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How the Crisis Went to Waste

Having spent decades assuring the public that their renunciation of the New Deal was genuine, in 2008 Democrats suddenly decided that the New Deal was back and that Franklin Roosevelt was more relevant than ever.
It took a global financial catastrophe to make them reverse themselves in this way—a recurrence of the Great Depression complete with Wall Street swindles, a burst financial bubble, and weeks of panic as unemployment spiked, assets tumbled, and the economy’s foundations quivered. The confident days of the free-market consensus seemed to be shuddering to a close. The promise of a universally affluent postindustrial era now looked as empty and forlorn as a row of abandoned McMansions on some lonely cul-de-sac in the Nevada desert.
It wasn’t merely Barack Obama’s singular identification with “Hope” and “Change” that made him seem like the reincarnation of Franklin Roosevelt; in contrast to every other candidate, he recognized how political convention had given us economic disaster. In March of 2008, he gave his speech at Cooper Union in New York City appraising the crisis even as it developed; he understood the parallel with the bubble and burst of 1929; he knew how deregulation had contributed to our present predicament; and he blamed Wall Street for giving us an economy in which ordinary people never got a chance to prosper. It was a complete break with the school of Democratic Party thinking I have described in these pages.
His adversaries also did their part to make the parallel complete. President George W. Bush basically checked out for the crisis, leaving matters to his Treasury secretary, Hank Paulson. This official, in combination with Fed Chairman Ben Bernanke, proceeded to infuriate the public with a series of massive bank bailouts. Nor was the Republican presidential candidate, Senator John McCain, really up to the shocking turn of events; in his desperation and muddlement he announced that “the fundamentals of our economy are strong” on the very day of the Lehman Brothers collapse.
Obama, by contrast, seemed capable, youthful, vigorous, and intelligent. The volunteers who fuelled his run were so organized and enthusiastic that they appeared, to quote a team of scholars who have studied them, “more like a social movement than an electoral campaign.” As the economic crisis deepened, Obama’s greatness seemed to intensify; 100,000 listeners showed up at a rally for the candidate in St. Louis that October; another 100,000 turned out in Denver. There were an estimated 240,000 people on hand in Chicago on election night when Obama swamped McCain; the largest crowd ever to attend a presidential inauguration showed up to witness his swearing-in on January 20, 2009.1
The Democratic landslide carried away years of crusted ideas about the benevolence of high finance, and it also seemed to herald the end of decades of panicky Democratic capitulations to the right. Obama appealed to many of the fought-over demographic groups, and he did it without the concessions that party orthodoxy said he needed to make. He wasn’t a Southerner; he wasn’t mired in the culture wars; he hadn’t tried to prove he was tough by supporting the Iraq war; he didn’t triangulate and split hairs and cater in some nonverbal way to the white backlash; hell, he wasn’t even white himself. For good measure, he snubbed the Democratic Leadership Council when they met in Chicago in 2008.
The connection between the confident new president and the hero of the 1930s was noted again and again by newspaper and magazine journalists. That a period of activist, FDR-style government should of necessity follow the collapse of capitalism seemed to be a truth universally acknowledged; writers on the left were enthusiastic about the prospect while conservatives trembled at the imminent reversal of everything they had achieved over the decades. “Roosevelt-mania” had seized America, declared the Economist magazine; Obama himself was reading books about the Depression, and on an episode of 60 Minutes in November 2008 he said “what you see in FDR that I hope my team can emulate is not always getting it right, but projecting a sense of confidence, and a willingness to try things. And experiment in order to get people working again.”2
Obama’s $800 billion stimulus program, introduced in Congress six days after his inauguration, was said to be so sweeping it constituted nothing less than a “New New Deal,” to quote the title of a book by Time magazine’s Michael Grunwald. Another frequent comparison concerned Roosevelt’s famous “brain trust,” the group of professors and intellectuals the president called together in 1933 to help him plan the nation’s economic recovery; Obama, it was said, needed to do exactly the same. The incompetents of the Bush Administration had run the country into the ground; perhaps what we needed most of all was government by the capable. Brains would find the way out of this crisis.
That was certainly what I myself thought at the time. Another journalist who seemed to feel this way was Jacob Weisberg, whom we last met calling attention to Clinton-era “Clincest” and who now called for a “Brilliant Brain Trust” in Newsweek.3 Obama needed to “pick the smartest people he can find for his cabinet,” to “give greater weight to intellectual acumen and subject-specific knowledge.” The embodiment of such an approach, Weisberg went on to claim, was the economist Larry Summers, formerly the president of Harvard University and “the outstanding international economist of his generation.” Summers had his problems, Weisberg admitted; he could be arrogant and contemptuous toward the less intelligent. “But these are the defects of a superior mind,” Weisberg wrote, the unavoidable price you pay for having such a gifted individual on your team.
The professorial Obama proceeded to fill his administration in precisely this way. According to Newsweek reporter Jonathan Alter—who has written books on both Obama and FDR—some 90 percent of the new administration’s staffers had professional degrees of some kind, and some 25 percent had either graduated from Harvard or taught there. Obama’s team included a Nobel Prize winner, a Pulitzer Prize winner, a MacArthur “genius grant” winner, numerous Rhodes Scholars, and Summers, who presided over his National Economic Council. “It’s merit-based,” Claire McCaskill, senator of Missouri, is reported to have said of the president’s hiring strategy. “It’s getting the best people and best ideas.”4
The process by which “the best people” were chosen is hinted at by an episode Chris Hayes describes in Twilight of the Elites. It was 2009, the president was picking a new Supreme Court justice, and pundits and presidential advisers alike were carefully weighing the qualifications of the well-graduated individuals under consideration. One attribute in particular commanded their attention: Which candidate was the “smartest”? On and on the wise ones reasoned, deducing somehow that one candidate was “smarter” than a second, who was, in turn, smarter than a third, who was, sadly, “not as smart as she seems to think she is.” Of all the controversies before the nation and the many nuances of legal thought, this is what it came down to for the liberal class: smartness. For them, the Supreme Court was like a really selective institution on the far side of some cosmic SAT test.
Putting “the best people” in charge takes us to the essential battleground of American politics, as some people see it. This is what so many believe the war between Ds and Rs comes down to: intellect versus ignorance; science versus faith; Harvard versus wherever it was that Sarah Palin went to collidge. Summers himself was a forceful exponent of this point of view, saying in the first months of the new administration, “We’ve gone from a moment when we’ve never had a less social-science-oriented group”—meaning the philistine government of George W. Bush—“to a moment when we’ve never had a more social-science-oriented group. So … we’ll see what happens.”5
SAME-DOT-GOV

It has now been seven years since the Day Change Came, and we can indeed see what happened. On the most urgent issue facing the nation—what to do about the banks—the intelligence quotient of the president’s team turned out to matter almost not at all. The erudite Obama administration used its mandate to continue the policies of the crude and tasteless Bush administration essentially unchanged, at least for the first few years. The bank bailouts proceeded as before. Tim Geithner, who had helped to run the Bush administration’s bailouts from his seat at the New York branch of the Federal Reserve, now ran the Obama administration’s bailouts from his seat at the Treasury Department. Ben Bernanke was re-upped at the Federal Reserve Board in Washington. Summers himself went on TV to defend the Policy of Same at its very worst juncture, the time in 2009 when bonuses went out to the executives of the failed insurance company/hedge fund AIG.6
For the new administration, as for the old, an obliging consideration toward banker confidence took precedence over everything else. For fear of frightening the men of lower Manhattan, the Obama team dared undertake none of the serious measures the times obviously called for. No big Wall Street institutions were put into receivership or cut down to size. No important Wall Street bankers were terminated in the manner of the unfortunate chairman of General Motors.
As a result, the situation continued as follows: The Wall Street banks, being “too big to fail,” enjoyed a more-or-less explicit government guarantee against bankruptcy, but in order to enjoy that protection they were not required to stop doing the risky things that had got them in so much trouble in the first place. It was the perfect outcome for them, with the taxpayers of an entire nation essentially staking them to endless turns at the roulette wheel.* Writing of this awful period, Elizabeth Warren (who worked then as a bailout oversight official) concluded that “the president chose his team, and when there was only so much time and so much money to go around, the president’s team chose Wall Street.”7
The classic and most direct solution to an epidemic of corrupt bank management and fraudulent bank lending is to use the authority that comes with rescuing failed banks to close those banks down or to fire those banks’ top managers. This was evidently never seriously considered by Obama’s team of geniuses.
Another landmark Thirties policy option—requiring banks to separate their investment operations from their commercial banking services—was ultimately taken up by Democrats, and a version of it was even written into the Dodd-Frank bank reform measure. Whether and how it will actually be enforced is unknown as of this writing, since the law’s provisions and loopholes are still being written and hollowed out by lawyers and regulators. We do know this: the too-big-to-fail banks are bigger than they were before the crisis, having swallowed up other banks as part of the rescue scheme. We also know that people who work in securities still make far more than those who toil in other industries—the average salary for people in that line of work in New York City was $404,000 in 2014—and their bonuses have almost returned to the levels achieved in the days before the crash.
On the second-most-urgent issue facing the nation—what to do about the recession and the unemployed—the administration’s “New New Deal” program of deficit spending proved to be insufficient for what the ailing nation required. In an uncanny replay of the episode with which the Clinton administration had started, Obama’s economic brain trust instructed him not to frighten markets by spending too much and expanding the federal deficit too greatly.8 It was exactly the wrong advice for the moment, as less orthodox economists like Paul Krugman spent those years insisting.
But Obama’s stimulus package did get through Congress, and it was larger in nominal dollars than any stimulus had ever been before. Unfortunately, the biggest single part of it was wasted on tax cuts designed to lure Republican votes. Another chunk was wasted on coaxing state governments to embrace charter schools and to open their education systems to consultants and entrepreneurs. The Big Stimulus also contained many good things: subsidies for clean-energy projects, a push to update medical record-keeping, billions for high-speed rail projects, and support for a long list of state and local construction schemes—the famous “shovel ready” projects about which everyone was talking in 2009. If you can name just one of them today without going to Wikipedia, you have my respect.9
What the sprawling stimulus measure did not include was the obvious thing, the most effective thing, the thing Americans of all ages remember that Franklin Roosevelt did—direct federal job-creation in the WPA manner. Obama was careful to avoid such things, because they would have expanded the federal workforce. Instead, his New New Deal merely sent money to others; on its own it built no tunnels in national parks, constructed no Art Deco county courthouses, painted no murals on post office walls, published no guidebooks to the states. As a result, it missed out on another achievement of the Roosevelt era: the creation of spectacular and unmistakable monuments to activist government.10
Unemployment did eventually come down, of course, as the economy healed from the bursting of the housing bubble. But the process was slow, it somehow didn’t bring rising wages, and eventually the president came to believe that it couldn’t be otherwise. According to the journalist Ron Suskind, President Obama convinced himself in late 2009 that there wasn’t much he could do about the problem anyway; that, thanks to productivity growth, a high-unemployment economy was “the way it was supposed to be,” in Suskind’s words.11 It was on the basis of this fatalistic illusion, Suskind continues, that Obama instructed his team not to push for another round of stimulus spending.
A NEW DEAL FOR WHOM?

