There will be mud...

Last night, LI went and saw There will be blood. An infrastructure film – what great timing! A shot from the past, when capitalism had its hooks in nature, instead of like it is today, when the real money is made in the supernatural, capital flows marked in nice digits on screens that have as much meaning as messages left on Ouija boards from old Aunt Marge’s avatar in the Beyond. Anyway, I loved the oil derrick. I loved the finding of the oil I loved the gloves on the pipemen, the long johns, the big, thick greasy ropes. I loved the moment the gusher came up. Giant has nothing on this film. Of course, even being a transplant to Texas, certain of the stories of the tribe have penetrated my skull, and I, even I, am stirred primally by an oil strike, vaguely remembering Spindletop and a thousand tents springing up all at once, oil rush towns and gushers that took weeks to cap, wildcatters suddenly rich and then squandering that money and dying on the down in a Houston backalley, of exposure – yeah, we revel in that shit. Hey, at one point in my life I was friends with the chauffeur of one of H.L. Hunt’s mistresses, at that time already long in the tooth, the mistress that is, and now no doubt lying peacefully underground. So I, too, have seen a little bit of the mystery and the glory.

The star of There will be blood is undoubtedly not the blood, but the dirt. Dirt as petroleum residue. Dirt as silt. Dirt as clay. Dirt as sludge. The blood at the end is not half as impressive as the pools of oil in the middle. There’s the scum that dries on the face of the minister who is dragged into a rivulet of oil by Daniel Plainview, and that he wears to the dinner table, a mask of his humiliation. There’s the puddles everywhere, black on that salt barren land – which Plainview promises to irrigate, which, of course, will eventually harvest its own lithic disasters as the mineral salts come to the surface. There’s the dried crust on the boots of the oilfield workers. There’s, picturesquely, oil on Plainview’s face as he watches the flames catch hold of the derrick – his demonic face. And oil on the child’s face. One never forgets that oil is gritty.

As has been remarked, ain’t a lot of women in this flick. In fact, for the first time in my memory, a film about man and primary product extraction goes to the brothel and shows – men! Not a female form to be found, dressed or undressed. A most, an irritating female laughter off camera, in the background.

LI, truth be told, is rather finicky, especially about grease. We do despise grease. But in this film, dirt is heroic. That’s the true sex in the film: man and mud. And just as we liked the grease here, the shine of it, we liked the capitalist at the center of it, the toad with the jewel in his forehead – he is an I.W.W. caricature kapitalist sprung to life, except that we only see him buying land, not chiseling his workers or breaking strikes. Nowadays, of course, those are considered virtues. To create an effect, best cheat people out of the unearned wealth they deserve from the minerals upon which they’ve planted their dwellings – that is a thing we all know is wicked. It is like robbing a man’s winning lottery ticker. But even here, in truth, by the standards of wildcatters in Texas, he pays pretty well for the land – enough to sicken your orthodox Randian.

brother, can you spare a trillion?

They used to tell me I was building a dream ...

LI had to swallow a little sob of pride, yesterday, as the Bush administration, in the form of the Fed, did what it does best – made sure that our billionaire class is all tucked in and shit. Are they being fed well? Have their diapers been changed? Since last August’s cuts (which, we’ve been assured over and over by financial journalists, were ‘brilliant’), the Fed has shown that it takes its mission (“drinks on the house!”) seriously.

Many might be thinking, gee, if trillions of dollars can be lost in the blink of an eye, perhaps the state should have captured that money and used it for something useful. Such thinking is vicious, criminal, and should be outlawed. As libertarians would point out, such thinking would hamper all our freedom – freedom – freedom. Soon we’d be demanding free health care and who knows what other kinds of shit. It would be the Soviet Union all over again.

But carpers are always a problem. Econospeak has a nice post referencing an article in the dear old New York Times of last July. Remember last July? It was the gilded age, last July. We were all so happy. Things were turnin’ around in Iraq. The towers of Babel were being built in the heart of many a gentrified area – such as in Austin – and everybody was getting rich, mining the potential in their up and up houses by tapping the mortgage money, here and there, for the new kitchen, the boat, and how about a six pack of 25 dollar wines? It was then that we heard the words of one of the captains of our industry and fate as though it were a blast from the Whore of Babylon herself, speaking at the ‘Anti-Christ welcome home’ party:


"Kenneth C. Griffin, who received more than $1 billion last year as chairman of a hedge fund, the Citadel Investment Group, declared: "The money is a byproduct of a passionate endeavor." Mr. Griffin, 38, argued that those who focus on the money -- and there is always a get-rich crowd -- "soon discover that wealth is not a particularly satisfying outcome." His own team at Citadel, he said, "loves the problems they work on and the challenges inherent to their business." Mr. Griffin maintained that he has created wealth not just for himself but for many others. "We have helped to create real social value in the U.S. economy," he said. "We have invested money in countless companies over the years and they have helped countless people"."

