The Parallel Parliament

by Glen Pearson

Tag: economy

The Real Creator of Jobs

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IN RESPONDING TO NICK HANAUEER’S observation that “the pitchforks are coming,” one of the .01% noted that the democracy has successfully “tamed” the masses, to the point where violent responses to growing economic inequality are no longer likely.

One wonders what that person must think of the millions marching in the streets of Paris in response to a brutal attack on Charlie Hebdo, or the hundreds of thousands marching in streets across the world seeking change in the world’s financial system. These demonstrators might not carry rudimentary weapons like pitchforks, it’s true, but on the other hand, armed with smartphones, websites, petitions, cameras, and powerful texting abilities has meant that they can actually enter into the consciousness of the world in ways never seen before.

Hanauer understands the distinction, saying forcefully that modern revolutions come gradually, then suddenly. He believes his financial peers just don’t get it, despite all their supposed acquired intelligence.

But his greatest frustration is reserved for just how unnecessary it all will be.

“If we, the elites, do something about it, if we adjust our policies in the way, say, Franklin D. Roosevelt did during the Great Depression – so that we help the 99% and preempt the revolutionaries and cries – that will be the best thing possible for us rich folks, too. It’s not that we’ll escape with our lives; it’s that we’ll most certainly get even richer … My suggestion to you is: Let’s do it all over again. We’ve got to try something. These idiotic trickle-down policies are destroying my customer base. And yours too.”

It was when he realized this that Hanauer decided he wanted to try changing the conversation. He calls it “middle-out economics,” and it’s compelling stuff. It simply asserts that if workers have better jobs and more money, businesses have more customers.

In this he hits on a great truth that has been overlooked. The financial elite is fond of saying that governments don’t create jobs. Well, if recent years are any indication, neither do corporations. It is, in fact, middle-class consumers, not rich businesspeople, that are the true job creators. When businesses have more customers, they require more workers to fill the demand. It is a thriving middle-class that created the rich, not the other way around. Endanger that middle-class and it’s inevitable that fabulous wealth will prove fleeting.

Hanauer is compellingly effective when exposing the underlying fallacies of elite assumptions. For those calling for smaller government, it will never happen, he claims, if so many people keep falling through the cracks. “You have to reduce the demand for government and that hasn’t happened under conservative Republican leadership – in each case, the size of government and debt has mushroomed under their watch.” He isn’t trying to be partisan, he maintains, but it should be obvious to all sides of the political spectrum that the more people out of work or facing financial insecurity, the greater will be the call and need for government intervention and support. It’s inevitable.

Governments are in the crosshairs of the 1% not because they are big or small, but because they can legislate regulatory control and nothing scares the wealthy class more. And so the assault on government continues. Yet despite this reality, Hanauer believes that both the right and left sides of the great political divide are slowly finding common ground on the need for a common approach to save capitalism from itself. “Perhaps that’s one reason the right is beginning, inexorably, to wake up to this reality as well,” he says. If he’s right, then unbridled capitalism doesn’t have much time left. In the next post we’ll examine if politics can actually begin to formulate a plan to pull it all back from the brink.

Pitchfork Democracy

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THE DAVOS MEETINGS HAVE CONCLUDED AND, as always, we await the results. Warnings were coming from everywhere prior to the exclusive sessions – possible recessions, the lowering price of oil, global inequality. But as far back as last summer, one of those in the world’s most elite financial club was already sounding the alarm at various levels.

Nick Hanauer helped launch 30 businesses, including Amazon, owns a bank, his own plane, a huge yacht, and qualifies, not as a member of the 1%, but of the .01%. He says that one of his keenest strengths is to possess a kind of instinctive sense of what the future will bring.

What is his sense picking up now? “I see pitchforks,” he states confidently.

“Our problem is that inequality is at historically high levels and getting worse every day. Our country (the U.S.) is rapidly becoming less a capitalist society and more a feudal society. Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution.”

Did the folks at Davos hear this message? It seems likely, and from numerous sources. The problem is that many of those who attended the World Economic Forum last week are of the investment kind. They attend because they sincerely want to hear of the problems in order to know where to place their funds. They aren’t out to solve the problems, but to stay clear of the greatest risk to their resources. Hanauer knows this reality and so put his challenge in plain terms: “And so I have a message for my fellow filthy rich, for all of us who live our gated bubble world: Wake up, people. It won’t last.”

