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Paul Nyden book review: Government by the money, for the money

"The Servant Economy: Where America's Elite Is Sending the Middle Class."

By Jeff Faux. John Wiley & Sons, 2012, 298 pages. Hardcover, $27.95.  CHARLESTON, W.Va. -- Few political leaders and government officials -- Democrats and Republicans -- look out for the average American these days.

Wages have stagnated for more than 30 years. Pension benefits are declining, or disappearing, especially for younger workers. Proposed federal budget cuts threaten Social Security and Medicare.

Under recent "free trade" agreements approved by Congress, the United States now imports far more products than it exports -- increasing the national debt and cutting back jobs at home.

The increasingly bleak economic opportunities for our middle class are the focus of Jeff Faux's engaging, and disturbing, new book: "The Servant Economy: Where America's Elite Is Sending the Middle Class."

Faux was founding president of the Economic Policy Institute, an independent think tank in Washington, D.C.                  

The way Americans think about their future changed profoundly under Franklin Delano Roosevelt, first elected in 1932, and changed again under Ronald Reagan, elected in 1980, Faux argues.

FDR and his New Deal gradually transformed the federal government into a major player looking out for working and poor people.

Most Americans enjoyed a generation of prosperity between 1947, after World War II, and 1979.

But then, "the age of Reagan greatly strengthened the class solidarity of our financial elites," Faux writes. 

Between 1947 and 1973, wages in the United States rose by 75 percent. Between 1979 and 2005, they rose by four percent.

The end of the Cold War, marked by the collapse of the Soviet Union in 1989, Faux believes, "might have broken [the U.S.] out of the historical cycle of expansion and decline that had brought previous empires to ruin."

But when we needed national leaders to help mold a new era, they backed away, encouraging "an increasingly reactionary politics," Faux argues.   

As president, Jimmy Carter was a "transitional figure" who built a bridge from the politics of FDR to those of Reagan.

Before Reagan took office in 1981, Carter had already begun deregulating airlines and banks, as well as the trucking and telecommunications industries.

Between 1993 and 2001, another Democrat -- Bill Clinton -- promoted "free trade" and undermined domestic jobs by further deregulating banks and financial institutions. Clinton's policies also undermined domestic manufacturing industries by facilitating imports of cheap foreign products from places like Mexico and China.

"The ideological framework was Reagan's, but the heavy political lifting was done by Clinton," Faux argues.

Clinton helped convince Congress to pass the North American Free Trade Agreement in 1994. He created the World Trade Organization in 1995 and increased trade relations with China in 2000.

Throughout the 1990s, the late Sen. Robert C. Byrd, D-W.Va., was an outspoken opponent of "free trade" legislation.

"By the end of the 'liberal' Clinton years," Faux writes, "financial regulation had been gutted and the regulatory agencies demoralized, a process that was then accelerated by his successor, George W. Bush."

Is opening up our country to "brutal global competition" really the best thing to do, when it drives up trade deficits, foreign debts and domestic unemployment? 

Why do the overwhelming majority of our political leaders consistently fail to ask this question?

Between 1980 and 2006, the share of all domestic profits made by banking and investment companies rose from 20 percent to 45 percent. During those same years, the manufacturing sector's share of domestic profits fell from 45 percent to 5 percent.

In today's economy, more and more American corporate leaders plan their economic futures as part of a global economy, increasingly disconnected from the future welfare of their own country and its workers.

Most new jobs for many companies -- including Apple, Boeing, IBM and Cicso -- are created abroad. 

The nation's financial elite, Faux argues, was "aware that if manufacturing industries shrank, so would the political power of its strongest class adversaries, the unions."

Weaker unions have hurt Democrats running for office across the country.

Richard Trumka, described by Faux as "the most dynamic leader the AFL-CIO had since its inception in 1955," has criticized the Obama administration's "broken promises to labor."

"The Servant Economy" criticizes Barack Obama's policies that decrease federal civilian spending, leave our financial markets in the hands of speculators and do little to restructure our "bloated, inefficient health-care system."

Faux also criticizes the growing military budget. By 2011, it was larger than any military budget since World War II.

Part of those increases come from ongoing lucrative payments to private military contractors, like Blackwater.

In 2009, private military contractors provided 48 percent of all U.S. armed forces fighting in Iraq and 57 percent in Afghanistan. Mercenaries routinely get paid between $750 and $1,000 a day, or even more. Regular enlisted soldiers receive a pittance in comparison.

Faux criticizes some Democratic leaders for calling Social Security and Medicare "entitlements," a word suggesting those benefits are unearned and undeserved, even though deductions for those programs are taken out of every American's paycheck every week.

"No serious pundit argues that Social Security has anything to do with the deficit. If fact, it's just the opposite: the program's annual surplus has been financing the federal government. Despite this, cutting Social Security benefits is a priority among deficit hawks in both parties."

Faux believes regulating money that finances political campaigns has become a major "Constitutional question."

Public financing of elections is not the answer, especially since 90 percent of all Americans do not designate $3 from their already-paid federal taxes for public financing.

"The vast majority of Americans believe that money corrupts and prevents the government from serving the public's needs."

In 2010, the U.S. Supreme Court issued its Citizens United decision, allowing corporations to donate unlimited amounts of money to political campaigns.

At least 80 percent of all Americans disagreed with that decision, according to a Washington Post-ABC poll. Those who disagreed included 76 percent of all Republicans.

Americans will not be able to "effectively deal with the long economic twilight of empire that lies in front of them," Faux concludes, without insisting on reforms, especially cutting the dominant role corporate money plays in curbing our democracy.

Reach Paul J. Nyden at pjnyden@wvgazette.com or 304-348-5164.


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