Thinking Differently About Apple and 21st Century Society

Here in my household, we are swimming in Apple products. We have four iPhones, although only three of them are currently in use. We have an iPod and an iPad. We have a MacBook and a MacBook Air (on which this post is currently being composed). We have two iBooks in storage, along with my iMac, which dates to the summer of 2000. It still boots up and works just fine.

Just a few of my Apple products

I’m not an Apple fanboy. I just prefer products that work well, rarely ever crash, and help me create value. Apple products meet those needs perfectly, whereas most PCs I’ve used simply don’t.

If those were the only things I cared about in life, I wouldn’t give those products a second thought, and I certainly wouldn’t be spending my Sunday afternoon writing this post. But there’s more to life than a functional piece of consumer electronics. Those items should exist to help me do the things in life that I want to do, to help me live a better life. They’re tools, not ends.

Even that’s not sufficient. One of my main goals in life is to build a better world, to ease suffering, end oppression, and provide equality – all in order that others may have the freedom to pursue their own dreams. A well-designed product can certainly help that process along. But what if the way that product is made actually undermines those broader goals? Suddenly, there’s a problem.

In the last year or two, it’s become increasingly clear that the way Apple makes its products is deeply flawed. Working conditions at the factory which makes most of their products – Foxconn in Shenzhen, China – are so appalling that workers engaged in a rash of suicides in 2010 to ameliorate their own suffering. Earlier this year workers threatened mass suicide over pay and working conditions. And of course, there’s the fact that Apple makes these products overseas rather than in the United States, where unemployment remains at some of the highest levels we’ve seen since the Great Depression.

Here in the 21st century, it should be clear to us that better technology is not sufficient to build the kind of better lives and society that we want. If it were, we wouldn’t be in a position of mass unemployment, widespread suffering, and a democracy in decay. Social institutions, including workplaces and corporations, have to be full partners in building a democratic, empowered, and equal society.

Most corporations, however, don’t see themselves that way – including Apple. Today’s New York Times took a look at Apple, America And A Squeezed Middle Class, curious to see why Apple no longer manufactures its products in the US and what the impact is on our prosperity. They found that Apple builds in China in large part because they have a narrow focus on their products and their profits, and disdain wider concerns for the good of society. When an unnamed Apple executive was asked about their role in addressing America’s economic problems, their response was revealing:

They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job.

“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

That quote is perhaps the best encapsulation of the pathologies of the modern American corporation. In fact, Apple does have an obligation to solve America’s problems. Everyone who lives in this country has that obligation. And corporations have that obligation too. If they don’t want to help make things better, then they shouldn’t exist.

The notion that companies exist only to generate profit or build a specific few set of products is corrosive. Those profits and products serve the rest of society. And as a part of that society, companies and their executives exist to make that society a better place. If they are engaged in a set of practices that make society worse off, then those actions are indefensible and need to be changed.

For the last 30 years, American businesses have been devoted to a single-minded pursuit of maximizing short-term profits. Unsurprisingly, this has had profound ripple effects throughout the rest of society. The economy became focused on those profits, and so with it followed politics, culture, and our values as a civilization.

By now it should be clear to everybody that while this works well for the small elite that has hoarded all these profits – the so-called “1%” – it has utterly failed to provide a happy and fulfilled life for everyone else.

This is true not only of the American workers who have lost their jobs due to outsourcing, it’s true of the workers around the world who have those jobs now. Those workers aren’t villains – if anything they’re even worse off. Foxconn’s chairman not only compared his workforce to animals, he suggested he might learn good management techniques from a Taiwanese zoo.

The NYT article talks about one of the reasons Apple likes Foxconn is because the factory is willing to push its workers not just to the breaking point, but well beyond it, in service to Apple’s profits and product demands. The NYT article described Steve Jobs’ 2007 rant about the iPhone needing an unscratchable glass surface within six weeks, and how Foxconn went about fulfilling that need:

In mid-2007, after a month of experimentation, Apple’s engineers finally perfected a method for cutting strengthened glass so it could be used in the iPhone’s screen. The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones. Within three months, Apple had sold one million iPhones. Since then, Foxconn has assembled over 200 million more.

Was that necessary? Certainly not. That might not sound as bad as other reported abuses, but the situation is likely much worse at Apple’s suppliers, with overwork and other forms of employment fraud being rampant. As William K. Black explains at Alternet, this is a good example of what may be a widespread tolerance for fraud in the global economy:

These frauds take place abroad, but they harm employees at home. Mitt Romney explains that Bain had to slash wages and pensions to save firms located in the U.S. who had to meet competition from foreign anti-employee control frauds. The damage from foreign anti-employee control frauds drives the domestic attack on U.S. manufacturing wages. Bad ethics increasingly drive good ethics out of the markets and manufacturing jobs out of the U.S. and into more fraud-friendly nations.

One only needs to look at the widespread fraud that underlay the housing bubble of the ’00s to see further evidence for these claims.

Apple likes to think of itself as a model corporation. But as we saw above, their attitude is the same as that of many other businesses – that only the product and the profits matter, with all other elements of human life and social good being unimportant. The NYT article implicitly endorses this view by framing Apple’s decisions as being driven by the marketplace:

It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.

In fact, the article explains that Apple is the world’s most profitable company, so clearly there is room to give. I would personally pay $65 more per iPhone if I knew it was going to American workers. I’m an internationalist, and so I’m also willing to pay more if I knew it was going to create better pay and better working conditions for the Foxconn workers in Shenzhen.

The NYT suggests that it’s not just profit motive that drives Apple’s unwillingness to bring jobs back to the States, but the lack of a skilled workforce and existing factory capacity:

But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies. Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.

The NYT treats this as a kind of historic accident, a consequence of the marketplace. But it is in fact the product of 30 years of deliberate American government policy to deskill our workforce and send their jobs overseas so that the top 1% of our society can enjoy greater profits.

Nowhere in the article is the notion of an “industrial policy” described. China spends vast sums of money to develop, promote and protect its manufacturing sector. The United States has not only done no such thing, at least not since 1980, but has instead spent its money and used its laws and policies to encourage the deindustrialization of this country. This is not a market failure but a deliberate outcome of specific political choices.

