Why the Rich Aren’t Job Creators

This is a short talk by venture capitalist Nick Hanauer, who among other things, was the first non-family investor in Amazon. Hanauer in very simple and effective terms debunks the “rich are job creators” myth. Even though the video is going viral (now at over 1 million views on YouTube, it is important enough that I wanted to make sure NC readers saw it and circulated it.

Hanauer’s remarks illustrates the degree to which propaganda has overcome commercial common sense. Any real entrepreneur will tell you that the thing you most need to start a new business is customers. But you here almost nothing about that in the media these days. The “job creator” meme has sucked almost all the air out of conversations on how to establish new ventures (and remember, for well over a decade, small businesses have been the driver of employment growth).

Hanauer is also the author of an important piece at Politico: The Pitchforks Are Coming… For Us Plutocrats. The money section:

What sets me apart, I think, is a tolerance for risk and an intuition about what will happen in the future. Seeing where things are headed is the essence of entrepreneurship. And what do I see in our future now?

I see pitchforks.

At the same time that people like you and me are thriving beyond the dreams of any plutocrats in history, the rest of the country—the 99.99 percent—is lagging far behind. The divide between the haves and have-nots is getting worse really, really fast. In 1980, the top 1 percent controlled about 8 percent of U.S. national income. The bottom 50 percent shared about 18 percent. Today the top 1 percent share about 20 percent; the bottom 50 percent, just 12 percent.

But the problem isn’t that we have inequality. Some inequality is intrinsic to any high-functioning capitalist economy. The problem is that inequality is at historically high levels and getting worse every day. Our country is rapidly becoming less a capitalist society and more a feudal society. Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution.

And so I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds: Wake up, people. It won’t last.

If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.

Hanauer’s comparison to the period right before the French Revolution is instructive in another respect. Students of that period of history know that there was a period of intellectual ferment before the Revolution, as well as a good deal of interest among some aristocrats in more participative forms of government (remember, the Corsican constitution, which was the model for the US constitution, was signed in 1755) along with better treatment of the destitute. So the revolution didn’t spring out of a vacuum, but recognition of the need for changes fell well short of the will and ability to act.

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  1. John

    Something profound will happen, we just don’t know when. The big difference between the French Revolution and now is the Police State of the 21st century is very effective at clamping down dissent. They have a wide array of lethal hardware ready for immediate use backed by unconstitutional laws.

    The taxpayer bailouts of 2008-2009 provided the moral hazard for the elites with a sense of comfort knowing the government would be there to protect their interests if things go bad. You can see it in their swagger.

    1. MikeNY

      Sadly, I agree with you. And that’s a big reason why I think Snowden performed a noble act by focusing attention on the creeping excess of the NSA. If (when?) social instability erupts, the first impulse of the plutocrats will be to use the immense apparatus of the security state to suppress it.

      1. digi_owl

        Sadly it was learning that NSA was spying on the big wigs as well as the commoners that got him riled…

    2. MRW

      I listened to Cara Dansky of the ACLU DC on CBC As It Happens tonight. My local NPR gives me an hour of this every night. She was discussing a recent ACLU report about the militarization of local law enforcement across the US, and just how bad it’s become. Apparently, Clinton gave the Pentagon permission to give police paramilitary weapons for free; theirs for the asking. The spot is about 5 minutes.
      It starts at 19:30 minutes in the first part shown.

      This is the report. War Comes Home: The Excessive Militarization of American Policing

      1. Olivier

        It wasn’t Clinton. This policy of recycling military hardware into the police forces was devised by then AG Edwin Meese under Reagan and is a side-effect of the “war on drugs”.

        1. MRW

          Thanks for the headsup. ACLU’s Kara Dansky (the correct spelling) said that it was Clinton.

    3. Greg T

      I agree to an extent. Yes, the police state has a variety of tools available to it, but it hasn’t really been tested yet. The one thing a state can’t control with technology is legitimacy. Once the public loses confidence in the system and in the elites that run it, it’s only a matter of time before that system is overturned and those elites are replaced.

      1. YankeeFrank

        Agreed. The police state looks really scary but its all about the numbers, not the equipment.

      2. Kurt Sperry

        Yes, this. The modern American security state has never been tested under any real adversity. It hasn’t been particularly efficacious at doing anything concrete claimed as its purpose beyond anecdotal accounts. If one views as I do the likeliest primary motivator of any of the parts of the security state as simply spreading money around to cronies then there’s no real reason to expect it to be capable of doing much beyond that, its primary purpose. The obvious uses I see of the surveillance arm of the security state are its potential for diplomacy, blackmail, insider trading and industrial espionage. All this low hanging fruit looks to be gotten surveilling powerful and wealthy people and acting directly on whatever is learned, I’m not sure it can easily exert much direct influence on broader events except through acting upon or through powerful individuals.

        I also doubt that even militarized law enforcement can be brought to bear at the level needed if a broad consensus were to exist that the government’s legitimacy was tenuous or worse. Chris Hedges is good on describing how legitimacy can dissolve overnight under such conditions. Calling out the law enforcement bulls against a movement with broad public sympathy is extremely high risk brinksmanship. It might work at OWS level–and we really don’t know how close that it really got to a tipping point or how stressed law enforcement were even dealing with a relatively small and peaceful situation, but surely things get very quickly more dangerous scaled up. And if that tactic ever fails or backfires (likely) those in charge are exposed to outright regime change, probably not something they would relish the prospect of, Gulfstreams, mansions and yachts in NZ notwithstanding.

        I think we fear all this stuff to our own disservice. I think all this control stuff very quickly falls into pieces if the average guy/gal doesn’t buy into it. In spite of it being obviously designed to operate without our consent, I don’t think it actually would under pressure. A little love and courage combined could change everything very swiftly.

