A Strategic Plan for Liberals

In August of 1971, corporate attorney Lewis Powell—two months shy of his appointment to the United States Supreme Court by President Richard Nixon—wrote a memo to Eugene Sydnor Jr., who chaired the education committee of the U.S. Chamber of Commerce. In Powell’s and the chamber’s view, the American free-enterprise system, and conservatism more generally, was losing the battle of ideas and policy to an ascendant liberalism. “No thoughtful person,” Powell wrote, “can question that the American economic system is under broad attack.” 

Forty-one years later, Powell’s memo can seem more than a little paranoid. Such marginal figures as William Kunstler and Herbert Marcuse loomed large on Powell’s list of threats to the American system. But Powell was correct that conservatism had been marginalized for decades by New Deal liberalism. American social scientists, he noted, were largely liberal; environmental regulations were encroaching on corporate behavior (indeed, Nixon had established the Environmental Protection Agency the previous year); and business was not defending itself ably in the court of public opinion, much less effectively promoting pro-business candidates at the ballot box. Confronting a “massive assault upon its fundamental economics, upon its philosophy, upon its right to continue to manage its own affairs,” Powell wrote, business had “responded—if at all—by appeasement, ineptitude and ignoring the problem.” 

It was high time the chamber began to change all that, and to that end, Powell laid out a number of specific steps that the chamber and business could undertake.

Corporate America, he wrote, had to learn “that political power is necessary; that such power must be assiduously cultivated; and that when necessary, it must be used aggressively and with determination.” To reclaim the ideological battlefield, “the Chamber should consider establishing a staff of highly qualified scholars in the social sciences who do believe in the system” and help conservative academics publish their ideas both in journals and as books. Business should insist on getting its viewpoint represented on television news shows. It should publicize the crucial role of stockholders—“the real entrepreneurs, the real capitalists”—and try to mobilize them on behalf of corporate interests and priorities.

The Powell Memo must be reckoned as one of the most successful political directives in history. The chamber and American big business took his ideas to heart. They increased their involvement in both lobbying and elections, proclaimed the shareholder (not the worker) to be the most important figure in the American economy, and established and funded a host of new institutions (or reinvigorated old ones, like the American Enterprise Institute) to advance their viewpoints and interests. The Business Roundtable, composed of the CEOs of the nation’s biggest corporations, was created in the memo’s wake, as were the Heritage Foundation, the Cato and Manhattan institutes, and other pillars of laissez-faire thought and right-wing propaganda. The Powell Memo spawned an assertive business and intellectual infrastructure that formulated the ideas and policies of the revitalized conservative movement.

The triumphs of this conservatism are everywhere to be seen. Big money dominates politics and government as it has not since the Gilded Age. Anti-government ideology is pervasive and leading politicians seek either to dismantle universal social programs (the Republican position) that once enjoyed near-consensual support or scale them back (the position of many Democrats). Corporate America aims to end collective bargaining. Fox News and talk radio have become a massive source of counterfactual news and agitprop. And it was a right-wing organization, the Tea Party, not a left-wing one, that emerged in the wake of the greatest crisis of capitalism since the Great Depression. The fortunes of ordinary Americans have been declining for years, but millions of working-class Americans remain in the sway of the right’s idealization of markets and demonization of government. 

The right is reaping the rewards of having built for the long term. And the left … the left needs a Powell Memo of its own, its own 40-year plan. Liberalism does not lack for either movements or organizations, but its battles are more frequently defensive than offensive and its forces scattered across an array of causes. It’s time for some comprehensive strategic and organizational thinking on how to promote the ideas and build the infrastructure that can inform and spur a liberal revival. To that end, the Prospect has asked a number of organizers, thinkers, labor and business leaders, and funders to submit mini Powell Memos of their own. Reclaiming America from the financial and corporate powers that have taken it over is the work of decades. What follows are 19 essays on how to begin.

The following essays are from the Prospect's November/December Issue. We will post three of the 19 essays each day.


