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How Wall Street Was Able to Profit from Trashing America's Mainstreet Economy



By Richard Clark, February 26, 2012

What follows here is a synopsis, simplification, and to some extent an interpretation of a recent Truthout interview with author Thomas Frank, who a few years back wrote the seminal book, What's the Matter With Kansas?, which is about why so many middle-class Americans vote against their economic interests.

Now, Frank has returned with an equally important book about how the super-rich were able to double-down on economically disastrous policies and thereby push those policies to ever greater extremes.

Even by itself, the subtitle of his new book says a lot: "The Hard-Times Swindle and the Unlikely Comeback of the Right." So here we have a brilliant exposé of the most breathtaking ruse in American political-economic history: How right-wing multimillionaires, with the help of hucksters like Glen Beck and astroturf organizations like the Tea Party, were able to turn the biggest capitalist breakdown since 1929 into a huge opportunity . . for themselves!

If you're confused about how people with ever lower incomes and ever more indebtedness, living from day to day, can be made to come to advocate for lowering taxes on the super-rich (which inevitably raises their own taxes), let Frank be your guide. For we desperately need to better understand how it is that groups like the "Tea Party" can successfully lead millions of low-information voters to embark on such insane ideation. Get this book shipped directly from Truthout, by clicking here.

Hucksters like Glenn Beck played a huge role in the rise of the Tea Party and the broader shift of the nation to the right. As chief huckster, with an audience of millions, Beck was on the cover of Time as well as the New York Times Magazine; he was also the subject of two separate biographies. Whether we liberals can accept it or not, he was the face of a political moment, the voice and persona that caught the public imagination. In fact, it's hard to make any sense at all of the Tea Party movement absent Glenn Beck's weird views of history and his ridiculous dread of the Obama Administration. Go back and look at footage of Tea Party events or interviews with Tea Party participants and you will find that they often echo, sometimes word for word, the crazylessons taught by the mad "professor' Beck.

Three Main Concepts in This Analysis

Market populism is the idea that markets speak with the voice of the people, i.e. that markets are a sort of naturally occurring democracy, that whoever is attuned to the holy spirit of the market is one with the spirit of the people themselves. In a phrase, Vox populi, vox dei. Back in the 1990s, this was the straight-up propaganda ideology of management theorists and other corporate shills. Today, thanks to Beck and associates, it's everywhere.

Social conservatives are often working-class people who are uninterested in the grander conservative rightwing project of reversing the New Deal. Instead they are steeped in what is called the culture wars.

The Tea Party says that all they're interested in is trying to create an unregulated free-market utopia. This shift has been, amazingly enough, a response to hard times, which has pushed the culture wars off the front burner, just like hard times did in the early 1930s. (In those days the social issues were evolution and prohibition).

What unites the two (culture wars & the quest for free-market utopia) is the crushing irony of populist conservatism. In both cases you're talking about a movement that empowers the powerful but that does so by insanely imagining that it's standing up for the little guy a.k.a. the common man.

In "Pity the Billionaire," Thomas Frank marvels that the Ayn Rand myth of the free market could make such a sweeping comeback with "free market" deregulation which even then was almost cratering the US economy. On page 118 of this new book, Frank brings up Naomi Klein's shock doctrine theory and the irony that the right claimed that the Obama administration was trying to take advantage of the economic crisis to move America to the left. In reality however, the conservatives and their captive economists apply the shock doctrine to America's economic meltdown to invent an even more utopian vision of a free market.

What Naomi Klein was talking about were deeply unpopular policies forced on nations at moments of crisis. The irony here is that the Wall Street bailouts of 2008-09 fit this pattern: At a moment of supreme danger, the country was asked to prop up the banks that had basically spent the previous decade in an orgy of fraud and wholely unwarranted bonuses. "Give Wall Street what it wants, we were told, or else."

But what is really spectacular is how this alarming historical episode got processed through the right's "upside-down machine' and came out as the story of how power-hungry leftists trying to "transform America," by force, during a crisis: Rather than a story about how Hank Paulson and Co. bailed out their friends, it became a nutcake story of how "Big Government" was trying to get its fingers around the throat of free enterprise! This was the moment, you will recall, when sales of "Atlas Shrugged" spiked, and the great fear of a "crazed government reacting to hard times by grabbing economic power' really got going. The year after that (i.e. 2010) saw the publication of Glenn Beck's surprisingly influential novel, "The Overton Window," with its big central idea of liberals using fake crises to grab power. Masterful propaganda all this. We at least have to give them credit for that, disgusting as their achievement might be to us.

