30 years that capitalism is supremely adaptable? That it’s highly intelligent and adaptable in crises and resistant to revolutionaries like Occupy or whatever? It adapts, it commodifies, it incorporates. . . . Indeed, in Occupy, which I’ve been involved in, one of the aspects of it that was most dispiriting was that people would love to come at the beginning of meetings and give speeches, but when it came to doing really hard work . . . people would drift away. The bourgeoisie don’t seem to be inclined to revolution. This seems to be our problem. I don’t believe myself, I don’t have your faith that the system is going to contradict itself sufficiently so it will collapse on its own accord. That collapse has to be brought about.

I agree with you. But I don’t think Lewis is saying that it will collapse on its own accord. Just that it will become corrupt, like a stinky, smelly cheese. Everything else is up to us. To count on the dialectic to change anything or to rescue us is an absurdity. I think it’s a terrible mistake. Look, the left in America . . . it’s like journalists and bloggers, everybody talking to one another. That’s what it is. The part of it that actually used to get things done, you know, like organized labor, has diminished down to almost nothing. This whole inequality debate is a debate among, today, not people like Lewis and me anymore; it’s among economists. Economists talking to other economists and having academic conferences about the subject of inequality. That’s not the way anything changes.

You may be right. I have this argument all the time. The Quarterly is held by something called the American Agora Foundation and on the board we have some of the finest and most enlightened capitalists in the country. And I come along with the argument that capitalism is going to fail and they point out how and why I’m writing. So I know that argument you make. You might be right. On the other hand civilizations tend to collapse. What we have now is not just a capitalist system. It’s a civilization. It’s based on the global capitalist system of money. But at some point it just gets too big to govern. We have a dysfunctional government. Civilizations, empires only last as long as there is a morale and an idealism and an energy sustaining it. To me, that seems to be exhausted. There’s a good deal of cynicism. We don’t have enough people in this society who believe in democracy. That goes to your point about they’re there for the speech and then they leave for the rest of it. [Ralph] Nader has written wonderful books about this. He said, “If a million people in the United States would give $100 and 100 hours of their time we could make truly significant change. But if you don’t have people who believe in it passionately it loses its energy. It dies according to the second law of thermodynamics. It’s a form of moral entropy.

Can I just say one other thing? What you said about capitalism solving its problems, getting out of these difficult situations, that’s exactly what this book is about. (Waves a copy of “The Conquest of Cool” again.) The great critique of capitalism in the 1950s was the “mass society” critique. Remember this? Conformity. The Man in the Gray Flannel Suit. The Organization Man. Now, individual economic leaders can be very stupid people. Often they are. These billionaires whining about being persecuted by Nazis and stuff like that. They’re morons. But the system itself has a kind of genius. And what the system did back in the Sixties is it took the symbols of the counterculture and used them to reinvent itself and to solve this critique of capitalism, this critique of the mass society, the Organization Man, how we were all being depersonalized and “look at all the lonely people” and all the rest of it. By the end of the 1960s capitalism is this wonderful, sensitive, fantastic thing.

Audience question: Talk about the genesis of this issue. How did you start putting this issue together? When did you start coming up with the idea for it? What instigated it?

There was Occupy Wall Street and I was listening to people talk about the possibility of revolution. “Things are so bad, why don’t we have a revolution here in the U.S. of A.?” I was being asked, and I had never, myself, been a revolutionary activist. I was not that kind of a journalist and people were telling me that my skepticism was misplaced. That certainly revolution was just over the horizon. I asked myself: What did that mean? And this is me thinking about it and borrowing from more reliably informed sources to address that subject.

