The Democracy Project
How much of the average American’s life income ends up getting passed to the financial services industry in the form of interest payments, fines, fees, service charges, insurance overhead, real estate finder’s fees, and so on? No doubt a defender of the industry would insist some of these are payment for legitimate services—e.g., real estate finder’s fees—but in many cases, these finder’s fees are imposed even on renters who have found apartments themselves. The real estate sector has imposed laws making it effectively impossible to acquire an apartment without paying such a fee. If nothing else, it is clear that there has been a massive increase in such fees in recent decades without any notable increase or improvement in the services provided.
How much of a proportion of the average American family’s income ends up funneled off to the financial services industry? Figures are simply not available. (This in itself tells you something, since figures are available on just about everything else.) Still, one can get a sense. The Federal Reserve’s “financial obligations ratio” reports that the average American household shelled out roughly 18 percent of its income on servicing loans and similar obligations over the course of the last decade—it’s an inadequate figure in many ways (it includes principal payments and real estate taxes, but excludes penalties and fees) but it gives something like a ballpark sense.
This already suggests most Americans are delivering as much as one dollar out of five they make directly to Wall Street in one form or another—that is, if you take “Wall Street” in its popular sense, as a code word for the financial sector as a whole. But of course “average Americans” don’t really exist. The depredations of the financial industry fall very unevenly. First of all, while much of this money is simply pocketed by executives at financial companies (all those bankers’ bonuses and so on), some gets redistributed in the form of dividends. Not to everyone, however. Before the crash there was a perception that everyone was in on the deal; that capitalism was becoming a popular enterprise where all Americans, through their investments and retirement accounts, got to own a piece of the action. This was always wildly overstated, and after the crash, when 401(k)s took an enormous hit, but large investors recovered quickly, you don’t hear much of that anymore. No one can really deny that the profit system is still what it always was: a way of redistributing money to those already on the top of the chain. Wealthy Americans, even if they are not employed in the financial sector themselves, end up net winners. Pretty much everyone else has a certain proportion of their income siphoned off.
Those on the bottom of the financial food chain, on the other hand—and this is true any way you measure it, by race, gender, age, employment—invariably end up paying disproportionately more. In 2004, for example, those eighteen to twenty-four ended up paying 22 percent of their income on debt payments (this includes principal, but doesn’t include service charges, fees, and penalties)—with about a fifth paying more than 40 percent—and for twenty-five- to thirty-four-year-olds, the cohort most impacted by student loans, things were even worse: they spent an average of a quarter of their income on debts. And these figures are true of younger Americans as a whole, regardless of education. We need hardly speak of the fate of that roughly 22 percent of American households so poor they have no access to conventional credit at all, who have to resort to pawn shops, auto title, or payday loan offices that charge as much as 800 percent annual interest.
And all this was true before the crash!
In the immediate wake of 2008 everyone in America who had any means to reduce their debt, and hence, the amount of their income siphoned off to Wall Street, immediately began to do so—whether by frenetically paying off credit card debt, or walking away from underwater mortgages. This might give a sense of how dramatic was the change:
Yet at the same time, certain types of loans had been set up in such a way that this really wasn’t possible. For example, while it’s possible, if not easy, to renegotiate a mortgage,d student loans cannot be; in fact, if you so much as miss a few payments, you are likely to have thousands of dollars in penalties slapped onto the principal. As a result student loan debt continues to balloon at a giddy rate, the total amount owed having long since overtaken total credit card debt and other forms of debt as well:
TOTAL DEBT BALANCE AND ITS COMPOSITION
Mortgage
72%
HE Revolving
5%
Auto Loan
6%
Credit Card
6%
Student Loan
8%
Other
3%
*2011Q3 Total: 11.656 Trillion
Aside from students, the other group stuck in the debt trap is the working poor—above all working women and people of color—who continue to see huge chunks of their already stagnating earnings culled directly by the financial services industry. They are often called the “subprimers,” since they are those most likely to have signed up for (or been tricked into) subprime mortgages. Having fallen victim to subprime mortgages with exploding adjustable rates, they are now faced with being harassed by collectors, having their cars repossessed, and, most pernicious of all, having to resort to payday loans for emergency expenses, such as those related to health care, since these are the Americans least likely to have meaningful health benefits. Those paydays operate with annual interest rates of roughly 300 percent a year.
Americans in either of those overlapping categories—the working class and underemployed graduates with crippling student loans—are actually paying more of their income to Wall Street than they pay to the government in taxes.
Back in September, even before the occupation began, Chris—the Food Not Bombs activist who helped us create the first democratic circle in Bowling Green in August—set up a web page on tumblr called “We Are the 99 Percent,” where supporters could post pictures of themselves, holding up a brief account of their life situations. At the time of this writing there are more than 125 pages of these, their authors varying enormously in race, age, gender, and just about everything else.
