Archive for category Occupy Wall Street

The Failure of the Free Market Experiment

What's wrong in America

The last thirty plus years have been an experiment in lowering taxes, cutting regulations, and weakening both unions and the social welfare system.   The result is graphically clear above – a massive shift of relative wealth and income from the poor and middle class to the very wealthiest of society.

The experiment proves that the illusion that markets are magic and, if left to their own devices, will give the best possible result is wrong.   This deregulation and market fetish has led to the biggest economic catastrophe since the Great Depression (which was also proceeded by a belief in markets and inactive government) and a country that risks become a shadow of its former self — weaker, more divided, and in risk of long term economic decline.

It’s time to be forceful and clear about the lessons of the last thirty years, and reject the free market fetish that many on the right engage in.  They get seduced by ideology, a overly simplified economic theory that makes it sound as if all would be great if only the government was less active, taxes were minimal, and social welfare programs were cut.

Numerous fallacies support such ideological delusions.   One is the notion that the poor are simply leaches.  It’s a self serving and incorrect belief, but one that can be used to justify a lack of concern for the many people struggling in our economy.  If, instead of seeing them as humans trying to make it in rough times they can be dismissed as lazy parasites who simply live of taxpayer money, then there is no need to be concerned about them.   That kind of dehumanization of others has been the tool of many ideologies — the Communists about the kulacks, the Nazis about the Jews, the Hutus about the Tutsis, etc.  This case may be more benign — a “let them eat cake” response rather than a desire to eliminate them — but it’s still a false, dangerous propagandistic trend.

The problem is power.  The free market myth has a hidden assumption.   There is a belief that everyone is an equal player in the game, everyone is a free agent, able to make choices and act.   If that were true, then the result of these interactions would be due to the choices made.   Moreover, there is an assumption that people have good information upon which to act.   However, if information is false, imperfect or manipulated, and if there are power differentials, then the market easily gets warped to serve the needs and desires of those with power (wealth) and more information.

Thanks to inside info and power, the benefits of increasing productivity went to investors, not workers, as this chart shows. Their investments went to fuel bubbles not create jobs.

A classic class is the housing bubble and resulting derivatives market that led to the crisis in 2008.   Some on the right wrongly claim the crisis came from trying to get poor people into homes (it didn’t — that is a clearly and obviously false argument), but it’s clear to anyone who looks at the evidence that the crisis was caused by big banks turning mortgage debt into bonds that they sold (and then repackaged and resold) on the market.    Dervivatives begot dervivatives and soon the market was awash in what the banks knew were dangerous junk bonds – albeit with a AAA rating.

After deregulation the growth in derivatives trade skyrocketed, and led to the housing bubble and economic breakdown in 2008

Here’s a classic example of market fail.   The banks knew what was in the bonds.  But their money and clout got the ratings agencies to rate these AAA.   Then the banks sold bonds and credit default swaps to investors even though they knew the investments were dangerous — e-mails and phone logs prove that.  Hence wealth gets increasingly transferred to the already wealthy — a redistribution of wealth which has no ethical rationale.

Even before that, back in early 2000 I was part of an e-mail correspondance group that included a very wealthy connected individual.  In January he wrote that we should all dump our stock, especially tech and dot com stocks.  The insiders are all abandoning the market, he said — something’s about to go south.  The insiders know.

This shouldn’t be controversial.   The evidence is overwhelming that markets left to their own devices simply create a very powerful, wealthy class that dominates and rigs the game.   That’s why the graph looks like it did — less regulation, less taxation and more emphasis on the market alone warped the US economy.   Moreover, it made it easy for high debt to grow (private debt grew faster than governmental) and banks to avoid controls that used to limit such behavior.

From a comparative perspective, the evidence is equally strong.  The states faring best in this crisis are those who kept more regulation on the market and maintained social protections.   The best performing economies are from Scandinavia and Germany.   They seemed to growing more slowly during the bubble years (leading some Americans to claim that their regulatory approach harmed growth), but it was more that they avoided the worst aspects of the bubble and emerged more in tact.   Yes, due to globalization they aren’t immune to the crisis, and deregulation and bad policies in Ireland, Greece and Italy impact all of Europe, but Germany and Scandinavia prove that regulation, a strong social welfare system, strong unions and more equality does not weaken capitalism or hurt the economy — quite the contrary!

