The Crash of 2016

by Thom Hartmann

  But the greatest probability is that the Obama administration will do the same thing the Bush administration did when confronted with the forces of the oncoming Great Crash in 2007–08. It will tinker around the edges, inflate as many bubbles as possible, and try desperately to hold things off until the November 2016 elections are safely in the bag. If it doesn’t all come apart before then, that will be the time of maximum vulnerability.

  Chapter 2

  A Corporate Call to Arms

  A fascist is one whose lust for money or power is combined with such an intensity of intolerance toward those of other races, parties, classes, religions, cultures, regions or nations as to make him ruthless in his use of deceit or violence to attain his ends. The supreme god of a fascist, to which his ends are directed, may be money or power; may be a race or a class; may be a military, clique or an economic group; or may be a culture, religion, or a political party.

  —Vice President Henry Wallace, New York Times, April 9, 1944

  The 1960s came roughly thirty years after Franklin D. Roosevelt first declared war on the Economic Royalists. A war he won by changing the basic American compact from one of “let the rich do what they want, and the working people are on their own” to one where if you worked hard and kept your nose clean, then you could have that “American Dream,” even if it meant the rich had to cough up a little more to “spread the wealth.”

  In those first five decades after the crash, America became a place where you were protected from old age and disability with Social Security, protected from joblessness with unemployment insurance, and honored with a living wage thanks to strong new protections for labor unions.

  Productivity rose at a steady rate—and in lockstep along with it, working people’s wages rose. Average working Americans were getting richer and richer, comparatively speaking. A third of the nation’s workforce was unionized, and because union jobs set the wage floor in much of America, well over two-thirds of the workforce had all the benefits of a union job. Working-class people bought homes and cars, had affordable health care, and took vacations. By the 1960s, a solid middle class had emerged.

  The Royalists were horrified. The conservative intellectual base, such as Russell Kirk and W. F. Buckley, genuinely feared that if a middle class grew large enough—and politically and economically powerful enough—it would inevitably lead to social chaos.

  Average and largely unsophisticated factory-working people—and particularly their teenage children—now had more time and money on their hands. And, the Royalists knew, idle hands—with free college, growing civil and social rights, and economic safety—could jeopardize their excessive profits.

  The Royalists of the 1950s and early 1960s predicted there would be even louder calls for even more rights. They saw themselves losing control of our nation’s politics and, thus, our nation’s economic future.

  But the Economic Royalists also knew that the vigilant spirit FDR had instilled in the nation against the forces of plutocracy was waning by the end of the 1960s. Those who were just coming into power with FDR during the last Great Crash in 1929 were, by the late 1960s and early 1970s, retiring and dying off, being replaced with a new generation with little direct memory of why the crash had happened, how it had worsened for three long years, and, most important, who’d caused it. And that generation would be teaching the next generation, which had no memory whatsoever of what caused the Great Crash and the war that followed it.

  Taking advantage of this Great Forgetting, a new group of Economic Royalists rose up and plotted their way back into power.

  The Sixties

  According to the first few paragraphs of the Wikipedia entry on the 1960s—Wikipedia being a heavy target of right-wing think tanks that pay people to essentially rewrite history all across the Internet—the 1960s was a horrible dystopia.

  “The 1960s have become synonymous with the new, radical, and subversive events and trends of the period, which continued to develop in the 1970s, 1980s, 1990s and beyond.…

  “Some commentators have seen in this era a classical Jungian nightmare cycle, where a rigid culture, unable to contain the demands for greater individual freedom, broke free of the social constraints of the previous age through extreme deviation from the norm.”29

  As a young activist in the 1960s, someone who’d tried drugs, meditation, and “free love”; who’d fought and demonstrated against the Vietnam War; and who’d attended college, built a business, and traveled from one end of the country to the other, I don’t remember it as a dystopia. For me and many of my generation (I was born in 1951), the sixties were a time of great spiritual growth, insight, and positive social change.

  But from the point of view of establishment, wealthy, white male conservatives, the era was a nightmare. They were under siege from every quarter—from their wives, to their children, to their employees.

  African Americans—explicitly kept from the American Dream for over four centuries on this continent—were let into previously white-only schools by the Supreme Court in Brown v. Board of Education in 1954. In 1964 and 1965, President Lyndon Johnson and a Democratic Congress built on Brown with a series of laws enforcing the civil rights of racial minorities and guaranteeing their political rights.

  More than four hundred years of pent-up desire for participation and equality collided with the political conservatives who believed social and political change should happen slowly over time, and the spillover was seen from the Afro hairstyle, to a series of sometimes violent Black Liberation movements, to Martin Luther King Jr.’s nonviolent calls for revolution.

  The birth control pill was approved for sale to the public in 1961, leading to an explosion of “sexual liberation”—known at the time as “free love.” Perhaps more important, it allowed women nearly absolute control over their reproductive decisions (assisted by the Supreme Court’s Roe v. Wade decision in 1973), allowing women who wanted to compete with men in the workplace to choose to do so without the burden of pregnancy or fear of social ostracism. Then referred to as the “women’s liberation movement,” everything about it horrified conservatives, from young women going braless (and even burning bras), to the emergence of Ms. magazine in 1971.

