Republicans want a country Scrooge would have loved
Republicans are unwilling to accept that our founders viewed the collective efforts of the people, through the government, to include providing for “the general welfare.”
By Lamar W. Hankins / The Rag Blog / July 26, 2013
It seems self-evident. A person who does not have enough to eat will experience hunger. Since the Great Depression, the U.S. government has provided food assistance to people who were hungry. Although responding to hunger was not the reason the direct assistance began, the ethical underpinnings soon developed, and for three-quarters of a century Americans have recognized the societal obligation to help those who need food.
Now, however, Republicans in Congress deny a moral obligation to help those in need. Their callousness is historic: On July 11, Republicans in the House deleted the nation’s general food assistance program from the existing law that is usually called the Farm Bill.
While it is true that charitable organizations and churches have provided, and continue to provide, some food relief for those in need, their efforts fall far short of satisfying that need. Without the general food assistance program, lately known as SNAP (Supplemental Nutrition Assistance Program), some 50 million Americans would be what is now called food insecure; that is, they would be hungry some of the time because they do not have adequate meals three times a day.
The history of public food assistance in the U.S. makes clear how we got to this place. Public food assistance began in the 1930s as crop support for farmers. Farm commodity prices were depressed because many people could not buy food during the Great Depression. Efforts by farmers to grow more crops to make up for the low prices pushed the prices still lower, leading to surpluses, much of which were wasted. The Congressional response to these surpluses was to make loans to farmers to allow them to store their surplus non-perishable crops until prices were better.
When farmers began defaulting on the loans, Congress allowed them to give their crops to the government, which sold them in international commerce and also made them available for distribution to those in need of food in a way that did not disrupt domestic commerce. In 1935, the first commodity distributions were authorized. The motivation for these distributions came mostly from concern about widespread malnutrition among children.
The United States Department of Agriculture (USDA) made surplus commodities available for school lunch programs, nonprofit summer camps for children, charitable institutions, and families in need of food assistance. Later, child care centers were given commodities, the Bureau of Indian Affairs distributed food to Native Americans who were in need, and private welfare organizations provided the same assistance to the needy both within and outside the United States.
In the 1950s, all schoolchildren, without regard to their need, could buy reduced-price milk. I remember paying 4 cents for a half-pint at the school cafeteria. Those in need could get the milk at no cost.
In the 1960s, the nation began to focus more on the need, especially among children, for food assistance and less on the distribution of foodstuffs bought through the price support programs of the USDA. School breakfast programs, summer feeding programs, adult food programs, and programs to meet the food needs of the elderly were developed, mostly administered through the states. New programs aimed at helping meet the nutrition needs of pregnant women and those with infants were developed.
In more recent decades, food assistance has been directed through food banks and general feeding programs that were once known as soup kitchens. Assistance to families in the form of food stamps that could be used like money at stores to purchase groceries have been supplanted by credit cards for the same purpose.
While concern for the nutrition of all of our citizens has become a prime factor in the increase of nutrition assistance programs, many food assistance programs continue to be related to the government’s price supports for farmers and the surplus food that farmers produce.
Since the late 1700s, soup kitchens have been generally well regarded by most people, who see them as a vital need in a civilized society, but there have always been critics who think they encourage dependency and attract undesirable people to the part of town where the services are provided.
Those criticisms continue to be heard and are part of the mean-spiritedness of today’s Republicans who feel no moral obligation to help those whose economic fortunes wax and wane with the capitalist economy. But these same Republicans now talk about waste, fraud, and abuse in these food assistance programs without much evidence to support their position.
The expanded food assistance programs of the 1960s and 1970s were severely curtailed in the early 1980s after Ronald Reagan became president. A 2002 government survey found that 90% of the then-existing food banks, 80% of the food kitchens, and all “known food rescue organizations” were created after 1981. Even Reagan’s mild Republicanism had a devastating effect on our collective responsibility to help those who were hungry.
While the private charitable efforts of the nation have taken up some of the slack created by Reagan’s cutbacks in food assistance, they have not been enough to meet the needs of people during economic downturns.
Currently, the government allocates about $105 billion for food assistance. Indiana University’s Center for Philanthropy reported that in 2005, total charitable giving in the U.S. was about $252 billion. Of that amount, less than $60 billion went to programs that included some food assistance. These figures suggest that private sector giving cannot possibly make up for the loss of federal government expenditures for food assistance.
Republicans seem to have distorted views about the amount of food assistance that is actually provided to those who need it. The SNAP program currently provides about $4.45 per day per person -- less than what most people spend on a hamburger and soft drink. As for fraud, it amounts to no more than 1% of the total, far less than Republicans would have us believe. And the fraud is not committed only by recipients. Some of that 1% in fraud is committed by food retailers who lie on their applications to be approved to participate in the program.
Most Americans support the federal government’s food assistance efforts, but the House Republicans do not reflect this broad national compassion toward people who have inadequate food resources. They are unwilling to accept that our founders viewed the collective efforts of the people, through the government, to include providing for “the general welfare.”
This point was so important to the founders’ understanding of the social contract they were creating that they provided for efforts to promote the general welfare in both the Preamble to the Constitution and in Section 8, which created the power to tax, provide for the common defense, and provide for the general welfare.
Virtually all of the Republicans voting against food assistance on July 11 support the right to life of the unborn. It is apparent that their concern for life does not extend beyond nine months of gestation.
Today’s Republicans can be fairly described much like the main character in Charles Dickens’s A Christmas Carol before he has an epiphany. Ebenezer Scrooge has only disgust for the poor, that group that he believes the world would be better off without, thus, "decreasing the surplus population." Scrooge thinks the poor are most adequately cared for by being in prisons and workhouses, which were dismal institutions of indentured servitude and impoverishment for the destitute during his time.
Unlike Republicans, 69 percent of Americans believe the federal government should have a major role in providing food to low-income families, according to a 2012 poll by Hart Research Associates, which measures attitudes toward the poor.
But as a result of gerrymandering of congressional districts, most Americans are not fairly represented by people who share their values. In the last election, more voters chose Democrat candidates, but the House has about a 55 percent majority of Republicans. Gerrymandering is one way that the minority diminishes the voice of the majority.
Anyone who still believes that the SNAP program is too generous should live for a week spending less than $1.50 per meal. That might make a prison or workhouse look pretty good. To learn more about hunger in America, food insecurity, and the way our economy exacerbates these problems, see the new documentary A Place At the Table and view the Frontline program “Two American Families.”
Knowledge about our country and its economic system is essential to being a good citizen.
[This is the first section of Part 11 of Bob Feldman's Rag Blog series on the hidden history of Texas.]
The oil industry of Texas continued to produce a lot of wealth for out-of-state Eastern investors, some local Texas businessmen, politicians, and investors, and the “non-profit” University of Texas during the Great Depression of the 1930s. But for most people who lived in Texas as farmers or workers between 1930 and 1940, economic survival continued to be difficult.
In an essay, “Women and Work During the Great Depression in Texas,” that appeared in the 2002 book that Donald Willett and Stephen Curley edited, titled Invisible Texans: Women and Minorities in Texas History, Baylor University Oral History Program Director Rebecca Sharpless described what life was like for most people who lived in Texas between 1930 and 1940:
Cotton families made up most of the rural population in Texas... In 1932, cotton prices hit a low of 5 cents a pound... Farmers spent more money raising their crops than they received for the sale. West Texans, furthermore, endured the miserable conditions known as the Dust Bowl. Between 1933 and 1936, drought scorched the land... Only the fortunate minority had running water in the house. Most rural families used outdoor toilets, known as privies... Most rural and town women still cooked on wood stoves... .
The majority of Texas farmers worked land owned by someone else... Many landowners... turned their tenants off the land... Between 1930 and 1940 the number of tenants in some parts of the state dropped by half... Many unemployed farmers were forced to go on government relief... By mid-1932, an estimated 400,000 Texans were out of work...
During the 1930s, more than half a million Texas women worked for wages. In urban areas, this group encompassed about 25 percent of Anglo women, about 25 percent of Mexican women, and 55 percent of African-American women... In 1932, researchers for the Women’s Bureau of the U.S. government found that women in Texas industries worked for the lowest wages in the nation... More than three-quarters of employed African-American women in Texas worked as domestic servants throughout the 1930s.
According to Randolph Campbell’s Gone To Texas:
The value of farms in Texas would fall from $3.6 billion in 1930 to $2.6 billion in 1940... The state had fewer manufacturing establishments in 1939 than in 1929, and workers... received less in wages. As late as 1940 more than 300,000 Texans had no employment in private enterprises... Black tenants... decreased in number from 65,000 to 32,000... Unemployment among black farm laborers probably ran as high as 90 percent by 1935... An estimated 250,000 Mexicans... left the state between 1929 and 1939.
Most of the Latino people of Mexican descent in Texas who left the state during the 1930s moved to Mexico, and “many left because they were denied access to government relief programs or fell victim to an intense federal repatriation program,” according to the same book.
Around 20,000 African-Americans who lived in Texas also left the state between 1930 and 1940; and “as late as 1937 Negroes formed 25 percent of all unemployed persons” in Texas, though they only “composed 14 percent” of the state’s population, according to Alwyn Barr’s Black Texans.