Audience question: So much when we picture revolution I think we picture the ends of it toward a kind of European-style social democracy or the ’30s or a Keynesian state brought about by the New Deal. But so much of American reformism has been motivated by a kind of Libertarian critique of big-C capitalism going back to the Jacksonians and even to a certain extent in the Populists and during Occupy Wall Street you saw a very big divide between some different factions in that body. For example, Tea Party people were totally rejected and I get the sense that even the Tea Party today, there are, within it, certain critiques that can be leveraged for different kinds of, maybe progressive kinds of revolution. I wonder what your thoughts are. If it’s necessary to adopt some Libertarian concepts or Libertarian approaches in order to get the changes happening on a progressive level.

I’m not sure about that. I wrote a book about the Tea Party movement called “Pity the Billionaire.” You know, about billionaires self-pitying. And when I would talk to Tea Party people or go to Tea Party rallies, weirdly enough, one of the things that you would sometimes hear — this is in the early days; it’s all changed now — is they would vilify Clinton for overturning Glass-Steagall. That’s not very libertarian. Libertarians wanted Glass-Steagall to be overturned. But the Tea Party opposition to this was definitely a point of common interest, a point where different people could have been brought together.

Another point of intersection. The Tea Party movement was very definitely a movement of small businessmen or small business people. And Populism was too, in part. Once upon a time, small business people were reliable members of the progressive coalition. I’m talking way back, 100 years ago. And the reason for that was very interesting. It’s something completely forgotten today: Antitrust. The antitrust movement really used to exist in America. It was a hot issue once upon a time. It would get people’s blood pumping. People could get really angry about big corporations, especially small business people. One of the Supreme Court justices — do you know who it is, Lewis? I forget which one it was — said the Sherman Antitrust Act was the “Magna Carta of free enterprise” or something like this. Do you remember that?

Yeah, I do. But I don’t remember the name.

That seems to be an easy point where the one movement could have reached out to the other, or even the Democrats could have reached out to the Tea Party movement, but nobody even tried. Nobody even thought about that.

But with the progressive movement also, it has its roots in the 1890s, and the 1890s are a very down decade in the United States. There is a serious recession. Lots of people homeless in the streets of New York. There are bitter strikes in Ohio and Pennsylvania. People are getting killed and there is a fear among the middle-class gentry on the Upper East Side of Manhattan and so on, of real revolution. They’re afraid of workers in the streets. You have to remember. There have been truly bloody strikes in the 1870s, 1880s, and 1890s. Together with the bust of 1873 and then another one in 1893. Times were grim and the distance between rich and poor was as grotesque, if not more grotesque, as it is now. You’d have homeless waifs following, begging at the wheels of gilded carriages driving on Fifth Avenue and you’d have the carriages run over poor people who happened to be standing in the street. Manhattan was also an island of vice. Between 42nd Street and the Battery in 1895, there were 8,000 brothels as well as 2,000 opium dens and 10,000 bars. The conditions on the Lower East Side in the 1890s were worse than they were in the same decade in Calcutta. So there was a lot of grist for the revolutionary mill. And today, not so much. Brooklyn is gentrified. Everybody’s on the way up.

Yet, ironically this is the city where De Blasio is elected and yet if you go out to the places that are really hurting like Appalachia. . . . Do you read the stories about the politics in West Virginia? The Republicans think they’re going to flip it. This was once a reliably deep-blue if not radical state. And everyone thinks it’s going Republican this year. It’s the strangest thing in the world. So they’re going one way and you all are going the other. It’s highly ironic. I think only Lewis Lapham could do this justice.

“What’s the Matter With Kansas?” That was the same thing, right?

Audience question: Back to the stinky cheese. Can you address the difference between corporatism and capitalism and then the government? Like what’s our problem, really? What’s the soul of corporatism? What’s the soul of capitalism? Or is it corporate capitalism?

Well, corporate capitalism is a term invented by Mussolini. It’s the alliance of money and the state.

Audience question: Right. Isn’t that our problem?


Audience question: So capitalism isn’t…

No, capitalism is a machinery. It’s neutral. It’s not an idea. It’s a mechanism.

Audience question: So we are up against an idea?