There is nothing stopping the United States from shifting our current industrial policy away from “doing everything we can to help the 1% get richer” and toward “doing everything we can to promote the development of a manufacturing sector that employs a lot of people, paying good wages with good working conditions.” Well, nothing except the political power of the 1% – and the hegemony of neoliberal ideology, which holds that “the market” should decide who wins and who loses in life, rather than all of us collectively deciding that there’s no reason anyone should ever have to “lose” at all.

The United States could and should spend money to provide job training to help create a workforce that can build the products that make a 21st century society go. We can and should spend money to help make it easier to build sustainable, environmentally responsible factories. We can and should pass laws to ensure those factories are run by a democratic workforce, ideally by a cooperative, rather than by a large corporation focused on profits rather than the social good.

If companies are complaining about costs, we can help solve that problem without letting them fall back on the extremely damaging “solution” of simply cutting their workers’ pay, benefits, or even their jobs. Universal health care, funded through taxation, would mean a company like Apple would not have to include that cost in deciding when and where to hire. The same holds true of universal defined-benefit pensions – an augmented version of Social Security – as well as better schools and a freight and passenger transportation infrastructure that was not dependent on expensive oil.

Those things would not necessarily have to benefit just large corporations. They could provide the basis for people to innovate for themselves, for cooperatives to start setting up shop in the US and begin to design and build things like smartphones.

Changes to the way our companies operate, including eliminating the laws requiring them to maximize shareholder value and instead focus on operating in a way that makes society better, are also key pieces of building a better 21st century prosperity.

If all we want out of life is an iPhone, then we can just continue on the present path. But for those of us who know we can and should aspire to much more fulfilling things, it’s time we started figuring out how to change the global economy, rather than let it continue undermining our values and our lives.

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Building A Society on Betterness

For the last 30 years, American businesses have been devoted to a single-minded pursuit of maximizing short-term profits. Unsurprisingly, this has had profound ripple effects throughout the rest of society. The economy became focused on those profits, and so with it followed politics, culture, and our values as a civilization.

By now it should be clear to everybody that while this works well for the small elite that has hoarded all these profits – the so-called “1%” – it has utterly failed to provide a happy and fulfilled life for everyone else. Instead we have the worst recession in 60 years. Unemployment is sky-high. There is widespread poverty, hunger, and suffering. The climate is changing fast and having catastrophic effects on humanity and the natural world.

2011 saw the stirrings of a global movement determined to finally challenge this situation. And they quickly identified the root cause as the hoarding of wealthy by the 1%. That was a good start. But what underlay that hoarding? Pull back the veils and one sees the single-minded pursuit of profits as a crucial factor. Unless we find a way to remove and replace that deviant ideology that has corrupted us and our communities and institutions, we’re not going to get very far in turning our present condition into something better.

That’s where Umair Haque comes in. His new book Betterness: Economics for Humans (available as an e-book) is designed to address this crisis of the 21st century human spirit. His insight is deceptively simple – that what we all want out of life isn’t profit but to live a meaningful and rich life. He’s certainly not the first person to realize this basic human truth, but he is one of the first in our time to understand why it is so central to resolving the crisis we now face. If we are to find a way out of the dead end of poverty, decline, oligarchy, and a life of resigned desperation, we need to reorient the way we do business and the way we measure success to reflect the highest aspirations we have as individuals and communities. In a word, Haque argues, we need a world built on “betterness.”

Betterness is written toward an audience of business executives and entrepreneurs, but don’t let that fool you. Haque is after much bigger game. As he regularly makes clear on his Twitter feed @umairh, he is interested in how each of us can play a role in building a society whose institutions – including its businesses – can be reoriented around a project of building a better life for everyone, rather than simply maximizing profit without regard to the cost.

I’ve never started a business in my life and doubt I ever will. I’ve long been skeptical of the central place in American life that business and the economy are given. But just as Haque is after bigger changes that aren’t limited to the economy, so too must we recognize that unless we reshape the way we do business, we’re never going to be able to reverse the slide into a dark future where democracy and prosperity are just fading memories.

More importantly, the elements of “Betterness” that Haque describes in his book are fundamental building blocks of a 21st century civilization. These things can be applied throughout society, including in government and politics, my own particular area of interest and expertise. Haque doesn’t have all the answers, nor does he have to. He’s pointing to a path forward that many of us have been on for some time, and suggests some ways to think about our collective project of renewal that I believe to be useful.

Haque argues that 20th century economies – and therefore, 20th century societies – were focused on measuring outputs, particularly profits. Gross Domestic Product (GDP) became the primary means by which national success was defined. This was true for the Communist Bloc as well as the First World, and after 1989 has been universally applied across the globe. It’s the national form of the 20th century obsession with profit.

Instead, Haque argues the goal should be what the ancient Greeks called “eudaimonia”:

The ancient Greeks called a good life eudaimonia. Descended from the biggest big idea in history — Aristotle’s notion that “the highest good” was the final end of all human endeavor — eudaimonia, the concept of a “good life,” went on to become the fundamental design principle of ancient Greek civilization, the raison d’être for city states, gyms, schools, and polities.

But eudaimonia wasn’t an easy, comfortable, materially rich life, but one that was authentically, meaningfully rich: rich with relationships, ideas, emotion, health and vigor, recognition and contribution, passion and fulfillment, and great accomplishment and enduring achievement, exactly what “business,” “output,” and “product” seem so achingly deficient at producing. That conception of prosperity is very different than the one we know today.

In other words, our businesses and economies – and with them our governments, our politics, our cultural and social values – are not aligned with the goal of living a better life. We have to think differently AND we have to measure differently:

How would a better metric than GDP help us solve this conundrum? A balance sheet makes it possible to distinguish between “good” and “bad” income, income earned through reinvestment or by selling yesterday’s capital assets. A glimpse into a would-be balance sheet suggests that advanced economies have been “growing” their incomes more via the latter than the former. Earning income by selling (or mortgaging) real wealth is a vicious circle, bringing economies closer to a tipping point, where fewer, lower-quality assets are left to trade or to generate lasting gains. It’s as if we’re pawning our stocks of higher- order capital—whether social, intellectual, or emotional—for cash in hand today, but the consequence of such real underinvestment is that we’re left with fewer, poorer assets with which to pioneer opportunities and enjoy higher standards of living tomorrow—whether denominated in jobs, net worth, income, meaning, or fulfillment.

