What's the Matter with the System?

— Suzi Weissman interviews Thomas Frank

Suzi Weissman: I'm really pleased to be speaking with Thomas Frank, the author of The Wrecking Crew: How Conservatives Rule. (Metropolitan Books). He is also the author of What's the Matter with Kansas? and One Market under God, founding editor of the Baffler, and a contributing editor at Harpers. He writes a column for the Wall Street Journal Wednesdays. Check out his website: www.tcfrank.com.

The Wrecking Crew has been described as a kind of "how-to" history of the conservative era: how to destroy a government - and enrich yourselves at the same time. Tom, you say "We behold the majestic workings of the free market itself boring ever deeper into the tissues of the state. Ultimately, we gaze upon one of the true marvels of history: democracy buried beneath an avalanche of money." So it's the corruption of everything democratic?

Thomas Frank: It is, and this is the essential puzzle that I started with. Each of my books starts with trying to solve a historical puzzle. With "Kansas," it was working-class conservatives, which is kind of a strange thing on the surface. And with this one, I moved to Washington DC, and I beheld what everyone else in the country has beheld, this avalanche of scandal, just one after another, after another, after another.

At the same time, this incredible botched misrule, with all these different departments in Washington asleep at the switch; tainted spinach getting into the food supply, nobody's watching the mortgage market. You know, everything is going wrong. They can't recover from Katrina…

SW: I was going to say, they can destroy a city…  

TF: They can destroy things, yeah, but they can't seem to rebuild anything. Government apparently doesn't work. And so I started thinking: what connects these things? What is there that is making all this happen at the same time? What I finally came up with is this core idea of the conservative movement, which is their love of the market, their mistrust of government, and their determination to bring market forces to bear on government.

SW: We certainly know a lot about market forces in the United States. We have the only free market approach to health care in the world, and we spend the most and get the least.

TF: It works so well.

SW: You said you started out with Kansas in your previous book, What's the Matter with Kansas? What you'd done in a bestselling book is to understand how people not only vote against their interests, but think against their interests, as Gore Vidal would say; making America's ruling class the most successful in history. I guess Marx would call it false consciousness; yet here you go into how a group of conservatives set out on a wrecking mission. Can you go back and talk a little bit about what you call the "enterprise," Jack Abramoff and the beginnings of this whole phenomenon?

TF: I followed the career of Jack Abramoff because the man came to fascinate me, as he has so many people in Washington DC; the scandals that are associated with him are so elaborate and so repugnant. So I decided to research his early history, back to when he became prominent as the national leader of the College Republicans. He took over that organization in 1981.

What distinguished his leadership there, apart from the fact that he moved the College Republicans dramatically to the right - before him it had been an organization mainly of moderate Republicans - was that he also brought all sorts of entrepreneurial activities into the College Republicans. He seems to have discovered something that a lot of other conservatives were discovering at the time, that you could make money by being a conservative.

It's not just a movement; it's not just a bunch of people sharing a particular idealism. It is a way to make money. That's sort of where it all begins.

Washington is a very wealthy town now. There are many ironies in this book, and one of them is that the conservative movement, which has for all these years railed against big government and complained about big government, has them taking charge of the state. They have made Washington DC into the richest city in America, which it never was before Reagan came into office. That's because they've figured out how to make money out of government, and they made the money by wrecking it.

SW: Of course you can look at Iraq and, as you mentioned, Katrina as examples. In Iraq, billions of dollars from American taxpayers have gone into creating an "emerald city" that isn't for the Iraqis…

TF:  What you're referring to is the Green Zone, where all the American headquarters are. But they've outsourced all the work, or most of the work of Iraqi reconstruction, and all sorts of projects have been failures. Just about every week; another project will turn out to be a disaster. The Bush administration has basically decided to privatize every imaginable kind of government work, to turn it over to the private sector on the assumption that the private sector always, and in every situation, does the work better than the federal government. This is disproved again and again and again, but I think most dramatically in Iraq, where it's just been this gigantic money sluice into the pockets of the big contractors.

