Though it also draws on stories of displaced middle-class workers, America: What Went Wrong? is dense with facts and figures. (Betrayal is a more accessible, less data-driven read.) But America does a masterful job of explaining how “the government rule book” of the 1980s promoted trade imbalances and hastened the destruction of American manufacturing; deprived workers of secure, well-paid jobs; helped dismantle the private pension system; and shifted the federal tax burden away from the wealthy by lowering both marginal rates and capital gains taxes. The book is a wide-ranging, painstakingly documented indictment—not just of business practices, but also of our democratically elected government. “Congress,” the authors write without equivocation, “has stood for the rich.”
Barlett and Steele make much of two relatively arcane features of the US tax code: the ability of businesses to reduce taxes by carrying net operating losses forward for several years, and by deducting interest payments on loans. They demonstrate how these tax breaks helped propel the merger-and-acquisition boom of the 1980s, and how the assumption of massive debt led to the contraction, and often destruction, of otherwise healthy companies.
This last refrain resurfaces, with a vengeance, in The Betrayal of the American Dream. One of the book’s case studies recounts a story well-known to media insiders: Barlett and Steele blame a single investor, the Florida-based money manager Bruce Sherman, for forcing the sale of the Knight-Ridder chain, owner of The Philadelphia Inquirer, The Miami Herald, the San Jose Mercury News, and other newspapers. Barlett and Steele describe the repercussions of Sherman’s involvement:
The troubles affecting former Knight-Ridder properties are part of an industry-wide trend that has hit all newspapers in the Internet era. But Sherman’s acquisition of a large bloc of the company’s stock on behalf of his clients served to drive up the company’s stock price in excess of its value and was a contributing factor to the papers’ later weaknesses in dealing with debt. Every former Knight-Ridder paper has gone through layoff after layoff, killed pensions, frozen benefits, mandated unpaid furloughs, or taken other harsh measures to try to remain viable.
The valuation of these newspapers continues to plummet, as a revolving cast of owners, publishers, and editors struggles to define an uncertain future. (At the beleaguered Inquirer, the rapid exits and entrances are starting to evoke farce as much as tragedy.) Meanwhile, Barlett and Steele tell us, Sherman has retired and lives in a condominium he purchased, in 2003, for $9.5 million.
Sherman’s wealth and good fortune may inspire the opposite of Schadenfreude, but they reflect our expectations for Wall Street types. Within the lower-salaried, rapidly shrinking media industry, similar windfalls seem especially irksome—at least to journalists. Newspaper executives continue to receive six-figure bonuses and seven-figure golden parachutes after shedding personnel and driving their businesses into the ground. Meanwhile, displaced staffers are forced to find new careers, or resort to freelancing at pay rates that keep spiraling downward.
To be fair, the special travails of journalists and journalism are just synecdoche for Barlett and Steele—one instance of larger trends toward inequality and job insecurity.
Often, they make their points in black-and-white terms that verge on parable. “America is now ruled by the few—the wealthy and the powerful who have become this country’s ruling class,” they write. “Lacking a civic or moral compass, it’s a peer group . . . with no mission except to wall in the money within its ranks to an ever-greater extent.” This group consolidates its power via political spending—an old story, made worse by the super-PAC phenomenon. “We have become a plutocracy,” they write, “in which the few enact programs that promote their narrow interest at the expense of the many.”
Presumptive GOP presidential nominee Mitt Romney’s campaign promises, including more tax cuts for the wealthy and a further unraveling of the safety net, seem to forecast more of the same. But Barlett and Steele implicate the Democrats as well, noting that President Obama’s healthcare law, however maligned by conservatives, “still leaves most of the power in the health industry in the hands of private insurers.”

So Reagan killed this lady's husband and drove his employer into bankruptcy with tax reform 26 years ago!
It wasn't $4.50 a gallon diesel fuel. Or federal regs that make it impossible to hire enough drivers. Or the highest corporate income tax rate in the known Universe. Nah... It wasn't any of that. It was Reagan, alright!
Oh, and the Tea Party helped.
Of course, we have the standard "people are too stupid to vote - we know what's good for them, why don't they vote the way we tell them to?" liberal schtick.
And, above all, it's not Obama's fault.
Gotcha!
I'm sure we'll get a book report on a conservative take from one of our CJR "watchdogs" any day now, right?
#1 Posted by padikiller, CJR on Mon 6 Aug 2012 at 12:18 PM
Someone should send these robo-Left guys on a travelling fellowship to countries that do not have a political system that stands up only for 'the rich' - places such as Spain, Greece, Italy, France, etc. They will be shocked to discover that people in those places have hard times, too, especially the young and immigrants. Gee, who will they blame?
Actually, you don't have to go overseas. How about a compare/contrast from Bartlett & Steele on Democratic California vs. Republican Texas, let's say. I have always had the impression that these guys (writing for Vanity Fair - there's something for those with a sense of irony to discuss in and of itself) know the story that they are going to write, and then go out and cherry-pick factoids to support that frozen narrative. The idea that regulation and taxes and the rest of the leftist laundry list could (as in the European crisis) end up having negative effects on people who are always, no matter what set of 'policies' they live under, going to be vulnerable is too complex for the followers of the conventional political/media echo chamber's narrative to comprehend. There is no policy 'magic bullet'. You could put Bartlett and Steele themselves in as dicators and they still wouldn't have the answers (and throw in Krugman) - only scapegoat-seeking explanations of their failures.
#2 Posted by Mark Richard, CJR on Tue 7 Aug 2012 at 12:40 PM
Barlett & Steele continue to be among the few who write about the one big story of our time. They do get it right, too. No way to deny that, unless you think that, suddenly, right around 1978, American workers all got lazy en mass & stopped deserving any share of the productivity gains that have occurred ever since.
But in regard to the Big Bubble, the review says "they fail to apportion any responsibility to careless home-buyers who signed contracts providing for adjustable-rate mortgages without reading or understanding them. Or, for that matter, to the power of the American Dream itself, which so exalts home ownership."
The missing piece of analysis on the housing boom has always been this: lack of decent-paying, secure jobs pushed millions of ordinary idiots into the "real estate investment" world--and into the arms of predatory lenders and other sharks. Millions of otherwise poor and working-class people saw themselves, however briefly, as budding moguls, free from the timeclock tether, living on their wits and creativity.
Many of these "investors" (maybe a majority) started committing mortgage fraud, since the originate-to-securitize mortgage model encouraged that up and down the chain.
They were emulating their financial betters.
They mostly got away with it.
As there are still no "middle class" jobs for such folks, most are still living by their wits. It's a huge bubble of desperate hucksters running little scams on everyone who surrounds them--multi-level nutritional supplements, "we buy houses," Amway, debt consolidation and bankruptcy consulting . . . a wild bloom of new "entrepreneurs" for the "new economy." The implications for both the economy and the polity are yet unexamined.
#3 Posted by Edward Ericson Jr., CJR on Tue 7 Aug 2012 at 02:10 PM