Haque suggests one possible standard of measurement:

Now here’s a crude approximation of what eudaimonia might look like:

W = N+F+I+H+S+E+O

It says: real human welfare equals natural capital, plus financial capital, plus intellectual capital, plus human capital, plus social, emotional, and organizational capital. Not all these kinds of wealth are created equal; I’d suggest that higher-order wealth, to the right, is scarcer, stickier, more enduring, and more productive.

This is a much more progressive concept of the role economic exchange should play in a society oriented around humanistic values, rather than profit values. I’m not sure I like the idea of defining these things in terms of “capital” – one problem I believe we face today is that not only are we too profit-focused as a society, we are also too market-focused and too business-focused. But in whatever form of social democracy we wind up building, there will likely be some kind of market and some kind of business in it. And Haque’s concept of how a eudaimonic economy can be measured seems compatible with the broader goals of orienting our civilization toward the maximization of everyone’s potential, rather than the maximization of a few people’s profit.

If we apply this concept to government and politics, some interesting similarities present themselves and suggest, at least to me, that Haque is on to something. After all, government is often being told it should be run like a business. This is a truly awful idea for any number of reasons – government’s job isn’t to make a profit but to serve people no matter the cost – but we’re not going to get out of that trap unless we come up with some coherent alternative to explain how government should work.

Some examples follow, starting with education. The current vogue of corporate “reformers” is to base student assessment – and pretty much every aspect of education – on standardized test scores. That seems pretty likely to produce the same kind of unhappy outcomes for individuals and for our society that the analogous focus on business profits has produced. The purpose of business isn’t to produce profits, and the purpose of education shouldn’t be to produce high test scores. But without a broader set of measurements – including students’ ability to think and reason, their ability to be creative and innovative, their ability to understand who they are and how to be good to each other – then we’re likely to continue down the present, flawed course.

Police departments often measure their success by their crime rates. Are there fewer or more murders, robberies, and other crimes this year than last year? But we know a city can have a low crime rate but not be any happier. Does the community feel safe? Are the police achieving the low rates at the expense of everyone else’s rights? Or perhaps there is a better way to measure what we expect from our police department.

I should be clear that I am, and will probably always be, inherently uncomfortable with measuring the fundamentals of human life. A good life is something you feel, sometimes even something you know. It can’t always be reduced to numbers. Doing so can strip the essence of life.

Still, if we are to move away from a single-minded pursuit of profit, we’ll need a different way to understand how our actions lead to the kind of better, holistic lives that we want to live. In both economics and politics we can see that our measurements, and the structures and institutions that are tied to those measurements, will have to change to become consonant with our true values.

Of course, new measurements alone won’t be enough to remake our economy into something that works with us to achieve our goals rather than something that is working against us. More than anything, we need economic democracy. Businesses are focused on profits because they are generally undemocratic, hierarchical organizations. Whether run by one person or by a small group of elites, the undemocratic structure is mutually reinforcing with the inhuman focus on profit alone.

So an essential part of Betterness will also have to be creating business structures that operate democratically. Eudaimonic goals require eudaimonic practices. Cooperatives are a good example of how this could work, enterprises where decisions are made democratically rather than from the top down. Democracy is hard, but the rewards are significant and compelling – and generally better for eudaimonic outcomes than an autocracy.

The reconstruction of our economy is an essential element of the reconstruction of our society. What Umair Haque has done with Betterness is start to sketch out some of the things that economic reconstruction must include. We cannot simply try and make different things with the same 20th century economic practices and values – we have to create new practices and values to match our aspirations. The purpose of business isn’t to sell things or make profits but to help us achieve our individual and collective dreams. We need to figure out how exactly we build an economy that gets us there.

And while we’re at it, we need to undertake similar projects elsewhere in our society, including in our governments. Government right now isn’t doing a whole lot better than businesses at meeting human needs, and is rapidly losing public trust. Even those public servants who still believe in doing what is right are finding themselves boxed in by 30 years of right-wing attacks on government and the limitations of a system designed to help a few people maximize their profits rather than help everyone share in prosperity.

Reviving government will require more than just convincing voters to approve new taxes or reject right-wing and corporatist politicians. It will require us to determine what must be done to make government a fully democratic and effective partner in building a eudaimonic society. Government’s measurements, values, and goals will have to change too. It won’t be the same as what we need for business – government’s job is to provide the permanent architecture of prosperity, and should not necessarily constantly be chasing numbers.

But the overall concept is the same. We can and we must have a society that actually meets people’s wants and needs, rather than just struggles along as increasing numbers of people suffer. If we are to produce significant political and economic changes, it’s not enough to be against “the 1%” or against “free market economics” – we have to also provide a clear and coherent alternative. Umair Haque’s book is one part of constructing that alternative. It’s up to the rest of us to keep the momentum going.

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Occupy the Progressive Movement

It was during the fifth or sixth major argument within the netroots in 2011 about the Obama Administration that the first protestors attempted to Occupy Wall Street in mid-September. Within days the talk of primary challenges, donor strikes, and third parties had vanished as the eyes of the progressive movement turned toward NYC. As protestors across the country took up the cause and the practices of Occupy Wall Street, setting up tents in cities large and small and bringing the message of the 99% to the masses, many progressive activists and organizations stopped what they were doing and gravitated to the new movement springing up in the streets.

Occupy Philadelphia
Occupy Philadelphia by Craig Fineburg

This was a moment many of us had long been waiting for. 2011 had seen mass street protests across the globe against the global economic system and the political systems that enabled the 1% to rob us blind. But with the localized exception of the Wisconsin protests, that street movement had not yet come to America.

Throughout 2011 progressives tried to stoke that flame. Some, like, came very close, turning out thousands at the White House in late summer to stop the Keystone XL pipeline. Others like Van Jones recognized the need for a new kind of mass politics to challenge the 1%, launching Rebuild the Dream in late June.

America was a tinder-dry land of California brush awaiting a spark – and the hot winds were already blowing. But it took the anarchist activists of OWS to actually get things started in the streets. Almost immediately the public conversation around economic policy was changed, as it finally became acceptable for everyone to admit what we already knew: our nation, our households, and our economy had been robbed blind by the wealthy elite, and it was time to do something about it.

