Open thread for night owls: Debtpocalypse and the Hollowing Out of America

Labor historian Steve Fraser is co-founder of The American Empire Project and author most recenlty of of Wall Street: America's Dream Palace. He is currently at work on a book about America's two Gilded Ages. At TomDispatch, he writes The Archeology of Decline'Debtpocalypse and the Hollowing Out of America:

'Debtpocalypse' looms. Depending on who wins out in Washington, we're told, we will either free fall over the fiscal cliff or take a terrifying slide to the pit at the bottom. Grim as these scenarios might seem, there is something confected about the mise-en-scène, like an un-fun Playland. After all, there is no fiscal cliff, or at least there was none'until the two parties built it. Steve Fraser And yet the pit exists.  It goes by the name of 'austerity.' However, it didn't just appear in time for the last election season or the lame-duck session of Congress to follow. It was dug more than a generation ago, and has been getting wider and deeper ever since.  Millions of people have long made it their home. 'Debtpocalypse' is merely the latest installment in a tragic, 40-year-old story of the dispossession of American working people. Think of it as the archeology of decline, or a tale of two worlds. As a long generation of austerity politics hollowed out the heartland, the quants and traders and financial wizards of Wall Street gobbled up ever more of the nation's resources. It was another Great Migration'instead of people, though, trillions of dollars were being sucked out of industrial America and turned into 'financial instruments' and new, exotic forms of wealth. If blue-collar Americans were the particular victims here, then high finance is what consumed them. Now, it promises to consume the rest of us. [...] In the 1980s, when Jack Welch, soon to be known as 'Neutron Jack' for his ruthlessness, became CEO of General Electric, he set out to raise the company's stock price by gutting the workforce. It only took him six years, but imagine what it was like in Schenectady, New York, which lost 22,000 jobs; Louisville, Kentucky, where 13,000 fewer people made appliances; Evendale, Ohio, where 12,000 no longer made lights and light fixtures; Pittsfield, Massachusetts, where 8,000 plastics makers lost their jobs; and Erie, Pennsylvania, where 6,000 locomotive workers got green slips. Life as it had been lived in GE's or other one-company towns ground to a halt. Two travelling observers, Dale Maharidge and Michael Williamson, making their way through the wasteland of middle America in 1984 spoke of 'medieval cities of rusting iron' and a largely invisible landscape filling up with an army of transients, moving from place to place at any hint of work. They were camped out under bridges, riding freight cars, living in makeshift tents in fetid swamps, often armed, trusting no one, selling their blood, eating out of dumpsters. Nor was the calamity limited to the northern Rust Belt. The South and Southwest did not prove immune from this wasting disease either. [...] Laments about 'the vanishing middle class' have become commonplace, and little wonder. Except for those in the top 10% of the income pyramid, everyone is on the down escalator. The United States now has the highest percentage of low-wage workers'those who earn less than two-thirds of the median wage'of any developed nation. George Carlin once mordantly quipped, 'It's called the American Dream because you have to be asleep to believe it.' Now, that joke has become our waking reality.  [...] Think back to the days of junk bonds, leveraged buy-outs, megamergers and acquisitions, and asset stripping in the 1980s and 1990s. (Think, in fact, of Bain Capital.) What was getting bought and stripped and closed up supported windfall profits in high-interest-paying junk bonds. The stupendous fees and commissions that went to those 'engineering' such transactions were being picked from the carcass of a century and a half of American productive capacity. The hollowing out of the United States was well under way long before anyone dreamed up the 'fiscal cliff.'   For some long time now, our political economy has been driven by investment banks, hedge funds, private equity firms, real estate developers, insurance goliaths, and a whole menagerie of ancillary enterprises that service them. But high times in FIRE land have depended on the downward mobility of working people and the poor, cut adrift from more secure industrial havens and increasingly from the lifelines of public support. They have been living instead in the 'pit of austerity.' Soon many more of us will join them.

A spirited 23-minute June 2008 interview with Fraser by Bill Moyers can be watched here.

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