        1. nuar hegrat

          “A little love and courage combined could change everything very swiftly.”
          I like the cut of your jib. :)

    4. Lord Koos

      It’s not just the hardware. it’s the software. All the spying makes it possible for them to nip things in the bud, as any online movement is instantly monitored. Even though the Occupy movement was just getting started, it had already been infiltrated by “law enforcement” AKA security forces.

      1. Nathanael

        It really doesn’t. They think it does. They’re wrong. And I’ll explain why. It’s the signal to noise ratio.

        Once the *vast majority* of people are bitching about how the government should be overthrown, it becomes completely impossible to (a) respond to everything, (b) figure out who’s serious and who’s just talking, (b) figure out whose plans are going to be executed and whose will be cancelled.

        They’re monitoring every online movement! Oh noes! But there are so many of them that they aren’t really paying attention to most of them.

        They can’t even censor successfully, because business depends on the same communications channels as dissent does. (China is trying… with really so-so effectiveness.) It was much easier to censor back when most people were illiterate and communications were very slow.

        The Stasi eventually just ignored most reports of conspiracies against the government; there were too many, and none of them were serious. The ones they did crack down on were a random subset, and they weren’t even the most effective ones (which were being operated *inside the Stasi* by Stasi members). In the end, East Germany was kept down by the threat of Russian tanks (outsiders), and the moment it was clear that threat was gone, the police state fell apart overnight.

        On top of that, the elites have shown a massive tendency to fail to understand what they’re dealing with. In the Middle East the military nuts keep following “behead the leader” policies, which have backfired continuously because they’re fighting against actual popular movements. They don’t understand what they’re trying to counteract. The banksters have the same out-of-touch character, and so do the Koch Brothers and the other oilmen. Murdoch is perhaps the most in-touch of the lot.

        Occupy. They wasted their time and energy on that, and what did they get? A bad reputation, and Occupy changed the dialogue.

        Security forces and paramilitaries can suppress small groups. It is quite impossible for them to suppress mass movements (except using region-vs-region divide-and-conquer tactics).

        This is the problem, for a would-be dictator or oligarchy, with being unpopular. Being popular is a far better tactic.

        So the first question is how long until we have a mass movement; it is, of course, inevitable as long as the current insane neofeudal policies continue. The second is whether the divide-and-conquer tactics will work, and at this point I’m guessing not; the current elites are too arrogant and are playing their hand too obviously, so that people who *should* disagree on most things *agree* that the banks are cheating them.

        The most important question, of course, is what happens *after* the movement becomes really powerful. Does it get diverted into a hopeless direction, hijacked, or does it accomplish something?

    5. Nathanael

      Effective at clamping down dissent? Pffft. The police state of the 21st century is totally incompetent at clamping down on dissent. Very good at generating *more* dissent.

      Much less competent at clamping down on dissent than, say, Henry VII of England. These clowns don’t even know how to *identify* dissent. Look at their reaction to Snowden — complete surprise.

      Anyway, revolutions never succeed until a fairly large portion of the military forces supports them. The US has made this quite likely by abusing and mistreating the military rank-and-file to a ridiculous degree.

  2. MRW

    remember, the Corsican constitution, which was the model for the US constitution, was signed in 1755

    [I did research on this about 6 years ago.] And here’s another, with an interesting fact alleged in Genius of the People: The Making of the Constitution by Charles L. Mee Jr.

    The Committee of Detail met daily – at the State House and probably in James Wilson’s study, too, and over at the Indian Queen. [John] Rutledge was the chairman, and he took advantage of his position by opening the proceedings with readings from portions of some of his favorite documents. Rutledge had always admired the Iroquois Indians, particularly their legal system, which gave autonomy to each of the six Iroquois nations for their internal affairs but united them for purposes of war. The first text Rutledge read was taken from a piece of parchment that was a replica of the Iroquois Treaty of 1520, which began: “We, the people, to form a union, to establish peace, equity and order . . .” He commended the phrasings to his colleagues – and so, in some part, the preamble to the new constitution was based on the law of the land as it had been on the east coast before the first white settlers arrived.

    The Tyendanaga Mohawk (Iroquois), to this day, maintain that the Executive, Legislative and Judiciary branches of the US government were taken from the Constitution of the Five Nations, of which the Mohawk and Iroquois were two, and who later became Six Nations. They have some of the original docs on their res. Their Constitution (1390? 1500?), in turn, was based on Tekanawita’s Great Law of Peace 1200 AD. They honored women as leaders and officials. Arthur C. Parker, Archeologist of the State Museum in New York, published The Constitution of the Five Nations – or – The Iroquois Book of the Great Law. in 1916, University of the State of New York, Bulletin 184.

    1. Andrew Watts

      Timid intellectuals haven’t been able to adequately explain the framing of the US Constitution since the advent of McCarthyism and the political suppression of the American left wing. Instead of considering self-interested motives such as money or class they attributed other factors despite the lack of concrete historical evidence. In Federalist Paper No. 10 Madison makes it clear that class interests played a pivotal role in shaping the Constitution.

      “Extend the sphere, and you take in a greater variety of parties and interests; you make it less probable that a majority of the whole will have a common motive to invade the rights of other citizens; or if such a common motive exists, it will be more difficult for all who feel it to discover their own strength, and to act in unison with each other.”

      What could possibly provide political unity to the many against the few? The massive disparity in the distribution of wealth or other related issues.

      “A rage for paper money, for an abolition of debts, for an equal division of property, or for any other improper or wicked project, will be less apt to pervade the whole body of the Union than a particular member of it; in the same proportion as such a malady is more likely to taint a particular county or district, than an entire State.”