The progressive movement hasn’t been the same since. That movement, born around 2003 out of deep anger at the Democratic Party’s enthusiastic embrace of the Bush Administration’s warmongering policies as well as growing unease about the direction of the nation’s economy, had by 2011 started to spin its wheels. The arguments over Obama were, in large part, an argument about the future of the movement.

A lot of work had been done since 2003 to build a functioning left in the United States. It began online, but quickly moved offline. The Dean campaign was one early example. By 2006 the movement was in full flower, with the first national convention (then called “YearlyKos”) held amidst a national political campaign to retake Congress from the Republicans. Progressive activists provided the money and the ground troops to wrest control of both the House and Senate back from the right.

Two years later, the Obama campaign seemed to vindicate the movement. Obama’s campaign style was in the new progressive mold. It was “people-powered.” It challenged the establishment Democratic Party with an inspirational message of hope and change. It perfected the Internet-based organizing strategies the netroots had pioneered. It mobilized the masses and generated higher turnout than had been seen in years.

But by 2009, it became clear that nothing had really changed. Obama immediately brought on board all the old Clinton Administration hands and showed his desire to govern as if the 1990s had never ended. Obama began rapidly abandoning the agenda he championed in 2008 and it became clear to progressives that their hopes for change were going to be dashed. The movement began to sputter. Momentum from 2006 and 2008 wasn’t sustained and as the right became more energized, progressives and Democrats more broadly went down to defeat (with California being an important exception) in 2010.

This was the landscape onto which Occupy Wall Street burst in September and October of 2011. What OWS did was expose the failure of a core assumption of the progressive movement dating back to 2003 – that if the movement focused on winning elections, change would follow. The progressive movement was always more diverse than that, and had interesting cultural forms, intellectual developments, and a clear desire to do mass organizing. But since at least 2004 electoral organizing had been the top focus of the movement.

Progressives eagerly embraced Occupy Wall Street because it suggested a way out of the blind alley of an overfocus on winning elections. This weekend’s Netroots New York conference bore little resemblance to previous Netroots conferences, whether state or national, in that it was dominated by discussion of the Occupy movement. It’s a telling example of how many progressives themselves had lost faith in their movement’s ability to produce change.

It was time for a correction anyway. What we have learned is that winning elections isn’t on its own enough to produce change. What’s needed is a clear policy agenda and a strong external movement that can help progressives in power implement that agenda – and stop others in power from implementing a bad one. That requires a movement in which electoral organizing is just one piece. In other words, the progressive movement needs to grow not only in numbers but in the diversity of what it does.

That isn’t what drives most Occupiers, however. Occupy is also a rebuke of organized politics. They’re in the streets because they believe it’s the only way change can be produced. What it has revealed is that distrust of government is now rampant on the left as well as the right. To most Occupiers, government is the enemy. And their confrontations with local governments showed this. Even though the vast majority of local electeds in the big cities are sympathetic to the Occupy movement and are no friend to the 1% (with Bloomberg being a notable exception), Occupy’s choice of tactics reflected their belief that anyone in government was either incapable of helping or was determined to break the protest. And Occupy has brought a new group of people into political activism. New voices are popping up online, new leaders are emerging, and they are much less interested in the more incremental changes that the progressive movement had unfortunately become accustomed to accepting.

Occupiers are openly advocating revolutionary change from the streets. But here is where I think the progressive movement’s love affair with OWS should find its limits. Occupy alone won’t produce the changes we need in this country. By focusing on physical occupation of public space, they’ve muddled their early message and have alienated potential allies. On the other hand, they have succeeded in kicking a door open. The public wants action on inequality and wants to go after the 1%. Progressives should walk through the door that Occupy opened – and they should be willing to work with anyone, Occupiers or not, who are interested in providing the leadership that is needed to make lasting change happen.

The goal of progressives should be to build a broader, long-term, mass movement to achieve a democratic economy, an equal society, and a peaceful planet. Taking to the streets is a tactic to help get us toward that goal. But it is those who are best organized who will prevail even if street action leads to major political change.

That is the key lesson of history. In February 1917 a mass movement took to the streets of the Russian Empire and overthrew the tsar. But because they were the best organized, it was the Bolsheviks who ultimately prevailed, even though most Russians seemed to prefer a more moderate and democratic outcome. In February 1979 a mass movement that had been in the streets of Iran for nearly a year finally toppled the shah. Many of the leaders of that movement wanted Iran to become a western-style liberal democracy. What they got was the Islamic Republic, because the Ayatollah Khomeini and his followers were by far the best organized group in the country.

In February 2011 a mass movement took to the streets of Egypt and overthrew Hosni Mubarak. But because they were the best organized, it was the Muslim Brotherhood that won the fall elections and is now poised to govern Egypt. The people of Tahrir Square are struggling to maintain their vision of the revolution and are finding that taking to the streets is a tactic that can work at times, but isn’t enough to produce long-term change. If it were, the occupations of Syntagma Square would have stopped Greece from imploding on austerity, and would have brought down the neo-Thatcherism of the Cameron-Clegg government in the UK.

Progressives were not wrong to care about winning elections and making sure the right people were in government. That matters a great deal. Who controls the levers of government, whose ideas prevail in a campaign, which ballot initiatives win and lose, which budgets get cut and which budgets get increased – all of these things are crucially important. And ultimately, if we are going to take our money back from the 1%, it’s going to require governmental action.

What progressives were wrong to do was to make electoral organizing such a central focus of their work, almost to the exclusion of everything else. The movement needs to broaden. The problem with focusing so much on Occupy is that it too is narrow. It’s the overture to the greater opera of change that is beginning. It won’t produce change on its own either.

Our government needs renewal. Our institutions need to be rebuilt. Our economy needs to be made democratic. Our culture and our society need to become much less barbaric and atomized and instead become much more loving and collaborative.

And we have to build that while also fending off the 1%’s move toward a neofeudal society, where we all become serfs, dependent on large corporations that have merged seamlessly with a government that has abrogated most of our basic rights. Defeating that requires not just direct action. It also requires us to have a clear and compelling alternative. Right now we don’t have that. And we don’t have a broad enough movement to push it forward even if we did.