In San Antonio, most of the white Anglo women who had jobs between 1930 and 1940 either worked in shops as sales clerks or in offices as clerical workers, while most of the Latina women of Mexican descent who had jobs worked in light industries, the food canning industry, garment factories, cigar rolling firms, pecan shelling firms or as seamstresses.
Although Houston’s unemployment rate in January 1931 was around 23 percent, “Austin, cushioned by the presence of state government employees and the University of Texas probably suffered the least among major cities” in Texas, according to Gone To Texas. So, not surprisingly, during the 1930s the number of people who lived in Austin increased by 66 percent; and by 1940, 88,000 people now resided in Austin. As the “Women and Work During the Great Depression in Texas ” essay recalled:
In Austin... young white women could find employment in the state capital, in various places: state institutions and agencies, the telephone exchange, local mercantile establishments, chain variety stores, laundries, hotels and cafes, beauty parlors, canning factories, or binderies...”
But “black women could find jobs only in laundries, domestic service, and sometimes hotels as `scrub women’ or chamber maids,” “Mexican women could gain employment in canning factories, domestic services, laundries, and occasionally as seamstresses in dry goods stores,” and “the supply of rural women wanting work became so great that the local telephone service began to requiring applicants to have a high school diploma and a year of residence in Austin,” according to the same essay.
[Bob Feldman is an East Coast-based writer-activist and a former member of the Columbia SDS Steering Committee of the late 1960s. Read more articles by Bob Feldman on The Rag Blog.]
Reading “The Grapes of Wrath” in 2010: Immigration, capitalism, and Arizona's historic moment
By Alex Knight / The Rag Blog / June 14, 2010
[The Grapes of Wrath by John Steinbeck, published 1939 during the last Great Depression.]
Arizona SB1070, signed into law by Governor Jan Brewer on April 23, 2010, requires Arizona’s local and state law enforcement to demand the immigration status of anyone they suspect of being in the country illegally, and arrest them if they lack documents proving citizenship or legal residency.
Effectively making racial profiling into state policy, this law is the latest in a series of attacks on Latin American immigrants, as well as the entire Latino community, who must live with the fear of being interrogated by police for their brown skin. Then on May 11, Arizona went one step further, outlawing the teaching of ethnic studies classes, or any classes that “are designed primarily for students of a particular ethnic group or advocate ethnic solidarity." This same law also states that schools must fire English teachers who speak with a “heavy accent.”
Perhaps these new laws make sense if we imagine that undocumented immigrants are merely “aliens," a danger to the good, mostly white citizens of this great country. But suppose we look at the problem of immigration from the perspective of the immigrants? Why are they risking life and limb to come to a foreign land, far from their home and families? Why aren’t they deterred from making this trip no matter how many walls we put up, no matter how many police collaborate with ICE, no matter how many angry armed “Minutemen” vigilantes are conscripted to guard the border?
John Steinbeck’s classic novel The Grapes of Wrath, following the Joad family as they migrate to California during the “Dust Bowl” of the 1930s, sheds light on these questions in a way that perhaps every American can relate to. One of the most popular and well-written American books of all time, The Grapes of Wrath gives a very human perspective on the harsh lives of migrants, personified by the Joads -- a family of poor sharecroppers from Oklahoma.
Evicted from their family farm, just as the millions of Mexicans who have suffered enclosure from their land and become homeless and jobless because of NAFTA, the Joads travel to California in a desperate search of work, only to encounter the harassment of authorities and the hatred of the local population.
There are important differences between the “Okies” who traveled to the Southwest in the 1930s and Latino inmigrantes of the 2000s. The Joads, of course, were white, and did not cross a national border when they made their exodus. But at its core the story of the Joads is the story of the migrant workers, their troubles, their fears, but also their humanity, and their hope.
It is a story that can inspire us to recognize the historic nature of the moment in which we live, understand why these enormous transformations are occurring, and recognize that justice for the immigrants is justice for everyone, regardless of color or citizenship status.
"Migrant Mother." Destitute pea picker Florence Thompson with several of her children, photographed in Nipomo, California. Farm Security Administration (FSA) photo by Dorothy Lange (1936) / Wikimedia Commons.
Enclosure
In order to understand the inmigrantes we first have to understand the story of their displacement, or the enclosure of their land, which has left them homeless and with no other options than to leave their homeland in search of a wage. What can The Grapes of Wrath tell us about this reality?
People usually do not resort to risky and desperate moves unless they have nothing left to lose. Steinbeck begins the Joads’ story with the loss of everything they had: the small farm on which they had sustained their family for generations by growing cotton. Young Tom Joad, fresh out of prison, returns to his home to find it deserted.
The Reverend Casy and young Tom stood on the hill and looked down on the Joad place... Where the dooryard had been pounded hard by the bare feet of children and by stamping horses’ hooves and by the broad wagon wheels, it was cultivated now, and the dark green, dusty cotton grew... ‘Jesus!’ he said at last. "Hell musta popped here. There ain’t nobody livin’ there." (51)
Whether as tenants or small landholders, either for subsistence or for markets, the vast majority of the poor inmigrantes now coming to this country are fleeing the loss of their farms and their livelihoods, just as the Joads. Perhaps for generations, maybe hundreds or even thousands of years, they had lived in connection with the land and had been able to depend on it for the survival of their families and culture. The loss of this land is devastating to those cultures, but larger forces stand to gain by driving these people into homelessness.
The phenomenal book Caliban and the Witch: Women, the Body, and Primitive Accumulation (Autonomedia 2004) details the violent origins of capitalism in 15th-17th century Europe. In it, author Silvia Federici defines the “enclosures” that were necessary for giving birth to capitalism by divorcing the European peasantry from their traditional lands and leaving them with no other choice but to sell their labor for a wage in the emerging industrial economy.
In the 16th century, "enclosure" was a technical term, indicating a set of strategies the English lords and rich farmers used to eliminate communal land property and expand their holdings. [In the footnote she quotes E.D. Fryde:] "[p]rolonged harassment of tenants combined with threats of evictions at the slightest legal opportunity" and physical violence were used to bring about mass evictions… (69)
She goes on, revealing that this enclosure process remains a core element of the capitalist economy we live in:
In the same way in which multinational corporations take advantage of the peasants expropriated from their lands by the World Bank to construct "free export zones" where commodities are produced at the lowest cost, so, in the 16th and 17th centuries, merchant capitalists took advantage of the cheap labor-force that had been made available in the rural areas to break the power of the urban guilds... As soon as they lost access to land, all workers were plunged into a dependence unknown in medieval times, as their landless condition gave employers the power to cut their pay and lengthen the working-day." (72)
Enclosure is precisely the part of the story we never hear about in the mainstream immigration debate in America. It is never questioned why hundreds of thousands of workers are scrambling to come to the U.S., other than for “our freedom” or to “take our jobs.” But Steinbeck boldly begins The Grapes of Wrath by highlighting the enclosure process as it operated in rural America during the Great Depression.
In the 1930s, Oklahoma was ground zero for the “Dust Bowl." Unsustainable industrial farming practices such as the monoculture of cotton without crop rotation caused the soil to die, then be picked up by the wind and create enormous dust storms. On page 41, Steinbeck laments, “You know what cotton does to the land; robs it, sucks all the blood out of it.” The settling layers of dust killed the crops and made it harder for small farmers to earn a living, and many were driven into debt and became tenants on land that was then technically owned by the bank.
At the same time, large, wealthy landowners were able to use tractors and other new farming machinery to replace the many tenants who had previously been needed to work the land. “Pa borrowed money from the bank, and now the bank wants the land. The land company -- that’s the bank when it has land -- wants tractors, not families on the land” (193).
In this passage, Steinbeck brilliantly exposes the evictions as part of the normal functioning of capitalism, as a land owner arrives to evict a tenant family:
Some of the owner men were kind because they hated what they had to do, and some of them were angry because they hated to be cruel, and some of them were cold because they had long ago found that one could not be an owner unless one were cold. And all of them were caught in something larger than themselves...
If a bank or a finance company owned the land, the owner man said, the Bank -- or the Company -- needs -- wants -- insists -- must have -- as though the Bank or the Company were a monster, with thought and feeling, which had ensnared them… [T]he owner men explained the workings and the thinkings of the monster that was stronger than they were. A man can hold land if he can just eat and pay taxes; he can do that. But -- you see, a bank or a company can’t do that, because those creatures don’t breathe air, don’t eat side-meat. They breathe profits; they eat the interest on money. If they don’t get it, they die the way you die without air, without side-meat... The bank -- the monster has to have profits all the time. It can’t wait. It’ll die. When the monster stops growing, it dies. It can’t stay one size. (40-42)
As far as capitalism is concerned, whatever will maximize profit is the arrangement that must be pursued, regardless of the human consequences. The situation in Mexico today resembles that of Oklahoma 75 years ago. Small family farms are no longer profitable enough, and people are being thrown off their land every year by the thousands.
