Sunday, May 14, 2006

American Theocracy's Hostile Takeover, Part 1

Picked up the Philips and Sirota books last week and have read a few chapters from each. I think both books represent opposite sides of the same coin. Philips' is generally a macro perspective of the effects of corporate conglomeration and political influence on aggregate U.S. finances and the U.S.'s role in the international system, while Sirota's is more of a micro analysis, concerned more about the distributional impacts of recent corporate induced policies flowing out of Washington on the American middle class. And both books in turn sound a great deal like Thomas Franks' What's the Matter with Kansas? that came out last year, synthesizing the conservative movement's melding of economic corporatism and religious fundamentalism.

Sirota's book covers a wider range of specific policies, from taxes to debt and pensions. Although each chapter can be read alone, it's clear they are linked, all representing how Big Business has acted to reduce the participation and influence of workers and consumers by funding political campaigns, formulating policy options, and manipulating public opinion to further its goals.

Sirota's book is certainly the more infuriating of the two. Reading the chapters on debt and legal rights, for example, is enough to make you want to shoot somebody in the face (by accident of course, during a hunting trip). The tone and structure of the book is in some ways similar to the style of conservative reactionary pamphlets on "moral relativism", moral values, religion in the public square, etc, that the Mellon's and Scaife's have financed over the past couple of decades from the right, meant to shock and inflame, but on closer examination, lacking the sort of context, nuance and balance necessary for a well-informed view on the issues. For example, in the pensions chapter, Sirota refers to the (relatively recent) corporate practice of converting traditional defined benefit (db) pension plans for employees into "cash-balance" plans, leaving the recipient with a lump sum distribution presumably lower than what an annuitized db payout would provide. But Sirota doesn't indicate how prevalent this is or what it's magnitude is in the market-place.

Sirota also provides anecdotal evidence of cases in which corporations (like United Airlines) have apparently sued the employees or retirees in order to recoup or limit their pension obligations. But Sirota doesn't mention the protection offered employees by way of the Pension Benefit Guarantee Corporation, which insures private, db style pension plans. Nor does Sirota refer to the shift in private pension plan coverage from db to defined contribution (dc), which while it offers some employees the potential for higher investment returns, also involves a shift in risk from the employer (i.e. social or collective risk) to the worker and retiree (i.e. individual risk). This shift in risk is an important feature of Sirota's overall narrative (and an important political dynamic I think) and I'm a bit surprised he doesn't make this connection.

Likewise, while last year's bankrupcy "reform" bill was truly excretable, a payback to credit card companies that generously fund congressional campaigns and a shaft to vulnerable families, and while the loan shark level of interest rates companies can charge is inherently immoral and predatory, Sirota's, and the Democratic Party's opportunity for generating the appropriate public outrage over them will be difficult as long as the middle class homes in neighborhoods like mine continue to showcase one or two SUV's. If people are doing well, if unemployment is low, if the economy is "growing", I suspect that Democratic efforts to drive up middle class economic angst through a populist sort of appeal may fall short. It's worth trying, and the corruptness of the current regime and processes need to be pointed out, but I'm not optimistic.

In short, while Sirota is good at dialing up the outrage for us progressive types, as long as the political economy debate is confined to individual anectdotes and issues of redistribution progressives will probably have a hard time making use of them.

More interesting to me in some ways and more important in the long run I believe is the implication many of these policies--and the forces making them operative--have for the U.S.'s overall economic health, financial stability, and standing in the international arena.

Here's where Philips' book comes in. Philips takes many of the strands of Sirota's book and weaves them into a larger narrative of how the U.S. is weakened nationally and internationally through policies favoring financial deregulation, debt expansion, and oil dependence. Philips provides data showing that the U.S. economic sector has changed dramatically in the past 20 to 30 years, from one based on manufacturing to one based on financial services. And contrary to standard conservative economic philosophy which asserts that the U.S. national government shouldn't pick winners or losers, Philips asserts that U.S. policymakers have done just that in encouraging financial deregulation, allowing banking and insurance interests, for example, to both be conducted under the auspices of particular companies. Likewise, the increase in debt by the government and by U.S. households provides an additional troubling harbinger of future economic prospects.

Philips' perspective thus provides a framework for understanding how individual policy choices, like the kind Sirota highlights, shape the nation's overall economic future in the aggregate and how we can understand the apparent disjunction between soaring personal debt and a growing economy. Based on Philips' data and arguments, both individual and national economic prosperity are at a considerable risk given our consumption and financing patterns.

Of course, America's economic hegemony has been pronounced dead, or at least on life support before, only to rebound at least in the short run. But the data and narratives contructed by Sirota and Philips, originating largely from unrelated points on the political-economic map, would seem to indicate that the U.S. economy and political superstructure could be soon facing a point of reckoning. At least we can say we've been warned.

As I finish reading these books I hope to have more to say on these issues, especially Philips' explanation of how religious changes in America have contributed to its economic ones.

For now, if you're wondering what's going on at the political level, given recent developments with the NSA, read this.

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