Feeding the Blue Beast

[RightField]

March 15, 2011
A Red Dixiecrat Dawn?
Walter Russell Mead

Is America turning into Dixie? And, if it is, is that a bad thing?

The controversy over the blue social model keeps heating up. With the controversy over Wisconsin’s restrictions on public employee unions metastasizing from the Madison protests to what increasingly looks like a national political battle, the blue state and red state models of social development and economic governance seem to be at daggers drawn.

The South — anti-union, anti-government and ‘pro-business’ — looks to be squaring off against what remains of the industrial North with its historically higher wages, stronger unions and more interventionist government.

Many liberals worry that what we are seeing with the assault on public sector unions in Wisconsin and elsewhere is the triumph of red state capitalism over the blue state model — and that the result will be the export of classic southern poverty and ignorance to the rest of the country. This is not, on its face, an unreasonable fear; many southern states rank at the bottom for school achievement, teacher pay, life expectancy and per capita income. (I remember hearing as a kid that South Carolina’s motto should be “Thank God for Mississippi!” since Mississippi was often the only state keeping the Palmetto State out of dead last on national comparisons.)

Wisconsin doesn’t want to thank God for Mississippi, and rightly so.

But jumpy Wisconsin liberals should relax — and Southerners should not feel so smug. The policies associated with red state economics aren’t the cause of Southern poverty; they are if anything associated with its cure. And in any case, the South is going to have to change its development strategy too. Red state ‘catch-up’ capitalism is as dead as blue state ‘coaster’ capitalism and the United States is going to have to strike out in a new direction that, while ultimately very promising, is going to cause trouble in every section of the country.

Most people in the south have been poor for a very long time. Before the Civil War a relative handful of Dixie planters were fabulously wealthy, while most whites eked out a hardscrabble living on small farms back among the hills and piney woods: Dogpatch, USA. Blacks, again with a handful of exceptions (such as the small number of antebellum free blacks who owned slaves themselves in states like Louisiana), were even worse off.

With the devastation of southern infrastructure during the Civil War, and seventy years of pro-northern economic policy by the federal government (featuring among other policies high tariffs, pro-big business legislation that consistently favored big money banks and corporations mostly based in the Northeast, and a generous pension program for Union Civil War veterans), the gap between Dixie and the rest of the country became a chasm.

During and after World War One, millions of Blacks and whites poured out of the south into the expanding industries of the Middle West. During the Depression and World War Two they streamed west into the promised land of California. Crippled by Jim Crow and a destructive legacy of racial bigotry, hampered by poor schools, backward health care, a weak industrial base and dependent on producing commodities and raw materials, the South was America’s very own chunk of the Third World, with the corrupt oligarchs and demagogic populists to match.

As recently as 1950, per capita income in Dixie (which included relatively prosperous states like Georgia, Virginia, Tennessee and Texas) was 32% lower than in the rest of the country. Per capita income in Mississippi, at $764, was less than half the average northern level (and given the unequal distribution of Mississippi incomes, that number understates the deep poverty in which most of the state’s residents lived). In 1948, 38 out of every 1000 children born in Mississippi died compared to 26 in Wisconsin.

Poverty, malnutrition and illiteracy were endemic. My mother grew up in a house without electricity or running water in South Carolina; as a boy I knew families who kept their kids out of school in part because they could not afford to buy them shoes. Many adults could not read and did not have birth certificates — one service that southern congressional offices would long provide to their constituents was help with getting proof of birth so that older people could document their age to receive Social Security.

What the South did to catch up was essentially what much of the Third World has also done. It began by aggressively luring textile mills from New England and the North. Offering low wages, a non-union working force, low taxes and very low business costs (subsidized power rates, for example), Southern governors and business agents did everything they could think of to draw investment. The South also reversed the post-Civil War tilt of federal policy so that federal expenditure went increasingly to Dixie. (It’s not clear that all congressional Republicans are ready to change this today.)

Like many third world countries, the South started out with textiles and then gradually moved up the industrial food chain to heavier and more sophisticated industries. As early as the 1950s, the Research Triangle Park in North Carolina was bidding for high tech investment from companies like IBM. Banking and other sophisticated services would follow; ultimately corporate headquarters of some of America’s largest companies would shift into Dixie. In the first Fortune 500 list published in 1955, none of the top 15 companies were headquartered in the South; in the most recent list, the largest three companies were all based in Dixie. Overall three of the four cities with the largest number of Fortune 500 corporate headquarters are in the formerly Confederate states.

In the South as in many parts of the world, the model worked. The South is not only richer than it used to be; its social conditions have improved. Today Dixie’s per capita GDP is 90 percent of the national average, up from 68 percent in 1950. Infant mortality in Mississippi (at 10 per 1000 live births) is still higher than in Wisconsin, but the gap has narrowed from 12 to 4. Poverty rates across Dixie fell from 17.9 percent to 15.7 percent between 1969 and the recession year of 2009 even as they rose in the Northeast (from 8.6 percent to 12.2) and Middle West (9.6 to 13.3). The South has largely closed the gap in educational achievement with the North; race relations have improved across the region.

The flow of migration reversed; millions of Blacks and whites streamed back into Dixie in search of better lives in recent decades, and after the 2010 census the South will have its greatest strength in Congress and the electoral college since the Civil War.

There are a lot of reasons to like the old blue model: for many Americans it brought high wages, secure jobs and great benefits — especially cheap health care and generous defined benefit pension plans. Back in the day, if you were a white, male American worker with a high school education you could reasonably expect a lower middle to middle middle class lifestyle with a job guaranteed for life in unionized industries.

