by Thomas Frank
There are consequences to excessive hope, just as there are to other forms of intemperance. One of these is disillusionment, another is anger, and a third is this book.
For a generation, Democratic politicians have talked of "hope" as though it were their unique selling proposition, a secret ingredient they had that no other major-party brand could offer.
Today those same Democrats express annoyance at the suggestion that anyone could really have taken them seriously on this hope business. It is hard to govern, they say; you can't get everything you want from politics. Ordinary citizens are beyond disillusioned, though. It has been nine years since the last recession began, and whether the country is in a recovery or a slump or even a galloping bull market makes no difference to them anymore.
According to official measurements, the last few years have been a time of brisk prosperity, with unemployment down and the stock market up. Productivity advances all the time. For those who work for a living, however, nothing seems to improve. Wages do not grow. Median income is still well below where it was in 2007. Workers' share of the gross national product (as opposed to the share taken by investors) hit a record low in 2011—and then it stayed there right through the recovery. It is there to this day; economists now regard its collapse as a quasi-permanent development.
In the summer of 2014, with the Dow Jones Industrial Average hitting all-time highs, a poll showed that nearly three-quarters of the American public thought the economy was still in recession—because for them, it was.
There was a time when average Americans knew whether we were going up or going down—because when the country prospered, its people prospered, too. But these days, things are different. From the middle of the Great Depression up to 1980, the lower 90 percent of the population, a group we might call "the American people," took home some 70 percent of the growth in the country's income. Look at the same numbers beginning in 1997—from the beginning of the New Economy boom to the present—and you find that this same group, the American people, pocketed none of America's income growth at all. Their share of the good times was zero. The gains they harvested after all their hard work were nil. The upper 10 percent of the population—the country's financiers, managers, and professionals—ate the whole thing. The privileged are doing better than at any time since economic records began.
To be a young person in this economy, just out of school and starting to feel the burden of now-inescapable student loans, is to sense instinctively the downward slope that most of us are on these days. People who are twenty-five today are doing worse than people of that age ten years ago, and much worse than people who were twenty-five back in 1996. The same is true, incidentally, of people who are thirty-five, forty-five, and probably fifty-five, but for the young this reversal of the traditional American trajectory is acutely painful: they know that no amount of labor will ever catapult them into the ranks of the winners.
At the other end of the social ladder, meanwhile, it is all upside all the time. In 2012, corporate profits (measured as a share of gross domestic product) hit their highest level on record. In 2014, according to a much-discussed think tank report, the total of all the bonuses handed out on Wall Street was more than twice as much as the total earned by every person in the country who worked full-time for the minimum wage. Measured in terms of wealth—of property and investments, stocks and bonds—matters are even more perverse. One particularly lucky American family, in fact, has as much wealth as does 40 percent of the American population. The main accomplishment of the six individuals who make up this fortunate bunch was to inherit shares in Wal-Mart, the retailer that has sucked the life out of thousands of middle-American towns. Sucked the wealth out of those towns and spent it on the six Wal-Mart heirs' tasteless mega-mansions, their degrees from prestigious colleges, their fancy racecars, and their sports teams. They own a bank, a ballet company, an art gallery (where you can see Norman Rockwell's painting of Rosie the Riveter), and of late the Wal-Mart bunch have begun "reforming" the public schools your kids go to.
Should all this go on—and it will—those kids of ours are going to be educated on certain matters far better than we ever were. They will know to laugh at the old middle-class promise—retirement, pension, a better life than the previous generation had—because it is propaganda so transparent it sounds like something the Soviet Union used to put out. They will understand that this isn't a commonwealth; it's a workhouse.
And that's where we are, eight years post-hope. Growth that doesn't grow; prosperity that doesn't prosper. The country, we now understand, is simply no longer arranged in such a way as to make its citizens economically secure.
A while ago I spoke at a firefighters convention in the Pacific Northwest, talking as I always do about the ways we have rationalized these changes to ourselves. Firefighters are the sort of people we honor for their bravery, but they also happen to be blue-collar workers, and they have watched with increasing alarm what has been happening to folks like them for the last few decades . . . watched as the people formerly known as the heart and soul of this country had their lives taken apart bone by bone. They themselves still make a decent living, I was told—they are some of the last unionized blue-collar workers who do—but they can see the inferno coming their way now, as their colleagues in other parts of the country get their contracts voided and their pensions reduced.
