Bob Kuttner on Homelessness

My interview with economist Robert Kuttner, founder and co-editor of The American Prospect magazine, a regular columnist for the Boston Globe, and a frequent guest on TV and radio shows where these things are discussed, comes out in Wednesday's Real Change. His new book, The Squandering of America, is subtitled “how the failure of our politics undermines our prosperity.” Kuttner argues that the corporate capture of the democratic process has resulted in windfall profits for the wealthy at the great expense of average Americans. Our choices, he warns, are to build a citizen’s movement that curbs the power of wealthy elites, or face continued decline and inevitable economic disaster. Here's a brief excerpt.

RC: One of the things that struck me about the American Prospect special issue on poverty was that there was no mention of homelessness. How did that happen?

I don’t have a good explanation for it. Maybe we just dropped the ball. We have written about homelessness in other issues.

RC: I can venture a guess. Homelessness seems more manageable when approached as a technocratic social services issue, as opposed to a problem of growing poverty and inequality. Government reframes the issue in a de-politicized way, and homeless advocates generally follow their lead.

I think that’s right. It’s often said that one of the problems Democrats have is that Republicans can reduce their ideology to a bumper sticker and Democrats can’t. So the Republican story is “Markets work, governments don’t. Poor people reflect poor values.” That’s nine words. You can put it all on a bumper sticker.

I think the typical middle class person who walks by someone who is homeless sees that person as dysfunctional. Either they look strange to the middle class, and you conclude that that person is mentally ill, or they look okay and the middle class person says, “Well gee, why isn’t that person working?”

Instead of seeing this as a failure of capitalism — as a failure of government to provide enough good jobs, to pay a living wage, to have decent housing policies and adequate mental health services — it’s seen as a problem of marginality and dysfunction. So, if we did not include homelessness, shame on us.

RC: Why do you think there is so little discussion of structural unemployment and the people who have, statistically speaking, just dropped off the radar?

I think it is the fracturing of the coalition that used to exist between the working middle class, the working poor, and the very poor. The periods when that coalition was together is when you had transformative social policies like the New Deal and Great Society. Those were the few periods in America when we actually had progressive politics.

It’s too easy for people who have jobs to ignore people who don’t have jobs. I have this polite argument with John Edwards that goes, “Look, it’s magnificent that you are talking about the bottom fifteen percent and you will go to heaven for talking about the bottom fifteen percent, but if you want to go to the White House, maybe you want to talk about the bottom seventy percent.”

Increasingly, the difference between the bottom seventy percent and the bottom fifteen percent is one of degree. The bottom fifteen are a lot poorer, but the bottom seventy percent have the same vulnerability. It’s less a problem with structural unemployment than of the vulnerability that almost everybody has to losing their jobs, losing their health coverage, losing their retirement coverage, losing the ability to have work that pays a living wage.

The job of political organizing and leadership is to remind somebody who’s making fifty or sixty thousand dollars a year that they’re just as vulnerable. People have those worries privately, but that needs to be politicized.

Change You Can Believe In

Anyone with an ounce of political curiosity has probably seen Barack Obama's Iowa victory speech by now, but if you haven't, you really should. This one's going to go down in history along with LBJ's 1965 We Shall Overcome speech, and Ted Kennedy's 1980 primary concession to Jimmy Carter (a speech that I regard as the last gasp of the true Democratic Party). It's inspired, inspiring, and calculated to create the wave of organizing that it will take to turn this disaster-ridden nation around.

I appreciate that Edwards is talking economic populism, but Obama is an organizer at heart, and his appeal is far more broad. Maybe it's easy to look smart next to George Bush, but this guy really is. His memoir Dreams Of My Father is beautifully written and shows a fine mind at work. He has a deep grasp of the complexities of race in America, and is well-positioned to begin addressing the greatest fault line dividing this country. He masterfully moves beyond the divisive rhetoric of the right even as he calls it out. I believe him when he says he'll pull us out of this horrible war. And his smile is real.

Hillary, on the other hand, would be a political disaster. My friend Paul Loeb writes about this brilliantly. She's Lucy to our Charlie Brown, pulling the football away to leave us flat on our asses and deflated. She'll run on hope and change, and revert to mainline Democratic Leadership Council business as usual about three seconds after the Inaugural Ball. She's better than Bush, yeah, but so is McCain. We need Obama.