The North American Free Trade Agreement (NAFTA), signed into law by Bill Clinton on December 8, 1993, created the largest “free trade” zone in the world: Canada, the United States, and Mexico. The treaty stipulated that there could be no “barriers to trade," such as a tariff/tax on foreign products. In this video [below] MIT professor Noam Chomsky, interviewed by Rage Against the Machine frontman Zack de la Rocha, explains how the modern enclosures in Mexico are a result of NAFTA, which has not had the effect it was promised to have for the U.S. and Mexican economies.
As mentioned by Professor Chomsky, one direct result of NAFTA was the flooding of the Mexican market with artificially cheap agricultural products from the United States, such as corn, which is heavily subsidized by the U.S. government. From 1990-2000, the price of corn in Mexico fell by 58 percent, and as there is simply no way for the vast majority of Mexican tenant farmers to compete with this artificially low cost of American corn and other products, millions were driven into poverty and debt, and soon faced eviction.
This excellent article from the Institute for Food & Development Policy states that “Since NAFTA, 80 percent of rural Mexicans live in poverty, with 60 percent living in extreme poverty.” It also points out that as of 2004, a total of 1.7 million subsistence farmers had been pushed off their land because of NAFTA. So it should be no surprise that the number of Mexican immigrants entering the U.S. increased by 75 percent in the five years after NAFTA became law. The form of the enclosures has changed, but the fact has remained. People driven from their land will search for work in other places.
A group of Mexican immigrants await the arrival of authorities after being apprehended in the Arizona desert by members of Civil Homeland Defense, a citizen vigilante group. Photo by Mike Kane (2004) / UT Documentary Center / University of Texas at Austin.
Xenophobia
The second great lesson The Grapes of Wrath reveals about the immigrants is how they are feared and hated, by the local population as well as the authorities, and what it means to endure and overcome this xenophobia.
Once California belonged to Mexico and its land to Mexicans; and a horde of tattered feverish Americans poured in. And such was their hunger for land that they took the land -- stole Sutter’s land, Guerrero’s land, took the grants and broke them up and growled and quarreled over them, those frantic hungry men; and they guarded with guns the land they had stolen... And as time went on, the business men had the farms, and the farms grew larger, but there were fewer of them.
Now farming became industry, and the owners followed Rome, although they did not know it. They imported slaves, although they did not call them slaves: Chinese, Japanese, Mexicans, Filipinos. They live on rice and beans, the business men said. They don’t need much. They wouldn’t know what to do with good wages. Why, look how they live. Why, look what they eat. And if they get funny -- deport them. [....] And then the dispossessed were drawn west -- from Kansas, Oklahoma, Texas, New Mexico; from Nevada and Arkansas families, tribes, dusted out, tractored out. Caravans, carloads, homeless and hungry; twenty thousand and fifty thousand and a hundred thousand and two hundred thousand. They streamed over the mountains, hungry and restless -- restless as ants, scurrying to find work to do -- to lift, to push, to pull, to pick, to cut -- anything, any burden to bear, for food. The kids are hungry. We got no place to live...
They had hoped to find a home, and they found only hatred. Okies -- the owners hated them. And in the town, the storekeepers hated them because they had no money to spend... The town men, little bankers, hated Okies because there was nothing to gain from them. They had nothing. And the laboring people hated Okies because a hungry man must work, and if he must work, if he has to work, the wage payer automatically gives him less for his work; and then no one can get more. (297-300)
Throughout the book, as the weary Joads meander west on their old jalopy, their eagerness and optimism about finding decent work and a better life in California is dashed against the rocks of poverty and hatred. Early in the book, Tom’s pregnant sister Rose of Sharon Joad goes on about her expectations about life once the family arrives in California.
Well, we talked about it, me an’ Connie... Connie gonna get a job in a store or maybe a fact’ry. An’ he’s gonna study at home, maybe radio, so he can git to be an expert an’ maybe later have his own store... An’ Connie says I’m gonna have a doctor when the baby’s born; an’ maybe I’ll go to a hospiddle. An’ we’ll have a car, little car... (212)
But shortly after crossing the border into California, the Joad family encounters the authorities, who are less than pleased by the arrival of more migrants into their state. After setting up camp by a river, Ma settles down for a nap in the tent, only to be disturbed by a law enforcement agent who gives her a threatening welcome.
“Well, you ain’t in your country now. You’re in California, an’ we don’t want you goddamn Okies settlin’ down." Ma’s advance stopped. She looked puzzled. "Okies?" she said softly. "Okies." "Yeah, Okies! An’ if you’re here when I come tomorra, I’ll run ya in." He turned and walked to the next tent and banged on the canvas with his hand. "Who’s in here?" he said. (275)
It becomes clear through the story that the California police and authorities tolerate the presence of the “Okies” so they can be exploited for their extremely cheap labor. Sheriffs and rangers even guard the grounds of large private farms where migrants are bussed in. However, the cops maintain a close eye on the Okies, and are not afraid to resort to violence when they step out of line.
The Joads arrive one night in a “Hooverville,” the name for the slums on the edges of towns during the Great Depression where unemployed would set up camp. Here a contractor comes to find desperate workers, escorted by a deputy sheriff with whom Tom Joad gets into an altercation.
The contractor turned to the Chevrolet and called, "Joe!" His companion looked out and then swung the car door open and stepped out... "Ever see this guy before, Joe? He’s talkin’ red, agitating trouble…" "Hmmm, seems like I have. Las’ week when that used-car lot was busted into. Seems like I seen this fella hangin’ aroun’. Yep! I’d swear it’s the same fella." Suddenly the smile left his face. ‘Get in that car,’ he said, and he unhooked the strap that covered the butt of his automatic. Tom said, "You got nothin’ on him." The deputy swung around. "F you’d like to go in too, you jus’ open your trap once more. They was two fellas hangin’ around that lot." (338-9).
The goal of the authorities in the story, as in the country today, is to keep immigrants in a constant state of precariousness, where they cannot make waves for fear of being imprisoned or deported. This climate of fear is the real effect of Arizona SB1070, not to actually deport all the undocumented workers from the state, because that would hurt the economy that depends on their cheap labor.
In fact, this CNN video [below] documents that SB1070 has already driven away too many workers from the state and hurting the businesses that had employed them. It seems it has backfired so much that even Russell Pearce, the author of the legislation, has now reversed his stance and is supporting “guest worker” legislation to invite undocumented workers back into the state.
What does the climate of fear surrounding immigrants do for the U.S. capitalist economy and its ruling class?
First, it keeps undocumented immigrants in that precarious state where they will not seek help or point out injustices, nor will they try to organize unions and demand higher pay or working conditions. It guarantees they will mostly toil for less-than-minimum wages and suffer in silence.
Most Americans are not even aware that since NAFTA was enacted, at least 3,000 Mexicans have died trying to cross the border. Every wall that goes up on the border drives the immigrants into more remote deserts to reach their destination, increasing the likelihood of injury and death, but precious few U.S. citizens are willing to stick their necks out to help prevent such unnecessary deaths.
Second, the xenophobia encouraged by measures like SB1070 is useful for the ruling class because it drives a racial wedge into the American working class. Instead of uniting to fight for better jobs, affordable education, health care, housing, an end to environmental nightmare and endless wars, the anger of the common people is directed at the scapegoat of the immigrant.
Steinbeck illustrates this phenomenon when “a crowd of men” “armed with pick handles and shotguns,” confront the Joads after they flee the Hooverville. Interrogating and threatening the Joad family, these self-styled vigilantes act just as the “Minutemen” who today rove the deserts of Arizona, looking for “illegals.”
Though these people’s anger and fear over the state of the U.S. economy is warranted, they are failing to confront the actual thieves and criminals who have plunged the world into a new Great Depression. Because by identifying “foreigners” and people with brown skin and different accents as the reason why wages are low and jobs are lost, corporations and politicians are able to deflect attention away from the real source of economic hardship: themselves.
Conclusion
The crisis in the Southwest in the 1930s is unfortunately similar to the situation today. Hundreds of thousands of poor migrants, their land enclosed and with nowhere to go, facing long trips through the heat of the desert and the ice of xenophobia, are nevertheless persisting to do what they need to do to feed their families.
There is a tidal wave coming north now, which resembles one that three generations ago came west, but like that one there will be no stopping it by putting up walls and threatening people with violence or deportation. Desperate people will always do what they need to do to survive. The only way to stem the flow is to repair the dam that has burst through poverty and enclosure.
Latinos need decent livelihoods in Latin America before they will stop coming here, “scurrying to find work to do.” Repealing NAFTA and ending the massive corn subsidies for U.S. agribusiness would be two huge steps in the right direction. Rather than making the United States into a nasty place that no one will want to come to, why not focus on helping Mexico, Latin America, and the world as a whole, be suitable places to live, work, and raise a family?
The Grapes of Wrath, though it details the hardships of the migrant workers at great length, won the Pulitzer Prize and captured the hearts of the nation because it is ultimately a hopeful book that inspires us to act for positive change.
John Steinbeck, flexing his radical muscles, argues in the book that by targeting the weak and poor with measures such as those currently being enacted in Arizona, capitalism is only putting off its inevitable demise. “The great owners ignored the cries of history.” “[Especially,] the little screaming fact that sounds through all history: repression works only to strengthen and knit the repressed.”