Well, no. We’re up against heavily entrenched interests.

Audience question: Which is the idea…

Well, I don’t think they even put it to themselves that way. The only idea that I can ever see in the minds of the moneyed interests is that money is good for rich people and bad for poor people. That’s about the beginning and end of their idea, I think.

Audience question: In the expanse of time, the past 6,000 years or so, how often do you see revolutions that really change a situation that’s so ingrained in the economy and culture as in the Wall Street issue? How often do you see them taking less than a generation, because I’ve been led to believe through reading about the 30 tyrants in Athens and even things that are less political like Martin Luther. The Reformation takes a generation of people dying sort of, from natural causes, rather than violence. So do we have to wait for bankers to die of gout?

I think it could go fast. There are also times where history moves very fast. That’s what’s so wonderful about studying revolutions. When history speeds up. Wars do the same thing. Another one of my favorite revolutionary moments, well it wouldn’t count as a revolution by the standards you mentioned but: the 1930s. The wave of industrial organizing happened overnight in the mid-to-late ’30s and completely changed the face of the economy. Now, it didn’t really sink in until after World War II that this was permanent and it was not going to be reversible. And that change completely altered the way wealth was distributed in this country and it happened very quickly over just a few years. But of course there’s a lot of build-up behind it.

Well, it’s changing back.

Yes, it is. A different revolution. And we’ve had several of those too. The Reagan Revolution. The Gingrich, they called that the Republican Revolution. Then, I don’t know…

Unions aren’t in good shape today. Well, you have the Cuban Revolution. Castro’s been in power for over 50 years. Has that completely changed Cuban culture or the face of Cuba? I don’t know.

You know, there is something else we need to think about and that is, one of the reasons Americans love capitalism is because it seems to be meritocratic and it seems to reward geniuses like Steve Jobs. But if you go back to why people once hated capitalism… Do you remember Gustavus Myers? He wrote the “History of the Great American Fortunes” and then he wrote a follow-up book in the ’30s called “The Ending of Hereditary American Fortunes.” And one of the reasons people hated capitalism back then was because so much of the wealth was inherited. These millionaires hadn’t done anything to deserve it. They were riding around in these carriages like you said and they had done what? Nothing. They had been born into it.

No, no, no. The original ones made it.

Of course. Or they stole it like Jay Gould.

I mean Rockefeller, Carnegie, Vanderbilt. These are people that made things as well as stole.

Kevin Phillips wrote about this as well. People have a different attitude toward the ones that inherited their millions. You know what I’m saying. And we aren’t at that point yet, right now. But we will be before very long.

We’re getting very close to that because as long ago as 1985 or 1986, the money earned in the United States, the income earned from wages on one hand and income earned from rents which would be real estate, stocks, dividends and interest — together they’re considered rents. But the first time in the history of the United States, either in 1984 or 1985, that rentier income surpassed the income earned from wages. And we are developing right now a really, an extremely opulent rentier class. If you think of the profits that have been made in the stock market in the last 30 years and you think of the compound interest, that is why you now have apartments selling for $95 million. So we are getting a rentier class. There’s no question about that. The numbers are all there.

Audience question: Talking about the speed, sort of dovetailing off his question, the idea of a rentier class, the divergence between GDP and wages which is another way of thinking about it. With that as a framework and with the way that demographics are changing and the millennial generation is rising and sort of having a consciousness about this, do you think that speeds the eventual revolution and could it be done through a political framework through realigning election with…

That’s a problem that our corporate form of capitalism is unable to solve. The problem of unemployment. And that will get worse as more and more labor is outsourced and more and more labor is given to machinery.

Do you remember an essay you published in Harper’s Magazine years ago, Lewis, by Edward Luttwak? Do you remember this? About the mid-’90s.

I do.