Some progressive organizations have learned the lesson well. In California, a group of progressive organizations have come together to support a ballot initiative that would reverse austerity that has crippled education and health care services by taxing millionaires. (Note: I worked for one of these organizations, Courage Campaign, from 2007 to 2010.) This proposal had been in the works before Occupy Wall Street began, but they are walking through the door that OWS kicked open. Their polling shows their measure is very popular, with 67% voters saying they would support it.

It’s true that this initiative alone won’t fix all of California’s problems. It’s one piece of a much broader strategy to produce change. But that’s the point. If it passed it would put into action a key piece of the Occupy agenda – tax the rich to save our schools and services.

Government isn’t working right now. But neither is it going away. We still need to pass good initiatives, and elect good progressives like Darcy Burner, and work to get policies changed. What we now know is that those things on their own are still necessary but are also not sufficient to produce a better world. Those need to be part of a much bigger movement that is able to create cultural products, social values, and new ways of doing work that match our deepest values of democracy, collaboration, and care for everyone.

And there will be times where we have to go around the system to get there. Taking to the streets has its place. But even that will only be effective if it’s tied to a bigger agenda and to organizing that ensures the left prevails if and when an historic moment of change arrives.

There’s no right answer and no wrong answer. We haven’t figured out how to stop neofeudalism and build a better society. Progressives should let a thousand flowers bloom. What we now know is that we can’t focus on any one flower and neglect the field as a whole.

Occupy Wall Street is showing the progressive movement it’s time to mature. This decade should be, and must be, our decade. The crisis is growing worse, not better, and it is up to us to ensure that when it passes, we come out the other side with a sustainable, lasting social democracy that meets everyone’s needs in a society built on love and collaboration rather than hatred and competition. That only happens if we commit ourselves to lasting organizing, to take back our government (whether on the inside or outside) in order to rebuild it as a properly functioning tool of the people, and not as a tool of the 1%.

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Dancing Around the Edges of Student Loan Reform

Mike Konczal proposes two steps to tackle the student loan crisis and invited feedback on the proposal. Before doing that, I think it’s important to understand the nature of the crisis in order to produce useful solutions to it.

Total student loan debt in the United States is now around $1 trillion. The average balance is $25,000 but it’s common for many students to have a lot more.

The high debt levels are particularly damaging given that it hits young people who have low incomes as they start their careers – if they’re able to start their careers at all given the difficulty of this job market. Student loan debt is a big reason behind the boomerang children phenomenon of college graduates moving back home. It’s also a huge drag on our economy, as young people are paying back debt that could and should otherwise be usefully spent to grow the economy. Young people should be among our most entrepreneurial people, full of innovative ideas based on the fact that they are closer to present day realities than older generations whose worldviews were formed in an era that has passed.

The immediate problem for most young people is that the repayments are not affordable. Why that is the case is extremely important. It’s not because the interest rates are too high. It is because the principal is too high. In that sense the student loan crisis is not very different from the mortgage crisis.

As Konczal points out, however, there is a key difference – one can literally walk away from a mortgage by abandoning the house and letting the bank repossess it. The home is gone but so too is the unaffordable debt. Student loans, however, cannot be discharged in bankruptcy. It is literally a form of indentured servitude, as Konczal himself argued in 2009.

Walking away from a mortgage has seriously negative economic consequences on a macro level, however useful and smart a solution it is on the household level. That’s why one common solution that progressives and many economic observers have called for is principal writedowns. Lowering interest rates won’t solve the problem of negative equity. And getting out of a mortgage is as easy as putting the keys in the mail. So the principal, which is the core of the problem, has to be addressed.

Konczal’s proposal today does not address this central problem. He suggests that we return to the 1989-era student loan rules that loans cannot be discharged through bankruptcy for the first 5 years of the loan, and that we find a way to use the discount window to allow borrowers to refinance their debts at low rates.

Neither solution will provide relief to the indentured. The problem isn’t that the loans will be unaffordable in 5 years, it’s that the repayments are unaffordable now. And the problem isn’t that the interest rates are too high, it’s that the principal levels are too high. Young people are struggling to make the monthly payment not because of high rates but because of high balances.

So any student loan reform proposal that does not include some form of principal writedowns is not likely to be very effective. Konczal is worried about “moral hazard” which, broadly speaking, is a worry we cannot afford to have in this economic crisis. The far greater problem is years of lost economic activity and job creation because people are struggling to pay debts rather than innovating in a Great Reset, and that an entire generation is going to lose wages, equity, and the possibility of career advancement because of their need to repay debts.

The cry among the Occupy protestors, echoing the silent screams of an entire generation, is “forgive student loans now.” They have it right. They understand the problem is the principal balance itself. Let’s tackle that instead.

The best solution is to simply forgive all existing student loan debt. I cannot imagine a more powerful economic stimulus than $1 trillion in debt forgiveness. It would liberate a generation and unleash their creative potential. Not only would they spend money now, helping the economy when it is wobbling between slow growth and recession, but they would be able to start new businesses and innovate new things that can be the basis of a longer term prosperity.

Forgiveness can take several forms. It could be an immediate elimination of the debt. Other, less effective but still potentially useful options include a universal deferment of 5 to 10 years or some kind of mass principal writedown. But why be half-assed about it? If we can free a generation and reboot the economy, we ought to do so.

Student loan forgiveness is only one piece of the puzzle. The underlying problem of skyrocketing college costs has to be addressed. Those costs are rising because of a bipartisan agreement to shift the costs of college from taxpayers (who are usually older) to middle-class parents and their children in school. Free or cheap public college was a key part of building the assets and earning power of the GI, the Silent, and the Boomer generations. We need to return to that model, as Konczal has also argued.

That model included student loans for certain kinds of degrees, though the balances were typically affordable. In a properly functioning social democracy, even medical and law school would be cheap or free. If loans are to be used, they should be used sparingly. Here is where Konczal’s proposals of 5 years of nondischargeability and low rates would become useful – as part of making professional and graduate education more affordable. His proposals are far less useful for the current problem of young people becoming indentured to get their bachelor’s degree.