If this was a modern-day New Deal, it was a timid iteration that was not particularly concerned with the big-picture deterioration of average people’s economic situation—the wages that never grew, the rising incomes that always went to someone else. In terms of rhetoric, Barack Obama could be an eloquent champion of these people and their problems; it is thanks in part to his speeches that “inequality” became a mainstream political issue at all. But in terms of deeds, the Obama administration repeatedly sacrificed working people’s interests in the service of some greater goal, or for what Washington called “optics,” or for no discernible reason at all.
Things didn’t go down this way because helping average citizens during hard times is a utopian dream, but rather because those citizens’ interests conflicted with the interests of the upper strata. A choice between the two had to be made, and Obama made it.
The most notorious example was a Democratic proposal that would have allowed judges to modify homeowners’ mortgage debt when they filed for bankruptcy—a process called “cramdown” that would have been extremely helpful to millions of homeowners but would also have had unpleasant consequences for whoever it was who owned the mortgages. In 2008, Obama had announced he was in favor of cramdown, but when it came up in the Senate in April of 2009, the president and his team, in the concise description of Obama biographer Jonathan Alter, “wouldn’t lift a finger to help.”12 With the banks lobbying energetically against it, the measure naturally failed.
Fortunately, the original bank-bailout measure that had passed Congress under President Bush included a component that was supposed to assist homeowners who were underwater on their mortgages; unfortunately, it was implemented in such a way as to become another costly fiasco, sometimes actually worsening the homeowners’ situation. Neil Barofsky, one of Elizabeth Warren’s colleagues in overseeing the bailouts, met with Treasury Secretary Geithner in the fall of 2009 to talk it over. Here is how the meeting went, according to Barofsky’s memoir:

In defense of the program, Geithner finally blurted out, “We estimate that they can handle ten million foreclosures, over time,” referring to the banks. “This program will help foam the runway for them.”
A lightbulb went on for me. Elizabeth had been challenging Geithner on how the program was going to help home owners, and he had responded by citing how it would help the banks.13
Workers got the same treatment. As a presidential candidate, for example, Obama had loudly denounced the still-unpopular NAFTA; as president, he let such talk drift away. In Obama’s early days, labor’s highest priority in Washington was a legislative proposal called the Employee Free Choice Act, which would have made it easier for workers to bargain collectively with management, and might even have reversed the long slide in the unionized percentage of the workforce. Again, Obama declared himself in support of the measure; he had even voted for it as a U.S. senator. Again, though, as Wal-Mart and the Chamber of Commerce mobilized their lobbyists against the measure, the president’s audacity seemed to disappear. The White House simply chose to let it go. One detail that caught my eye at the time was the amazing number of erstwhile liberals that business interests had hired to do their lobbying on this matter: former assistants to John Kerry, to Rahm Emanuel, to several Democratic senators, even to the secretary of labor.14
When the president did take a bold stand, it sometimes came at the expense of those same working Americans. I am referring to the 2015 debate over the Trans-Pacific Partnership treaty, which aimed to extend the NAFTA pattern to many countries on the Pacific Rim. Predictably, the phrase “no-brainer” made its appearance again, most notably from the pencil of an economist who thought the question before us was not the treaty’s particulars but whether trade was a good thing. Obama himself, having spun a full one-eighty since his days criticizing NAFTA, accused the treaty’s opponents of stupidly wanting to “pull up the drawbridge and build a moat around ourselves.”15
The enlightened ones who knew better than to pull up the drawbridge were the industry groups—representatives of Big Pharma and Silicon Valley, for example—who got to advise the officials negotiating the partnership. Unsurprisingly, the treaty they produced will serve these industry groups well: like NAFTA, it is mainly designed to protect their investments abroad. For example, the TPP will help to obstruct trade in cheap generic pharmaceuticals and push people toward buying the expensive brand names. American workers will receive no such protections, of course; for them, it’s to be competition to the death. Their employers, on the other hand, will be further empowered to move operations at will, traveling to low-wage, nonunion locales as they see fit and suing countries for adopting policies that disrupt their profits.
Treating workers and owners in these sharply different ways has been the rule of the Obama years, but there have also been exceptions to it—big ones. The one great achievement of Obama’s presidency, the health insurance reform known as “Obamacare,” has many flaws, but it also subsidizes the purchase of coverage by people who otherwise can’t afford it. This detail was an important victory for the poor—and also a measure without which Obamacare could not accomplish the other things it does, such as stopping insurers from cancelling sick people’s insurance. Another triumph was the establishment of a Consumer Financial Protection Bureau in 2010, a much-needed regulatory agency that is supposed to keep an eye on predatory practices by payday loan shops, credit card companies, and the like. The CFPB is especially interesting to the historian of modern liberalism because its mission statement denounces debt products of the past that were “overly complicated” as well as “loans that [Americans] did not fully understand”—qualities that some well-graduated Democrats often think of in positive terms.16
One place where workers definitely came first was Obama’s 2012 reelection campaign. Economic conditions were still terrible for ordinary people, even though the recession was over by then, and while the Republican nominee, the wealthy venture-capitalist Mitt Romney, tried to blame Obama for this state of affairs, the Democrats had a reply that was simpler still. They played the class card. Obama gave the first of his many speeches deploring inequality in December of 2011 in the small town of Osawatomie, Kansas—symbolically important as John Brown’s hometown and as the place where Theodore Roosevelt announced his conversion to progressivism—and over the course of the next year populist rhetoric came to suffuse his party’s talk. All of it pointed to one single conclusion: rich-kid Romney, blue-ribbon fat cat, doesn’t get people like you. He “may get the economy, he may know how to make money, he may have made hundreds of millions for him and his investors,” an Obama adviser told journalist Dan Balz. “But every time he did, folks like you lost your pensions, lost your jobs, jobs got shipped overseas.”17
That’s how the campaign of 2012 came to feature the starkest proletarian appeals in many years. That’s how the Democratic convention became a long exercise in lighthearted class animus. And that’s how a Democratic Super PAC came to air a shattering TV commercial in which a worker at a paper company that had been taken over by Bain Capital, Romney’s firm, recalled how his new bosses instructed him to build a stage; when he had finished the job, those bosses climbed up on that stage and fired that worker and everyone else at the company. The commercial was so shockingly maudlin that, according to Balz, voters in Ohio could recall “specific details” about the spot even after it had not aired for seven weeks.18
Talk aside, the situation of working people has continued to deteriorate. Since the recession ended in June 2009, the country’s gross domestic product has grown by 13.8 percent; in that same period, salaries and wages have gone up a mere 1.8 percent. The economic clout of labor unions has continued to shrink, as the percentage of private sector workers who were members of a union has dwindled from 7.2 percent in 2009 to 6.6 percent in 2014. The “labor share” of the nation’s income, as I mentioned in the Introduction, declined sharply from its old postwar average; during the Obama presidency it has stumbled along at or near its all-time lows.19
The “profit share,” meanwhile, has hit all-time highs, as has the Dow Jones Industrial Average, the NASDAQ, and Wall Street compensation. There’s been another novel factor as well. In the past, administrations taking office after a wave of corporate crime would often use high-profile prosecutions to signal that a tough new sheriff was on the job. Obama chose not to. Instead, his Justice Department let slide nearly every bit of bank misbehavior to make headlines, from the countless apparent frauds of the housing-bubble days to the huge LIBOR-fixing scam to the “robo-signing” mass-foreclosure scandal of 2010. All these outrages—and yet, according to one study, Federal prosecutions for white-collar crimes hit a twenty-year low in 2015.20
In a 2012 speech, the head of Obama’s Criminal Division, Lanny Breuer, announced that he was sometimes persuaded when banks and corporations asked him not to prosecute on the grounds that it might cause the company in question to fail and thus hurt the economy. “We must take into account the effect of an indictment on innocent employees and shareholders,” Breuer said, describing a courtesy that American prosecutors extend to no other group and that, by its nature, makes a joke of the idea of equality before the law.21
This was Clintonism on monster-truck tires. Not only is it more profitable to make your living by speculation than by working, but it puts you above the law as well.
THE OCEAN-LINER PRESIDENCY