Before taxes and transfers the distribution of income as measured by the GINI index (used by the CIA as the best method of measuring relative equality) shows the US about average - .00 would be perfect equality, 1.0 would be one person with all the money.

Yet in this country class war from the right continues.   Paul Ryan’s budget shifting even more money to the wealthy while cutting assistance to the poor is a stark and to me comically absurd example of not learning from history.  It doubles down on the mistakes of the last thirty years, closing eyes to reality in order to smoke the drug of ideology.

After taxes and transfers the US has improved equality very little (there isn't much redistribution), but almost every other state has -- consider Germany which was worse than the US before taxes and transfers, but much more equal afterwards.

The evidence is powerful.  2012 needs to be a year where President Obama, and responsible Republicans and Democrats halt this flight of ideological fancy and take a pragmatic approach that recognizes that the country is strongest when government policy is used to try to combat the impact of power and information on the market.   The goal isn’t to equalize outcomes, but to create true opportunity for everyone, and counter the advantages power, wealth and inside information provide to a small elite.

Occupy Wall Street was a start.  It changed the conversation and got a lot of this information out there, even to people who don’t like protest movements.  The impact of OWS could be profound, especially if they reignite their efforts this summer to get the word out about how warped our economy is, and how this is a result of a false belief in market magic.   Deregulation, tax cuts, and cuts in social welfare programs have led us to where we are today – on the brink of collapse.

I think this message is starting to get out, and it has to be a theme of the 2012 campaign.  The country seems ready to turn around and reject the grand thirty year experiment in deregulation, tax cuts and free market ideological fantasy.  It’s time to change course.

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Street Collage

“And if you’ve got enough money where you don’t have to work, let’s face it, who wants to work? There’s no reason why anybody, that five generations of people got to be on welfare…Kids nowadays, that’s the whole thing, too much money, they’ve got too much money. They don’t have to struggle and work for things like when I was growing up had to do. And I was lucky if I got that job delivering hats in a hat store for twenty-five cents per hat. Too much money today is with the young kids, everything was handed to ’em, and that’s why they are the way they are.”

If you read that quote and reflect, you may find yourself agreeing. This generation of kids grew up with DVDs, cell phones, computers, video games and everything they wanted just handed to them. This is why they’re “the way they are” – selfish, lazy, unambitious, entitled, etc. Yup, not like when my generation grew up, we had to work!

Teens often seem entitled, aloof and arrogant to many

However, the quote comes from a street interview (not sure if it’s real or staged) in the middle of the song “Movement for the Common Man” on the album Styx I, which was released in 1972. That means that the ‘young people’ talked about in that quote are probably nearing 60.

In other words, how elders view youth hasn’t changed much in 40 years, even if today’s elders are yesterday’s youth! Why would that be? First, consider another part of that track “Street Collage” from Movement for the Common Man:

Well, you see now, I’m a depression baby and I remember the WPA. If we could just start the same thing again and get people working out there, why not? Is it too menial for somebody to sweep the street?

The elders of 1972 looking at the youth of that time compared them to the depression era. By the early seventies consumerism was beginning, the convenience society was forming (TV dinners were becoming standard fare, the microwave oven was gaining popularity. 40,000 were in use in 1970, by 1975 it was 1,000,000. Fast food was popular, but not yet omnipresent. McDonalds still kept track of how many million had been sold, not just “millions and millions.”

And then there’s this, from the same section of the song:

I had one gentlemen get in — No offense to you gentlemen, he had long hair and a beard — And I told him, he had better go home and take a bath; He had B.O. so bad, it was terrible! I said “You might be educated, but did your parents tell you to go dirty?”

It was the era of the hippies, protesters against the war, for civil rights, and sometimes against the western industrialized society completely. Having survived the depression and used to being thankful for a chance to make money, the counter culture movement of the seventies was a different cultural world. Emblematic of this is a television show that started in January 1971, All in the Family. Just consider the opening tune:

Those were the days! Now many “elders” look at see gays marrying, have the same reaction to Occupy Wall Street that their parents or grandparents had to Vietnam war protesters, and see a youth that has grown up in a time of plenty being used to having material abundance. Beyond that there are cell phones, video games, facebook (and the younger generation seems to disregard the intense concern about privacy that earlier generations cling to), a black President, and a very different world.

Plus ça change, plus c’est la même chose….the more things change, the more they stay the same!