Many in the financial order actually appreciate his forthrightness and candour, but figure they can avoid the troubles he speaks of. What they don’t comprehend is that Hanaeur is saying this great challenge before them isn’t financial but democratic and human. Just so they wouldn’t misinterpret him, he defined it for them:

“If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this didn’t see the pitchforks eventually come out. There are no counterexamples. None. It’s not if, it’s when.”

We’ll explore more regarding his reasonings in the next post, but for now the contrast between his language and that used in Davos is profound, even exasperating. The jargon largely used in Davos is of the corporate style – technical and vaguely antiseptic. While organizations like Oxfam were providing a clear contrast, speaking with pathos and urgency, the prevailing language is always one of neutrality and a morally numbing kind of objectivity. It focuses on the great problems of the day by analyzing their implications rather than solving their harsh realities. Yes, the great needs of the world are there – poverty, women’s rights, climate change, poor governance, even greed – but they are gathered effectively on the outside, looking in. The fundamental driving force of meetings like those in Davos is how to grow prosperity in order to overcome these problems rather than clearly solving them in human terms.

Just one other thought. If, as presented at the Swiss village last week, over half of the world’s wealth is about to be owned by the 1%, how can we expect them to tackle the great challenges of the age if it would necessarily cut into their profits if more effective measures at reducing inequality were to be undertaken?

This is where Hanauer is helpful, because he speaks from inside the gates, reminding his peers that if they have the most of the wealth, then they will have to apply themselves to the solutions. If democracy is not merely about deregulation, supportive corporate legislation, or access to hordes of capital, but angry citizens coming together, then a day of reckoning might indeed be on the horizon, the modern equivalent of pitchforks everywhere.

Experience: The Lifeblood of Leadership

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SHE DIDN’T START OUT WITH HER PRESENT position, but where she has ended up has placed her at the epicentre of the political/economic debate in America. In 1978, Congress had passed a law making it easier for individuals and companies to declare bankruptcy. It had upset Elizabeth Warren and so she, “set out to prove they were all a bunch of cheaters and that those declaring bankruptcy should be exposed, “because they were just taking advantage of the rest of us.”

She was smart, shrewd, and had research assistants to prove her case. The problem was, she was wrong. The research revealed that the vast majority of those in bankruptcy courts were from hardworking middle-class families, or from small businesses, who had their life savings wiped out. “It changed my vision,” she said. With her researchers she set about to explore what those forces were that were creating all the financial havoc. Things were convoluted at first but it wasn’t long until she came to understand that the lending and financial institutions had successfully worked themselves a sweet deal. It was this “Damascus experience,” as she called it, that redirected her life until she ended up in politics.

What most forget is that Warren is a senior, born in 1949 – a reality that saw her witness both the rise and the fall of the great American middle-class experiment. Her own personal life tracks the experiences of that journey and she not only tells it convincingly, she still bears the scars of that narrative. Her age and her intelligence are precisely what qualify her for speaking to all generations about the great economic turbulence that has turned a once stable middle-class world upside down. “If we hollow out the middle-class,” she says, “then the country we know has gone.”

It’s that language, coming from a voice of experience and poignancy, that has created enemies unlike any she has faced previously. One Republican congressman called her a liar on national television, even though the statistics proved her correct. She has also been labelled incompetent, power-hungry, ignored, and perhaps worst of all, a media whore. The over-the-top comments aren’t reserved merely for Republicans; some officials in the Obama administration have proved equally as ignorant. One member of the banking association who is one of the few members from the sector who supports her call for reform, Roger Beverage, put it plainly: “They are all blaming her for something they all swore would never happen.” Exactly. This isn’t something that merely happened to the financial industry; they helped cause it and pave the way for the fantastic earnings it would bring their elite members. Politicians on both sides of the divide have facilitated this injustice against financial equity and they jointly speak out against anyone who points out their culpability – especially a woman as eloquent and powerful as Senator Warren.

