Democracy Betrayed
After independence was won, the colonial elites who had inserted themselves to take control of what was a self-organized rebellion turned their attention to securing their hold on the institutions of government. The human rights that had been carefully delineated in an earlier Declaration of Colonial Rights, and the principle so elegantly articulated in the Declaration of Independence that all men are created equal and enjoy a natural right to life, liberty, and the pursuit of happiness, fell by the wayside.
The focus shifted to securing the interests of industrialists, bankers, and slave-owning plantation owners and to assuring that the powers of government would remain in the hands of white men of means. Empire morphed once again into a new form, but it remained true to the essential organizing principle of domination. Genocide against Native Americans continued, as did the enslavement of blacks, the denial of the basic rights and humanity of women, and the denial of a just share of profits to those who toil to make capital productive.
Imperial Plutocracy
What the founders brought forth is best described as a constitutional plutocracy with an agenda of imperial expansion. The British lost to the rebels in the American Revolution, but Empire remained robust in a new nation that ultimately became the greatest imperial power the world had ever known.
The new nation joined together the peoples of thirteen colonies settled on a narrow bit of land along the east coast of North America. This land had been taken by force and deceit from its indigenous inhabitants, and much of it continued to be worked by slaves.
When its leaders decided the lands they occupied were insufficient to their needs, they supported an imperial westward expansion, using military force to expropriate all of the Native and Mexican lands between themselves and the far distant Pacific Ocean.
Global expansion beyond territorial borders followed. The United States converted cooperative dictatorships into client states by giving their ruling classes a choice of aligning themselves with U.S. economic and political interests and sharing in the booty or being eliminated by assassination, foreign-financed internal rebellion, or military invasion. Following World War II, when the classic forms of colonial rule became unacceptable, international debt became a favored instrument for gaining leverage over local economies. Subsequently, economies were forced open to foreign corporate ownership and control through debt restructuring and trade agreements.
THE LONG STRUGGLE
The stirring rhetoric of the Declaration of Independence, a revolution, and the U.S. Constitution all failed to bring democracy to North America. They did, however, inspire and lend legitimacy to a long popular struggle of more than two centuries, a global movement that gradually narrowed the yawning gap between political reality and the democratic ideal in the face of determined and often bloody elite opposition. Within the larger historical context, the accomplishments of the American Revolution, though incomplete, were monumental.
Power of the People
Two centuries of struggle reduced monarchy to little more than a historical curiosity. In the United States, a clear separation of church and state secures freedom of religious conscience and worship. Since the founding, a system of checks and balances has successfully barred one elite faction from establishing permanent control of the institutions of government. Active genocide against Native Americans ended, and genocide against any group is now universally and globally condemned. Slavery is no longer a legally protected institution and is culturally unacceptable.
Native Americans, people of color, people without property, and women have the legal right to vote and to participate fully in the political process. Pervasive though it remains in practice, open discrimination to deny the political rights of any group is culturally unacceptable.
That we now take these accomplishments for granted underscores how far we have come.
A Taste of the Possible
Many of us who grew up in the United States in the post– World War II years came to accept democracy and economic justice as something of a birthright secured by the acts of the founding fathers. We were raised to believe that we were blessed to live in a classless society of opportunity for all who were willing to apply themselves and play by the rules.
The experience of the middle class in those years seemed to confirm this story. Those of us who were a part of it, and I include myself here, were inclined to dismiss people who spoke of issues of class as malcontents who would rather promote class warfare than accept responsibility for putting in an honest day’s work.
Sure, there had been problems in the past, but thanks to America’s intellectual genius and high ideals, we had resolved them and rendered them irrelevant to our present. In our arrogance, we even believed it our responsibility to make the rest of the world more like us. During my years of work in Africa, Asia, and Latin America in service to this agenda, I came to realize how wrong we were.
The middle-class ascendance in post–World War II America was an extraordinary demonstration of the possibilities of democracy and the idea that everyone should share in the benefits of a well-functioning society. Unfortunately, it turned out to be only a temporary victory in the war of the owning class against the rest.
All the disparate historic struggles to achieve justice for workers, women, and people of color, as well as the struggles for peace and the environment, are subtexts of a larger meta-struggle against the cultural mindset and institutions of Empire.
Divided We Fall, United We Stand
The owning classes have long recognized that any political unification of the oppressed places their imperial class privilege at risk. The separate claims of identity politics based on race, gender, and occupational specialization are tolerable to Empire, because they emphasize and perpetuate division. Discussion of class, however, is forbidden, because it exposes common interests and unifying structural issues around which a powerful resistance movement might be built.