Frankly, I’m impressed with today’s youth. Teaching at a university I see them engaged, concerned about their future, and more knowledgable than ever due to the internet and connections made often across borders. To be sure, these are college kids, but I teach at a rural state university not an elitist private school. If students here are engaged and connected, that’s a good sign.

Today's youth - ready to change the world!

Yes, they are used to technology. I hear students talk about how hard it would be to go without their mobile phone for even part of a day — they are more connected to friends and family than I would have wanted to be when I was their age. Parents are often almost tyrannical in their desire to keep in contact with their kids, even at college (note to self: I will not be that way as my kids grow up!). When we’ve done travel courses to Italy and Germany, parents increasingly try to demand students stay in contact with them every day.

In fact, if anyone deserves criticism its the parents’ generation. There is so much effort done to protect kids or make sure they succeed that kids often get stifled by the attention and control. It’s a well intentioned stifling, and certainly better than ignoring kids or not caring, but it can go too far. If the youth of today seem spoiled it’s often not their fault — it’s being forced on them by their elders.

Being over protective leads to sometimes irrational and harmful efforts at control

That’s probably the biggest difference I notice between my youth and now. There is so much protection now – a kid brings a swiss army knife to school to show his friends and he’s expelled. Who does that protect? An ESPN announcer has “chink in his armour” about a Chinese athlete and the fact “chink” had a double meaning as a pejorative for Chinese folk and he gets fired. Really? Protecting us from double meanings in popular expressions?

Yet with all the protections, the ubiquity of fast food, video games and other temptations overpowers those who would want to protect kids from themselves. It’s a bit surreal. Yet through it all, I think we underestimate the youth — just as my elders were doing back in the 70s. They learn to navigate their reality, they understand dangers and risks, even if their belief in their immortality causes them to sometimes foolishly disregard them. But my generation was the same way. That’s youth.

Today’s youth are being handed a country in debt and decline and asked to fix things. They are pioneers in a world where even the phrase “high tech” sounds old fashioned. They are crafting new realities, throwing off old prejudices (such as the prohibition against gay marriage) and are cynical of the ideology-based politics of the past. Kids these days? Well, count me impressed. The most hope I have for my country and its future comes when I consider today’s youth. They’re no more spoiled than my generation was, and they seem to grasping the information revolution tools that can reshape the world with a gusto.

Anyway, given the mountain of debt and the myriad of ecological, social and political problems my generation is leaving in our wake, I don’t think we elders have any standing to complain!

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Can Angry Win?

When Ronald Reagan won the Presidency in 1980, he charmed Americans as a man of character who was inherently good natured and calmly confident.   When Jimmy Carter tried to jab him in debates he said “there you go again,” with a smile.  No anger, no bile.

The one time Reagan did get angry was when George H.W. Bush tried to keep a New Hampshire debate to two people.  Reagan’s ire was not at Bush but at the moderator who was ordering “Turn off Governor Reagan’s microphone.”   A visibly agitated Reagan stood up, and said with steely resolve “I am paying for this microphone,” and got thunderous applause.

Reagan was elected, however, for his optimism and character more than his ideology.   Since Reagan it’s hard to find a successful candidate who ran on anger.     Bill Clinton was charisma and hope, George W. Bush espoused a “compassionate conservatism,” with a vow to unite.   Barack Obama promised “change we can believe in.”    That last angry candidate was Richard Nixon, though most of the anger we know about now was hidden from the public.    In the history of media intensive US elections (the last sixty years or so) there has never been someone with an angry and volatile persona like Newt Gingrich who has won the White House.

Add to that his ethical failures — serving divorce papers to his wife while she’s in bed with cancer, having to leave the House Speaker position and being fined $300,000 for ethics violations in Congress, and numerous stories that show him to be arrogant and extremely self-centered only accentuate the unlikelihood that he could be elected President.

So what the heck are the Republicans in South Carolina thinking?    Is the GOP really going to ditch Romney not for a new visionary to lead the party into the future, but an angry ‘blast from the past’ with a blemished character and lack of appeal beyond the GOP base?

Probably not.  Gingrich plays better in the south and in the more conservative states.   The GOP primary battle will be a slog, and the party establishment fears he could not only fail to defeat President Obama, but could perhaps endanger Republican efforts to take the Senate or keep its House majority.   Still, this says something about the state of the Republican party.