The Squandering of America

Last Sunday, I had the privilege of interviewing Robert Kuttner, whose new book, The Squandering of America: How the Failure of Our Politics Undermines Our Prosperity is the perfect companion piece to Robert Reich’s Supercapitalism. While these two American Prospect superstars have some minor chicken and egg differences over what’s behind our current period of growing inequality and declining democracy, their perspectives have far more in common than not. Both agree that the window of opportunity after which things become infinitely harder to change is closing fast.

Kuttner was in town for his Sunday Town Hall reading, and we talked for about half an hour in the swank lobby of the Alexis Hotel as curious people came by to take free Sunday papers from our coffee table. It was an exciting interview. I hope to see the thing in print over the next few weeks. I know that Angela Davis is in line ahead of me.

His analysis is basically that opportunity and a certain amount of equality are foundational American values that would be much better served by some moderate form of a managed economy than by the current environment of radical free market ideology. Like Reich, he identifies a period — for him it's 1948 to 1973 — during which a balance of power between business, government, and mass-based organizations led by labor gave us 3.8% average annual growth and steadily declining levels of inequality. The common good was well served by this system.

Recession and the OPEC oil shocks of the 70s offered a leg up to business and financial interests that were chafing at regulatory restriction and looking to reduce the power of organized labor. Things began to shift significantly under Carter, and with Reagan, the new rules became our explicit national policy. Taxes and regulatory controls were out. Homelessness and cuts in social spending were in. Inequality has steadily increased since 1973, and we now have the widest income disparity this country has seen since the twenties.

Due to the enormous influence of wealth in politics (Kuttner describes how democratic participation is very much alive and well among the elites) both political parties have largely turned their back on the concerns of ordinary Americans. The days when the Democratic Party had the back of the middle class are long gone. It gets in the way of fundraising. Ordinary Americans, therefore, have also turned their backs on politics. Expectations that government might actually improve our lives are so low that most people hardly bother. This, he says, is a vicious cycle that needs to be broken.

One ray of hope is that the six Democratic candidates that defeated Republican incumbents in 2006 all ran as economic populists. Kuttner describes how he’s advised John Edwards that his use of poverty as a campaign issue should be broadened to include the concerns of the increasingly economically vulnerable bottom 75-80% of the population. Edwards has ignored this advice to his peril. Obama, on the other hand, seems to get it. Bill Clinton’s economic populism seemed to evaporate right around the time Maya Angelou finished reading her inaugural poem. Hopefully, things will be different this time.

Kuttner describes our current situation as a bit of a race. Conditions in the financial sector are very reminiscent of the twenties, when there was little accountability, transparency, or regulation, and the current subprime mortgage crisis has the potential to escalate into broader financial collapse. Kuttner’s analysis of the financial sector is what makes this book “a slog,” as one reviewer put it, but the writing is as lucid as it is detailed, and he succeeds brilliantly in conveying just how dangerously out of hand things have become

The difference between now and the 1929 crash is that the Federal Reserve now plays a bailout role that mitigates the potential damage. Kuttner and Reich both argue that this creates a situation of “moral hazard.” Financial speculators — driven to take big risks by an environment that demands unrealistic rates of appreciation as a matter of course — know that the Fed will keep the whole floating crap game going. Kuttner argues that this creates a downward spiral of greater risk, and that government must come to understand its obligation to regulate the financial sector, as opposed to just bailing it out when the whole economy threatens to tank.

His solution? Mass-based organizing, typified by the sort of work ACORN and the IAF have led in many regions of the country. Only a reinvigorated grass-roots politics that reclaims democracy and addresses the economic interests of the squeezed middle class, the working poor, and those left out of the economy altogether, is capable of holding government accountable to the people and overcoming the raw power of money. In his view, campaign finance reform is where we end up, not where we begin, because under the current conditions, getting big money out of politics just isn’t possible.

The bad news is that time is running out. The severe economic shock of a real economic crash could clear the way for the sort of demagoguery that might lead to harsh political repression of pro-democracy organizing. And there are multiple scenarios under which this sort of financial collapse might occur. This next election, it seems, is for most, if not all, of the marbles.