Democrats lost control of the House of Representatives in 2011 and of the Senate in 2015. Although Obama was resoundingly reelected in 2012, he did little on equality issues once the Tea Party tidal wave hit the Washington beach.
By then he had already veered off in pursuit of a “Grand Bargain” in which Democrats would offer up their once-sacred social insurance programs to the budgetary knife if Republicans would consider tax increases. To co-chair the commission charged with hammering out the budget agreement, Obama even chose Erskine Bowles, the man who had been Clinton’s emissary to Newt Gingrich in the secret negotiations over privatizing Social Security.
The Bowles-Simpson Commission failed in its unsavory budget-balancing mission. So did all the other similar efforts of those years. No one outside Washington could really follow the two sides’ complicated budget battles, though they dragged on year after year. But Obama’s determination to win some great Clintonian victory over the federal deficit grew so strong that for a while it cancelled out nearly everything else that had once animated his hopeful supporters.
Obama still had his remarkable skill with words, but at some point the eloquent president reportedly lost his faith in persuasion.22 His presidency had its great moments, of course: the Osama bin Laden raid, the diplomatic recognition of Cuba, the deal with Iran. But on inequality he was reduced to making speeches.
To the dismal record of the later Obama years, leading liberal-class thinkers have responded in an entirely characteristic manner: by constructing a theory of American politics in which inactivity was the best anyone could hope for. Obama has not really disappointed at all. On the contrary, they’ve claimed, the powerlessness of the presidency has been one of the great determining facts of American history—a truth established by political science itself—and Obama has grappled with it as best he could. Presidents, wrote New York Times columnist Frank Bruni in 2015, are “not always mighty frigates parting the waters”; sometimes they’re “buoys on the tides of history, rising and falling with the swells.” The true problem, liberal thinkers concluded, were the whining, unrealistic idealists who expected so much from Obama—and of course those diabolical Republicans in Congress, constantly outmaneuvering the poor, powerless man in the Oval Office.23
By June 2015, Obama himself had taken to saying the same thing, relating to the comedian Marc Maron how he often had to tell his disappointed supporters that “you can’t get cynical or frustrated because you didn’t get all the way there immediately.” A little later he offered the classic metaphor for U.S. government inflexibility:

Sometimes the task of government is to make incremental improvements, or try to steer the ocean liner two degrees north or south, so that ten years from now, suddenly we’re in a very different place than we were. But at the time, at the moment, people may feel like, we need a 50 degree turn, we don’t need a two degree turn.… And you can’t turn 50 degrees.
And it’s not just because of corporate lobbyists, it’s not just because of big money, it’s because societies don’t turn 50 degrees. Democracies certainly don’t turn 50 degrees.24
It is easy to understand why pundits want to write apologetics for the president, and it is even easier to understand why Obama wants to describe his presidency in such a way. Having put so much faith in his transformative potential, his followers need to come to terms with how nontransformative he has been.
OCEAN LINERS WERE MEANT TO FLY

If our goal is to rescue the reputation of a hero who turned out to have clay feet, this is surely the way to go. Ocean liners are hard to turn. Presidents don’t have a lot of power. Republicans are in league with the devil.
If what we are concerned with is inequality, however, it would behoove us to admit the obvious forthrightly: that Obama could have done many things differently, that the Republicans aren’t superhuman, and that the presidency is in fact a powerful office.
It is so powerful that, even in Obama’s worst period, with Congress entirely in the hands of intransigent Republicans, it would still have been possible for the president to use the executive branch to do big and consequential things about inequality. To name just one: He might have resumed Franklin Roosevelt’s legacy on antitrust enforcement.
Allow me to explain. Not too long ago, monopolies and oligopolies were illegal in America. This was because our ancestors understood that concentrated economic power was incompatible with democracy and equality in all sorts of ways. Since the days of Ronald Reagan, however, every administration has chosen to drop the enforcement of the antitrust laws except in rare cases. This has come to mean that mergers and takeovers are permitted in nearly all instances, and achieving monopoly has once again become the obvious objective of every would-be business leader. From Big Pharma to Silicon Valley, everyone in the C-suites knows that this is the path to success today. “Competition is for losers,” they say. Unless your startup has a plan for cornering and using market power, you can forget about interest from venture capital.25
Tolerating such practices has had obvious consequences, both in our everyday economic lives—where citizens face unchallengeable economic power everywhere from beer to bookselling—and in terms of the gradual plutocratization of society. Unrestrained corporate power has naturally yielded unrestrained wealth for corporate leaders and their Wall Street backers.
Barack Obama could have changed this, and by extension, changed the political climate of the country merely by deciding to enforce the nation’s laws in the same way that administrations before Reagan did. The antitrust laws themselves were written a century ago and are still on the books. The current Republican Congress would have had little say in the matter. It would have been almost entirely up to the executive branch.
On this front and many others* Obama was completely free to act, especially before 2010, and even after the Republicans took Congress. The times certainly called for it, with Amazon, Google, and AB InBev romping the globe. Still, he did next to nothing. In fact, anti-monopoly investigations conducted by Obama’s Justice Department went from a barely breathing four in 2009 to a flat zero in 2014.26 (By way of contrast: In 1980, under a different Democratic administration, there were 65 such investigations.)
Let us return again to the financial crisis and the Wall Street bailouts—the episode that will define our politics for generations, that captured everything that is going wrong with the country, that ensured Obama’s election as president in the first place. To say that Obama fumbled this most critical issue is to understate the matter pretty dramatically. More to the point is the great question of why he fumbled it so dramatically. Was it because the ocean liner couldn’t be turned?
On the contrary. It was fully within Obama’s power to react to the financial crisis in a more aggressive and appropriate way: laws were in place, there was ample precedent, he wasn’t forced to pick the men whom Democrat Senator Byron Dorgan plaintively called “the wrong people” for his economic team.27 It wasn’t the Republicans who made Obama choose Tim Geithner to run the bailouts or Attorney General Eric Holder to (not) prosecute dishonest bankers or Ben Bernanke to serve another term at the Fed.
It would have been good policy had Obama reacted to the financial crisis in a more aggressive and appropriate way—by which I mean, the economy would have recovered more quickly and the danger of a future crisis brought on by financial fraud or concentrated economic power would have been reduced.
It would have been massively popular had Obama swung the wheel of the ocean liner and reacted to the financial crisis in a more aggressive and appropriate way. Everyone admits this at least tacitly, even the architects of Obama’s bailout policies, who like to think of themselves as having resisted the public’s mindless baying for banker blood.28 Acting aggressively might also have countered the sham populism of the Tea Party movement and prevented the Republican reconquista of Congress.
There were countless opportunities for the kind of decisive action I am describing: Obama could have questioned or even unwound Bush’s bailouts; he could have fired the bad regulators who let it all happen; he could have stopped the AIG bonuses instead of having his team go on television to defend them; he could have pushed to allow bankruptcy judges to modify mortgages; he could have put the “zombie banks” into receivership; he could have shifted FBI agents back to white-collar crime; and so on.
Obama did none of it.
This is a critical point. On the matter of dealing with Wall Street, there was no conflict between idealism and pragmatism. The high-minded and Jeffersonian move, in this case, would have also been the practical move, the policy that would have been healthiest for the nation, the one that would have paid off best in the crude terms of public opinion polls.
And still he didn’t do it. He didn’t even try. In fact, Obama’s team did the opposite. They did everything they could to “foam the runways” and never showed any real interest in confronting the big banks.
Obama didn’t play the greatest of all issues the way he did because getting tough with Wall Street would have looked bad or because the presidency lacks sufficient power. Everything I just mentioned was eminently doable in 2009. Putting banks into receivership is a common and even sometimes necessary legal procedure. The country was begging Obama to do it. But he chose not to.
Once we acknowledge this, we must acknowledge the possibility that Obama and his team didn’t act forcefully to press an equality-minded economic agenda in those days and in the years that followed because they didn’t want to. That he and they didn’t do many of the things their supporters wanted them to do because they didn’t believe in doing those things. It wasn’t because the ocean liner would have been too hard to turn, or because those silly idealists were unrealistic; it was because they didn’t want to do those things.
The Defects of a Superior Mind

Let us now examine in detail each of President Obama’s three big legislative victories, which he won in the two years before the Democrats lost control of Congress in the 2010 elections: The big stimulus package of 2009, the Dodd-Frank banking measure, and the landmark Affordable Care Act. In certain remarkable ways, each of these legislative achievements followed the same characteristic pattern—one that diminishes their effectiveness but allows Democrats to pursue the professional consensus they crave.
THE ENDS OF COMPLEXITY

