Listen, Liberal: Or, What Ever Happened to the Party of the People?

by Thomas Frank

It is doubtless important to the good of nations that those who govern have virtues or talents; but what is perhaps still more important to them is that those who govern do not have interests contrary to the mass of the governed; for in that case the virtues could become almost useless and the talents fatal. —Alexis de Tocqueville, Democracy in America

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.

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.

In Federalist Paper No. 10, published in 1787, James Madison famously identified “unequal distribution of property” as the main cause of political “faction.” Madison deplored these factions, but he also made them seem, well, natural: Those who hold and those who are without property have ever formed distinct interests in society. Those who are creditors, and those who are debtors, fall under a like discrimination. A landed interest, a manufacturing interest, a mercantile interest, a moneyed interest, with many lesser interests, grow up of necessity in civilized nations, and divide them into different classes, actuated by different sentiments and views.

here is William Jennings Bryan, in his “Cross of Gold” speech in 1896: There are two ideas of government. There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests upon them.

“The areas in which the left has made the most significant progress,” writes the journalist Chris Hayes, “—gay rights, inclusion of women in higher education, the end of de jure racial discrimination—are the battles it has fought or is fighting in favor of making the meritocracy more meritocratic. The areas in which it has suffered its worst defeats—collective action to provide universal public goods, mitigating rising income inequality—are those that fall outside the meritocracy’s purview.”16

Unlike the Obama administration’s roster of well-graduated mugwumps, the talented people surrounding Franklin Roosevelt stood very definitely outside the era’s main academic currents. Harry Hopkins, Roosevelt’s closest confidant, was a social worker from Iowa. Robert Jackson, the U.S. Attorney General whom Roosevelt appointed to the Supreme Court, was a lawyer who had no law degree. Jesse Jones, who ran Roosevelt’s bailout program, was a businessman from Texas with no qualms about putting the nation’s most prominent financial institutions into receivership. Marriner Eccles, the visionary whom Roosevelt appointed to run the Federal Reserve, was a small-town banker from Utah with no advanced degrees. Henry Wallace, who was probably the nation’s greatest agriculture secretary, studied at Iowa State and came to government after running a magazine for farmers. Harry Truman, FDR’s last vice president, had been a successful U.S. senator but had no college degree at all. Even Roosevelt’s Ivy Leaguers were often dissenters from professional convention. John Kenneth Galbraith, who helped to run the Office of Price Administration during World War II, spent his entire career calling classical economics into question. Thurman Arnold, the Wyoming-born leader of FDR’s Antitrust Division, wrote a scoffing and derisive book called The Folklore of Capitalism.

it was Bill Clinton’s administration that deregulated derivatives, deregulated telecom, and put our country’s only strong banking laws in the grave. He’s the one who rammed the North American Free Trade Agreement (NAFTA) through Congress and who taught the world that the way you respond to a recession is by paying off the federal deficit. Mass incarceration and the repeal of welfare, two of Clinton’s other major achievements, are the pillars of the disciplinary state that has made life so miserable for Americans in the lower reaches of society. He would have put a huge dent in Social Security, too, had the Monica Lewinsky sex scandal not stopped him. If we take inequality as our measure, the Clinton administration looks not heroic but odious.

there were people who opposed NAFTA, like labor unions, for example, and Ross Perot, and the majority of Democrats in the House of Representatives. The agreement was not a simple or straightforward thing: it was some 2,000 pages long, and according to reporters who actually read it, the aim was less to remove tariffs than to make it safe for American firms to invest in Mexico—meaning, to move factories and jobs there without fear of expropriation and then to import those factories’ products back into the U.S.

To owners and shareholders, who would see labor costs go down as they took advantage of unorganized Mexican labor and lax Mexican environmental enforcement, NAFTA held fantastic promise. To American workers, it threatened to send their power, and hence their wages, right down the chute.

The predictions of people who opposed the agreement turned out to be far closer to what eventually came to pass than did the rosy scenarios of those 283 economists and the victorious President Clinton. NAFTA was supposed to encourage U.S. exports to Mexico; the opposite is what happened, and in a huge way. NAFTA was supposed to increase employment in the U.S.; a study from 2010 counts almost 700,000 jobs lost in America thanks to the treaty. And, as feared, the agreement gave one class in America enormous leverage over the other: employers now routinely threaten to move their operations to Mexico if their workers organize. A surprisingly large number of them—far more than in the pre-NAFTA days—have actually made good on the threat.9