      I must admit that I prefer progressive era historians like Charles A. Beard and contemporary intellectuals like Ferdinand Lundberg over the revisionism of post-McCarthy historians.

    2. Susan the other

      MRW, thanks for this info about the Iriquois Treaty and law. Which Thomas Jefferson so willingly plagiarized!

      1. Andrew Watts

        Umm Susan, Jefferson wasn’t even in the country when the US Constitution was written. Neither was John Adams who was another expert on constitutional matters.

  3. Carolinian

    His article makes an appeal to reason but that seems to be in short supply these days. Will the mega-rich even listen?

    And I’m dubious whether a “new new deal” can succeed when we liberals didn’t do a very good job defending the old New Deal. Complacency is a problem. We are, as Gore Vidal said, the United States of Amnesia. After awhile people forgot the struggles that went into creating the reforms of the 1930s and decided that was all ancient history.

    Change, when it comes, is probably going to have to come from the bottom up rather than the top down–hopefully not with pitchforks. But drum circles aren’t going to work either. The left needs to reconstitute itself into a viable movement.

    1. Andrew Watts

      Middle class liberals didn’t do a very good job of advocating for the New Deal in the first place. That was the work of the farmer populists and socialists who were drawn primarily from the working class.

      1. Carolinian

        Not sure if that’s entirely true. The creative class were substantially left leaning during that period and boosters of FDR (or, alternately, the Communist party). I guess it depends on what you mean by middle class. Certainly the rich, for the most part, considered Roosevelt a “class traitor.”

        1. Andrew Watts

          Yeah, I was probably being too harsh. I’m just not on board the FDR cult of personality. When Social Security was passed it initially didn’t cover some of the poorest workers like household maids and such, It took the post-war expansion under the Truman/Eisenhower Administration to correct this and other deficiencies in the original legislation.

      2. MRW

        @Andrew Watts,

        And Marriner Eccles, the Mormon Republican banker who helped FDR craft The New Deal after we went off the gold standard, putting millions back to work. FDR made him the first Chairman of the Federal Reserve.

    2. Nathanael

      “His article makes an appeal to reason but that seems to be in short supply these days. Will the mega-rich even listen?”

      Remember the appeals made by Lord Grey during his attempts to pass the Great Reform Bill in England in 1832. No, most of the Lords did NOT listen.

      There was mass unrest, including a lot of political organizations far to the left of Lord Grey; the most successful ones claimed (quite correctly) that they were preventing even more radical people from acting. (Sort of like MLK and Malcolm X.) There were aggressive “break the government” tactics including a deliberate run on the banks (wouldn’t work as well with fiat currency, but still).

  4. craazyman

    What Sets Me Apart?

    What sets him apart? How about the one thing they never say? The one thing some of them, them most dark minded and spiritually sterile, the ones flexing their glistening money-muscles in a mirror, perfectly possessed . . . the one thing those might not even know how to know. The one thing the others, the ones still sentient, the thing they might hear their mind whisper quietly to themselves, almost in guilt or embarrassment, that some, who fear this whisper, hide from, run from, evade, distance, decry, deny. The one thing, in addition to the magnificent capacity for insight and prediction and organization and “risk taking”.. Here is the most important thing that sets him apart. that sets all of them apart. Every one of them. The one thing ubiquitious, omnipotent, hovering like a God above all things. Here it is . . . . “I got lucky” . ]

    Doesn’t mean there wasn’t hard work and intelligence and insight and skill and good directed effort. It doesn’t mean there’s a lack of worthiness or merit. It doesn’t mean the success is not “deserved”. It doesn’t denigrate or delegitimize. It’s just a form of analytical completion. Lots of people, poor people, even many people who walk down the street. They also do all of these things. But it’s not enough. Why? Because it doesn’t get measured by money, unless they get lucky. But if they can do all of those things, in a way they’re already lucky. So it’s a double lucky. Lucky two times. That’s a lot of luck! haha . . . That is the money section, no doubt about it,

      1. ambrit

        “Doing God’s Work” is the Calvinist formulation of “I Got Lucky.” In other words, substitute ‘Providence’ for ‘Randomness.’ (The concept of Predestination is sooo useful.)

          1. ambrit

            Too true Beard. I’m sure none of the commenters here would have liked living in Calvin’s Geneva one bit. Nor, for that matter, very many of today’s evangelicals.

  5. EoinW

    The opposition against violent uprising has been based on the French Revolution turning into the Reign of Terror. I’ve the greatest respect for people like Chris Hedges, however I do not see peaceful protest as ever succeeding. It would never have worked against the Nazis. Do you think our plutocrats give human life – outside their Country Clubs – any more value? You’d be hard pressed to find anyone in Iraq who thinks so. Time will tell as to how we get treated. Personally I’m not comfortable leaving my fate in the hands of those who are obviously so much better than I.

    Perhaps peaceful submission is best to give people time to adapt and make the best of a neo-feudal world. The thing is that the majority are clueless as to what’s going on, plus they don’t want to know. They’re not going to prepare at all then one day they’re going to get a terrible shock. Then what? Pitchforks?

    It could be the aversion to violent protest is simply because things are not bad enough yet. The masses are still able to function thus the intellectuals – who certainly are not starving – can formulate their high minded, non violent revolution. I doubt the Chris Hedges of the world will be leading the revolution when it comes. Who knows what we’ll get.

    Still I can’t help but feel a French style revolution is inevitable. Does one really think the 1% can change in any way to get society back on track? It seems we’re(they’re) already too far gone for that. Their Operation Barbarossa was launched in late 2008. There’s no Plan B, just follow the road to Stalingrad. On the other hand, does one think the masses are going to suddenly become enlightened and demand change within the system? Maybe we could focus on targeting sporting events, television, internet and cell phones. Shut those distractions down and see what happens.