He explains:
The land fell into fewer hands, the number of dispossessed increased, and every effort of the great owners was directed at repression. The money was spent for arms, for gas to protect the great holdings, and spies were sent to catch the murmuring of revolt so that it might be stamped out. The changing economy was ignored; and only means to destroy revolt were considered, while the causes of revolt went on. The tractors which throw men out of work, the machines which produce, all were increased; and more and more families scampered on the highways, looking for crumbs from the great holdings, lusting after the land beside the roads. The great owners formed associations for protection and they met to discuss ways to intimidate, to kill, to gas. And always they were in fear of a principal -- three hundred thousand -- if they ever move under a leader -- the end. Three hundred thousand, hungry and miserable; if they ever know themselves, the land will be theirs and all the gas, all the rifles in the world won’t stop them.” (306-7)
[Alex Knight is an organizer, teacher and writer in Philadelphia. He is currently helping Philly mobilize for the United States Social Forum Source in Detroit this June 22-26. He also maintains the website endofcapitalism.com and is in the process of writing a book called The End of Capitalism. He can be reached at activistalex@gmail.com.]
Good times around the corner? Real unemployment rate at 17.5 percent
This economic disaster was created by far too many years of Reagan-Bush-supply-side-trickle-down-union-busting-corporate-welfare-market-driven economic policy.
By Ted McLaughlin / The Rag Blog / November 7, 2009
Yes, I know the federal government says the unemployment rate is now 10.2% -- up from 9.8% after the country suffered a net loss of another 190,000 jobs in October. And that is a very scary figure in itself. After all, it shows nearly 16 million Americans are out of work.
But those are the "adjusted" figures the federal government uses to keep the American people from knowing just how bad unemployment really is in this country. When you add in the number of people who have given up trying to find a job and the people who have accepted part-time work because they can't find a full-time job, you get much closer to the REAL unemployment rate. The sad fact is that the real unemployment rate is now at least 17.5%. That means more than one out of every six workers in this country cannot find a full-time job.
Folks, that's rapidly approaching the unemployment figures from the Great Depression, when the rate of unemployment climbed over 20%. And the government admits that the rate will continue to climb over the next several months (and probably longer). It is within the realm of possibility that we'll reach those Great Depression numbers.
What bothers me is that the government and private economic pundits are currently trying to convince Americans that better times are just around the corner. They tell us the recession is actually over (because one quarter of GDP showed some growth). Then they assure us that unemployment is just a lagging indicator and will turn around in a few months as the economy continues to grow.
I wish I could believe that, but I don't. All of the jobs were not lost due to the poor economy. Some of those jobs were cut so the companies could show a short-term gain and drive up their stocks -- making millions for executives and investors. Many other good-paying jobs have been shipped overseas where the companies can exploit low-wage workers. None of these jobs are coming back, regardless of how much the economy rebounds.
Around 70% of the GDP (Gross Domestic Product) figure depends on consumer buying in this country. With the job losses continuing to rise each month in this country, fewer people each month will have money to spend. Those who still are working will also close their pocketbooks even tighter because the tanking economy scares them.
Even when the economy does start producing jobs instead of losing them, what kind of jobs will they be? Will they be good-paying jobs with benefits, or minimum wage jobs with no benefits? There is no shame in flipping burgers, but you certainly can't buy food, make house payments and pay for a car with that kind of job.
Political pundits are now saying that if the economy and jobs don't turn around before the next election, it will be blamed on the Democrats because they are in power. That's probably true, even though it may be unfair.
Lest we forget, this mess wasn't created by the Democrats. This economic disaster was created by far too many years of Reagan-Bush-supply-side-trickle-down-union-busting-corporate-welfare-market-driven economic policy. The elder Bush was right when he called it "voodoo economics" (before he sold out and went along with it).
The truth is that the recession is not over. It won't be over until the economy starts producing good jobs. But fasten your seat belts, because that's a long way down a very bumpy road.
[Rag Blog contributor Ted McLaughlin also posts at jobsanger.]
Jane Darwell as Ma Joad and Henry Fonda as Tom Joad.
Above the din, Ma Joad's voice still confident, clear By Pierre Tristam / April 7, 2009
Homeless camps now sprawl instead of developments. Unemployment numbers are spilling off front pages into our lives. Employers are turning workers into modern-day sharecroppers (every man his own contractor). And next week, as if on cue, marks the 70th anniversary of the publication of "The Grapes of Wrath," John Steinbeck's novel of foreclosure and dispossession in the 1930s. How timely.
The Oakies at the heart of the story were sharecropper migrants drummed off their land by banks and the Dust Bowl only to be terrorized by locals across the West in what Time in 1939 called "one of the grimmest migrations of history." By then the Depression and Franklin Roosevelt had shaken up the country's conscience, but Steinbeck gave the decade's angers its voice. It was outraged and lyrical -- as revolted over the country's exploitative instincts as it was hopeful of its redemptive capital. Have we lost something since? The din of hateful sanctimony mugs the airwaves, giving no chance to a voice like Steinbeck's, at once protesting, confident and forgiving. But nothing has been lost, exactly.
"The Grapes of Wrath" resonated with American empathy as few works of art ever have. It sold 100,000 copies in less than a week and became the biggest-selling novel of 1939. Within six days of publication Twentieth Century-Fox had acquired the movie rights for $75,000, close to a record for a novel back then. Within 20 days Henry Fonda was cast as Tom Joad and the ending was rewritten, supposedly to make it less grim, but in fact to avoid the image of Tom's sister, Rosasharn (who's given birth to a stillborn baby), breastfeeding a stranger demolished by starvation. The most charitable image of the novel somehow turned, in the perverted little minds of Hollywood producers, into an objectionably unhappy ending.
In the movie ending, what's left of the Joads amble down a road toward the promise of 20 days of cotton picking while Ma, played by the wonderful Jane Darwell, who won an Oscar for the role, sums it all up: "I ain't never gonna be scared no more. For a while it looked as though we was beat. Good and beat. Looked like we had nobody in the whole wide world but enemies, like nobody was friendly no more. Made me feel kinda bad and scared, too. Like we was lost and nobody cared. . . . We keep a comin'. We're the people that live. They can't wipe us out, they can't lick us. We'll go on forever Pa, 'cause we're the people." The End.
Steinbeck loved it. "In fact," he wrote his agent, "with descriptive material removed, it is a harsher thing than the book, by far. It seems unbelievable but it is true." He couldn't have objected to the ending because his books were nothing if not sentimental anyway. It was their weakness and their strength, what makes reading Steinbeck the kind of guilty pleasure that secretly wishes irony wasn't every contemporary novel's inside joke.
Judging from the bestseller list's biggest titles of the past 40 weeks (a novel about one woman's resistance to space aliens and comedian Chelsea Handler's "Are You There, Vodka? It's Me, Chelsea") you'd think Tom Joad's famous last words, in the book and the movie, would themselves sound like alien gibberish to contemporary ears: "Wherever they's a fight so hungry people can eat, I'll be there. Wherever they's a cop beatin' up a guy, I'll be there . . ." Steinbeck took the lines from Eugene Debs, the social democrat and union founder who said, "While there is a lower class, I am in it; while there is a criminal class, I am of it; while there is a soul in prison, I am not free." Speak these words today -- words that once redeemed America -- and you're more than likely branded a scumbag, a socialist, a loser, or worse.
But self-pity would be very un-Ma like. So would romanticizing Debs and Tom Joad as some sort of irrecoverable standard of decency. Recently I came across words similar to theirs: "Where there is injustice, we should correct it; where there is poverty, we should eliminate it; where there is corruption, we should stamp it out; where there is violence we should punish it; where there is neglect, we should provide care; where there is war, we should restore peace; and wherever corrections are achieved we should add them permanently to our storehouse of treasures."
Those weren't in any fiction. You can read the words on one of the most famous tombstones at Arlington National Cemetery -- that of Earl Warren, the lifelong Republican and Chief Justice of the United States from 1953 to 1969. You can also see the line from Tom Joad's last words to Ma Joad's to Warren's, with this difference: Warren and people like him, when they had the power, made them real. That voice, that instinct, is as American as grand old plagues of greed and exploitation. It was on the defensive for a few decades. But it was never absent. Last November, it was 10 million voices louder than the cynics'. There's wrath in those grapes yet. And wine, too.
[Pierre Tristam is a Daytona Beach News-Journal editorial writer. Reach him at ptristam@att.net or through his personal Web site at www.pierretristam.com.]
'This society has run its course. We the people have long been ready for fresh growth, greener growth, scaled more to the needs of human beings and their communities.' By Doris “Granny D” Haddock
[These remarks are excerpted from a speech given by Doris “Granny D” Haddock on October 12, 2008, in Philadelphia, as it appears in the December issue of New Hampshire Magazine. Granny D, 97, gained fame by walking across the continental United States in 1999 to advocate campaign finance reform and in 2004 ran unsuccessfully as a Democrat for the US Senate from New Hampshire. The entire speech can be found at NH Mag's website.]