After I spoke, a firefighter from the Seattle area picked up the microphone. Workers had been watching their standard of living get whittled away for decades, he said, and up till now they had always been able to come up with ways to get by. The first adjustment they made, he recalled, was when women entered the workforce. Families "added that income, you got to keep your boat, or your second car, or your vacation, and everything was OK." Next, people ran up debt on their credit cards. Then, in the last decade, people began "pulling home equity out," borrowing against their houses. "All three of those things have kept the middle class from having to sink down into abject poverty," he said. But now all three coping mechanisms were at an end. There were no more family members to send to work, the expiration date had passed for the home-equity MasterCard, and still wages sank. His question was this: "Is there a fourth economic savior out there, or do you think that maybe we have reached the end?"
I had no good answer for him. Nobody does.
What Happened at the Turning Point
That these things are happening under the watch of the Democrats, the political party that was once such a militant defender of workers and the middle class, makes the triumph of inequality that much more startling.
This latest Democratic administration started so auspiciously, too, with a hero who was going to put things right. Do you remember what that felt like? The hundreds of thousands who would congregate to hear Barack Obama speak back in the dark days of 2008; the throng of revelers in Grant Park on the night he won; the million spectators who stood on the Mall in Washington to witness his inauguration.
The cool and eloquent champion arrived in a capital gripped by panic. Poisoned financial instruments had by that time killed several banks, countless hedge funds, and the savings of the nation. The investment banks that had survived had run to the government for help. A vast bailout was under way. Portents of fresh disaster were in every headline. The economic course on which we had traveled since the early 1980s was obviously finished. Deregulation had opened the floodgates; instant-millionaire paydays had removed every incentive to behave ethically; and an epidemic of fraudulent finance had duly swamped the system. All this was as plain as the line of desperate depositors out in front of IndyMac Bank. Now something was going to be done about it.
Our new president stepped up to fulfill his promise. He was living, breathing evidence that our sclerotic system could still function, that we could rise to the challenge, that we could change course.
It was the perfect opportunity for transformation. All the stars were in alignment. The president had carefully surrounded himself with some of the brightest minds of our time. Congress was controlled overwhelmingly by members of his own party. The public was prepared to back him in the most far-reaching reforms. History had dealt Barack Obama four aces. He could not lose.
Yet that is pretty much what happened. The crisis went to waste. The hero we put behind the wheel didn't heed the GPS device telling him to turn. He saw the warning lights flashing, and he heard that disturbing pounding under the hood, but he kept right on going.
To say "the center held," as one of his biographers does, is an optimistic way to describe Barack Obama's accomplishment. Another would be to say he saved a bankrupt system that by all rights should have met its end. America came through an economic debacle, an earthquake that shook people's faith to the ground. Yet out of it, the system emerged largely unchanged. The predators resumed operations. Everything pretty much stayed the same.
Opportunity Cost
This is a book about the failure of the Democratic Party—about how they failed when the conditions for success were perfect.
It is not another collection of familiar Beltway gripes—complaints about gridlock in Washington, or how appalling it is that Americans are so polarized. The failure I'm referring to is bigger than that. With the exceptions of global warming and the Soviet threat, it is the greatest public problem we have faced in our lifetimes.
President Obama himself has said that inequality is the "defining challenge of our time." That is a sweeping statement, but think about it for a moment and you realize it isn't anywhere near sweeping enough. "Inequality" is shorthand for all the things that have gone to make the lives of the rich so measurably more delicious, year on year for three decades—and also for the things that have made the lives of working people so wretched and so precarious.
It is visible in the ever-rising cost of health care and college; in the coronation of Wall Street and the slow blighting of wherever it is you live; in the dot-com bubble, in the housing bubble, in whatever bubble is jazzing the business pages as you read this. You catch a glimpse of it when you hear about the bankruptcy your neighbor had to declare when his child got sick. Or when you read about the lobbying industry that drives D.C., or the election fund-raising system, which allows a single Vegas billionaire to personally choose the acceptable candidates for a major political party. "Inequality" is a euphemism for the Appalachification of our world.
"Inequality" is what we say when we describe how the relationship of the very wealthy to the rest of us has come to approximate the relationship of Louis XVI with the peasantry of eighteenth-century France. Inequality is about you working harder than ever before while others work barely at all and yet are prospered by the market god with every imaginable blessing. Inequality is about the way speculators and even criminals get a helping hand from Uncle Sam while the Vietnam vet down the street from you loses his house. Inequality is the reason some people find such significance in the ceiling height of an entrance foyer or the hop content of a beer while others will never believe in anything again.