TR or FDR or HT or LBJ would instantly recognize what is sickest about 2012 America and would be bellowing it from the rooftops. If everyday Americans from 1968 could somehow have been informed that by 2007, LBJ's $10.64/hr minimum wage (adjusted, CPI-U *) would drop almost in half they would have asked whether earth was going to be hid by a comet or some equal disaster. (* http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1.60&year1=1968&year2=2012 )

The cratering of -- both -- the economic and political muscle of the average person can be explained in one word: deunionzation. Given naturally selfish human nature the all-in-one essential of economic or political justice in any society is fairly balanced power. No amount of corporate political muscle (indeed that is what corporations should be exercising in their own interest) is going to oppress an EFFECTIVELY unionized electorate.

Legally mandated, SECTOR-WIDE LABOR AGREEMENTS -- wherein everybody doing the same type of job, for instance retail clerk, in the same geographic locale work under one common contract with all firms -- is the only proven way (proven over half the century and around the world) to fairly balance both labor market AND political forum in an all-in-one stroke.

Don't bother doing anything else to remedy so called "inequality" (the detached intellectual word for the Great Wage Depression/Post-Apocalyptic American Labor Market -- think Soylent Green) if you are not going to do sector-wide bargaining.

Twas post WWII European industrialists who first introduced sector-wide collective bargaining on country wide scales to prevent labor unions from going on a race with each other to the top -- so more resources could be invested into post war rebuilding. Europe's fabled welfare state (which everyone over here seems to think represents the big difference between us and them) was offered to labor as a compensation for the putting up with sector-wide. (England did not adopt sector-wide; why it fell behind the continent -- think I saw this in Barry Eichengreen's book The European Economy after 1945.)

Conservatively (best as I can understand the figures) average income increased 80% (if not 100%) since 1968 while per capita income increased at most 25% and maybe fallen back. This means that 50% of the work force should be paid at least 50% more -- and ($7.25/hr) minimum wagers 100% more. That is a hell of a lot more all-important than whether 3-5% more of the workforce is unemployed than should be.

(Doubling the minimum wage to $15/hr would add only 4% direct inflation: http://ontodayspagelinks.blogspot.com/2008/08/3-cost-of-gdp-output-and-inflation.html )

A couple of years back Northwest Airlines flight crews gave back a billion dollars in pay -- presumably to stay competitive and viable in the face of competing airline pay cuts. The following year Northwest awarded a thousand managers a billion dollars in bonuses. Supermarket unions all over the county are agreeing to two-tier contracts, sharply reducing the pay of what was once a terrific middle class job (right in the neighborhood) for new entrants under pressure from nonunion big boxes.

Airline and supermarket employees would kill for legally mandated, sector-wide labor agreements (as exist in Germany, France, Argentina, Indonesia and, yes, right next store in French Canada). TR and FDR and HT and LBJ would be bellowing all this from the rooftops.

The closest thing we have to a "liberal" movement today is just a campaign to bolster the bourgeoisie. Our "urgent discussions" have deteriorated into cheer-leading sessions for the middle class. America is defined by its socioeconomic policies. Today's liberal agenda is actually well to the right of such conservative stalwarts as Eisenhower and Nixon! I think "Occupy" defined this generation. A powerful people's movement with the potential to change the country (much like the progressive movements of the 1910s, 1930s and 1960s) was rapidly re-defined (largely by media) as a movement of "middle class workers" alone. So, the rest of us walked away, and the movement fizzled out. Historically, when the richest few gained too much power, the poor and middle classes united to successfully push back, to the benefit of both. This time, a strategy to deeply divide the poor and middle was implemented back in the 1990s to prevent a push-back. It worked. Dirty little secret: It is not possible to "Rebuild the Middle Class" without shoring up the poor. Instead, we cut the rungs off of the proverbial ladder out of poverty, and are trying to turn the middle class into a gated community.

Johnson's "War on Poverty" was abandoned because conservative persuaders in the media got the middle class to feel that the "poor" were a threat to them, by implying that the social safety net was not there for the middle class, since "ambitious" and "classy" people would never become poor; the safety net was then portrayed as a "voluntary" permanent resting place for the "lazy", paid for by "working" middle class people.

That this persuasion was possible is a negative side effect of the otherwise positive belief in American individual ambition (the Horatio Alger myth), which had the effect in the 19th and early 20th century of preventing the Marx-predicted mass revolt of the "proletariat" against the "bourgeoisie"; in America, the proletariat aspired to BECOME the bourgeoisie, and so the revolt became a struggle to counter the power of business owners WITHIN the system, rather than to overthrow the system.

