Upstream - Election 2016 Aftermath with Doug Henwood

Episode Date: January 1, 2017

In this Upstream Conversation we spoke with author and journalist Doug Henwood. Doug wrote a book about Hillary Clinton called My Turn: Hillary Clinton Targets the Presidency, which is a critique of Hillary Clinton and her policies from the left of the political spectrum. We spoke with him about the response to his book, his thoughts on the Democratic Party and the election, the economic forecast of the Trump administration, the state of the economy, and much more.  This episode of Upstream was made possible with support from listeners like you. Upstream is a labor of love — we couldn't keep this project going without the generosity of our listeners and fans. Please consider chipping in a one-time or recurring donation at www.upstreampodcast.org/support If your organization wants to sponsor one of our upcoming documentaries, we have a number of sponsorship packages available. Find out more at upstreampodcast.org/sponsorship For more from Upstream, visit www.upstreampodcast.org and follow us on Twitter, Instagram, Facebook, and Bluesky. You can also subscribe to us on Apple Podcasts, Spotify, or wherever you listen to your favorite podcasts.

You're listening to an Upstream Conversation with economist and journalist Doug Henwood. Doug was first featured in our Sharing Economy episode last year and since has written a book about Hillary Clinton titled My Turn, which was based off of an article that he wrote in 2014 for Harper's Magazine. The article outlined a strong critique of Hillary Clinton and her policies from the left of the political spectrum. We spoke with him after the election in his home in Brooklyn. For this upstream conversation, we're going to jump into where Doug begins to tell us how his critiques of Hillary Clinton were received by many of the liberal pundits he was in contact with. We then move quickly into a broader conversation

about challenging our current economic system in the political arena. I sent this email discussion list populated mostly by elite liberal pundits. It's all supposed to be very secret and off the record, but I won't name any names, but you'd recognize them if I mentioned them. And as soon as I said I was doing this project for Harper's, I started by asking, like, okay, what do you like so much about Hillary? Why do you support her? Why is she such a good candidate? No one could come up with an answer. People who'd written about Hillary, these are people, many of them professional writers or political operatives of some sort.

So talking about politics is their bread and butter. And they could not come up with an argument in her favor. And they got really hostile to me. And then they'd say, what do you want, you know? Cruz? That's when people thought Cruz was a possibility. They assumed that any critique of Hillary had to be coming from the right, that you were enabling Republicans by criticizing her. And the consensus of this crowd, which I later came to see as the campaign developed, is kind of pervasive among democratic thinkers, if you want to call them that, is that the country is so right-wing

that making ambitious demands of the sort that Sanders did only will hurt you in the end. So all we can do is wage defensive battles. You can't fight for anything like single-payer, for example, because that would open up, they love this term, relitigating Obamacare. So all we had to do was defend Obamacare, even though it has lots of flaws and is very unpopular among lots of people. But you have to defend it because by demanding single payer, you're going to make things worse. I was stunned by this kind of politics that to to me, in politics, if you want to accomplish something, you make a maximal demand to start with, and then maybe through compromise, you'll get half of what you want.

But if you start out with a quarter of what you want and end up compromising, you end up with nothing. I mean, this is very strange, just in very practical terms. I didn't understand this approach to politics, but it really pervades the Democratic Party. understand this approach to politics, but it really pervades the Democratic Party. And this probably has something to do with why the party is in such terrible shape. Two-thirds to three-quarters of the states are now controlled by Republicans, both houses of Congress and the presidency. Now, all by Republicans. Throughout the campaign, all these Democrats are saying, oh, this party's in meltdown. It was amazing to watch them pronounce the Republican Party dead. And they have done pretty well at the presidential level. But below that, they've been a disaster, to use Trump's favorite word.

The ideological weakness and the lack of political boldness in fighting for what they presumably believe in, I was they presumably believe in. Really, really, I was really stunned by that. But this seems to be a lot of what animates, if you can call it that, democratic thinking now. If you look at some of the progress that has been made in the country, like a lot of people tell me when I have this conversation with them, look at women's rights or look at the state of LGBTQ issues that a lot of this stuff has progressed. And so the Democratic Party has actually been quite successful in a lot of ways. But I'm wondering what your response to that would be. Well, I don't think it's the Democratic Party that took the lead on those things.

The fight for women's rights, the fight for gay rights, were all started by radicals who are making extreme demands. And then when it enters the mainstream political system, they all get watered down. But you need a radical social movement to get anything going. The civil rights movement started with civil disobedience. You need people who are willing to rock the boat, started with civil disobedience. You need people who are willing to rock the boat, and then the politicians may follow suit. But I don't think you start a movement for liberation by looking to political figures and established parties.