That lifestyle depended on a lot of hidden exclusion: women and people of color were not able to compete in the job market on equal terms — and many unions reinforced these barriers by restricting apprenticeships to people of the right race, gender and even ethnic group. More, with European and Japanese industry in ruins after World War Two and most of the Third World not yet able to attract capital for manufacturing, American workers and their employers faced little international competition.

The South, along with Japan, Taiwan, Korea and western Europe, began to chip at those exclusionary walls in the 1950s. In the 1960s, non-whites and women in the United States, and increasing numbers of people in Asia and southern Europe got into the game as well. In the 1970s and 1980s some of these countries — like the American South — began to experience competition from new entrants into the international manufacturing economy, and the competition to scramble up the value added ladder intensified.

In the United States today, neither catch-up nor coaster capitalism can help us much. Coaster capitalism is most clearly doomed; there are too many people playing catch up too well. Countries and states that do not provide business friendly environments cannot attract new investment; that might be OK for countries like Germany and Japan with falling populations, but the United States still has a lot of growing to do and we have millions of families north and south who want to build a higher standard of living moving ahead.

But if the Yankee model of building larger welfare states and mandating higher wages and tougher regulations has passed its sell by date, the catch up capitalism of the South also fails to provide a blueprint for the future. You can’t play catch up once you have caught up. The South can no longer poach enough business from the wealthy North to support its growth — and the federal subsidies to the region are also going to drop.

Both regions are going to need a new growth strategy — one that is likely to depend on new enterprises and small business rather than on established industries.

As many readers on the blog have pointed out, when I write about the post-blue world I don’t offer a detailed picture about what it will look like. That’s inherent in the nature of the changes we have to make: discontinuous change driven by unpredictable technological innovation is where it’s at. I will try to write more on this subject in future posts, but one can no more expect anybody to produce a map of our future world than Queen Isabella could have asked Christopher Columbus for a detailed map of the Americas before sending him on his first voyage.

Whatever the future looks like, it’s not about returning to Dogpatch, USA, or building a society that looks like outtakes from “Deliverance“. It’s not even about reducing the government to the “good old days” when the only federal employee most people ever saw worked for the Post Office. It’s about deploying America’s greatest social and cultural strengths to keep this country on the cutting edge of human progress.

Right now that means learning to restructure government so that adequate services can be delivered more efficiently. Soon it will be about restructuring our education and health systems so that American productivity in these services amazes the world. Ultimately it is about producing a society in which fewer people need government help as opposed to a society in which more and more people rely ib more and more subsidies to pay for necessary services they cannot afford on their own.

Coaster capitalism and catch-up capitalism are both relatively easy. Cutting edge capitalism is hard, and you have to make it up as you go along, but it is the only route to the kind of future Americans want.

And for all my Yankee friends and readers, let me assure you that whatever else this route to our mysterious future may be, it is not Tobacco Road. And there are no strange fruits hanging from its trees.

 

[RightField]

Why Blue Can’t Save The Inner Cities Part I
WALTER RUSSELL MEAD

We’ve been trying to solve the problems of the American inner cities for almost fifty years with the ideas, institutions and techniques of twentieth century progressive and liberal thought. While individuals have been helped, the Black middle class has grown, and better policing has brought crime rates down out of the stratosphere, those left in the inner cities are farther away from participating on equal terms in the national economy than ever.

There are those who say the problem is that we just haven’t done enough, that we should spend more money, establish more programs, and work harder to pull down the invisible barriers that still limit Black participation in American life.

It’s impossible to refute this argument completely; nobody knows what would happen if we spent another $100 billion, $1 trillion or more. But there are a couple of things we can say. One is that given the fiscal constraints on every level of government (even if Republicans give some ground on taxes), no significant expansion of spending on inner city problems is coming down the pike. Far more likely is a series of painful cuts as federal, state and city budgets are slashed. If what we are doing fails now at current levels of spending, there is little chance that lower levels of spending with the same methods and programs will achieve more.

We can also say that a critical mass of inner city problems cannot be helped with the methods and tools that the progressive state can bring to bear.

Let’s start with government itself. The rise of public employment in the United States has for more than 150 years been linked to the efforts of urban political machines to provide for their constituents. This is not a Black thing; the Black patronage political machines of our cities today are the direct descendants of the Nativist and Irish political machines of the 1830s and 1840s.

The core idea is that by hiring local residents to work for the government, real social needs could be met and jobs would be created that would form the nucleus for a growing middle class. Waves of Irish, German, Polish, Italian and other immigrants in turn used their voting power to get jobs for their people.

African-Americans, the last major group of migrants into the cities before the recent Hispanic migration, did the same thing — though with a difference. As part of the progressive system of social reforms enacted in many cities in response to the corruption and inefficiency of the old machines, civil service jobs and lifetime tenure were introduced into many branches of municipal government. When the Blacks came along, they could no longer do what past groups had done: fire members of other ethnic groups from patronage jobs and put their own in. By the time Black politicians were in power in urban governments, civil service rules got in the way of traditional ethnic empowerment; much of the fighting over affirmative action represented Black efforts to achieve traditional ethnic goals in a progressive era. (This by the way is one of the ways that a problem looks racial when Blacks are involved — even though similar problems existed in the past with no Black participation. Unqualified Irish, Italians and others flooded into government jobs in the past and we talked about machine politics. Blacks do exactly the same thing and we talk about race.)

Tammany Hall, headquarters of the New York City political machine that helped many Irish immigrants climb the social ladder in the nineteenth century. (Wikimedia)

In any case, Blacks are now well represented in government jobs: close to 20 percent of government jobs are filled by Blacks although Blacks constitute only 12 percent of the workforce generally. Although wages, health care and retirement benefits will be under pressure as governments respond to tight budgets, these are still pretty good jobs by most standards. In many places, government workers are mainstays of the Black middle class.