The funny thing about the "Righties" is that they too want to imagine themselves as the victims of the "shock doctrine." Even the parties that were manifestly the beneficiaries/architects of it want to imagine that!

Despite being organized by Americans for Prosperity (Koch brothers) and FreedomWorks (Dick Armey), the Tea Party has taken on a life of its own and that's driving the GOP presidential primaries. Although "Pity the Billionaire" focuses on the sleight of hand that the right successfully pulled off by doubling down on disastrous economic policies, some say that many of the "free market" populist backers are crossovers with the religious and "social-values" white "American-entitlement" movement.

On the other hand, the Tea Party movement has been pretty forthright about not wanting to discuss culture-war issues. This was especially the case in 2009-2010, when economic issues drove everything else off the front pages. The Tea Partyers are primarily small business people for whom the culture-war issues are secondary, while attacking "red tape" and organized labor are primary. As EJ Dionne has pointed out, the communitarian spirit that drove culture-wars populism for decades is very different from the individualistic spirit of the free-market creed. If anti-evolution types suddenly got the old-time religion of the free market, that's fairly remarkable. Which is not to say it can't happen or it won't happen even more broadly -- Lord knows these groups have come together before. Anything is possible when you don't have a vigorous left challenging these people's views and thereby making their contradictions obvious. People might even start to believe that Jesus was a great venture capitalist or something. Never underestimate the powers of brilliantly well-planned and well-funded propaganda when it is focused on a large population of low-information voters!

A good many true believers think "capitalism" and "America" are synonymous. What makes the Tea Party so powerful is that it also appears to be an uprising against capitalism, against Wall Street -- in particular against the bailouts. For example, Tea Party protesters often talk about how much they hate "crony capitalism." It's only when you really dig down that you discover that their understanding of "what went wrong" in the housing bubble and the financial crisis is that government played too large a role in the economy, not too small a role. And their crazy idea for getting revenge on "crony capitalism" is to cut red tape and get regulators out of the picture altogether. A perfect example of this is Newt Gingrich's Super PAC's TV commercials against Romney and Bain Capital: The ad's narrator is all for "capitalism," but oh how he hates what Bain Capital has done to working people's lives! (But Newt's solution would be further deregulation!)

[Watch this very slick million-dollar video (paid for by Newt's sugar daddy) that utterly destroys the credibility and alleged integrity of Mitt Romney and the doings of his predatory, leveraged-capital buyout operation, Bain Capital and other such enterprises.]

In his book, Frank says that the right wing and their media shills suffer from a "victim complex." But how is this possible? (How to understand books such as "The Persecution of Sarah Palin"?)

That they do indeed understand themselves as victims is undeniable. It is Sarah Palin's entire raison d'etre. Whenever one sees her face TV, one knows that very soon someone is going to make the point that someone, somewhere was mean to her. This is also what explains the whole fantasy of concentration camps for conservatives, which continues on in places. [See this link, for example].

Not surprisingly, perhaps, this ties in with the absurd theme that runs throughout "Atlas Shrugged," where the main character, who has organized a strike of the billionaire class, describes himself as "the defender of the oppressed, the disinherited, the exploited," by which, quite incredibly, he refers to his fellow billionaires! That's right, in one of the most popular novels in recent history, billionaires are said to be -- insisted to be! -- the "disinherited" and "exploited" class. And millions of college sophomores and others who came to be of like mind have gobbled this up!

How can conservatives keep this down, once they've gobbled it up? The explanation is that they merely understand "elitism" in a different way than you and I. In their deluded way of thinking, the true "powers' of society are not the rich, but the professionally-credentialed and the government-connected. Conservatives basically invert the populist categories of yore: Instead of blue-collar workers or farmers being the exploited producer class, it is entrepreneurs. Why? Because it's they who have to work so hard and have to comply with regulations and pay taxes and put up with the whining of their tattooed hipster employees. And so to their way of thinking it is the rest of us who are the real parasite class.