You need figurative bomb throwers to get the work done. You mentioned that you would start with maximal demands and then somehow kind of go somewhere in the middle. What would be your maximal demands? Like just in terms of like what would you envision as the future you'd want to see in the United States? Well, you know, not just the United States, but the world. I would like to see an end to capitalism. I'd like to see the end of the private ownership of the means of production.

I'd like to see some kinds of, you know, we can argue about the details or experiment with the details, but some way of having broad social control over what is produced and how, and not have these very important things decided by small groups of very rich people. So that's my maximal demand. That's my ultimate dream. But in the shorter term, there are plenty of things that one could ask for, and by the standards of American politics, almost seem revolutionary in themselves. For example, single-payer health insurance. It's something that works in a country not very unlike the United States. There's no reason why it couldn't work here. The only obstacles are political, meaning the preferences of established interests. That's a maximal demand

that I see no reason even to compromise on. Now, all the other things about transforming the nature of ownership, that's going to take some time. But, you know, that's something like a single payer or more civilized income supports for people. These are all just basic social democratic agenda. All these things seem, at least in some sense, you know, achievable, although it may seem very difficult now that Donald Trump is on the verge of taking office. So what are Trump's economic policies as you see them right now? Because, you know, there were times when he talked that he was going to not follow through with the Trans-Pacific Partnership, or there were times when he is very anti-corporate language,

but then obviously we're seeing who he's appointing into his position. So from what you've known around his policies and what you're seeing right now, what are you seeing in terms of the economic changes that will occur? I just was reading a Bloomberg roundup of the cabinet nominees so far. Collective net worth is $6 billion, the $6 billion cabinet. And as for economic policy, it's really, really hard to read what he's going to do. He talks about tax cuts and infrastructure investment.

And the infrastructure plan that he came up with or his advisor came up, was mostly tax breaks and not very much public spending at all. They wanted to have purely commercial infrastructure projects so they could get private finance, which would mean not what we would think of as infrastructure projects. It would mean like toll roads and things like that. But then even the Republican Congress probably would not pass any kind of large spending program. Congress probably would not pass any kind of large spending program. He's appointing people who would like to privatize Social Security and Medicare, although he campaigned against doing that. So it seems like an extreme right-wing agenda, very dangerous,

that will be easily gotten through Congress. So it just looks like it's smooth sailing for the most right-wing agenda. Even Reagan had more opposition than Trump is going to likely to face. A lot of people on Wall Street think that, and the stock market started rallying almost immediately after he won the election, thinking that he's going to go through some sort of economic stimulus program of some sort to try to push up the growth rate, deregulate and cut taxes, which of course is music to Wall Street's ears. It was amazing how Trump was completely opposed, almost completely, with very few exceptions, by the corporate and Wall Street establishment during the election.

He didn't get a single endorsement from a major CEO. Most of Wall Street was against him. You could see the stock market almost trading in the mirror image of his popularity ratings in the polls. As soon as he wins, he makes it clear that he's going to pursue this tax cut deregulation agenda, and suddenly they all come around to him. So it's very easy to buy off the American elite, just promise them more money and fewer regulations. But people on Wall Street assume that there's going to be some kind of stimulus coming out of the government, whatever precise form it takes. But the Federal Reserve doesn't want that. So there may be a battle between him and the Federal Reserve to match

the one between him and the CIA. What's the battle between him and the Federal Reserve going to be about? The Federal Reserve made it clear in their meeting in mid-December that they'll be raising interest rates on a trajectory that was steeper and more rapid than most people had assumed beforehand. And it seems that they think the economy is pretty close to full employment already and that any additional stimulus would just be inflationary and dangerous. And the Fed made it clear that they're going to do what they can to oppose that by raising interest rates. Janet Yellen, the chair of the Fed, has another year and a few months on her term. I think she expires in February 2018.

I think it's virtually certain that Trump wouldn't reappoint her. 2018, I think it's virtually certain that Trump wouldn't reappoint her. But I wonder if he'd pick some sort of fight with her in a very high profile public way over this, which would be a remarkable development because most presidents don't pick fights with the Federal Reserve. Also, most presidents don't pick fights with the CIA either. So that could be a really tumultuous period if Trump goes to war with the Federal Reserve. Wall Street would freak out if that happened. The whole political establishment would freak out if that happened. So it would be a very interesting series of events to watch him have a fight with the Federal Reserve.

But that's one reason it's hard to really figure out what kind of economic policies will be coming out of Washington in the coming year or two, because for one, you don't really know what Trump thinks. And for two, you don't know what kind of opposition he's going to get either from Congress or the Federal Reserve. So it's hard to figure out, but my guess is nothing good. And what do you think about the idea of the Federal Reserve increasing the interest rates? You think we're ready for that yet? The Federal Reserve has kept interest rates very, very low ever since the financial crisis, historically low, very close to zero.

