Yesterday on Morning Joe, Joe Scarborough trotted out one his preferred observations. “Americans don’t resent the rich,” he said. “We want to be rich.” He noted that voters had a high regard for the Kennedys and the Roosevelts, who managed to convey a sense of concern for the general good.

I suppose Scarborough is right; we do not resent the rich per se. But we resent a lot of qualities that are associated with the rich. We don’t like snobbery, for example. We don’t like a sense of superiority. Or a sense of entitlement. We don’t like people bucking the line, or favoritism. We don’t like shallowness, and we don’t like self-absorption. In general, we believe that anyone who inherits wealth doesn’t know what life is really like, and that most people who have accumulated vast wealth forgot mostly all of whatever they once knew as fast as they could. We do resent people who can spend money without a second thought; and more, we envy those who can pamper themselves; and most of all, we have contempt for those who waste it. We acknowledge that money can’t buy happiness, but we do believe that having more money would buy us more happiness, and that the rich don’t know what real unhappiness is, because at the bottom, no matter how bad things are, having money gives them options that a lack of money forecloses. We don’t mind being taken advantage of by the rich on any particular deal, for we expect that everyone has his thumb on the scale, and believe that capitalism is a system where goods and services are exchanged in a way that mostly keeps a lid on the gouging; what we resent is lying, dishonesty, theft, and being forced to swallow a bad deal and told we ought to like it. We don’t really like that the exploit workers or rape the planet, but not many of us are willing to do much about it, as long as prices remain cheap on our end.

Some rich we like quite a bit–lotto winners, entertainers, criminals of a certain style, and the unlikely rich, like whoever owns Shamwow. We feel we could be these people. We have a certain tolerance for the discreet rich–the ones who live behind drawn shades in the big house on the hill, or behind the granite facades of the austere apartment buildings on Sutton Place, and who just go about their business without throwing their wealth in our faces. We actually like a very few of these discrete rich, people whom you hear about from time to time who work as librarians or janitors and who save and invest every penny they ever made, and whom you never hear of until they die and bequeath millions to some worthy charity. We like those rich a lot.

I do not think Scarborough is right when he says that we all want to be rich. All of us have a fantasy in which we are rich, and it is not unpleasant. Richness is a condition that we would accept, preferring it to most other conditions. In reality, what most of us want is more. According to a survey I saw a few months ago, most Americans believe they would have their dreams fulfilled with an income of about $150,000 a year.

That is the American Dream, isn’t it? It’s not to be as rich as Mitt Romney. It’s to have a house, a car or two, food on the table, some money for vacations, enough savings for the kids, health care as needed, and enough money for a decent retirement. For what it’s worth, the distance we are from that dream on any given day is equivalent to the amount we resent the rich.

With the premiere of Iron Lady approaching at the end of December, we are certain to be treated to a heavy dose of Margaret Thatcher‘s greatest hits. None will be more pertinent to the issues of this moment that the point she made in her final Question session as prime minister in 1990, shown in the clip above. In the merry, feisty exchange, a Labor MP respectfully asks her if she regrets that disparity between rich and poor widened during her tenure. Thatcher denied the relevance of such statistics, and instead argued that people of all classes had benefited during under her administration. And that, she said, was the difference between her and her opponents in a nutshell: “He would rather the poor were poorer as long as the rich were less rich.”

Well of course this is a false choice: the poor could certainly be less poor without the rich becoming richer, but that is neither here nor there. Thatcher came up with a phrase that has served as the underpinning for at least fifty years of American policy. Ever since that old sailor John F. Kennedy pointed out that a rising tide floats all boats, it has been widely accepted by nearly all Americans that as long as everyone is improving, we can accept wide discrepancies in wealth. As even the great American mafioso Barzini acknowledged in The Godfather, “After all, we are not communists.” Our social contract accepts the reality of the rich, as long as things overall are improving for everyone.

But as Paul Krugman once again points out today in the Times, things really aren’t improving for anyone. He cites a Congressional Budget Office report that showed that between 1979 and 2005, “the inflation-adjusted, after-tax income of Americans in the middle of the income distribution rose 21 percent. The equivalent number for the richest 0.1 percent rose 400 percent. For the most part, these huge gains reflected a dramatic rise in the super-elite’s share of pretax income. But there were also large tax cuts favoring the wealthy. In particular, taxes on capital gains are much lower than they were in 1979 — and the richest one-thousandth of Americans account for half of all income from capital gains.”

In other words, the rising tide has been channeled into the Yacht Club’s marina. The super rich have been getting richer, while almost no one else has enjoyed very much of a gain at all. And much of what the super rich have gained has come through government tax-cutting, which has exacerbated the deficit, which hurts everyone. Far from Thatcher’s trade-off, the rich have grown richer precisely at the expense of the poor and middle classes.