It seems that the world is changing around us this autumn. I know that some of my feistier friends have been hoping for big social and political changes — for a revolution of some sort — to get us on a new path to a better future on a healthier Earth. I do not think they imagined that the revolution might take the form of strange torpedoes called credit default swap derivatives, exploding our banks and bankrupting our governments, but revolutions rarely arrive or turn out the way you expect. This society has run its course. We the people have long been ready for fresh growth, greener growth, scaled more to the needs of human beings and their communities. I have been thinking lately of my old Texas writer friend Molly Ivins, who passed away not long ago and left us with an insufficient store of good humor to see all the amusing and satisfying turns of justice in the present economic collapse. She would remind us that Freedom’s just another word for no retirement money left to lose. Yes, the walls have crumbled, but now we are free from all that anxiety about losing all our money. There’s not much left to worry about.
Sticking together, none of us will starve. Besides, we can always grow enough zucchini for everyone, can’t we?
We need not fear Fear Itself this time around, for fear is a humbug. If we have learned anything in all the Aquarian splendor of the last few generations, it is that fear for the loss of material things is but the jitters of an addict, and the jitters go away once we relax into whatever new world we find ourselves come into.
You will hear people on television worrying about the return of the Great Depression. I have heard that several times during the last week or so.
I am old enough to have memories of that time, are any of you? Maybe we were hungry sometimes, but did we starve? No, because we had our friends and family and the earth to sustain us. The earth may have been reluctant to feed us in some of those years, but never our friends nor our families.
If you lived through that time, and if now you hear some young expert on television saying the term “Great Depression” as if it were a great monster who might return, let me ask you — you who remember the last time — there are a few of us left — let me ask you if your memories of that time are not more round and golden than sharp-edged?
My husband, Jim, made an ice rink from a little meadow, and he made a few dollars extra those winters of the Depression. I learned to put on one-woman plays, and performed in women’s clubs here and there, making the rest of what we needed. We were fountains of creativity. We were fountains of friendship to our neighbors. As a nation, we were a mighty river of mutual support.
That same Great Depression made some people in other countries ready for violence, genocide and war. But, somehow, through the exceptional miracle that is America itself, the hard times only made us more willing to help the world when our help was needed.
I am not advocating hardship, and I am not cheerleading for poverty. Indeed, prosperity is the green wreath we cherish most, though it means little without the times between.
How prepared are Americans today to cope, adjust, improvise, and to help one another as things really get tough in the coming year or two? Could really bad times that go on and on bring about a forced reset of the American psyche?
By Larry Ray / The Rag Blog / December 25, 2008
What happens after the last strains of Auld Lang Syne fade away on New Year’s Eve, and the glow of the historic inauguration of Barack Obama on January 20th quickly dims? By then, the deep economic mess we face should really start to sink in across America. Those of us in our Golden Years may see things coming that those of more recent generations can’t even imagine. Its really a matter of what our parents knew about the great depression in the 1930’s and what they taught us when we were young. But if you were born in 1970, by the time you were old enough to remember daily life, things would have probably seemed fine. Your parents grew up when America was taking deep swigs of the new good life and opportunity after WWII. My folks were little kids when the 1929 crash happened. They grew up in the depth of the depression and did without. So, I got stern warnings about spending and saving money. Warnings that 40-somethings today probably didn’t get. And 40-somethings certainly didn’t see thrift and restraint reflected in the America of their youth.
How prepared are Americans today to cope, adjust, improvise, and to help one another as things really get tough in the coming year or two? Could really bad times that go on and on bring about a forced reset of the American psyche? A sea-change in leadership is coming, but a new Obama administration will begin work in the midst of global recession. Our new leaders will inherit record-setting national debt, and the diplomatic debris and great political uncertainty left by Bush and company. Massive government stimulus and work programs will be part of the long term solution but individual responsibility for daily survival will be key on the community level.
Compared to the more than ten years of misery, loss, unemployment, hunger and grinding uncertainty following the crash of 1929, we are a much stronger nation today. But the ability of average Americans to make do and to do without will be an unfolding saga. Will the new jobless again be forced to depend upon soup-kitchens and handouts to survive? Can we even imagine that? Millions, who for decades have been spending money they do not have, using a wallet full of credit cards to get whatever they want, will be forced to take a hard look at themselves. A pay-as-you-go world is a great social leveling force.
I would like to see an exchange of ideas about what you see coming on the basic person to person level. Post a comment and let's hear your thoughts and observations. Hardship can also create positive changes. Will humbling loss and poverty merely increase crimes like shoplifting and burglaries or will it bring out a renewed American strength and pride? What role will the internet and wireless communication make as times get really tough?
Let's start by exchanging ideas and talking to one another early on.
[Retired journalist Larry Ray is a Texas native and former Austin television news anchor. He also posts at The iHandbill.]
'The financial crisis involves a great deal more than shaky home mortgagers. The key problem is that our financial markets have been deregulated and, lacking policing, have engaged in a massive speculative binge.'
By Sherman DeBrosse / The Rag Blog / December 12, 2008
[This is the first of a three-part series on the economy by The Rag Blog's Sherman DeBrosse.]
Almost 70 years ago, the Great Depression began after the stock market collapsed. This time, a recession came first in December, 2007. Then a mortgage crisis in 2008 triggered a meltdown of the financial system. After the collapse of Lehman Brothers on Sept. 15, the markets entered uncharted territory, and it soon became clear that financial houses held trillions in worthless paper. Moreover, bad paper from America had poisoned markets abroad. Overwhelmed by their own debts and bad assets, banks and financial houses protectively dried up all credit. This development deepened the recession. At this juncture, a third blow to the domestic economy looms large and could push the economy into a deep pit. It depends on how many more bankruptcies there are and whether the Big Three automakers are allowed to go under.
We were months into the economic collapse of 2008, and we still do not quite know what has hit us. Four years ago, Paul Krugman warned that the housing bubble carried with it the seeds of disaster. There were bad sub-prime loans and home owners refinanced their homes to get extra cash to spend. The sub-prime market fell apart in the summer of 2007, and the larger mortgage market collapsed this year.
This is clearly the worst financial crisis since 1929, there are more safety nets in place now than in 1929, so it is unlikely that the current bad times will match the Great Depression. Cushions are in place such as Social Security and insured savings. Another difference is that even conservatives know that the people expect government to act to improve conditions. Had the GOP had another ten years to stamp out the New Deal heritage, this public expectation might have been considerably diminished.
It is difficult to determine how many people have lost or will lose their jobs as a result of the economic melt-down. So far, more than 2 million have lost their jobs this year. Productivity dropped to a 26 year level. We cannot trust our unemployment figures because we only include in the work force those officially looking for work. If unemployment benefits are not extended, those whose benefits have run out simply disappear from the equation. The Bureau of Labor Statistics recognizes this and generates another estimate of real unemployment, which stood at 9.2 % in April, and must be much higher now.
We are told that as many as 3 million home mortgages are in danger of forfeiture. Assume that each has lost $100,000 in value, and we would have about $300,000,000, 000 in lost value. Even if my estimate of loss per home is wrong by half, we would still be looking at a mortgage bail-out of $600,000,000. The fact is that much more is involved than mortgage defaults.
The problem is that in the financial casino, it is possible to take $600 of bad mortgages and create trillions of bad assets. Of course, traders also have used other bad assets to create still other bad securities. Wall Street had built an elaborate and very fragile house of cards built on speculation which was made far less stable when the mortgage crisis occurred.
The mortgages were bundled and turned into collateralized debt obligations (CDOs); they were securitized, and sold as investments. Then other instruments, that derived their worth from the CDOs, were created and traded. These securities that derive their value from other securities are called derivatives, and, at first, they were designed to spread risk. They could be stacked on top of one another. Soon, ways were found to use them for gambling. This is how bubbles are created, and soon, a mortgage based bubble was created. A huge housing bubble was created; then it burst. Now 12 million home owners have mortgages valued at more than their home were worth. Only the people who created it, profited. It could be that they did nothing illegal due to legislation passed in 1999 and 2000. Lax enforcement of whatever regulatory legislation there was added to the problem.
One kind of transaction called credit default swaps was intended to protect against default on the bundled mortgages. The amount of value assigned to these swaps, before they began to come apart, was $62 trillion. Swaps also involve other securities, and are essentially bets on whether the issuers can make good on their obligations. Warren Buffett called the swaps and similar instruments “financial Weapons of mass destruction.”
A very serious problem with securitizing these mortgages and other loans occurs at the local level, where it becomes difficult for people to renegotiate their mortgages when they are held by some far distant bank. Often in the past, a motel owner or gas station proprietor could go to the local bank to renegotiate the terms of his mortgage in rough times. The same is true of commercial paper, which also gets securitized. This time around, these people will have great problems keeping their businesses open by renegotiating the terms of their loans. Focusing mainly on Wall Street problems will not address these Main Street problems and will eventually increase the former.
When the crisis came, many Republicans blamed it on Jimmy Carter and the Democrats who wanted to help minorities own their own homes. The idea was that 1977 legislation against blue-lining somehow forced bankers to make bad loans. No sensible person can believe that the largest part of bad home loan debt was incurred by blacks and Hispanics. That’s a very powerful argument for people who don’t like Blacks and Hispanics. Most of these folks will not look into the problem any further, even if they lost half their stocks and bonds portfolio.