"The income distribution has to stand," Mr. Griffin said, adding that by trying to alter it with a more progressive income tax, "you end up in problematic circumstances. In the current world, there will be people who will move from one tax area to another. I am proud to be an American. But if the tax became too high, as a matter of principle I would not be working this hard."

Can you imagine how we would all suffer if Mr. Griffin did not work so hard? I imagine that he would get out of his seat slower. Or, when some suited scumbag came in with another computer simulation showing how to fleece suckers ever more creatively, he’d airily wave them away. He’d be on strike, our maestro. Imagine that creativity taken away from the common good to which he so richly contributes! He’d lie down on his office sofa more. It would be so sad. Similar sentiments were uttered by Russian serfholders in 1850 – take away the ability to own a serf and you simply destroy the incentive structure that had made Russia great!

Sganarelle, 1848

O er hat nicht unrecht, jener populäre Philosoph, wenn er sagt, daß das Sein, nur ein Begriffsaggregat mit markierten elektro-magnetisch-psychologisch-galvanoplastischen Momenten ist. – Nestroy, Freiheit in Krähwinkel

It is strange that Nestroy’s Freedom in Kraehwinkel (Martin Swales once suggested that the title should be Englished as ‘Freedom comes to Chickentown’), which combined songs and music with farce, was never transposed into some equivalent of the Magic Flute of 1848. It is a political farce that takes revolution as another route to the improbable junction of two hearts; it makes a light operetta of revolution and reaction. Those with an interest in opera and Marx – ahem, Chabert? - would, I think, love Nestroy’s play – if this ain’t achin’ for a dialectical-materialist-allegorical reading, I don’t know my Benjamites! That someone like myself, not exactly an expert in real music, especially after the lifetime I’ve spent under the dulling influence of pop, that even I can hear the ghost of the opera it could be in the play, must count for something.

Okay, to come clean, people. Yes, there is one Nestroy play all Americans know. Except they don’t know that it came from Nestroy, via Thornton Wilder. I mean, of course, Hello Dolly. This can’t be helped - and hey, I love the Louis Armstrong version of this, so go fuck yourself if you have a problem with that! So there, my full confession has been made. The Nestroy play was also recast by Tom Stoppard as On the Razzle.

Freedom comes to Chickentown was revived in 1980 in Schwechat, a suburb of Vienna that contains the Schloß Rothmühle. This was the castle where Mesmer produced some of his first cures. It is now the center of the international Nestroy society. The history of revivals is pretty bizarre. The play was revived after the Anschluss, and – ah, the abysses that open up! – the word “Führer” was substituted for the word “Freiheit”.

The most interesting character in the play is Eberhardt Ultra, a journalist, and thus by trade a troublemaker. He appears in numerous disguises in the place – now as a Russian general (the Russians were called in by Franz Joseph to help crush the revolution), now as a priest, and once, crucially, as Metternich himself.

This play fits so well with the metaphoric of ghosts that Derrida explores in Specters of Marx that it is … ghostly. Except here the ghost is not communism, but just the opposite:

“Ultra: Also, wie's im großen war, so haben wir's hier im kleinen g'habt, die Reaktion ist ein Gespenst, aber G'spenster gibt es bekanntlich nur für den Furchtsamen; drum sich nicht fürchten davor, dann gibt's gar keine Reaktion!”

(Thus, as in the great world, so in the small, reaction is a ghost, but a ghost, as is well known, only exists for the timorous. thus, stop being afraid and reaction will just cease to exist!)

As we will see when I get to those Herzen posts, the ghost metaphoric is written all over Herzen’s 1848 writings. I think I will postpone, however, making the Derridean connections until then.

