How “W” Destroyed the American Dream

Every foreign correspondent visiting Iran seems to come back with stories of ordinary Iranians approaching them, and asking them for help with getting a visa to come to the U.S. America, it seems remains the land of dreams for millions of improvised and oppressed people throughout the world. Yet, ironically, America isn’t what it used to be! Over the past two decades there has been a steady erosion of the ‘American Dream’.

Don’t get me wrong, America is still much better than many places around the world. And for sure, the American Dream (for an Iranian) is much more than a European Dream or should I say European Nightmare (for an Iranian). America still has a comparatively pluralistic society. Despite pockets of racism and fanaticism (against Muslim-Iranian after 9/11), there is still relative tolerance. In most cases there is real appreciation for immigrants and the contributions they can make to America. The record uprising of  ultra-right wing parties throughout Europe (notably, France, UK, Germany etc.) still make Europe relatively unpleasant for most immigrants (especially Muslim-Iranians).

But even with incredible economic news coming out of America recently  – with a new record for the Dow Jones Index, and an unemployment rate drop to pre-08/09-crisis levels – there is a noticeable ‘lag’ in America’s economy. Almost all the prosperity has been funneled upwards to the top 2% – not broadly across America.

There has been a serious erosion of ‘dynamism’ in America. The broad economy is NOT recovering to the precise point it was at in say 2007 or even a decade or so ago.

This graph from the Brookings Institution illustrates this shift, very well:

 

I am sure, in future centuries historians will look back at the demise of the American empire.  And, the “W” era (King George Bush II [“W”]) will be seen as a turning point in America’s history. Like King Louis XVI before the French revolution, or Britain’s King George III (during the American Revolution) or the Shah (before the Iranian Revolution), the “W” era will mark the inflexion point before a downward turn.

For it was “W”’s reckless policies that created a chain of events that has resulted in a series of reactionaries policies. And these policies will have a profound (and deep) consequences on the U.S. no matter what is done going forward. A system that took many decades, maybe centuries to be established was undermined quickly in 8 years of the Bush II reign.

You see, America was always the land of opportunity. Many people explain this with tales of how America is the melting pot. I am told people of all nations (like us, Iranian-Americans) can come here study, find jobs and work side by side without prejudice to better their lives. Others say it is the land of opportunity because of its endless free enterprise system that results in open, free competition resulting in those that work hardest to eventually win in the market place. But all this is a partial truth. Not the whole story.

In fact America was the land of opportunity, because it was so fragmented. If you were stuck somewhere you could move. You had options. There was always a way around a problem or a situation. If there was mass unemployment in one city, people would move to where jobs were. If there was political grid lock in one state, you could move to somewhere that had more progressive politicians.  There was a central government providing linkage throughout the country, but, many different expressions of local government. This meant if you wanted to ‘make it’, you could migrate to where opportunity was.

One excellent example of how America became the land of opportunity can be found in America’s Banking systems. America always had a very fragmented and decentralized system in terms of how consumers interfaced with Banks.

America had the highest ratio of banks per capita to any other country in the world. There were all these ‘economic’ scouts out there – masquerading as Bank executives – looking for economic talent. They were in the business of finding good people to lend money to. And if you had economic talent, they would find ways to lend to you. Good economic talent, after all, is in very short supply globally.

People from all over the world, would beat the doors to America. Here you could borrow money and start a business. You can’t do that easily in other parts of the world. In fact it’s very hard.

Years of anti-trust federal legislation, had resulted in a splintered banking system in the U.S.  You could find a community bank or a credit union in every county. Banks would jump over each other to find depositors and borrowers. If you kept your nose clean, you could get a loan. You could finance a new business.

And as a result of all this financing, the U.S. boasted the highest rate of business start-ups globally. This high rate of enterprise, then became the ‘secret’ engine that led to spectacular economic growth. No nation in the world could duplicate this.  Yes, of course there were bankruptcies, and failures. But if you throw a lot of shit at a wall, some of it is going to stick! No?

The winners in this domestic economic race created spectacular businesses that not only led to massive domestic economic gains, but also global dominance. From McDonalds and Starbucks to Intel; America, it seemed, was able to produce incredible economic champions. Immigrants like Andrew Grove (CEO of Intel) would land in New York, then find a way to hustle…and create billion dollar enterprises. It was the American Dream.

In comes, “W” in 2001. With false pretexts, and a war agenda …by the time he finished office in 2008 he had borrowed and spenta record $3 trillion dollars to pay for these two ‘wars’. The U.S. economy had been ‘bubbled’ to pay for the war(s). By August 2008, the bubble had burst with foreclosures hitting the banks, and a steady increase in unemployment.

