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Wednesday, October 19, 2011

How We Came to Occupy Wall Street

The roots of Populist opposition to tyrannical management and big money abuse were planted in a 19th century American garden.

The Occupation, as this most technologically sophisticated protest in history has come to be called, was inspired by a martyred street vendor in Tunisia. But as “We Are the 99 Percent” continues to grow with more people swarming to New York’s Zuccotti Park and as protests keep spinning off worldwide, it has taken on a traditional grass roots American push back against big business excesses.

Today’s Angry Americans are people who are falling out of the middle class. They took out mortgages to pay for education. They took out mortgages to buy their American Dream houses. They worked hard at whatever jobs they could find and who now find themselves standing on the narrow edge of ruin.

Yesterday’s Dreaded Populists

In the closing decades of the 19th century, the Angry Americans were those who had been displaced from farms and workers who sweated away in the drudgery and humiliation of factories and mills. Their enemies were the men who were turning the U.S. into the world’s greatest marketing giant – bankers, sweatshop operators, meat packers, mill owners, railroad executives, and steelmakers who were out to capitalize on capitalism, to make the most money possible without restraint, and to keep it wadded up and lining their own pockets.

At the end of the 19th century, these two sides went at each other with guns, dynamite, black lists. Thousands died as the labor movement developed and slowly grew. During the acrimonious presidential campaigns of 1896 and again in 1900, the have-not candidate was William Jennings Bryan. He represented rural Populists and free-silver Democrats.

The man of the haves, the urban banks and big corporations in both elections was Republican William McKinley. Although he was a decorated hero of the Civil War, McKinley was a mild-mannered “go along to get along” politician. The former Ohio Congressman and Governor first ran for and won the presidency in 1896. Their major issue in that election: should gold (Bryan) or silver (McKinley) support America’s currency? McKinley’s running mate in 1896 was Garrett Hobart. The team was backed by industrialist Mark Hanna, a man who loved politics, but not people.

McKinley and unbound capitalism won against Bryan again in the election of 1900. Their point of contention in 1900 was imperialism and an expanded American role in world affairs, which was much touted by the young new Vice Presidential nominee, Theodore Roosevelt, of New York.

Roosevelt was competing with Hanna for GOP power. He recognized his rival’s special campaign skills. Hanna’s strategy called for unlimited spending and anything goes malice. It was Hanna who organized the first political mass mailing, for example. His campaign was the precursor to every election to follow. And it marked the fixed alliance between capitalism and the GOP.

The New York Republican machine hated “that damned cowboy” and believed the best way to deal with him was to put him out to pasture as the V.P. McKinley was healthy, young, and destined for four more years. Roosevelt was tagged as an ambitious nuisance reformer out to restrain (modestly, for sure) big business.

Roosevelt, who claimed that McKinley “has no more backbone than a chocolate éclair” (according to historian H.W. Brands), was eager to go to war with the declining Spanish Empire. He believed that moderate controls on capitalism would effectively mask it from its victims. He was aggressively ambitious. And he went along with nobody, which surprisingly got him along pretty far and pretty fast. Several months after the 1900 election, McKinley was assassinated.

The Assassination of William J. McKinley

Only weeks into his second term, President McKinley was gunned down in Buffalo by a newcomer to anarchism, Leon Czolgosz. Ironically, the first American anarchist was also the first Libertarian and a socialist reformer, Josiah Warren. He formulated the basic idea central to anarchism at the time – “each being a law unto himself” without violating the freedom of anyone else.

Warren posited his ideas about individualist anarchism in the mid-1800s, before Populist anger about the abuses of the exploding Industrial Revolution had taken form. Later, anarchism became remarkably violent.

Forty-five anarchists met in London in 1881 and agreed that violence was the only way to bring about change and their revolution. They pledged to a doctrine that all rulers and substantial property-owners must be exterminated. In 1894, they stabbed to death the president of France. Two-years of terror followed.

