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Decline and fall: how American society unravelled

June 29th, 2013 · No Comments

http://www.guardian.co.uk/world/2013/jun/19/decline-fall-american-society-unravelled
The Guardian 19 June 2013

Decline and fall: how American society unravelled

*Thirty years ago, the old deal that held US society together started to
unwind, with social cohesion sacrificed to greed. Was it an inevitable
process – or was it engineered by self-interested elites?
George Packer
Youngstown, Ohio, was once a thriving steel centre. Now, the industry has
all gone and the city is full of abandoned homes and businesses.
Photograph: Brian Snyder/Reuters

In or around 1978, America’s character changed. For almost half a century,
the United States had been a
relatively egalitarian, secure, middle-class democracy, with structures in
place that supported the aspirations of ordinary people. You might call it
the period of the
Roosevelt
Republic.
Wars, strikes, racial tensions and youth rebellion all roiled
national life, but a basic deal among Americans still held, in belief if
not always in fact: work hard, follow the rules, educate your children, and
you will be rewarded, not just with a decent life and the prospect of a
better one for your kids, but with recognition from society, a place at the
table. *
*

*The Unwinding*

by George Packer

This unwritten contract came with a series of riders and clauses that left
large numbers of Americans – black people and other minorities, women, gay
people – out, or only halfway in. But the country had the tools to correct
its own flaws, and it used them: healthy democratic institutions such as
Congress, courts, churches, schools, news organisations, business-labour
partnerships. The civil rights movement of the 1960s was a nonviolent mass
uprising led by black southerners, but it drew essential support from all
of these institutions, which recognised the moral and legal justice of its
claims, or, at the very least, the need for social peace. The Roosevelt
Republic had plenty of injustice, but it also had the power of
self-correction.

Americans were no less greedy, ignorant, selfish and violent then than they
are today, and no more generous, fair-minded and idealistic. But the
institutions of American democracy, stronger than the excesses of
individuals, were usually able to contain and channel them to more useful
ends. Human nature does not change, but social structures can, and they did.

At the time, the late 1970s felt like shapeless, dreary, forgettable
years. Jimmy
Carter was in the White
House,
preaching austerity and public-spiritedness, and hardly anyone was
listening. The hideous term “stagflation”, which combined the normally
opposed economic phenomena of stagnation and inflation, perfectly captured
the doldrums of that moment. It is only with the hindsight of a full
generation that we can see how many things were beginning to shift across
the American landscape, sending the country spinning into a new era.

In Youngstown, Ohio,
the steel mills that had been the city’s foundation for a century closed,
one after another, with breathtaking speed, taking 50,000 jobs from a small
industrial river valley, leaving nothing to replace them. In Cupertino,
California, the Apple Computer Company released the first popular personal
computer, the Apple II
. Across
California, voters passed Proposition
13
,
launching a tax revolt that began the erosion of public funding for what
had been the country’s best school system. In Washington, corporations
organised themselves into a powerful lobby that spent millions of dollars
to defeat the kind of labour and consumer bills they had once accepted as
part of the social contract. Newt
Gingrich
came to
Congress as a conservative Republican with the singular ambition to
tear it down and build his own and his party’s power on the rubble.
On Wall Street, Salomon Brothers pioneered a new financial product
called mortgage-backed
securities
,
and then became the first investment bank to go public.
A steelworker in Youngstown, Ohio, in 1947. Under the old deal, his hard
work was to be rewarded. Photograph: Willard R. Culver/National
Geographic/Corbis

The large currents of the past generation – deindustrialisation,
the flattening of average wages, the financialisation of the economy,
income inequality, the growth of information technology, the flood of money
into Washington, the rise of the political right – all had their origins in
the late 70s. The US became more entrepreneurial and less bureaucratic,
more individualistic and less communitarian, more free and less equal, more
tolerant and less fair. Banking and technology, concentrated on the coasts,
turned into engines of wealth, replacing the world of stuff with the world
of bits, but without creating broad prosperity, while the heartland
hollowed out. The institutions that had been the foundation of middle-class
democracy, from public schools and secure jobs to flourishing newspapers
and functioning legislatures, were set on the course of a long decline. It
as a period that I call the Unwinding.