All of them, for starters, chose complexity over straightforwardness. The virtue of the old Glass-Steagall Act, which regulated the banking industry from 1933 until its final repeal in the Clinton era, was its simplicity: It structurally separated investment banking from commercial banking and forced those parts to compete with one another. The 2010 Dodd-Frank Act, which was supposed to re-regulate the business, uses a different method—it instructs federal agencies to make detailed new rules for the industry. As I write this, the agencies have finished about two-thirds of that task, with their regulatory work now running to a staggering 22,000 pages of rules, loopholes, and exceptions.
This intricacy does not make Dodd-Frank an outlier among Obama-era reforms; this makes it typical. The Affordable Care Act is even more profoundly dizzying. On the matter of reforming the country’s health care system, there were in 2009 two admirably straightforward proposals on the table: a Canadian-style single-payer system and the briefly popular “public option,” in which the government itself would provide competition to existing health insurance companies. President Obama had publicly declared his support for both these choices over the years. Neither won the favor of Obama’s all-important proxy on this issue, however, by which I mean former Senator Max Baucus, Democrat of Montana, a notable friend of the lobbyist and (as of this writing) the U.S. ambassador to China.
Instead we got Obamacare, with its exchanges, its individual and employer mandates, its Cadillac tax, its subsidies to individuals and to the insurance industry, and its thousands of other moving parts, sluicing funding this way and that. Complexity is its most striking characteristic. No one is really certain how it operates, whether it is a tax or a mandate (OK, the Supreme Court has determined that it’s the former), or whether it will truly make health care more affordable. In a video clip accessible on YouTube, Democratic Senator Jay Rockefeller can be seen describing Obamacare as “the most complex piece of legislation ever passed by the United States Congress”; a former state health-insurance official in Massachusetts, whose health care system was Obama’s model, moaned that “We took the most complex health care system on God’s green earth, and made it 10 times more complex.”1
Why did Team Obama choose to go this route? One explanation is suggested by the infamous remarks of Obamacare consultant Jonathan Gruber, an MIT economist who was videotaped telling an academic conference in 2013 that the law was deliberately “written in a tortured way” with a “lack of transparency” that was meant to confuse evaluators and thus get it past the clueless and bewildered public. (Gruber’s exact phrase was “the stupidity of the American voter.”2) This is repugnant, but it seems plausible. We know that complexity serves exactly this purpose in other branches of professional practice—think of the baffling opacity of Wall Street’s technical dialect, which is designed to make outside scrutiny difficult if not impossible. Why not here, too?
Had fairness and greater equality been the primary goals of either Obamacare or Dodd-Frank, they would no doubt have been far more straightforward. But complexity allowed Obama to square the circle of modern liberalism. It allowed him to achieve the double mandate of making health care more affordable while preserving existing players at the same time. A single-payer system would obviously have done grave damage to the insurance industry, while a public option would have given it unwelcome competition. But Obamacare did the opposite—it made those insurers into a permanent feature of the economic landscape. Their enthusiasm for the measure was obvious and much discussed at the time, as was that of Big Pharma: Obamacare essentially made our patronage of these industries mandatory.
A forgotten school of left-wing historians used to argue that the regulatory state began not with public-minded statesmen cracking the whip and taming big biz, but just the opposite—with business leaders deliberately inviting federal regulation as a way to build barriers to entry and give their cartels the protection of law. Long-ago giants of steel, tobacco, telephones, and meatpacking all welcomed federal regulation because of the effects it would have on smaller competitors. That old style of regulation brought ancillary benefits to the public, of course: better food, a standardized phone system. But its main objects were stability for existing businesses and guaranteed profits in perpetuity.3
Certain events surrounding the advent of Obamacare have resurrected this scary hypothesis. In the summer of 2009, PhRMA, the lobby of the big pharmaceutical companies, aggressively supported the president’s health care proposal. In exchange for their support, the administration had made a deal barring any possibility of drug reimportation from Canada, a country with a sane health care system.
Nevertheless, in July of that year, President Obama chose to describe opponents of his reform as people desperate to preserve “a system that works for the insurance and the drug companies.” This gave the proceedings an air of populist drama that they otherwise lacked, but it hurt the feelings of the PhRMA lobbyists. It seems they were sensitive souls. Didn’t the president know they were on his side? Thanks to emails later released by the House Energy and Commerce Committee, we know that the folks from PhRMA visited the White House and demanded an explanation. As a PhRMA lobbyist described the scene,

Then Rahm came in. Among other things, said very positive things about what we were doing and said “I know you are swimming in different waters. I take personal responsibility for that error. As you know, this is out of character for what the President has been saying since we made our deal.”4
This is not to say that the “deal” Obama made with PhRMA was altogether without merit, only that it was a deal, a deliberate swap in which a chance for a truly democratic health care system was parlayed into the opposite.
The deal that the financial industry secured from the Democrats wasn’t quite as rich, but in it we can see traces of the same impulse. In the Obama administration’s early years, you will recall, the Wall Street banks were regarded as “too big to fail,” their health essentially guaranteed by the federal government even though many of them appeared to have been neck-deep in fraudulent activity during the bubble days. Dodd-Frank was supposed to change this: being a “systemically important financial institution” now carried special regulatory obligations with which lesser banks did not have to comply.
The objective of the law’s tortuous complexity was again to allow us to have it both ways—to leave the big banks intact and to render them harmless at the same time. Dodd-Frank goes about reforming the banks by outlawing many of the specific practices that were implicated in the housing bubble and the financial crisis, thus generating the tens of thousands of pages of rules and exceptions that are the law’s most remarkable feature. At the same time, however, Dodd-Frank leaves the banks themselves standing, and it does little to alter the more fundamental conventions of modern banking—like ballooning compensation—that gave rise to the madness in the first place. As the regulatory expert Bill Black says, it is like trying to achieve gun safety by banning the specific caliber of ammunition that was used in the latest massacre. It won’t be difficult for the villains to find a different way to get what they want.
Structural reform would actually have been much simpler, since much of it could have been accomplished by carefully rolling back the deregulations of the Clinton and Reagan years. Such a reform would have been far-reaching, too. But as it stands, Dodd-Frank does little to tackle the greater problem of the financial sector swallowing the real economy, although that was obviously what the times called for and although taking the banks apart would no doubt have done much to reverse the ever-growing wealth of the One Percent. Instead, Wall Street executives are still among the wealthiest people in the land; their lobbyists are still like a small army besieging Capitol Hill; and with their campaign contributions and their friendly persuasiveness they are industriously writing loopholes and exceptions into the fiendishly complicated and yet still unfinished new law.
AMONG THE SERIOUS

In the early days of the Obama administration, as we have seen, there was a healthy Ivy League delegation in the executive branch; as the years went on, the administration grew even more selective, even more closely focused on professional status as it is defined by a tiny group of institutions. As of this writing, fully two-thirds of President Obama’s cabinet-level officers are products of these elite schools; all but three of them have graduate degrees.5 For the rest of us, this should serve as a cue to inquire a little more carefully into the phenomenon of genius-in-government. Of what does these people’s brilliance really consist?
It is not book-learning alone. Consider Larry Summers: during the two years when he worked at D. E. Shaw, the hedge fund that is thickly populated with chess champions and math Olympians, he is known to have made some $5.2 million. In exchange for this, he reportedly worked one day a week at tasks that have been described as standing somewhere between trivial and ornamental. Do the math and that comes out to about $52,000 a day—more than the average American household earns in an entire year.6
Stints like this turn out to be a frequent item on the résumés of Obama’s leadership clique, almost as common as the Ivy League educations and advanced degrees that so impressed the nation’s pundits in the administration’s early days. Rahm Emanuel, the president’s first chief of staff, had also spent a brief period in investment banking, during which he amassed a sum several times greater than Summers’s. Bill Daley, the man who replaced Emanuel, had passed many years at JPMorgan, while Jack Lew, who eventually replaced Daley (before going on to run the Treasury Department), had previously directed a Citibank group that invested in hedge funds. Michael Froman, the president’s trade representative, also came from Citibank.
Other Obama officials worked the equation in reverse. Tim Geithner, the Treasury secretary during the crisis years, serves today as president of Warburg Pincus, a private equity firm. Obama’s first director of the Office of Management and Budget, Peter Orszag, left government for a job at Citibank. Gene Sperling, a director of the National Economic Council, signed up with PIMCO, as did Ben Bernanke, Obama’s first Fed Chairman; White House Counsel Gregory Craig opted for Goldman Sachs; and the incorrigible Daley worked it at both ends, choosing post–White House to join Argentière Capital, a hedge fund based in the Swiss city of Zug.
Thus did the Party of the People turn the government over to Wall Street in the years after Wall Street had done such lasting damage to … well, the People. The classic explanation for this perverse act is the donations the banks made to Obama’s campaign in 2008. But there’s another, and it takes us deep into the shared predilections of the liberal class: Obama deferred to Wall Street in so many ways because investment banking signifies professional status like almost nothing else. For the kind of achievement-conscious people who filled the administration, investment bankers were more than friends—they were fellow professionals; people of subtle minds, sophisticated jargon, and extraordinary innovativeness. They were the “creative class” that Democrats revere.
What I am suggesting is that the liberal class’s unquestioning, reflexive respect for professional expertise was an impediment to thinking rationally about Wall Street. It blinded the Democrats to the problems of megabanks, to the need for structural change, and to the epidemic of fraud that overswept the business.
Washington’s professional deference to Wall Street comes up again and again in accounts of the Obama era. Neil Barofsky, for example, found it at work in the Treasury Department, where no one would question the industry’s basic assumptions about merit and compensation:

The Wall Street fiction that certain financial executives were preternaturally gifted supermen who deserved every penny of their staggering paychecks and bonuses was firmly ingrained in Treasury’s psyche. No matter that the financial crisis had demonstrated just how unremarkable the work of those executives had turned out to be, that belief system endured at Treasury across administrations. If a Wall Street executive was contracted to receive a $6.4 million “retention” bonus, the assumption was that he must be worth it.7
Thus did meritocracy subvert reform. Jargon also helped. Elizabeth Warren tells how Wall Street’s simulation of professional expertise helped to bamboozle members of Congress:

Financial reform was complicated, and the bank lobbyists used a clever technique: They bombarded the members of Congress with complex arguments filled with obscure terms. Whenever a congressman pushed back on an idea, the lobbyists would explain that although the congressman seemed to be making a good point, he didn’t really understand the complex financial system.… It was the ultimate insider’s play: Trust us because we understand it and you don’t.8
Then there was the aura of financial worldliness with which liberal groupthink surrounded itself. As with trade issues, which always seem to come down to a clash between the educated against the ignorant, the administration’s policymaking professionals regarded the demand for breaking up too-big-to-fail banks as hopelessly unsophisticated—even when the argument was made by no less an authority than former Fed Chairman Paul Volcker. Jonathan Alter captures this feeling exactly when he writes, “To the policy mandarins, who believed from the beginning of their academic training in the merits of financial engineering, Volcker’s argument wasn’t serious.”9
And seriousness is the coin of the realm in Washington, a city that finds Wall Street’s simulation of professional solemnity to be highly convincing, what with its impenetrable technical dialect and its advanced financial instruments. So complex are the latter, one deputy U.S. attorney general complained in 2014, that when examining them, “we are dealing with financial rocket science.”10
The economic expertise of Wall Street’s analysts, strategists, and traders is taken for granted in Washington. This belief seeps into all corners of life in the capital. Consider the words of White House Press Secretary Jay Carney, who advocated for a payroll tax cut in 2011 by referencing “responsible economists,” by which he meant “not adjuncts of one party or the other, or people from partisan think tanks, but economists on Wall Street, economists out in the country and academic economists who are not affiliated with a party or a position.…”11 What is interesting here is Carney’s assumption, three years after the financial crisis, that “Wall Street” shares the high ground of respectability with academia. It is not a synonym for “criminal,” but the opposite: a signifier of legitimacy.
Public officials aren’t supposed to wreck this highly creative industry by regulating its operations or capping its compensation scales or putting its great institutions into receivership; they are supposed to respect it. To forgive its peccadilloes. To nurture its innovations. To let it know that it need never fly to London or Zurich. This is professional courtesy on a level so elementary it shouldn’t even require thought.
CONSENSUS OF THE WILLING

All the things I have mentioned so far—the fascination with complexity, the desire to preserve existing players, the genuflection before expertise—all of them arise from one of the deepest wellsprings of liberal thought and action: the longing for a grand consensus of the professional class that never seems to come. We saw an earlier version in Bill Clinton’s presidency, but Barack Obama displayed a passion for reaching an understanding with his foes that was at times embarrassing to behold. The president borrowed big chunks of his health care reform plan, for example, from the conservative Heritage Foundation and from a plan proposed by Republicans back in the 1990s. He struck deals with the insurance companies, the medical profession, and Big Pharma. He and his team then sat vainly for months waiting for a Republican to sign on to the plan and thus certify it as “bipartisan.” In the very speech that so affronted the thin-skinned men of PhRMA, Obama also boasted that “we’ve forged a level of consensus on health care that has never been reached in the history of this country.”12
That Obama would be more interested in consensus than in confrontation was something we should have seen coming; after all, the magical healing properties of consensus had been one of the great themes of Obama’s pre-presidential career. It was the motif of his bestselling 2006 book, The Audacity of Hope, a long salute to bipartisanship that is distinguished from the hundreds of other titles in that genre by the intellectual pirouettes that then-Senator Obama performed around this deeply boring topic. Americans have “a common set of values that bind us together despite our differences,” he proclaimed in Chapter One of that work, just before telling us “we need a new kind of politics, one that can excavate and build upon those shared understandings that pull us together as Americans.” Ideology, which is the opposite of consensus, cannot possibly “meet the challenges we face as a country.” And so tritely on.
As president, Obama worked hard to signal continuity with Bush administration policy and then, in 2010, to lend his gravitas to the worldwide push for austerity. This was the low point of the Obama years, when the president made his “pivot” to deficit reduction even though the slump continued and unemployment was intolerably high. “Families across the country are tightening their belts and making tough decisions,” he said in his State of the Union Address in 2010. “The federal government should do the same.” As a matter of fact, the federal government shouldn’t do the same; as many pointed out at the time, it should do the opposite—that’s the wisdom of countercyclical spending, which the world learned at such great cost during the Great Depression.
This may have put Obama on the wrong side of history, but it put him squarely in the center of Beltway culture. The editorial page of the Washington Post, for example, kept up its endless war against deficits and entitlements right through the financial crisis and the economic slump that followed; any occasion was a good one for getting tough about the deficit. This was the context in which the capital embarked on its years of deficit-reduction measures, each of them chasing the president’s dream of a “Grand Bargain” in which the war between the political parties would be forever resolved: the Spending Freeze, the Bowles-Simpson Commission, the Congressional “Supercommittee,” the “fiscal cliff” that was reached when the Supercommittee failed, the Sequester of 2013, and so on. They were, each of them, the product of a self-assured culture of D.C. professionalism that Paul Krugman has lampooned with the phrase, “very serious people.”
“Serious” is exactly the right word. One of the timeless characteristics of rule-by-experts is the belief that informed and “serious” people know the answers to our problems, and that ideology and politics are pointless distractions keeping us from putting solutions in place.13 But never has the connection between professionalism and this post-ideological faith been more obvious than in the career of Barack Obama. For him, all the issues are already settled; all the answers are known; all the serious people are in agreement. Everyone in D.C. knows that entitlements have to be reformed and that the deficit has to be brought under control.
For Obama and his supporters, there seems to be something elemental, something basic in the many showdowns between his cool, technocratic style and the raging, wailing, senseless defiance of the Republicans in Congress. Surely they believe that it’s mind against sentiment, ego against id, civilization against barbarism.
For us, however, what needs to be pointed out is that, with their sonorous warnings about deficits, Obama’s “very serious people” turned out to be completely wrong. The expertise of the experts was, in this case, worthless.
THE HORROR OF THE UNPROFESSIONAL

I was surprised to learn that when Secretary of Defense Ashton Carter wanted to scold Russia for its campaign of airstrikes in Syria in the fall of 2015, the word he chose to apply was “unprofessional.” Given the magnitude of the provocation, it seemed a little strange—as though he thought there were an International Association of Smartbomb Deployment Executives that might, once alerted by American officials, hold an inquiry into Russia’s behavior and hand down a stern reprimand.
On reflection, slighting foes for their lack of professionalism was something of a theme of the Obama years. An Iowa Democrat became notorious in 2014, for example, when he tried to insult an Iowa Republican by calling him “a farmer from Iowa who never went to law school.” Similarly, it was “unprofessionalism” (in the description of Thomas Friedman) that embarrassed the insubordinate Afghan-war General Stanley McChrystal, who made ill-considered remarks about the president to Rolling Stone magazine. And in the summer of 2013, when National Security Agency contractor Edward Snowden exposed his employer’s mass surveillance of email and phone calls, the aspect of his past that his detractors chose to emphasize was … his failure to graduate from high school.14 How could such a no-account person challenge this intensely social-science-oriented administration?
But it was public school teachers who made the most obvious target for professional reprimand by the administration. They are, after all, pointedly different from other highly educated professions: Teachers are represented by trade unions, not proper professional associations, and their values of seniority and solidarity conflict with the cult of merit embraced by other professions. For years, the school reform movement has worked to replace or weaken teachers’ unions with remedies like standardized testing, charter schools, and tactical deployment of the cadres of Teach for America, a corps of enthusiastic graduates from highly ranked colleges who take on teaching duties in classrooms across the country after only minimal training.
Team Obama joined the fight against teachers unions from day one: the administration supported charter schools and standardized tests; they gave big grants to Teach for America. In Jonathan Alter’s description of how the administration decided to take on the matter, it is clear that professionalism provided the framework for their thinking. Teachers’ credentials are described as somewhat bogus; they “often bore no relationship to [teachers’] skills in the classroom.” What teachers needed was a more empirical form of certification: they had to be tested and then tested again. Even more offensive to the administration was the way teachers’ unions had resisted certain accountability measures over the years, resulting in a situation “almost unimaginable to professionals in any other part of the economy,” as Alter puts it.15
As it happens, the vast majority of Americans are unprofessional: they are the managed, not the managers. But people whose faith lies in “cream rising to the top” (to repeat Alter’s take on Obama’s credo) tend to disdain those at the bottom. Those who succeed, the doctrine of merit holds, are those who deserve to—who race to the top, who get accepted to “good” colleges and get graduate degrees in the right subjects. Those who don’t sort of deserve their fates.
“One of the challenges in our society is that the truth is kind of a disequalizer,” Larry Summers told journalist Ron Suskind during the early days of the Obama administration. “One of the reasons that inequality has probably gone up in our society is that people are being treated closer to the way that they’re supposed to be treated.”16
Remember, as you let that last sentence slide slowly down your throat, that this was a Democrat saying this—a prominent Democrat, a high-ranking cabinet official in the Clinton years and the man standing at the right hand of power in the first Obama administration.*
The merit mind-set destroyed not only the possibility of real action against inequality; in some ways it killed off the hopes of the Obama presidency altogether. “From the days of the 2008 Obama transition team offices, it was clear that the Administration was going to be populated with Ivy Leaguers who had cut their teeth, and filled their bank accounts, at McKinsey, Goldman Sachs and Citigroup,” a labor movement official writes me.