Bureaucratic city government has historically been more than a way of steering tax money into the pockets of people who then vote reliably for the machine that imposes the taxes. It was also a way in which immigrants and their kids were integrated into the middle class. Steady civil service and fire and police department paychecks created credit worthy consumers who could buy houses and cars on credit. White collar work in a municipal office was pretty close to white collar work in an insurance company.

In the peak years of the blue social model (roughly, FDR through Ronald Reagan, or 1933 through 1984), American economic life was bureaucratic. Kids went to schools where they learned to sit at a desk and do what they were told. Those who learned the basics and graduated from high school worked in factories. Those who did better and got a bachelor’s degree worked in offices. Those who did better still and went on to graduate school moved into the professions.

Once employed, people moved gradually up the ranks or the salary scale based on seniority and paper credentials. Get a master’s degree and get a salary bump. Accumulate seniority and get the best assignments. At the end, everybody retires at the mandatory retirement age and collects a defined benefits pension until the final checkout comes.

The whole economy didn’t work this way. There were still holdovers from the old, pre-organized world: sharecroppers, Coney Island carnival barkers, unfranchised Mom and Pop burger joints and so on. There were also entrepreneurs and start ups and sales-oriented companies where the bottom line mattered more than credentials and procedures. But more than before or since, the Age of Blue was a time when the organized and predictable corporate-bureaucratic world dominated American culture and life.

During the Blue Age, life in government was not very different from life outside it. Salaries were a bit lower and the bureaucratic structures were sometimes more rigid, but on the whole post office clerks and insurance company clerks had similar work experiences and their families lived similar lives.

As this social model increasingly broke up in the 1980s, conditions in the private and public sector diverged. Automation reduced the number of clerical positions in the insurance industry, but politics slowed the pace of change in the Post Office. Private sector employment changed its nature, becoming less predictable, less egalitarian (in terms of salary distribution), and companies shifted from defined benefit pensions based on seniority to defined contribution benefits based on how much employees paid in.

Generally, political inertia and public worker unions combined to keep government in the Blue Age even as the rest of the economy moved on. Today, the experiences and the expectations of people in the private sector and people in the public sector are quite different. There are many results, including taxpayer revolts against public sector benefits and pay, but from an urban policy standpoint the key one is this: the government job machine is no longer an escalator to the middle class. In fact, the dependence of the Black middle class on government work is going to be one of the chief threats to the health of the Black middle class as we’ve known it.

The threat takes two forms. Accelerating upheaval in government staffing patterns combined with employment freezes and tight fiscal limits will force many government workers into the uncertain atmosphere their private sector counterparts have breathed these many years. Layoffs, salary rollbacks and massive, job shedding restructurings will become much more common as governments respond to tough fiscal conditions by trying to cut costs and innovate rather than just cutting services.

Government workers enjoyed a holiday from history in the last thirty years as Blue Age working conditions and staffing levels survived in government work; for many, that holiday is coming to an end. The number of government jobs is likely to drop, the link between performance and pay (rather than seniority and pay or paper credentials and pay) will become tighter, and job tenure will become less secure.

In some cases this will come through changes in the way government works as unions accept cutbacks and budgets are slashed; in others it will come through outsourcing and privatization. If anything, this will happen faster in blue cities and states than in red ones. Blue states like New York, California, Illinois and New Jersey face the ugliest budget choices. Ideology may prompt some conservative and Tea Party-style politicians to fight unions and cut government costs; arithmetic (a much stronger force in the end) is forcing those choices on liberals like Andrew Cuomo and Jerry Brown.

This is one danger for the Black middle class and it’s an urgent and obvious one: the good jobs are going away — and they won’t be quite as good anymore. The second danger is subtler but no less important. In the past, government work served to integrate ethnic minorities and urban populations into society at large. In the current atmosphere of sharpening debate over the role and cost of government, the ties of so much of the Black middle class to government employment may make it harder, not easier, for Blacks to take advantage of the opportunities that the emerging Red Age economy offers. Government work doesn’t build either the attitudes or the capacities that workers will need to take full advantage of in the changing economy; in some cases, it does the opposite.

Take, for example, credentialism. The belief that more courses and more degrees make you more “qualified” and therefore entitled to more responsible and better paid jobs is a driving force in government work as in blue society generally. It is a pillar of much of the affirmative action legislation now in place. In the emerging new economy of smaller companies, more start ups and a more service and sales oriented working environment, paper qualifications won’t count nearly as much as they used to. Your supervisors in a web content service, for example, don’t care how many degrees you have. They want to see how many hits you can generate. Employers want results and the cause and effect relationship between performance and pay is much tighter and much more dramatic in the private sector than in the public one.

Many Blacks thrive in performance based evaluation systems and businesses (think Hollywood, professional sports, the music industry) in part because the ability to demonstrate their effectiveness and drawing power insulates them from any racism or old boy networking that might otherwise sideline their careers. There is no reason why more Blacks can’t have this same kind of experience throughout the private sector where objective, performance based criteria for promotion and compensation can open doors and elevate careers.

But the bureaucratic mindset — risk averse, stability seeking, seniority-focused, process-oriented — militates against success in more entrepreneurial and performance-based systems. Eighty years ago, private sector bureaucracies and corporate structures were much more like government offices, and the gap between the Hartford city government and the Hartford Insurance Company could be bridged. That is much less true today.

Additionally, there is a strong risk that politics will lead many Blacks to consider the new economy as an enemy to be resisted rather than an opportunity to be exploited. The current Washington battle over deficits is a perfect example; in some ways it boils down to a battle of mostly white Republicans to keep taxes on mostly white rich people low while cutting spending on programs that disproportionately hire Blacks and seek to serve them. Viewed from this angle, the break up of the Blue social model looks like an attack on Blacks in specific and the poor and middle class more broadly.

