Customer Reviews

Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream

5 star:		(22)
4 star:		(10)
3 star:		(7)
2 star:		(4)
1 star:		(7)

 

 

Arianna Huffington paints a grim picture of the State of the Union: "Every day, Americans, faced with layoffs and tough economic times, are forced to use their credit cards to pay for essentials such as food, housing, and medical care--the costs of which continue to escalate." P. 77.

Our mediocre grammar school and high school educational system continues its downward slide. The Great Recession is squeezing school budgets.

Meanwhile, multi-national corporations avoid taxes, while enjoying bailout loans and fat government contracts.

The over-hyped American Recovery and Reinvestment Act of 2009 earmarked only $72 billion of the $787 billion appropriation of taxpayer dollars to projects to improve the country's infrastructure.

Top subprime lenders included Wells Fargo; Countrywide, purchased by Bank of America, Washington Mutual, now part of JPMorgan Chase; CitiMortgage, part of Citigroup; First Franklin (now closed), purchased by Merrill Lynch, which was purchased by Bank of America; ChaseHome Finance, part of JPMorgan Chase; Ownit, partly owned by Merrill Lynch, which was later purchased by Bank of America; and EMC, part of Bear Stearns, which was purchased by JPMorgan Chase. Most of the rest depended on massive loans from Wall Street. Many of these lenders were sued by states for fraud and paid billions in settlements.

According to trade publication "Inside Mortgage Finance," top mortgage backed securities underwriters included now defunct Lehman Brothers, Bank of America's Countrywide Securities, Morgan Stanley, Bank of America's Merrill Lynch, JPMorgan's Bear Stearns, and Goldman Sachs.

This doesn't even include collateralized debt obligations (CDOs), and structured investment vehicles (SIVs) and credit derivatives, all of which amplified losses.

Fannie and Freddie do not make loans. They purchase mortgage loans and earn fees for guaranteeing payments on the loans. In 2006, Fannie and Freddie accounted for 33% of total mortgage backed securities issuance. In the first half of 2010, they accounted for around 64% of new issuance. They were forced to pick up the slack and buy more when Wall Street's private label securitization Ponzi scheme blew up. Fannie and Freddie did not create the housing bubble, and they are now Wall Street's dumping ground.

At the start of the meltdown, the IMF and the U.S. administration estimated losses of $2 to $2.5 trillion. Unemployment and the losses are now shockingly worse. What was merely a recession escalated into the Great Recession.

According to William K Black, after the much tinier S&L crisis, there were over 1,000 successful felony prosecutions, several thousand successful enforcement actions, and roughly 1,000 successful civil actions. This time Congress gave us the Great Cover-up. Bank officers dodged jail time and collected billions in bonuses.

Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream names the culprits and gives a roadmap for solutions. Congress must start over on financial reform, regulate derivatives, commodities trading, break-up the Too Big to Fail financial institutions (update Glass-Steagall), and more. We deserve better than a third world economy divided by ultra-rich on one side and debt-ridden middle class and dirt poor citizens on the other.

We'll need a Constitutional amendment requiring full public financing for political campaigns (for starters). Our politicians have shown us how willing they are to be owned by special interest groups that will buy votes, buy a campaign, or just buy them off. As Arianna Huffington explains: "If someone's going to own the politicians, it might as well be the American people." (P. 172)

The current chapter being written about the American man of 2010 is haunting. Huffington shows us how the very political system our Founders created has been hijacked and used to fill the pockets of those soulless enough to steal from their own (see the Right Wing). The system no longer works for the middle class. Our politicians simply do patchwork, reacting to what the media says--putting their fingers on a different leak everyday. It has become apparent-- and Huffington points this out--that running for, and taking office, is nothing more than a way to protect one's financial interests--or better yet--to line one's own pockets. Huffington articulates this pervasive corruption quite poignantly. We see how the media has become the fourth branch of government--often setting the political agenda by creating the very stories they report on (i.e. CNN poll question: is Obama a Muslim?/results covered on a 24 hr. loop). And many of those news-created stories perpetuate the Right's agenda of delaying any legislation designed to benefit the middle and working classes. In fact, an eye-popping inditement of this 21st Century media is on full display in the book: 71 Days: The Media Assault On Obama. Huffington gives us a gift by unveiling an America that is drowning in propaganda, tabloid-news-programming, racism, capitalistic greed, and an ever-growing imperialistic philosophy regarding our role in the world. It's an America whose politicians are destroying the middle class at warp speed. The middle and working classes cannot afford for Sarah Palin to set the political agenda. But all she has to do is tweet something irrelevant and the media will run with it--ignoring any meaningful economic legislation that needs attention. Who suffers as a result? We do.