She is more than intelligent, more than courageous, and more than tough. Warren is haunted and motivated by the experience of watching as her country’s greatest asset – a remarkable and robust middle-class – is permitted to slide into despair by financial and political barons that should have known better. Nothing is more powerful than a woman or man empowered by ideals seasoned by personal experience.

Do yourself a favour and read her remarkable story and insight in A Fighting Chance. Better yet, listen to the audio version as I did (downloaded from our local public library for free). There is something about her voice that has the timber of a woman who openly admits her shortcomings but refuses to shy away from her beliefs. The first half of the book chronicles the very human story of a woman attempting to juggle so many responsibilities but who could never permit the lessons of government and financial failures to be put to the side. Warren is one of those remarkable people who fights for more than her own survival and empowerment, offering her life and experience to an entire country despite the personal cost.

Citizens will only trust those who, in turn, trust them. In 65-year old Elizabeth Warren, millions of women and men have at last encountered a politician whose experience has mirrored theirs, but whose courage to fight for all has given hope in a troubled age. In most cases, experience matters far more than opinion and she has it in abundance.  The secret to political reform lies not in the politician but in the citizen who demands the best for their family and community. In this one seminal woman comes the reminder that it’s never politics that changes citizens, but the other way around.

A Populist With Punch

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SOMEHOW THE COUNSEL OF THOMAS JEFFERSON doesn’t seem too dated anymore: “The end of democracy and the defeat of the American revolution will occur when government falls into the hands of lending institutions and moneyed interest.” It’s an insight Elizabeth Warren would readily adhere to over two centuries later. And who can blame her, given the troubling rise of Wall Street again.

The crippling economic crisis of only a few years ago, largely precipitated by Wall Street’s incompetence, was supposedly a wake up call to all of us. Those initial attempts at regulation to keep it from happening again have been the object of numerous complaints from financial executives who claim that such constraints only serve to keep the economy from effectively recovering.

For financial institutions, however, the times couldn’t be better. The federal government forwarded Wall Street hundreds of billions of dollars of new capital, and trillions of dollars of credit were made available to keep capital flowing. At the height of this spree, the Fed was buying $85 billion in bonds each month, in what became a massive windfall for Wall Street. All of it happened without Wall Street having to significantly change anything in how it operated. Even worse, the market for risky financial practices is booming again. Huge bonuses to CEOs continue to rise. It’s now assumed that any urgent and necessary reform will have to come after the next great crash.

But don’t tell Elizabeth Warren that. For her the time is now and the need for political reform to effectively match any kind of economic change is essential before it’s too late. Here it is in her own words:

“I know everyone is wringing their hands about the recent election. What went right, what went wrong, what we could have done better, what we need to do now, and these are all very important questions. But one thing has not changed: the stock market and GDP continue to go up, while families across the country are getting squeezed harder and harder. Dealing with this problem requires an honest recognition of the kinds of changes we need to make if families across the country are going to get a shot at building a secure future. This is not about big government or small government. Rather, it’s the deep down concern over who government works for. Say what you like, people across the country, everyday folks with bills to pay and kids to raise, know that this government does not work for them.”

This isn’t new stuff, but it’s powerfully presented and courageously proclaimed. To the great discouragement of many, Warren has opted not to run in the upcoming race for the presidency. Many Democrats, fearful of another elitist candidate like Hillary Clinton or other challengers, are pressing her to jump into the race; she refuses. And the Republicans? Well, Elizabeth Warren is their worst nightmare – a populist with punch. For now at least, she is contented to align herself with the citizen side of politics and in doing so she is gaining some remarkable credibility in an awfully pessimistic time.

She’s come by her financial perspective honestly. A former Harvard Law School professor, she’s an expert on how Wall Street and the financial industry is, in her words, “destroying the middle class.” That intelligence sees her rapidly becoming the most articulate voice in Washington D.C. In fact, Vanity Fair finished a column on Warren titled The Woman Who Knew Too Much.

Another title would also have been appropriate: “The Woman Who Experienced Too Much.” Read her book, A Fighting Chance, as I did over the holidays, and you’ll immediately pick up the narrative of a young girl (Warren) personally witnessing her normal middle-class family decline in income, stature, and hope. A sad tale, it is also the story of millions of families who looked to government for a sense of balance and who came to the understanding that they were alone. It was that experience, unfolding over difficult years, that lit the fire of challenge that eventually wound its way to the U.S. Senate. That mix of the personal, the passionate, and the principled, is what makes her a modern force to be reckoned with – her story is like that of millions.