I wonder what the Iron Lady would say about that?

Following Saturday’s “Take a bath and get a job” slam on Occupy Wall Street, Grumpy Old Man Newt Gingrich continued his “Hey You Kids, Get Off My Lawn!” campaign for the presidency yesterday by advocating an end of Child Labor laws. Proving that there is truly nothing sacred in the right’s efforts to roll back the accomplishments of decades of progressive government, Gingrich said to an audience at Harvard’s Kennedy School of Government “It is tragic what we do in the poorest neighborhoods, entrapping children in, first of all, child laws, which are truly stupid. Most of these schools ought to get rid of the unionized janitors, have one master janitor and pay local students to take care of the school. The kids would actually do work, they would have cash, they would have pride in the schools, they’d begin the process of rising.”

First question: Has Gingrich ever seen how kids clean?

Second question: Do we really want 14 year old kids cleaning toilets?

Third question: When Gingrich talks about the tragic things we do in the poorest neighborhoods, do “truly stupid” Child Labor laws really top the list of the policies and programs we have promulgated? Are they really ahead of negligence, indifference, hostility and racism?

Fourth question: What’s next–restoration of the work houses?

“You’re going to see from me extraordinarily radical proposals to fundamentally change the culture of poverty in America,” Gingrich added. How much more extraordinary radicalism can we stand? Poor school districts across the country are cutting teachers, cutting labs, cutting books, cutting after-school study sessions, and cutting extra-curricular activities. I guess this radical rollback isn’t enough; this radical disinvestment in the future isn’t enough. Let’s pass out the Lysol. I’m all in favor of young people having jobs, and learning discipline and responsibility, but this proposal is squarely in mold of those middle-class destroying policies that lay off older workers in favor of cheaper youngsters, and lay off American workers in favor of cheaper workers abroad. It’s hard to send janitor jobs off-shore, so let’s end Child Labor regulations, and get minimum-wage teens to haul garbage instead of unionized workers.

Gingrich’s brainstorm is just a new rendition of the same GOP theme: the maximization of profit and its retention by the ownership class, at all costs, is the only thing it stands for.

Today in New Hampshire, presidential candidate, corporate consultant, and Tiffany’s Customer of the Year Newt Gingrich told a group of college students that he would change the social security system to allow them to opt out of the current system, in favor of putting the money into private retirement accounts. Seven years ago, in what may have been the most prescient three minutes of his life, the peerless George Carlin warned us this was coming.

This is a picture of Ray Lewis, a retired Philadelphia Police Department captain, being arrested with other Occupy Wall Street protesters in Zuccotti Park last week. Lewis was carrying signs a pair of signs urging New York City cops to join the protests. “NYPD Don’t Be Wall Street Mercenaries,” one read. Lewis was highly critical of the NYPD’s tactics in the park: “This bullrush–-what happened last night is totally uncalled for,” said Mr. Lewis, who argued that the removal should have been accomplished through negotiation instead of force. “You should, by law, only use force to protect someone’s life or to protect them from being bodily injured, okay? If you’re not protecting somebody’s life or protecting them from bodily injury, there’s no need to use force. And the number one thing that they always have in their favor that they seldom use is negotiation–continue to talk, and talk and talk to people. You have nothing to lose by that.” Lewis dismissed the claims of Mayor Bloomberg that the raid was necessary because the protest encampment carried with it a risk of crime, fire and health hazards. “That’s a farce. They complained about the park being dirty. Here they are worrying about dirty parks when people are starving to death, where people are freezing, where people are sleeping in subways and they’re concerned about a dirty park. That’s obnoxious, it’s arrogant, it’s ignorant, it’s disgusting.” Lewis says that the police should be careful not to get on the wrong side of the protests. “All the cops are, they’re just workers for the one percent and they don’t even realize they’re being exploited,” Mr. Lewis said.

Among the few embarrassing experiences left to a person in his fifties is to be exposed as a naif. Over the years I’ve grown quite complacent, in my aging bourgeois post-9/11 whiteness, to snuggle myself under the warm comforter of a visible police presence. It’s been dismaying and alarming and frightening to see what I had come to be believe were law-enforcement professionals suddenly act like goons in the service of the Banking State. Now is the time to remind ourselves of the terrifying brilliance behind Mayor Richard Daley‘s timeless malapropism: “The police are not here to create disorder, they’re here to preserve disorder.” (Photo, by Randy L. Rasmussen of The Oregonian, showing an Occupy Portland protester the same age as my daughters being pepper-sprayed in the face by a policeman.)

