A BUZZFLASH INTERVIEW
Why should we care about the fate of the middle class? The answer to that question is a very simple one. Without a middle class, you won’t have a democracy. If you look at history, you see that those times when countries have had emerging or established middle classes are the times that those countries have been the most democratic, the most peaceful, and have best fulfilled the promises of life, liberty and the pursuit of happiness. And it’s the best thing literally for all life on earth.
-- Thom Hartmann
"Middle Class" was, until recently, a description that most Americans felt described them. We all felt we were middle class if we had a steady income, a decent home, and a shot at an even better life. But today, as Thom Hartmann helps us understand, the middle class reality is slipping away. As author Paul Loeb has written, Hartmann's new book, Screwed, "explores why, showing how this is no accidental process, but rather the product of conscious political choices, choices we can change with enough courage and commitment. Like all of Thom's great work it helps show us the way forward." BuzzFlash and Thom Hartmann talk here about the myth of a free market economy and government's role as the arbiter of trade and wealth.
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BuzzFlash: Your new book is Screwed, The Undeclared War Against the Middle Class and What We Can Do About It. First of all, what is your rough sketch definition of the middle class?
Thom Hartmann: I would use the definition that Teddy Roosevelt came up with when he defined a living wage as being pretty much the same thing. Somebody who’s earning a living wage is probably in the middle class. Working a normal work week, one person is able to support a family in a way that they can put their children through school, including college, they can pay for all of their medical and health expenses, they can have enough set aside for a safe retirement, they can have enough to take and enjoy a vacation every year, they can live comfortably and meet the needs of their family -- I guess that’s pretty much it. I can’t remember his words, but I think that that’s pretty much it. I play that sound clip of him from 1912 all the time on the radio program.
BuzzFlash: A lot of your writing is concerned about American politics and the Revolutionary and Constitutional heritage of the United States. How does that point in our history relate to the issue of the American middle class?
Thom Hartmann: Well, we’ve had two periods in the United States when there was a substantial middle class. The first was from the time that the country was founded up to about ten-fifteen years before the Civil War. That middle class was established by virtue of cheap land -- cheap resources, basically. The person-to-resource ratio was such that there was a lot of wealth. Granted, many of those resources came from stealing land from Native Americans and enslaving Africans. But nonetheless, setting aside the obvious moral issues of that, that middle class came about as a result of basically cheap land and cheap labor.
The second middle class came about starting in the late 1930s as a result of Franklin Roosevelt intentionally interfering in the marketplace. The passage of the Wagner Act in 1935 and a series of specific interventions in the marketplace said to business essentially: if you want to play the game of business in the United States, you’re going to play by federal rules that are going to establish a middle class, and not just make a profit. What’s significant about these two periods is that, in both cases, the middle class emerged as a consequence of something that violated the normal rules of laissez-faire free market capitalist economy. The first was that cheap land and labor, which was, in a way, similar to the original Renaissance, because after the black death in Europe where there were so few people, labor was in such demand, and the wealth-to-person ratio dramatically increased because of the death of a third of the population of Europe.
Whenever you see a normal functioning economy without intervention, without government regulation and without participation of either workers through unions or the people through government, what you’ll find is the normal outcome of laissez-faire economics -- which is no middle class, or a very, very small mercantile middle class. In Europe for a couple of thousand years, you had a small class of wealthy ruling elites, and a very, very large class of working poor, and then a very small class of people in the middle who were able to carve out a middle for themselves, usually by virtue of expertise. They are the expert jewelers or the expert watchmakers, the stonecutters, and also the small shopkeepers -- the butcher, the baker, the candlestick maker. But not their employees.
The lesson of this is that a middle class is not a normal phenomenon. A middle class has to be created. It will either be created by external circumstances, as in the case of Europe after the black death, or the United States in the colonial times, or it’ll be created by internal circumstances -- the people through their elected representatives saying we’re going to modify the rules of the economy to intentionally create a middle class. That’s what Europe has done largely since the 1940s, although you could argue that that movement started in the 19th Century. And that’s what the United States did, starting with Franklin Roosevelt, and intentionally stopped doing, or began the radical slowdown of, starting with the election of Ronald Reagan in 1981.
BuzzFlash: Many people think of the post-World War II era as the golden era of the middle class. Is that a correct assumption or stereotype?
Thom Hartmann: Yes, it truly was. We saw real wages rise, and rise substantially, from the 1930s right up through the late seventies, early eighties, depending on which numbers you're looking at. We’ve seen the wages of the middle class basically erode since that time, although the wealthiest among us have seen an explosion in their wealth since Reagan began changing the economic direction of the ship of state.
BuzzFlash: The title of your book is certainly provocative -- Screwed -- The Undeclared War Against the Middle Class -- but who’s conducting this war?