At a time of record corporate profits, a time when 14 million Americans are out of work, when millions have lost their homes and, according to the Census Bureau, the ranks of those living in poverty has grown to one in six, Warren has turned this development into a just cause. She has become the living embodiment of advocate Elie Wiesel’s observation that, “There may be times when we are powerless to prevent injustice, but there must never be a time when we fail to protest.” And protest she does – a voice to the voiceless, an oracle to the outcasts, and an enemy to the elites. But she’s intelligent enough to know that unless millions of others follow suit she will remain a voice crying in the wilderness.

No Need For Persuasion

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JUST WHEN YOU THINK NATIONAL POLITICS appears firmly cemented into the realm of hyper-partisan and unimaginative policies comes along a candidate who causes us to think different. Sometimes the effect of such a presence is profound, as I discovered over the holidays reading U. S. Senator Elizabeth Warren’s gritty, A Fighting Chance. The New York Times describes the book as, “a potent mix of memoir and policy,” as indeed it is. Her presence in the political dimension is energizing enough to spend more than one post on her influence. She’s rapidly becoming the most captivating political personality in years.

Yes, Warren is a Democrat, and, yes, she comes from the progressive spectrum. But she is best described as a populist, as seen in the massive movement of middle-class citizens who have found in her practical reasoning and delightful courage a cause for hope. Tired of elitist politics, millions have come to see her as the best choice for president over people like Hillary Clinton or any Republican candidate. And because of that very reality she has become dangerous to the establishment on the Left and Right of the political spectrum.

Put simply, she has successfully launched a new wave involving millions of citizens who are buying into an agenda for political and economic change. It’s important to note that Warren didn’t woo people into such a decision; they were already there, energized and increasingly angry. It’s foolish to think that these people needed convincing and were mere kindling for Warren’s fiery rhetoric.  They lived through a number of decades which saw billions of dollars poured into politics and trillions into a globalized financial system with little to show for it in their own personal progress. So convincing them wasn’t necessary. They are savvy enough to know when the game is fixed, frustrated enough to feel they can’t prevail over an unjust economic order, but just furious enough to stay in the arena and fight back. And Elizabeth Warren has assisted them in understanding their potential for change. Whereas Obama’s early calls for change had been more of a social phenomenon, Warren’s clearly comes from a desire for equity and economic justice.

But the reality is that she has won over so many people specifically because she credits the average person with being smart enough to know something is wrong and human enough to demand change. In drawing a direct link between economic justice and financial reform she has located the sweet spot of middle-class angst.

To give us just a fleeting sense of her outlook, here’s a brief portion of her recent speech to the New Populism Conference last May:

“From tax policy to retirement security, the voices of hard-working groups get drowned out by powerful industries and well-financed front groups. The game is rigged by powerful interests – against the rest of us. If Wall Street can borrow money at 0.75% interest, why can’t we? Our college kids are getting crushed by student loan debt. We need to rebuild our roads and bridges and upgrade our power grids. We need more investment in research. But instead of building a future, this country is bleeding billions of dollars in tax loopholes and subsidies that go to the wealthy and profitable corporations. For big corporations, trade agreement time is like Christmas morning. They can get special gifts they could never pass through Congress out in the public. Because it’s a trade deal, the negotiations are secret and the big corporations can do their work behind closed doors. The game is rigged. The rich and the powerful have lobbyists, and lawyers, and plenty of friends in Congress. Everyone else, not so much. Now we can whine about it. We can whimper. Or we can fight back. Me? I’m fighting back.”

Words like these have been uttered before, but not usually by someone so high up the political ladder and who has effectively galvanized millions of people behind the message. Yes, she’s dangerous – not merely because of her rhetoric, but because of the movement she is assisting to create. Just in time for national elections looming north and south of the 49th parallel has come a voice that counts more on people like us than her own influence. It’s a start. But it’s not the finish.  It might by the early days of the new year, but the old fight continues.

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