    I’m an optimist at heart. If the 1% succeed in maintaining control that likely suits me personally very well. But for the sake of society and future generations we are going to need to clean house and it won’t be done non-violently. We are a more advanced, more sophisticated and better educated society than 19th century France. There doesn’t have to be a Reign of Terror this time. Anyway, eliminating 1% of the population is a good first step to combating over population.

    1. Generalfeldmarschall von Hindenburg

      Not to be too pedantic, but there were some instances of mass public protest against the Nazis proving successful.

    2. jrs

      “On the other hand, does one think the masses are going to suddenly become enlightened and demand change within the system? Maybe we could focus on targeting sporting events, television, internet and cell phones. Shut those distractions down and see what happens.”

      Those distractions are overrated in their ability to distract. Sure they spew propaganda (even sporting events sometimes with jingoistic stuff), sure people play with their gadgets, maybe even enjoy them. But is that what people really REALLY want from life? A bunch of gadgetry? Or do they want a world in which their economic options improve? THAT is what the leftists sold America on in the early 20th century.

      They didn’t sell anyone anything as upper middle class elitist liberals looking down on the masses being not too bright and liking gadgets too much (and what else is left in this garbage society for people?). They sold them the promise of better working conditions, better pay etc. – regardless of their slant whether it was focusing on trade unionization, socialism etc.. Sure IF people were better educated they’d know more about this already. They’d have some intellectual foundation. But that’s just lack of knowledge.

      Now whether the reaction of the economic elites will be non-violent is pretty doubtful. But it’s not because too many ipads.

      1. jrs

        FWIW no economic options improving is not solely what people want from life though it’s pretty important for those at the bottom. But the leftists sold much more – bread and ROSES. They sold more leisure, more control over work, worker management of companies under worker control etc.. And these become very much part and parcel of a meaningful life. Work and love, or even just work and time and meaningful social connection not destroyed by the pressures of a ruthless society, a compassionate world to bring children up in, etc.

    3. Nathanael

      Gandhi’s “nonviolence” scheme is often misunderstood. His method was essentially to engage in noncompliance: various forms of strike, boycott, obstruction, tax avoidance, etc. These can be remarkably effective; but most thuggish governments respond with violence. At which point, pretty soon, you’re likely to be in a violent revolution. (Luckily for Gandhi, the British just didn’t care enough about trying to control India, and gave up.)

      The survival of the British upper classes is mostly down to them giving up when push came to shove. Other upper classes refused to compromise and ended up dead.

  6. Dino Reno

    Oh yeah, there will be change alright in the form of the Big Crackdown. Anyone brandishing a pitchfork, even for agricultural purposes, will be slain by a lethal drone. The feudal state is now a big, high-tech security state that will crush dissent before it poses a threat to the Exceptional Ones. Done right, this phase may last 50-100 years before climate change kicks in and destroys the security state infrastructure. The rest of the world will look on in horror as we destroy ourselves and everything around us in our final paroxysm of death and destruction. Did I mention, this will not end well?

    1. jrs

      What about brandish a pitchfork to pose in American gothic variations?

      But seriously noone knows any of this stuff. Ok climate change is a real threat that might yet wipe out the human race. Fair enough. Climate change IS THE BIG ONE. And I don’t think the elite will go quietly. But asymmetrical warfare can secure gains even if not securing full scale revolution and total social transformation. The workers movement was such a force. Violence might be part of it, but I’m not talking strictly violence, there are other ways to subvert the social order, the workers movement practiced plenty.

  7. Carolinian

    FDL had a post on this subject yesterday and this comment seems interesting


    Here it is in full:

    Nick Hanauer has an estimated net worth of $1 billion.
    http://www.celebritynetworth.com/richest-businessmen/ceos/nick-hanauer-net-worth/ This is actually second tier wealth these days: Bill Gates’ net worth is $76 billion (http://time.com/11389/bill-gates-worlds-richest-man/) and the Koch brothers’ net worth exceeds $100 billion), while Warren Buffet’s net worth is a mere $58 billion. http://www.celebritynetworth.com/richest-businessmen/richest-billionaires/warren-buffett-net-worth/ On Forbes’ list of the 20 most wealthy individual’s, the least wealthy (Jim Walton) has a net worth of $21.3 billion (http://www.forbes.com/2011/03/09/billionaires-20-richest_slide_20.html).

    While the differences in wealth between the super-super rich and merely super rich may appear meaningless to us commoners, there is in fact a tremendous difference in the clout that can be exercised by the two groups. The super-super rich are in charge and the super rich must dance to their tune.

    The sharpest political fights today (usually in the shadows but occasionally coming into the open as with Nick Hanauer’s missive) may be between these two groups. Perhaps when Hanauer speaks of revolution, he is really thinking of a revolution BY the mere super rich.

    The crack between super-super and mere super wealth is the weak point in the plutocracy. (It should not be assumed without more evidence, by the way, that the Republicans represent the super-super rich and the Democrats the super rich. Gates and Buffet, for example, stride the two parties, and even the supposedly arch-Republican Koch brothers contribute to the DLC.) http://www.democrats.com/node/7789.

    1. Nathanael

      At those levels, the cracks are not about money, they’re about power. We’re witnessing a bizarre replay of the core fight between Whigs and Tories in the British Parliament in the 1820s & 1830s. The Whigs believed that they needed more people to feel *invested* in the system, *responsible*, and that expanding the vote and democratizing the system would secure their future. (They were correct.) The Tories were just “If the lower classes complain, shoot them!”

      Thankfully, the Whigs had the French Revolution to point to *within living memory* as an example of why the Tory policy was doomed.

