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Privilege & Precarity in the New Gilded Age

Deborah Johnstone Sep 17

Makers and Takers: The Rise of Finance and the Fall of American Business
By Rana Foroohar
Crown Business, 2016

The Precariat: The New Dangerous Class
By Guy Standing
Bloomsbury Academic, 2014


The erosion of banking regulations has been an insidious and largely clandestine undertaking. Unlike the 1929 crash, after which policy makers attempted to properly regulate the banking industry, the 2008 crash saw Wall Street and Washington align forces to protect their interests.

“Incomprehensible rules crafted and controlled by a small cadre of insiders, discussed in a language that only they understand is one of the key ways elites maintain power — in finance and elsewhere,” writes CNN economic analyst Rana Foroohar, who in her new book succinctly tracks Wall Street’s monopoly on finance and how it has used that monopoly to induce the average citizen to invest in risk and debt. Foroohar cites the people and companies that capitalize on a systemic dysfunction that perpetuates insecurity and volatility. 

Citigroup — the kingpin of banking deregulation — created a financial climate that guaranteed a casino banking system would become the standard. With the 1998 merger of Citicorp and Travelers Group, a fatal blow was delivered to the Depression-era Glass-Steagall Act that maintained a firewall between commercial banking and riskier investment banking. The financial services industry was no longer concerned with helping businesses grow. Instead, the big banks freely gambled with depositors’ money while extending their sway over Washington. 

Speculation became de rigueur and “assets” such as highly volatile mortgage-backed securities become attractive investments.

Looking back over the decades, Foroohar follows the money from Reagan's fiscal irresponsibility to the halls of Congress and Apple’s shadowy offshore banking, and from there to Main Street, where the hubris of financialization has destroyed economic growth. The banking industry claims their solvency is the only thing preventing America from sliding into economic disaster, but over the last 20 to 30 years there’s been no evidence that a complex and titanic financial system has contributed to increased growth or stability. In fact, all evidence points to the contrary. The real “trickle-down” effect is stagnant salaries, escalating prices, extreme economic inequality and endemic job loss.

While Foroohar takes on a system rigged by the powerful to enrich themselves, economist Guy Standing, in The Precariat: The New Dangerous Class, tackles the causes of extensive job loss and the rise of the contingent worker. Standing’s target  is corporate globalization and its preference for a “disposable itinerant labor force.” He posits this growing population, typified by insecurity and alienation, is a pressure cooker waiting to explode into a new sociopolitical force.

Standing focuses on the psychic effects of a global digital revolution that has greatly reduced steady employment. The malaise is global. Precariousness is now a way of life; websites dedicated to freelancing abound and the life of a “part-time” worker is celebrated by innumerable media outlets. Underneath the positive spin, people are suffering.

Standing links technology’s promise of instant gratification to a loss of individual and civic  ideals. Couple this with work that doesn’t pay the rent and the result is despair.  People will eventually react. Despite warnings from establishment figures of dire consequences should the U.K. leave the European Union, Brexit became a reality — driven primarily by discontent with a system that had failed to work for a majority.

Many more people need to become mad as hell and even more people need to be aware of the rage. As Foroohar writes in Makers and Takers, “The key to reforming our current system is making the American public understand just how deeply and profoundly things aren’t working for the majority of the people.” Standing argues that the precariat must mobilize and become strategically and socially threatening in order to affect change. If this doesn’t happen, there are always racist demagogues like Donald Trump ready to fill the void by tapping into a mounting fear and uncertainty about the nature of work and a lagging economy.

A working-class consciousness has traditionally linked “job security” to a social contract. Since job security has effectively been removed for so many, this no longer holds true. “Twentieth century spheres of labor protection … were constructed around the image of the firm, fixed workplaces, and fixed working days and work-weeks that apply only to a minority in today's tertiary online society,” Standing writes. But not anymore. The global deterioration of job security has left many millions of workers (and would-be workers) uneasy about their futures. These trends will only continue to increase over time leading Standing to believe the precariat class will eventually morph into a populist movement and at that point, “they” will become “we.”