The Future (23 page)

Meanwhile, the highly organized and well-funded counterreform movement also created and funded think tanks charged with producing research and policy initiatives designed to further corporate interests. In addition, they financed the creation of political movements at the local, state, and national level. By the 1980s and 1990s, this movement launched fierce battles to place opponents of robust government policies in state legislatures, in Congress, and in the White House. Ronald Reagan’s defeat of Jimmy Carter was their first watershed victory, and the takeover of Congress in the mid-1990s solidified their ability to bring most Progressive reform to a halt.

In part, the policies of FDR—which had been, in the main, supported by presidents and Congresses of both parties for several decades—were victims of their own success. As tens of millions were lifted into the middle class, many lost their enthusiasm for continued government interventions, in part because they began to resist the levels of taxation necessary to support a more robust government role in the economy. Labor unions, one of the few organized forces supporting continued reform, lost members as more jobs migrated from manufacturing into services, and as outsourcing and robosourcing hollowed out the U.S. middle class. The nature and sources of America’s economic strength have changed over the last several decades as manufacturing has declined. America’s branch of Earth Inc. can’t be driven solely by wages—investment is of course critical—but the tilt is important, and too little noted.

Slowly at first, but then with increasing momentum, the prevailing ideology of the United States—democratic capitalism—has shifted profoundly on its axis. During the decades of conflict with communism, the internal cohesion between the democratic and capitalist spheres was particularly strong. But when communism disappeared as an ideological competitor and democratic capitalism became the ideology of choice throughout most of the world, the internal tensions between the
democratic sphere and the capitalist sphere reappeared. As economic globalization accelerated, the imperatives of business were relentlessly pursued by multinational corporations. With triumphalist fervor and the enormous resources made available for a sustained implementation of the Powell Plan, corporate and right-wing forces set about diminishing the role of government in American society and enhancing the power of corporations.

Market fundamentalists began to advocate the reallocation of decision-making power from democratic processes to market mechanisms. There were proposals to privatize—and corporatize—schools, prisons, public hospitals, highways, bridges, airports, water and power utilities, police, fire, and emergency services, some military operations, and other
basic functions that had been performed by democratically elected governments.

By contrast, virtually any proposal that required the exertion of governmental authority—even if it was proposed, debated, designed, and decided in a free democratic process—was often described as a dangerous and despicable step toward totalitarianism. Advocates of policies shaped within the democratic sphere and implemented through the instruments of self-government sometimes found themselves accused of being agents of the discredited ideology that had been triumphantly defeated during the long struggle with communism. The very notion that something called the public interest even existed was derided and attacked as a dangerous concept.

By then, the encroachment of big money into the democratic process had convinced many Democrats as well as almost all Republicans to adopt the new ideology that supported the contraction of the democratic sphere and the expansion of the market sphere. It was during this same transition period that television supplanted newspapers as the principal source of information for the majority of voters, and the role of money in political campaigns increased, giving corporate and other special interest donors an even more unhealthy degree of power over the deliberations of the United States Congress and state legislatures.

When the decisions of the United States result not from democratic debate but are instead determined by powerful special interests, the results can be devastating to the interests of the American people. Underfunded and poorly designed U.S. social policies have produced a relative decline in the conditions of life. Compared to the other nineteen
advanced industrial democracies in the Organisation for Economic Co-operation and Development (OECD), the United States has the
highest inequality of incomes and the highest poverty rate; the lowest
“material well-being of children” according to the United Nations’ index, the
highest child poverty rate and the
highest infant mortality rate; the
biggest prison population and the highest homicide rate; the biggest expenditures on health care and the
largest percentage of its citizens unable to afford health care.

At the same time, the success by corporate interests in reducing regulatory oversight created new risks for the U.S. economy. For example, the deregulation of the financial services industry, which accompanied the massive increase in flows of trade and investment throughout the world, led directly to the credit crisis of 2007, which caused the Great Recession (which some economists are now calling “the Second Great Contraction” or “the Lesser Depression”).

The international consequences of that spectacular market failure dramatically undermined global confidence in U.S. leadership of economic policy and marked the end of an extraordinary period of U.S. dominance. Nations had generally accepted the so-called Washington Consensus as the best formula for putting their economies on sound footing and building the capacity for sustainable growth. Although most of the policy recommendations contained in the consensus were broadly seen as reflecting sound economic common sense, they tended to expand the market sphere in domestic economies as they removed barriers to global trade and investment flows.

Two other factors combined with the 2007–08 economic crisis to undermine the leadership of the United States: first, the rise of China’s economy, which did not follow the prescriptions of the Washington Consensus even though its success was driven by the uniquely Chinese form of capitalism; second, the catastrophic invasion of Iraq—for reasons that were later proven to be false and dishonest.

Within the United States, it is a measure of how distorted the “conversation of democracy” has become that in the aftermath of the economic catastrophe, the most significant “populist” reaction in the U.S. political system was not a progressive demand for protective regulations to prevent a recurrence of what had just happened, but instead a right-wing faux-populist demand by the Tea Party for
less
government regulation. This movement was financed and hijacked by corporate and
right-wing lobbyists who took advantage of the sense of grievance and steered it toward support of an agenda that promoted corporate interests and further diminished the ability of the government to rein in abuses. Extreme partisanship by congressional Tea Party Republicans almost produced a default of the U.S. government in 2011, and threatened to again at the end of 2012.