Beneath the political stresses that at times threaten to tear our nation apart, we can see the emergent outlines of a largely unrecognized consensus that the world most of us want to bequeath to our children is very different from the world in which we live. Conservatives and liberals share a sense that the dominant culture and institutions of the contemporary world are morally and spiritually bankrupt, unresponsive to human needs and values, and destructive of the strong families and communities we crave and our children desperately need. Deceived by the divide-and-conquer tactics of imperial politics, each places the blame on the other rather than forming a united front to reject Empire’s lies and uniting to achieve our common dream.
To raise healthy children we must have healthy, family-supportive economies. This can be achieved only by stripping imperial institutions of their unaccountable power and bringing about an equitable redistribution of real wealth. The struggle for the health and well-being of our children is potentially the unifying political issue of our time and an obvious rallying point for mobilizing a political majority behind a New Economy agenda.
EPIC OPPORTUNITY
It is fortunate that at the precise moment we humans face the imperative to make a collective choice to free ourselves from Empire’s seemingly inexorable compete-or-die logic, we have achieved the means to do so. Three events have created possibilities wholly new to the human experience and have forever changed our perception of ourselves and our possibilities.
1. The United Nations was established in 1945. This made it possible for the first time in human history for representatives of the world’s nations and people to meet in a neutral space to resolve differences through dialogue rather than force of arms.
2. The first human ventured into space in 1961, allowing us to look back and see ourselves as one people sharing a common destiny on a living spaceship.
3. In the early 1990s, our communications technologies gave us for the first time the capacity to link every human on the planet into a seamless web of nearly costless com munication and cooperatio
n.
Geographical isolation once served well Empire’s need to keep us divided. That barrier is no more.
The world’s estimated 1.7 billion Internet users, a quarter of all the people in the world, are learning to function as a dynamic, self-directing social organism that transcends boundaries of race, class, religion, and nationality to serve as a collective political conscience of the species.4 On February 15, 2003, more than 10 million people demonstrated the power and potential of this technology when they took to the streets of the world’s cities, towns, and villages in a unified call for peace in the face of the buildup to the U.S. invasion of Iraq.
A unified demonstration of political sentiment on this scale and geographic scope would have been inconceivable prior to the Internet. This monumental collective action was accomplished without a central organization, budget, or charismatic leader, through social processes never before possible. It was not only a demonstration of the transformative power of our newly acquired technologies but also an expression of the awakening of a new human consciousness to our shared interests and common destiny — and a foretaste of the possibilities for new and radically more democratic ways of organizing human affairs.
Most of the economic, social, and environmental pathologies of our time — including sexism, racism, economic injustice, violence, and environmental destruction — originates upstream in institutions that grant unaccountable power and privilege to the few and assign the majority to lives of hardship and desperation. The history of the United States demonstrates a simple but profound truth: economic democracy — the equitable distribution of economic power — is an essential foundation of political democracy.
Among the founding fathers of the United States, Thomas Jefferson sought to close the divide between owners and workers by making every worker an owner. Alexander Hamilton sought to secure the position of an elite ruling class by assuring that ownership was firmly concentrated in its hands. Hamilton served as the first secretary of the treasury and laid the foundation of the financial system we now know as Wall Street.
Jefferson had it right, but the Hamiltonians have been winning. Fortunately, the struggle is not over, and the financial crash and its aftermath — particularly the continued obscenity of billion-dollar Wall Street bonuses juxtaposed with deep unemployment, foreclosures, and bankruptcies — creates a rare opportunity to rally political support for measures to actualize the Jeffersonian ideal of a middle-class economic democracy.
A façade of political democracy has cloaked the extent to which Wall Street financial interests control our lives and run Washington, D.C., as a wholly owned subsidiary. That cloak has now been pulled away to reveal how far we remain from the democracy we thought we had. Wall Street has so eroded the economic, social, and environmental foundations of its own existence that its fate is sealed. The unanswered question is only whether it will maintain its grip until it brings down the whole of human civilization in an irrevocable social and environmental collapse or will be swept away by the already emergent values and institutions of a New Economy. Wall Street’s days are numbered. Ours need not be.
CHAPTER 9
GREED IS NOT A VIRTUE; SHARING IS NOT A SIN
The 2008–2009 economic crisis presents us with an enormous opportunity: to rediscover our values — as people, as families, as communities of faith, and as a nation. It is a moment of decision we dare not pass by.
JIM WALLIS
No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon.
JESUS TO HIS DISCIPLES, MATTHEW 6:24
It is really quite simple: Society works better and life is more pleasant for everyone when people share and cooperate. Far from a new discovery, this has been a defining message of religious leaders down through the ages.
Humanity’s most celebrated teachers are those who spoke what others knew in their hearts to be true but were afraid to express because that truth contradicted the practice and often the words of those in positions of power. That is our situation today.