Our "elevator" or "bumper sticker" message should be something like:

We're You're
In v On
This s Your
Together Own

or: "What part of 'nobody going broke due to illness' DON'T you like?"

or: Making a country prosperous by making most of its citizens poorer
is like healing a sick person by bleeding!

Any other ideas?

Sorry, but my attempt to show the geometry of my bumper sticker was foiled by the text engine removing consecutive spaces. I intended something like:

column 1, left justified: We're / In / This / Together / WITT [blue on white]
column 2, centered: / V / S / / or [black on white]
column 3, right justified: You're / On / Your / Own / YOYO [red on white]

You will have to replicate this on paper or in Notepad to see the visual.

Liberals brought this dismal state of affairs on themselves by embracing identity politics ; and promoting utopian post-industrial fantasies. Effectively liberals left important economic development issues to the most rapacious business interests. Worse yet, in people like Obama and Clinton, they actually embraced the most reactionary elements of finance capital.

Liberals hardly have working brain power left even to comprehend the gravity of the global economic/ financial collapse--- indeed, people such a Barney Frank help engineer the debacle.

None of this is likely to change as liberals will now rally around BO's plan for attacking Medicare and Social Security in unity with Wall Street and reactionary GOPers.

Such alliances will finish off what's left of liberalism ... and pave the way, likely, for hard core fascists as the economic order literally collapses and chaos ensues.

I'm not looking forward to living ins such a world.... but that's where we are heading.

Some people advocate a new age of austerity. The Republican budget, reflects this kind of thinking. They cite Greece with an unemployment rate of 22.6% as supporting this belief. They say Greece is a nation we will follow if we do not tighten our belt and reduce government services. They also cite Spain's 24.3%, Portugal's 15.2% and Italy's 10.2% unemployment rate. But, they do not mention that tax avoidance (Like Mitt Romney's) and evasion in each of these countries is a national sport.

No taxes have been paid on an enormous percentage of the national income (GDP) of these countries. This is due to both legal (tax avoidance) and illegal (tax evasion) acts. When I speak below of tax evasion, I am also including tax avoidance. They both have the same economic effect on a country. This non-taxed share of GDP is the gray economy.

The chief tax inspector of Greece said tax evasion costs Greece up to $57 billion a year. This is almost twice the amount the country needs to pay off its debts. The gray economy, is 37.5 per cent of its GDP.

In Spain more than $23.5 billion a year is lost because of tax evasion. Almost 25% of national GDP of Spain is gray.

Portugal estimated $17.5 billion in taxes are evaded. The gray economy represents 24% of the country’s GDP. If people did not evade their taxes, the government would have a balanced budget.

In Italy the share of the gray economy of the Italian GDP is 27.8%. When Silvio Berlusconi was Prime Minister, he said the evasion of taxes was a God-given "right."

In Greece, Italy, Spain and Portugal, the government is seen as being controlled by special interests. The members of an elite upper class, many times, legally pay no income tax at all. Because of this, people who cannot use legal tax loopholes evade taxes illegally.

These countries have also had austerity budgets for several years. Yet, even as these budgets have been in place, their economic problems have only gotten worse. These budgets have only prolonged the recessions in these countries. They have added to hardship of the people, and lead to political disorder. Many economists now feel that, in fact, the austerity programs are the main cause of the economic problems these countries face.

On the other hand, economies in many countries are doing well. These countries include: Germany which has unemployment rate of 5.4%, Austria 4.3%, Norway 3.0%, Netherlands 4.2%, Switzerland 2.9%, Japan 4.1%, Australia 4.9% and so on. What do they have in common? And what are they doing differently when they are compared to the United States?

1- The rate of tax evasion is low since the level of services provided by the government is high. People feel they are getting their money's worth from the government.

2- They have Universal socialized health care, or a government sponsored one payer system. While all their people have health care, they spend a small fraction of what United States businesses and Government spend on health care.

3- They have Universal Education. This means you can get an education up to your PhD at low cost or for free. This means their people are trained for the jobs of the future.

4- They have much higher taxes than in United States on someone making more than 250 thousand dollars, for example in Germany the rate is 45%.