The financial crisis involves a great deal more than shaky home mortgagers. The key problem is that our financial markets have been deregulated and, lacking policing, have engaged in a massive speculative binge. Now the taxpayer is being asked to pay for the damages. We have spent more than two trillion dollars patching up the financial system, and the government is said to be potentially liable for from $7.76 to 8.5 trillion, according to Bloomberg. That includes what has already been provided. CitiBank alone was just given a second loan and the promise to guarantee $300 billion of its questionable debt. There is no guarantee that the liability for casino capitalism will be capped at between $7.76 billion and 8.5 trillion. Most of this debt came not from sub-prime borrowing or other weak mortgage. It is a product of casino capitalism.
[Sherman DeBrosse, the pseudonym for a retired history professor, is a contributor to The Rag Blog and also blogs at Sherm Says and on DailyKos.]
'What kind of new administration could actually get beyond Roosevelt's era as well as our own staggering disaster, leaving "the bailout state" behind us?' By Tom Engelhardt / December 1, 2008
See 'Roosevelt's Brain Trust vs Obama's Brainiacs' by Steve Fraser, Below.
If you want to catch something of the fears and hopes of Americans right now, go to News.Google.com and try searching for a few words. For instance, put in "FDR" -- the well-known initials of the man who was president four times and took America through the Great Depression and all but the last months of World War II -- and endless screens of references pop up. The Nation and the National Review have both devoted space to him. Paul Krugman and George Will both thought this was the moment to focus on him. Checking out the headlines you might think that the intervening sixty-four years since his death had simply vanished: ("Will FDR Inspire Obama?" "Obama's jobs plan could echo FDR's," "Clinton's potential pitfalls seen in FDR's secretary of State," Channeling FDR," "FDR saved capitalism -- now it's Obama's turn," and so on); headlines galore, not to speak of that Time Magazine "Obama as FDR?" cover.
Or, if you have another moment, try "the New Deal," or even the 2008 Obama version of the same,"the new New Deal"; or, if you really want to get a sense of the moment, try "since the Great Depression," which now seems to be embedded in any article about the present economic situation -- as in the "worst crisis since the Great Depression," or "the worst economic downturn since the Great Depression," or even "the most severe credit crunch since the Great Depression." It's a phrase that hovers between horror and euphemism, between the urge to invoke the word "depression" for our moment and an almost superstitious fear of doing so.
Historian Steve Fraser, author of Wall Street: America's Dream Palace, has been writing at TomDispatch about both the Great Depression and the possibility of a modern version of the same for some time. Now, he returns to the dawn of the Rooseveltian era to offer a unique and telling comparison -- between FDR's expansive, experimental "brain trust" and Obama's new "team of rivals." In his usual fashion, he raises the truly pregnant question: What kind of new administration could actually get beyond Roosevelt's era as well as our own staggering disaster, leaving "the bailout state" behind us?
Beyond the Bailout State: Roosevelt's Brain Trust vs Obama's Brainiacs By Steve Fraser / December 1, 2008
On a December day in 1932, with the country prostrate under the weight of the Great Depression, ex-president Calvin Coolidge -- who had presided over the reckless stock market boom of the Jazz Age Twenties (and famously declaimed that "the business of America is business") -- confided to a friend: "We are in a new era to which I do not belong." He punctuated those words, a few weeks later, by dying.
A similar premonition grips the popular imagination today. A new era beckons. No person has been more responsible for arousing that expectation than President-elect Barack Obama. From beginning to end, his presidential campaign was born aloft by invocations of the "fierce urgency of now," by "change we can believe in," by "yes, we can!" and by the obvious significance of his race and generation. Not surprisingly then, as the gravity of the national economic calamity has become terrifyingly clearer, yearnings for salvation have attached themselves ever more firmly to the incoming administration.
Yet today, something is amiss. Even if everyone is now using the Great Depression and the New Deal as benchmarks for what we're living through, Act I of the new script has already veered away from the original.
A suffocating political and intellectual provincialism has captured the new administration in embryo. Instead of embracing a sense of adventurousness, a readiness to break with the past so enthusiastically promoted during the campaign, Obama seems overcome with inhibitions and fears.
Practically without exception he has chosen to staff his government at its highest levels with refugees from the Clinton years. This is emphatically true in the realms of foreign and economic policy. It would, in fact, be hard to find an original idea among the new appointees being called to power in those realms -- some way of looking at the American empire abroad or the structure of power and wealth at home that departs radically from views in circulation a decade or more ago. A team photo of Obama's key cabinet and other appointments at Treasury, Health and Human Services, Commerce, the President's Economic Recovery Advisory Board, the State Department, the Pentagon, the National Security Council, and in the U.S. Intelligence Community, not to speak of senior advisory posts around the President himself, could practically have been teleported from perhaps the year 1995.
Recycled Clintonism is recycled neo-liberalism. This is change only the brainiacs from Hyde Park and Harvard Square could believe in. Only the experts could get hot under the collar about the slight differences between "behavioral economics" (the latest academic fad that fascinates some high level Obama-ites) and straight-up neo-liberal deference to the market. And here's the sobering thing: despite the grotesque extremism of the Bush years, neo-liberalism also served as its ideological magnetic north.
Is this parochialism, this timorousness and lack of imagination, inevitable in a period like our own, when the unknown looms menacingly and one natural reaction is certainly to draw back, to find refuge in the familiar? Here, the New Deal years can be instructive.
Roosevelt was no radical; indeed, he shared many of the conservative convictions of his class and times. He believed deeply in both balanced budgets and the demoralizing effects of relief on the poor. He tried mightily to rally the business community to his side. For him, the labor movement was terra incognita and -- though it may be hard to believe today -- played no role in his initial policy and political calculations. Nonetheless, right from the beginning, Roosevelt cobbled together a cabinet and circle of advisers strikingly heterogeneous in its views, one that, by comparison, makes Obama's inner sanctum, as it is developing today, look like a sectarian cult.
Heterogeneous does not mean radical. Some of FDR's early appointments -- as at the Treasury Department -- were die-hard conservatives. Jesse Jones, who ran the Reconstruction Finance Corporation, a Hoover administration creation, retained by FDR, that had been designed to rescue tottering banks, railroads, and other enterprises too big to fail, was a practitioner of business-friendly bailout capitalism before present Treasury Secretary Henry Paulson was even born.
But there was also Henry Wallace as Secretary of Agriculture, a Midwestern progressive who would become the standard bearer for the most left-leaning segments of the New Deal coalition. He was joined at the Agriculture Department -- far more important then than now -- by men like Mordecai Ezekiel, who was prepared to challenge the power of the country's landed oligarchs.
Then there were corporatists like Raymond Moley, Donald Richberg, and General Hugh Johnson. Moley was an original member of FDR's legendary "brain trust" (a small group of the President's most influential advisers who often held no official government position). Richberg and Johnson helped design and run the National Recovery Administration (the New Deal's first and failed attempt at industrial recovery). All three men were partial to the interests of the country's peak corporations. All three wanted them released from the strictures of the Sherman Anti-Trust Act so that they could collaborate in setting prices and wages to arrest the killing deflation that gripped the economy. But they also wanted these corporate behemoths and the codes of competition they promulgated subjected to government oversight and restraints.
Meanwhile, Felix Frankfurter (another confidant of FDR's and a future Supreme Court justice), aided by the behind-the-scenes efforts of Supreme Court Justice Louis Brandeis, fiercely contested the influence of the corporatists within the new administration, favoring anti-trust and then-new Keynesian approaches to economic recovery. Secretary of Labor Frances Perkins used her extensive ties to the social work community and the labor movement to keep an otherwise tone-deaf president apprised of portentous rumblings from that quarter. In this fashion, she eased the way for the passage of the Wagner Act that legislated the right to organize and bargain collectively, and that ended the reign of industrial autocracy in the workplace.
Roosevelt's "brain trust" also included Rexford Tugwell. He was an avid proponent of government economic planning. Another founding member of the "brain trust" was Adolph Berle, who had published a bestselling, scathing indictment of the financial and social irresponsibility of the corporate elite just before FDR assumed office.
People like Tugwell and others, including future Federal Reserve Board chairman Marriner Eccles, were believers in Keynesian deficit spending as the road to recovery and argued fiercely for this position within the inner councils of the administration, even while Roosevelt himself remained, until later in his presidency, an orthodox budget balancer.
All of these people -- the corporatists and the Keynesians, the planners and the anti-trusters -- were there at the creation. They often came to blows. A genuine administration of "rivals" didn't faze FDR. He was deft at borrowing all of, or pieces of, their ideas, then jettisoning some when they didn't work, and playing one faction against another in a remarkable display of political agility. Roosevelt's tolerance of real differences stands in stark contrast to the new administration's cloning of the Clinton-era brainiacs.
It was this openness to a variety of often untested solutions -- including at that point Keynesianism -- that helped give the New Deal the flexibility to adjust to shifts in the country's political chemistry in the worst of times. If the New Deal came to represent a watershed in American history, it was in part due to the capaciousness of its imagination, its experimental elasticity, and its willingness to venture beyond the orthodox. Many failures were born of this, but so, too, many enduring triumphs.