Inequality is not an "issue," as that term is generally used; it is the eternal conflict of management and labor, owner and worker, rich and poor—only with one side pinned to the ground and the other leisurely pounding away at its adversary's face. "Inequality" is not even the right word for the situation, really, since it implies a technical problem we can solve with a twist of the knobs back in D.C. The nineteenth century understood it better: they called it "the social question," and for once their polite Victorian euphemism beats ours. This is nothing less than the whole vast mystery of how we are going to live together.
Why Should the Liberal Listen?
It is the Republicans, certainly, who bear primary responsibility for our modern plutocracy. They are the party that launched us on our modern era of tax-cutting and wage-suppressing. They are the ones who made a religion of the market and who fought so ferociously to open our politics to the influence of money at every level. These days Republicans are rolling in deep fantasies of persecution and capitalist authenticity; not only will they not reverse course, but they often seem lost to reason itself. What afflicts them would take an expert in mass psychology to cure.
But it is time we understood that our current situation represents a failure of the Democratic Party as well. Protecting the middle-class society was the Democrats' assigned historical task, and once upon a time they would have taken to the job with relish. Shared prosperity was once the party's highest aim; defending the middle-class world was a kind of sacred mission for them, as they never used to tire of reminding us. And to this day, Democrats are still the ones who pledge to raise the minimum wage and the taxes of the rich.
When it comes to tackling the "defining challenge of our time," however, many of our modern Democratic leaders falter. They acknowledge that inequality is rampant and awful, but they cannot find the conviction or imagination to do what is necessary to reverse it. Instead they offer the same high-minded demurrals and policy platitudes they've been offering since the 1980s. They remind us that there's nothing anyone can do about globalization or technology. They promise charter schools, and job training, and student loans, but other than that—well, they've got nothing.
My fifty-year-old thesaurus offers "politician" as a synonym for "opportunist." But when Mr. Roget first put those two words together way back when, he wasn't reckoning with today's high-minded Democrats. Since 1992, Democrats have won the plurality of votes in every presidential election except one. For six of those years, they controlled Congress outright. But on matters of inequality they have done vanishingly little. They have stubbornly refused to change course when every sign said turn: when it would have been good policy to turn, when it would have been overwhelmingly popular to turn, when the country expected them to turn, when it was fully within their power to steer in a different direction.
Yes, I know, Democrats are the good guys, or rather the less bad guys. Many individual Democrats get enthusiastic, five-star approval ratings from me; many more are completely without blame in the narrative that follows. And it is largely thanks to the Democrats that mainstream pundits now feel it's OK to talk about inequality at all.
But as things have grown worse, income inequality has become an increasingly awkward issue for them. It just doesn't come naturally in the way that, say, talking about marriage equality now does. Looking back over their actual record, one starts to suspect that there's a better chance the party will resolve to kick Wyoming out of the union than to do something meaningful to halt the country's economic breakdown.
This is not because they are incompetent or because sinister Republicans keep thwarting the righteous liberal will. It is Democratic failure, straight up and nothing else. The agent of change isn't interested in the job at hand. Inequality just doesn't spark their imagination. It is the point at which their famous compassion peters out.
What I am suggesting is that their inability to address the social question is not accidental. The current leaders of the Democratic Party know their form of liberalism is somehow related to the good fortune of the top 10 percent. Inequality, in other words, is a reflection of who they are. It goes to the very heart of their self-understanding.
Snoozing Through the Liberal Hour
This is an age of Democratic failure, but what gives the failure its bitter tang is that it is also an age of Democratic triumph—a "Liberal Spring," as a jubilant New York Times story put it in the summer of 2015. Yes, economic inequality is soaring, nothing can be done on that front, but in other realms these are times of extraordinary Democratic achievement. Gay marriage is legal now, the Confederate flag is coming down all across the Deep South, and America is led today by a black president, a formerly hypothetical scenario that pollsters long ago used to determine someone's relative liberalism. In 2008, that black candidate's campaign raised more money from the financial services industry—which is to say, from Wall Street—than did his Republican opponent.
And just cast your eyes over the long list of billionaires and venture capitalists who supported the campaign to legalize gay marriage, say the liberal optimists. Or consider the way the Silicon Valley brass swung into action when the state of Indiana passed a law permitting discrimination against homosexuals. Or how the CEO of the country's largest chain of coffee shops urged his employees to instruct customers about the evils of racism. In terms of public righteousness, liberals are as conspicuous today as at any time in our history.
