NEW YORK (Reuters) – New York state’s construction companies will be subject to new criminal and civil penalties if they misclassify employees as contractors to underpay them or dodge taxes, Governor David Paterson said on Tuesday.
To say that the American people are angry is an understatement. The political brain of Americans today reflects a volatile mixture of fear and fury, and when you mix those together, you get an explosion. The only question at this point is how to mitigate the damage when the bomb detonates in November.
The bad news is that it’s too late for Democrats to do what would have been both good policy and good politics (and what the House actually did do), namely to pass a major jobs bill when it was clear that the private sector couldn’t keep Americans employed. The “Obama Doctrine” should have been that Americans who want to work and have the ability to contribute to our productivity as a nation should have the right to work, and that if the private sector can’t meet the demand for jobs, we have plenty of roads and bridges to fix, new energy sources to develop and manufacture, and schools to build and renovate so our kids and workers returning for training can compete in the 21st century global economy. From having spent much of the last four years testing messages on a range of issues, from immigration to taxes and deficits, I can say with some certainty that nothing John Boehner or Eric Cantor could say could come within 30 points of generating the enthusiasm — particularly among swing voters — of a message that began, “We don’t have a shortage of work ethic in this country, we have a shortage of work.” That message resonates across the political spectrum. And it isn’t even the strongest message we’ve tested in the last weeks or months that beats back the toughest deficit-cutting language the other side can muster.
But it’s too late for that. The administration opted for an alternative doctrine, which Larry Summers enunciated on This Week several months ago: that unemployment is going to remain high for the foreseeable future and eventually come down — as if there’s nothing we can do about it — and that they will push here and there for small symbolic measures whose symbolism tends to escape people who are out of work. It’s hard to be excited by symbolism when your children are hungry or the bank is repossessing your home — although you didn’t do anything to deserve it — while the people who did are once again making out like bandits.
Although the situation looks bleak for Democrats in November, it ain’t over ’til it’s over. Republicans are shooting themselves in the foot all over the country, running Tea Party candidates who are so far to the right you can’t see Middle America from their porch. And some endangered Democrats will likely see victory in November from theirs if they understand the public mood and speak to it.
What is that public mood? It can be characterized by a single phrase — populist anger — and it cuts across partisan lines. On the right, it is alloyed with racial anxiety and prejudice. On the left, it is alloyed with tremendous disappointment at what could have been if we had the kind of bold leadership for which times like these cry out. And among people in the vast political center, populist anger is alloyed with anxiety and uncertainty — about their jobs, their homes, and their children’s future.
How to Create a Populist Explosion: A Tragedy in Two Acts
So how did we get here? The story can be told as a tragedy in two acts.
Act I: The GOP Sets the Country on a Course of Economic Destruction and the President Calls for Truth and Reconciliation without the Truth Part
Act II: An Anemic Economy Meets an Anemic Health Care Plan
Where Do We Go from Here?
So that is where we find ourselves today: a Democratic Party and Democratic base that is demoralized and unlikely to vote in high numbers in November; a Republican Party that is selling replanted Bushes with tremendous enthusiasm; and a vast political center filled with voters who are utterly confused and unsure who to turn to but certain that things aren’t going well.
In January 2009 no one could have predicted that Democrats would be in this predicament today. Perhaps Democrats might lose a few seats lost in an off-year election, but certainly no more than that. We had just seen — and the American public knew we had just seen — the most disastrous performance by a president and party in living history, and the American people had elected a tremendously charismatic young president with enormous Democratic majorities in both houses of Congress. They had given the president and Congress a strong mandate for whatever kind of change was necessary to get us out of economic free-fall and to put Americans back to work.
But there were red flags already by the end of Obama’s first week in office that led me to offer the following advice to the new administration: Tell the story of how we got in this mess or you’ll own it. Tell a coherent story about deficit spending. Re-brand government because there’s only one story out there now (Reagan’s), and it’s not one that supports a progressive agenda. Never let attacks go unanswered, because doing so only emboldens your opposition and leads the public to believe that you have no answers to them. And if you throw a bipartisan party and no one comes, don’t throw another one. All of what followed has been as predictable as it has been unfortunate. A year and a half later, the White House hasn’t consistently done any of these things, although the President is now intermittently doing some of them, and when he does, he does them well.