  LBJ not only gave free health care to seniors with a program called Medicare, but he raised taxes on the very, very rich through a sleight of hand that involved dropping the top rate from 90 to 74 percent but closing up so many loopholes that the highest earners actually ended up paying more in income taxes. If there was to be social justice, after all, somebody had to pay for it.

  There were over 70 million teenagers during that era, a demographic bulge that in both absolute and relative numbers had never before been seen in America. It was the age of youth, and every marketer in America was pandering to the kids, adding to their feeling of empowerment—and to their willingness to openly confront social and political institutions they saw as corrupt or unfair.

  Students for a Democratic Society (SDS) was jump-started in large part by Tom Hayden’s “Port Huron Statement” in 1962—long before the Vietnam War was an issue—and concerned itself mostly with the inequality of wealth and power in America, and with American militarism. It explicitly called out American institutional racism and the military-industrial complex (a phrase coined by outgoing Republican President Dwight D. Eisenhower in his 1961 farewell address).

  In 1962, Rachel Carson published the fifth-best-selling nonfiction book of the entire twentieth century—Silent Spring—and ignited an environmental movement that challenged the right of chemical-industry CEOs to poison the environment for profit. In 1965, Ralph Nader published his blockbuster book Unsafe at Any Speed, which ignited a consumer movement and challenged the right of auto industry CEOs to risk consumers’ lives simply for increased profits. In just a few short years, corporate bigwigs had gone from being hailed and respected to being reviled and suspected.

  In the midst of all this, the Supreme Court in 1961 and 1967 made decisions that prevented illegall
y obtained evidence from being used against criminals (including kids smoking pot) and required that people (including antiwar protestors) be told the rights they had—among which were the right to a free lawyer—when they were arrested.

  While the world of America’s wealthy was being shaken, their homes and families seemed to be under assault as well. Newspaper heiress Patty Hearst was kidnapped in 1974 by the Symbionese Liberation Army (SLA) and then participated with them in robbing a bank.

  Self-styled gurus and messiahs—from Reverend Moon to the Maharishi to the Hare Krishnas—popped up all over the nation, popularized by the Beatles’ 1967 embrace of Transcendental Meditation. In every city of consequence in America you would see street corners occupied by young people who had given up everything, left family and friends, and joined one of the many cults that sprang up from coast to coast. They sang, they danced, they sold flowers and incense, they begged. In the spirit of Henry David Thoreau, they were on a spiritual pilgrimage, having rejected the religious institutions of the country.

  Conservatives tried to push back against the flood that threatened them. Governor Reagan and others began dismantling opportunities for free college education, as this “gift” seemed to simply breed antiwar dissidents and free-loving potheads. Police cracked down—particularly at the 1968 Chicago Democratic Party Convention—and began extensive intelligence-gathering operations against students involved in politics. From coast to coast, political activists were arrested, and when it wasn’t easy to jail them for their political activities, they were set up for drug busts.

  W. F. Buckley wrote a series of articles with titles like “Let the Rich Alone” (1967), and Russell Kirk joined in with his 1964 “Religious Instruction: A Natural Right.” Dr. Hyrum S. Lewis brilliantly documented the entire process in his book Sacralizing the Right.30

  Senator Everett Dirksen attempted to pass a constitutional amendment providing for prayer in public schools, hoping it would calm down future generations; it failed to get even fifty votes.

  None of this made sense to the Economic Royalists. History, they believed—from the Roman Empire to feudal Europe to Victorian England—showed that societies were most stable when the middle class was the smallest—not the largest—class in a nation. At the top there should be a small but very, very, very wealthy (and, thus, powerful) ruling class. Below them, a small middle class of professionals and mercantilists—the doctors, lawyers, bankers, and shop owners—and below them a huge class of the working poor.

  As Charles Dickens pointed out in nearly all his books (his father had been thrown in debtors prison when he was a child—he knew the system well), the working poor don’t turn universities upside down or go nuts with sex, drugs, or religion. His famous A Christmas Carol was the story of Ebenezer Scrooge, a middle-class mercantilist who ran a two-person small business. Scrooge discovered that while it was still important to keep his working-poor employee (Bob Cratchit) in poverty, it was OK to give the man a turkey and a small bit of health care for Tiny Tim. But, of course, never was there even a mention that Cratchit should get partial ownership of the business or have any real power or wealth.

  But the 1960s changed everything. Hunter S. Thompson (“the Doctor of Journalism”) summed up the energy of the decade in his book Fear and Loathing in Las Vegas: “There was madness in any direction, at any hour… You could strike sparks anywhere. There was a fantastic universal sense that whatever we were doing was right, that we were winning… that sense of inevitable victory over the forces of Old and Evil… We had all the momentum; we were riding the crest of a high and beautiful wave.”