  8. madopal

    The idea of our police state being different is nice, but it’s not like there’s not history with the powers that be trying to use the military to keep their populace in line. What will happen is what always happens: the lie about law eventually is shown as so hollow through corruption. The military the winds up falling squarely in line with the populace. They have families and debt as well. The rich eventually don’t pay well enough for the military to swallow their BS.

    We just haven’t gotten there yet.

    1. jrs

      The idea that it’s so different because of a police state is also interesting. The U.S. has a pretty violent history of crackdown on the left etc.. And it kind of worked? Well the world around is evidence of that yes. But it didn’t work entirely as workers had some gains for awhile despite all the violence. Violence is nothing new. Yes the police state is a plenty bad development but it might be better to see it on a continuum rather than being something that was entirely untrue before and is entirely true now. And if a continuum, it doesn’t quite allow “everything is different now” thinking.

  9. lakewoebegoner

    “Hanauer’s comparison to the period right before the French Revolution is instructive in another respect. Students of that period of history know that there was a period of intellectual ferment before the Revolution, ”

    The “American Left,” how ever you may describe it, is confused, doesn’t know what it wants (e.g. you can’t have a $15 minimum wage and open immigration), and is willing to tolerate awful policy choices as long as a candidate passes a cultural litmus test (see Feinstein or Obama or both Clintons).

    the only solution is if the Democrats morph into the main conservative party and a national new left-of-center party takes hold, though with the importance of campaign money that’s incredibly unlikely.

    The straw that broke the camel’s bank in France was widespread famine and food inflation. And it looks like it’ll take the same here to awaken the consciousness of the rank-and-file American.

    1. Jsn

      QE, while having the visible effect of goosing asset prices, has the real effect of reducing the import purchasing power of the dollar. Because the of the value of oil, mostly imported, embedded in the cost of our food, we are beginning to see a real run up in food costs the Fed is struggling to ignore: if they admit inflation, now undeniable in fuel, they feel obligated to raise rates but know that could risk puncturing the asset bubble their policies require. Incoherencies like this are cropping up all over the place, a number of which, when the elites reflexively circle the wagons, in a crisis could reintroduce famine and epidemic to what is quickly becoming a techno-feudalist civilization. To the extent some fraction of the elite recognizes the dependence of technical complexity on social complexity, there remains some possibility of a positive “conservativism” arising from the ashes of Western Liberalism.

    2. Jackrabbit

      The “American Left” is not monolithic. This point has been made many times at NC.

      The institutional left sucks on the Democratic Party teat. They are thoroughly compromised and confused. But progressives are more independent and much less taken with identity politics.

      When the music stops, and people see that the neolibcon promise was a mirage, the progressive left will strengthen.

      H O P

      1. hunkerdown

        The institutional left endeavors continuously to co-opt the term “progressive”, and has been succeeding to my eyes.

        1. Kurt Sperry

          I don’t think that game can be played forever though, and in fact it may be reaching its “sell by” date.

        2. jrs

          What co-ops “progressive”, while not necessarily in the Dem party camp, isn’t actually fully left in many cases either. Leftists has not been co-opted.

        1. Jackrabbit

          This is true to the extent that, at this point in time, ‘the left’ can not seem to mount a political movement that can contest elections. In large part this is due to the Democratic Party co-opting much of the left (as I described above).

          The power of ‘the left’ is best seen by the need of Democratic and Republican Party operatives and partisans to attack the “the left” (which they do frequently). Even Obama jumps through hoops to sideline or sidestep “the left” (11-dimensional chess, “hippy punching”, “don’t let the perfect be the enemy of the good”, etc.).

          But since the institutional left is widely seen as compromised, whom is it on the left that they really fear? It can only be the progressives, who are principled, independent, smart, and vocal.

          1. seabos84

            “progressives” are principled? – as a high school math teacher, I can teach you how to figure out if a relationship is linear or quadratic, and how to make an accurate model.

            unfortunately there isn’t a Big Database of every piece of crap legislation & rule & clause approved by legislators calling themselves “progressive” – in MY selective memory, “progressives” are just a new branch of diaper pissing compromising cowards, incessantly sniveling and whining how Joe Lieberman / Gingrich / McConnell / ________ is mean and isn’t nice, and, how it isn’t nice to be a mean meanie.

            ‘the left’ ?? in Seattle and in Boston – there are 20 or 200 lefties whose solution to everything is the organic tofu shoe, roof shingle, hat, … barter system. 1/2 of them are anti m.o.n.e.y. cuz they’re trustafarians. Then there are all those professional / managerial class lefties who need incessant pats on the head cuz they aren’t drooling, homophobic racists … and cheer the Kerry – Clinton – Obama sell out cla$$. I’ll admit my view of “progressive” is limited – I don’t know who you’re talking about.


            1. Jackrabbit

              As I wrote above: “the ‘American Left’ is not monolithic”.

              Driving a car while arguing against climate change doesn’t make you unprincipled.

    3. jrs

      Yes well no water in Detroit and lack of water is much like the lack of food (even if there’s enough to drink to sustain life and I figure it’s likely there will be – bottled water if nothing else – there’s sanitation problems and so on). So maybe IT REALLY IS that bad HERE.

  10. as promised

    It all makes absolute perfect sense and hopefully we won’t need pitchforks to correct the situation. Just as megacorps have colluded for years to depress wages they must now collude to increase them, simply to “save themselves”. The trickle-down theory has come full circle and proved itself to be a failed theory. There is no point to supply-side economics when there is only ONE SIDE.
    Additionally, America’s No. 1 employer is the service industry. We all need to figure out a new wage model for these workers and adjust accordingly or face an ever-shrinking consumer base. The US Military is done nation-building. It will not be opening new horizons for megacorps to do business in. For once, these companies will have to adjust their operations to fit the consumers they have now.