In one view, the Unwinding is just a return to the normal state of American
life. By this deterministic analysis, the US has always been a wide-open,
free-wheeling country, with a high tolerance for big winners and big losers
as the price of equal opportunity in a dynamic society. If the US brand of
capitalism has rougher edges than that of other democracies, it is worth
the trade-off for growth and mobility. There is nothing unusual about the
six surviving heirs to the Walmart fortune possessing between them the same
wealth as the bottom 42% of
Americans
that’s the country’s default setting. Mark Zuckerberg and Bill Gates
are
the reincarnation of Henry Ford and Andrew Carnegie, Steven
Cohen
is another JP
Morgan, Jay-Z is Jay Gatsby.

The rules and regulations of the Roosevelt Republic were aberrations
brought on by accidents of history – depression, world war, the cold war –
that induced Americans to surrender a degree of freedom in exchange for
security. There would have been no Glass-Steagall
Act,
separating commercial from investment banking, without the bank failures of
1933; no great middle-class boom if the US
economyhad not been the
only one left standing after the second world war; no
bargain between business, labour and government without a shared sense of
national interest in the face of foreign enemies; no social solidarity
without the door to immigrants remaining closed through the middle of the
century.

Once American pre-eminence was challenged by international competitors, and
the economy hit rough seas in the 70s, and the sense of existential threat
from abroad subsided, the deal was off.
Globalisation,
technology and immigration hurried the Unwinding along, as inexorable as
winds and tides. It is sentimental at best, if not ahistorical, to imagine
that the social contract could ever have survived – like wanting to hang on
to a world of nuclear families and manual typewriters.

This deterministic view is undeniable but incomplete. What it leaves out of
the picture is human choice. A fuller explanation of the Unwinding takes
into account these large historical influences, but also the way they
were exploited by US elites – the leaders of the institutions that have
fallen into disrepair. America’s postwar responsibilities demanded
co-operation between the two parties in Congress, and when the cold war
waned, the co-operation was bound to diminish with it. But there was
nothing historically determined about the poisonous atmosphere and
demonising language that Gingrich and other conservative ideologues spread
through US politics. These tactics served their narrow, short-term
interests, and when the Gingrich revolution brought Republicans to power in
Congress, the tactics were affirmed. Gingrich is now a has-been, but
Washington today is as much his city as anyone’s.

It was impossible for Youngstown’s steel companies to withstand global
competition and local disinvestment, but there was nothing inevitable
about the aftermath – an unmanaged free-for-all in which unemployed workers
were left to fend for themselves, while corporate raiders bought the idle
hulks of the mills with debt in the form of junk bonds and stripped out the
remaining value. It may have been inevitable that the constraints imposed
on US banks by the Glass-Steagall Act of 1933 would start to slip off in
the era of global finance. But it was a political choice on the part of
Congress and President Bill Clinton to deregulate Wall Street so thoroughly
that nothing stood between the big banks and the destruction of the
economy
.
One of the 99%: an Occupy Wall Street protester in Union Square, New
York, in 2011. Photograph: Spencer Platt/Getty Images

Much has been written about the effects of globalisation during the past
generation. Much less has been said about the change in social norms that
accompanied it. American elites took the vast transformation of the economy
as a signal to rewrite the rules that used to govern their behaviour: a
senator only resorting to the filibuster on rare occasions; a CEO limiting
his salary to only 40 times what his average employees made instead of 800
times; a giant corporation paying its share of taxes instead of inventing
creative ways to pay next to
zero.
There will always be isolated lawbreakers in high places; what destroys
morale below is the systematic corner-cutting, the rule-bending, the
self-dealing.

Earlier this year, Al Gore made $100m (£64m) in a single
monthby
selling Current TV to al-Jazeera for $70m and cashing in his shares of
Apple stock for $30m. Never mind that al-Jazeera is owned by the government
of Qatar, whose oil exports and views of women and minorities make a
mockery of the ideas that Gore propounds in a book or film every other
year. Never mind that his Apple stock came with his position on the
company’s board, a gift to a former presidential contender. Gore used to be
a patrician politician whose career seemed inspired by the ideal of public
service. Today – not unlike Tony
Blair

he has traded on a life in politics to join the rarefied class of the
global super-rich.

It is no wonder that more and more Americans believe the game is rigged. It
is no wonder that they buy houses they cannot afford and then walk away
from the mortgage when they can no longer pay. Once the social contract is
shredded, once the deal is off, only suckers still play by the rules.

*George Packer’s The Unwinding is published by Faber & Faber at £20*

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