Many Republicans are driven by nostalgia, seeing a 21st Century America that looks far different than the country they grew up in.    That is also much of what drives the tea party – nostalgia for the loss of an America they remember from the past.    The white middle class ethos and life style of the late 20th Century have given way to a new cultural landscape.  From the shining city on the hill with a vibrant economy and unquestioned world leadership to economic collapse and international decline, everything about the country has changed.

This has happened before.  Nixon and the “silent majority” was a response to the changes brought by the sixties counter culture.    Rock music, women’s liberation, the civil rights movement, a growing social welfare system all caused a yearning for the America of the 50s.   Not that the fifties were all that great in objective terms, but change yields an idolized view of the past.   That was the real America, somehow we lost it.

Of course, the cultural changes of the sixties and seventies took root.   Cultural change is inevitable and real.  America’s future will never be from its past.

Nonetheless, with a black President with foreign roots, an Occupy Wall Street movement that challenges the status quo, and international crises that call into question our faith in the economy and the US role in the world, it’s possible that Gingrich can pull a Nixon – perhaps anger can win.   I doubt it.   Nixon may have ultimately been more flawed a human than Gingrich, but he constructed an effective public persona.   Gingrich’s problems are well documented and should he get the nomination the ad hominems will be intense, and almost certainly effective.

Can he pivot?   Right now he has to play to the right wing of the GOP now to get the nomination.   But his past work with Nancy Pelosi on climate change and other clearly moderate positions also define his record.   His recent attacks on Romney at Bain Capital have echoed some of the concerns of Occupy Wall Street about capitalist excess.   Might the anger and venom of the primary season give way to reason and calm vision?   Will a “new Gingrich” bury the old one, with the public forgiving or shrugging at his personal problems in order to express the view of the new “silent majority” that change is coming in a too fast and too scary manner?

Perhaps.    Gingrich has proven as malleable in his politics as Romney, but his angry forceful manner makes it appear he’s sticking to a principled script.     Yet just as the cultural changes of the 60s were real and did not go away at all with the elections of Nixon or Reagan, the changes that the tea party and the right decry are likely to remain a part of what America is becoming regardless who wins.   And perhaps in 2044 we’ll see a candidate running on the notion that we need to get back  “America as it once was” – back in the old fashioned era of circa 2012.

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Let Them Eat Cake

Mitt Romney repeated one of the most malicious and misguided political lies of recent years: that people who criticize Wall Street and inequity in America are driven by “envy.”

Besides the fact that one has to wonder who Warren Buffett envies — he’s one of the richest men in America and he’s been a critique of inequity, as has George Soros, a wealthy international capitalist tycoon — the claim is not only absurd, but fundamentally dishonest.

Rather than look at real issues of power, wealth and opportunity, those who question whether it is good for society to have extreme wealth alongside extreme poverty are dismissed via insult — it’s “envy.”    Occupy Wall Street, nothing but envy.   President Obama’s effort to curb Wall Street excesses – just envy.   Any criticism of the wealth gap and lack of opportunity gets brushed aside as “envy.”

This is a point that President Obama and the Democrats need to turn around on Romney.    It’s best to do it with real stories.  A family who lost health care and couldn’t afford an operation for a child, thereby leaving the child crippled or handicapped, for instance.   Is their problem simply that they envy the rich?   It’s not wrong that the wealthy have excellent insurance as a matter of course and the poor often see their children suffer.   They’re just envious of the health care the rich take for granted.

A worker that lost his job and has nowhere to turn as they can’t afford college for their children or to keep their house thanks to the recession.   They shouldn’t be upset about the shenanigans on Wall Street or how the wealthy have gained nearly 300% in the last thirty years while the poorest have barely stayed ahead of  inflation.   No, it’s just envy.

The message should be clear:  It’s not envy to want real opportunity for Americans.  It’s patriotism.  It’s the values of our constitution, it’s the key to the future of the country.   If we allow these inequities to continue in the false belief that somehow wealth and opportunity will trickle down and the wealthy are all “job creators,” then our country will continue to decline and we’ll find that America’s day in the sun is over.   We need to fight for real opportunity and against a new aristocracy, because that’s a fight for America’s values and future.   That’s got to be the message that the President runs on this year.

And soundbites of Romney muttering “it’s envy” should be ubiquitous on Obama commercials.   An elitist Wall Street insider who has lived of life of privilege sneers down his nose and says the poor unemployed and struggling are just envious of people like him.