Nothing is done. Well, things get done, but it doesn't help the Iraqis. For example, they bring KBR over there (formerly Halliburton), and say they win the contract for running the cafeteria at the military base, and subcontract it, then the subcontractor subcontracts it, and on down the line. And each one of them takes a big slice of the money, and finally they bring in workers from India and Pakistan, or Nepal to actually do the work.

They don't even hire the people who live in the country, when basic disaster recovery tells you to get the people who live there back to work, get some money in their pockets. But that's just one of a thousand stories of idiocy from over there.

SW: I just was thinking about Katrina, because the same thing is true there too, in New Orleans. We're now three years later and the Ninth Ward, and much of the city, is still empty. The perfect metaphor for me is when Halliburton went there and decided to sell blue plastic tarp as temporary roofs. They spent billions of dollars, and the tarp lasts six or eight weeks, and then they have to do it all over again. With the amount of money spent, of course, we could have had roofs and probably new buildings.

TF: Oh yes, it's much more expensive the way that they did it. This is one of the things that just drives me up the wall every time I think about it, all this money down the chute. You know, why we have all this "government by contractor" is because back in the '80s the Reagan Administration set up a blue ribbon commission that insisted that privatizing and outsourcing would save us money. It was a way to bring down the deficit.

What you see now is that it's a way to drive the deficit up, it's a way to just blow the money out the back to the right campaign contributors.

Katrina was a moment of realization for me. I was at the Maryland state fair, my little girl was riding on the roller coaster, and I was talking to a friend of mine. It was this beautiful sunny day, and my friend is a sociologist, he's something of an authority on disasters - an interesting field to be an expert in these days.

It was right after the hurricane, and he was describing what was going on down there, and how ill prepared FEMA had been. I couldn't believe it; this was just four years after 9/11, and as a nation we'd made this titanic effort to make this country more secure, you know, Homeland Security - billions and billions of dollars. Now you find out a hurricane hits and they don't do anything? They don't even know it's coming? It was the moment when the light went on in my head.

The Role of Ideology

SW: You say that the "wrecking crew" hates government so much, and ridicules it to the extent that they really just want to destroy it, and if they spend it out of business, then it can't get anything done. Can you talk a little bit about from their point of view, what they think government should do?

TF: They think government is a criminal enterprise. The conservatives - including some of the people who've been caught up in things like the Abramoff scandal - think that they are experts on corruption. They talk about corruption all the time. They think they know exactly what it is: when government interferes in the economy, when it regulates your business, when it taxes you…

SW: When it inspects your food…

TF: When it does any of the liberal things. Government is OK as long as it's like the Federal Reserve or the police force, or the army, or something like that - but when it does anything liberal it is an act of corruption, and of unjustified interference, if not tyranny. What's ironic about looking at government in this way is that it allows you to do these horrible things, like fill the Department of Labor with people who hate labor unions.

SW: People think that the Monica Goodlings incident was an aberration. How could somebody who came from a fourth-tier law school be in charge of vetting U.S. attorneys? In fact, what you say in your book, is that this is entirely deliberate.

TF: It's universal in this administration. Not just unqualified people, but people who are opposed to the mission of a given agency will be put in charge. You've got one of these guys from the Cato Institute, who's always talking about privatizing Social Security, as number two at the Social Security Administration right now.

As I said, the Labor Department is filled with all kinds of amusing people. You mentioned the Justice Department. In Iraq, the country is overflowing with these very young people with very little experience in anything, but who've been put in charge of reconstruction.

One of my favorite examples was a young kid they put in charge of rebuilding the Baghdad Stock Exchange. He had no experience. It wouldn't be hard to find a person on the right who had a lot of experience on Wall Street, but they didn't! They just got some kid who sent his resume into the Heritage Foundation or something like that, and put him in charge of this very sophisticated enterprise.

"Personnel is policy" - this is one of the sayings on the right. The idea is to get their people in, and get the liberals out. And by "liberal" they mean career civil servants. Take the power away from those people, make those people be quiet, cut their pay, make their job unpleasant, and let our people handle everything and outsource all the work that we can.