The plot of Freedom comes to Chickentown is your usual farcical fare. The established power – reaction – in Krähwinkel is represented by the mayor and his chief official, Klaus. Klaus has a marriageable daughter, Cecilie, who Klaus wants to marry to Jesus Christ – highing the obedient Cecelie to a nunnery, in short. But Cecilie is secretly smitten with Siegmund – who Klaus believes is in love with the Night watchman’s daughter. This belief is essential to the trick that brings Cecilia and Siegmund together, which I won’t reveal – I mean, one day you all might see this play! On the side of ‘freedom’ are the mid level Kraehwinklers – there’s little reference to labor. Thus, the Nightwatchman and his friends, Pemperl and Schabenfeller, among others, represent freedom and revolt. Pemperl is in it mainly for the sensation – as he says, he “just wants to see a little revolution”. The true liberals, here, are members of the ‘new class,’ relatively speaking. There’s Ultra, the journalist. And there is the vaguely upper middle class widow, Frau von Frankenfrey, with whom Ultra is smitten. Ultra’s disguises are not only in the service of the revolution – they are primarily designed to free Frau von Frankenfrey from the manipulations of the Burgermeister, who is manipulating the terms of her late husband’s will to force her to marry him.

Such is the genius of farce that the path of love and the expulsion of the villain create a perfect vehicle for freedom - freedom - freedom. Although by the time the play was performed, on July 1, 1848, reaction was on the verge of coming back. Ultra’s exorcism was uttered just as the specters were changing.

LI is interested in how, exactly, it came about that after 1848, an attitude arose, shared among the intellectuals of the three sites I’ve already referred to – the pessimists, the liberals, the radicals – that “freedom” was a secondary value for the ‘people’ – whereas, pre-1848, freedom was considered to be a subversive shibboleth that bonded together the dangerous class. On the one hand, there was the visible betrayal of the cause of the people by the liberals to the cause of legitimacy. On the other hand, there was the adoption of a narrower political notion of freedom – I would label this, provisionally, as the defeat of existential political freedom, the freedom to disturb the social order, and the rise of liberal freedom, which named a specific order. Ultra represents this split – he is visibly, in his changing costumes and his tricks, a Lord of Misrule, a visitor from the older notion of freedom – but at the end, with the Burgermeister expelled by fake students, Klaus’ rule over Cecilia overturned, and Ultra’s suit accepted by Frau von Frankenfrey, nothing really changes the order in Chickentown. The exorcism of the ghost of reaction at the end point is truly a surface phenomenon, the end of the rule of pigtails, or Zopf, representing the pseudo ancien regime of Metternich. The restricted order of freedom, the compromise with reaction that, in fact, became the norm, had the effect of demystifying freedom – taking away its former, chthonic power, and in essence removing it, in the perspective of the intellectuals, from the interest of the people.

A little note: that Ultra of Ultras, Karl Marx, was in Vienna on August 28, 1848, where he analyzed the struggle for democracy in terms of the struggle between the workers and the bourgeoisie, comparing it to what was happening in France. After he ended his talk, a man arose and said that no, the Viennese workers weren’t conscious, like the French ones were – they simply wanted 5 more Kreuzer a week. (G. Herman, Karl Marx in Wien, in Der Kampf, 268)

Our poor Pres

In some ways, LI feels sorry for Bush. The man’s plan, after 2004, was clearly to set another bubble in motion by clearing out the middle class’ retirement accounts. Plug Social Security into the stock market, watch the shenanigans make his friends rich, and the looting of that retirement wealth would have stretched the bubble well into 2009, when its fall, and the consequent decimation of the middle class ability to retire for the next generation, would fall on somebody else’s head. Oh, ownership society! a swindler’s wet dream, now even farther off! although the thugs in D.C. will still lustily call out for Social Security Reeeform, by which they mean finding that last trillion or two dollars Americans hid in the cabinet. Where’d that bitch hide my drinkin’ money! That is the question good Republicans want answered.

Revolutionary justice in the Mortgage Market.

TKO - watch it on the video!

Via Eschaton, LI went to this astonishing site, the Irving Housing blog. The writer uses public information to profile the use of multiple loans on houses to extract money on the “appreciation” of the house’s value – and, of course, that money was not exactly invested in the organs of production in these here states. More like vacations and private schools and the lot. The rhetoric on the site is reminiscent of the charivaris and jacqueries of the Old Country, when communities would come down upon the those who threatened the social order. At the same time, there is a distinct whiff of real estate porno about the whole thing – the comments about the condition of the houses pictured, down to the year and model of the stove in the kitchen, are … amazing. Rather like YouTube comments about whether some stripper/singer in some video is fat or not.

