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| As chief speechwriter for Vice President Hubert Humphrey, and an advisor to a half-dozen presidential candidates, Ted Van Dyk got acquainted with liberalism - and he doesn't see much of it in Seattle. Photo by Ken Dean |
Progressive economist Robert Kuttner is founder and co-editor of The American Prospect magazine, and a regular columnist for the Boston Globe. His new book, The Squandering of America (Knopf, 2007), is subtitled “How the failure of our politics undermines our prosperity.” Kuttner argues that the corporate capture of the democratic process has resulted in windfall profits for the wealthy at the great expense of average Americans. Our choices, he warns, are to build a citizen’s movement that curbs the power of wealthy elites, or face continued decline and inevitable economic disaster. We spoke in December when Kuttner was in Seattle for a reading at Town Hall.
More and more people are feeling economically squeezed, particularly the middle class, and yet the inflation rate has been fairly modest. What’s going on there?
If we go back 30 years, the average American has had no increase in earnings and the bottom 40 or 50 percent has had a real decrease in earnings during a period when the economy as a whole has almost doubled in size. So, almost all the gains have gone to the top 10 percent, with the biggest gains in the top 1 percent and the biggest gains of all to the very rich.
If you are in your 30s, don’t have wealthy parents, and are hoping to make it into the middle class, the price is much higher than a generation ago. Housing costs have outstripped incomes. You either don’t have health insurance, are paying too much for your health insurance, or you’re in a job that maybe you’d rather not be in so you can have health insurance. Tuition has vastly outstripped income, so you’ve got college loans to pay off. On top of that, you have the family squeeze, where it takes two incomes to do what used to take one, and no offsetting changes in policy to make the work and family straddle any easier. So the fact that inflation is moderate is of small comfort.
We have a kind of a gadget economy where you may have scant prospects of joining the middle class but you’ve got your latte and you’ve got your iPod. A young colleague of mine said to me, “When you’re in your 20s, you feel rich, you’ve got all this nifty techie stuff, but then when you’re 30 and you want to start a family and buy a home, you realize that you’re poor.”
The challenge for politicians is to help people connect those dots. My colleague at the Boston Globe, Ellen Goodman, has just a marvelous line that I wish I had thought of. Social change occurs when people learn what they already know. And I think a lot of people know — in a passive, semi-conscious kind of way — that they’re getting screwed. But in the absence of organizing and political leadership, it doesn’t get politicized.
One of the things that struck me about the American Prospect special issue on poverty [May 2007] was that there was no mention of homelessness. How did that happen?
I don’t have a good explanation for it. Maybe we just dropped the ball. We have written about homelessness in other issues.
I can venture a guess. Homelessness seems more manageable when approached as a technocratic social services issue, as opposed to a problem of growing poverty and inequality. Government reframes the issue in a de-politicized way, and homeless advocates generally follow their lead.
I think that’s right. It’s often said that one of the problems Democrats have is that Republicans can reduce their ideology to a bumper sticker and Democrats can’t. So the Republican story is “Markets work, governments don’t. Poor people reflect poor values.” That’s nine words. You can put it all on a bumper sticker.
I think the typical middle-class person who walks by someone who is homeless sees that person as dysfunctional. Either they look strange to the middle class, and you conclude that that person is mentally ill, or they look okay and the middle-class person says, “Well, gee, why isn’t that person working?”
Instead of seeing this as a failure of capitalism — as a failure of government to provide enough good jobs, to pay a living wage, to have decent housing policies and adequate mental health services — it’s seen as a problem of marginality and dysfunction. So, if we did not include homelessness, shame on us.
Why do you think there is so little discussion of structural unemployment and the people who have, statistically speaking, just dropped off the radar?
I think it is the fracturing of the coalition that used to exist between the working middle class, the working poor, and the very poor. The periods when that coalition was together is when you had transformative social policies like the New Deal and Great Society. Those were the few periods in America when we actually had progressive politics.
It’s too easy for people who have jobs to ignore people who don’t have jobs. I have this polite argument with John Edwards that goes, “Look, it’s magnificent that you are talking about the bottom 15 percent and you will go to heaven for talking about the bottom 15 percent, but if you want to go to the White House, maybe you want to talk about the bottom 70 percent.”
Increasingly, the difference between the bottom 70 percent and the bottom 15 percent is one of degree. The bottom 15 are a lot poorer, but the bottom 70 percent have the same vulnerability. It’s less a problem with structural unemployment than of the vulnerability that almost everybody has to losing their jobs, losing their health coverage, losing their retirement coverage, losing the ability to have work that pays a living wage.
The job of political organizing and leadership is to remind somebody who’s making $50,000-$60,000 a year that they’re just as vulnerable. People have those worries privately, but that needs to be politicized.
Why should ordinary people care about financial regulation?
Well, Exhibit A right now is the subprime meltdown. Here’s where a scam hatched on Wall Street and carried out by local predatory lenders is going to spill over on the whole economy and hurt a lot of innocent people.
People were given these bait and switch mortgages that started out with very low rates and then after two years typically snapped back to 10, 11, and 12 percent, so the average rate would be much higher than normal and the wise guys on Wall Street could make a lot of money.