SW: Talk just a little bit about Saipan as a sort of epitome of the kind of experiment that they think is good and certainly profitable.

TF: Saipan is an island in the western Pacific that's part of the United States, a commonwealth of the United States, all the way over on the other side of the Pacific. It came to my attention because it was a client of Jack Abramoff, and it's one of the parts of his career that is most fully documented. You can find out virtually everything that the man did on behalf of this client. By the way, he hasn't been charged with any wrongdoing; as far as I can tell he represented their cause very ably and got what they wanted for them. He did a good job for them.

But when Saipan signed up to be a part of the United States, we let them write their own immigration policy, and to some degree control things like their own taxes and their own labor situation, and their own minimum wage. What would you guess would happen in a situation like that? It's part of the United States, so whatever Is manufactured there could be sent to the United States duty free…

SW: "Made in America." Well, I have a student who wrote a report about it and called it "slave labor."

TF: "Made in America." So instantly it become sweatshop hell. "Indentured servitude" is, I think, the accurate expression for it. There's a whole book out by John Bowe* that goes into it in great detail. He lived there for a couple of years, and interviewed lots of people.

It's astonishing that these things go on in a part of the United States. It's largely coming to an end now, because they were afraid that the United States would step in and say, "okay, enough - you guys now have to obey U.S. law in all respects." That's why they hired Abramoff, to fight that, and it's finally happened now Abramoff is out of the picture.

SW: One question I have is why do you exclude the Democrats from this? Clinton started a lot of this. I had Chalmers Johnson on the program about a week ago, and he said that Clinton was always a Republican, that he certainly subscribed to this same notion. Do you let them off the hook? And I guess that begs a larger question, because, if what happened in "Kansas" is about "false consciousness," isn't The Wrecking Crew a kind of catalogue of cannibalistic finance capital. Is this the era where capital plunders itself?

TF : You said a mouthful! Let me start with the Democrats: It wasn't my intention to let them off the hook. I wanted to document the era of conservative governance, and the book you referred to earlier, One Market Under God, is largely about the Clinton era. I have a lot to say about Bill Clinton in that book. As you said, he's the most conservative Democrat president since Grover Cleveland, and basically ruled for all intents and purposes as a Republican, but - here's the funny thing - as a responsible Republican, as a kind of Dwight Eisenhower Republican, the sort of Republican that now looks good.

I fault Clinton for a couple of things. The bottom line on Clinton is that he accepted a lot of the Reagan economic agenda: deregulation, privatization, you name it, he accepted it, and by doing that he legitimated it. Instead of pushing back, he accepted it.

SW: Many people want the New Deal back, or some version of it. They certainly want to feel less insecure, and to see some rebuilding of infrastructure. Do you think that the excess and destruction that's gone on in the last 20-30 years can be turned around?

TF: Not right away; it's going to take a very long time. They have destroyed it so thoroughly and so systematically that I think the government is going to have to be rebuilt from square one. Obama has that youthful vigor and he inspires people, and that's the sort of president we need…
SW: In light of the stunning economic collapse of the last couple of weeks, I wanted to ask you about this gigantic ideological flip-flop from some of the wreckers in the wrecking crew.

TF: The events in recent weeks aren't something that you're happy to say, "I told you so" about. It's an awful thing. But these are the wages of deregulation. What The Wrecking Crew is about: is the systematic dismantling of the regulatory state, the liberal state, by conservatives.

The agencies still exist, the regulatory bodies are all still there on paper. But they don't do what they were set up to do by Congress, and in many cases they're basically the property of the industries they were set up to regulate. It sounds perverse, does it not? Yet it is the case.

SW: Even as we see this so-called bailout plan - obviously they have to prop up the world economy so there is some need to rescue Wall Street - they want to give Treasury Secretary Paulson $700 billion and no oversight. There are three branches of government and he wasn't elected to any of them. It's pretty astonishing; I hope the Democrats don't give in to that one.

TF: I sure hope they don't. The idea of proceeding without any oversight or accountability at all…

SW: Doesn't Paulson come from Goldman Sachs?