Beyond the Bailout State
Why, at least so far, is the Obama approach so different? Some of it no doubt has to do with the same native caution that caused FDR to navigate carefully in treacherous waters. But some of it may result from the fallout of history. Because the Great Depression and the New Deal happened, nothing can ever really be the same again.
We are accustomed to thinking of the Bush years -- maybe even the whole era from the presidency of Ronald Reagan on -- as a throwback to the 1920s or even the laissez-faire golden years of the Gilded Age of the late nineteenth century. In some respects, that's probably accurate, but in at least one critical way it's not. Back in those days, faced with a potentially terminal financial crisis, the government did nothing, simply letting the economy plunge into depression. This happened repeatedly until 1929, when it happened again.
Since the New Deal, however, inaction has ceased to be a viable option for Washington. State intervention to prevent catastrophe has become an unspoken axiom of political life in perilous times. Of course, thanks to regulatory mechanisms installed during the New Deal years, there was no need to engage in heroic rescues -- not, at least, until the triumph of deregulation in our own time.
Then crises began to erupt with ever greater frequency -- the stock market crash of 1987, the savings and loan collapse at the end of that decade, the massive Latin American debt defaults of the early 1990s, the collapse of the economies of the Asian "tigers" in the mid-1990s, the near bankruptcy of the then-huge hedge fund, Long Term Capital Management, later in that decade, the dot-com implosion at the turn the century, climaxing with the general global collapse of the present moment. Beginning perhaps with the bailout of the Chrysler Corporation in the late 1970s, these recurring crises have been met with increasingly strenuous efforts to stop the bleeding by what some have called "the bailout state."
The Resolution Trust Corporation, created to rescue the savings and loan industry, first institutionalized what Kevin Phillips has since described as a new political economy of "financial mercantilism." Under this new order the state stands ready to backstop the private sector -- or at least the financial sub-sector which, for the past quarter century, has been the driving engine of economic growth -- whenever it undergoes severe stress.
Today, the starting point for all mainstream policymakers, even those who otherwise preach the virtues of the free market and the evils of big government, is the active intervention of the state to prevent the failure of private-sector institutions considered "too big to fail" (as with most recently Citigroup and the insurance company AIG). So, too, the tolerance level for deficit spending, not only for military purposes but, in extremis, to help stop ordinary people from going under, is infinitely higher than in 1932. Ronald Reagan was prepared to live with such spending, if necessary, even as he removed portraits of Thomas Jefferson and Harry S. Truman from the Cabinet Room and replaced them with a canvas of Calvin Coolidge.
The question for our "new era" -- not one our New Deal ancestors would have thought to ask -- has become: How do we get beyond the bailout state? This is one crucial realm where genuinely new thinking and new ideas are badly needed.
At the moment, as best we can make out, the bailout state is being managed in secret and apparently in the interests, above all, of those who run the financial institutions being "rescued." Often, we don't actually know who is getting what from the Federal Reserve and the Treasury, or on what terms, or even which institutions are being helped and which aren't, or often what our public monies are actually being used for.
What we do know, however, is anything but encouraging. It includes tax exemptions for merging banks, prices for public-equity stakes in failing outfits that far exceed what is being paid by governments (or even private investors) abroad for similar holdings. Add to this a stark lack of accountability, aggravated by the fact that the U.S. government has neither voting rights (nor even a voice) on boards of directors whose firms would be in bankruptcy court without Washington's aid.
Living in an Empire of Depression
Are we, then, witnessing the birth of some warped, exceedingly partial version of state capitalism -- partial, that is, to the resuscitation of the old order? If so, lurking within this string of bum deals might there not be a great opportunity? Putting the economy and country back together will require massive resources directed toward common purposes. There is no more suitable means of mobilizing and steering those resources than the institutions of democratic government.
Under the present dispensation, the bailout state makes the government the handmaiden of the financial sector. Under a new one, the tables might be turned. But who will speak for that option within the limited councils of the Obama team?
A real democratic nationalization of the banks -- good value for our money rather than good money to add to their value -- should be part of the policy agenda up for discussion in the Obama era. As things now stand, the public supplies the loans and the investment capital, but the key decisions about how they are to be deployed remain in private hands. A democratic version of nationalizing the financial system would transfer these critical decisions to new institutions created by the Congress and designed to pursue public, not private, objectives. How to subject the flow of credit and investment capital to public control ought to be on the drawing boards if we are to look beyond the old New Deal to a new one.
Or, for instance, if we are to bail out the auto industry, which we should -- millions of jobs, businesses, communities, and what's left of once powerful and proud unions are at stake -- then why not talk about its nationalization, too? Why not create a representative body of workers, consumers, environmentalists, suppliers, and other interested parties to supervise the industry's reorganization and retooling to produce, just as the president-elect says he wants, new green means of transportation -- and not just cars?
Why not apply the same model to the rehabilitation of the nation's infrastructure; indeed, why not to the reindustrialization of the country as a whole? If, as so many commentators are now claiming, what lies ahead is the kind of massive, crippling deflation characteristic of such crises, then why not consider creating democratic mechanisms to impose an incomes policy on wages and prices that works against that deflation?
Overseas, if everything isn't up for discussion -- and it most certainly isn't -- it ought to be. What happens there bears directly on our future here at home. After all, we live in the empire of depression. America's favorite export for more than a decade has been a toxic line-up of securitized debt. Having ingested it in lethal amounts, every economy in the world from Iceland's and Germany's to Russia's and Indonesia's is either folding up or threatening to fold up like an accordion under the pressure of economic disaster.
Until now, the American way of life, including its economy of mass consumption, has depended on maintaining the country's global preeminence by any means possible: economic, political, and, in the end, military. The news of the Bush years was that, in this mix, Washington reached for its six-guns so much more quickly.
A global depression will challenge that fundamental hierarchy in every conceivable way. The United States can try to recapture its imperiled hegemony by methods familiar to the Obama-Clinton-Bush (the father) foreign policy establishment, that is by using the country's waning but still intimidating economic and military muscle. But that's a devil's game played at exorbitant cost which will further imperil the domestic economy.
It might, of course, be possible, as in domestic affairs, to try something new, something that embraces the public redevelopment of America in concert with the global South. This would entail at a minimum a radical break with the "Washington Consensus" of the Clinton years in which the United States insisted that the rest of the world conform to its free market model of economic behavior. It would establish multilateral mechanisms for regulating the flow of investment capital and severe penalties and restrictions on speculation in international markets. Most of all, it would mean lifting the strangulating grip of American military might that now girdles the globe.
All of this would require a capacity for re-imagining foreign affairs as something other than a zero-sum game. So far, nothing in Obama's line-up of foreign policy and national security mandarins suggests this kind of potential policy deviance. Again, no Rooseveltian "brain trust" is in sight, even though unorthodoxies are called for, not just because of the hopes Obama's victory have aroused, but because of the urgency of our present circumstances.
If original thinking doesn't find a home somewhere within this forming administration soon, it will be an omen of an even more troubled future to come, when options not even being considered today may be unavailable tomorrow. Certainly, Americans ought to expect something better than a trip down (the grimmest of) memory lanes into the failed neo-liberalism of yesteryear.
[Steve Fraser is a visiting professor at New York University and the author of Wall Street: America's Dream Palace. He is a regular contributor to TomDispatch.com and co-founder of the American Empire Project (Metropolitan Books).]
It's not getting better any time soon. By Roger Baker / The Rag Blog / October 26, 2008
See ‘US government throws oil on fire’ by Henry C K Liu, and ‘What now?’ by Jim Kunstler, Below.
The economic crisis is worldwide and long-term and I think is likely to be at least as bad as the great depression or worse, because this time we are facing increasing natural resource limitations. In brief, far more long term global debt has been issued in the recent bubble era than it is really possible to ever pay back. The USA has been running $2 billion a day trade deficits, about half to pay for imported oil, for a very long time, and the per capita US consumer debt is something like $20,000, not counting the mortgage stuff. There is a global bank run as everyone tries to pull out of their investments, so everyone is dumping commodities and hoarding dollars; we are now in a deflationary spiral. The most savvy economic analyst (from my point of view), always with lots of numbers and examples to illustrate his points, is Henry C. K. Liu. Here is a long description of the underlying economics of our current situation, the beginning of which follows with a link to the entire story:
US government throws oil on fire By Henry C. K. Liu / October 23, 2008
Free-market fundamentalists have been operating in denial mode for more than a year, since the US financial sector imploded in a credit crisis from excessive debt in August 2007, claiming that the economic fundamentals were still basically sound, even within the debt-infested financial sector.
As denial was rendered increasingly untenable by unfolding events, champions of market fundamentalism began clamoring for increasingly larger doses of government intervention in failed free markets around the world to restore sound market fundamentals. For the market fundamentalist faithful, this amounts to asking the devil to save god.