What's more, Democrats in Washington now believe they possess a permanent hold on the presidency, thanks to the country's demographic shifts. "The coalition of the ascendant" is the phrase journalists began to use in 2008 to describe the Democrats' victorious and inexorably growing army—"young people, minorities, [and] upper middle class white professionals," to quote the pundit who coined the locution—and what it means is that every augury now points the Democrats' way. Yes, they might lose a Congressional election here and there, but they are the natural majority party now, they think; when they encounter an obstacle, all they have to do is stand by and let the natural process of demographic "ascendancy" work.
Talk about the coalition of the ascendant causes Democratic hearts to race joyfully. For so many years they were the loser party, the wimp faction, the party of McGovern and Carter and Mondale and Dukakis. Now, suddenly, they have been transformed into the dominant party, the rightful occupants of the White House. The righteous will be rewarded, goes the proverb, and to Washington Democrats their advancing ascendancy feels a lot like cosmic justice.
For them it is an awesome vindication. So what if Republicans trounced them in 2010 and 2014? So what if the GOP dominates the state legislatures and both houses of Congress? Democrats now know with the certainty of political science itself that those Republican advances will slowly but surely be reversed. Democrats no longer need to plead, explain, or persuade; henceforth they need merely to wait.
"Nothing much changed"
Trying to pinpoint where and when the hope drained out of the Obama movement is something of a parlor game for my disgruntled friends. Some say they lost their faith in Obama even before he took office, when he named the bailout architect Tim Geithner as his choice for Treasury secretary and the deregulation architect Larry Summers as his main economic adviser. A big chunk of the public came to believe the fix was in two months into his first term, when a round of bonuses—not reprimands or indictments, mind you, but bonuses—went out to executives of the financial sinkhole known as AIG.
But all that is mere speculation. Thanks to journalistic science, we can now pinpoint the exact moment when the Obama administration formally renounced any intention of making the big historical turn it had been elected to make: it was the meeting between the new president and a roomful of nervous Wall Street CEOs on March 27, 2009. After warning them about the "pitchforks" of an angry public, Obama reassured the frightened bankers that they could count on him to protect them; that he had no intention of restructuring their industry or changing the economic direction of the nation. "Lots of drama," is how one mogul described the meeting to the journalist Ron Suskind, "but at day's end, nothing much changed."
I clung to the "hope" for a little while longer than that. I can remember the exact moment when I finally gave it up—it was the first time I heard the phrase "grand bargain," Barack Obama's pet term for his proposed deficit and tax deal with the Republicans. In a split second I understood the whole thing: that big compromises like this were real to the president, but "change" was not. I had known that Obama had a passion for centrist talk; everyone did. Bipartisan conciliation was the theme of Obama's famous keynote speech at the 2004 Democratic convention. It was one of the themes of his 2008 stump speech, when he talked so inspiringly about "the politics of addition, not the politics of division."
What was shocking about all this was to realize that Obama believed these clichés. Consensus, bipartisanship, the "center": those were the things this admirable and intelligent man was serious about—the kind of stale, empty verbiage favored by Beltway charlatans on the Sunday talk shows. The other things Obama used to say—like when he connected deregulation, corruption, and income inequality in his Cooper Union speech in 2008—those things were just to reel in the suckers. The suckers being the people who could hear the pillars of their middle-class world snapping. The suckers being the people who could see that the system was crumbling and thought maybe we ought to do something about it.
What I realized in the instant when I heard that phrase was that this man, in whom I and so many others had placed such faith, was in fact another ordinary consensus Democrat with ordinary consensus ideas. He believed the same tired partisanship-deploring platitudes as everyone else. Nothing could budge our leadership class from this illusion. Unemployment could hit 50 percent, foreclosures could sweep through entire states, there could be riots in every city in the land, and the TV hosts would still be moaning about how dreadful it is that Democrats and Republicans don't agree on things.
Which brings us face-to-face with our mystery: how is it that, in our moment of utmost need, a fake crisis like the problem of "extreme partisanship" was able to trump the real deal?
These are not Obama's shortcomings alone. They are failings of the party he leads. They are, in a word, ours. It's time to own up.
Copyright © 2016 by Thomas Frank
Thomas Frank is the author of Pity the Billionaire, The Wrecking Crew, and What's the Matter with Kansas? A former columnist for The Wall Street Journal and Harper's, Frank is the founding editor of The Baffler and writes regularly for Salon. He lives outside Washington, D.C.
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