Thom Hartmann: There are two groups of people participating in the destruction of the American middle class. The first is those who benefit directly from it economically -- basically the "pure capitalists," or people who derive most or all of their income from their investments, and simply want to maximize return on investment. Some very wealthy families have been working in this direction -- for example, the Walton family, who helped fund the ten-plus-year effort to change the use of the term estate tax to "death tax."
Then the second group is the ideologues, the true believers -- the libertarians and objectivists who read Ayn Rand and truly believe that pure unrestrained laissez-faire capitalism is not only a good economic system, but is also a good political system. They’re perhaps the most dangerous and destructive. Those are the Grover Norquists of the world. And they get it that there’s something in it for them.
BuzzFlash: You have a chapter called “There Is No Free Market.” What do you mean by that?
Thom Hartmann: The only natural free market is a local barter economy. Once we take a step beyond "I’ll mow your lawn if you’ll wash my car," once we start using mediums of exchange, like money -- we are involving government. Government creates the currency of exchange. Government defines that.
Then we have to say, okay, if you’re giving me this, I’m giving you that, we’re making an agreement to do that. If we’re making an agreement to do that, we’re executing a contract. The government defines the rules of the contract. If one of us is taken advantage of in that contract, the government defines how that harm would be adjudicated and what punishment would be rendered. So without the courts, without a treasury system of some sort, without very specific rules for the game of business, and things like protection for intellectual properties -- the copyright laws, patent laws and things like this -- without these things, you can’t have the marketplace.
So the concept of a free market that people simply trade things in an absolute vacuum is a fantasy. Every market is created by government, and the parameters of that market are defined by government. What’s happening right now is that these cons are redefining the structure of the marketplace in a way that is more free and more profitable for big multinational corporations and those with extreme wealth, and less useful and less functional for the middle class and the working poor.
BuzzFlash: We were interviewing Senator Byron Dorgan recently. He's’s written a book about how the American worker is under siege, and certainly many of those workers are the middle class or were the middle class. One of the interesting things he brought up is that in the so-called "free trade" agreement era, corporations were given rights that overran or co-opted sovereignty. The trade agreement -- NAFTA, I believe -- gave a Canadian firm the right to sue the state of California for inhibiting their trade. In essence, what we’re seeing is that corporations now have treaty guarantees that put them above nation-states.
Thom Hartmann: Or at least on a par with them. I remember 1960s and 1970s hearing conservatives like Barry Goldwater, Everett Dirksen -- the classic conservatives -- being very cautious about the United Nations. And the reason why conservatives had been so wary of the United Nations was that in signing some of the treaties, we had to give up some rights that are generally reserved to sovereign nations. Basically we surrendered some of our sovereignty, as did all the other nations in the United Nations, to the United Nations in exchange for a hope for real peace.
Now that’s a pretty noble reason to give up some of your sovereignty, and I can understand the fear of giving up sovereignty. With regard to these so-called free trade agreements -- we are surrendering sovereignty far more substantially than we did to the United Nations. We’re surrendering the sovereignty of our kitchens and our bathrooms and our bedrooms. I would argue that the sovereignty that we have lost that is economic reaches all the way into our individual homes and families, and it is a greater loss of sovereignty than the UN's limits on our ability to wage war indiscriminately. It just baffles me that the conservatives who are so worried about the surrender of sovereignty to the United Nations have nothing to say about the surrender of sovereignty to the World Trade Organization and to the Chapter 11 Commission of NAFTA.
BuzzFlash: Here in Chicago we have an example of a middle class under siege. The City Council of Chicago passed a living wage ordinance that would bring a guaranteed livable wage by 2010. It was particularly aimed at the prospect that Wal-Mart stores would open up in Chicago, and more Target stores that paid extremely low wages. Mayor Daley, who we admire greatly, but we think is dead wrong on this issue, has vetoed this because Target and Wal-Mart said, well, we’ll locate on the suburban borders right outside the city -- a threat which they’ve made apparently to other cities like San Francisco and Santa Fe. Mayor Daley’s argument is that they bring low-wage jobs and tax revenue to the city, and so we can’t afford to lose them. What's happened when you have a leading Democrat, and in many ways, a working person’s type of Democrat, like Mayor Daley, vetoing a living wage law that represents the last hope of the middle class?
Thom Hartmann: This is a trend that began in the 1890s when the state of Ohio told John Rockefeller that by combining oil companies together into the Standard Oil Trust, he was violating both the Sherman Act of 1881 and the state laws of Ohio. He was acting in restraint of trade and harming the freedoms of Ohio. So Rockefeller said to the other states, Ohio doesn’t want me. Who wants me? Who’s going to change their laws? So you had competition between the states to see how far they could lower the standards of the laws that they had regulating corporations -- how large corporations could be, how long they could last, the terms under which they’re incorporated, how much oversight they’d have over them.