The resentments definitely are going to be spilling out this year. I was happy to see, on the NYT Opinion page last week, the loathsome opinions of that all around toad, Steven Landsburg – the oh so contrarian economist who contributes to everybody’s favorite white supremicist mag, Slate. (a, but they are contrarian KKK-ers there, as we all know – secretly liberal to the core!). It was a Timon of Athens happy feeling - the feeling of confronting something rotten in its purest aspect. Landsburg starts out dumb and gets dumber, paragraph by paragraph. His point is that free trade is good! mmm good! Welfare is bad! We don’t owe anybody nothing, people unemployed as manufacturing goes down, ha ha sucker. Landsburg, who is supposedly defending a thesis about international trade, defends it by cavalierly identifying it with trade per se:

“I doubt there’s a human being on earth who hasn’t benefited from the opportunity to trade freely with his neighbors. Imagine what your life would be like if you had to grow your own food, make your own clothes and rely on your grandmother’s home remedies for health care. Access to a trained physician might reduce the demand for grandma’s home remedies, but — especially at her age — she’s still got plenty of reason to be thankful for having a doctor.”

How to put one’s brain around this fatuousness? Suppose I defended a law making it illegal not to speak French in the U.S. by writing – I doubt there’s a human being on earth who hasn’t benefited from language.”

Landsburg’s idea is that the destruction of the U.S.’s manufacturing base is made up for by the lower prices on goods we get from abroad:

“All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices. In other words, the winners can more than afford to compensate the losers. Does that mean they ought to? Does it create a moral mandate for the taxpayer-subsidized retraining programs proposed by Mr. McCain and Mr. Romney?
Um, no. Even if you’ve just lost your job, there’s something fundamentally churlish about blaming the very phenomenon that’s elevated you above the subsistence level since the day you were born. If the world owes you compensation for enduring the downside of trade, what do you owe the world for enjoying the upside?”

This is a nice argument. It calmly ignores the fact that the era of free trade has coincided with the era of trade deficits. Of course, if you just conceptually abolish the difference between trading in a nation and trading between nations – which is the point of Landsburg’s idiotic paen to trade – then there’s no problemo. The globe itself doesn’t have a trading deficit. But if you actually live on some point in that globe – say, the U.S. – then there is a big problem. If we pay for the lower prices through lower wages and greater and greater amounts of national debt, we are eventually going to be constrained in very nasty ways – or I should say, the bulk of the American population. Landsburg’s notion of we is confined to the five percent of the exploiters who have, through various unscrupulous and predatory means that are unwinding as I write this, engrossed the great benefit from destroying the bargaining power of labor.

These thoughts, I must confess, came to me only after I read a very sharp commentary on Landsburg’s column by my new favorite economics blogger, Peter Dorman. My first reaction to Landsburg is that he is using a measure that excludes intangible goods – in other words, he is tallying up the lower prices of first order consumer goods and ignoring social costs, which are evident whenever you go to Rust belt areas or industrial areas and start poking around. They are multipliers of crime and decreased well being. But, as Dorman points out, Landsburg is also bullshitting on the macro-economic level – like most of the radical free traders.

“Ordinary people in many parts of the world, and not just in the US, worry about trade because they are afraid that jobs lost to imports will not be counterbalanced by jobs gained through exports. They worry that there will be fewer economic opportunities for them and their children. They worry that their wages or working conditions will be pushed downward through competition with even more vulnerable, desperate workers in other countries. They are right to worry about these things. Such miseries are not destined to happen, but they cannot be ruled out either.

Except in standard economic models which begin with the assumption that increases in imports automatically call forth equally valued increases in exports. If trade balances on the margin we live in the happy world of comparative advantage, and it is indeed true, as Landsburg says, that “when American jobs are outsourced, Americans as a group are net winners.” But the assumption that trade balances at the margin is simply a modeling convenience, something that enables Landsburg to regale his students with blackboards full of elegant diagrams and equations. It is not grounded in real experience, and especially not the experience of the US economy since the 1970s.”