Ironically, utopian capitalism is, in all sorts of ways, a delusion that runs parallel to utopian communism.

It's not a coincidence that both movements, utopian capitalism and utopian communism, had their heyday as responses to systemic economic breakdowns, and that both of them have spawned similar social movements, in which the gleam of the utopia is so blinding that it cancels out all sorts of realities that are obvious to everyone else (famine in the Ukraine; the role of toxic credit default swaps in the US). There are dozens of other curious parallels, all of them drawn out in shocking detail in Frank's book.

The Obama presidency was the time for a second FDR, not Clinton II.

As a result of Obama's accommodation to Wall Street, the wealth and assets of the US have shifted so much into the hands of the few that (bipartisan) big-money governance is by now virtually unstoppable. Sadly, even tragically, we have missed what will probably prove to be our generation's greatest opportunity to reverse the direction of history. In 2008 and 09, Wall Street was so hated by the American public that we could easily have chosen a New Deal type of direction. The conservative economic policies of the last forty years were in ruins around us. But Obama was afraid (or otherwise unwilling) to point this out. So this golden opportunity was squandered. Obama had a once-in-a-lifetime chance to take our financial oligarchy apart -- not just for electoral reasons, but because that was what real democracy required. Yet despite the right's perception of him, already, as Robespierre reincarnated, he didn't do it! Yes, he may win re-election this fall, but at best he will be remembered as just another Clinton -- a guy who "triangulated' and got the best deals he could, while supposedly facing down a right-wing nation. That the nation isn't right wing, and that it would have followed him had he led with boldness, is something that people like you and I will get to meditate on sourly for the rest of our lives.

But what about the bait and switch of the "small business operator" vs. the emergence of global corporations, many based in the US? One of the biggest myths of the populist right, that the Wall Street/global corporate overseers exploit, is that some kind of absolute "free market" benefits the US. The reality is that with the global trade agreements, global financial markets and corporations don't have significant national allegiances. Multinational corporations put small business out of business! -- think pharmacists, hardware stores, clothes stores, small grocer, bakeries, book stores etc. These global corporations belong to the market place and labor forces of the world, not to the US. But there are no Tea Party members who are out protesting companies like Walmart or General Electric.

The important fact here is that the Tea Party, and to some degree the larger conservative revival generally, is a movement of small business. Small biz carries with it its own variety of populism, which is sometimes mistaken as representative of the interests of the people as a whole, but which almost always tends to act as a front for the larger corporate interests. So: Small merchants are out there in the town square, mad as hell about the Wall Street bailouts, rallying the public with them. But their solution is always to get government "off their backs" and to defenestrate organized labor -- "solutions' which have nothing to do with the problems before us!

The funny thing is, you can see a situation where small business might have gone the other way, had the Obama administration made even the smallest effort to correct their populist narrative. Once upon a time, small business people were fairly progressive -- because progressives were the people who enforced antitrust laws.

So how might the Obama team have reached out to the angry small retailers demonstrating in the park down the street? Answer: By promising to bring back antitrust enforcement and Glass Steagall, just for starters -- things that are deep in the Democratic tradition, but that for whatever reason are off limits in this day and age. But even to bring this up as a topic of discussion is to understand the terminal absence of creativity from which the Democrats suffer.

Epilogue

F. Scott Fitzgerald once concluded his greatest novel with these lines: "Gatsby believed in the green lights, the orgiastic future that year by year recedes before us. It eluded us then, but that's no matter -- tomorrow we will run faster, stretch out our arms further.... So we beat on, boats against the current, borne back ceaselessly into the past."

Parallel to this, Frank writes, "Every problem that the editorialists fret about today will get worse, of course: inequality, global warming, financial bubbles. But on America will go, chasing a dream that is more vivid than life itself, on into the seething Arcadia of all against all." Gatsby, an aspiring romantic member of the nouvelle riche, was shot to death. Frank ends his book on an almost equally gloomy note, saying that "Hope" and utopia, for conservative protesters, is achieving a seething Arcadia of all against all. But this is, unfortunately, a pit of hell for everyone else. Their green light (that of the conservatives) ought to be a bright, flashing red light for the world.