Adrianna Huffington does a good job of describing the ongoing destruction of the middle class. I found the real-life stories of individuals and families that have been impacted particularly compelling. The degree of income concentration in the United States is really quite shocking.

My major complaint is that Huffington fails to indentify advancing technology as a primary driving force behind income inequality. This is an important point because if technology (along with globalization) is a major culprit, then it tells us something about the future: Things are very likely to get even worse. We're sure to see more advanced automation and also new technology that makes it even easier for companies to offshore work. Even the upper middle class is not going to escape this tend. The basic reality is that technology and globalization are making our labor worth much less and giving workers less and less bargaining power.

For a great overview of this issue--and a focus on the future rather than the past--I'd strongly recommend this book: The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future. It shows how advancing technology will very likely lead to structural uemployment and even more extreme concentration of income into the hands of the few. As someone who works in the technology field, I'm convinced that the trends described in this book are already well underway and explain, at least in part, the situation that Huffington describes. As "The Lights in the Tunnel" points out, this problem may ultimately be so big that it defies conventional solutions. I highly recommend that anyone concerned about the plight of middle class Americans check out this book and give these issues some serious thought.

This is a story about disconnects, disconnects between Wall Street and Main Street, disconnects between the middle and lower classes with the wealthiest, disconnects between Congress and citizens, and disconnects between the American dream and reality. That is one thesis Huffington proposes. The other is the belief that as long as Americans work hard and play by the rules, they will prosper and get ahead. Huffington makes the case that the power brokers don't play by the rules, and stack the decks in their favor. Thus, the American dream has little chance of crystallizing.

The first disconnect, between Wall Street and Main Street is a sore spot with Americans of any political hue. Goldman Sachs commits fraud on a grand scale and is slapped with fines that barely put a dent in the company's profits, yet we will put in jail the person who holds up $500 from the cash register. The disparity in treatment between those in power and those who are powerless is glaring. Huffington wonders why those who have caused so much financial misery are not held accountable, and avoid being treated as the common thieves they are.

The disconnect between the middle and lower classes with the wealthiest. The disparity is well documented, but Huffington adds one depressing statistic after another: the reduction or elimination of aid programs, the increase in foreclosures and people below the poverty line, and the increase in productivity and decline in income.

The two most profound disconnects are the differences between Congress and citizens, and what the author calls, "Who could have known?" The disconnect between Congress and citizens is that Congress dances to the tune of the lobbyists and the money they contribute to members of Congress. According to Huffington lobbyists outnumber Congressmen by 26 to 1, and have spent 3.5 billion to influence their bills and their votes. That works out to 6.1 million for each of the 535 members of the House and Senate. Huffington contends that by the time a bill has made it to the floor or even to committee, the particulars and loopholes have already been decided in backroom deals with lobbyists present. She doesn't distinguish betweeen Republican or Democrat noting that Phil Gramm, Chuck Schumer, Alfonse D'Amato, and Chris Dodd. The result were bills that would not protect us against future Wall Street greed, bank incompetence, or inadequate medical care. Knowing about crony capitalism was one thing, reading it was quite another.

"Who could have known" or "the struggle of memory against forgetting" describes the variousl blunders over the past several years as the excuses of people who were paid to anticipate such blunders. Who could have known that al-Qaeda was going to use airplanes as missiles against the United States? Who could have known that the wars in Afghanistan and Iraq would go on for nine and seven years respectively? Who could have known that Citicorp was awash in toxic investments that would collapse? Who could have known that New Orleans would be hit with a Category 5 hurricane and its levees would be breached, and how could Alan Greenspan have predicted the economic collapse after he gave such a rosy picture of its future? In other words, how can people predict success without the possibility of predicting failure? The August 8th Memo, General Shinseki, Brooksley Born (not mentioned in the book) all gave ample warning.

