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Californicate It!

The Koch Brothers’ Plan for Wisconsin

by JEFFREY SOMMERS

The Koch Brothers have instructed Scott Walker to go for complete victory.  Wisconsin’s governor is implementing that order.  Yet, what does complete victory mean?

The United States has had three major economic crises the past century. The last one was in the 1970s and represented what the late Harvard political scientist and US policy advisor, Samuel Huntington, referred to as the “Crisis of Democracy.”  By “crisis,” Huntington meant there was too much democracy, both economically and politically.  Turning upside down fighting Bob LaFollete’s, (or Al Smith, the 1928 Democratic presidential candidates) statement that the “cure for the ills of democracy was more democracy,” Huntington argued that democracy itself was the problem.  It was a straight shot back to John Locke’s Second Treatise on Government published in 1690, whereby popular rule was only to be exercised by the rich as a class on their own behalf.  For Huntington the public’s calls for increasing equality, again, both economic and political, was the great danger.

The message seemed to resonate among elites in the Anglo-American world.  As the US stumbled around for solutions to the 1970’s crisis, it came clear that further investment in its real economy of production would cost too much.  In short, the price of restored economic competitiveness was too high.  There was no quick money in it.  Another way had to be found.  The fast way back to riches, for the rich, would be through keeping the gains of America’s economic growth for themselves.  This represented quite a change.  Since FDR the New Deal was that American workers would get their share of America’s economic growth. 

Enter California.  UCLA’s Robert Brenner argued that the expedient political solution America’s elites arrived at for the problem of America’s working middle class continued expectations to share in the country’s economic growth, was to divert their attention elsewhere.   As the 1970s ended, this meant way from capital and instead against government.

It’s really quite simple.  If people’s salaries are stagnant and declining, then take their minds off employers who were either unable or unwilling to increase salaries.  Focus the public mind on taxes.  While terribly short sighted, this was something the public could understand.  If I can’t get more salary I can reduce my taxes, and thereby increase the money in my pocket.  Unionizing is hard work and employers have many tools at their disposal to prevent it.  But, what I can more readily do is to vote for lower taxes.  Thus, a kind of Molotov/Ribbentrop Pact was formed between parts of the white working middle class and business elites, against government social spending and services.

This felt good for a while.  All the conservative movement had to do was gin up people’s already existing prejudices so they would shift their ire to the poor as the case of their economic woes.  So, in California they launched Proposition 13, which began the tax “reform” in the US.  The results were predictable.  Californians had a bit more pin money in their wallets as they starved their public sector.  Yet, the price was high.  The state eventually went from having the highest ranking schools in the country to among the lowest.  Its university system went from having no tuition for residents, to charging high tuition, thus saddling its students with massive debts that make them both poorer and more likely themselves to call for more tax relief, thus creating a “virtuous” circle of continuing calls for tax relief as its residents got poorer.  Thus, the state went from the previous “California Dreamin” of prosperity to a nightmare of debt, failed institutions and increasing inequality.

The same program is now being reprised in Wisconsin.  Wisconsin residents are getting poorer.  NAFTA, free-market radicalism, no industrial policy, and tax policy that often subsidize off shoring of jobs have left it a low wage state (it was once among the highest in the 1950s & 1960s: think the TV show “Happy Days” and all that).  The 2008 Wall Street induced crisis hit Wisconsin hard, and indeed, the entire decade saw Wisconsin incomes fall as the country invested in the folly of war rather than in rehabilitating industry.
What to do?  The poor could no longer be scapegoated (African-Americans especially) as they were in previous decade, as welfare was largely eliminated by the late 1990s, courtesy of Bill Clinton.  The answer was quite clever; blame public sector workers for the state’s (and thus people’s) problems.  The late robber baron financier, Jay Gould, once declared, “I can hire one half of the working class to kill the other half.” 

This is precisely what is happening in Wisconsin today.  The Koch brothers and other special interest big money are using Wisconsin as their experiment to see if they can go for complete victory. 

Not too many years back, teachers, fighter fighters, city engineers, were set as Norman Rockwell portraits in the American mind.  In just a few short years that perception has been reshaped to resemble that of yesterday’s scapegoat, the welfare queen. Private sector workers have been turned against their public sector brethren.  The former have been hit hard; especially given only 6% have union representation.  With no unions, it has been like Dick Cheney hunting ducks from inside a tinted window Hummer (“roll down the window son and try to keep your face out of the way while I shoot!”).  The workers simply have no chance to defend themselves as the old man gets driven around after them with his blunderbuss. 

Without unionization, vacation, paid sick days, decent health care benefits, and pensions have all disappeared, leaving the working middle class both less secure and poorer.  They might, and were, asking the right questions about what happened in the fall of 2008.  Yet, President Barak Obama’s failure to address the real causes of America’s economic problem and chiefly just bail out Wall Street, left the working middle class open to others who could provide answers to what had befallen them. 

The public sector thus, makes an inviting target.  Unionized, they still have the benefits that many in the private sector once enjoyed.  From the Koch brothers’ standpoint, this is a very bad example.  And, thus, we now answer the question what is complete victory.  Complete victory is the final destruction of FDR’s New Deal and the working middle class.  Private sector workers are set upon those in the public sector in the hopes of crushing labor, and full potential of exploiting labor once and for all.  Once labor is totally defeated, then capital can also completely dominate government with no speed bumps placed in their way for rent seeking off the public, as we see in the current Wisconsin budget repair bill that permits the Governor to sell off state power plants in no bid contracts. 

Three decades after Proposition 13, California sees little left of the New Deal’s legacy.  Now, we see the impending Californication of Wisconsin.  Soon we will know if the Koch brothers have been delivered their “complete victory.”

JEFFREY SOMMERS is visiting faculty at the Stockholm School of Economics in Riga. His opinions are his own and are not meant to represent those of his academic affiliations. He can be reached at jeffrey.sommers@fulbrightmail.org