TF: He does. And I think the markets are really counting on him. Wall Street fell 300-odd points today. They want that free money. They want that goddamn free money, Suzi. When do we get the free money??

SW: Bush didn't succeed in privatizing Social Security, but…

TF: Oh, thank goodness. But he did pass the bankruptcy bill. So those guys get a bailout, and what do you get? You get the screws turned a little tighter.

SW: Exactly. So, you don't think this bailout is out of character at all, the fact that they're not ideologically wedded, really, to anything.

TF: They are wedded to something, and that's business: The business community. Another way of putting it is...M-O-N-E-Y, money. But at the end of the day, one of the things that strikes me about the conservative movement - and this theme runs throughout The Wrecking Crew - is the idea of conservative opportunism, or cynicism, if you want to call it that. They'll grab hold of an idea, and ride it for all it's worth, then toss it overboard the next day. They'll do this with leaders, they'll do it with members of their constituency.

They're doing it with George Bush. As soon as he became unpopular - you know, the man has the lowest approval rating of any president ever since they started measuring those things. What is their response? It's to say, "He's not really a conservative. He's a liberal in disguise." They were saying this at their convention, in Mitt Romney's speech.

Did you see what happened today? The last two remaining investment banks have changed their status because they want the regulation. It's a rush to safety on their part as well. The whole "laissez-faire" thing is going by the wayside.

You know the old saying: It's socialism for the wealthy and the free market for the rest of us. There's another way of putting that, which is to privatize the profits and socialize the risk. I am really sorry to say that seems to be what they have in mind here, reinflating a bubble. Let the damn thing go, my friends.

I was very supportive of Paulson and Bernanke in what they were doing last week, because I like to see energetic government. I don't care what party it is; I don't want to see disaster happen. I want to see somebody step in and take control of the situation. But the idea that the dude would just get a blank check of enormous size - as expensive as the entire Iraq War - to spend however he sees fit, to buy out assets that we can't properly price...I mean, what's he going to pay for them?

This is the conservative movement returning to form in a spectacular manner. I mean, their great shibboleth has crumbled before our very eyes, and now they're just like, "okay, well, forget that."

SW: The Wrecking Crew is historical as well. Tell us about precedents for this behavior.

TF: I traced it back to the 1880s, during the second Cleveland administration, when there was a guy who was appointed Attorney General. He'd been a railroad attorney - railroads being the big corporate power of their day - and Congress had just enacted the first regulatory agency in American history, the Interstate Commerce Commission, which was supposed to regulate railroads.

He comes in as a U.S. Attorney General, and his boss writes him a letter and says, "You know, I don't like this Interstate Commerce Commission. I think we should kill it." The new Attorney General of the United States writes back and says "No. We don't want to kill it. We want to conquer it. We want to take it over and use it for our own purposes, and that way the public will always think, 'Look, there's a watchman, somebody's looking out for me. They've got the Interstate Commerce Commission, there it is,' but all along we - the railroads - will control it."

That was the very first regulatory agency so this has been going on since day one.

SW: Well, I heard Newt Gingrich earlier today saying he's opposed to the bailout. He's worried about the orthodoxy being overturned.

TF: The whole idea of the free market is a fig leaf. It's an ideological fig leaf, it is and it always has been. It's a smokescreen. What they are really about is serving the business community, serving the business class. The free-market stuff is a utopian scheme that they use to cover what their actual politics are, which are class politics. And it's bad class politics.

When I moved to Washington in 2003 - I mean, I'll be square with you (and I'm a very square individual, as you can easily see) - there was only a single Republican in both houses of Congress that I liked, and that was John McCain. He was good on campaign finance reform, he is the man who busted Jack Abramoff, and he's been very good on contracting issues.

But he has always been very, very bad on financial regulatory issues, going back to his days in the Savings and Loan crisis in the 1980s - and you look at who his advisors are. They are deregulator team A.

SW: Gramm, and Fiorini.

TF: Go right down the list. They're awful. I mean, that's who he's listening to. No, he can talk about greed on Wall Street, but...that's what Wall Street is. Anybody can say they're against greed; the question is the structure.

ATC 137, November-December 2008

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