The question today is whether Democrats can channel the populist anger we are seeing around the country this late in the game. The answer is that we’d better try. Having recently tested messages on economics and jobs, including how to talk about deficits and taxes — widely assumed to be Democrats’ Achilles Heel, particularly now — there is little question that if Democrats and progressives from center to left simply say what they believe in ways that are evocative, values-driven, and speak to people’s worries and anger, many stand a good chance of surviving November, particularly when their opponents have nothing to say other than warmed-over rhetoric about cutting taxes to millionaires and multinationals and fiscal restraint except where it cuts into profits of their campaign contributors. Even the most evocative boilerplate conservative messages fall flat against honest messages that speak to the need to get Americans working again. And on issue after issue, no message is more resonant right now than one that sides with working and middle class Americans and small business owners against special interests, big business, and their lobbyists.
But actions speak louder than words, and Americans want to see action. It may be too late for the kind of jobs bill we should have seen a year and a half ago, but it isn’t too late for Democrats to go on the offensive against the Republicans — virtually all of them — who opposed extending unemployment insurance to millions of Americans who were thrown out of work by the Republicans’ corporate sponsors. It isn’t too late for Democrats to contrast their support for the highly popular aid to state and local governments that just saved the jobs of hundreds of thousands of teachers, firefighters, and police all over the country with Republicans’ desire to throw them out onto the street. It isn’t too late to make a voting issue out of the bill the Republicans are stalling that would give small businesses a fighting chance in an economy stacked against them, and to make clear that one party stands for small businesses, which create 75 percent of the new jobs in this country, and the other party stands for big businesses that outsource American jobs and offshore their profits to avoid paying their fair share of American taxes. It’s not too late to pass a bill that would limit credit card interest rates to a reasonable percent above the rate at which credit is made available to credit card companies. It’s not too late to pass the first badly need “fix” to the health care reform act to demonstrate to Americans that Democrats mean it when they say this was just the first step, namely a law that stops insurance companies from increasing their premiums by 40 percent while cutting the size of their networks by 50-75 percent, which violates the principles of affordability and choice that were so essential to efforts to sell health care reform to the public. It’s not too late to vow to change the rules of the Senate to prevent the use of the filibuster to give every special interest veto power over every important piece of legislation. It’s not too late to introduce legislation that’s been on hold in both the House and Senate to guarantee fair elections, so that the voice of everyday Americans is heard over the voice of the special interests that finance political campaigns.
On every one of these issues, a strong populist message trounces anything the other side can say. But Democrats need to play offense. They need to take up-or-down votes on bill after bill, including those they expect the other side to block, knowing that every one of those votes has the leverage of a campaign ad behind it. They need to change the narrative from what sounds to the average American like a whiny and impotent one — “the Republicans won’t let us do it” — to a narrative of strength in numbers shared with their constituents. And they need to make every election a choice between two well-articulated approaches to governance — and to offer their articulation of both sides’ positions and values.
That leads to a final point. What Democrats have needed to offer the American people is a clear narrative about what and who led our country to the mess in which we find ourselves today and a clear vision of what and who will lead us out. That narrative would have laid a roadmap for our elected officials and voters alike, rather than making each legislative issue a seemingly discrete turn onto a dirt road. That narrative might have included — and should include today — some key elements: that if the economy is tumbling, it’s the role of leadership and government to stop the free-fall; that if Wall Street is gambling with our financial security, our homes, and our jobs, true leaders do not sit back helplessly and wax eloquent about the free market, they take away the dice; that if the private sector can’t create jobs for people who want to work, then we’ll put Americans back to work rebuilding our roads, bridges, and schools; that if Big Oil is preventing us from competing with China’s wind and solar energy programs, then we’ll eliminate the tax breaks that lead to dysfunctional investments in 19th century fuels and have a public-private partnership with companies that will create the clean, safe fuels of the 21st century and the millions of good American jobs that will follow.