“Let them eat cake,” he may as well add.

Don’t get me wrong.   I actually think Mitt Romney isn’t a bad candidate and would probably do well as President.   But as you can probably tell, this claim that “it’s envy” to be concerned about poverty, equal opportunity and wealth disparity has gotten under my skin.

Moreover, if I compare my household income with the rest of the country’s, I’m not in the 1%, but I’m not that far away.   My wife and I work very hard, make good money and are living the American dream.    We’ll be able to provide the best for our kids, help them if they ever have difficulties in school, and get them a good education.    But if I were to say “well, we’re smart and got ahead, those poor blokes down the road who are having a rough go are just envious,” well — what kind of arrogant slime ball would I be?

The second fallacy is the dodge, “oh we should be concerned and help, but government shouldn’t do it, it should be done by individuals.”   Sure.   We should all be concerned about murder, rape and arson, but government shouldn’t handle those protections, let individuals do it.    The fact of the matter is that the collective action problem is real, well documented, and undeniable.   If you leave it to the private sector problems get worse.   You need government to do so because nobody else can do it.   You might get food shelves to keep the poor from starving, but you won’t get real opportunity.

And that is where Obama has the rhetorical upper hand.   He can say “the American dream is that every American has access to the education and opportunity to go into the market, work hard, innovate and be rewarded for the fruits of his or her labor.   We reject socialism and efforts to equalize all outcomes because that makes everyone worse off and undercuts innovation and ambition.  If you doubt that, look at the former Communist world.   But to work capitalism needs to make sure that the elites aren’t rigging the game in a way that denies liberty, opportunity a fair shot to the middle class and poor.

“If we unleash America’s potential of ingenious experimentation, a willingness to work hard and take risks, and freedom to break with the past and try new things, we can achieve anything, we can maintain the American dream for generations.   When a small group of elites rig the game with insider trading, schemes to rob pension funds and retirement accounts, predatory lending practices aimed at the poor and a tax system that gives them advantages that most people don’t have, it’s undercutting the American dream.  It’s contrary to American values.   It’s risking our future.

“It’s not envy to want a fair chance for everyone.   Let those who work hard and innovate well succeed and become wealthy.   Let those who choose to do the minimum and refuse to take the opportunities that exist suffer the consequences.   Let it be the actions of the individual that determines the outcome, not the structure of a rigged game.   It’s not envy to want fair play, it’s a sense of justice.”

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The American Myth?

A lot of Americans believe that the US offers unique opportunities for people to rise to the top if they work hard and show innovation.  It’s the American dream – the idea anyone can grow up to be rich, anyone can be President.  After all, look where success stories like Barack Obama and Bill Clinton came from; neither were from the ranks of the rich and famous.

Yet as the New York Times reports, that dream is quickly becoming a myth.   If you’re poor in America, you’re likely stay poor.   It’s no longer the land of opportunity.   Canada and most of Europe offer a better chance for the poor to succeed.   The findings are sometimes stark.   In Demark about 25% of men in born in the bottom fifth end up there, in the US it’s well over 40%.    Even Great Britain’s level is 30%, much lower than that of the US.   Two thirds of those born in the bottom 20% stay in the bottom 40%.

The top fifth is also “sticky” as the article notes.  If you’re born in the top 20% of the population in terms of wealth, you’re very likely to stay there.   It’s hard for those on lower levels to move into the top fifth.

The good news is that in the middle things are more fluid.   About 36% born in the middle fifth move up, while 41% move down.     It’s the very rich and the very poor who appear stuck.

What do we make of this?   First, you can’t deny the role of economic and social structure in creating opportunities and constraints.   Being born into wealth assures you opportunities that others do not get — that’s why so many people stay there.     Being born into poverty means a lack of opportunity and a series of constraints:  poor health care, poor schooling, bad neighborhoods, etc.

This is not something that Republicans deny.   The article points out that Rick Santorum and other conservative voices are pointing out the lack of mobility from the bottom.

Second, the US does not fare any better than other advanced industrialized states in any measure of mobility.    The inability for the poorest to rise is stark, but at other levels countries fare similarly.   The American dream and the ability to achieve it for those outside the bottom 20% is about the same as the Canadian dream, Danish dream, etc.