    1. ambrit

      The problem with your solution is that the elites have transitioned from a truly productive economy to a big “Financial Circle Jerk.” Their main counterparties are all members of the same ‘exclusive club.’ For now, their best idea for adjusting operations is how to determine who the new Pivot Man will be.
      Yes, the Trickle Down Theory has proven itself to be bogus, but no one in power will admit it. Their own power and prestige are inextricably tied up in Trickle Downs perpetuation.

      1. Nathanael

        Well, they actually haven’t all. One of the cracks in the elite between the New Economy Rich (Google/Amazon/etc) and the Old Economy Rich (oil/gas, mostly).

        The New Economy Rich are very aware of how they got their money, and the current governmental elites are *damaging their income stream* with bullshit like the NSA spying. They’re willing to support Whig ideas of “making more people care about maintaining the system”, Fordism, etc, and they don’t assume that trickle-down works.

        The Old Economy Rich are pure reactionary Tory Ultras, with the added attitude of hatred for science and desire to make money by pumping sludge out of the ground.

  11. Crazy Horse

    50-100 years before climate change kicks in? Ha Ha.

    There are 318 million of us and only a few thousand of them.
    Sniper rifles with a range of over a mile are available at any gun show all over the country.
    There are probably 318 million guns already in the hands of the populace.
    Internal police force repression is only as effective as the mental state of the Enforcers.
    Control depends upon perpetuating delusion, not upon Homeland Security weapons technology.

    Can’t afford steak? Eat the Rich!

    You are right, this will not end well.

  12. Vatch

    Yves, thank you very much for posting Nick Hanauer’s insightful talk! In February, I submitted a comment to Naked Capitalism with a portion of what Mr. Hanauer is saying:


    Tom Perkins, and his fellow plutocratic commissars, such as John Mack, Steve Schwarzman, Lloyd Blankfein, and the Koch brothers, like to claim that they and their corporations are “job creators”. Lickspittles such as the talking heads at Fox News propagate this myth. In reality:


    Without customers, plutocrats like Perkins would eventually run out of money. Of course, Perkins is a very old billionaire, so he won’t run out of money before he dies. A pity.

  13. TedWa

    The great recession of 1920 led to the Roaring 20′s and the great depression where everyone demanded the banksters heads. The New Deal included throwing many CEO banksters in jail. Would the revolution some are contemplating now have occurred if the New Deal hadn’t been a long needed great equalizer? Can we expect history to repeat itself?

    “Few today remember that a half-century ago a number of New York and Chicago’s top bankers were sentenced into penitentiaries-the New Yorkers into Sing Sing-the senior partner of J.P. Morgan and Company, the president of the National City Bank, the president of Chase Bank. Every one of them had been found to be doing reprehensible financial tricks. They were selling their own friends short. They were opening their friend’s mail and manipulating the stock market. They were manipulating everybody. They were way overstepping the moral limits of the privileges ethically existent for officers in the banking game, so a great housecleaning was done by the New Deal.”

    Buckminster Fuller “Critical Path”

  14. Jackrabbit

    I can’t help but comment on the contrast between this sensible “lefty” talk and Banger’s ‘realism’.

    Banger urging us to recognize that “the left has failed” and that to effect change we must attempt to influence oligarchs, showing “love” to those that appear to do the right thing. There are people in the elite, he insists, that are compassionate and caring. We need to understand the elite, and those that support them, and adjust our actions and expectations accordingly.

    I am not picking on Banger. There are many, I’m sure, that hold such a benign view of TPTB. But what I think this point of view misses is that:

    – being ‘realistic’ has resulted in being disenfranchised by big money and impoverished by bullsh!t like ‘shared sacrifice’ and ‘trickle-down’;

    – “the left has failed” fails to recognize that people suffer from misinformation and misdirection;

    – the vast majority of elite/oligarchs, and almost all with any real power, are neolibcons.

    It seems virtually inevitable that has people “wake up” they will support progressive change. Unless people like Banger can convince us to meekly accept the status quo.

    H O P

    1. Nathanael

      In order for the moderate reforms of Lord Grey to pass, the Political Unions needed to be out there threatening revolution. In order for the Political Unions to avoid crackdowns, there needed to be even more extreme people out there being even more threatening. What can I say.

      The dynamic Hanauer needs is for the public to really start organizing for the revolution; only then can he convince the other 0.1%ers to see sense. They’re too dumb to see anything which isn’t in the headlines!

  15. Carolinian

    On Firedoglake they say Hanauer’s Ted talk was done some time ago but Ted wouldn’t post because allegedly “political”….he had to protest to get it liberated.

    Also, while Hanauer tells the familiar story of Ford paying his workers enough to buy a car he doesn’t talk about later when Ford hired thugs to bust heads and oppose a union at his factory.

    Which is to say for the ultra wealthy money is about power–about who is in charge–as much as about accumulation. So much of what goes on in life boils down to “you’re not the boss of me.”

    So maybe pitchforks will be needed.

    1. jrs

      Another thing the nice little Henry Ford story that the nice little liberals (as in “love me I’m a liberal”) like to trot out leaves out is Henry Ford GOT SUED BY HIS SHAREHOLDERS for being too good to the workers for sharing some of the profits with them and not giving it all to the shareholders. And the shareholders WON the suit. So yea Henry Ford yes not necessarily a nice guy, but also the problem might be systematic. And yes it’s always liberals who trot out the Henry Ford story, conservatives don’t care, but liberals like to get nostalgic about the “good old days” when big business owners “cared about their workers”, if only we could go back, blah blah.