Many people feel that way, including some who comment regularly here at Via Meadia. Certainly, the argument over government finance and race is going to be powered on both sides by racial feelings. There are whites who see government as a source of patronage employment for lazy, unqualified Blacks; there are Blacks who see efforts to curb government spending and keep taxes low as efforts by racist whites to shift resources from poor and middle class Blacks to wealthy whites. Both parties will try to exploit these undertones to reinforce party loyalties, with Democrats especially using these arguments to cement Black loyalty even as Democratic officials cut budgets, employment and wages in response to the logic of numbers.

The road to success for many Blacks, and for Black America as a whole, however, lies less in fighting a rearguard action on behalf of public sector workers and more in embracing a government reform agenda to harness technology to improve the quality of service while cutting costs — replacing trips to the DMV with internet sign ups for license renewal. Simultaneously, Blacks individually and collectively will advance by finding new ways to ensure that Black political clout gets behind ways of using government resources more effectively to promote a Black middle class equipped to thrive in the emerging, post-Blue model economy.

One approach that merits discussion is the question of what might be called the communitization of government. As governments seek to cut costs and payrolls, they frequently look to contract work out to private sector firms. Minority and small business set-asides ensure that Black owned or managed firms get some of this business; the process can be both inefficient and corrupt and the savings are often questionable, but the promotion of Black business is, in my view, a clear gain for African Americans and for society as a whole.

I think we can do more; I’ve written earlier about charter schools as an important new alternative in American education. Their importance goes beyond that; charter schools point towards a format that could promote a new generation of small business growth and professional responsibility among Americans around the country while improving the delivery of government services.

This post-Blue approach to government would see small, locally based partnerships or firms take over current government functions. A charter school organized by teachers and administrators who have roots in their community is one example, and some of these have been extremely successful. Perhaps unemployment offices and other government services could be remodeled in this way.

Transforming government programs as far as possible (and some are more transformable than others) from programs administered by career bureaucracies into programs managed by independent community based firms under contract is a way to use government resources to build a private, entrepreneurial middle class. In a sense, it updates 19th century land policy which built a nation of free farmers on what had once been government land.

This is a concept that makes sense all over America; it would offer particular benefits in the inner cities. Even if it doesn’t save a lot of money directly (though by encouraging competition and innovation it ultimately probably will), communitization will pay off. It will create communities of entrepreneurs and give more people the experience of being responsible for the welfare of enterprises that they themselves own and control. That social capital is what will help the United States succeed in this competitive century.

But to get there, the country as a whole and the Black leadership in particular, is going to have to let the Blue model go.

http://blogs.the-american-interest.com/wrm/2011/07/17/why-blue-cant-save-the-inner-cities-part-i/

What do you think? Is this racist? Is it an accurate and dispassionate analysis? Is what he says true? One of his recommendations is to strengthen and expand affirmative action. Do you like his recommendations?

What do you think of his assessment that the "blue" model is no longer viable, or at least only viable as a small sub-section of society?

It's pertinent to the current budget/deficit discussions (for reasons described in the article). Did this article cause you to think about the debt/deficit any differently?

 

[RightField]

November 6, 2011

Occupy Blue Wall Street?
Walter Russell Mead
The American Interest

New Yorkers are getting an uncomfortable look at the ugly realities behind what we like to think of as the country’s bluest, most European and most enlightened city. A series of trials now underway in the Bronx reveal the harsh truth of embedded corruption and contempt for the public at the heart (if that is the right word) of the New York City police union.

A palpably shocked New York Times covered the story last week as union-organized cops hurled their venom and hate at the law they are sworn to uphold:

As 16 police officers were arraigned at State Supreme Court in the Bronx, incensed colleagues organized by their union cursed and taunted prosecutors and investigators, chanting “Down with the D.A.” and “Ray Kelly, hypocrite.”

Many of the approximately 1,600 allegations against the Bronx 16 are low level ticket-fixing charges. In the Bronx (as in many other American jurisdictions) it has been a police perk for many years that officers can quietly fix tickets for family, friends and, one supposes, the occasional generous stranger. Those perks seem to reflect an informal, parallel power structure in the police force which gives long serving cops and union connected officers what those involved no doubt see as just and fair recompense for services rendered and dues paid.

Unfortunately a number of the allegations are more serious, as the piece by N. R. Kleinfield and John Eligon goes on to point out:

Jose R. Ramos, an officer in the 40th Precinct whose suspicious behavior spawned the protracted investigation, was accused of two dozen crimes, including attempted robbery, attempted grand larceny, transporting what he thought was heroin for drug dealers and revealing the identity of a confidential informant.

Ramos is not the only officer charged with something more serious than ticket-fixing. The Times piece spares us the details, but four of the 16 are charged with helping someone get away with an assault. Other charges involve “drugs, grand larceny, and unrelated corruption.”

Together with a string of other recent cases, the Bronx case suggests that a culture of corruption and entitlement has spread through the ranks of the thin blue line. Worse, it is clear that police union officials are the mainstay of the illegal ticket fixing enterprise, so much so that prosecutors considered indicting the union as a corrupt organization under racketeering laws. The police demonstration in the Bronx was apparently orchestrated by the union, which sent text messages to officers urging that they show up to support colleagues involved in ticket fixing. “It’s a courtesy, not a crime,” was the slogan.