Why, though, do our poor have more difficulty than those in other states?    The answer is obvious: social welfare programs.   For all their faults, social welfare programs assuring health care, basic housing and nutrition to all citizens make a difference.   That’s why a Dane born at the bottom finds more opportunity to rise up than an American born in similar circumstances.    It simply is not true that social welfare programs only create a sense of entitlement and dependency; they actually get people motivated to pursue opportunities and move forward.

This also suggests that it does the top fifth little or no harm to increase taxes to create social welfare programs to help the bottom fifth.   This isn’t unfair since the top fifth already has so many more opportunities and chances for success.   They don’t earn these opportunities through their own choices and work, they achieve it by dint of where they are in the social structure.   A major causal aspect of their success is from outside their individual efforts.

That doesn’t mean that individual choices don’t matter — people have to take the opportunity that they receive and not waste it.    Still, somewhat higher taxes won’t change that fundamental social structure.   Moreover, one could make a strong argument that it is a denial of liberty to those down the ladder by allowing so many individuals to be given such greater opportunity and fewer constraints because of position of birth.   It’s not much different than the old aristocracy.

However, how such money is spent still is debatable.   I don’t think a Danish social welfare system would necessarily work the same in the US because the social divisions, size of the country, and the impact of years of neglect will make it more difficult to get real opportunity to the poor.   Also, while it’s clear that social welfare programs can work – they help people move up the ladder, they don’t necessarily create dependency – not every program is equal.   Some programs do create dependencies, especially if like in the US the programs are meager transfers that don’t really create opportunity.  If you’re not going to be able to move up, why bother?   Just take what you can!

For the US to create opportunity we need to focus on helping people help themselves, providing education, health care, and the basics that children need to be in a position to let their effort and innovation actually determine what they achieve in life, not their position of birth.   Perhaps the kind of welfare programs we have is part of the problem

To be sure, 8% of Americans (still the lowest compared to other countries) born in the bottom fifth make it to the top fifth.   It’s not that there is no opportunity or that the constraints are insurmountable.    But Americans tend to over estimate how likely it is for one to be able to do that, and under estimate the impact of social structure on opportunity.

This also vindicates at least one message from Occupy Wall Street.   The 1% are almost certain to stay at the top, the game is structured in their favor.   The poorest have real constraints, and even the middle class have limited means.   That doesn’t mean that the radical solutions the protesters sometimes suggest are right — there is huge room for debate amongst conservatives, liberals, free marketeers and social democrats about the best ways to move forward.  What we have to do, though, is accept the fact the class mobility in the US is low, especially for the top and bottom 20%.

Finally, the article points out that some skeptics note that 81% of Americans earn more in absolute terms than their parents.   While that is a sign that as a society we’ve become more prosperous, the American dream is not simply about making more money, but real opportunity.   A trash collector today earns more than a trash collector did 20 years ago.  But the children of trash collectors should have the same opportunity to become doctors as the children of doctors.

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A Retrospective of 2011

TIME magazine’s naming of  “the Protester” as person of the year in 2011 captured what clearly is the defining aspect of the year gone by.   Whether it was the Arab Spring, the Russian winter or the Occupy Wall Street movement (which spawned imitations across the globe), 2011 was a year in which people started to more strongly question both authority and conventional wisdom.

This is made all the more poignant by how unexpected it was.   I challenge you to find me any pundit or psychic who predicted the events in Egypt (which began in January 2011) or the force of Occupy Wall Street.    Much like how no one saw the fall of the Berlin Wall coming when we went into 1989, experts and pundits are again shown to be narrow minded fools by the people on the street.   The Tunisian protests were growing when 2010 ended, but the idea that this would start a process ending with the overthrow of multi-decade stalwarts like Mubarak and Gaddafi?  Pshaw!

Moreover, in the US the talk still was of the “tea party” and the surge of the GOP.   The idea that the left would strike back with its own grass roots movement that would rise as suddenly and with force didn’t seem possible.   Not only didn’t the left have FOX News and especially Glenn Beck, primary proponents and builders of the Tea Party, but they were a spent force after 2010 — dissatisfied with Obama but nowhere else to turn.

No one knows where all this will go.   The Arab Spring is a good thing, the dictators had to go.   As bad as things may get, postponing change would have been worse.   The only alternative would have been to defend dictators doomed to fall in any event.    The path towards a better future will be rocky and often violent.   Such is how history unfolds.