I won’t speculate why Konczal avoided the issue of principal and did not go down the path of forgiveness. He’s a good guy and a solid progressive. My own belief is that as progressive policy wonks, we’re best off figuring out how we achieve our big, even radical dreams. Occupy protestors want student loan forgiveness. OK then. Let’s figure out what it takes to turn that into reality. In the meantime the government can and should allow anyone who wants to defer their payments for, say, 5 years to do so while we figure this out.

The only thing we have to lose is our indentures.

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What Right-Wing Economic Populism Is and How We Beat It

As the global economy fishtails down the road, it’s becoming clearer that fundamental changes are going to be required to avoid another crash. This economic crisis was caused by stagnating wages, which have eroded household stability and caused many more to turn to debt to make up the shortfall. The incomes of the top 1% have grown dramatically over the last 30 years, but for everyone else they haven’t. Lacking any other choice, people took on debt to try and afford housing, cars, education, and often basic necessities. Debt levels became too high by the mid-’00s, and when oil prices spiked and the housing market collapsed, the hollowed-out economy skidded into the ditch.

What we’re experiencing is a classic balance sheet recession – where a revulsion against debt leads households to deleverage as rapidly as possible to get their heads back above water. The problem is that stagnant wages, still-frozen credit markets, the collapse in housing values and the scarcity of work are all making it extremely difficult for people to pay off their loans. Left alone, this deleveraging will go on for quite a long time, perhaps a decade, and only when the debts are paid off will recovery be possible. Countless lives will be ruined, productive and creative years lost, and who knows whether the American political system can handle the stress of such a long period of Depression.

There are several possible ways out of the crisis. Debts can be forgiven – cramdown legislation and mortgage principal modifications are especially useful here. People can declare bankruptcy and wipe out their debts, although this leaves most who go through the process very unwilling to risk their financial security again by spending or taking on any new debt. (It can also ruin any chance of getting work.) Debts can also be inflated away. The best answer would be using a combination of massive government stimulus to put people to work, and new regulations and fiscal policies to break up large concentrations of power and wealth in order to grow wages to help people get rid of their debts. Whatever the answer, progressive economic recovery policy has to include debt relief as a major, perhaps even the central element. The broader rebooting of the American economy along sustainable and democratic lines won’t be possible until the debt is purged.

Economists like UC Berkeley’s Laura D’Andrea Tyson are calling for just this kind of policy:

In a balance-sheet recession caused by too much private-sector debt, the government should also use its resources to catalyze debt workouts and debt reductions.

In the United States, where mortgages account for most of the private debt overhang, the federal government should enact stronger measures to reduce principal balances on troubled mortgages and to make refinancing easier. These measures would help stabilize the housing market, would prevent future defaults and would free money for borrowers to use to pay down their debt or increase their spending.

This would translate into stronger private-sector demand and more jobs.

In a balance sheet recession, the biggest threat is deflation. Falling wages make it much more difficult to pay down debt, prolonging the misery. Deflation works very well for people who already have a lot of money, since it preserves their position atop society. Rentiers continue collecting their interest, and with laws in place making default and bankruptcy very difficult (student loans cannot usually be discharged in bankruptcy), their income streams are not significantly challenged.

Battling deflation, debt, unemployment and wage stagnation seem like obvious necessities if a prolonged Depression is to be avoided. And while the elites have the money and the political connections to try and block these things, there are more of us than there are of them. In theory, the great mass of Americans who are suffering from the economic crisis caused by the financial elite should be ready and willing to unite in support of the progressive solutions described above.

And yet that hasn’t happened. Working Americans are deeply divided into two camps, right and left, Tea Party and progressive. As David Atkins points out these two groups have a lot in common:

Tea Party crazies and progressives–i.e., the real people in the real economy who spend the most time obsessing over and paying attention to politics, as opposed to those encased in the D.C. or Manhattan bubbles–know that Thomas Friedman and friends are horribly out of touch. Tea Partiers and progressives have radically different theories of politics and governance, and radically different explanations for why Friedman and friends are wrong, but each camp definitely agrees that the demise of this sort of sophomoric neoliberal commentary would be a great thing for democracy. Both Tea Partiers and progressives can see the economic destruction of the American way of life, and agree that it’s being destroyed on behalf of elites. The two camps differ greatly in who they believe those elites to be, but both camps know this: Thomas Friedman and friends lie to serve the interests of the elites, not of ordinary working people.

Instead of embracing progressive solutions, however, the Tea Party is vehemently pro-deflation. Texas Governor Rick Perry caused a firestorm of controversy when he called Federal Reserve Chairman Ben Bernanke “treasonous” for even considering quantitative easing policies that might reverse a slide into deflation. (Quantitative easing is not sound policy for many reasons, but its attempt to stop deflation is one of its few benefits.)

Michelle Bachmann has made deflation a core policy objective, arguing that money should never lose its value:

The shorthand way of describing to you what quantitative easing is is a license to print money without any value behind it…In the last two years of the Obama administration, if you pull a dollar out of your pocket, you have lost 14 percent of the value of that dollar. That means the federal government has stolen that money from you… They’ve been printing essentially valueless money and flooding it into the money supply. I don’t stand for that. A dollar in 2011 should be the same as a dollar in 1911. A dollar should be worth a dollar.

Think Progress called her claims “laughably uninformed,” and yet it hasn’t hurt Bachmann. That’s because Perry and Bachmann have their finger on the pulse of a very deeply seated right-wing hostility to anything that smacks of inflation. If progressives are going to build a popular front to attack the economic crisis, they have to understand and confront the right-wing’s love of deflation.

Some progressives dismiss conservative fear of inflation as being nothing more than an expression of right-wing servility to the wealthy elites. But that misses the mark, and doesn’t properly explain why fear of inflation – and therefore love of deflation – is so visceral to not just right-wing populists, but to many Americans.

The conservative populist worldview is not so difficult to understand. To them, what matters is whether or not someone deserves to be prosperous. In their world, those who work hard and succeed on their own – without any visible means of assistance – are the only ones who deserve success. There will always be winners and losers, that’s the natural order of the world (or so they believe). Those deserving winners are seen as constantly struggling against those who are not successful and who are always out to take what the successful have. The overriding goal for conservative economic policy, then, is to ensure that the losers can never stop the winners.