That’s what Democrats stand for. It’s time they said it.
Drew Westen, Ph.D., is Professor of Psychology and Psychiatry at Emory University, founder of Westen Strategies, and author of The Political Brain: The Role of Emotion in Deciding the Fate of the Nation.
Read more: Democrats Elections, George Bush Economy, Third World America, Economy, Bush Tax Cuts, Middle Class, Obama, Democrats, Obama Health Care, Democrats Economy, Health Care, Democrats Midterm Elections, Republicans Midterm Elections, Politics News
Wall Street will not let up. In spite of the financial regulation bill passed last month, the Wall Street casino continues at full tilt. Just last week the New York Times reported (“Despite Reform, Banks Have Room for Risky Deals“08.25.10) that the likes of JPMorgan Chase and Goldman Sachs are continuing to squander hundreds of millions on bets, purportedly on transactions handled for their customers, (they are now passing themselves off as “croupier” at the roulette wheel) bets that seem to serve little or no economic value other than to further pressure an economy already in distress, pushing a deeply burdened American middle class further into third world status, and taking the entire nation along for the ride. It is a phenomenon all too real and has been authoritatively set forth Arianna Huffington’s recent book, Third World America.
Among the most malicious effects of Wall Street’s workings on our economy has been its ruthless focus on the bottom line and its grim focus on its self enrichment, irrespective of the societal cost visited on workers, communities, the nations economic sinews and the nation’s entrepreneurial vision. Millions of workers have lost high value and productive jobs in manufacturing, trade and the professions. Jobs having been sent overseas and many destroyed through the brutal and self-serving leveraging of debt by the financial engineers, pledging the assets of the companies of which they have taken control before flipping them or dressing them up for an IPO. Many were enterprises with years of tradition created by the hard work of entire communities that have now been closed down entirely or moved offshore after having dismissed its workers en masse. All to the rapacious benefit of the Wall Street Mergers and Acquisition teams and their banking enablers, and the hedge fund honchos.
But our friends on Wall Street need not despair. They have their admirers, or better said “emulators” in, of all places, Beijing. Heartlessness in the name of Capitalist efficiencies makes strange bedfellows. And China, as in so many endeavors, will not be left behind.
Just yesterday the New York Times’ lead article blared “China Fortifies State Businesses to Fuel Growth“. The article informs us that China, which calls itself socialist, is often perceived as brutally capitalist. Once eager to learn from the United States, “China’s leaders during the financial crisis, have reaffirmed their faith in their own more statist approach to economic management.” And yet some of the lessons learned under Wall Street tutelage continue to linger on, all to our shame.
Some weeks ago an illuminating article, again in the Times (“Workers let Go by China’s Banks Are Putting Up a Fight” 08.15.10) reports on the single largest public offering ever, a $22 billion IPO of the Agricultural Bank of China, resulting in windfalls for the well placed in China and overseas. But wait, having learned a thing or two from Wall Street the bank “slashed payrolls and restructured to raise profitability and make themselves more attractive to outside investors.” And where have we heard that before?
And of course in China nothing is small. Some 70,000 people among the laid off by the bank are seeking to regain their old jobs or receive fair monetary compensation. There are differences of course. Here we do not, as yet, place recalcitrant laid off workers into labor camps or have them do jail time without having been prosecuted.
But then again, here as in China, the financial upheavals of these last years are tearing at the very fabric of our society. In China, dozens of former bank staffers — unsuccessful at finding new jobs- have committed suicide. Where it will all end for China and for us, as the excess of the few trumps the welfare of the many, is yet to be told.
Read more: Mergers and Acquisitions, Goldman Sachs, JPMorgan Chase, Banks, Wall Street, Third World America, Financial Reform, Financial Crisis, New York Times, Agricultural Bank of China IPO, China, Business News
Google recently announced a new machine learning engine that it will make available to software developers. Machine learning is a form of artificial intelligence (AI) in which an application can learn from processing real data and become more proficient over time. By making the tool available, Google will enable businesses and entrepreneurs to use AI in wide range of new applications.