LI has some respect for the libertarian view of limiting the state’s right over one’s lifestyle choices. But we have zero respect, in general, for the libertarian view of the state. It is childish nonsense, and its motives are simply to paper over the unhinged system of mass inequality and increased exploitation in which we live with spurious justifications sprung from defective economic models. And, of course, the more spurious it is, the smugger the tone. I think libertarians have captured a certain tonal range of smug that you rarely hear, outside of successful high school debate teams. Ah, the soul in the tone of voice! There's the unctuous "I know best" voice of PC lefties hairsplitting identities and vying for the victim brand; and then there is the adenoidal, bowtied smugness of libertarians. I can take the former, but barely. The latter is the kind of thing that you just want to punch in the face.

Freedom vs. Happiness in the world series of Love

On March 13, 1848, this is how the revolution came to Vienna:

“On this day – recounted an eyewitness – already rather early, I observed in Herrenstrasse, on which there were State office buildings, individual workers were standing around, and a giant man, with a jacket, which was covered with patches, that was obviously neither his size nor made for him, moved in the direction of the buildings, with his dirty cap pressed boldly down over his eyes, with balled up fists, flashing glances and a backwards bent posture, all ready for blows, as if going into battle, with giant steps, whilst keeping suspiciously to the middle of the street. In his rear pockets he must have carried a mass of stones as ammunition, because his jacket was stiff on his back, and visibly he had to force himself not to be pulled backwards by the weight of his pockets. At his side hurriedly humped along, in order to keep up with his steps, a small, weighed down, dirty and rather aged man with a long open coat with long arms. He was loaded, each pocket stood out, and the hind coat pockets almost hit his calves…” (Ernest Victor Zenker, 112).

As the riot commenced in Herrenstrasse, the factories went up in Mariahilf (a linen factory in which a financial agent – presumably an accountant – was tossed into the flames); in Sechshaus, the police station and government building, plus a cotton factory, was stormed; by evening smoke was drifting into Vienna from the suburbs.

And this is how the revolution came to Krähwinkel:

Krähwinkler citizens, among whom are the Night watchman, Pemperl and Schabenfellner sit around a big table and drink)
…

“Klaus(coming to the middle of the stage). Good evening, my fellow citizens.

Nightwatchman (whispers to Pemperl). And here comes my very point!

Pemperl (to the nightwatchman). He’s a little round to be a point.

Klaus. I want just a little drinky, but you all don’t mind me – drink up!

Night watchman. Well, we are free to do so.

Klaus. Free? You should not use such brutal expressions. I am from the state office, and we don’t like it, that men are free.

Pemperl(to the group), Let’s go out in the garden – it is pleasanter in the free air.

Klaus. If only it wasn’t so free, that air – I’m staying here.

Pemperl. Primo, then we won’t have you breathing down our necks. (To the Night watchman) Come on, Mister!”

Nestroy plays with ‘freedom’ and its galvanic effect on the state officials who compose the respectable strata of Krähwinkel throughout the play. Freedom has the same horrifying sense for the respectable state employees as the invisible power of St. Petersburg has for the respectable strata of Russian officials in Gogol’s The Inspector General.

Which brings me to an issue that I haven’t even mentioned, in all of my posts so far. The liberal opposition – the protest against the hedonistic tendency of bourgeois society made by bourgeois intellectuals – was made, time and time again, in the name of freedom. That opposition informed, say, the cold war liberalism of Isaiah Berlin. Here’s a typical passage from his 1955 essay, Herzen and Bakunin on Liberty:

“It is a singular irony of history that Herzen, who wanted individual liberty more than happiness, or efficiency, or justice, who denounced organized planning, economic centralization, governmental authority, because it might curtail the individual’s capacity for the free play of fantasy, for unlimited depth and variety of personal life within a wide, rich, ‘open’ social milieu, who hated the Germans (and in particular the ‘Russian’ Germans and German Russians0 of St. Petersburg because their slavery was not (as in Russia or Italy) arithmetical, that is, reluctant submission to the numerically superior forces of reaction, but algebraical, that is, part of their ‘inner formula’ – the essence of their being – that Herzen, in virtue of a casual phrase patronizingly dropped by Lenin, should today find himself in the holy of holies of the Soviet pantheon, placed there by a government the genesis of which he understood better and feared more deeply than Dostoevsky, and whose words and acts are a continuous insult to all that he believed and was.” (Russian Thinkers, 104)

