The Ideology of Unfettered Capitalism Is Crumbling -- It's a Huge Opportunity for Alternative Economics
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Recently, I shared the stage with Leo Hindery, Managing Partner of InterMedia Partners, at a forum on the economic crisis organized by A New Way Forward. The organizers had warned me to be ready to do battle with this media mogul who was CEO of TCI and AT&T Broadband, founded the YES network, is a former professional race car driver, and may be about to own the Chicago Cubs.
In preparation I Googled him and discovered he also served as John Edwards’ senior economic policy advisor. That made him a big time Democrat who at least was somewhat liberal. As we chatted before the event he said, “I’m the most progressive CEO you’ll ever meet.” And I’m thinking, “So what? I’ve only met two!”
Given that I had recently written a book ( The Looting of America), which isn’t too kind to the super-rich, I was nervous. I didn’t want to be rude but I had every intention of making it clear that our financial crisis was the direct result of the ever growing gaps in wealth and income. I tried to think of humorous ways to weave in my knowledge of fantasy baseball with Hindery’s potential ownership of the Cubs. I was hoping to make my points without offending anyone; I wanted to be political, not personal. However, I was caught off guard by what unfolded.
Hindery was up first. With a sincere and kindly demeanor he proceeded to blame the entire crisis on the super-wealthy who designed the game more than thirty years ago. All of it: globalization, the derivatives orgy, the asset booms, the crushing of unions—all designed by the rich for the rich. He pointed out that the top 300,000 super-wealthy taxpayers account for half of all U.S. income, which gives them as much of the total pie as the other 150 million working people combined.
Say what? I did a lot of research for The Looting of America (with plenty of help—see the acknowledgements in the book) and had not come up with that gem. He gave me the citation: According to 2006 IRS data reported in the New York Times, “the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980."
I was stunned. This guy took my spiel! At that point in the forum, I became tongue tied. I stammered about how the unemployment rate was a deception—that instead of the widely reported 9.4 percent figures, the real jobless rate was more like 15 percent—some 25 million people who either were without work or economically forced into part-time employment. Hindery then calmly pointed out that my numbers also underestimated the problem—that his computations using Bureau of Labor Statistics data showed that the true rate in May was over 18 percent and that 30 million people were either jobless or underemployed. (I’ve since verified that data as well.)
He then tore apart the financial system, pointing out that it was a rigged game designed to enrich the rich. He didn’t think there was any way that regulations alone could do much to prevent future meltdowns. He had been a CFO on Wall Street many years ago, and he knew it was impossible to figure out what was going on until it was too late.
Instead, he urged us to consider policies that invested in job creation for those 30 million who are jobless, rather than rebuilding a failed financial system. It wasn’t entirely clear to me what he would do with the current financial mess but it was clear that he would take no prisoners: He would construct a new financial structure from the ground up that served the needs of the real economy.
But his most chilling observation concerned where he thought we were: “We are at a critical fork in the road. We can either create the millions of jobs needed for the 30 million who are right now effectively unemployed, or we can bail out Wall Street, again. We can either re-grow the incomes of the 300,000 richest Americans, who for many years have earned half the nation’s income, or we can build an economy that serves the employment and income needs of the 150 million hard working Americans who earn the other half. For more than three decades we’ve focused on the 300,000, through ‘trickle down’ and other discredited economic practices. That’s been easy, although horribly unfair. The hard but fair thing to do is to manage our economy so that it responsibly serves the 150 million.”
He then sounded an alarm: If we don’t adequately address the needs of the 150 million it is possible that politics could move dramatically to the right. Progressives will be blamed for not getting us out of this mess and we will suffer through another round of virulent free-market policies…or worse. And if that sounds like panic mongering, just look at the European Parliament elections held a few days ago: In almost every country, virulent right-wing parties led the polls, while progressives suffered sometimes historic defeats.
It was sobering evening, but also encouraging. It’s not everyday that a very successful CEO like Leo Hindery and a harsh Wall Street critic like me share the same stage, let alone agree fundamentally on the shape of the problem and the direction we must head. I’m not implying that we should expect other CEOs to come our way. Forgetaboutit. But the ideology of deregulation, unfettered globalization, and trickle down economics is crumbling. This is the best teaching moment in 65 years. It’s now up to us to provide a hard hitting analysis and an alternative agenda. And we can’t sit around and expect the Obama Administration to do it for us.
Most of all, this is no time to be timid. I’ve learned two things: We should pull no punches in attacking the income gap and the call for millions of new jobs. And I’ll have to work harder not to be outflanked by Leo Hindery.
Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and author of The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperityâ€”and What We Can Do About It (Chelsea Green, 2009).