There is a Chinese curse that reads, “May you live in interesting times.” Like it or not we live in interesting times. They are times of danger and uncertainty, but they are also more open to the creative energies of man than any time in history. History will judge us and as time goes by we will surely come to judge ourselves on the effort we have contributed to building a new world society, where the strong are just and the weak secure. “Give me a place to stand,” said Archimedes, “and I will move the world.” Few will have the greatness to bend history, but each of us can work to change a small portion of the events.
Bobby Kennedy, Fordham University, 1966
With the fragile state of the economy, much of the attention of American working families has been on the problems of recovery. On the Right, the Tea Party and Libertarians are rallying around the enormous deficits Washington has incurred trying to staunch the bleeding of the financial sector, and the threat of massive tax increases; while, on the Left, progressives and Socialists are fixed on social spending, the environment, and financial reform. For the rest, the catastrophic impact of this crisis – the threat or reality of unemployment, collapsing home prices, eviscerated public and private pensions and 401(k)s – and, the continuing fall of basic living standards menace the well being of everyone without regard to their political or ideological allegiances.
The grievances of working people are many and often appear contradictory, as can be seen by the great divide over the issue of health care reform. Yet, despite all the differences among us over what should be done in Washington to address our grievances – whether we fall into the camp that says government should do more, or the camp that says government should do less – we all know government has escaped our control entirely.
We think both sides in this debate are right. The federal government, despite accounting for one out of every four dollars spent by all national governments on the planet, nevertheless leaves its citizens suffering with public services that are both shameful and embarrassing. We have the worst of both worlds. Our education system is a disaster, our medical care system is literally sickening, our environment borders on catastrophe, and we are constantly warned that we are not secure within our own borders; yet, we spend more on these things than 172 other countries – combined.
It is not our political differences that poses the biggest obstacle in this recovery, but Washington’s crass indifference to us. Unless Washington is forced to address our concerns, it is unlikely we will see a serious debate over how to resolve them. Instead, we will continue to see the sterile exchange of talking points between the two major parties.
So how can we force Washington to address our collective concerns? This is surprisingly easy to do, although it requires outside the box thinking and tactics: We can slow or stop the economic recovery, until Washington consents to proceed in a way that is beneficial to us. We can demand that Washington dismantle its empire and shift those resources to address our concerns, or suffer a prolonged financial crisis created not only by market forces, but also by our unwillingness to cooperate in its schemes.
This only requires borrowing the successful tactics of the Montgomery Bus Boycott, the 5 year long boycott of grape. lettuce and wine producers led by Caesar Chavez and the United Farm Workers Union, and the boycott of British goods during the American Revolution, and applying those tactics to Washington’s attempt to restart the consumer debt bubble.
The financial crisis itself was only the result of Washington’s deliberate policy of encouraging consumer debt to mask the stagnation of wages for the last thirty years and especially for the last ten. According to Martin Baily and Susan Lund:
Household borrowing rose along with incomes for decades. But after 2000, interest rates fell well below their long-term average because of the combination of U.S. monetary policy and rising foreign purchases of U.S. government bonds by Asian governments and oil exporters. When low rates were combined with looser lending standards, consumer borrowing soared. From 2000 through 2007, the ratio of household debt to disposable income shot up from 101 percent to 136 percent—as much in seven years as in the previous quarter-century. Even with low interest rates, the ratio of household debt service payments to income rose to a record high.
Washington deliberately encouraged this growing debt bubble by keeping interest rates low, and by making no attempt to regulate lender standards on consumer loans. When this debt bubble encountered the limits of the stagnating wages that serviced it, a crash was certain. Even as the economy tottered on the brink of collapse, and Wall Street scrambled to cover its bets, Washington stepped in, not to protect working families from the fall out, but to bail out the very banks it encouraged to make bad loans in the first place.
Even now, Washington’s entire preoccupation is on holding interest rates – especially consumer rates – as low as possible, for as long as possible in order to restart the consumer debt ponzi scheme. And, this is for good reason, Baily and Lund calculate that if our consumer debt fell to its long term trend level, without an corresponding increase in wages, it would cost some 2.5 trillion dollars in lost GDP. This would dry up demand for imports from China, Korea, Taiwan, Germany, etc., and send shock waves throughout the global economy. Companies could no longer bet on moving their production facilities to these countries and importing back into a US consumer market funded by cheap, easy credit. Economic growth would be strictly limited to the real wages increase of American working families as it should be:
If incomes stagnate, as they have for most U.S. households since 2000, each percentage point reduction in the debt-to-income ratio would require nearly one percentage point more in the personal saving rate. And each extra point in the saving rate translates into $100 billion less spending … [a] reduction in household [debt] would require … $539 billion less consumption [per year].
A boycott of the consumer credit markets now would interrupt the cycle where export of jobs leads to imports of Chinese made goods leading to greater consumer debt.
Now is the time for us to think about economics in a whole new way – Not as a means of enforcing the existing order, but as a weapon in our hands to dismantle the Empire. A boycott of the consumer credit markets until Washington relents and withdraws its troop from Iraq, Afghanistan, and dismantles all of its foreign bases – a goal shared by significant portions of both Right and Left – could decisively change the debate in the United States, and overcome our divisions in a way that points to an entirely new paradigm.
As we look back on the success of Montgomery, Salinas, and the Colonies, we can being to imagine our own success!
To quote Chicago:
We can make it happen
We can change the world now
We can save the children
We can make it better
We can make it happen
We can save the children
We can make it happen