Since the 1960s American progressives have been trained to see how this worldview plays out with regard to race. White conservatives are convinced that people of color (who are always seen as “losers”) are not capable or deserving of success, and so they’re out to take the wealth of successful whites. White conservatives therefore vehemently oppose any programs that are designed to benefit people of color.

Progressives haven’t always understood that white conservatives are also quite happy to apply these very same rules to other whites. Right-wing hostility to President Barack Obama’s health insurance reform wasn’t because they thought people of color would benefit – they opposed it because they didn’t want someone who hadn’t earned it would benefit from the reform at their expense.

This logic was never hard to find as the 2000s bubble was unwinding. Right-wingers had an easy narrative for the housing crisis – people who didn’t deserve to own a home were able to get loans because of lax policies by the banks, bought more than they could afford, and couldn’t pay their mortgages, causing the crash. This was sometimes racialized, but it often wasn’t. I’ve heard many conservatives back home in Orange County criticizing other middle-class whites for this “reckless” behavior. Irresponsibility by people who tried to get success the wrong way, without working for it and earning it, was the cause of the crisis.

And because irresponsibility on the part of the undeserving caused the crisis, it was illegitimate to do anything to help those people. In fact, any effort to help relieve the suffering of those facing foreclosure was seen as robbing the successful to help the unsuccessful. The very people who created the problem were going to be bailed out and once again it would be the successful people who paid the price. If the undeserving losers couldn’t afford to pay their debts, they shouldn’t have taken on the debt in the first place. Suck it up and deal with it alone, the right-wing populist says, lest you make a winner help a loser.

One could and should respond that those “successful” people have also benefited from a lot of government aid, from public education and infrastructure to the mortgage deduction. But that doesn’t faze the right-wing populist, who believes that those things are legitimate because they deserve those benefits by virtue of their own hard work. By this logic it’s easy to see how taxation gets seen as illegitimate, because it’s the best example of all of the losers taking from the winners. And it’s easy to see how government gets seen as illegitimate, because it is the institution making the “theft” happen.

Questions of inflation and deflation, then, have to be viewed with the issue of “deserving” in mind. Right-wingers believe they succeeded all on their own. They prize what they gained. They are deeply attached to the value of what they possess, because they believe it is theirs. If what they own loses value, it is a direct shock to the right-wing populist, because they do not see any legitimate way to recover the lost value. If they sought government aid, then it’s a sign they’re no longer a deserving winner but an undeserving loser.

Inflation causes a visceral hatred, then, because it is impossible to square with the right-wing populist’s worldview and is a direct threat to their concept of individual success. Deflation is a great thing, because it gives a further advantage to the winners. Whether the losers suffer is immaterial, because either the losers will be motivated to work hard and succeed, or they won’t and can be simply forgotten. Any fiscal or monetary policy act that even risks deflation will be attacked with that same visceral hatred. Any fiscal or monetary policy that is seen as a guarantee against inflation will be worshipped – which explains the right’s fetish for gold. (Ironically, as Nouriel Roubini enjoys pointing out, even gold can be devalued.)

Right-wing ideology is notoriously impermeable. There’s no way any progressive can break through it, except in individual cases owing to specific circumstances (like a progressive getting through to a conservative relative). So the goal here shouldn’t be to convince the right, but to understand their arguments so we can win over the persuadables – those who aren’t rigid right-wing ideologues – to a progressive populism.

That has to begin with a rejection of the concept that society only has winners and losers, that everyone is atomized and succeeds or fails on their own merits. Collaborative and collective institutions and relationships have to be the networked basis for progressive populism to spread, because those forms already have the basis for undermining the right-wing narrative that prevents action to grow wages and purge debts.

None of this knowledge is new. This is precisely the same issue that populists and progressives faced over 100 years ago, during the Long Depression from 1873 to 1897. Anti-inflation policies prolonged the downturn for nearly 25 years. Activism during the Gilded Age and the Progressive Era was characterized by building new institutions that could connect people and overcome the atomization of the American economy. Many of their policy goals weren’t won until the New Deal, when some of the most powerful institutions and movements oriented around collaboration and connections – particularly labor unions – hit their stride.

What this analysis suggests, then, isn’t just that progressives need to develop narratives that prevent persuadables from embracing right-wing policies that will prolong our suffering. It suggests that collective organizing and collaborative institutions are as important, if not more so, to the success of progressive economic policy.

We break down the notion of winners and losers, of deserving and undeserving, if we build a movement whose values and practice are ones of working together toward a common end. That’s not to say that individual goals are gone, far from it. We work together so that each of us can achieve our own brilliance, whatever that may be. But we recognize that individualistic policies lead to prolonged misery, and collaborative policies lead to prolonged happiness.

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Resistance Is Futile

Earlier this week, Bruce Levine wrote a widely circulated article titled 8 Reasons Young Americans Don’t Fight Back: How the US Crushed Youth Resistance. I read it hoping to find a good discussion of Millennial politics amidst the worsening American crisis. Instead I found a list of assumptions that did not reflect the lived experiences of most young Americans. If we’re going to talk about how to produce effective, meaningful, systemic change – which the events of the last few weeks should have reminded us is an essential task – then we need to understand how people are viewing the overall political situation in the country and what, if anything, they feel empowered to do about it.

Of the eight items listed by Levine, only the first one – regarding the burden of student loans – holds any water. Student loan debt is a huge crisis facing young Americans, crushing not just youth resistance but youth innovation, entrepreneurship, and creativity. It’s a big drag on the national economy, and if there’s ever a moment where the mass of American youth take to the streets to demand change, getting rid of that debt will be a top priority. (And no, tinkering around with interest rates doesn’t make any difference – it’s the principal balances that are the problem.)

The other things listed strike me as a list of Levine’s own assumptions and don’t really resonate as being a brake on activism. Instead we need to ask why young Americans – or any Americans at all – would feel the need to resist. The assumption is that “well of course it’s time for mass resistance.” But only a very small handful of people feel that way.