Delaware ended up with the least regulated corporations, which is why more than half of the companies listed on the New York Stock Exchange right now are Delaware corporations. New York, New Jersey, Connecticut, and several other states were engaged in this competition, described as charter-mongering. We didn’t put a stop to it at that point. They got away with it.
There have been efforts to slow down the corporate intimidation of government. By and large, they’ve been unsuccessful, because when you combine the changes that happened during the charter-monger era with the changes that came about as a result of the Supreme Court's Santa Clara decision in 1886, giving the corporations right to personhood, corporations have become essentially more powerful than, or at least as powerful as, government entities. I think we need to have a serious discussion of this in the United States, and that there should be laws passed that say if a state is going to engage in competition with other states in a downward spiral, then that state loses certain federal money such as highway funds.
For example, you had Boeing a couple of years ago saying, okay, we’re going to leave Washington state. What state’s going to give us the best tax break if we go there? Cities were really being played off, one against the other, in the race to provide a corporation a huge tax break. And we see this all the time. This is just normal now in the United States. Nobody’s giving you or me tax breaks to move into their town, but they are giving breaks to these corporations.
BuzzFlash: Isn’t Mayor Daley kind of throwing in the towel and saying, basically, the middle class is gone. It’s going to bring jobs to poor people. This is the best they’re going to get.
Thom Hartmann: Well, we’re not even talking about the middle class. Ten dollars an hour is not middle class. That’s not a living wage in Chicago. What we’re talking about is a wage that would be low enough that people are still the working poor, but high enough that they don’t qualify for welfare benefits. A lot of municipalities are not so much interested in giving people a buck and a half raise because it’s going to help the people out. They’re interested in giving them a buck and a half raise because now they’re above the threshold where the city has to pay for part of their housing or part of their medical care, or assistance with food.
BuzzFlash: We were surprised to read in a recent Zogby poll that Bush was slipping among the Wal-Mart shoppers. The Wal-Mart voters are a very key group of people for Bush because 75% -- I believe that was the figure -- voted for Bush in the last election. It was kind of shocking. Why is it that we aren’t seeing people with pitchforks, rising up to protest that the middle class is under siege? These are people who need to shop at Wal-Mart because it has such low prices, even though more than half of its goods come from China -- outsourced jobs that is -- and they're a horrible employer.
Thom Hartmann: I don’t think they put two and two together. I mean, this is what Thomas Frank said so eloquently about in What’s the Matter with Kansas? The conservatives have been so good at messaging that they have caused Wal-Mart shoppers and Wal-Mart voters to believe that prosperity can be achieved through the Republican strategies. They talk about how good the economy is, but they’re speaking about the stock market, and people think that they’re talking about them. Part of this is because we have lost a labor press in the United States. And that is, in part, because of the consolidation of our newspapers and our media.
When I was growing up, there were competing newspapers in most cities, and even small towns or medium-sized towns. Usually those newspapers competed on the basis of left-right politics. I remember growing up in Michigan, the Detroit News and the Detroit Free Press reached the entire state. One had a section that was the business section, and the other had a section that was a labor section. The paper that's more Democratically inclined had the labor section. And you knew the filter through which the news was being presented. You could -- and there was labor news. People were actually talking about labor news. There was a lot of labor news going on.
Every day, there’s labor news happening all over this country. None of it is getting reported in the mainstream media any longer. So workers don’t identify with themselves. The only economic cohort with whom they can identify are investors, because that’s the only economic cohort that’s being talked to or talked about in the media. In part, that’s because the media is made up of these large corporations, not their interests. And also it’s because most of the people in national media are -- I mean, ___ Katy Couric is getting, you know, $15 million to do the NBC evening news. Is she going to be concerned about labor news? Somehow I doubt it. She’s not part of that group anymore, if she ever was. So we have commentators who are working for corporations run by multi-millionaire CEOs, owned in large part by billionaire investors, deciding what the news is going to be for the Wal-Mart voters.
BuzzFlash: Let’s finish up by asking about the subtitle of your book, "And What We Can Do About It." What can we do about the undeclared war against the middle class?
Thom Hartmann: I think there are two steps to this. The first is to expose it -- to wake people up from their lethargy. The second is to take control of one or both of the political parties and intentionally do something about it. Since the government defines the rules of the game of business, including the rules of the game of employment. Government can define the rules of business in such a way that a middle class does emerge and is stable. We need to take control of government. Those of us who are concerned about the fate and future of the middle class are right now at the place where the Goldwater conservatives were in ’64 or maybe ’68 or ’72 -- where we’re saying, okay, how do we go about taking over a political party? How do we participate in the process? We need to get the people out there and get them involved.