They've inched them up a little bit over the last year or so and have widely been thought to be planning to do more of that in the coming year. And now they've made it pretty clear that be planning to do more of that in the coming year. And now they've made it pretty clear that they intend to do just that. And we have a fairly low unemployment rate right now. It's below 5%. We have recovered the jobs lost in the recession. A lot of those jobs, the new jobs, stink.

And low wages, poor benefits. There's still a smaller portion of the adult population working than before the financial crisis. So it's really hard to say that we're close to full employment, but from the point of view of people on Wall Street and people within the Federal Reserve System, we are at full employment, and pushing unemployment any lower would be an inflationary threat.

One of the things that they worry most about on Wall Street and also within the Federal Reserve is what they call wage inflation, which means higher wages. They don't like that. If the labor market gets too tight, they don't like it. If workers find it, if it's easy to get a new job and you can tell your boss to go jump in a lake, they don't like that either. They want people to be a little fearful. boss to go jump in a lake, they don't like that either. They want people to be a little fearful. And we're not at that point yet where they can tell the boss to go jump in a lake, but I think they're afraid that that might happen sometime in the next year or so. So I think there's still an awful lot of vulnerabilities in the economy. A whole lot of the problems that were exposed by

the financial crisis of 2008 have not been cured. The banking system is probably in better shape than it was before the crisis. But an awful lot of people are still highly in debt. American corporations have been borrowing money like crazy over the last several years. And not to invest in anything, but mainly just to take each other over and buy up their own stock. in anything, but mainly just to take each other over and buy up their own stock. So any significant increase to interest rates, any slowdown in an already slow rate of economic growth could result in a recession, quite possibly a serious one. And there's certainly a lot of bad stuff going on in the outside world that would make it

even worse. So it's a very risky proposition to start raising rates. And I'm a little concerned the Federal Reserve may be overestimating the underlying health of the economy. But on the other hand, you can't have an economy that's just sustained on 0% interest rates forever. We need something more substantial. We need a real infrastructure program.

We need real income supports. We need real efforts at closing or reducing the polarization between rich and poor. You know, they're all really what Wall Street likes to call real sector, as opposed to financial sector stuff. And we're not going to get that. You know, if anything, we're going to get the opposite under Trump. So low interest rates are the only stimulative game in town now. Trump. So low interest rates are the only stimulative game in town now. And to have those disappear with all these long-term vulnerabilities still unaddressed, it's scary.

This so-called expansion, we're now about eight years out of the financial crisis. And it's by the history of the economic cycle. That's quite an old expansion. By just timing, we're due for a recession fairly soon. And it could be a bad one because we still have all these underlying problems that have not been addressed. If you look at the long-term strategy of elites during the neoliberal era, since the late 70s, early 80s,

what they've done is attack people's living standards, squeeze wages, squeeze benefits, make the conditions of employment less secure. Everyone, it's become a fact of daily life. People just know what that's all about now. And for the first part of that, from roughly, say, early 80s into the financial crisis, people are able to use borrowing to offset the squeeze of their incomes to maintain some kind of semblance of a middle-class standard of living. After the financial crisis, that became impossible. Households have not been borrowing anything like what they used to.

And that's one of the reasons the economy has been so weak over the last seven or eight years is that there's just can't supplement weak incomes with aggressive borrowing. of all people, did a paper a couple of years ago arguing that we need to do something about income polarization just for purely economic reasons, that financial crises are generated because people borrow a lot of money when their living standards are under pressure. And then at some point, they can't borrow anymore, and then things fall apart. And they do the example of the 1920s and the recent period and saying we've got to do something to boost incomes at the bottom and the middle. But we're not doing that, of course.

And there are no powerful interests or completely opposed to that agenda. So it seems kind of scary to think about that fundamental problem not really being addressed. No new model of how to come up with this economically sustainable system. Something broke in 2008 that hasn't been repaired again. And if we face another recession with all these things unaddressed, then it could be messy. Is there a part of you that thinks that right now where we're at is potentially the end of this system, this capitalism as we've known it maybe for the past,

however long we've had this specific iteration of it? Yeah, 18th century, 13th century, who knows when they started exactly. I don't know. something seems very fundamentally broken. And I think that's particularly true, well, I don't know if it's particularly true in the United States because Western Europe looks like a mess now too. But in the United States, I've gotten the feeling that we've just been in a slow decline for the last several decades. And now the decline just seems to have accelerated rapidly.