For the mild and unfortunate McKinley, as with President James A. Garfield fifteen years earlier, medical treatment proved to be more lethal than the anarchist’s bullets. Only eight weeks later, Czolgosz was also dead, electrocuted at Auburn Prison. The cause of anarchism would never recover. Even its first American proponent, Josiah Warren, faded into history.

For the new 26th President Theodore Roosevelt, who was just 42, reform was a smart way to shelter capitalism from angry Americans who felt victimized by the abuses of big business and from Populists and ever-expanding labor unions. He saw to it that regulation would become respectable and an accepted part of the Republican Party’s alliance with capitalism. The old-guard, who controlled Congress and Republicans who managed business, believing controls were an unfair intrusion on their right to profit to the maximum, hated Roosevelt.

As Republican leaders feared, Roosevelt emerged as a trust buster, proving his commitment to bringing labor and capital together without granting favors to either. As a crusader, he became most famous as a conservator, adding to the national forests and reserving lands for the public use, to the consternation of big business interests.

The 99% versus the Property Party

History teaches us that violence fails but peaceful demonstration works to bring change. Occupy Wall Streeters are modern Populists who are protesting the greed and corruption that benefits only the one percent just as 19th century Americans protested the abusive capitalists of their day. Violence failed to change the status quo then. Can peaceful disruption win greater social and economic justice today?

Unlike the Populists of the past, today’s have-nots may no longer feel represented by the Democratic Party, however. An Occupy Wall Street spokesperson, Bill Dobbs, said on October 17, 2011, “There is only one party in the United States, the Property Party, and it has two right wings, Republicans and Democrats.”

This view sounds similar to position statements made by that other modern grass roots Populist group from the far right, the tea party. Its members managed to get people into positions of power by allying with the reactionary side of the Republican Party, but its ability to continue to grow remains in doubt.

The Occupation is not limited to the tea party’s simple, rural American notions. Nor are the occupiers attempting to make religious faith part of any election. They don’t come armed to Zuccotti Park. Their anger is not directed at gays or lesbians, Muslims, Hispanics, African-Americans, or any religion, and they don’t seem to care whether Mormons attempted a conversion after death of Anne Frank or George Washington. Signs do not broadcast hate. Instead, they are more along the lines of “Up Against the Wall Street.”

As it spawns similar protests around the world in the manner of the Arab Spring, the gathering in Zuccotti Park may grow into a new Third World. But to break the Republican Party alliance with capitalism in America and to effect lasting economic and ecological change in the world, the occupiers must recognize that all the world’s popular struggles are connected. To succeed, we all must come together.

Resources:

Miller, Scott, The President and the Assassin: McKinley, Terror, and Empire at the Dawn of the American Century, Random House, New York, NY, 2011

“Occupy Wall Street: The New Populists”, Los Angeles Times, October 6, 2011 Issue, Los Angeles, CA, 2011

“Tea Parties = Populist Movement?”, Campus Progress, April 30, 2010, The Center for American Progress, Washington, D.C., 2010

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Sunday, October 2, 2011

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Saturday, August 13, 2011

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How Americans were Persuaded to Put the Blame on Their Government

It all began in the 1970s when we were told that greed is good.

In his book The Age of Greed with the long and telling subhead, The Triumph of Finance and the Decline of America, 1970 to the Present, Jeff Madrick presents the prodigious cast of villains who transformed banking from vigilant guardian of industry to high rolling gambler. His chronicle begins when the structure of regulations -- that had kept banking safe and boring since the days of FDR -- began crumbling some 40 years ago.

Swearing that self-interest furthers the common good, many once cautious bankers turned into eager speculators, first creating and then using taxpayer money to bail out of repeated crises in order to plunge into their next speculation. After each bailout, the bankers ungratefully bit the federal hand that fed them, complaining that banker-bashing hurt their feelings.

Each subsequent calamity has been worse than the one that preceded it. If Yogi Berra was still with us, he’d refer to the past 40-year history of busts simply as “deju vu all over again.” Will the deju vu continue? If so, will the next bust be even worse than the wreck of 2008-2009?

Junk Bonds, Derivatives, and Sub-Prime Mortgages: Where were the Regulators?