The other question that you didn’t ask that I think is really an important one is why should we care about the fate of the middle class? The answer to that question is a very simple one. Without a middle class, you won’t have a democracy. If you look at history, you see that those times when countries have had emerging or established middle classes are the times that those countries have been the most democratic, the most peaceful, and have best fulfilled the promises of life, liberty and the pursuit of happiness. And it’s the best thing literally for all life on earth.
BuzzFlash: Why is that?
Thom Hartmann: Because people are not clawing over each other to reach a level of survival, and we’re not dominated by small groups who have very narrow interests. This goes back to some of the early research that was done by Francis Fukuyama, where he found that, by and large, democratic countries don’t go to war with each other. And why? Because nobody’s going to vote to send their own kids off to a war unless they feel that they’ve been attacked. And so they’re not going to start aggressive wars.
I would submit to you that what Bush did in 2003, invading Iraq wouldn’t have been possible twenty years ago or thirty years ago when America was much more democratic, because we had a strong middle class and people were willing to go out into the streets and protest, and speak up because they had the time to do it. They had some free time. And they had the job security to do it. And they could always get another job, they had educational security. Now we have young people who are educationally insecure. They’re graduating from college with $40-50,000 in debt. That’s assuming that they can get into college. They’re basically slaves from day one that they entered college, which is not a healthy middle-class thing. You have employees who are viewed as human resources, and who are terrified that their jobs are going to be outsourced or their pensions are going to be pulled, or their benefits are going to be taken away. As a consequence, they’re not speaking up.
During the Sixties, people were out in the streets protesting, and raising their fists and saying no to government, no to authority figures, who looked at that with horror. They said: oh, my God, this is civilization decaying. Well, in fact, it was exactly the same thing that we’re talking in the 1770s, and the exact same thing that happened in Greece before the revolt of the 400. There was a middle class that was strong enough to say we’re going to engage in social transformation. We’re going to give women equal power, and African Americans true equality that was promised to them long ago. And that’s a good and healthy thing.
But the conservatives viewed that social change, that social transformation, as a terrible thing, and a dangerous thing, It was a threat to institutions of power, and conservatives are fundamentally about the idea that the best thing is stability. It was a threat to the institutions of power, which were institutions of segregation and oppression frankly.
The environmental movement also came out of there being a middle class. One reason the environmental movement is not as strong now is because again the people don’t have the freedom and the leisure that they once had to speak out and get active and participate. Political action was at an all-time high during the height of the American middle class.
Reagan started chopping away at the American middle class. He declared war on organized labor in America, he ratcheted down the economic potency of the American middle class, thus producing a stronger ruling elite and a disempowered working class, which was the goal of the conservatives because they really and truly believe, as Edmund Burke said back in 1790, that society is best served by stability, not by freedom -- that stability is the most important thing.
BuzzFlash: Let me close with one recollection, which certainly is a telling moment that speaks to your book. Bush had one of his many staged townhall meetings. There was a woman on stage with him and he was asking her what her family life was like, and did she work? And yes, she worked three jobs. She needed to work three jobs. And he said, “That’s fantastic. That’s so American,” or something to that effect. Here is a woman working three jobs just to get by, and Bush praises her for being such a good American. It used to be the dream of the middle class that if you worked one solid job, you had the night with your family. You had weekends off. You could afford your kid’s college tuition. You could save for retirement. Bush's new role model is a woman with a family who works three jobs. What does that say to you?
Thom Hartmann: It perfectly crystallizes the entire thing. George W. Bush was born a multi-millionaire and feels the entitlements of being a member of the ruling class economically and politically. He apparently was not raised with the sense of noblesse oblige that, at least, Joe Kennedy was good enough to impart to his children -- that if you’re wealthy, you have some obligation to society. And so you’re just seeing it in a very raw form -- the belief that there are rulers and there are the ruled. There is the overclass and there is the underclass. And there’s really no need for a middle class in Bush’s world, in the conservative world.
BuzzFlash: And the role of the underclass is to work three jobs.
Thom Hartmann: That’s right. Because if you’re working three jobs, you’re not going to be politically active. You’re not going to be a pain in the butt. You’re not going to be uppity. You’re not going to be problematic for the political and economic forces that are running the country. You’re not going to be in anybody’s way because you’re out there working. So let’s just pat them on the head and say, yeah, keep it up. That is the conservative role model.
BuzzFlash: Thanks so much.
Thom Hartmann: Great talking to you.
Interview Conducted by Mark Karlin.
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Screwed: The Undeclared War Against the Middle Class -- And What We Can Do About It (Hardcover), by Thom Hartmann, a BuzzFlash Premium.
A BUZZFLASH INTERVIEW