The reasoning that led Clinton to turn the Rector execution into a ritual appeasement of the electoral gods brought him, in 1994, to call for and then sign his name to the most sweeping police-state bill that modern-day America has seen. Among other things, the measure provided for the construction of countless new prisons, it established over a hundred new mandatory minimum sentences, it allowed prosecutors to charge thirteen-year-olds as adults in some cases, and it coerced the states into minimizing parole. It also increased the number of federal death penalties from three to sixty, including some for nonlethal offenses—and this from a political party that in 1972 had called for the abolition of capital punishment in its national platform. Clinton’s aides referred to this bid for mass imprisonment as “upping the ante,” as though it were a poker game with the Republicans. Winning that game was the subject of boasting for Democrats. Said Joe Biden, then a Democratic senator from Delaware, during the debate on the bill: The liberal wing of the Democratic Party is now for 60 new death penalties. That is what is in this bill. The liberal wing of the Democratic Party has 70 enhanced penalties.… The liberal wing of the Democratic Party is for 100,000 cops. The liberal wing of the Democratic Party is for 125,000 new State prison cells.18

Bruce Reed, the Clinton aide who helped to craft the ’96 welfare reform measure, once wrote that “The real Clinton legacy on the poor comes down to one word: work.”11

Thanks to Bill Clinton’s welfare reform, there has been a large increase in the number of people living in what the sociologists call “extreme poverty,” meaning living on less than two dollars per day. Studies of people in merely “deep poverty,” meaning at a level half the official poverty line, noted that this particular stratum of the wretched reached its all-time high point in the years just after the Great Recession. The number of people on food stamps in 2014 was double what it had been in 1997.13

Another goal of welfare reform was reducing what used to be called the “illegitimacy rate.” By removing society’s guarantee for single moms, its proponents used to say, we would change the incentives and give people a nudge, and soon everyone would get married before they had kids. That’s not what happened, though. In 1995, 32 percent of American children were born to unmarried mothers; today that number is 40 percent.14

welfare reform “confirmed and accelerated the gradual replacement of a protective (semi) welfare state by a disciplinary state mating the stinging goad of workfare with the dull hammer of prisonfare, for which the close monitoring and the punitive containment of derelict categories stand in for social policy toward the dispossessed.”15 Toil hopelessly or go to prison: that is life at the bottom, thanks to Bill Clinton.

This is what so many believe the war between Ds and Rs comes down to: intellect versus ignorance; science versus faith; Harvard versus wherever it was that Sarah Palin went to collidge.

It is so powerful that, even in Obama’s worst period, with Congress entirely in the hands of intransigent Republicans, it would still have been possible for the president to use the executive branch to do big and consequential things about inequality. To name just one: He might have resumed Franklin Roosevelt’s legacy on antitrust enforcement.

ATOMIZED LABOR

Consider the many celebrated business innovations that are, in reality, nothing more than instruments to get around our society’s traditional middle-class economic arrangements. Uber is the most obvious example: much of its value comes not from the efficiencies in taxi-hailing that it has engineered but rather from the way it allows the company to circumvent state and local taxi rules having to do with safety and sometimes insurance.

Organized labor was the great force of the Roosevelt years, but it is atomized labor, cheered for and pushed by Democrats like Plouffe and Lehane, that will forever shape American memories of the Obama years. Of the companies that are poised to profit on this coming war of all against all, Uber is the most famous; as I have mentioned, it invites each of us to spend our spare time as hacks for hire. But with the magic of innovation, virtually any field can join the race to the bottom. There’s LawTrades, a sort of Uber for lawyers, and HouseCall, an Uber for “home service professionals.” Everyone’s favorite is something called TaskRabbit, which allows people to farm out odd jobs to random day laborers, whom the app encourages you to imagine as cute, harmless bunnies.

Technological innovation is not the reason all this is happening, just as the atomic bomb was not the cause of World War II: it is the latest weapon in an age-old war. Technological innovation is not what is hammering down working peoples’ share of what the country earns; technological innovation is the excuse for this development.

These are fine, sterling sentiments, but they suffer from one big problem: microlending doesn’t work. As strategies for ending poverty go, microlending appears to be among the worst that has ever been tried, just one step up from doing nothing to help the poor at all. In a carefully researched 2010 book called Why Doesn’t Microfinance Work?, the development consultant Milford Bateman debunks virtually every aspect of the microlending gospel. It doesn’t empower women, Bateman writes; it makes them into debtors. It encourages people to take up small, futile enterprises that have no chance of growing or employing others. Sometimes microborrowers don’t even start businesses at all; they just spend the loan on whatever. Even worse: the expert studies that originally sparked the microlending boom turn out, upon reexamination, to have been badly flawed.

What I concluded from observing all this is that there is a global commerce in compassion, an international virtue-circuit featuring people of unquestionable moral achievement, like Bono, Malala, Sting, Yunus, Angelina Jolie, and Bishop Tutu; figures who travel the world, collecting and radiating goodness.

What drives this market are the buyers. Like Wal-Mart partnering with the State Department, or Goldman Sachs paying two hundred grand for a single speech, what these virtue-consumers are doing is purchasing liberalism offsets, an ideological version of the carbon offsets that are sometimes bought by polluters in order to compensate for the smog they churn out.