There are real consequences to reckless war and spending. In order to pay the bill (for the war) America had to borrow money. And huge quantities of it. Barriers to interstate banking had to collapse. Mega-banks were created to attractmore global depositors like the Chinese, Brazilians…! America needed trillion dollar bank institutions to absorb trillion dollar sovereign depositors.

Not only did the debacle in 2008 / 2009 undermine America’s whole banking system. But the government stepped in and bailed out all the mega-banks! The same mega-banks that created the crisis were the ones that were bailed out!! The Federal government had no choice…they had to bail out their bankers.

And what did they do in response? What did they do to fix the problems? Over the following 3 years, the regulators forced 381 community banks out of business and consolidated these community banks into these same (bailed out) mega-banks.  The big banks created the problem – and they went after the small banks. The very banks that have been critical to helping small companies develop.  They killed America’s economic scouts.  Even while the economy is recovering, home loans are at a 19 year low, small business loans are at a 20 year low!!

Today, 70 percent of U.S. banking is in the hands of 12 ‘big’ banks. 12 banks – that by the way – would have been ‘illegally’ formed even a decade before “W” took over. You see, inter-state banking was not permitted in the U.S. Banks could not cross state lines. It took huge, heroic efforts in the 19th century to bring down monopolies, and trusts. And the consequent destruction of monopoly power with increased competition was precisely what established the American dream…and made America the land of opportunity.

As of third quarter 2012, there were approximately 5,600 commercial banking organizations in the U.S. The bulk of these—roughly 5,500—were community banks with assets of less than $10 billion. These community-focused organizations accounted for 98.6 percent of all banks but only 12 percent of total industry assets. Another group numbering nearly 70 banking organizations—with assets of between $10 billion and $250 billion—accounted for 1.2 percent of banks, while controlling 19 percent of industry assets. The remaining group, the inter-state megabanks (Like Bank of America, Wells Fargo …) —with assets of between $250 billion and $2.3 trillion—was made up of a mere 12 institutions. These dozen behemoths accounted for roughly 0.2 percent of all banks, but they held 69 percent of industry assets. Executives in these banks control mass lending policies, and also (obviously) control federal policies. The regulators listen to them. Talk to any small community bank president and you’ll hear what I have heard numerous times – the big banks and regulators are making lending practice very difficult. Overall level of bank lending – especially to small businesses – has gone down considerably in the U.S.  It’s a big deal.

This same consolidation pattern has repeated itself in many other key industries. 

Take for example the media conglomerates. In 1983 50 companies controlled 90% of the media. Today it’s down to 6! Yes, 6. Its GE, Viacom, Disney, News Corp, CBS, Warner Brothers. 232 Media Executives control the information diet of 277 Million Americans. A recent merger of Comcast and NBC guarantees control of 1 of every 5 hours of television and monopoly of 11 major U.S. markets including New York City and Chicago. 178 Million Unique users read Time-Warner news every month. In 1995 the FCC (federal regulators) forbade companies to own over 40 stations, yet today Clear Channel Communications owns 1200 radio stations. 80% of stations’ playlists match. It was announced today that AT&T is in a deal to buy/merge with DirecTv; and that Warner Communications is in a deal with Comcast Cable.  Bottom-line there seems to be no end to the degree and scale of media consolidation. These executives control 90% of everything Americans see, hear and consider important news. Oh, and by the way, these media companies are actually global.

This is a global consolidation of media…banking…. And….etc.  This means the WORLD is becoming more ‘centrally’ dominated. This loss of an ‘American Dream’ – may actually be influencing the loss of a ‘Global Dream’.

One key element of King George II (W’s) era was tax cuts for the top 2 percent of U.S. taxpayers. This was for Individuals earning more than $200,000 a year and married couples making more than $250,000. These were the so called “job-creators”.  In fact these were two-earner professional couples living on the East and West Coasts. Doctors, lawyers, engineers and Wall Street executives.

By the end of his reign, the top 2% of Americans controlled over 50% of the national wealth, and the top 20% controlled 85% of the national wealth. The disparity and polarization between rich and poor had been accentuated.

For an immigrant coming to America “W”’s reign meant less opportunity. The American Dream had been diminished.

To make matters worse, “W” decided in his last 6 months in office to raid virtually every major manufacturing entity in the U.S. to “kick out the immigrants” to suppress the domestic unemployment rate for the November elections. What a F*** idiot?

Immigration has been another key to American prosperity. Immigrants start businesses. They – NOT the top 2% – create the jobs in America. Immigrant businesses are the ones that really drive growth. Immigrants are the ones that really live and believe the American Dream.