  From the viewpoint of the Economic Royalists, never in the history of modern civilization had the fundamental social (and, thus, economic and political) order been under such attack. It was the opposite of what happened in the late 1800s when the Royalists seized power after a Great Crash and war, ushering in a Gilded Age for the 1 percent. This time, organized people had beaten back organized money. Or, so it seemed.

  But when the Great Forgetting finally came around, that wave, as Thompson had described it, finally broke, and then rolled back.

  The Powell Memo

  Lewis F. Powell Jr. was just sitting down to breakfast in his suite at the Waldorf Astoria Hotel in New York City, when he received a call from the White House.

  The year was 1971—more than forty years since the last Great Crash. The sixties had ended and the Vietnam War had destroyed the Democratic Party, leaving Richard Nixon as president of the United States. And Nixon needed a favor.

  A thin, ascetic man with wispy hair and fragile features, Powell had ancestral roots in America’s first European settlement, Jamestown, and a lifetime of participation in the law. He deeply loved his Richmond, Virginia, home, and the law practice he had there, which mostly consisted of defending corporate interests and wealthy Southern white men.

  He walked comfortably, often in crepe-soled shoes, dressed as a Southern gentleman, and spoke so softly that people sometimes leaned forward to listen. But when he spoke, his words were precise, well measured, and carefully considered.

  He was one of the most brilliant jurists of his day, and it’s no surprise that the Nixon White House was considering him for a seat on the Supreme Court, a job he turned down at first, but then, when Nixon called him again at the Waldorf Astoria, reluctantly accepted.

  As a Supreme Court Justice, Lewis Powell was very much the moderate, and his legacy on the high court would reflect his balanced and authentic interpretation of the rule of law in America.

  However, just a few months before he was nominated by Nixon, Powell had written a memo to his good friend Eugene Sydnor Jr., the director of the United States Chamber of Commerce at the time. And Powell’s most indelible mark on the nation was not to be his fifteen-year tenure as a Supreme Court Justice, but instead that memo, which served as a declaration of war—a war by the Economic Royalists against both democracy and what they saw as an overgrown middle class. It would be a final war, a bellum omnium contra omnes, against everything the New Deal and the Great Society had accomplished.

  It wasn’t until September 1972, ten months after the Senate confirmed Powell, that the public first found out about the Powell Memo (the actual written document had the word “Confidential” stamped on it—a sign that Powell himself hoped it would never see daylight outside of the rarified circles of his rich friends). By then, however, it had already found its way to the desks of CEOs all across the nation and was, with millions in corporate and billionaire money, already being turned into real actions, policies, and institutions.

  During its investigation into Powell as part of the nomination process, the FBI never found the memo, but investigative journalist Jack Anderson did, and he exposed it in a September 28, 1972, column titled, “Powell’s Lesson to Business Aired.”

  Anderson wrote, “Shortly before his appointment to the Supreme Court, Justice Lewis F. Powell Jr. urged business leaders in a confidential memo to use the courts as a ‘social, economic, and political’ instrument.”31

  Pointing out that the memo wasn’t discovered until after Powell was confirmed by the Senate, Anderson wrote, “Senators… never got a chance to ask Powell whether he might use his position on the Supreme Court to put his ideas into practice and to influence the court in behalf of business interests.”32

  This was an explosive charge being leveled at the nation’s rookie Supreme Court Justice, a man entrusted with interpreting the nation’s laws with complete impartiality.

  But Jack Anderson was no stranger to taking on American authority, and no stranger to the consequences of his journalism. He’d exposed scandals from the Truman, Eisenhower, Nixon, and later the Reagan administrations. He was a true investigative journalist.

  In his report on the memo, Anderson wrote, “[Powell] recommended a militant political action program, ranging from the courts to the campuses.”33

  Powell’s memo was both a direct response to Roosevelt’s battle cry decades earlier
and a response to the tumult of the 1960s. He wrote, “No thoughtful person can question that the American economic system is under broad attack.”34

  When Sydnor and the Chamber received the Powell Memo, corporations were growing tired of their second-class status in America.

  Even though the previous forty years had been a time of great growth and strength for the American economy and America’s middle-class workers—and a time of sure and steady increases of profits for corporations—CEOs felt something was missing.

  If only they could find a way to wiggle back into the people’s minds (who were just beginning to forget the Royalists’ previous exploits of the 1920s), then they could get their tax cuts back; they could trash the “burdensome” regulations that were keeping the air we breathe, the water we drink, and the food we eat safe; and the banksters among them could inflate another massive economic bubble to make themselves all mind-bogglingly rich. It could, if done right, be a return to the Roaring Twenties.

  But how could they do this? How could they convince Americans to take another shot at what was widely considered a dangerous “free market” ideology and economic framework and that Americans once knew preceded each Great Crash and war?

  Lewis Powell had an answer, and he reached out to the Chamber of Commerce—the hub of corporate power in America—with a strategy.

  As Powell wrote, “Strength lies in organization, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.” Thus, Powell said, “The role of the National Chamber of Commerce is therefore vital.”35

  In the nearly six-thousand-word memo, Powell called on corporate leaders to launch an economic and ideological assault on college and high school campuses, the media, the courts, and Capitol Hill.