Recently there was an Internet discussion about the “ideology of the 99 percent” as revealed by these testimonies. It all began when Mike Konczal, of the blog Rortybomb, carried out a statistical analysis to determine the twenty-five most frequently used words in the html texts, and discovered that the most frequent was “job,” the second, “debt,” but that almost all the rest referred to necessities of life, homes, food, health care, education, children (after “job” and “debt,” the next most popular words were: work, college, pay, student, loan, afford, school, and insurance). Glaringly absent was any reference to consumer goods. In trying to understand the implications, Konczal appealed to my own book on debt:
Anthropologist David Graeber cites historian Moses Finley, who identified “the perennial revolutionary programme of antiquity, cancel debts and redistribute the land, the slogan of a peasantry, not of a working class.” And think through these cases. The overwhelming majority of these statements are actionable demands in the form of (i) free us from the bondage of these debts and (ii) give us a bare minimum to survive on in order to lead decent lives (or, in pre-Industrial terms, give us some land). In Finley’s terms, these are the demands of a peasantry, not a working class.10
Konczal saw this as a profound diminution of horizons: no longer are we hearing demands for workplace democracy, or dignity in labor, or even economic justice. Under this newly feudalized form of capitalism, the downtrodden are reduced to the situation of medieval peasants, asking for nothing more than the means to make their own lives. But as others soon pointed out, there was a certain paradox here, because ultimately the effect is not to diminish horizons, but to broaden them. Defenders of capitalism have always made the argument that while as an economic system it surely creates vast inequalities, its overall effect is a broad movement toward greater security and prosperity for everyone, even the humblest. We have reached the point where even in the richest capitalist nation on earth, the s
ystem cannot provide minimal life security, or even basic life necessities for increasing proportions of the population. It was hard to escape the conclusion that the only way to restore us to lives of minimal decency was to come up with a different system entirely.11
For my own part, the whole discussion might serve as a case study in the limits of statistical analysis. Not that such analysis isn’t revealing in its own way, but it all depends on what you set out to count in the first place. When I read through the tumblr page for the first time, what really struck me was the predominance of women’s voices, and the emphasis not just on acquiring the means for a decent life, but the means to be able to care for others. The latter was evident in two different aspects, actually. First was the fact that so many of those who chose to tell their stories worked in, or aspired to work in, a line of work that involved providing care for others: health care, education, community work, the provision of social services, and so on. Much of the terrible poignancy of so many of these accounts revolves around an unstated irony: that in America today, to seek a career that allows one to care for others usually means to end up in such straitened circumstances that one cannot properly care for one’s own family. This is, of course, the second aspect. Poverty and debt have a very different meaning for those who build their lives around relationships with others: it is much more likely to mean being unable to provide birthday presents for one’s daughter, or watching her develop symptoms of diabetes without being able to take her to a doctor, or watching one’s mother die without ever having been able to take her off for a week or two of vacation, not even once in her life.
There was a time when the paradigmatic politically self-conscious working-class American was a male breadwinner working in an auto factory or steel mill. Now it is more likely to be a single mother working as a teacher or a nurse. Compared to men, women are more likely to enter college, more likely to finish college, and more likely to be poor, the three elements that often lead to greater political consciousness. Labor union participation still lags slightly: only 45 percent of union members are women, but if current trends continue, a majority will be women in eight years. Labor economist John Schmitt observes: “We’ve seen a big increase over the last quarter century of women in unions, particularly as the unionization of the service sector expands,” he states. “The perception that unions are great for white guys in their 50s is false.”12
Moreover, this convergence is beginning to change our very conceptions of work. Here I think Konczal got it wrong. It’s not that the 99 percenters are not thinking about the dignity of labor. Quite the contrary. They are broadening our conception of meaningful work to include everything we do that isn’t for ourselves.
QUESTION 4
Why did the movement refuse to make demands of or engage with the existing political system? And why did that refusal make the movement more compelling rather than less?
One would imagine that people in such a state of desperation would wish for some immediate, pragmatic solution to their dilemmas. Which makes it all the more striking that they were drawn to a movement that refused to appeal directly to existing political institutions at all.
Certainly this came as a great surprise to members of the corporate media, so much so that most refused to acknowledge what was happening right before their eyes. From the original, execrable, Ginia Bellafante piece in the Times, there has been an endless drumbeat coming from media of all sorts accusing the movement of a lack of seriousness, owing to its refusal to issue a concrete set of demands. Almost every time I’m interviewed by a mainstream journalist about Occupy Wall Street I get some variation of the same lecture:
How are you going to get anywhere if you refuse to create a leadership structure or make a practical list of demands? And what’s with all this anarchist nonsense—the consensus, the sparkly fingers? Don’t you realize all this radical language is going to alienate people? You’re never going to be able to reach regular, mainstream Americans with this sort of thing!
