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‘Change, but no progress’

Highly recommend taking a look at George Packer’s piece about inequality and the social contract in Foreign Affairs. It’s free, but you have to register to see it. Worthwhile. I think I might have linked to this here before, but if so, it’s worth a second look. Excerpts: The Iraq war was a kind of […]

Highly recommend taking a look at George Packer’s piece about inequality and the social contract in Foreign Affairs. It’s free, but you have to register to see it. Worthwhile. I think I might have linked to this here before, but if so, it’s worth a second look. Excerpts:

The Iraq war was a kind of stress test applied to the American body politic. And every major system and organ failed the test: the executive and legislative branches, the military, the intelligence world, the for-profits, the nonprofits, the media. It turned out that we were not in good shape at all — without even realizing it. Americans just hadn’t tried anything this hard in around half a century. It is easy, and completely justified, to blame certain individuals for the Iraq tragedy. But over the years, I’ve become more concerned with failures that went beyond individuals, and beyond Iraq — concerned with the growing arteriosclerosis of American institutions. Iraq was not an exceptional case. It was a vivid symptom of a long-term trend, one that worsens year by year. The same ailments that led to the disastrous occupation were on full display in Washington this past summer, during the debt-ceiling debacle: ideological rigidity bordering on fanaticism, an indifference to facts, an inability to think beyond the short term, the dissolution of national interest into partisan advantage.

Packer invites his readers to compare their lives today with that of Americans in 1978. Things were far crappier then in many respects, he admits. “By contemporary standards, life in 1978 was inconvenient, constrained, and ugly,” he concedes, and none of us would willingly return to that year. And yet, for all the stagnation, Packer argues, things were better in an important way. American institutions were still fairly functional:

We can upgrade our iPhones, but we can’t fix our roads and bridges. We invented broadband, but we can’t extend it to 35 percent of the public. We can get 300 television channels on the iPad, but in the past decade 20 newspapers closed down all their foreign bureaus. We have touch-screen voting machines, but last year just 40 percent of registered voters turned out, and our political system is more polarized, more choked with its own bile, than at any time since the Civil War. There is nothing today like the personal destruction of the McCarthy era or the street fights of the 1960s. But in those periods, institutional forces still existed in politics, business, and the media that could hold the center together. It used to be called the establishment, and it no longer exists. Solving fundamental problems with a can-do practicality — the very thing the world used to associate with America, and that redeemed us from our vulgarity and arrogance — now seems beyond our reach.

Packer goes on to argue that it was in or around 1978 that the postwar consensus arrangement broke down amid the pessimism and frustration of the era:

What was that arrangement? It is sometimes called “the mixed economy”; the term I prefer is “middle-class democracy.” It was an unwritten social contract among labor, business, and government — between the elites and the masses. It guaranteed that the benefits of the economic growth following World War II were distributed more widely, and with more shared prosperity, than at any time in human history. In the 1970s, corporate executives earned 40 times as much as their lowest-paid employees. (By 2007, the ratio was over 400 to 1.) Labor law and government policy kept the balance of power between workers and owners on an even keel, leading to a virtuous circle of higher wages and more economic stimulus. The tax code restricted the amount of wealth that could be accumulated in private hands and passed on from one generation to the next, thereby preventing the formation of an inherited plutocracy. The regulatory agencies were strong enough to prevent the kind of speculative bubbles that now occur every five years or so: between the Great Depression and the Reagan era there was not a single systemwide financial crisis, which is why recessions during those decades were far milder than they have since become. Commercial banking was a stable, boring business. (In movies from the 1940s and 1950s, bankers are dull, solid pillars of the community.) Investment banking, cordoned off by the iron wall of the Glass-Steagall Act, was a closed world of private partnerships in which rich men carefully weighed their risks because they were playing with their own money. Partly as a result of this shared prosperity, political participation reached an all-time high during the postwar years (with the exception of those, such as black Americans in the South, who were still denied access to the ballot box).

At the same time, the country’s elites were playing a role that today is almost unrecognizable. They actually saw themselves as custodians of national institutions and interests. The heads of banks, corporations, universities, law firms, foundations, and media companies were neither more nor less venal, meretricious, and greedy than their counterparts today. But they rose to the top in a culture that put a brake on these traits and certainly did not glorify them.

I can’t do justice to the scope and insights of the article by quoting it here selectively, so I hope you’ll read it. Packer puts his finger on the unintended consequences of popular cultural upheaval from both the left and the right that undermined and even destroyed the authority of traditional elites. It had some good effects. But America’s post-2008 economic crash reveals the down side:

This is a story about the perverse effects of democratization. Getting rid of elites, or watching them surrender their moral authority, did not necessarily empower ordinary people. Once Walter Reuther of the United Auto Workers and Walter Wriston of Citicorp stopped sitting together on Commissions to Make the World a Better Place and started paying lobbyists to fight for their separate interests in Congress, the balance of power tilted heavily toward business. Thirty years later, who has done better by the government — the United Auto Workers or Citicorp?

Packer is careful not to blame the American public for “false consciousness” — that is, voting against their own interests by shifting to the Republicans and rejecting Jimmy Carter and the sclerotic Democratic Party, and the welfare state they represented. People really were sick and tired of it. (An aside: my wife and I were in the waiting room of the Ford dealership in my hometown, waiting for our minivan to be fixed, when we stopped to look at a display case of Ford memorabilia. There was a button, if memory serves, from the late ’70s, advertising a great Ford incentive to buyers: finance your new Ford at a low, low 14 percent! That was 1978.)  More:

But that archetypal 1978 couple with the AMC Pacer was not voting to see its share of the economic pie drastically reduced over the next 30 years. They were not fed up with how little of the national income went to the top one percent or how unfairly progressive the tax code was. They did not want to dismantle government programs such as Social Security and Medicare, which had brought economic security to the middle class. They were not voting to weaken government itself, as long as it defended their interests. But for the next three decades, the dominant political faction pursued these goals as though they were what most Americans wanted. Organized money and the conservative movement seized that moment back in 1978 to begin a massive, generation-long transfer of wealth to the richest Americans. The transfer continued in good economic times and bad, under Democratic presidents and Republican, when Democrats controlled Congress and when Republicans did.

This is a key point, and one that resonates with me more than any of it, because it is part of the cultural revolution that has taken place too. And it comes from the left as well as the right. The loss of a sense of shame has — surprise! — created shamelessness:

But even more fundamental than public policy is the long-term transformation of the manners and morals of American elites — what they became willing to do that they would not have done, or even thought about doing, before. Political changes precipitated, and in turn were aided by, deeper changes in norms of responsibility and self-restraint. In 1978, it might have been economically feasible and perfectly legal for an executive to award himself a multimillion-dollar bonus while shedding 40 percent of his work force and requiring the survivors to take annual furloughs without pay. But no executive would have wanted the shame and outrage that would have followed — any more than an executive today would want to be quoted using a racial slur or photographed with a paid escort. These days, it is hard to open a newspaper without reading stories about grotesque overcompensation at the top and widespread hardship below. Getting rid of a taboo is easier than establishing one, and once a prohibition erodes, it can never be restored in quite the same way. As Leo Tolstoy wrote, “There are no conditions of life to which a man cannot get accustomed, especially if he sees them accepted by everyone around him.”

Read the whole thing. Really, it’s worth registering.

 

 

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