The President, who was so impressed with his classmates’ intelligence at Harvard and Columbia, gave them the real reins of power, and they used those reins to strangle him and his ambition of being a transformative President. The overwhelming aroma of privilege started at the top and at the beginning.… It reached down deep into the operational levels of government, to the lowest-level political appointees. Our members watched this process unfold in 2009 and 2010, and when it came time to defend the Obama Administration at the polls in 2010, no one showed up.
THE RACE IS NOT TO THE SWIFT

All these brilliant people, all these honored professionals and Ivy League PhDs, and yet one of the most striking features of the Obama administration has been its timidity, its leaden lack of originality. The situation of 2009 called for daring and imagination, but what we got were half-measures in all things.
It didn’t have to be this way. In fact, none of the lamentable episodes I have described in these chapters—not even the technocratic longing for consensus—are built-in defects of expertise-in-government. Nations have found ways to have genius and daring at the same time; indeed, before the “ocean liner” experience of the Obama years taught me otherwise, I used to believe that these qualities went hand-in-hand. For example, the original New Deal, which set the standard for an administration of intellectuals, was creative and experimental above all else. Programs would be conjured out of nothing overnight. And when one of them failed, Roosevelt’s Brain Trust would try something else.
Obama’s team, by contrast, was “smart.” They were often people of dazzling credentials as scholars but not necessarily as reformers, regulators, and law enforcers. They had successfully internalized mainstream thinking in their respective disciplines, maybe, but that was not enough for the challenges of the moment. Reform often comes from the margins of American life, but marginal is not a term anyone would use to describe the satisfied, conventionally minded people of the Obama administration. This team was limited by its excellence, restrained by its orthodoxy.
Professional correctness also fetched the Obama administration a beating in the arena of partisan combat. In their guileless search for Grand Bargains and bipartisan comity, it seems never to have dawned on Team D that their Republican opponents might do exactly what Newt Gingrich and Tom DeLay taught them to do in the 1990s: dedicate themselves completely to obstruction, drag the conversation always to the right, and refuse to confer even the slightest bit of legitimacy on the Democratic administration. Failing to guess that this extremely likely eventuality might come to pass cost our pack of geniuses many months of wasted time as they fruitlessly pursued Republican votes for their health care bill. Worse: the Affordable Care Act that Obama ultimately signed into law relies in numerous ways on the cooperation of state-level politicians—many of them Republicans who, we now know, are just as enthralled by the obstruction game as are their national leaders.
Worst of all was the administration’s ideological assumption that Democrats simply owned economic discontent. Those upset because Team Obama didn’t get tough with Wall Street would have nowhere else to go, they thought. It was science, political science: move to the center, and you can take such people’s votes for granted.
That the liberals’ failures might expose them to deadly flanking fire from the right is something the administration appears not to have seen coming; for all their subtle learning, many members of the liberal class still don’t believe it really happened—what did them in, they think, was just the recrudescence of some boorish reflex in the minds of an unenlightened public. And this brings us to perhaps the most crucial indictment of them all: these Democrats don’t seem really to care about winning elections. Even that, the most fundamental political act, takes a back seat to professional vanity.17

The Innovation Class

In his 2011 State of the Union Address, President Obama addressed the plight of the country’s working people—of Americans who used to be able to get a “job for life” without having a college degree. The president gave a powerful description of what had happened to them with deindustrialization: their shattered towns, their ruined lives, their piddling paychecks.
Ordinarily, this is the point where a Democrat would start laying out his plans to reverse this disaster—a public works program, an end to the exodus of manufacturing, and so on. But not this Democrat. Instead, using the following words, he told those working people that nothing could be done for them: “So yes, the world has changed. The competition for jobs is real.” What has happened to working people was simply “real.” It was reality. What you do about reality is you get used to it.
But then, a few moments later, Obama pivoted to a happier subject. It was 2011, the recession was technically over, his signature health care proposal had been enshrined in law, and it was time for him to outline the positive economic program that would define the rest of his presidency.
You guessed it: innovation was what we needed more of. “The first step in winning the future,” Obama announced, “is encouraging American innovation.” On this matter the president showed no trace of fatalism or resignation before an unalterable reality. On this matter, government could act without any problem. We needed to subsidize innovators, he said, and generously, in order “to spur on more success stories.” Since everyone knows that innovation is connected to higher learning, Obama called on students to study harder and for more people to go to college.
I remember listening to him talk about “innovation,” and just tuning it out. At the time I thought of innovation as a cliché, a generic faith in progress. But Obama was serious about this stuff. Encouraging innovation was to be his great economic vision, his liberal utopia. Bill Clinton had become identified with the dot-com New Economy by accident; Barack Obama was going to do it deliberately. A month after that State of the Union speech, the White House made it official. “America’s future economic growth and international competitiveness depend on our capacity to innovate,” a policy document declared. “To win the future, we must out-innovate, out-educate, and out-build the rest of the world.”1
WHAT’S GOOD FOR GOOGLE

I have described Barack Obama’s commitment to traditional Democratic concerns as falling somewhere between indifferent and icy. The financial industry, however, has seen him as a red-hot radical since his first days in office. In 2008, they had sided with Obama over John McCain, but by 2012 Wall Street stood solid behind the Republican Romney.
No matter. By that time, the place once filled by finance in the Democratic imagination had begun giving way to Silicon Valley, a different “creative-class” industry with billions to give in campaign contributions. Changes in the administration’s personnel paralleled the money story: at the beginning of the Obama years, the government’s revolving doors had all connected to Wall Street; within a few years, the people spinning them were either coming from or heading toward the West Coast. In 2014, David Plouffe, the architect of Obama’s inspiring first presidential campaign, began to work his political magic for Uber. Jay Carney, the president’s former press secretary, hired on at Amazon the following year. Larry Summers, for his part, became an adviser for an outfit called OpenGov. Back in Washington, meanwhile, the president established a special federal unit that used Silicon Valley techniques and personnel to revolutionize the government’s web presence; starstruck tech journalists call it “Obama’s stealth startup.”2
The mutual attraction between the president and Silicon Valley had actually begun during Obama’s first campaign, when he famously used Facebook to connect with the young; his reelection effort was the first to use big data and microtargeting to find swing voters. Some observers like to imagine the Obama campaigns as triumphant social movements; others see them as triumphs of quite a different nature: as electronic victories demonstrating the irresistible power of digital networks.
For people who take the latter view, the Obama presidency is another triumphant iteration of the story Silicon Valley loves to tell itself, the tale of the brilliant startup challenging the slow-moving incumbent, of the scrappy underdog who takes on the conservative dinosaur. Obama is thus said to be, in a typical bit of liberal-class narcissism, “the first tech president.” The tech people themselves go further: a prominent Silicon Valley venture capitalist calls him “the greatest president of my lifetime.” This is virtually the last surviving form of Obama idealism out there, still going strong in the president’s final year in office.*
The administration’s relationship with Silicon Valley has never caused the kind of controversy that his former closeness with Wall Street did—probably because Silicon Valley has never contrived to toss the world economy into a wood chipper. Also, it is hard to hate this industry, regardless of what they do. An aura of youthful lightheartedness seems to envelop every interaction between the president and the techies. After all, one notable manifestation of Obama’s outreach to this powerful industry was his farcical 2015 interview with YouTube comedienne GloZell Green. Another was this famous exchange with Mark Zuckerberg, in the course of a “town hall” meeting at Facebook headquarters during which Obama proposed that the rich should pay higher taxes than they currently do:

Zuckerberg: “I’m cool with that.”
Obama: “I know you’re OK with that.”3
In the 1980s and ’90s, Silicon Valley was not a particularly Democratic industry. Its libertarianism was well-known and the subject of endless fascination; its leaders were among the richest people in the world; and its great chronicler and booster at the time, George Gilder, was a prominent conservative intellectual whose works had been influential in the Reagan administration. Gilder’s take on Silicon Valley’s politics went far beyond the partisan preferences of its leading figures; the primacy of market economics, Gilder said, was actually inscribed in the structure of the microchip itself. By its very architecture, tech was supposed to work against economic authority of the taxing and regulating kind.
Not anymore. Today, Silicon Valley’s prosperity is supposed to be the ultimate demonstration of the worthiness of the liberal class. Just look at how the postindustrial society has singled out the educated and the creative, the engineers and the scientists; see how it has showered them with economic rewards beyond imagining. History itself has elevated this one industry over all others, and with it the Democrats have prospered as well, since they long ago positioned themselves as the party of the modern world’s winners. You may be drowning, but the rising tide is lifting their boat very nicely.
When Democrats talk about tech, sooner or later they always go back to the search-engine giant Google. In The Audacity of Hope, Barack Obama tells how he made a pilgrimage to the company’s headquarters as a senator, and as president, according to a Wall Street Journal story from 2015, he went on to name-check Google in fully half of his State of the Union speeches. Google employees made up the third-largest group of contributors to Obama’s 2012 campaign, and Eric Schmidt pops up in the annals of modern liberalism with a curious regularity. He served on Obama’s Transition Economic Advisory Board, for example, and even stood on stage with the president-elect and his economic advisers during Obama’s news conference three days after the 2008 election. During the 2012 race, Schmidt advised Obama’s team on its famous big-data strategy. In 2015 Schmidt launched a “political technology startup” that is supposed to deliver the latest techniques in digital voter identification to the Hillary Clinton presidential campaign.4 He is the liberal class’s favorite billionaire.
Schmidt’s own writing makes it obvious why he and Google appeal so strongly to the Democrats: the party and the company are traveling parallel cultural tracks. Schmidt begins his 2014 management book, How Google Works, by playing up the company’s academic pedigree. After launching Google out of a dorm room, the two founders acted “like the professors in their Stanford computer science lab” and gave the smart young professionals they hired maximum freedom. The company they proceeded to build, according to Schmidt, is a “meritocracy,” a place where the smartest prevail, where bias and prejudice count for nothing, where the best ideas win out.5 The ideal economic actor in this context is the one Schmidt calls “the smart creative”:

In our industry … she is most likely a computer scientist.… But in other industries she may be a doctor, designer, scientist, filmmaker, engineer, chef, or mathematician. She is an expert in doing.… She is analytically smart.… She is business smart.… She is competitive smart.… She is user smart.… She is curious creative.… She is risky creative.… She is self-directed creative.… She is open creative.… She is thorough creative.… She is communicative creative.6
It is a little tiresome, is it not? We’ve heard about the learning class, the wired workers, the creative class, and now the “smart creatives.” But always it means the same thing: the well-graduated professionals.
In a 2013 public conversation with journalist Walter Isaacson, Schmidt announced that everyone present in the audience was a faithful worshiper “in the church of the knowledge economy,” a stage of the development of civilization in which wealth is created by “entrepreneurs and innovation.” When Schmidt was asked what America might do to get its economy going again, the answer was predictable: “What we need to do is come up with policies which actually allow the creative people who can create value and invent new things” to do their stuff. If we put these people first, we will enjoy “huge new jobs, huge new choices of employment.” As an example of the kind of thing these people might come up with, Schmidt mentioned driverless cars, a legendary Google project that, if it is ever perfected, might make redundant everyone who drives a taxi, limo, or semi-trailer truck. The short-term effect of such an efficiency would obviously be to increase unemployment, not reduce it.
In the bailout days, you might recall, people were outraged to learn that, thanks to the number of federal officials drawn from Goldman Sachs, one of its nicknames was “Government Sachs.” Now, though, as the Obama years draw to a close, it’s the “United States of Google” that should concern us more. I mean this not just in terms of the revolving door between Google and government or the weird ubiquity of Eric Schmidt in Democratic Party gatherings, but in a grander way as well. Google’s vast ambitions often seem to aim at replacing government. Its core business, to begin with, is providing services that will be the public utilities of the twenty-first century: searching the Internet, for example, or communicating via email. In my fiscally challenged hometown of Kansas City, Google even got the rights to set up a local fiber-optic broadband system, making Google a public utility by definition, although one that is not obliged to provide service to everyone.7
Then there’s the spying. In his important 2013 book, Who Owns the Future?, the tech writer Jaron Lanier describes the emerging Internet giants of our time as “third-party spy service[s].” Many of them, he argues, make their profits via “the creation of ultrasecret mega-dossiers about what others are doing”;8 everything else they offer—retail sales, connecting with friends, searching the Internet—is secondary.
Back to Google, the liberal class’s favorite Internet company: they track your web searches to sell you stuff; they scan your emails to sell you more stuff. For those who are worried about the loss of privacy such practices seem to portend, Eric Schmidt tells us—in a book cowritten with a former adviser to Secretary of State Hillary Clinton—that it’s all inevitable anyway, nothing we can do about it. In the future, they write, “by the time a man is in his forties, he will have accumulated and stored a comprehensive online narrative, all facts and fictions, every misstep and every triumph, spanning every phase of his life. Even the rumors will live forever.”9
The aim of such a statement, obviously, is to make Google’s scary business model seem like no big deal, just the future doing what comes naturally. Even so, the scary side keeps peeking through. Schmidt’s single most famous statement, delivered to a CNBC talker in 2009, is a direct rationalization of surveillance-for-profit: “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.”10 The way to react to a world in which you are under observation at all times, in other words, is simply to never step out of line.
INNO-QUALITY

What’s wrong with liberals embracing tech and innovation? Surely it’s not an expensive passion, like mass transit or Medicare or the hundreds of other things Democrats love to blow money on. Even if it seems like empty rhetoric, there’s still a small chance that something good will come of it. Maybe a bunch of students with a really awesome idea will enter a contest at a startup incubator somewhere and win the eye of a friendly billionaire, and next thing you know we’ll all be driving cars that don’t pollute or something. It might happen. Why not give it a shot?
Besides, nobody is against innovation. It is the subject of an enormous literature, a literature that sells well and is almost entirely laudatory. President Obama says innovation is how to “win the future.” Democratic governors across the country agree with him. It is as purehearted an undertaking as the liberal mind can conceive.
In fact, the culture of innovation is so pure and so stridently noble that it often sounds like advertising. You hear about the startup that is going to help with sanitation in African cities; the one that’s going to print out prosthetic hands for disabled children; the one that’s procuring clothes for homeless children. “We’re with people who are curing cancer in a different way, and changing banking technology, and helping folks who can’t see anymore,” says a woman in a short YouTube video about MassChallenge. Inno is going to solve global warming. Inno is coming up with new treatments for autism. Inno is so inherently moral that there is even a UNICEF Innovation team; dial up its homepage and you will encounter the following introductory sentence: “In 2015, innovation is vital to the state of the world’s children.”
The fog of righteousness surrounding this concept is so thick it allows all manner of absurdly altruistic claims. “Can startups help solve Boston’s Biggest Problems?” asked an email I received last spring. Of course they can! The group that sent it, CityStart Boston (“Leveraging the Innovation Community to Tackle Civic Issues”), announced plans to mobilize “the entire Boston startup ecosystem” to “collaborate to develop viable ventures designed…” Wait! Stop here for a moment, reader, and try to guess: in what way is the startup ecosystem going to collaborate to solve Boston’s biggest problems? If you guessed “to enhance innovation in Boston’s neighborhoods,” you were right. Startups are going to collaborate to enhance startups.
This struck me as a pretty basic misunderstanding of the way capitalism works—as does, in fact, the whole notion of a nurturing “ecosystem” dedicated to “mentoring” and “incubating” other people’s precious startups. (It’s a basic misunderstanding of ecology, too, but we will let that pass.) Other than the chance to make some money, why would a capitalist participate in such a thing? If startups really were to encourage other startups, they would be contributing pretty directly to their own competition—and robust competition is precisely what today’s thinking business person wants to avoid. The winning quality today is monopoly, not competition.
But this is not a literature given to subtlety or introspection. As the tech writer Evgeny Morozov points out in To Save Everything, Click Here, the cult of innovation holds every info-age novelty to be “inherently good in itself, regardless of its social or political consequences.” Sure enough, as far as I have been able to determine, few of the people who write or talk about innovation even acknowledge the possibility that innovations might be harmful instead of noble and productive. And yet recent history is littered with exactly such stuff: Innovations that allow companies to spy on us. Innovations that allow terrorist groups to recruit online. Innovations that allowed Enron to do all the fine things it used to do. Come to think of it, the whole economic debacle of the last ten years owes its existence to the financial innovations of the Nineties and the Aughts—the credit default swaps, or the algorithms companies used to hand out mortgage loans—innovations that were celebrated in their day in the same mindlessly positive way we celebrate tech today.
Somehow that stuff never comes up, however. We know what innovation is about, and it’s righteousness and triumph. Success is all you’ll find when you riffle through the inno-thoughts produced by the various foundations, institutes, websites, mentors, accelerators, incubators, and entrepreneurship competitions. You hear about startups that just raised $3.1 million in venture capital; startups that are partnering with some more established operation from California; startups that have made their starter-uppers into billionaires.
Inno is about egalitarianism as well. Indeed, as the preeminent expression of the endless American uprising against the entrenched and the powerful, how could it be otherwise? Inequality is, by definition, just one more problem our lovable entrepreneurs have set out to solve, and in the eyes of some, they have succeeded. Marc Andreessen, the famous venture capitalist, has described the vacation rental platform Airbnb as a solution for income inequality. Chris Lehane, a former assistant to Bill Clinton and Al Gore who now does public affairs for Airbnb, has said the same. Objecting to proposed regulation of the company, Lehane has said that cities “understand that in a time of economic inequality, this is a question of whose side are you on: do you want to be on the side of the middle class, or do you want to be opposed to the middle class?”11
David Plouffe, Obama’s great people-mobilizer, now sells the freelance taxi app Uber with the same workerist pitch he once used to sell Obama: as the solution to the recession. “There are still too many people who aren’t feeling the full effects of [the] recovery, and too many people who are still looking for work,” he said in a speech at a Washington incubator in 2015. But Uber, for whom anyone could sign up and drive, is “making a real and growing difference when it comes to the challenges of wage stagnation and underemployment.”12
During a talk at South by Southwest in 2014, Eric Schmidt lamented the effects of growing inequality on places like San Francisco, where the cost of living has ascended out of most people’s reach, but he declared that the solutions “all involve creating more fast-growing startups.” The answer, he told the audience, was a society-wide acceptance of inno as a way of life. “Each and every one” of us must be “in favor of more education, more analytical education, more immigration, more capital formation, more creative areas, more areas that are allowed by regulation to be unregulated, so that startups can actually flourish in them, [and] we can get through this.”13
ATOMIZED LABOR

