Friday, September 23, 2011

Elizabeth Warren Speaks the Truth on the Economy

There is a class war in the U.S., and the financial crisis exposed it to all, but those under attack--the American people--have not yet begun to fight back against the super-rich.

Ben Bernanke had the opportunity recently to tell the truth about the economy and evaded it. Others are doing far worse. So what would an honest person in public office say? Elizabeth Warren, who should at a minimum be our Secretary of the Treasury, just said it:

There is nobody in this country who got rich on his own — nobody.
“You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory — and hire someone to protect against this — because of the work the rest of us did.
“Now look, you built a factory and it turned into something terrific, or a great idea. God bless — keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along.” [As reported by Campaign for America's Future.]

Now that is honesty. Can you tell the difference between that and the drivel you hear from your representative in your state capitol or Washington?

The underlying issue here is of course the hypocritical references to "class warfare" being bandied about by those defending privilege. They are right: it is class warfare, but what Americans need to understand is what those classes are in the U.S. today. The conservative attempt to make an under-the-table allusion to the old Soviet Union merely illustrates their ignorance about world history...or their assumption that you are too ignorant to realize you are being cheated. Class warfare in 1917 Russia grew out of a huge majority in Russian society of poor peasants and poor factory workers. That has little to do with modern America, where the story since WWII and arguably since 1776, has been one of an expanding middle class. 

Two generations ago, Americans congratulated themselves on being in the process of rapidly inventing the world's first 100% middle class society. Poor existed still, but any poor individual had a real shot at rising into the middle class and permanently keeping his family there. The rich existed too, but they increasingly seemed just like the rest of us except a bit luckier. 

That dream is obviously off the charts today, with the explosive growth of the permanent poor at one extreme (if one can term some 40%!! of the population an "extreme") and the equally explosive growth of a thin layer of super-rich now almost totally out of control at the other. Don't relax in the impression that the U.S. is implementing a three-class society, with "you" comfortably in the middle, however. The trends of foreclosures, employment, wage levels, hours worked, availability of jobs for those who want jobs (excluding truck driver in Afghanistan), house values, job security, job benefits, and pensions all suggest that the middle is being sucked into the bottom.

The trends toward 1) a poor majority, 2) a steady weakening of the middle, and 3) a distant, thin layer of the super-rich controlling a steadily rising percentage of total national wealth at the top jointly lay the foundation for the evisceration of democracy and a rude awakening from the American Dream. Now, this brings us to class warfare. The class warfare that exists is a war by the super-rich to exploit everyone else. You don't have to read socialist analysis to see this, though you owe it to yourselves to get that education; you don't even have to read the commentary of leading economists (e.g., Robert Reich, Paul Krugman, Joseph Stiglitz, or William Black); just take a look at the executive summary of the recently published U.S. Senate report from the Permanent Subcommittee on Investigations ("Wall Street and the Financial Crisis") on the fraudulent behavior of the super-rich that brought us the endless recession.

The Senate report lays out in no uncertain terms what it means for the super-rich to be "out-of-control," detailing such "shoddy lending practices" as "steering" customers to high-risk mortgages [3] and a pattern of "unacceptable lending and securitization practices." [4] Former U.S. financial regulator William Black pointed out the elephant in the financial room by posing the question: "why, this is the greatest financial crime in the history of the world and no one senior, at any of the major places that drove the crisis, has gone to jail?" [Interview on]

Ms Warren has cut to the chase: the point of the war of the super-rich is to evade responsibility for building the future.

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