This paragraph stands out in Berlin’s essay for its overwhelming flow – the commas, here, that barely organize the sentence, signal that the rush of something – some feeling? some oratorical impulse? – has overwhelmed the analysis of 'Herzen on Liberty'. And that flood of feeling is directed towards a capture, or an envoûtement – one justified by a previous envoûtement, the capture of Herzen by the Soviets, who have put him in an (imaginary) pantheon. Although the motives of the Soviets become a little hazy – is it really because of some ‘casual’ word dropped by Lenin? In any case, the reason this is a kidnapping rather than an alignment of the interests of Herzen’s ghosts with the ghastly Soviets is because Herzen was defending the individual’s liberty. Interestingly, that liberty is connected to a decentralized economy – although Herzen was clearly a socialist throughout his life, and towards the end of it was recommending peasant communes, which, although decentralized in one way, surely bear upon the economic liberty of its members in ways quite other than that one would expect from Berlin’s Hayek-Popper language.

But whether Berlin is right or wrong about Herzen, surely his instinct – that liberty is opposed to schemes for social happiness – picks up on the tradition LI has been examining. Our question is about whether some further kidnapping hasn’t shaped this history – whether it is the socialist leaning working class or the bourgeois intellectual protecting liberty, proclaiming the worth of freedom, in 1848. This is not only a question of what Herzen believed – it is a question of what was being said by, say, the workers in Herrenstrasse. And this is where Nestroy’s play, written in 1848 (astonishingly, I can’t seem to find an English translation. Hard to believe this play hasn’t been translated) becomes really interesting. Nestroy was, like Moliere, an actor, and he did not exactly rank high among his socially snobby Austrian fellow writers of the time – Hebbel compared Nestroy to some poisonous flower whose stink corrupted the smeller.

As always, one must correct for the astonishingly persistent and stupid idea that the Masses were silent, that the writers were all mirrors of the bourgeoisie, and that we had to wait around until a buncha nervous intellectuals, Marxists all, gave ‘voice’ to the working class. One of the sources I am using to understand the 1848 effect is, for instance, a journalist whose writings were highly respected by Karl Kraus and a sentence from whom serves as the epigraph to, I believe, Wittgenstein’s Philosophical Investigations – Ferdinand Kürnberger. Kürnberger was the son of a lamplighter, and his enthusiasm for freedom, his exile from Austria, his return and his success as a journalist – as, indeed, the greatest journalistic essayist of the later half of the 19th century in Vienna – are all of a piece with being of the people. If one looks around at where the writers come from, the journalists, the pamphleteers, you will soon enough dispel the idea that all the writers came from out of the perfumed pocket of a furlined overcoat in some salon. Nor did their origins predict their predilections – aesthetes came from coal heavers. LI is playing around with the notion that one of the themes that emerges in the investigation of happiness triumphant is the third life – how it was constructed, how it operated, how it collided with the happiness culture in which it recognized something of its own, a sort of child to which it had given birth, but which it could no longer control.

1979 - a flashback

One thing LI loves about libertarians is their “never say die” attitude to reality. If reality blows up your ideology – why, then reality just needs a bigger dose of ideology! If we have a financial system which used the “magic of the market place” to take a financial sector that has the dull task of providing money for investment and turned it into the exciting task of betting on betting on betting on The Wheel of Fortune, the fault lies not in the financial market – but in the remaining structure of regulation. We never de-regulate enough, you see.

In fact, of course, we need a lot of re-regulation. We need re-regulation out the bungus. We need to regulate the financial markets to make it very, very difficult to maintain a hedge fund. We need to rein in derivatives, and we need to make sure that the excuse that is usually given for not regulating derivatives – that the market is played only by millionaires who can afford it – is roundly shown up as the lie that it is. In reality, the financial markets are tied in one with another – as how could they not be, since the whole point of deregulation was to make them interpenetrate each other and ‘speed up’ the transfer of capital – and so the millionaire’s misfortune quickly becomes everybody’s social misfortune.

We are really living in some kind of John Law virtual world. Surely, we are creatures in his dying dream. That brilliant little Scotsman’s vision is our reality. The American government – followed by the U.K. – chose to outsource countercyclical policies to the financial sector. This might actually be the only course open to a society that wants to preserve an increasing inequality of wealth – impoverishing the middle class from an absolute standpoint – while preserving the relative wealth of that stretch between the 80 percentile and the 30 percentile on the income scale.