Two important elements emerge here. Free market economics has become crony capitalism and the democratic process that is supposed to be good for a plurality is only for the benefit of the few.

Huffington spends a long last chapter that expresses the American optimism that she claims is disappearing. Personal stories are interspersed with suggestions of how we can recapture government. Knowing our democracy is a rigged game, she suggests the reader makes a number of changes. "Fix Congress First" is a website dedicated to financial reform in Congress. Choking the powerful lobbyists is essential to restoring the democratic process. Innovative technology in the form of the Sunlight Foundation is also promising. During the healthcare summit in February 2010, the website was able to stream live the major contributors of each elected official speaking. Moving our money from banks "too big to fail" to consumer credit unions is another way of taking power away from the powerful.

This is a book for the uninitiated in American politics. It is for the people who are finally becoming aware of the economic and political world around them and information they may lack. While I found this book illuminating, I was already aware of much of the information. Nevertheless, it reminded me of one very important thing.

There are no lobbyists for the American Dream.







Also Recommended:

Johnston, David Cay, "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expesne and Stick you with the Bill." This is even better than "Third World America" and far more detailed.

Krugman, Paul, "Conscience of a Liberal."

Arianna tells readers that the U.S. is in danger of becoming a third-world nation. Our industrial base, education system, infrastructure, political, and economic systems are crumbling, and the middle-class is disappearing. Result - the American Dream is becoming an American nightmare of our own making, taken down by our corporate elite and the neglect of our elected leaders.

"Third World America" does a good job summarizing the ways we're headed for third-world status, and waking up those who haven't figured this out already. Her first recommendation - fixing campaign finance so citizens can take back their government from the corporate elite and their lobbyists, makes very good sense. I also like her recommendation to cut defense spending - Iraq and Afghanistan have become a horrible waste of money and lives. However, she also ignores the two 'elephants in the room' (off-shoring jobs, and millions of illegal aliens), and her recommendations for more spending on education and health care don't make sense. The former because we've already increased spending/pupil 2.5X in inflation-adjusted dollars over the last 3 decades with very little/no improvement, the latter because we already spend so much on health care compared to the recent past and other nations that it now close to swamping our economy (17.3% GDP, vs. 6+% for eg. Taiwan).

"No One is Lobbying for the American Dream" is a phrase that resonates in Arianna Huffington's powerful and provocative new book, Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream.

Embedded in one of the most powerful chapters in this short, concise, and mighty wallop of a book, Huffington calls out the culture of corruption and greed that has taken over our government. Money from corporate lobbyists has filled the halls of Congress, influences vote, and despite public outrage over bank bailouts, BP oil rig disasters, and an economy still on shaky ground, real reform that would make a difference in the lives of the dwindling American Middle Class has no chance of succeeding. The facts are not new, and are not unknown, but terrifying none-the-less.

Huffington's book is filled with stories of what Palin calls "real Americans", people who paid the price of becoming middle class by attending college, working hard, owning a home, and living comfortably. However, due to circumstances beyond their control, (having jobs shipped overseas, health crises, et. al), these people are living off retirement savings and credit cards, just to make ends meet. These aren't people living the high life off a government buck; these are our fellow citizens who played by the rules, but somewhere down the road, the rules changed to favor corporate profits beyond anything else, and when it comes time to pay the piper, the middle class gets stuck with the bill.

This is one of the most accessible books on the current crisis. Huffington writes with such precision that her points and information resonates powerfully. This book could easily be read in one night. Warning: have post it notes, sticky arrows, or a notepad nearby. There are facts, phrases and statistics you are going to want to remember. My book is covered with them.

Finishing the book, I wondered if anyone who has anything to do with this mess is going to listen? Is corporate money so pervasive in our system that it's made our policy makers, both Democratic and Republican, deaf to the concerns of the citizens they purport to represent? Are our children going to look at books such as this and Rebooting the American Dream: 11 Ways to Rebuild Our Country and ask why didn't people read and heed these lessons as we live in a truly corporate run America?

This book should not only be read by everyone, but paid attention to. Huffington has sounded the alarm brilliantly, but will anyone listen?

In this book Arianna Huffington drives home the fact that this economic crisis is generalized by the media rather than showing the personal side of it-particularly the unemployed.
Statistics and numbers are safer because there is little emotion attached to those figures.