This of course is what everybody thinks of special privileges. That’s what doctors and lawyers think when they cover up professional wrongdoings by their guild brethren. It’s what investment bankers think when they pass on inside information to favored clients — a courtesy not a crime. It’s what politicians think when they do favors in exchange for money and it’s what Don Corleone and Tony Soprano think when they do favors for their friends. The essence of privilege (private law, etymologically speaking) is exactly that: exemption from the laws that govern other people. The police union in New York believes that based on longtime practice it possesses certain unique rights to circumvent the written law.

Meanwhile, the Times was deeply shocked and troubled by what it saw. Policemen booing and cursing prosecutors and officers of the court? Open solidarity with lawbreakers? But it was even worse. Across the street from the courthouse is a “benefits center.” When the crowd lined up to collect welfare payments started chanting “Fix our tickets!” at the protesting cops, the cops responded with derisory chants of “EBT! EBT” (electric benefits transfer, a popular method of making social support payments here in the blue paradise of the northeast). As if heckling poor people wasn’t enough, the Times dismally notes, the taunting, chanting cops failed to pick up after themselves, leaving litter on the streets as the protest broke up.

No doubt the Times reporters involved are more knowledgeable and experienced than this, but the piece sometimes reads as if it was written by a couple of upper middle class college boys shocked and frightened at their first encounter with the rough edges of the urban male working class: dewy cheeked and candy bottomed political studies majors at their first Teamster rally.

The police rally against law enforcement was one of those rare moments that illuminate the life of a great city in crisis. Between the good government, pro-minority Times reporters, the angry crowd of police rallying to protect their privileges and perks against the background of a city facing financial cutbacks, and the crowd of poor benefit seekers waiting in the street, resentful of the privileged police, we see can see the political and social crisis of New York in a single space.

The good government upper middle class, the entrenched groups with a solid stake in the status quo and the marginalized working or non-working poor with no prospects for advancement apart from the patronage of the state: this is the mass base of the blue electoral coalition — and the groups in the coalition don’t seem to like each other very much.

Ties That Bind

What all three groups share is a burning desire for more: a hunger and demand for ever larger amounts of government revenue and power. Money and power for the government enable the upper middle class good government types to dream up new schemes to help us all live better lives and give government the resources for the various social, ecological and cultural transformations on the ever-expandable goo-goo to-do list that range from a global carbon tax to fair trade coffee cooperatives and the war on saturated fat. All these programs (some useful in the Via Meadia view, others much less so) require a transfer of funds and authority from society at large to well-socialized, well-credentialed and well-intentioned upper middle class types who get six figure salaries to make sure the rest of us behave in accordance with their rapidly evolving notions of correct behavior.

The Times reporters represented the goo-goos at the Bronx courthouse. Sixty years ago the reporters would have had more in common with the cops, but the professionalization of journalism has made these jobs the preserve of the college educated and the upwardly mobile in status if not so much in money.

The angry and determined unionized cops represent what used to be the heart of the blue coalition: the stable urban middle middle class. In the old days, this group included a much bigger private sector component than it does now. The disappearance of manufacturing and the decline of skilled labor in most of New York means that the middle middle class, so far as it survives, depends largely on revenue from the state. The cops, the teachers, the firefighters, the sanitation and transit workers: these are most of what remains of the backbone of what used to be the organized working class. Many who don’t work directly for the government work for the health care industry, where government and private insurance payments have kept the blue model alive for employees. Others work for infrastructure and construction companies – much of whose business comes from government. Their ranks were once swelled by reasonably well-paid manufacturing workers and other private employees in what was once a job-rich metropolitan environment. A few private bastions of the middle middle class remain (workers in the cooperative buildings where the überrich live, for example), but these days the purely private sector middle middle class is in full scale retreat in cities like New York and public and quasi-public sector employees take the lead.

This group doesn’t get paid as well or enjoy the prestige of the goo-goos, but they have built structures and institutions that secure them a middle-middle class existence. In the public sector at least they have done surprisingly well at passing their jobs and connections down to future generations. As the urban middle middle class shifted from a largely private sector group to a group primarily dependent on public sector spending and jobs, the political balance also changed. Like the goo-goos, the urban middle middle class needs more revenue from the rest of society: people in this group want the number of jobs in their institutions to grow and naturally enough they want to be better compensated: more take-home pay, better benefits, a younger retirement age with a more generous pension.

The third group at that scene in the Bronx comes from the city’s more marginal population who lack the connections and security that a public union would give them. In the city’s high-cost, high-regulation economy, there are not enough lower middle and middle middle private sector jobs for them. As the secure middle middle class comes under pressure, and as immigration brings new, often unskilled workers with weak English language skills into the economy, the low end of the labor market looms large. Folks in this group often work as casual labor or in hotels, restaurants or the other service businesses that serve wealthier urbanites and in bad times, the charity of the state is the refuge towards which they must turn: for food, shelter, healthcare and the other necessities of life. Not a few now are unable to do anything much more remunerative than wait in line outside benefit offices; between tight economic times, social pathology, poor personal choices, and the destruction of the city’s entrepreneurial, job-creating culture, the state is the only legal and reliable source of income some have ever known.

This group also has its hand out: the government pays for what education and healthcare they receive; in many cases through food stamps and other benefits it makes their lives possible. For this group also the most important political question is the revenue issue: they want and need more benefits and services from the only available source. With some of these needs one can’t help but sympathize; no one but the state can educate their kids or provide basic safety from crime on the streets.

These three groups, unhappily met at a Bronx courthouse, are the core of the blue coalition that has dominated New York politics for decades, but to understand their situation and the changing power relations between them it is necessary to consider another part of the coalition: a group that wouldn’t be caught dead off a highway in most of the Bronx but largely controls the fate of the three groups battling for power around that courthouse.