5- They have more generous unemployment benefits than in the United States. This stabilizes demand when people are laid-off from their jobs.

6- They have a more unionized workforce than in the United States. The unions provide hands-on apprentice programs for training new workers in industries.

7- They do not spend Trillions of dollars on a gargantuan military, and wars. This does not drain their budgets, so they can keep needed infrastructure both modern and repaired.

So maybe these countries should be our models for the future, rather than Greece, Spain, Italy and Portugal. It would seem this is the pragmatic thing to do. We must eliminate tax loopholes which allow people to avoid paying their fair share of taxes. There must also be sufficient services, so taxpayers feel they are getting a good value for their dollar.

This is what must be done. Simple solutions that can be communicated easily. Obamacare will fail because it is too complex and expensive. Expand Medicare to cover all is easy to understand, and people who are against Obamacare will support it. Social Security will go broke and it's payroll tax is unfair, remove the cap and make it fairer, save it and perhaps it will also be possible to reduce the tax rate. Talk with your audience not at your audience, Keep it simple stupid.

Charles Gallo, your comment was excellent except for the last paragraph. The biggest problem leading to high deficits now is the fall off on the income side of the ledger. From 2001 to 2003 the IRS did an extremely detailed study of income understatement. — excluding those with very high incomes; just your normal everyday Americans.

They found that the loss of tax income was about $350 Billion a year from people not declaring income and that virtually all of it was from small business owners. Wage earners rarely had even a chance to do this as the withholding rules insures that virtually all income is captured in the system. This got almost no publicity. It would be calling our celebrated small business owners tax cheats.

I think it would be beneficial especially if they would get really mad about what the upper income people could do to hide their income overseas or by conversion to favorable capital gains classification.

But i disagree with your comment on health care and even the far simpler social security. Since SS is an insurance scheme the capping of the deduction amount squared with the capping of the payment amount. If you take off the cap on the tax you either need to take off the cap on the payouts or you will be making it into a charity. It is already set up to be progressive with those who have been low earners all their lives receiving proportionately more and the top earners receiving proportionately less. That does fill its original function as insuring against destitution in the elderly. I am not against raising the cap but the change involves a big decision on the payment end.

Health care is different and far more complex. K.I.S.S. can't apply to a very complex problem. What is called ObamaCare is actually Title I of the ACA (and some of the later titles on financing). Title II is concerned with fixing Medicare and Medicaid. The other Titles (there are 10 of them) are concerned with improving quality and reducing costs. There is no way to continue Medicare as it is now much less dumping everyone under 65 into it. It is the cost of Medicare and Medicaid (and the health care costs of the federal employees including Congress and the Presidency) that are busting the budget. Those are the costs that are rising at rates far beyond inflation that are busting the budget.

Most people wrongly believe that Medicare is prepaid as SS is. It isn't. The Medicare trust fund is actually a Hospital Insurance fund which only covers hospitalization (that's Part A). Part B is what pays for doctors and other providers, suppliers and equipment. That is paid for 25% by premiums from participants and 75% by the government, ie general tax revenues.

Those costs MUST be curbed. The Republican scheme of voucherizing Medicare does nothing but transfer these costs to the elderly. However, that move increases costs off the bat by going from the wholesale purchase to a retail purchase of coverage, to say nothing of the confusion of millions of people not always in the best of health physically or mentally trying to find the best product in a marvelously opaque area.

Even if you could lick the problem of obtaining insurance you still have the problems that exist in our system: high cost and low quality. Much of that comes from over treatment. Some of it is purely fraudulent, much of it is ignorant, and virtually all of it is opaque.

The ACA mandates a lot of things — all critically needed like transparency. You wouldn't go to a restaurant that failed an inspection for cleanliness yet pre ACA we had no way of knowing hospital infection rates. Yet hospital acquired infections kill 100,000 people a year. Many more survive the infections but each one requires a lot of expensive health care to resolve.

There are too many points to even illustrate here so perhaps you will see why the ACA is so complex and why it is stupid to try to keep it really simple.


There is one issue on which all others depend. That issue is public campaign finance. The power of bribery has corrupted government, and until that is corrected, no issue can be resolved on it's own merits. All progressive organizations need to get behind , and make first priority, the goal of making the voters into the sponsors of elections.

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