The article people should be reading at the moment is THE SQUEEZE ON THE MIDDLE CLASS by William Kowinski in the New York Times Magazine. The New York Times Magazine, that is, of 13 July 1980. The pre-deluge days.

Kowinski starts out with the Newmans – a couple who are, for that time, doing very well:

“Now David and his wife, Bonnie, who works as a librarian in a suburban school, have a combined income of $60,000 a year. ''It's astounding that we have this much money,'' he says. ''And it's astounding that it doesn't buy anything.''

''Anything'' is, of course, an overstatement. The Newmans are not a family trying to stretch $15,000 and shocked to find no room for a daughter's prom dress or even, suddenly, next month's fuel bill. But that even they are concerned shows how pervasive the effects of inflation are. The inflated dollar's loss of buying power is only one change the Newmans have noticed in their everyday lives. There are other nagging reminders of inflation's effects - for example, quality seems to have declined as producers trim costs, while prices still go up. ''An item I might have bought a year ago for $30 would have been a quality item,'' Bonnie Newman says. ''Now it's inferior, and I won't buy it.''

''Whatever we're doing these days doesn't seem worth the money,'' David agrees. ''You spend $50 on dinner and it's not all that terrific.''

But economic expressions like loss of buying power or declining quality don't adequately convey the feelings of dismay and confusion that accumulate when inflation and recession change the value of money and all that money means, culturally and psychologically; when the assumptions of several generations about America's expertise and leadership and this country's pre-eminent place in the world are jumbled and wounded; when values are distorted and called into question by economic conditions that affect, in different ways, every class in society. Within the middle class in particular, there lurks the suspicion that their dream - the American dream - is endangered.”

Now, what is funny about the Newmans is that their complaints, that tiny addition to the collective roar in 1980 that brought Reagan into office, are based on economic conditions that were created for them by the mixed economic policies of the past. And those mixed economic policies were actually working pretty well for the Middle Class. That is, of course, one of the funnier ironies of the Reagan revolution. The Middle Class drove it, and thereby cut their own throats, systematically destroying the system that had favored them against the wealthy and the poor. A long quote here:

''Before, it seemed possible to look forward to a time when things would be O.K.,'' Bonnie said. ''Now I don't feel there will be an easy time when things are O.K. I feel it's always going to be like this. The whole situation is frightening and I don't know where it will end.'' At first glance, it might seem ridiculous that a young couple starting out with a $60,000 income should be worried about money, but the Newmans' worries aren't groundless. They live in Manhattan, for one thing, where costs and tastes make $60,000 less than the abundant income it might be in many other parts of the country, where taxes and the price of housing in particular are lower. And even with two paychecks (about half of the wage-earning families in America have at least two incomes), the fight against inflation is a losing one. Last year, median income for couples rose 8 percent, which was 5 percent less than the rate of inflation. From March 1979 to March 1980, despite a record increase in private, nonfarm wages, the real earnings of two-income households, adjusted for inflation, fell 4 percent. The only solace for them might be that single-income families did even worse.

On the other hand, the Newmans aren't suffering like many members of the lower middle class who have seen inflation deplete savings and dangerously erode buying power, or like those forced by the combination of inflation and recession to join food-stamp and unemployment and welfare lines. Even inflation alone, which attacks more directly than recession the professional middle class's buying power, liquidity and sense of security, does not hit the Newmans harder than anyone else. In fact, the Brookings Institution's Joseph Minarik, who has studied the situation in detail, says flatly, ''On almost every account, the average middle-class family is in a very good position in regard to inflation. They are the winners in inflation, in relation to both those above and below.''

Many people would find this a startling statement. Much of the clamor to control inflation arose because the middle class felt that it was inflation's primary victim, that in the rush to assist the poor and provide loopholes for the rich, the Government had forgotten the middle-class majority. But, according to Minarik, the poor have lost ground because welfare and other aid programs have not kept up with the rate of inflation, and the rich have lost ground because the investments that make up the bulk of their income have generally done badly. Only the middle class, because salaries have climbed, has held its ground - especially if a mortgage is the major debt, because homes have increased in value faster than prices through the worst of inflation.