Call the fourth group Blue Wall Street: the bankers, financiers and business leaders who thrive in the world of the blue social model — and who likely have never visited a criminal court or a benefits center in their lives. Members of what Howard Dean likes to call “the Democratic wing of the Democratic Party” prefer not to think too much about Blue Wall Street and its role in the Democratic coalition, but particularly as times get tougher for the blue social model, it is Blue Wall Street that makes things work and calls the shots.

For Blue Wall Street the conflict between the interests of the private sector and the power of the government does not really exist. The symbiosis between Blue Wall Street and the state is strong and deep. The pension funds, bond issues and other financial transactions that blue city and state governments need helps nourish Blue Wall Street; Blue Wall Street helps integrate the policy agenda of other government focused interest groups with larger national priorities and movements. Fannie Mae and Freddie Mac are the archetypes of this symbiosis: they are government-backed forces in the capital markets built around support for the single most important American social program of the blue period: home ownership. The securitization of home mortgages was one of the driving forces in the development of American capital markets after World War II; when the blue system was working, Fannie and Freddie promoted Wall Street profits and the economic well being of the middle class.

The explosive bursting of the subprime bubble has drawn attention to the role of the housing agencies; less attention has (yet) been paid to the other linkages between the blue social model and Wall Street. Health care, agricultural subsidies, infrastructure construction and the municipal bond market link Wall Street and government at many levels, all with important consequences for Democratic politics. That link between progressive social goals and the financial system isn’t just one of many features of the Democratic policy agenda: the essence of American progressive social policy since the New Deal has been to achieve “social” purposes through the financial system, linking important groups in society at large to powerful financial interests and firms.

Blue Wall Street benefits much more from the blue social model than the other elements in the coalition. Five figure cop salaries and low six figure salaries for goo-goo social engineers pale before the seven, eight, nine and ten figure paydays on the Street.

There is a direct connection between those big paydays and the connection between big finance, big government and Democratic (as well as Republican) interest group politics. Good relations with politicians help make money: ask the leadership of Goldman Sachs, which has provided much of the leadership and policy advice for administrations of both parties for some time. It’s a sensible trade-off for well connected i-bankers to accept higher general tax rates in exchange for significant influence over government policy. You can not only use that influence to carve out nice loopholes that insulate you from the high tax rates blue policies entail; you can get enough business from good government relations to offset the cost of the taxes the model requires. If Al Gore’s environmental businesses make enough money as a result of emission laws and price controls, he doesn’t have to worry too much about his tax rate. And in any case, carbon taxes favor the financial economy (which uses very little carbon though its PR firms emit a lot of hot air) over the manufacturing economy.

Blue, government-oriented Wall Street; the professional do-gooders and the progressive intellectual and foundation establishment; the unionized government workforce; and the beneficiaries of social programs: this is the blue coalition. Many blue partisans don’t fully get this; they think of Wall Street as the enemy without fully grasping the essential role that the financial community plays in the creation and administration of blue policy. The participation in and support of blue social and economic policies by American finance both enables and shapes those policies, and it was the belief on Wall Street in the 1940s and 1950s that the blue social model provided the most effective path for national economic development that created the postwar commonwealth, which many blue activists today hope to restore.

That blue political coalition was the natural party of government of the United States between FDR’s inauguration in 1933 and Ronald Reagan’s accession to power in 1981. It remains the dominant force in most American cities and the deep blue states from New England to the Pacific, though from state to state and place to place the relative strength of the coalition members shifts.

In its earlier, more functional state, the blue political structure matched the economic structure of the United States reasonably well. The Depression and World War II created a situation in which a small number of large companies, pretty well tied into the government by regulatory controls and laws that kept competitors out of the marketplace, dominated the economy. With other world economies smashed flat by the war and the international financial system small and tightly controlled, the US government could control the macroeconomic environment much more effectively than it can now. Cheap foreign labor was not a factor – and immigration was, until the 1960s, still tightly restricted under the quota system.

Under those circumstances, the blue social model could satisfy key interests on Wall Street and in the general population, dividing the rents of monopoly (AT&T) and oligopoly (oil companies, airlines, television networks, money center banks) between management, shareholders and workers, with the government taking its share. These days the model doesn’t work as well, partly because of changes in the international and national economy that I’ve discussed in earlier posts.

But the key fact for places like New York today is that as the model falters, the constituencies who support it are turning on one another. The good government types want to control the excesses (both financial and physical) of the police and the other government unions while continuing to shift state patronage from ethnic whites to minorities. They want “good schools” and increasingly are willing to take on the teacher unions to get them. They respond to the revenue shortfall by seeking to rationalize government, making it more efficient and less expensive so that the upper middle class reformers can continue to attract new resources to help them conquer new fields. The tougher the economic times the more the goo-goos see the need and the merit to rationalize expenses — and the more Blue Wall Street, worried about credit ratings in the municipal bond market and other such matters, supports them.

The police and their allies among state and municipal workers are ready to fight this agenda on the streets. They are often hostile to the social betterment agenda of the goo-goos, and frequently resist efforts of the reformers to replace informal networks and contacts as the way to get municipal jobs with exams and formal processes heavily tilted to help outsiders (minorities and immigrants) break into these jobs. They tend to see welfare clients as parasites on the social body, especially when those clients are recent immigrants or otherwise seem like outsiders. They believe they are competing with these folks for resources and respect, and they bitterly resent the habitual goo-goo preference for the outsider versus the teacher, the cop and the fireman.

