I've read many books since 2008 describing how the Great Recession has diminished the prospects of the Middle Class and proposing remedies for restoring them. I've read books by Democrat-leaning economists like Robert Reich, Joseph Stiglitz, James Carville and Stan Greenberg, and Charles Ferguson, and by Republican-leaning economists like Charles Murray.
These books have all had the tone: "Well, golly gee, times are really tough, aren't they, and people are really, really suffering, but, well, you know, it's not really anybody's fault. These things happen. They're part of the natural economic cycle. If you're a Republican, we'll put you back to work by cutting your wealthy neighbor's taxes. If you're a Democrat, we'll put you back to work by sending you back to school and maybe fixing the pothole on the road in front of your house; maybe we'll even build you a bullet train to ride around on."
The American people who are suffering through this never-ending Great Recession have told both parties: "You're crazy! None of this talk from the Republicans about cutting taxes or from the Democrats about spending trillions of dollars more on education and showcase boondoggles makes any sense. What we need now is JOBS ---- Fair-wage jobs that aren't subject to layoffs at the drop of a hat --- jobs that will pay our mortgages, put our kids through college, and provide for our retirements."
Because the Republicans and Democrats aren't making any sense, the people have been cycling back and forth between them. In 2008 the Democrats won the White House and both houses of Congress. In 2010 the "Tea Party" Conservatives Republicans booted them out. Who knows what's going to happen in 2012? It could be a landslide for either party, a close election, or most people might just decide to stay home because they think neither party has any interest in them.
The Republicans and Democrats aren't making any sense because both parties are speaking from ideological platforms. Republican leaders only want tax cuts and less government regulation. The leaders of the Democratic Party are creatures of big government and the big business interests that profit by making a cozy nest with government. Both parties shamelessly prostitute themselves before corrupt banking and corporate interests. Both are for unconditional free trade, no matter how one-sided and destructive of American jobs. Both parties' leaders obfuscate, either through ignorance or intentional deception, the causes of the Great Recession and its remedies.
CUTTING THROUGH THE PARTISAN FOG
I wanted to know right away whether this book cuts through the partisan fog that other books use to obscure the causes of the Great Recession and our way out of it. The answer is a resounding "YES!" Authors Donald Barlett and James Steele make clear that the destruction of the Middle Class has been a DELIBERATE POLICY, not a natural part of the economic cycle:
THE BETRAYAL OF THE AMERICAN DREAM is the story of how a small number of people in power have deliberately put in place policies that have enriched themselves while cutting the ground out from underneath America's greatest asset--its middle class. Their actions, going back more than three decades, have relegated untold numbers of American men and women to the economic scrap heap--to lives of reduced earnings, chronic job insecurity, and a retirement with fewer and fewer benefits. Millions have lost their jobs. Others have lost their homes. Nearly all face an uncertain future.
The attack on the middle class goes back long before that. We warned that by squeezing the middle class, the nation was heading toward a two-class society dramatically imbalanced in favor of the wealthy. At the time, the plight of middle-class Americans victimized by corporate excess was dismissed by economists as nothing more than the result of a dynamic market economy in which some people lose jobs while others move into new jobs--"creative destruction," it was called. Soon, they said, the economy would create new opportunities and new jobs. We said, Don't believe it. What happened to the middle class...wasn't just a blip, but part of a disturbing pattern: a shift by Washington away from policies that had built the American middle class and enabled successive generations to do better than their parents, in favor of policies that catered to Wall Street, corporate chieftains, and America's wealthiest citizens.
In the process, both Democratic and Republican administrations ditched the notion that all Americans should be treated equally, that the playing field should be level for everyone. America must stop sacrificing its greatest asset. Because, without a middle class, there isn't really an America.
This book hammers home these themes of CALCULATED ASSAULT ON THE MIDDLE CLASS:
* The unbridled greed of predatory corporate managements that have waged economic genocide against their employees. How many times have we heard corporate CEOs bellow out that the employees must be fired because their jobs cost too much money in a global economy? Then the CEO raises his/her pay to stratospheric levels that would have been considered obscene by any previous standard. "Cost cutting" means cut everybody's pay except the CEO's.