New protests against Putin in Russia show promise; will the Russian state assert dominance as it always has, or do the protesters have a chance?   OWS is certain to gain strength again when the weather is warm.  Will they focus their protests on making a political difference in an election year, or will they be angry and aggressive against the status quo?   The right wing predicts the latter, inside the movement they’re confident of the former.   We’ll see.

All of this reflects a fact I’ve blogged about many times: the information and technology revolution is changing politics in a fundamental way.   By fundamental I don’t just mean that now candidates solicit via e-mail or tweet their responses to world events.   I mean the nature of sovereignty, power, economic relations and world order are being altered.   The process is only beginning, but the result will be a world very different than the one we’re used to at the start of the 21st Century.

2011 gave us a taste of what this may entail.   No matter how powerful, brutal or apparently invulnerable the leader, politics in the new era make it harder to hang on to power when the people rise up.    It’s a good thing as it is a start of a shift of power away from elites towards the people.   But it was a good thing when the reformation challenged Church dominance in 1517.   After that Europe was at war until 1648.   Change may be necessary, but it can be violent and difficult.

It’s hard to find other ways 2011 stood out.   The world and especially Japan suffered an immense tragedy in March with an earthquake and tsunami that brought home the possible dangers of nuclear power, limits of human engineering and resilience of human heroes, as many in Japan gave their lives fighting to prevent absolute catastrophe.   I don’t think this means nuclear power should be taken off the table; rather, as with anything, we can’t say there is zero risk of disaster.

President Obama had a good foreign policy year, with the killing of Osama Bin Laden and an end to the Iraq war.  Obama’s diplomacy abroad has been effective, though a continually lagging economy at home makes him still vulnerable to defeat in his re-election bid.   That said, he leads any Republican challenger in head to head p0lls, though is pretty even against Mitt Romney, the strongest and most likely GOP candidate.

2011 has seen a late year bit of economic hope, but  the economy slogged through year four of a crisis that started with the bursting of the housing bubble in 2007 and then went into near melt down with the financial blow out in the fall of 2008.   The global economy is still resettling, deleveraging, and working out the structural imbalances the grew from 1981 to 2007.

For me personally it’s been a very good year.   I again participated as one of four faculty for a travel course to Italy in May with 42 students.   The weather was great and the students superb!   We installed our geothermal heating system, the boys excelled with skiing early in the year, Dana at age 5 skied from the top of Saddleback in April (he turned 6 this week).    The new Mallett School opened, a wonderful building with great teachers and staff.   I’ve been involved in the PTA and that’s been rewarding.   Work has been excellent, I’m even doing an online winter term course right now that is off to a good start.

The new Mallett school, built in 2011

My intuition says that 2011 has set us up for major events in 2012 (and no, I don’t mean the Mayan end of the world!)   In the US it will be an election year, and the world economy will come into clearer focus.   Right now there is optimism that the US economy is finally starting to improve, that the EU is on a path to overcome its crisis, and that we’re past the worst.  Yet debt remains a huge issue, and China is facing internal and external economic challenges that could be the first real threat to thirty years of constant 10% a year growth.  Events in Syria, Iran, Russia and elsewhere could all create real upheavals.

These changes aren’t new to 2011.   I think this has been building since the mid-eighties when the personal computer took off, globalization shifted the meaning of international relations, and the Cold War drew to a close.   So maybe it’s appropriate that a song written in 1990 captures my mood.   Glen Burtnik’s title song (co-written with Bob Burger) of the Styx album Edge of the Century reflects what I feel heading out of a very interesting 2011 and into what might be a consequential 2012:

See the world in revolution
Spinning faster all the time
We’re heading for the end of something
Just about to step across that line
Oh, can’t you see?
We’re staring in the face of reality

Can’t turn off the information
Can’t sit back in your easy chair
Can’t ignore a generation
Better get ready cause we’re almost there

We’re moving at the speed of life
Into a brave new world where the strong will survive
The dawn’s gonna break and I’ll meet you
On the other side

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2011: A Watershed Year?

I am currently reading 11/22/63 by Stephen King.  It is the first time I have ever read a Stephen King novel.  That’s nothing you are supposed to admit in Maine, he’s a state treasure.  But not being a fan of horror or even fiction for that matter, I’ve just never read one of his books.     The premise is a time traveler could alter history by intervening at “watershed” moments – events that alter the course of history — such as the assassination of JFK.

More on the book when I’ve finished it, but 2011 may prove to be such a watershed, even if it doesn’t seem that way yet (though it feels that way!)   The reason can be found in time magazine’s choice as “Person of the Year” – the protester.