''But the middle class doesn't see it this way,'' Minarik admits. ''Their homes are appreciating in value, but they don't see it. It doesn't put cash in their hands. Instead, they see prices rising. They don't see that the raises they are getting are inflated. Usually a raise of 2 percent would be considered good, but, because of inflation, they have to get 8 percent. But the inflation rate is higher than that, so what they see is inflation robbing them of all that extra money.'' Minarik's analysis of the middle-class position may be right, but it brings little comfort to David and Bonnie Newman. And it does little to allay the fears of middle-class families that their expectations will not be met.

Despite the changes in these expectations during the last couple of generations, the key ingredient in the middle-class formula for upward mobility is still higher education. So it isn't surprising that one of the middle class's primary concerns is the high cost of education.

It begins with a feeling of injustice, expressed this way by a former teacher: ''The thing that got me,'' she said, ''was when a bright, interested middle-class student didn't get a scholarship to college, but another student did just because he was from a lowerincome family.'' It is a variation on a middle-class theme: The middle class is denied financial help, especially from the Federal Government. Thus the middle-class student is excluded from college and that crucial step on the ladder to success, while the rich can afford tuition and the poor are given a free ride. There are two interesting facts about this variation: first, that the middle class has done something about it; and second, that the premise doesn't seem to be true.

The middle class has done better than the lower class - and even the upper class - in keeping up with the price of higher education. College costs have indeed risen over the last decade or two, but not, according to the Congressional Budget Office, as fast as the incomes of middle-class families with college-age children. The after-taxes income of upper-middle-class households, for instance, rose 106 percent between between 1967 and 1978, while education expenses increased 67 percent at public universities and 77 percent at private colleges. Between 1967 and 1976, the percentage of income both lower- and upper-middle-class families spent on education actually declined.

Despite studies consistently showing that middle-class students reach college, graduate and go on to earn advanced degrees far more often than lower-income students, formidable political pressure has been exerted to increase scholarship aid for middle-class students. It resulted in the 1978 Middle Income Student Assistance Act, which provides grants for middle-class students. A Capitol Hill aide who worked on the legislative package said, ''There was a feeling here that this was something that the middle class really wanted, so why not give it to them?'' According to Senator Daniel Patrick Moynihan of New York, whether the middle class had in fact lost ground relative to the lower class was not as important as its perception that it had. ''It has to do with the transfer of their status onto their children,'' Moynihan said.

''And, by God, they want it.''

Such perceptions, and their economic consequences, may be rooted in changes in attitudes brought on by the quick prosperity experienced by the middle class in the last couple of generations. Some families are pressed, for example, because they are trying to send two or three children through college simultaneously, whereas their own parents might have attempted to send only one at a time. With their standard of living based more on credit these days, families also may not have the savings in the bank that traditionally financed a college education.”

Ah, the factors are all there for the inversion – the middle class was on the brink of much easier credit, and much worse salary increases; it was on the brink of seeing social goods –education and health – skyrocket; it was on the brink of seeing the wealthy gain, first, an enormous tax advantage, and second, due to the de-regulatory impulse that has gone through thirty years, now, of governance, the advantage that comes from offloading costs of production onto third parties; and of course the breaking of what Moynihan called ‘middle class altruism’ – the willingness to spend taxes on helping the lowest income group. Because the latter factor outraged the narcissism of the middle class, it had to be accompanied by a myth that the lowest income group was, magically, so in charge of the State that it was directing all kinds of advantages its way. Why, the poor, in contradiction to every social law known to man, were living like kings! Getting that affirmative action; all those welfare payments; and all that terrible anti-discrimination law – it was so good bein’ poor in America that it was a wonder the middle class didn’t migrate en masse to the lower reaches. But, being virtuous and hard workin’ folks, they didn’t. That, of course, is the sour, reeking hypocritical attitude that colors one’s genuine affection for the poor old middle class. It is hard not to think at least sometimes: fuck em! Let the rich skin their fat asses! After all, they have voted all too often to get themselves into situations in which only aggressive fantasies – such as those feeding into the GWOT – offer them any escape. And that has been hard on the rest of the world. So far, no counter view has achieved any mass in the U.S. since 1979. We’ll see how much worse things have to get before such a view emerges again. Interestingly, the Middle Class has definitely become aware, since 1979, of the appreciation in the value of their houses. They seemed dimly aware that this was inflation, but since inflation was seemingly to their advantage, it drowned out the noise from other inflations. Now that this is not happening, it will be interesting to see how sensitive people get to the currents in the price system. They might just get very sensitive, indeed.