The thing they didn’t realize was that a lot of these mortgages were incapable of being paid back unless housing prices continued going through the roof, which is a very risky gamble. So now you’re going to have widespread foreclosures, almost all of them in moderate-income and minority neighborhoods, and the neighbors of those being foreclosed upon will also suffer declining home values. This is a real catastrophe.
Instead of doing what we did under Roosevelt, where the government calls a timeout and refinances these mortgages so people don’t lose their homes, the treasury secretary, Hank Paulson, is treating this as something to be dealt with behind closed doors by a private cartel, and the Democrats aren’t even screaming about it.
A lot of smart people think the subprime crisis will have a cascading effect. That this is just the beginning.
Well, it already has. It has led to a credit crunch, where people who have good credit have to pay more money for their mortgages; where other kinds of loans, like auto loans and credit card loans, are finding that they don’t have enough buyers. It’s the most serious credit panic since the Great Depression.
The other problem is that the Federal Reserve is lowering interest rates to prevent another depression. Most would say, “Well that’s good. Lower interest rates are good for everybody.” But the Fed is lowering rates below where they should just to bail out the big banks. That weakens the dollar, which raises the price of oil and means we pay more for gasoline at the pump and more for home heating. The value of a dollar goes down the drain.
So, these bad policies lead to other bad policies and it’s the little guy who gets screwed. I mean, if you’re Citibank and you make a bad bet and it costs you $17 billion, the feds come rushing to your rescue. But if you’re out in the neighborhood and three houses around you are foreclosed and your house is suddenly worth 30 percent less, nobody comes to help. So it’s the typical double standard that occurs when you let Wall Street run the show.
How does growing inequality undermine democracy?
It means that political agendas are set at the very top, and that money talks louder than voting. You can call this participatory inequality. If you go to Washington on any day of the week and walk around the hotel rooms, you will find literally thousands of meetings of business interest groups and trade associations. The democracy described by Alexis de Tocqueville is alive and well at the level of the elite. These people are networked. They’re organized. They’re participating.
But if you look at the bottom 30 to 40 percent, where is that? Maybe it exists in groups like ACORN and the Industrial Areas Foundation. Maybe it exists in the labor movement, but for the most part, economic inequality leads to participatory inequality and the weakening of political democracy.
The second part of that story is this: If you don’t offer vulnerable people some reasons to participate in politics — some hope that politics is actually going to do something for them, as it did during the New Deal, as it did, to some extent, during the Great Society — they’re just going to say “To heck with it.”
There are lots of examples in my book of interviews and focus groups of asking low-income people what they thought government might do for them. And people say, “Cut my taxes.” It stunts the political imagination. So people who might vote for progressives end up voting for conservatives because at least the tax cut is something you can touch that might make a difference in your life, whereas these empty slogans by a lot of liberal politicians don’t seem real.
Many say that campaign finance reform is the place to begin in terms of fixing the disconnect between capitalism and democracy, but you say that it’s where we need to end up.
The problem is that it’s so improbable over the short run. The good news is that you have examples of people who ran campaigns for the House and the Senate, in some cases for governor, where they just said, “I am going over the heads of big money to talk to the voters.” A lot of them ran as economic progressives and got elected. So, I think if you motivate people and you speak to their real needs, the power of votes is still greater than the power of money.
One of the things that keep me from just giving up is the fact that you can point to elections, like the 2006 mid-terms, where people like John Tester in Montana or Jim Webb in Virginia ran as progressives, and not by scuttling to the center. All of a sudden big money ceases to have a veto on the whole political system.
You describe our current political situation as a race between creating an environment where fundamental change is possible and impending crisis.
Right. In 1933, we got lucky. We got Franklin Roosevelt rather than Huey Long or some homegrown Hitler. You never know what a crisis is going to produce in the way of a political response. I think if progressive leadership doesn’t rise to the occasion, it’s all too easy for reactionary leadership to play a demagogic role and win office. This is one of those moments where it could go either way.
I find Lou Dobbs very scary, because if ordinary people are hurting, who better to blame than the immigrants? It’s this generation’s equivalent of racism. It splits the working class. It prevents alliances from occurring that could otherwise create progressive change. If we don’t get a handle on this, the right is going to use that issue, and it is going to use fear of economic vulnerability to pursue policies that are the opposite of what working Americans and unemployed Americans need.
What are the models for the sorts of organizing that we need to be looking at?
I think great moments in American history have been a combination of bottom-up organizing and political leadership. Lincoln would not have been Lincoln without the abolitionist movement. Teddy Roosevelt would not have been Teddy Roosevelt without the populist movement of farmers and working people. Roosevelt would not have been Roosevelt without the labor movement. LBJ would not have been LBJ — and I am talking about Lyndon Johnson before Vietnam ruined his presidency — without the Civil Rights Movement.
So today you’ve got some very heartening organizing at the level of community groups, and a resurgent labor movement that’s started to do what it should have all along, organizing the lowest-wage workers: homecare workers, janitors, people who clean rooms in hotels, security guards. The question is whether one of these Democratic candidates has the spark of greatness and is willing to jump over the conventional wisdom, seize the moment, and use leadership to help people learn what they already know. |