It feels like everything is either falling apart or about to fall apart. And I don't think I'm alone in that feeling. I think a lot of people feel that way. They may differ in their diagnoses exactly how and why and what might be done about it. But I think that's a very common perception, and it seems right. I mean, something seems very, very seriously wrong. And, you know, behind all the biggest threat, the climate crisis is so profound, and we are unable to think or talk about it, that we don't even know, you know, it's already

underway. I mean, it's wrong to speak of this thing in the future tense tense but it's certainly going to get significantly worse over not that many years and um it just seems like everything is going to hell and no one knows really how to talk or think about it or what to do about it uh i guess that's what things feel like when they're falling apart you just like sort of everybody's in a state of shock and unable to move or do anything. Then you have so many entrenched interests that don't want to change anything. It looks bad. Full of ideas on how we might change things,

but the political system doesn't seem too receptive to them at the moment. So I don't know. It just really does look like it's all flying to pieces. I'm wondering if you could do a little bit of a check-in of how you're doing emotionally with all this kind of stuff. As you have been talking about, you've had this kind of critical feedback and really feeling like it's all kind of spiraling down. So how do you deal with the kind of everything that comes up for you? And also what's most alive for you right now in terms of your questions or where you want to put your energy? Kind of like, what are you working on next now that this book, you know, is done? And so, you know, just kind of a check-in of how

you're doing and feeling with all this, what you do to be able to continue to go and work on this, and then where are you heading or what direction is your work taking? Well, these have all been very emotionally difficult. The primary campaign, I think I lost some friends for being opposed to Hillary. And I don't remember politics interfering with personal life anywhere near like this. I'm 64 years old. I don't remember politics interfering with personal life anywhere near like this. I'm 64 years old. I don't remember anything like this before. And then the Trump victory has been

extremely dispiriting. And the prospect of four years of this clown is just frightening to think about. I have a 10-year-old kid. I really worry about the world he's going to inherit. Most of my friends and family are in varying states of emotional distress over it. It's been very, very difficult emotionally, and more so than usual. I mean, I've been very involved in politics and have been for a long, long time, but I don't remember it feeling so personally affecting as it has. And so, yeah, there's a mix of paralysis and rage and fear, all of which are very unpleasant emotions to have. Every now and then I can capture some sense of hope

that this will energize a degree of resistance that could lead to something better over the longer term, but the short to medium term is going to be pretty terrible. And what I'm planning to do just in work terms is that I've been thinking about for quite a number of years, writing a book about the rot of the American ruling class. And it's just become greedy, just greedy and destructive to a degree we haven't seen since the early 20th, late 19th century.

So I want to write something about that, the decline of the American elite. Sometimes it seems like, you know, fish rot from their head. The rotting of American society might have something to do with this elite we have, which is just utterly driven by money and the maximum accumulation of money in the shortest possible time and, you know, the hell of the consequences. So that's my... As I said, they were unable to stop the rise of the consequences. So that's my... As I said, they were unable to stop the rise of Trump,

but now that Trump is won, they're immediately accommodating to him. It's just a debased and painful thing to watch. So I want to write something critical, but I also hope amusingly mocking about them. And when you use the rot of the ruling class, you mean as a verb. So you're saying that it's actually getting worse, the ruling class is getting worse, not as it's always been bad?

Well, it's always been bad in the sense it's a ruling class, but the people coming out of World War II, the elite that really kind of ran the country for several decades, was capable of thinking over the longer term and capable of making concessions for the health of the system. But that all began to fall apart in the late 60s, early 70s. And then it kind of reconstructed itself during the Reagan years in a much more aggressive, confrontational way. So we've had, for the last 30 years, a one-sided class war

in which they just keep attacking and taking away. And there has been very little in the way of a political challenge to them. And I think one reason that we had a much more coherent and far-sighted elite in the middle of the 20th century was that they were worried about challenges coming from below. The militant working class in the 1930s, going back even to the late 19th century, into the early 20th, there was a very militant working class then. The progressive era reforms were in response to that. The New Deal, of course, was partly motivated by fear of the whole system falling apart. But there were also factory occupations and a whole lot of union organizing going on.

So there was a real threat from below, and then add to that the fact that there was the Soviet Union as a rival, and they constantly felt anxieties about what the challenge of the USSR meant, not just domestically, but also in competing for the affections of the rest of the world. But when the Soviet Union collapsed and the unions started falling apart and there just was no longer any kind of challenge coming from below, they got very greedy and complacent. And now we just have this system that just seems utterly corrupt and broken.

And I don't know how you go about addressing that, but I think the rot of the elite is a very important part of the story in this larger rot. For more from Upstream, please visit www.upstreampodcast.org.