This was another moment in my life when the light went on in my head. Luttwak is not a radical or a leftist. He’s a geo-strategist. He said we’ve reached this economic stage where we have essentially gone back to a Victorian distribution of income. The economy no longer has any need for a big part of the population. There is just no structural need for us. That was shocking to me, to read that. And it’s, of course, turned out to be true. And another thing that was happening at about that time which you’re describing was — if you go back to the ’40s, ’50s, ’60s and ’70s — back then, when worker productivity grew, wages also grew, and they grew at the same rate. Every economist knew this. They were one-to-one. They were equivalent. Then at some point in the mid ’70s and the ’80s these things came loose, came apart. And what that means is as you grow more and more productive as a worker, the boss gets richer. It’s a shocking thing when you figure this out — both that this is happening and also that it wasn’t always like this.

Now for the generational consciousness, the thing that’s really going to do it, if you ask me, is student debt. What is happening to young people now is unbelievable. Lewis, when you went to college what did it cost?

I graduated from Yale in 1956. The tuition was $3,000.

I went to the University of Virginia in the ’80s and when I graduated I was about $7,000 in debt. And at the time I thought, that’s a lot of money. Of course it wasn’t really. But today, I have friends who are over $100,000 in debt. And they’re supposed to be going out and starting life with a burden like that. It’s impossible. That’s going to come back to bite us.

Michael Hudson, who is a friend of mine and an economist and editorial advisor for The Quarterly and is a brilliant man, an authority on early Mesopotamia among other things. He’s also the godson of Trotsky. He has a phrase for it, called “debt-peonage.” That is how we will enslave the American people. I mean, the great source of capital, of course, is milking the American public on their debt. That’s how the credit card companies operate. You think of cattle in pens in California, the way they grow beef. You might as well think of the American population as giving off interest, stuffed with junk commodities and then paying forever with… just standing still.

Audience question: I was going to say the shocking thing about student debt is you can’t get out of it through bankruptcy. So you have 18-year-olds who can’t buy booze but can sign themselves up for a lifetime of debt. It’s insanity.

Yep. It’s the most outrageous thing in the world. And do you remember, the bankruptcy law that made it that way was passed during the Bush administration. Earlier we were talking about the Tea Party movement and things we have in common with them. Well, you talk to blue-collar Republican voters, they’re not in favor of something like that bankruptcy law. This is a terrible thing that was done to them by the people they voted for. There are ways you can organize across party boundaries with issues like that.

Audience question: I can buy a Range Rover on credit and go bankrupt but I can go to a university for four years, get a degree but I don’t get to say…

Yeah. I don’t know what Obama’s position on bankruptcy is, but basically his solution for the totally out-of-control price of tuition is, let’s just give everybody more student loans. That’s not a solution at all. And you’ve got an entire generation lugging this debt around.

Audience question: A Russian scholar drew a map of the United States where it sort of dissolved into four or five regions, with the Northeast kind of drifting toward Canada because of shared interests. The idea of an empire collapsing under its own weight, is any version of that a plausible scenario to you?

To me that is an entirely plausible scenario. Actually, Kevin Phillips, the historian mentioned earlier by Tom, published an article in Harper’s Magazine in the ’70s called “The Balkanization of America.” He actually had the map and he had the way it would divide and why, and I see that as entirely possible. I do. Because Washington can’t govern the United States. They’re trapped inside the Beltway. They’re dysfunctional. Again, to answer the question, there’s a wonderful book that I just read which is influencing me because I’m very impressionable and I’m apt to parrot the last thing I read. This book is called “Immoderate Greatness.” And it’s short. It’s a hundred pages but it’s extremely persuasive as to what happens to civilizations when they become so big that they in fact must fail. The author goes into the laws of entropy and the laws of thermodynamics and the exponential growth and the environment. It brings all the angles to bear.

Thomas Frank is a Salon politics and culture columnist. His many books include “What’s The Matter With Kansas,” “Pity the Billionaire” and “One Market Under God.” He is the founding editor of The Baffler magazine.