This book provides personal experiences from unemployed citizens at the end of the first four chapters. This makes their suffering more personal and easy to identify with.

Among the complaints that the author shares with the reader is the tax haven ripoffs by such corporations as Halliburton, Goldman Sachs, and Citigroup. Those two banks received bailout money while they evade taxes!

She observes, quite accurately, that outsourced manufacturing jobs are eroding the middle class. Upward mobility has been replaced with downward mobility. Often the unemployed accept less pay in their desperate search for employment.

On page 55 Ms. Huffington writes;
"The two-tier economy comes with two sets of rules-one for the corporate class and another for the middle class."
For an example look at the treatment of Wall Street versus Main Street during this economical crisis.

The author focuses the reader's attention to other problem areas in America. The crumbling infrastructure and education.
She references Davis Guggenheim's documentary "Waiting for Superman" regarding problems in the education system. The system has not changed to meet the post-graduate needs of students in a world where a majority of those graduates will no longer find employment in factories.

She also furnishes examples of the "revolving doors" and cronyism in Washington where corporations now basically write their own regulations and "police" themselves.
On page 129 Ms. Huffington also provides a related quote on that subject:
"Some people look at laws and ask 'why?' or 'why not?'.I look at laws and ask 'who paid for them?'"

This book is well-written and current. It educates the reader while being entertaining with the authors style of writing.
The solutions are sensible and while not easy to implement, participation is what will ultimately decide whether "We the People" make ourselves relevant in American politics. She provides some useful internet links toward that purpose.
The author is honest and doesn't give preferential treatment to either party. She has plenty of criticism for the current administration. I recommend this book.
Two more books that I favor on the subject of class stratification in America are :

Class War in America: How Economic and Political Conservatives Are Exploiting Low- And Middle-Income American Families

Screwed: The Undeclared War Against the Middle Class - And What We Can Do about It (BK Currents (Paperback))

Huffington does a good job of showing the many problems facing America and the continued existence of the American Middle-Class. Huffington documents how the political elite of both major parties has failed to take concrete action to deal with such issues as the loss of manufacturing jobs, the huge budget deficit caused by America's gargantuan military budged, America's dilapidated infrastructure, the growing gap between rich and poor and declining social mobility. Their is also the seeming impunity in which corporations such as BP and Goldman Sachs commit crimes and are not forced to take responsibility for their actions. This is a result of the growing domination by corporations of America's political system.

Huffington has some good suggestions of increasing investment in America's infrastructure, order for the U.S. to bring America's roads and trains to the level of Europe and Japan. Huffington supports a complete overhaul of the campaign finance system as necessary for all other political reforms. I thint that Huffington spent too much time discussing self help solutions and philantrhopy, rather then political solutions to problems.

I disagreed with Huffington's characterization of the 19th Century Populist Movment as conspiracy theorists and anti-semites and equating them with Sarah Palin. Populist fears of a conspiracy of the money power were based on facts and the Populists were precursers of modern progressives such as Bernie Sanders, not Sarah Palin. Lawrence Goodwyn has written a good book on the Populist movement. Democratic Promise: The Populist Movement in America

I also disagree with Huffingtons criticism of Teachers Unions and her praise for the director of the documentary Waiting for Superman which offers simplistic solutions to the education crisis and unfairly blames teachers unions for preventing education reform.

Arianna Huffington seems to have a very good grasp of the process of economic and political decline currently being experienced in our country. She substantiates the old "the rich get richer while the poor get poorer" adage with some solid evidence showing that it happens not by evolution or happenstance but by darker means. She does seem to expect some knowledge of economics on the part of her readers, for example the abstract securities concepts like tranches, collateralized debt obligations, and so forth are not well explained. The explantions are widely available elsewhere in the wake of our latest economic crisis, however. I wish I shared more of her views in the somewhat optimistic last chapter, but the title sets the tone for the overall story.

Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream

We need more voices such as this in today's modern society. I hope you buy a copy (or several) and pass them on to others.

Ask yourselves, has this country improved in the past 10 years? Have the lives of those around you improved?

Let's not keep doing business as usual in this country. Let's actually work to improve our lives instead of the bottom line....