Lesson from Wisconsin: Time to Defend Common Wealth against Shared Misery

The American left is beating itself up over the fact that Walker won in Wisconsin. They blame big money, dirty tricks, everything except dealing with the fact that a substantial number of union members voted against their class and for the party of the rich.

Why did this happen?  You can’t simply say that people were fooled by Republican propaganda. That’s insulting. They voted for Walker because they believed in him. As Jeffrey Sommers pointed out in Counterpunch, “Walker’s constituency desperately needs a hero. Who are they? Overwhelmingly, they were the white working classes with no college education. By and large they have lost these benefits.  They may have not seen raises in years.  The public sector is an inviting target for them. It’s one of the few places where the working and middle class still receive decent benefits (medical, retirement, etc.).   This makes them suspect to a population that has largely lost these. … In short, Walker has given voice to the working and middle classes so much hurt by the Reagan Revolution.”

And this sentiment is not confined to Wisconsin: San Diego and San Jose residents voted overwhelmingly for a Democratic initiative to cut the pensions of city workers.  Karen McDonough, who has worked for the city of San Jose for two decades, told the Washington Post she tried to change voters’ minds by telling them she is a hardworking senior employee who had gone years without a pay raise. “The response I got the most was ‘I don’t get a pension. Why should you?’ ” she said.

Andy Kroll concludes in TomDispatch that it was wrong to have campaigned for the recall in the first place: “The movement’s mistake: letting itself be channeled solely into traditional politics, into the usual box of uninspired candidates and the usual line-up of debates, primaries, and general elections. … The takeaway from Walker’s decisive win on Tuesday is not that Wisconsin’s new populist movement is dead. It’s that such a movement does not fit comfortably into the present political/ electoral system.”

But this analysis also avoids the necessity of an ideological struggle against the Republican narrative. By all accounts the majority of Wisconsinites who protested in 2011 were not thinking in terms of continuous mass action. They genuinely supported the Democratic party as what they assumed would be a vehicle to defend themselves, and the movement inspired and was given legitimacy by the 14 Democratic senators who held up the legislative process.  The failure of the recall was a learning experience for the whole movement.

The real lesson of Wisconsin is that the Democrats and unions were unable to counter the Republican strategy of pitting sectors of the middle class against each other: privately employed workers against workers who work for the state. The Republicans’ potent ideological theme is that the super-rich have wealth because of their own individual efforts, creating the illusion of equal opportunity and a level playing field, and if you are not wealthy, it’s because you didn’t try hard enough. Objectifying the “state” as a dead weight on private efforts is part of this narrative, and helps to justify pushing the costs of capital reproduction onto the public. State workers are then a highly-convenient political target.

The national Democratic leadership is thoroughly intimidated by the right’s neoliberal rhetoric and cannot bring themselves to defend the positive role of government in enabling a collective solution to communal problems. Washington Post commentator E.J. Dionne is baffled by the Democrats’ reluctance to counter conservative anti-government ideas. “Both Clay and Lincoln battled those who used states’ rights slogans to crimp federal authority and who tried to use the Constitution to handcuff anyone who would use the federal government creatively. Both read the Constitution’s commerce clause as Franklin Roosevelt and progressives who followed him did, as permitting federal action to serve the common good. A belief in government’s constructive capacities is not some recent ultra-liberal invention.”

The extent to which neoliberal anti-government thinking has penetrated government itself is shown by the way states and localities suffering from budget crises are imposing cuts and layoffs rather than challenge the financial industry, which, in many cases, ensnared municipalities in extremely bad deals.

To take one egregious example: Wall Street banks persuaded many transit and other municipal authorities to issue bonds and simultaneously enter into complex interest-rate swaps in the heady days before 2008. When interest rates then dropped through the floor, bond-issuers found themselves trapped by hefty termination fees when they sought to refinance. New York Times finance writer Gretchen Morgenson reports that New York State alone  “has paid $243 million in recent years to extricate itself from swaps-related debt. That money went straight from taxpayers’ pockets to Wall Street.”

A group that supports public transit recently published a report that they had found 1,100 swaps deals at more than 100 government agencies that are costing taxpayers $2.5 billion a year. Transit agencies have cut services and increased fares to pay for these loans. Morgensen explains: “Money that might go toward services is going to swaps instead. … Everybody else — workers, riders, taxpayers — makes concessions. Banks give up nothing. … The trillion-dollar question is why debt issuers don’t push the banks to cut or reduce these exit fees.”

Government authorities that raise a lot of money in the debt markets have considerable leverage, given how much they pay Wall Street banks to underwrite their debt. If the financial markets were truly free, agencies could threaten not to place new bonds with a bank unless it agreed to renegotiate on the swaps. But when Morgensen asked Patrick McCoy, the New York transit authority finance director, why the agency doesn’t use its leverage to lower the fees, he replied: “It’s working. Why would I want to incur the costs, aggravation and bad faith that goes with it to suggest that we want out?”

Politicians and bureaucrats have internalized the banks’ own myths about their power to enforce contracts, when the reality is that they depend on public institutions to do it for them. The deputy director of the Fiscal Policy Institute in New York, James Parrott, complained, “Government officials need to acknowledge that they made a mistake when they signed up for these ill-conceived, high-risk financial bets. But that mistake is woefully compounded when they then impose austerity rather than stand up to the banks.”

Combatting neoliberal ideology within the labor movement and the government is a number one priority for activists. It means continuing the dialog that the Occupy movement started, together with rebuilding the civic infrastructure of communities and reasserting the concept of the public good in finding common solutions to the provision of health care, education and social security for all.


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Filed under austerity measures, credit creation, financiers, new york stock exchange, occupy wall street, political analysis, Republicans, state unions, Wisconsin, Wisconsin recalls

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