Aside from ideological inconsistency, the real cause of the year-long credit crisis has continued to be misdiagnosed in official circles whose members had until recently tirelessly promoted the merit of small government, perhaps even purposely by those in the position to know better and in whom society has vested power to prevent avoidable disaster. The diagnosis misjudged the current credit crisis as only a temporary liquidity quandary instead of recognizing it as a systemic insolvency. (See Fed helpless in its own crisis / Asia Times Online / Jan. 26, 2008.)
The misdiagnosis led to a flawed prognosis that the liquidity crunch could be uncorked by serial injections of more government funds into intractable credit and capital market seizure. This faulty rationale was based on the fantasy that distressed financial institutions holding assets that had become illiquid could be relieved by wholesale monetization of such illiquid asset with government loans, even if such government loans are collateralized by the very same illiquid assets that private investors have continued to shun in the open market.
It is not that government officials know more than market participants about the true value of these illiquid assets; it is only that government officials with access to taxpayers' money have decided to ignore market forces to artificially support asset overvaluation, the original root cause of the problem. Instead of being the solution, the government with flawed responses backed by the people's money has become part of the problem.
President George W Bush told the American people on October 10 that "the fundamental problem is this: As the housing market has declined, banks holding assets related to home mortgages have suffered serious losses. As a result of these losses, many banks lack the capital or the confidence in each other to make new loans. In turn, our system of credit has frozen, which is keeping American businesses from financing their daily transactions - and creating uncertainty throughout our economy."
Skipping over the basic fact that the housing market has been declining because of a burst credit bubble, the president went on to identify five problems, the first of which is that "key markets are not functioning because there's a lack of liquidity - the grease necessary to keep the gears of our financial system turning. So the Federal Reserve has injected hundreds of billions of dollars into the system. The Fed has joined with central banks around the world to coordinate a cut in interest rates. This rate cut will allow banks to borrow money more affordably - and it should help free up additional credit necessary to create jobs, and finance college education, and help American families meet their daily needs. The Fed has also announced a new program to provide support for the commercial paper market, which is freezing up. As the new program kicks in over the next week or so, it will help revive a key source of short-term financing for American businesses and financial institutions."
My own criticism of Liu is that he is mostly unaware of the profound economic implications of peak oil. It was a the sharp price rise in oil associated with a peaking in world oil production (peak oil is here now) that caused a global oil bidding war and cost-push inflation that finally sent the world economy into its current deflationary spiral. When the world economy is closely interconnected by finance capital, there are periodic global business cycles of overproduction, much like we have national recessions. Hundreds of trillions in derivatives have spread the risk of contraction everywhere.
It was about time for the hugely over-leveraged global credit bubble to lose steam, and sharply rising energy/transportation costs finally dragged the global economy down and initiated contraction, which is self-reinforcing on the way down. But sooner or later, maybe a year, all the newly created bailout money will get spent somewhere. My guess is that it will gravitate toward vital commodities like oil and food as declining oil production reasserts itself, and whoever has money will start bidding up these prices again. With decreasing oil, this is likely to reinitiate a raging bout of stagflation and then hyperinflation. You are quite unlikely to get a healthy recovery from a bunch of emergency bailouts aimed at the investment banks.
I will say the peak oil guys usually understand economics better the economists understand peak oil, probably since the latter are trained to ignore natural limits to growth. Kunstler is always fun to read and is one of the few who simultaneously understands peak oil and economics. Here's Kunstler's: "What Now?"
What Now? By Jim Kunstler / October 20, 2008
It's fascinating to read the commentators in mainstream journals like The Financial Times and The Wall Street Journal all strenuously pretending that "the worst is over" (maybe... we hope... fingers crossed... hail Mary full of grace... et cetera). The cluelessness would be funny if it didn't involve a world-changing catastrophe. All nations that have reached the fork-and-spoon level of civilization are now engineering a vast network of cyber-cables that lead directly from their central bank computers to the Death Star that is hovering above world financial affairs like a giant cosmic vacuum cleaner, sucking up dollars, euros, zlotys, forints, krona, what-have-you. As fast as the keystrokes create currency-pixels, the little electron-denominated units of exchange are sucked out of the terrestrial economies into the black hole of money death. That's what the $700-billion bail-out (excuse me, "rescue plan") and all its associated ventures are about.
To switch metaphors, let's say that we are witnessing the two stages of a tsunami. The current disappearance of wealth in the form of debts repudiated, bets welshed on, contracts canceled, and Lehman Brothers-style sob stories played out is like the withdrawal of the sea. The poor curious little monkey-humans stand on the beach transfixed by the strangeness of the event as the water recedes and the sea floor is exposed and all kinds of exotic creatures are seen thrashing in the mud, while the skeletons of historic wrecks are exposed to view, and a great stench of organic decay wafts toward the strand. Then comes the second stage, the tidal wave itself -- which in this case will be horrific monetary inflation -- roaring back over the mud flats toward the land mass, crashing over the beach, and ripping apart all the hotels and houses and infrastructure there while it drowns the poor curious monkey-humans who were too enthralled by the weird spectacle to make for higher ground. The killer tidal wave washes away all the things they have labored to build for decades, all their poignant little effects and chattels, and the survivors are left keening amidst the wreckage as the sea once again returns to normal in its eternal cradle.
So, that's what I think we will get: an interval of deflationary depression followed by a destructive wave of inflation that will wipe out both constructed debt and constructed savings, scraping the financial landscape clean. There's no question that stage one is underway. But we can be sure the giant wave of money recklessly loaned into existence in just a few weeks time will wash back through the global economy leaving a swath of destruction.
And then what? The societies of the world will be faced with the task of rebuilding systems of fruitful activity, i.e., real economies based on productive behavior rather than the smoke-and-mirrors of Frankenstein-finance con games. In fact, excuse me while I switch metaphors again, because the Frankenstein story -- the New Prometheus -- is yet another apt narrative to inform us what we have done. We have "played" with financial fire and brought to life a monster now bent on killing us. One question that this metaphor-narrative raises is: when will the angry peasant mob storm the castle with their flaming brands and cries for blood from the makers of this monster? Rather soon, I think.
Perhaps, in some countries (maybe the USA, if we're lucky), this will take the more orderly form of systematic prosecutions, bringing to justice persons who perpetrated swindles involving the alphabet soup of investment "products" that have gone bad in so many accounts (and ruined so many individuals, institutions, and governments). I think it has already begun with the inquisitors summoning the shifty Dick Fuld of Lehman Brothers -- but there are hundreds of other characters like him out there, who scored untold millions of dollars in activities that were simply grand swindles. I wouldn't be surprised if, eventually, Treasury Secretary Hank Paulson found himself in the dock to answer how come, when he ran Goldman Sachs, there was a special unit in the company dedicated to short-selling the very mortgage-backed securities that another unit in the company was so busy pawning off to every pension fund on God's green earth.
Apart from orderly prosecutions (which can certainly turn harsh and cruel), there is the possibility of sociopolitical upheaval -- revolution, violence, civil war, war between nations, the whole menu of monkey-human mischief that afflicts mankind. We are not necessarily immune to it here in the USA, despite our cherished notion of exceptionalism, which would have us inoculated against all the common vicissitudes of history.
Anyway, prosecution through the courts, while perhaps satisfying the hunger for justice (or, more particularly, revenge), is not a productive economic activity. So, the question begs itself again: what will we do? Under the best circumstances we will reorganize our society and economy at a lower level of energy use (and probably a lower scale of governance, too). The catch is, it will have to be a whole lot lower. I think we'll be very lucky fifty years from now to have a few hours a day of electricity to do things with.
The energy story and its hand-maiden, the climate change situation, are both lurking out there beyond the immediate spectacle of the financial fiasco. Both these things imply pretty strongly that the economic relations currently unraveling will not be rebuilt -- not the way they were before, or even close to it. The best outcome will be societies that can practice small-scale "process-intensive" organic agriculture and equally small-scale process-intensive modes of manufacture in the context of very local sociopolitical networks. An accompanying hope is that we can remain civilized in the process. Personally, while I recognize the appeal (to others, not me) of the "singularity" narrative, which has the human race making a sudden evolutionary leap into some kind of cyborg-nirvana, I regard it as an utter bullshit fantasy that has zero chance of occurring, given our stark predicament.
But returning to the short term, or "the present," shall we say, there is the matter of how the US gets through the election and then the first months of a new government, even while the larger fiasco continues. I'm voting for Mr. Obama. While I believe he will make a much better president than the addled old mad dog Mr. McCain has become, I feel sorry for anyone who is placed nominally "in charge" of things this coming year. The best a President Obama can do is offer some reassurance to a public that is totally unprepared for the convulsion now upon us. Mr. Obama will certainly not have "money" to "spend" on any of the promised social support programs that have been endlessly debated. But he could clearly articulate the reality we're facing, and ask not necessarily for "sacrifice," as the common plea goes, but for something more and better: for bravery and resolute spirit, for intelligence and resilience, for kindness and generosity -- among a people long unused to consorting with the better angels of their nature. He's already begun to set the example by appearing in public with his sleeves rolled up. The change that has been in the air all year -- that Mr. Obama has talked so much about -- is coming in a bigger dose than anyone expected. I hope we're ready to get with the program.
[Jim Kunstler’s new novel of the post-oil future, World Made By Hand, is available at all booksellers.]
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