As the regulators kept getting out of the way of the bankers, business interests, and politicians, the pattern of overstretch, taxpayer bailout, and Wall Street ingratitude took shape. Jeff Madrick says it began with Penn Central’s bankruptcy in 1970. The railroad’s banker, First National City, was saved by Federal Reserve emergency loans, a crisis was averted, and the bank renamed itself Citibank, a name that reoccurs throughout Mr. Madrick’s entertaining though alarming chronicle.

The next crunch was the severe debt crisis of the early 1980s, brought on by reckless lending to Latin America. Only official government lending to Brazil, Mexico, and other south of the border debtors kept it from turning into a ghastly catastrophe. The decade’s huge commercial real estate bubble, blown up with vast loans, finally exploded in 1991. Do you remember, or have your parents told you about, the savings and loan fiasco? Its cost to taxpayers was even higher than the current mess. Although the junk-bond market went bust, a major bank calamity was dodged because deposits were federally insured.

Subsequent deregulation enabled two more bubbles to form. The first, the technology bubble, filled up with the Internet’s hot air in the 1990s; the other was inflated with poison housing gas during the Bush Administration. The economic damage caused by both was severe, although the second was far worse, resulting in defaults and a run on the banking system. The world continues to suffer the pain of the debacle of 2008-2009. High unemployment combined with low, slow growth has especially hurt the young, the old, and all those who are financially vulnerable in between.

Reagan, Friedman, and Greenspan Promised the Financial Markets Could Do No Wrong

Nixon and Ford began the blame game against big government, ignoring sudden high oil prices and disappointing crop yields. Stagflation was all Washington’s fault, according to politicians who were attempting to deflect accountability. Treasury and Federal Reserve policy shifts, such as wage-price controls under Nixon, Ford, and Carter, made American voters doubt government’s management skills. An angry, frustrated public passively accepted the blaming attacks of Ronald Reagan ("government is the problem, not the solution" – his first inaugural speech) and Milton Friedman (“I say thank God for government waste. If government is doing bad things, it's only the waste that prevents the harm from being greater”-- interview with Richard Heffner on The Open Mind, December 7, 1975). The economic malaise opened the door wide for Reagan and anti-government “witticisms” such as, “"The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"

The truth is that the annual average increase in government during Reagan's administration was 6.8%, compared with "big government" Bill Clinton's average annual increase of 3.6%. Reagan promised to balance the budget within his first term. Instead, the annual deficit grew from $79 billion to $212 billion in that first term. Reagan rule added $1.9 trillion to the federal debt.

Reagan is still honored as a tax-cutter. The term "Reaganomics" continues to imply dramatic cuts in tax rates. But after pushing through a tax cut to be implemented over three years, he cooperated during the second year in the largest tax increase in American history up to that time. The nation's annual tax load increased by 65% during his reign.

Why Bankers and Big Business Climbed Aboard the Politicians’ Blame Big Government Bandwagon

Mr. Madrick tells how leading bankers promoted anti-government, anti-regulation policies so loan peddlers could lend to unqualified borrowers and enable others to package them as safe, AAA-rated investments.

Paul Krugman and other economists have said the pattern of bust and bust again can be traced to Southern white backlash against the civil rights movement. This transformation of American politics led to a relentless attack on the New Deal that would undermine regulations and controls. The usual money men got richer as the poor got poorer. No one can argue that money’s influence on politics has exploded since the 1970s when the bubbles began forming and bursting.

Of course, Ronald Reagan is still St. Reagan for most Republicans and Milton Friedman is still honored by the American Libertarian movement. Republicans and Libertarians continue to blame big government for the nation’s economic predicaments. They still rally against the kind of federal rescue investments that have saved their banks and businesses from disaster.

Can we all at least and at last agree that greed is not good? Not good at all.

Resources:

Madrick, Jeff, Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present, Alfred A. Knopf, New York, NY, 2011

Krugman, Paul, The Conscience of a Liberal, W.W. Norton & Company, Inc., New York, NY, 2007