So here’s what I’d list out as the problems:

Nobody sees or has defined the need to “resist.” Levine assumes people should “resist” but that assumption isn’t shared at all by the population. For young people, there’s no real sense of oppression, despair, or deep anger. And you need that before any “resistance” can happen. Most Americans, whether they’re happy with their situation in life or not, don’t see the system as hopelessly broken, don’t believe they have no future under current economic and political rules, and don’t see a need to take to the streets at all. The recession is grinding on, but just enough people are able to get by to where the majority of young Americans, and apparently the majority of Americans overall, do not see any problem that requires “resistance.” Even most of the long-term unemployed aren’t in a place where they believe taking to the streets is a necessary or viable option, even as they are full of anger and/or despair. We don’t yet live in a police state, we have the forms of a functioning democracy if not the reality, we had 30 years of economic growth punctuated by short recessions that leave people believing the good times are just around the corner, and we do not have huge numbers of people starving or barely able to make ends meet. To most people, the recession sucks, but it isn’t anything that requires “resistance” of any kind – because nobody has explained that to be necessary. Nobody has defined the problem in those terms.

What would the purpose of resistance be? In Egypt there was a clear purpose: get rid of Mubarak. In Greece there was a clear purpose: stop austerity. In Iceland there was a clear purpose: refuse to pay for the banks’ losses. What is the goal and purpose of the “resistance” this author is talking about? Nobody is going to “resist” without having some sense of why they are resisting, what their end goal is. That’s related to the lack of definition of a problem. People don’t just randomly go into the streets without a clear sense of motive or purpose. Until that is defined, you’ll see people quite rightly rejecting a nebulous and vague call for “resistance.”

Suffering is hidden from public view. Some might look at the above and say “well OK, but Levine’s other points could explain the passivity.” Thing is, I don’t actually see a passive population, I see a population that still believes hard work can produce rewards, and is going all-out to try and keep their heads above water. Until people come to believe that hard work is a fraud they will not be in any mood at all to “resist.” And one reason they maintain that belief is that American culture has done an excellent job of hiding suffering. The long-term unemployed have no voice, are not featured in our cultural productions, and are routinely ignored by our media and our politicians. Same is true for the hungry. The homeless do tend to be more prominent, partly because you can physically see it, but most people have defined the homeless as dirty bums, or mentally ill, and not as victims of the economy that there but for the grace of the next paycheck go I. So even if someone feels a gnawing sense of worry about their personal situation, most aren’t sitting there thinking “wow, I could be starving tomorrow” or “I could be homeless tomorrow.” And those that do have been taught to keep those worries to themselves, hidden from view.

Why “resist” at all? The assumption here is that social and political change has to be produced through a kind of revolutionary activism. That’s a pretty big assumption. Even if it were true, many young people don’t think in those terms at all. The protests of the 1960s don’t resonate because they don’t match Millennial values. Young Americans emphasize building institutions and collaboration. Taking to the streets is currently seen by them as alien to those values. They appear to prefer finding other ways to produce change, ones that have a long-term view in mind and that are the product of a positive effort to work together. So even for those people who do see the economic and political crisis and who do understand the need for big changes to occur, they don’t yet believe “resistance” is the only option.

It’s easy to fall back on the idea that the American population has been essentially drugged or trained into submission, and I may be discounting them too greatly, but I don’t think they’re part of the overall explanation. Instead it’s quite simple: people don’t see a need to resist, have no idea what they’d want if they did resist, and instead are focused on other methods of improving their lives that may or may not still be workable but are seen as more productive than a vague concept of “resistance.”

So if we really did want to see something like the protests in Egypt or Iceland or Greece, we need to do a much better job of actually explaining to people what the problem is, why the normal methods of change aren’t going to work, why suffering is right around the corner in their own future, and what exactly they need to do in order to achieve specific desired outcomes. Until that work is done we will not see any change in the American situation whatsoever. Nor should we expect to.

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A Quick Thought About Neoliberalism

It’s good to finally see the progressive blogosphere erupt with a discussion of neoliberalism. We must name the enemy before we can defeat it.

One recent entry in the discussion comes from Mike Konczal, Towards a Liberal Critique of Left Neo-Liberalism Policy. The discussion revolves around a recognition that neoliberalism has no genuine political base, and cannot really function in a democracy. Konczal’s effort in this particular post is to try and define some elements of neoliberalism, and this part of his post seems key:

Instead of the public aligning with government services as a political bloc, privatization and subsidies form a coordination device for private firms. This creates a countervailing force against the government provided welfare state, and services in the quasi-private-public space divorce people from government.

This is true, and I believe it can actually help get us at the question of how exactly it is that neoliberalism generates its ability to survive politically.

Neoliberalism is about capturing and using the state for the benefit of a small group of large businesses, and orienting public policy toward the preservation of those businesses – who are typically rentiers.

Neoliberalism’s politics, then, are straightforward – instead of mobilizing a coalition of voters, you mobilize a coalition of wealthy actors who can provide the necessary political support to sustain neoliberal politicians. Once the system is opened up to their influence, and things like Buckley v. Valeo made that possible, it becomes a self-sustaining force as the influence of money overwhelms those who wish to organize a resistance to neoliberal policies.

In the US and the UK, neoliberalism’s true triumph came when center-left parties adopted neoliberal policies as part of a conscious political strategy – in order to defeat the right, it was said, the right’s ideas AND its donors had to be coopted. Voters in the Democratic and Labour base were told this was necessary to prevent the right from winning and doing greater damage. Real but short-lived and unsustainable economic gains in the 1990s and mid-2000s were used to buy off just enough votes, while more money was used to discredit alternatives.

So I’m surprised people say there’s no politics of neoliberalism, when there quite clearly is, and it is tied to the policy goals. Together those politics and policies are about the creation and maintenance of oligarchy.

The middle class is offered some benefits too, but these are illusory and rooted in debt, not wages, thereby increasing their dependence on the neoliberal system. Those who do not benefit are stripped of practical political power and voice. They simply no longer count. Those who still resist are told that if they do not want right-wing repression, then they must choose neoliberalism, even if the actual outcome is an oligarchy that is comfortable with right-wing repression when it serves the purposes of oligarchy. If they choose neither, then they must choose extrapolitical resistance, and a state controlled by the elites has ways to ensure that resistance has a very difficult time going anywhere, except into the streets, where it can be kettled. Building a political base does not figure into the politics of neoliberalism because the politics of neoliberalism is about demobilizing the public and removing the important issues and decisions from their control.

There is no room for mass politics in neoliberalism. Which is why the United States no longer has them. Only outside the policies and politics of neoliberalism can power be returned to the public.

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