* The primary objective of too many corrupt managements is to transfer the entire wealth of the company into their own greedy pockets. They raise cash to pay for their lavish lifestyles by mortgaging the company's assets and diverting its entire cash flow into personal use. The company withers and dies while the executives whoop it up on the money that rightly belongs to the company's shareholders and employees.
* That free trade is used to put Americans out of work by replacing their jobs with overseas peon labor. Free trade doesn't create wealth but merely transfers it from the 99% who work to the 1% who inhabit the executive suite. The book makes clear that Free Trade with low-wage countries is a jobs-destroyer. When NAFTA was enacted in 1994 we had a trade SURPLUS with Mexico. Today it is a sixty-five BILLION dollar trade DEFICIT that grows larger every year.
* The myth that we can grow our way out of the recession with exports: "Many of America's fastest-growing exports are commodities you'd expect to see shipped from a Third World country: nuts, animal feeds, rice, oilseeds and food oils, sorghum, barley and oats. There is only one category in which the nation is an undisputed export giant--civilian aircraft. But its days as an export powerhouse are numbered" (because China has learned how to copy Boeing's aircraft designs and soon will be producing their own home-grown models, which they will export to the world).
* The myth that the Foreign Guest Worker (H1-B Visa) program brings to America foreign entrepreneurs who will invest in American business and create new jobs. The truth is that most H1-B visas are requested by American corporations who want to replace their American employees with lower-paid foreign citizens.
* The education trap. Americans are spending more on education and getting less for it. Education doesn't put people to work in America when all the jobs that require education have been moved overseas.
* It explains how corporate raiders steal their employees' pensions by loading them into dummy subsidiaries that are intentionally steered into bankruptcy.
* It explains the economic CHAOS that results from excessive deregulation.
Unlike most other books on the economic crisis, this one then proposes MEANINGFUL reforms to get us out of it:
* They propose an efficient tax system that would tax income from all sources --wages, interest, dividends, rental income, capital gains and royalties according to one schedule with progressive tax rates topping out at 50% on incomes over $10,000,000. Conservatives will like the simplicity of the one-sheet tax form. Liberals will like its progressivity. The book is worth reading to glean this one idea alone!
* Reforming trade: "It's time our trade policy was asked to serve the interests of all Americans--not just the markets and the people who control those markets. A good place to start would be to limit subsidized imports and insist that foreign nations lower their barriers to our goods. That would go a long way toward ending our massive trade deficit."
* Invest in America and rebalance college educations with apprenticeship training. They recommend sensible investing in infrastructure, while avoiding the pitch to invest in economically deficient boondoggles like bullet trains and windfarms. They suggest that instead of trying to send EVERYBODY to college, we'd do better to steer some into apprenticeships in hands-on businesses.
* Uphold the Law. Neither Republicans nor Democrats have shown much interest in enforcing business and banking laws. The FBI warned way back in 2004 that the mortgage lending industry was riddled with fraud and banking crimes. Both parties in the White House and Congress laughed off the FBI's report. The people have paid for our politicians' negligence with trillions of dollars of bailouts and "stimulus" spending.
I think the book is deficient in only two regards:
* It doesn't emphasize the importance of raising the minimum wage. IMO the quickest way to recover the economy is to raise the minimum wage to $20 an hour. This would immediately increase the purchasing power of the tens of millions who have been shoved out of manufacturing jobs and into service jobs. This would enable them to purchase more goods and services, thereby increasing consumer demand and creating a virtuous cycle of restoring employment.
* It doesn't emphasize the importance of using the law to protect workers from predatory corporate managements. IMO corporate managements must be prohibited by law from destroying employment by offshoring, mergers and acquisitions, substitution of make-believe independent contractors for regular employees, and double-loading of work on employees. They must be prohibited by law from stealing employee pensions. A whole new body of labor law needs to be developed to restore a proper balance to Labor and Capital.
Aside from that, the book explains to my entire satisfaction the factors that caused the Great Recession and exactly what remedies must be undertaken to recover from it. It is intellectually honest in excoriating Democrats as much as Republicans. It makes clear that we the people have got to do the work of recovering the economy ourselves. It will be up to us not only to do the physical work of rebuilding it job by job and business by business but also of replacing the leaders of the two parties with new leadership who understands the crisis as well as the authors Donald Barlett and James Steele.
This is the most enlightening, emotionally charged, and intellectually honest book of many that I have read on the Great Recession of 2008 and our way out of it.