As Brill’s sub-title indicates, this book charts the fall from prosperity for the many in the U.S., the escalating concentration of wealth, and the understaffed movement working to reverse this development.
After World War II. until about 1970, an uneasy partnership existed in the U.S., where industrial owners and managers shared the prosperity of that unique time with workers, thanks largely to the organizing efforts of unions. This of course was limited, obviously and disgracefully when it came to race. Various events coalesced to shift this fragile contract against workers – free trade policies, not necessarily intended to produce inequality, in fact supported by unions at the time, in the early 60s; the southern intentional bid to entice industry by maintaining a low-wage, docile, non-union workforce; even lower-wage foreign sweat shops; and automation and efficiency. The latter two features could create leisure for all but in fact predictably diminish working people and fatten the 1%.
Another development contributed in a major way to the upward trajectory of wealth, what Brill calls short-termism. Feeding into this was a move from what he calls aristocracy to meritocracy. The successful sent their children to Yale, Harvard etc; passing on an elite leadership, while the working classes struggled in disadvantage. A movement to “democratize” this situation, also in the 60s, brought in bright working class students who, lacking a sense of entitlement, tended to be driven and to outwork the entitled. Their success led to inventive changes to the good ol’ boy rules which evolved into the short-term-ism Brill derides. It also predictably evolved into this newly privileged group closing ranks to protect their privilege via political influence.
A few renegades are cited, isolated from the mainstream by ethnic prejudice – one, a Jewish attorney named Lewie Ranieri,, sparked the corporate take-over gambit that wrecked so many lives and businesses but enriched, beyond their imagining, those willing to pursue ruthless, short-term avenues. Buy-outs basically raped a company, borrowing heavily to pump up stock prices, downsizing employees, selling off marginal branches, facilities and equipment, grabbing the profits and abandoning ship. Other actors aggressively marketed mortgages to high risk customers, packaging and selling them to investors (suckers) looking for a high return, in a frenzy of profit-taking until the whole thing came crashing down in 2008. Wall Street, always a gamble, became a high-flying casino with little actually productive investment. Rather, short-term buying and selling voraciously sought profits. Synthetic credit default swaps were like side-bets, where investors bet a stock will rise or fall. Some made millions betting, say, mortgage-backed securities would fail. When they failed en masse they raked in the “winnings”. Sort of like buying life insurance on your unhealthy neighbor with you as beneficiary. After the deluge of course the fixed game proceeded to bail out the gamblers with taxpayer money and leave stranded their victims, homeowners in default and eviction, wiped out pension funds. Given that the key financial people in the administration of W. Bush and later Obama, were Wall Street players, the rescue package was certain to be tilted toward that infamous street. One of the culprits, in Congressional testimony, commented that “People are driven to improve their lives and in a capitalist society you do that with money.” A little hint here then as to where the problem lies. The author makes an odd statement, asking us to not see the actors in these schemes as, ”villains but as simply responding – many with trail-blazing ingenuity, to the incentives put in front of them and the culture of the times.” I wonder if he’d apply this same generous dictum to the inner city gang banger? But he does advocate, “changing the incentives and culture so that the genius of their successors can be redirected.” We can hope I suppose.
Another example is the firm Country Wide Financial, whose CEO, Angelo Mozilo made $500 million in dubious deals, plus a $140 million cash-out as he saw bankruptcy coming, and was eventually fined $67 million, no criminal charges. Not a bad result for him, but collateral damage for the losers (suckers). A Canadian consultant named Michael Pearson advised drug companies to cut research and development, instead buying up small drug companies, hiking their patented, critical meds to outlandish, predatory prices, running up the stock prices and selling, with the winning strategy, “We’ll be gone before the crash.” Going off on his own he bought up with borrowed money, a small drug company, merged with a larger, and over 8 years went on a buying binge which shot up stock prices, cooked the books, created billions on paper, and, when it fell apart, accepted an $11 million dollar severance package with his firing and presumably laughed all the way to his next venture. Many of the financial shenanigans leading to the 2008 disaster, were made possible by the undoing, in the 90s, of the Glass-Steagull act, and other regulations, designed to avoid risky investments like those that brought us the 1929 crash and depression. It was argued that this would jack up the creativity of our Wall Street geniuses. Indeed. Later the Dodd-Frank bill attempted to address “too big to fail” and other factors leading to the crash but the lobbyists moved in. Thirtysix hundred lobbyists made $483 million working for the financial industry that year and you can be sure this tax-deductible expenditure paid for itself. The 1935 Social Security legislation was 21 pages. Dodd-Frank was 848, much of it loopholes inserted to please lobbyists who no doubt showed their appreciation. Thus was it watered down and, more importantly, kept vague so that once it was being implemented at the agency level, the lobbyists could once again descend to have their influence. The public was so incensed though that the Consumer Financial Protection Bureau got in so it wasn’t a complete bust.
Speaking of lobbying, in a very competitive field for pernicious political behavior the gun lobby has to be up there at the top. They were able to stop a move to ban armor-piercing ammunition which of course would pierce police vests. You’d think that the traditional conservatism among police would get a little wake-up call from this, showing as it does whose interests are really served by that brand of politics.
Another important factor in the wealth transfer scheme we’ve been enjoying these last 50 years, were the money-is-speech decisions which gave business and wealthy individuals even more influence, ludicrously burying that fact in high-sounding rhetoric about free speech and “the people” needing information for democracy to work so limiting information from the always benevolent corporate sector, it was argued, violated the first amendment. Senators and representatives spend fully 70% of their time raising money for their reelection campaigns and of course they then owe “access” to their donars. The line of thought claiming that if the public were to finance elections then the politicians would owe the people not the corporations, is derided as a “radical”, even “socialist” intrusion on democracy. Let me put that in quotes, “democracy”.
A significant moment in this evolution was a Chamber of Commerce memo written by Lewis Powell which sounded the alarm about the threat to the U.S. economic system by unions and other subversive groups in the 60s, Ralph Nader for example. The memo went viral, energizing the “besieged” business sector, launching immense growth in the lobby profession. Powell later was appointed to the supreme court and many members of congress and other government officials found lucrative early or post- retirement careers in the profession (would objectivity be violated if I called this slimy?).
It strikes me how current Brill’s book is. A book of this depth and literal weight, it seems, would take a long time to write and be somewhat dated but he frequently refers to very recent events, in the Trump administration particularly. Despite a few instances where the author seems a bit naïve about the forces gathered here (he seems unaware of Jane Meyer’s assertion, in Dark Money, that the powers that be in the 30s put together a successful campaign to promote capitalism and demonize socialism in the public mind), the book is chock full of useful information and suggestions for draining the, ah… quaqmire. It would be an understatement to say that is a worthy project. Brill suggests that things have gotten so bad that there just might be an appropriate response in the form of, not left against right but “…everyone becoming personally accountable for what they do and share in their responsibility for the common good.” He lays out instances of this kind of thing already happening, providing a kind of hope in that and in his calling for more.==