      And yes I agree entirely it’s about POWER, pretty deep insight there.

  16. impermanence

    The rich are simply the most skilled at stealing from other people [most of being perfectly legal].

  17. John Merryman

    We think linear, but the larger reality is scalar. Mass/structure contracts, energy expands. So the order of society will always be trying to fix the disorder, but the expanding energy can only escape through those pressure valves, be they sports, sex, wars, crime, riots, etc. The more control, the bigger the bubble gets, until it can’t be patched. Then the big reset. “The King Must Die.”

  18. Jim Davey

    Ms Yves Smith, NakedCapitalism comes from the other side of the Earth daily about 6:00 p.m. ICT (IndoChinese Time) here. It is THE one email every day I am most eager to read from the country I left behind.

    Unlike Nick Hanauer, I nor my disabled wife, had developed the taste for risk, and definitely did NOT have his intuition about the future.

    My wife and I had been in the middle class back there, but made a terribly bad decision to build the dream home of our lifetimes; it was what we had been taught, and believed in … please pardon the parochial term, we wanted to achieve “the American Dream”. We went “all in” with a 25% down payment (not knowing we were gamblers … we didn’t even smoke). We moved to the little city and watched it be constructed daily, and I got a great job. We occupied it July, 2007 and by September, 2008 it had gone up in value, and was valued at more than a million dollars in theory.

    Location, location, location, and timing. July, 2007 was the peak month of property values in America’s bubble; September 2008 things changed financially far away on Wall Street; my (post government retirement) really good job went away; and by 2011 property values had gone down 62% in Clark County, NV, worst county in America; our dream in Mesquite was worth about $410,000.00. Jobs disappeared, businesses closed; the population shrank about 33%; the “Great Recession” was at hand; we tried to sell for over well four years; we gradually used up what we had; we even got two BofA first mortgage modifications thanks to the good intentioned non-profit N.A.C.A. but BofA would not reduce the principal (they second modification reduced the rate to the unheard of 2.00% fixed, but increased the payments! We were paying down the principal, but we stayed underwater, and it was harder! I like many could not leave the state to get a job as if any existed, without losing the house, and maybe getting sued for the second mortgage until we die.

    The middle class was literally melting away around us, except for some neighbors that were not middle class; not 1% either, but as lower-upper class, that wore their arrogant superiority of the cult on their foreheads, tongues, and sleeves. The divide between the haves and the have-nots was real in Sharron Angle country. Pitchforks? … no we had no pitchforks … YET. But we did have Cliven Bundy, a typical local conservative we knew just slightly, that liked to play cop with a gun, stopping people on unpaved rural roads outside of town. He was easy to ignore, all you had to do is ask him if he had a badge. He was nothing without an unregulated militia, and Fox “news” behind him.

    Over the years I had read everything I could to understand what was happening, and came to know NakedCapitalism as a shinning light of reason and balance some of which I could comprehend. I had seen a president get elected selling hopes and dreams; TARP had been applied to the casinos disguised as banks, NOT Main Street. I read how a hedgefunder candidate believid to his core as a part of the 47% that had served my country (including five tours of duty in war for 36 consecutive months in far off SouthEast Asia), and a served the American people as John Kennedy had chalenged me a total of 32 years government service; that my disabled wife and I were not contributing members of society, but were useless “takers”.

    We had failed to do what we were advised to file bankruptcy or walk away (more bad decisions … I agree). But we did get lucky. We found a greater fool. A buyer came finally and … made the mistake of applying for a loan with BofA … the same bank that held our first mortgage. The naive first time home buyer did not know what he was doing … He qualified for an 80% LTV 3.40% or 3.50% 30 year fuxed loan for the agreed price of $525,000.00 (records showed we owed on the 1st & HELOC 2nd), but the value was not there. BofA saw a chance to swap a 23 year fixed 2.00% loan, and convinced the buyer to take a 90% LTV 4.50% 30 year mortgage (not an 80%/10% … very naive buyer). I will go to my grave thanking the predatory instincts of BofA, and I will never understand how they either falsified the appraisal, or kept it from him. … Thank you greed.

    “Job Creators”, those benevolent givers of financial life, have not only passed me up as an old man, but they have become a recognized joke, like “Trickle Down” … only the ditto-head lemmings hold on to with their guns and false Christianity. At 65 it was too late for me to start over. I had come to no longer believe in capitalism as it was being practiced. I had come to no longer believe in democracy as it was dysfunctioning with its highest conservative leaders saying they would rather see the nation fail, than allow a twice elected by a plurality president succeed. I no longer believe in war as I had once, especially endless unfunded NeoCon wars for oil! I am convinced I know why wars have not been declared since WWII; the old existing federal laws against unreasonable profits in a time of war do not take effect without a declaration. Implement them, and Goldman Sachs would have us out of the ALL the endless wars in 90 days without pitchforks.

    To the 1% I am NOT a contributing member of society (thank you Mitt and Rush, I needed the reality check), I have nothing to invest in Wall Street, no dog in the race, nothing to skim in a nanosecond of HFT; no fodder for a dark pool; so I am a leach and a liability. My value in a consumer society is less than marginal. I will never borrow money again; I pay my credit card bills before they come due to avoid interest, not to increase my FICO. I am almost out of American debt and have money saved again in an Asian bank. I am done with the American system as best I can be in the post 9/11/; post Patriot Act; post Snowden revealed world. I can still vote in Mesquite, by internet. (No voter suppression in NV yet.)