This is the point where I am supposed to slap down Schmidt, Plouffe, Lehane, and company for suggesting that the solution to inequality is the very thing that is causing the problem. Technology is what has destroyed the livelihoods of so many, I am supposed to say: How can anyone suggest that more of it will make matters better?
But that’s not really the question. Oh, it’s easy to find people who say that technological advances are the root of inequality, that the massive efficiencies tech creates naturally shift wealth upward and put less-qualified people out of work. Indeed, this has been such a commonplace view for so long that Hillary Clinton herself repeated it in her 1996 book, It Takes a Village: “Changes in the economy, such as technological innovations and the globalization of commerce,” she wrote, “have combined over the past two decades to produce what economists Robert H. Frank and Philip J. Cook call a ‘winner-take-all society.’”14
When you think about it this way, it all seems inevitable. Inequality is a thing that is happening to us the way “globalization” or the weather happens to us: as an irresistible force of nature. That it also rewards the meritorious and bids down the lives of the unskilled and the poorly graduated makes it seem even more like an act of God.
In truth, however, nothing is inevitable and very little is new. And tech is no more the root of the problem than are trade or globalization. Many of our most vaunted innovations are simply methods—electronic or otherwise—of pulling off some age-old profit-maximizing maneuver by new and unregulated means. Sometimes they are designed to accomplish things that would be regulated or even illegal under other circumstances, or else they are designed to alter relationships of economic power in some ingenious way—to strip away this or that protection from workers or copyright holders, for example.
Consider the many celebrated business innovations that are, in reality, nothing more than instruments to get around our society’s traditional middle-class economic arrangements. Uber is the most obvious example: much of its value comes not from the efficiencies in taxi-hailing that it has engineered but rather from the way it allows the company to circumvent state and local taxi rules having to do with safety and sometimes insurance.
The circumvention strategy is everywhere in inno-land once you start looking for it. Airbnb allows consumers and providers to get around various safety and zoning rules with which conventional hotels must comply.15 Amazon allows customers in many places to avoid paying sales taxes. The circumvention strategy isn’t restricted to software innovations, either. One of the great attractions of credit default swaps—a big financial innovation of the last decade—is that they were completely unregulated.
Monopoly is the telos of innovation, the holy grail fervently sought after by every young coder sweating away in the incubator. The reason is plain enough: monopoly is the most direct road to profit, and the online world offers countless opportunities to achieve it. Jaron Lanier has described all the ways dominant digital networks can use market power to coerce customers, users, and advertisers; in his account the powerful players are all patterned after Wal-Mart, which so effectively dominates its suppliers and ruins its small-town competitors.16
With Amazon, the Wal-Mart comparison is obvious. The giant online retailer has used its position as the country’s dominant bookstore to dictate terms to book publishers and to punish those who won’t play ball. During its dispute with Hachette in 2014, the retailer actually singled out certain authors (namely, one Paul Ryan) for preferential treatment. Nice, friendly Google does similar things with its advertisers and was investigated for the practice by the Federal Trade Commission in 2012; the FTC’s staff decided that Google’s practices did “real harm to consumers and to innovation in the online search and advertising markets.” No charges were filed in either case.17
The pharmaceutical industry, one of the great gushing sources of inno-worship, enjoys an even closer relationship with monopoly. They must be granted the power to charge whatever they want for their patented drugs, they insist, or else innovation will cease. This is the logic that has permitted Big Pharma to raise prices so emphatically in recent years, even on drugs that are many decades old. Monopoly is what makes innovation possible; take it away and the genius factory will close down.18
But it is in the endless conflict between management and labor that our innovation class has shown true genius. It is a matter of legal record that, for years, the CEOs of Apple, Intel, Google, Pixar, and other Silicon Valley firms operated something very much like a cartel against their own employees. In a scandal that journalists now call “the Techtopus,” these worthies agreed to avoid recruiting one another’s tech workers and thus keep those workers’ wages down across the industry. In 2007, in one of the most famous chapters of the Techtopus story, the famous innovator Steve Jobs emailed Eric Schmidt, demanding that this CEO and friend of top Democrats do something about a Google recruiter who was trying to lure an employee away from Apple. Two days later, according to the reporter who has studied the case most comprehensively, Schmidt wrote back to Jobs to tell him the recruiter had been fired. Jobs then forwarded Schmidt’s email around with this comment appended: “:)”19
Amazon, meanwhile, is famous for devising ways to goad its executives into fighting with one another—engaging in what the New York Times calls an “experiment in how far it can push white-collar workers”—while its blue-collar workers, often recruited through local temp agencies, are electronically tracked so that their efficiency is maximized as they go about assembling items in the company’s enormous fulfillment centers.20 For the rest of us, Amazon has come up with a nifty device for casual employment called “the Mechanical Turk,” in which tasks that can’t be done by computers are tossed to the reserve army of the millions, who receive pennies for their trouble.
This last is a good introduction to the so-called sharing economy—“sharing” because you’re using your own car or apartment or computer, not your employer’s—which has been one of the few robustly growing employment opportunities of the Obama years. The magic derives from the way just about anyone can sign up at one of these sharing companies and work as a sort of temp, only hooked up with the client and employer via software, which makes it all digital and innovative and convenient. In nearly every other way, however, the sharing economy is one of the most lopsided, antiworker employment schemes to come down the pike in many years. The costs and risks associated with this industry—insurance, owning a car, saving for sickness and retirement—are all loaded onto the shoulders of the worker, and yet the innovator back in California who has written the software still helps himself to a large cut of whatever the proceeds of your labor happen to be. It is “every man for himself” as a national employment strategy.
Organized labor was the great force of the Roosevelt years, but it is atomized labor, cheered for and pushed by Democrats like Plouffe and Lehane, that will forever shape American memories of the Obama years. Of the companies that are poised to profit on this coming war of all against all, Uber is the most famous; as I have mentioned, it invites each of us to spend our spare time as hacks for hire. But with the magic of innovation, virtually any field can join the race to the bottom. There’s LawTrades, a sort of Uber for lawyers, and HouseCall, an Uber for “home service professionals.” Everyone’s favorite is something called TaskRabbit, which allows people to farm out odd jobs to random day laborers, whom the app encourages you to imagine as cute, harmless bunnies.
“Crowdworking” is the most startling variation on the theme, a scheme that allows anyone, anywhere to perform tiny digital tasks in exchange for extremely low pay. This way, everyone can become part of the great “on-demand labor pool” of millions, coming together to parse data and make Silicon Valley’s bottom line that much fatter. The CEO of a crowdworking company called CrowdFlower explains how the magic is done:

Before the Internet, it would be really difficult to find someone, sit them down for ten minutes and get them to work for you, and then fire them after those ten minutes. But with technology, you can actually find them, pay them the tiny amount of money, and then get rid of them when you don’t need them anymore.21
By the way, the CEO who reportedly spoke those lines—a young gentleman named Lukas Biewald—is an Obama donor who, according to a post on the CrowdFlower blog, was asked in 2012 to help out with the Big Data part of the president’s reelection campaign.22
TECH AS CULTURE

Few of the innovations I have mentioned here were laudable—at least, not in the ecstatic UNICEF way people celebrate inno these days. The more important point is that none of them were inevitable. Government could easily have prevented or at least mitigated every single one of the developments I have described; it was fully within the power of Washington or our various state governments. Indeed, when a company’s business strategy consists of some novel way to get around safety regulations, or antitrust statutes, or basic labor law, it is the government’s duty to do something about it.
The Obama administration’s Justice Department came into office promising stern action against corporate cartels that fixed prices, which is precisely what the Silicon Valley Techtopus seems to have been doing with tech workers; an official from the Antitrust Division had even announced in a 2009 speech that “the Division has long advocated that the most effective deterrent for hard core cartel activity, such as price fixing, bid rigging, and allocation agreements, is stiff prison sentences.”23
Not this time. When the Justice Department learned about the conspiracy to suppress tech workers’ wages in 2010, it did just about the same thing it had done with the “Too Big to Jail” banks: it filed a civil suit and boldly extracted from the tech companies in question … a promise not to do it again, for five years. (The affected tech workers had more success on their own, filing a class-action lawsuit against four of the big Silicon Valley companies; it was settled for $415 million in 2015.)24
Let’s look again at Uber, the machine for inequality, which has had a damaging effect on many people who drive taxis for a living. It also happens to be a clever innovation. This has made it a basic political test for Democrats: Should they support the company with its ingenious software, or the working people whose livelihoods it threatens?
Some cities in Belgium, Canada, Germany, and India have answered the question by banning Uber. France has declared certain Uber operations illegal and at one point arrested several Uber executives. In New York, Mayor Bill de Blasio chose to side with taxi drivers, calling for a cap on the number of Uber drivers allowed in the city. But Governor Andrew Cuomo got the last word, forcing de Blasio to back down and saluting Uber as “one of these great inventions, startups, of this new economy … it’s offering a great service for people, and it’s giving people jobs.”25
Had Andrew Cuomo chosen to require Uber to play by the existing rules in New York, he could have done so. Had the Federal Trade Commission wished to rein in exorbitant price increases in certain prescription drugs, they could have done so. Had the FTC chosen to lower the boom on Google, that too appears to have been within its power. Why didn’t the Party of the People try? Was that old ocean liner just too hard to turn?
I doubt it. That Google hired several of President Obama’s former advisers probably had something to do with it. But a more basic reason is that many of our leading Democrats know you don’t treat blue-state innovators in this way. They lead clean industries, virtuous industries—knowledge industries. They represent the learning class, the creative class. They are the future, and what you do with the future is you win it.
In reality, there is little new about this stuff except the software, the convenience, and the spying. Each of the innovations I have mentioned merely updates or digitizes some business strategy that Americans learned long ago to be wary of. Amazon updates the practices of Wal-Mart, for example, while Google has dusted off corporate behavior from the days of the Robber Barons. What Uber does has been compared to the every-man-for-himself hiring procedures of the pre-union shipping docks, while TaskRabbit is just a modern and even more flexible version of the old familiar temp agency I worked for back in the 1980s. Together, as Robert Reich has written, all these developments are “the logical culmination of a process that began thirty years ago when corporations began turning over full-time jobs to temporary workers, independent contractors, free-lancers, and consultants.”26 This is atavism, not innovation. It has not reversed the trends of the last thirty years; it has accelerated them. And if we keep going in this direction, it will one day reduce all of us to day laborers, standing around like the guys outside the local hardware store, hoping for work.
Technological innovation is not the reason all this is happening, just as the atomic bomb was not the cause of World War II: it is the latest weapon in an age-old war. Technological innovation is not what is hammering down working peoples’ share of what the country earns; technological innovation is the excuse for this development. Inno is a fable that persuades us to accept economic arrangements we would otherwise regard as unpleasant or intolerable—that convinces us that the very particular configuration of economic power we inhabit is in fact a neutral matter of science, of nature, of the way God wants things to be. Every time we describe the economy as an “ecosystem” we accept this point of view. Every time we write off the situation of workers as a matter of unalterable “reality” we resign ourselves to it.
In truth, we have been hearing some version of all this inno-talk since the 1970s—a snarling Republican iteration, which demands our submission before the almighty entrepreneur; and a friendly and caring Democratic one, which promises to patch us up with job training and student loans. What each version brushes under the rug is that it doesn’t have to be this way. Economies aren’t ecosystems. They aren’t naturally occurring phenomena to which we must learn to acclimate. Their rules are made by humans. They are, in a word, political. In a democracy we can set the economic table however we choose.
“Amazon is not happening to bookselling,” Jeff Bezos of Amazon likes to say. “The future is happening to bookselling.” And what the future wants just happens to be exactly what Amazon wants. What an amazing coincidence.
As long as we continue to believe such statements, for exactly that long will the situation of average Americans continue to deteriorate and inequality to worsen.