The underclass and the less privileged workers have divided interests. On the one hand, they depend so heavily on government for basic services and a safety net that it is hard for them to think much beyond their support for the blue coalition. On the other hand, as their booing of the cops outside the Bronx courthouse reminds us, they are getting the short end of the stick within that coalition and they know it. The education bureaucracy is failing their kids; the cops harass them on the streets. More profoundly, the network of regulations, subsidies and entry barriers the blue model has accumulated over the decades are a powerful force against the private sector job growth that could open up new opportunities and higher wages for them.

Threats to the food bowl both unite and divide the Party of Blue. All of them agree that federal revenues should be higher and that much of that money should flow to the cities and states. This preference helps hold the Democratic Party together and – combined with other groups (like big agriculture) that get fat subsidies – helps the Party stay competitive at the national level.

But when cuts must be made, or when limited resources must be divvied up, the groups divide. The goo-goos are willing to cut middle class entitlements and government pensions to fund upper middle class social priorities. Which, they will argue, is more important: to pay (excessive, irrational) pensions to superannuated firemen and cops. or to build a pathbreaking carbon cap and trade system that could save the planet? They are ready to sell state unions down the river, as Democratic politicians ranging from California’s Jerry Brown to Chicago’s Rahm Emanuel to New York’s Andrew Cuomo are doing as I write. But they prefer a peaceful and gradual approach that does not reduce the Democratic Party to a state of civil war and can present themselves to the unions as a lesser evil than Republican red staters who want to kill the unions altogether.

Government employees have a simpler point of view: they want the money and they want it now. They want it without reforms and they want it while they continue to enjoy their traditional privileges and perks.

Those who don’t have access to either upper middle or middle middle blue privilege just want what they can get. Many minority groups continue to support the traditional post-Civil Rights minority agenda of affirmative action plus expanded entitlements. The divisions between African Americans and Hispanic immigrants complicate this picture, and fights over the division of the “minority pie” between these groups can be expected to grow over time, particularly if that pie, as seems likely, continues to shrink.

What that Bronx courtyard shows us is a political culture in decline and a development model on the brink. New York’s dependence on Wall Street and the federal government is becoming more acute by the year. Post bubble and post stimulus, neither source of revenue can be expected to grow at an adequate rate, and it is not unlikely that both will be shrinking for years. The pieces of the coalition are venting their rage and hostility, and new supplies of money are nowhere in view.

I’ve written before about the need for a post-blue economic and social model for the United States. The time is getting short.

 

[4est_4est_Gump]

The South is the new home of John Galt...




... problem is, DC is going to take it down by forcing its blue economic morality upon it from afar.

 

[4est_4est_Gump]

NOVEMBER 11, 2011 5:15 P.M.
Occupy Wall Street Starts to Crumble
Inevitable divisions arise in Zuccotti Park.
Charles C. W. Cooke, NRO

Whether or not the Occupy Wall Street movement has a legitimate or coherent purpose and to what extent its ongoing “occupation” of lower Manhattan’s Zuccotti Park represents a violation of the law have been discussed and debated since the first tent was pitched on September 17. But we might put these questions aside for a moment and hope to agree on one thing: that, regardless of one’s views about its message, the camp itself has become a disgrace. If this is utopia, then deliver us from it, for imperfection has a fresh and heady appeal.

For an organization whose rhetoric casually claims “unity,” and which absurdly considers itself to be a mouthpiece for 99 percent of America, it is devastating that division and infighting increasingly mar OWS’s New York City franchise. The kibbutz has fractured. Walking around the site yesterday, it was clear that “one world” has become many. There are now palpable borders within the commune, and battle lines have been drawn.

The “original” protesters resent the “hangers-on” and the latecomers, as early fans of a rock band might hate those who discover their heroes only after they have become popular. As always, the hard-liners despise the reformers and those who would “compromise with capitalism,” and the anarchists predictably reject all such labels entirely. Meanwhile, an unfathomably asinine dispute rages over whether the movement should seek to represent the “100 percent” or the “99 percent,” with few taking the time to consider whether it actually does either. The homeless, much praised on placards and flyers, have clearly proven themselves useful only in the abstract, and have become a rather less attractive proposition now that they have joined the fray, bringing with them something of a crime wave.

Where unity does still exist, it is in the universal hatred felt toward the belt of “crazies” that surrounds the camp, even if the definition of “crazy” remains elusive to the vexed, and is largely reserved for anyone who “makes us look bad.” Fans of British comedy Yes, Minister will remember that “crazy” is an irregular verb: “I have an independent mind; you are an eccentric; he is round the twist.” Thus, in hushed tones, each faction complained to me about the others.

Moreover, OWS is discovering that it is by no means inured against the sort of political and economic problems that face all polities, utopian or not. A fistfight broke out yesterday on the testy northeastern side of the camp, when one protester fashioned and displayed a cardboard sign that read, “Food is for OWS only!” This, said some of those camped nearby, was “fascism.” “No, no,” came the rejoinder, “it’s only fair! We paid for it; it’s for us! You can’t just walk in and take our stuff!” And thus, in microcosm, the debate over welfare raised its head — as it always will.

Likewise, there is growing consternation over the group’s finances. The more than $500,000 that OWS has raised from supporters is in the hands of a shady eight-person finance committee, which is made up of “non-occupiers” who have a right of veto on proposals before they get to the General Assembly and are, thus, “becoming like the banks we are protesting.” Most of the money, the gripe goes, is “just sitting there doing nothing,” and “our ideas are not being listened to.” Worse still, some of this outrageous fortune has found its way into Amalgamated Bank, which has the temerity to deal with billionaires. To spend or not to spend, that is the question! It seems clear now that, however noble the protesters might consider themselves, and however unorthodox the community they have established, there will always be slings and arrows to suffer.