What started out as protests in Tunisia at the end of 2010 seemed relatively unimportant.   On January 14, 2011 Tunisia’s President Ben Ali gave in to the surprise unrest by resigning.   By late January Egypt was in turmoil and on February 11, 2011 Hosni Mubark’s 30 year reign in Egypt ended.   This was completely unexpected, Mubarak was seen as a rock of stability.   Unrest spread to Libya, Yemen, Bahrain and Syria.   Libya’s Gaddafi, in power for 42 years and seen as virtually invulnerable,  fell after a short civil war.   Yemen’s President appears on the way out and Syria remains awash with revolt and government violence.   The Arab world will never be the same after 2011.

Protests were not limited to the Arab world, however.   As the EU worked to try to save Greece from default, austerity programs caused massive protests there.   That could be expected; after all, austerity programs and budget cuts have brought out protesters in Europe before.   But in August another movement rose, which was unexpected:  Occupy Wall Street (OWS).

Nobody thought the OWS protests would amount to much — after all, even at the height of the Iraq war when the public had turned against the conflict actual anti-war protests were barely noticed.   I still remember a student asking me about what was happening on Wall Street in late September.  “Yeah, I heard about that.   I’m not sure exactly what’s happening,” I replied.   I thought that it was just another activist protest that would quickly fade.    Within a week OWS was taking off and altering American political discourse.

Its impact could go far beyond what people now expect.    No longer does the tea party’s talk about ‘taking back’ America resonate, but public discourse has shifted to whether or not wealth and the burden of dealing with our large debt and deficit is fairly distributed.   Fair does not mean equal.   Only the most radical OWS protester would oppose there being rich and poor folk, so long as those results reflect actions taken by individuals and not a rigging of the game.   Rather, there is real concern that in the last three decades de-regulation, tax cuts and the anti-government mood may have shifted things too far to the side of the wealthy in a way that harms the middle class.

Part of this is a rethinking of what freedom means.   The “right” has defined freedom simply in terms of negative freedom, not having the government ‘get in the way.’   But a government role in helping foster positive freedom – real opportunity and social justice — is increasingly a mainstream topic.

While the Republicans are beating each other up over who is a ‘true conservative,’ playing to a tea party discourse that appears to be fading, it may be that President Obama by the end of next year will be heading for a landslide victory.   That seems an odd prediction to make, given that at best Obama’s approvals have been inching up only slowly.    Yet when a discourse shifts, an early almost imperceptible trend can become a tsunami.

Moreover, while the Tea Party seemed to be a short term media event defying America’s demographic and culture change, OWS feeds into demographic changes that create a more diverse and socially liberal America.   That doesn’t necessarily bode well for the Democrats, even if they are able to harness its power in 2012.   People could be breaking out of the conformity demanded by 20th Century political ideologies, discovering ways to both empower themselves and force accountability from those with wealth and power, both business and governmental.   Such political discontent cuts to the core of the system, and while a democracy can handle such pressures better than a dictatorship, we could be on the verge of fundamental change in the US.

Most recently the protests have spread to Moscow.   Inside the Kremlin they debate whether to crush the protest movement now in its infancy, or let people vent and let the protests peter out.  The notion of actually responding to them or that the people may force change doesn’t even register.    That could prove to be a fatal error.

Just as the printing press allowed the reformation to spread rapidly in Europe, the power of the internet and social media gives the people information, voice and the tools to organize and communicate.   We don’t know what that means for the future, but it could portend a complete change in the very core of political action and organization.   This could be the start of the collapse of the sovereign bureaucratic state and the rise of, well…we don’t know!

People are hesitant to predict radical change.   Usually such predictions are wrong; systemic inertia is strong and people find a way to muddle through.      Yet I’m amazed each day how much I learn about through facebook — stories my friends posts, links to information I’d otherwise not notice.    Multiply that by all the millions linked and connected, and it can’t help to have an impact.   We as citizens are becoming better informed, empowered and able to act.   The elite are less able to control the discourse or dominate the culture.

2011 was the year of the protester.   From Cairo to Athens to Wall Street to Moscow people are rising up in ways unexpected and strong.    Perhaps we’re on the verge of what “Inner Simplicity” labeled a “black swan event” last August.  We could be in the process of change that impacts politics, culture and leads into a new era.

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