On the other hand, on my trip down the East Coast, I saw mile after mile of ancient, decrepit redbrick or cement factories that were covered in graffiti, cracking with weeds, dotted with boarded-up or broken windows looking at me like toothless old men staring unfocused out at the train through Salvation Army secondhand glasses.
Occasionally I could see the remnants of a name painted on the factory or etched into the concrete or brick rooflines or cornices, names that had been proudly put into place in the late nineteenth or early twentieth century. They spoke of the long-ago manufacture of steel and car parts and lawn mowers and machine tools, of sweaters and socks and jeans.
During one particularly poignant stretch, after passing dozens of empty factories the train passed what must have been at least a mile of empty houses. Most of them looked like they were formerly elegant brick row houses that, if they were in DC or New York today, would fetch a million dollars each. Yet these had once provided middle-class housing to the men and women who’d worked in the now-closed factories. Now they were mostly reduced to smashed-out windows, graffiti-tattooed walls, and rotting ceilings.
I was describing what I was seeing to Earl, who himself knew it all too well. “It looks like the end of America,” I said.
“It’s certainly the end of the American middle class,” Earl said in a soft, sad voice. “You can see it all across the country.”
This is the early stage of crash.
We’re not just talking about decaying railroads and buildings; we’re talking about decaying fundamentals—the pillars on which you can build a healthy economy, an expansive middle class, and a strong democracy.
All of it, sucked out of the country.
There was a moment of hesitation when Clinton signed the free-trade death warrant for the middle class.
According to Bob Woodward, during a meeting in the Oval Office regarding these trade deals, Clinton said sarcastically, “Where are all the Democrats? I hope you’re all aware we’re all Eisenhower Republicans.”73
He added, “We’re Eisenhower Republicans here. Here we are, and we’re standing for lower deficits and free trade and the bond market. Isn’t that great?”
It’s true, the political left had abandoned FDR’s fight against the Economic Royalists. They had assumed the position of New Deal Republicans such as Dwight Eisenhower.
And perhaps that wouldn’t be so bad. After all, Eisenhower believed in the New Deal. He told his brother Edgar in a 1954 letter, “Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history.” He added, “There is a tiny splinter group, of course, that believes you can do these things. Among them are… Texas oil millionaires, and an occasional politician or businessman from other areas. Their number is negligible and they are stupid.”74
The only problem is, while the Democrats turned into Eisenhower Republicans, the Republicans turned into something completely different.
When George W. Bush took office in 2001, the Economic Royalists would step up their assault. There would be no Leisure Society, only a cataclysmic crash.
CHAPTER 6
“Madness”
I made a mistake in presuming that the self-interest of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms.
One of the great chroniclers of the last era when the Economic Royalists were in control was economist John Kenneth Galbraith, who was born in 1908 and watched it all unfold as a young man. In 1954, while he was a professor of economics at Harvard University, he wrote the international bestseller The Great Crash 1929.
In it, he noted that the nine years of hot money (from low taxes on the rich) and minimal regulation had led to a hollowing out of the American economy, along with a massive transfer of wealth from the working class to the very rich.
He noted there was “little question” that in 1929 “the economy was fundamentally unsound.” There were, he said, five major weaknesses that “had an especially intimate bearing on the ensuing disaster.”75
Galbraith listed them as being the following:
(1) The bad distribution of income
(2) The bad corporate structure
(3) The bad banking structure
(4) The dubious state of the foreign balance
(5) The poor state of economic intelligence
Most important, though, Galbraith noted that it was a lack of any sense of conscience or remorse—of responsibility—among the movers and shakers in the business and governmental worlds that caused the Great Crash. Our nation’s governance and industry had been taken over by people who had absolutely no commitment to the community of humankind, nor even to the community of our nation, nor to the neighborhoods in which they worked or ran their businesses.
Without using the word, which was then relatively obscure and ambiguous, Galbraith suggested we’d been taken over by psychopaths—people who were unable to understand the damage their actions were causing to the economy as a whole. Bluntly, he referred to it as “madness.”
Galbraith went on to describe the effects of this madness. “The sense of responsibility in the financial community for the community as a whole… is nearly nil. Perhaps this is inherent.
“In a community where the primary concern is making money, one of the necessary rules is to live and let live.”
Galbraith noted that when the mad—as in “insane”—people take over an economy, just the simple act of pointing it out is dangerous. The result is that the psychopaths—he refers to them as “the foolish”—are even further empowered and not only make off with more of our nation’s wealth but also hollow out our institutions of both governmental and corporate regulation in order to make their heist easier:
To speak out against madness may be to ruin those who have succumbed to it. So the wise in Wall Street are nearly always silent. The foolish thus have the field to themselves. None rebukes them.
Only in the wake of that Great Crash, Galbraith and most other economists note, did we figure out that our economy had been dangerously hollowed out by the twin combination of well-meaning ideologues and the psychopaths they empowered.
The Evolution of Madness
Could it be that there’s a subset of that eighty-year crash/war cycle that produces a corresponding rise and fall in the number of psychopaths who are running American business and government?
Darwin’s finches say yes.
Charles Darwin, in the 1830s, famously sailed aboard the exploration ship HMS Beagle to the Galápagos Islands, where he observed a broad variety of species of finches (among other things). Some finches, for example, were adapted to eating large, hard seeds and had correspondingly larger beaks. Some ate small seeds, and so had smaller beaks. Some ate seeds inside cacti and had longer and thinner beaks.
This variety of finches had all presumably evolved from one or two initial species that had been blown all the way to the Galápagos by a storm or carried in some other way. From this he developed his theory of how evolution produces speciation, and published it in his book The Origin of Species.
But Darwin didn’t have the time to visit and revisit the island where he’d found the finches, so he didn’t have an opportunity to see how his finches would change over time in response to changes in their environment. That job fell to Peter and Rosemary Grant, who spent decades annually visiting Darwin’s finches and watched extraordinary changes, chronicled in Peter Grant’s book Ecology and Evolution of Darwin’s Finches and later more widely popularized by Jonathan Weiner in his best-selling book The Beak of the Finch: A Story of Evolution in Our Time.