Immigration is a big part of what distinguishes the U.S. from, say, the EU. Immigration makes America younger. Immigration makes America smarter. Half of all Silicon Valley start-ups have a co-founder no more than one generation separated from an immigrant. Immigration makes America work.

Another mark of “W’s” reign was his administration’s attack on immigrants and broken promises on immigration reform.

The unfortunate part of all this analysis is that even after 6 years of Obama’s administration, it’s been nearly impossible to unravel “W”’s policies. Gerrymandering (redistricting) during Bush’s reign has created conditions where Republicans can continue with their hypocrisy.  Republicans that once stood for free enterprise and free competition have only concentrated control of markets and government. Republicans have attacked the American Dream.

And who exactly are the top 2% of Americans? Who are the top executives of these Mega-Banks, of these mega-communication companies? Who were the neo-cons that pushed Bush to invade Iraq under false pretexts? Who?

America is still better than the EU for immigrants – but it will not stay this way if these trends continue. It is critical for us – new immigrants –to take an active role in civic affairs and understand what has been happening in America. We cannot allow the American Dream to be destroyed like this. We must restore America’s dynamism – and force the dilution of participants in critical markets and decentralization of America.

There is a lesson for Iran and Iranians in all this. One key element that has historically guaranteed some degree of economic freedom and political democracy in U.S. has been the presence of a decentralized electoral systems in America. No one party could control elections in all districts across the country. Local election boards are the ones that certify elections and approve candidates. In Iran, elections are controlled centrally by the Interior ministry. Iran’s central government control all aspects elections. Central government controls all media…and readily shuts down papers and arrests bloggers who step out of line. When you believe you should have a ‘monopoly’ on truth, then there is no room for those that disagree and have other ideas. The mullahs, pasdars and key elements of the government in Iran control 70% of Iran’s economy – and hold monopolies in key industries.

The very point of this article is that freedom, liberty, opportunity and prosperity is ultimately best guaranteed through decentralization and dilution of wealth, communication and therefore power.

The single greatest factor providing prosperity, is innovation. When you have greater opportunity and lower barriers to innovation – new ideas emerge that are transformational. These ideas are what create new value propositions and in turn new jobs, new markets, and new wealth. Look at the impact of new drugs, new gadgets…  and the huge impact they have had on humanity.  It’s not about redistributing wealth or concentrating it…that my friends, is a debunked 19th century argument. The future belongs to those nations that provide the greatest opportunities to their citizens.

When wealth, markets and elections become concentrated, everyone –especially the ‘wealthy’ – lose a lot. “W” simply didn’t get it. “W” and his gang will never get it. The Mullahs and their gangs will never get it. Clearly these Christian and Jewish fanatic, evangelical gangs …who by the way have secretly secured Iran’s religious fanatics in power for over 30 years are ignorant, arrogant and shameless.  They are destroying innovation, ideas and dreamers in America and around the world.

 

 

 

 

 

 

 

The remaining group, the inter-state megabanks (Like Bank of America, Wells Fargo …) — with assets of between $250 billion and $2.3 trillion—was made up of a mere 12 institutions. These dozen behemoths accounted for roughly 0.2 percent of all banks, but they held 69 percent of industry assets. Executives in these banks control mass lending policies, and also (obviously) control federal policies. The regulators listen to them. Talk to any small community bank president and you’ll hear what I have heard numerous times – the big banks and regulators are making lending practice very difficult. Overall level of bank lending – especially to small businesses – has gone down considerably in the U.S.  It’s a big deal.

This same consolidation pattern has repeated itself in many other key industries.

Take for example the media conglomerates. In 1983 50 companies controlled 90% of the media. Today it’s down to 6! Yes, 6. Its GE, Viacom, Disney, News Corp, CBS, Warner Brothers. 232 Media Executives control the information diet of 277 Million Americans. A recent merger of Comcast and NBC guarantees control of 1 of every 5 hours of television and monopoly of 11 major U.S. markets including New York City and Chicago. 178 Million Unique users read Time-Warner news every month. In 1995 the FCC (federal regulators) forbade companies to own over 40 stations, yet today Clear Channel Communications owns 1200 radio stations. 80% of stations’ playlists match. It was announced today that AT&T is in a deal to buy/merge with DirecTv; and that Warner Communications is in a deal with Comcast Cable.  Bottom-line there seems to be no end to the degree and scale of media consolidation.  These executives control 90% of everything Americans see, hear and consider important news. Oh, and by the way, these media companies are actually global.

This is a global consolidation of media…banking…. And….etc.  This means the WORLD is becoming more ‘centrally’ dominated. This loss of an ‘American Dream’ – may actually be influencing the loss of a ‘Global Dream’.

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