Asking why OWS refuses to create a leadership structure, and asking why we don’t come up with concrete policy statements, is of course two ways of asking the same thing: Why don’t we engage with the existing political structure so as to ultimately become a part of it?
If one were compiling a scrapbook of worst advice ever given, this sort of thing might well merit an honorable place. Since the financial crash of 2008, there have been endless attempts to kick off a national movement against the depredations of America’s financial elites taking the approach such journalists recommended. All failed. Most failed miserably.e It was only when a movement appeared that resolutely refused to take the traditional path, that rejected the existing political order entirely as inherently corrupt, that called for the complete reinvention of American democracy, that occupations immediately began to blossom across the country. Clearly, the movement did not succeed despite the anarchist element. It succeeded because of it.
For “small-a” anarchists such as myself—that is, the sort willing to work in broad coalitions as long as they work on horizontal principles—this is what we’d always dreamed of. For decades, the anarchist movement had been putting much of our creative energy into developing forms of egalitarian political process that actually work; forms of direct democracy that actually could operate within self-governing communities outside of any state. The whole project was based in a kind of faith that freedom is contagious. We all knew it was practically impossible to convince the average American that a truly democratic society was possible through rhetoric. But it was possible to show them. The experience of watching a group of a thousand, or two thousand, people making collective decisions without a leadership structure, motivated only by principle and solidarity, can change one’s most fundamental assumptions about what politics, or for that matter, human life, could actually be like. Back in the days of the Global Justice Movement we thought that if we exposed enough people, around the world, to these new forms of direct democracy, and traditions of direct action, that a new, global, democratic culture would begin to emerge. But as noted above, we never really broke out of the activist ghetto; most Americans never even knew that direct democracy was so central to our identity, distracted as they were by media images of young men in balaclavas breaking plate glass windows, and the endless insistence of reporters that the whole argument was about the merits of something they insisted on calling “free trade.”f By the time of the antiwar movements after 2003, which mobilized hundreds of thousands, activism in America had fallen back on the old-fashioned vertical politics of top-down coalitions, charismatic leaders, and marching around with signs. Many of us diehards kept the faith. After all, we had dedicated our lives to the principle that something like this would eventually happen. But we had also, in a certain way, failed to notice that we’d stop really believing that we could actually win.
And then it happened. The last time I went to Zuccotti Park, before the eviction, and watched a sprawling, diverse group that ranged from middle-aged construction workers to young artists using all our old hand signals in mass meetings, my old friend Priya, the tree sitter and eco-anarchist now established in the park as a video documentarian, admitted to me, “Every few hours I do have to pinch myself to make sure it isn’t all a dream.”
So this is the ultimate question: not just why an anti–Wall Street movement finally took off—to be honest, for the first few years after the 2008 collapse, many had been scratching their heads over why one hadn’t—but why it took the form it did? Again, there are obvious answers. Once thing that unites almost everyone in America who is not part of the political class, whether right or left, is a revulsion of politicians. “Washington” in particular is perceived to be an alien bubble of power and influence, fundamentally corrupt. Since 2008, the fact that Washington exists to serve the purposes of Wall Street has become almost impossible to ignore. Still, this does not explain why so many were drawn to a movement that comprehensively rejected existing political institutions of any
sort.
I think the answer is once again generational. The refrain of the earliest occupiers at Zuccotti Park when it came to their financial, educational, and work lives was: “I played by the rules. I did exactly what everyone told me I was supposed to do. And look where that got me!” Exactly the same could be said of these young people’s experience of politics.
For most Americans in their early twenties, their first experience of political engagement came in the elections of 2006 and 2008, when young people turned out in roughly twice the numbers they usually did, and voted overwhelmingly for the Democrats. As a candidate, Barack Obama ran a campaign carefully designed to appeal to progressive youth, with spectacular results. It’s hard to remember that Obama not only ran as a candidate of “Change,” but used language that drew liberally from that of radical social movements (“Yes we can!” was adapted from César Chávez’s United Farm Workers movement, “Be the change!” is a phrase often attributed to Gandhi), and that as a former community organizer, and member of the left-wing New Party, he was one of the few candidates in recent memory who could be said to have emerged from a social movement background rather than from the usual smoke-filled rooms. What’s more, he organized his grassroots campaign much like a social movement; young volunteers were encouraged not just to phone-bank and go door-to-door but to create enduring organizations that would continue to work for progressive causes—support strikes, create food banks, organize local environmental campaigns—long after the election. All this, combined with the fact that Obama was to be the first African-American president, gave young people a sense that they were participating in a genuinely transformative moment in American politics.