Speaking truth requires more courage than special talent. I find that my message resonates with many people, but not because I am revealing something astonishing or new. To the contrary, it is because I’m speaking what they already know to be true but have dared not express in public because it seems so at odds with conventional wisdom. As we each find the courage to give public voice to our inner truth, we empower others to do the same, and together we can change the world.
We humans are living out an epic morality play of five thousand years’ duration that pits good, that which serves life, against evil, that which destroys life. Good is represented by the forces of mutual caring, cooperation, and responsibility in the service of life. Evil is represented by the forces of domination, unbridled competition, and individual greed in the service of money.
Individual greed will surely be with us so long as there are humans, but if we are to survive and prosper, we must recognize that greed is a sin, not a virtue — a form of addiction and a sign of psychological dysfunction. Any public subsidy for persons so encumbered should be limited to payment for rehabilitation services as part of a national health care program.
Here is a brief review of what events since the crash reveal about the profound moral issues at stake in the work at hand.
WALL STREET WELFARE QUEENS
As of spring 2010, the Wall Street economy was in apparent recovery. The Dow Jones Industrial Average had gained 62 percent from its ten-year low on March 9, 2009, to mid-March 2010. Wall Street bonuses for 2009 were up 17 percent over 2008. Banks too big to be allowed to fail at the time of the September 2008 crash were even bigger and more confident that government would bail them out when their gambling habit got them in trouble.
Bank of America, Wells Fargo, and JPMorgan Chase accounted for 26 percent of U.S. mortgages and 21 percent of U.S. deposits in 2007. Considered too big to fail following the market crash, each received federal bailout funds, which they used in part to fund major acquisitions with government blessing. Bank of American acquired Merrill Lynch, Wells Fargo took over Wachovia, and JPMorgan Chase took over Bear Stearns. In 2009, with their new acquisitions, these three banks accounted for 42 percent of mortgages and 34 percent of deposits.1
As of March 2009, Bloomberg.com estimated that the federal government bailout commitments and guarantees totaled $12.8 trillion; the 2008 U.S. GDP was $14.2 trillion.2 (See chapter 7 for more details.) This, in essence, amounts to committing the nation’s entire economic output to backing Wall Street’s questionable bets. Quite a sum, given that Wall Street arguably serves no useful purpose not better served in other ways — the subject of chapter 14.
The “genius” for financial innovation and risk management that Wall Street regularly touts as its gift to the world consists mainly of finding new ways for an unethical trader to capture the profits from questionable financial transactions and shift the risk to others. The consequences for society are a revealing lesson in the importance of positive moral practice.
Thanks to these generous public subsidies, the Wall Street welfare queens are back to their usual business of speculating on asset bubbles, churning out phantom wealth unrelated to the production of anything of value while driving working people further into debt and rewarding themselves with billion-dollar compensation packages.
In the words of economics Nobel laureate Joseph Stiglitz:
Under the threat of a collapse of the entire system, the safety net — intended to help unfortunate individuals meet the exigencies of life — was generously extended to commercial banks, then to investment banks, insurance firms, auto companies, even car-loan companies. Never has so much money been transferred from so many to so few.
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THE UNSPOKEN STORY OF PUBLIC DEBT
It is public knowledge that the Federal Reserve has been extending credit — money it creates with an accounting stroke — to
member banks, which now include the infamous Goldman Sachs, at nearly zero percent interest. The reason, we are told, is to help them rebuild their capital and get credit flowing into the real economy.
There is rarely public mention of how the banks use this credit to rebuild their capital and the fact that it represents a direct but off-the-books taxpayer subsidy — off the books because it is not identified as a subsidy in public reports. Here is how it works.
The banks use some substantial portion of this money to buy securities issued by the Treasury Department. These securities cover the deficits created by the costs of the Wall Street bailouts and the economic stimulus package made necessary by the failure of Wall Street banks to keep credit flowing in the economy. Because these securities pay a substantially higher interest rate than the rate that the Fed charges the banks, holding Treasury bonds purchased with the Fed’s virtually free money yields the banks a tidy, effortless, and risk-free profit.
As Allan H. Melzer, a Fed historian and professor at Carnegie Mellon University in Pittsburgh, told Business-Week, “You can make three percentage points, which is a lot for a bank, for doing nothing. Why should the banks take risks?”3
What makes this outrageous is that, instead of giving money to the banks, the Fed could just as easily have given it directly to the Treasury Department. The government — and therefore the taxpayers — rather than the banks would have received the free money and saved a bundle.
* * *
We are accustomed to thinking of government transferring money from the well off to the poor. Here it was the poor and average transferring money to the rich. Already heavily burdened taxpayers saw their money — intended to help banks lend so that the economy could be revived — go to pay outsized bonuses and dividends. Dividends are supposed to be a share of profits; here it was simply a share of government largesse.4
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