In the coming years, artificial intelligence is going start showing up in more and more places. AI will be incorporated into productivity applications and into the enterprise software used by large companies. I’m not talking about science-fiction level general artificial intelligence (“Open the pod bay doors, HAL”), but rather specialized or narrow forms of AI. Narrow AI applications can already land jet aircraft and beat virtually any human being in a game of chess. In the near future, they will be able to do far more.
Google’s new AI tool is being offered as part of the company’s cloud computing strategy. Cloud computing is a new model in which computer hardware resources as well as application software are made available on an as-needed basis, in much the same way that utilities like electric power are provided.
The thing you should know about cloud computing is that it tends to concentrate information, power and income. The information technology resources of thousands of businesses and organizations will increasingly “migrate into the cloud.” One immediate result of this is increased concentration and automation of jobs. Information technology workers are already seeing significant job losses as a result of the move toward cloud computing.
Once artificial intelligence becomes integrated into the cloud, the effect will quickly be felt by far more than just IT professionals. Anyone with a knowledge-based job will be highly susceptible. Organizations will get flatter as more middle managers are eliminated. It’s also quite possible that AI tools will be used to amplify the capabilities of low wage off-shore workers–allowing them to move up the value chain and compete directly with professionals who have high skill and experience levels.
And AI-enabled cloud computing isn’t just about direct job automation: it will also allow larger organizations to leverage economies of scale, perhaps as never before. Companies like Wal-Mart and the big box retailers will gain, while smaller businesses continue to lose. Sophisticated applications will make it easier to run larger, more complex organizations with fewer people, and that will be an important enabler of corporate consolidations. Low interest rates are already driving a new wave of merger activity on Wall Street, and you can be sure that mass layoffs will follow.
The point here is that technologies like cloud computing and narrow AI are going to result in less opportunity for most workers–while concentrating income and power in the hands of the few (as if that is a new story). Corporations will need fewer managers and knowledge workers, while at the same time many of the small business opportunities that have traditionally led to middle class, or even upper middle class, success will continue to evaporate. The demise of the blue-collar middle class is already pretty much a done deal. College educated white-collar workers–even those with relatively high incomes–are next in line.
The broader trends that are driving income concentration and the destruction of the middle class–globalization, advancing technology, supply side economics–are of, course, not Google’s fault. However, within the IT field Google is becoming a poster child for the concentration of wealth and power: and it is making important contributions that will accelerate the process.
But here’s the rub: Google’s current business model is almost entirely dependent on a world in which income–and therefore purchasing power–is at least somewhat reasonably distributed. Google’s revenue comes primarily from its AdWords program, which allows businesses of all sizes to place highly targeted online advertisements.
AdWords is an enormously successful money machine, and it works because businesses know that among Google’s huge number of users there will be a significant slice of traffic with a high interest in a particular product or service. Here’s the thing though: AdWords advertisers aren’t interested in reaching web surfers. They want customers–customers with discretionary income.
In the long run, as income becomes more and more concentrated–as more average people in the population find themselves unemployed or forced to take lower wage jobs–the businesses that advertise on Google are inevitably going to see more surfers and fewer paying customers. As that happens, they will drop out of the program entirely, or they will be willing to pay less for the ads, and Google’s revenue will have to decline. If the economy continues on its seemingly relentless path toward increased concentration of income and consumption, then at some point, Google’s advertising model will no longer be an especially effective way to reach the few people who still have money to spend.
Of course, if the entire economy continues on that path, then the viability of Google’s business model may be the least or our worries. We already have BMW owners sleeping in their cars, and upper crust New Yorkers worrying about civil unrest or even revolution. Watch out.
Note: For more on AI, unemployment, the concentration of income, and the impact on Google’s business model, see the free PDF of The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future (pages 67-73, 81-84, and 180-183).
Martin Ford is the author of The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future (available from Amazon or as a FREE PDF download) and has a blog at econfuture.wordpress.com .