The sudden growth of the Tea Party was also due in significant measure to its promotion by Fox News, which under the ownership of Rupert Murdoch and the leadership of a former media strategist for Richard Nixon—Roger Ailes—has exceeded the wildest dreams of the Powell Plan’s emphasis on changing the nature of American television. Powell had proposed that “The national television networks
should be monitored in the same way that textbooks should be kept under constant surveillance.” He called for the creation of “
opportunity for supporters of the American system” within the television medium.

The inability of American democracy to make difficult decisions is now threatening the nation’s economic future—and with it the ability of the world system to find a pathway forward toward a sustainable future. The exceptionally bitter partisan divide in the United States is nominally between the two major political parties. However, the nature of both Democrats and Republicans has evolved in ways that sharpen the differences between them. On the surface, it appears that Republicans have moved to the right and purged their party of moderates and extinguished the species of liberal Republicans that used to be a significant minority within the party. Democrats, according to this surface analysis, have moved to the left and have largely pushed out moderates and the conservative Democrats who used to play a prominent role in the party.

Beneath the surface, however, the changes are far more complex. Both political parties have become so dependent on business lobbies for the large sums of money they must have to purchase television advertisements in order to be reelected that special interest legislation pushed by the industries most active in purchasing influence—financial services, carbon-based energy companies, pharmaceutical companies, and others—can count on large bipartisan majorities. The historic shift of the internal boundary between the overlapping capitalist and democratic spheres that make up America’s reigning ideology, democratic capitalism, has resulted in increased support within both parties for measures that constrain the role of government.

This shift has now moved so far to the right that it is not unusual for Democrats to propose ideas that originated with Republicans a few years ago, only to have them summarily rejected as “socialist.” The resulting impasse threatens the future of hugely popular entitlement programs, including Social Security and Medicare, and is heightening partisan divisions on questions considered basic and nonnegotiable on both sides. The tensions have grown more impassioned and bitter than at any point in American history since the decades leading up to the Civil War.

“Market fundamentalism” has acquired, in the eyes of its critics, a quasi-religious fervor reminiscent of the zeal that many Marxists displayed before communism failed—although those to whom the label applies feel that liberals and progressives pursue the ideology of “statism” with a single-minded devotion. U.S. self-government is now almost completely dysfunctional, incapable of making important decisions necessary to reclaim control of its destiny.

James Madison, one of the most articulate of America’s extraordinary founders, warned in his Federalist No. 10 about the “propensity of mankind to fall into mutual animosities” and cluster into opposing groups, parties, or factions:

Madison noted that this tendency in human nature is so strong that even “the most frivolous and fanciful distinctions have been sufficient to kindle their
unfriendly passions and excite their most violent conflicts.” But he went on to highlight the “most common and durable source of factions” as “
the various and unequal distribution of property.” The inequality in the distribution of wealth,
property, and income in the
United States is now larger than at any time since 1929. The outbreak of the Occupy movement has been driven by the dawning awareness of the majority of Americans that the operations of democratic capitalism in its current form are producing unfair and intolerable results. But the weakened state of democratic decision making in the U.S., and the enhanced control over American democracy by the forces of wealth and corporate power, have paralyzed the ability of the country to make rational decisions in favor of policies that would remedy these problems.

These two trends, unfortunately, reinforce one another. The more control over democratic decision making by powerful wealthy interests, the more they are able to ensure that decisions on policy enhance their wealth and power. This classic positive feedback loop makes inequality steadily worse, even as it makes democratic solutions for inequality less accessible.

The issue of inequality has become a political, ideological, and psychological fault line. Neuroscientists and psychologists have deepened the understanding of political scientists about the true nature of the “left-right” or “liberal-conservative” divide in the politics of every country. Research shows conclusively that these differences are also “sown in the nature of man,” and that in every society there is a basic temperamental divide between those
who are relatively more tolerant and others who are relatively less tolerant of inequality.

The same divide separates those for whom it is relatively more or relatively less important to care for the weak and victimized, maintain respect for authority—particularly when disorder is threatening—prioritize loyalty to one’s group or nation, demonstrate patriotism, and honor the sanctity of symbols and objects that represent group values. Both groups
value liberty and fairness but think about them differently. Recent research indicates that these temperamental differences may be, in part, genetically based, but perhaps more importantly, the
differences are reinforced by social feedback loops.

The issue of inequality also lies on the ideological fault line between democracy and capitalism. For those who prioritize capitalism, inequality is seen as an obvious and necessary condition for the incentivization of productive activity. If some receive outsized rewards in the marketplace, that is a beneficial outcome not only for those so rewarded but for the capitalist system as a whole, because it demonstrates to others what can happen if they too become more productive.

For those who prioritize democracy, the tolerance of persistent inequality is far more likely to stimulate demands for change in the underlying policies that consistently produce unequal outcomes. Inheritance taxes have become a flashpoint in American politics. Why, ask liberals, is there a social value in failing to redistribute some portion of great fortunes when a wealthy person dies? Yet for conservatives, the ability to pass on great wealth at death is just another part of the incentive to earn great wealth in the first place. And they view the imposition of what they call a “death tax” (a label coined by a conservative strategist who conducted deep research on
what language would most trigger feelings of outrage) as an encroachment upon their freedom. In my own view, it is absurd to eliminate inheritance taxes; they should be raised instead. The extreme concentration of wealth is destructive to economic vitality and to the health of democracy.