Then there is crime. Even as Zuccotti Park has become a sea of troubles, it has been regarded as unsporting to bring up its obnoxious elements, as if to report on the dark side is to tar all associates unfairly with the same brush. But the unpleasant are demonstrably in attendance, and are no longer necessarily in the minority. I asked a “press representative,” named Justin, how many of those in the park he considered to be genuinely part of his movement, and was surprised to hear him say “less than 50 percent.” Such a confession makes the “we are the 99 percent” chant seem somewhat comical. But then, it always has been. The idea that the camp represented something new by bringing a diverse group of people together was always solipsistic. Surely, I would ask, that is what America does? What is this country if not a grouping of different people who disagree, and who work out their differences through common institutions?

Every citizen has at least one gripe. There is something that abrades each and every one of us. But most of us do not join communes that earnestly and loudly pretend to be above the noisy and boisterous process we call democracy, even as our replacement society crumbles ignominiously around us.

All the things said about the Tea Party have finally come true from Nancy's grandkids...

Obama's children...

"Why are you here?"

"To get some money."

"What kind of money?"

"Obama money."

"Where's it coming from?

"Obama."

"And where did Obama get it?"

"I don't know... his stash, I don't know. I don't know where he got it from, but he's givin' it t'us to help us. We love him. That's why we voted for him... Obama! Obama!"

 

[4est_4est_Gump]

RF, you gotta read this...

http://www.americanthinker.com/2011/11/apollo_and_dionysius_meet_again.html

Miss Rand gave some inspiring lectures at Ford Hall in Boston in the 1960s. Luckily, they were recorded and can be heard online. My two favorites are The Fascist New Frontier (1961), and Apollo and Dionysius (1969).

In FNF, she compares the platform of Kennedy's new frontier to the Nazi party platform in Germany from the 1920s. In less than an hour she manages to dissect both documents and shows them to be nearly identical. Jonah Goldberg's well-researched book, Liberal Fascism", which makes much the same point, shows that it is a constantly recurring theme in modern politics.

Her lecture Apollo and Dionysius" could have been comparing the Tea Party gatherings to the occupying mobs but for the fact that it preceded those gatherings by half a century. Instead, she compares the enormous well-behaved crowds and orderly traffic jams in or near Cape Kennedy for the Apollo moon landing of Neil Armstrong, to the dirty and undisciplined mob at Woodstock later that summer.

...

This lecture itself is as chilling and as thought-provoking as any I have ever heard. Line by line, goal by goal, the influence of fascist philosophy on liberal politicians is documented. One slim difference remained. New frontiersmen were not motivated by anti-Semitism, nor by murderous racism. But look at the occupiers today. Anti-Jewish signs sprout like weeds in summer. As homage to Woodstock, accommodation is made to the cacophony of the drummers and profit opportunities for acid and dope peddlers. Stealthy organizers try to keep the crowds on message, but the corrosive bile of the wannabe killers of Jews keeps bubbling to the surface. And it goes on and on and on like a computer program caught in an infinite loop.

 

[LJ_Reloaded]

Starve the blue beast.

Let's start with cutting law enforcement budgets for rich areas.

Let the poor burn your asses down in your homes.

 

[LJ_Reloaded]

November 6, 2011

Occupy Blue Wall Street?
Walter Russell Mead
The American Interest

Oh you think THIS is bad?

Wait'll you put the rich all together on their little Libertarian island. They'll be at each other's throats before you know it.

 

[RightField]

Starve the blue beast.

Let's start with cutting law enforcement budgets for rich areas.

Let the poor burn your asses down in your homes.

I thought stealing hubcaps was as daring as you got.

 

[LJ_Reloaded]

I thought stealing hubcaps was as daring as you got.

I don't steal anything. But when the poor decide you Plutocrats need to be put down I'll be there handing out guns and ammo.

When your Blue Beast is starved to death you won't have an organized military or law enforcement to back you up.

No money to pay the troops = no defense.

 

[RightField]

We should have plenty of miltary and law enforcement...we shouldn't have ACORN and any recent interations of it. We shouldn't have enviro-wackos convincing Obama to turn down the oil pipeline and putting moratoriums on oil and gas extraction in the gulf or off Florida (where the Cuban's are authorizing Chinese oil companies to drill and extract "our" oil and gas).

 

[LJ_Reloaded]

We should have plenty of miltary and law enforcement...

But when you starve the Blue Beast you will find it very hard to find money to pay the hired guns to protect you.

we shouldn't have ACORN and any recent interations of it.

Why? The First Amendment protects their rights as much as yours.

We shouldn't have enviro-wackos convincing Obama to turn down the oil pipeline

Protests are legal. So is lobbying.

You wish to strike down the First Amendment? That's the only way you're getting rid of those "problems".

 

[KingOrfeo]

We should have plenty of miltary and law enforcement...we shouldn't have ACORN and any recent interations of it.

We already have plenty of military and law enforcement. And if we're talking about political organizations whose very existence is objectionable, let's start with the Tea Party and move on to the American Legislative Exchange Council.

 

[LJ_Reloaded]

More things that the rich lose when we starve the blue beast:

http://big.assets.huffingtonpost.com/SubsidiesoftheRichandFamous.pdf

 

[RightField]

We already have plenty of military and law enforcement. And if we're talking about political organizations whose very existence is objectionable, let's start with the Tea Party and move on to the American Legislative Exchange Council.

The tea party doesn't suck taxpayer dollars, ACORN does.

 

[RightField]

Fabulous article. It's a perspective not often seen and rarely appreciated, but with many good points.

http://blogs.the-american-interest.com/wrm/2012/02/28/beyond-blue-6-the-great-divorce/

 

[KingOrfeo]

The tea party doesn't suck taxpayer dollars, ACORN does.

1) Since when?

2) So what?