    America is an oligarchy run by the 1% for the 1%; Profit IS God; and until the derivatives house of cards collapses (correct me if I have miscalculated but the notional value is somewhere between $170,000.00 and $300,000.00 per human on the face of the Earth … what could go wrong?); OR the Chinese finish what I believe they told Bush in 2008 that if America did not guarantee them preferential payments on US Treasuries, they would slowly replace Wall Street; slowly replace the World Bank; and with the help of the IMF, replace the dollar as the world’s reserve currency; and worst of all, slowly stop buying Treasuries; and let America figure out what to do with its national debt after that. The Federal reserve will print money, my purchasing power will go down here in Asia, but I will be safer here than 99% of Americans back there when the violence in America begins in a collapsing economy, THE PITCHFORKS WILL COME for the 1%. When they come, I will read about it at NakedCapitalism.

    Thank you for existing Ms Smith. I promise to contribute to NakedCapitalism, when I am debt free.

    P.S. Please ask Nick Hanauer to twist that pitchfork a little for me once he gets it deeply inside a 1%er.

    1. Charles Duran

      I thought I was the only real revolutionary, I guess I will have to stand in line now. In all seriousness, I am pleased to learn there are many truly angry people out there. Thank you NC.

    2. PrairieRose

      Mr. Davey, this was one of the most beautifully written, honest posts I have ever seen. Thank you for sharing part of your story. Your words ring so true for me. I am glad to have found another kindred spirit, and there are many here at NC, but your story touched me in a deeper way. Thank you.

  19. Charles Duran

    I thought I was the only real revolutionary, I guess I will have to stand in line now. In all seriousness, I am pleased to learn there are many truly angry people out there. Thank you NC.

  20. Rosario

    No need to despair all, entropy is a confirmed instrument of the natural world, and last I checked we are part of that system. The more complex the system, the more energy needed to maintain it. The more energy consumed the faster the depletion of resources. Once the system can no longer be maintained it breaks down. This is the great equalizer. We need to teach resourcefulness, adaptability, sociability and empathy (particularly to our children). I’m hopeful we will make it through.

  21. Tehanu

    The major problem with this line of reasoning is that it requires increasing consumption by the middle class and would hasten global warming… Is there no meaningful way to advocate for the 99% while also turning away from an economic system that requires endless growth?

    1. Lord Koos

      The only real way is to localize the economy as much as possible. Credit Unions, barter, buy and sell from individuals rather than large companies whenever possible. And stop buying brand new stuff. Some of this I see happening already out of necessity but there should be a lot more of it. I’m always amazing at how many otherwise progressive people I know still bank with the Wall St. biggies — JP Morgan-Chase, Citi, Wells Fargo, BoA, etc. It’s apparently too much hassle to move your accounts and credit cards to a Credit Union… and so it continues.

      1. Nathanael

        Yeah, that’ll be one of the signs that people are starting to make a serious move: the resurgence of “move your money”.

    1. Yves Smith Post author

      He is clearly saying the tax preference on carried interest is ridiculous. By implication, he also supports progressive taxes. But yes, would be nice to hear him say more.

  22. Linrom

    I wouldn’t worry about any Police State. One only has to look to New Orleans post-Katrina to get a glimpse of the future Police state? Police state can only work in a well functioning, middle class tax supported economy, otherwise Police will become criminal free-agents.

    Who is going to pay police pensions and Homeland Security salaries? The rich? US won’t become East Germany, the rich won’t spent a nickel of their own money to support and feed the masses.

    What Hanauer says is what Prof Steve Keen Minsky Models are all about. Keen has shown that it is possible for capitalists, bankers and workers all to make money. But this is not REAL WORLD economics.

    Modern capitalists hoover up all the money in the world and LOCK IT UP in investments producing huge paper returns which are function of money-printing. There is no money velocity and thus the economy is doomed–it’s in the process of atrophying.

    The rich are creating exponential crack-up boom in all assert classes, but this going to be followed by the biggest bust in at least 300-years.

  23. liberal

    Why make it so complicated? They’re not job creators because they’re rent collectors.

    ‘Nuff said.

  24. Virmont

    “In May 2012, several online news outlets reported the TEDtalk[11] from Hanauer presented on March 1, was not chosen to be posted by TED. In the short presentation he speaks about the rising income inequality in the US, and the problems that may cause to future business ventures, as he feels the middle class consumer is far more responsible for job creation than wealthy entrepreneurs like himself.[12][13][14] Thus he proposed the necessity for higher median incomes rather than tax cuts for high incomes, stating that if cutting high income tax rates really worked “we would be drowning in jobs”, instead of unemployment being at current numbers.[15]
    Curator of the private organisation Chris Anderson stated that he felt Hanauer’s talk was “explicitly partisan” and included “a number of arguments that were unconvincing”.[16][17] Huffington Post writer Jillian Berman expressed bewilderment since TED had previously issued talks by politicians such as Al Gore or David Cameron without hesitation.[18] TED reserves the right to post only the talks it considers to be most effective. Hanauer partially defended Anderson’s decision in an interview with Sam Seder, saying he could understand that the position he himself offered in his talk might be controversial to the business community and that Anderson might have received unproportional critique for his decision to hold back the talk.[19] The original presentation is available on YouTube.[20]”

  25. jrs

    And who cares if they were job creators. In the Soviet Union the state was the job creator, did that make it good and admirable? No, it just meant that it held the accumulated wealth of a society like capitalists do under capitalism. Maybe some slave owners in the Antebellum south could fancy themselves job creators (well they did provide labor to do)!

    What is morally valuable anyway, creating a job or performing labor? If the labor is necessary then the labor itself is what is morally valuable. If it’s unnecessary (BS jobs) then nothing is of value in the whole transaction. Coming up with a new idea is also definitely valuable but often not even what entrepreneurs do (and coming up with a new idea might entail job DESTRUCTION, ephemeralization in Bucky Fuller’s words, but that would be ok if we weren’t unable to even cut labor hours).

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