What’s worse–the heavy-handed regimes like Russia, where the president rules like the former head of the KGB that he is, or the apparently democratic regimes where real power stands behind a curtain and whispers its dictates into the ears of the elected government? In an article in the Guardian, George Monbot reports on the Corporation of the City of London, the powerful and unaccountable body over which Parliament has no control. Monbot calls it the “dark heart of Britain, the place where democracy goes to die.”

Monbot tells us that the Corporation is the equivalent of a local council, one of the small units through which local government is administered in the UK. The Corporation is responsible for the area of London known as the Square Mile in which the large banks and financial services companies are based. There are 25 electoral wards in this tiny area, but only in four of them are the 9000 residents of the area allowed to vote; in all the rest, the officials who are elected are chosen by the corporations located there. The Top Man of this Old Boys’ network is the Lord Mayor, invariably a well-heeled insider, who oversees “a vast pool of cash, which it can spend as it wishes.”
As it happens, the Corporation usually wishes to spend that money to lobby on behalf of banks. According to its website, the Corporation “handle[s] issues in Parliament of specific interest to the City”; the job of the Lord Mayor is to “open doors at the highest levels” for business and to “expound the values of liberalisation”–that is, deregulation.

If all this smells fishy, here comes the whale: “The City of London is the only part of Britain over which parliament has no authority,” writes Monbot. “In one respect at least the Corporation acts as the superior body: it imposes on the House of Commons a figure called the remembrancer: an official lobbyist who sits behind the Speaker’s chair and ensures that, whatever our elected representatives might think, the City’s rights and privileges are protected” The result is “a kind of offshore state, a secrecy jurisdiction which controls the network of tax havens housed in the UK’s crown dependencies and overseas territories.” Those within this district then use their position “to launder the ill-gotten cash of oligarchs, kleptocrats, gangsters and drug barons,” depriving “the United Kingdom and other nations of their rightful tax receipts.” This Corporation also allows American banks a way to avoid regulation. “AIG’s wild trading might have taken place in the US, but the unit responsible was regulated in the City. Lehman Brothers couldn’t get legal approval for its off-balance sheet transactions in Wall Street, so it used a London law firm instead.”

Over the years, several governments have tried to reign in the City of London, but none succeeded. As former Labor Prime Minister Clement Attlee said, “Over and over again we have seen that there is in this country another power than that which has its seat at Westminster.”

Right now, Occupy Wall Street-like protestors are camping outside St. Paul’s Cathedral.The Corporation, working with the Church of England, is trying to evict them. The protesters, in turn, have demanded that the Corporation submit to national oversight and control. Look for a showdown on or before November 12th, the date of the Lord Mayor’s Show, which, as the website says, “brings together all the pomp and pageantry the City can muster.” The Show dates to 1215, when King John gave the City a charter which stipulated that the Lord Mayor must swear allegiance to the Sovereign and ‘show’ himself to the people. “If ever there were a pageant that cries out for peaceful protest and dissent,” writes Monbot, “here it is. Expect fireworks.”

More than two months ago, Drew Westen, a professor of psychology at Emory University, wrote a piece for the Times in which he criticized President Obama‘s failure to seize the narrative of the political issues of our times. Well, the president has made a lot of appearances in that time, but he still has yet to give the “here’s where we are, here’s where we want to be, and here’s how we’re going to get there” speech that charts a course on which he stakes his claim to lead the country. He can’t lower himself to a partisan slugfest, which is where he seems to be heading, because that isn’t going to end the Congressional paralysis which has so far wrecked his administration. Instead, he has to define a course of action, and take that plan to the electorate; if he wins, he can demand action from Congress. Which means he has to run on a plan to enact an economic stimulus, a trillion dollar infrastructure stimulus of the kind that Nouriel Roubini et al have recommended.

Obviously, given the temper of the electorate, this won’t be easy. People think it’s insane to add debt to the deficit, and it’s hard to argue that this instinct, to apply the brakes to spending, is illogical. But there is a metaphor for this predicament that the president could use, and which everyone would grasp.

The country needs to turn into the skid.

Every driver who has gone through driver’s ed has been taught that when you’re on an icy road and you start skidding, you need to turn into the skid. And every driver who had ever found himself skidding on an icy highway has had to fight the visceral instinct to slam on the brakes and turn away from the big ditch or tree or tractor trailer that is rapidly filling your windshield. Turning into a skid sounds about as sensible as advising a fighter to lean into his opponent’s left hook. But it’s physics–weight, traction, momentum–and anyone who has been able to keep a clear head knows that this is how to restore control.

The president needs to explain that right now we need to turn into the skid, that the government needs to restore demand, and that out of that investment, unemployment will drop, demand will rise, production will increase, government deficits will recede, and balance will be restored. For a long time we lived under the theory of trickle down economics, and what we’ve seen is that not very much has trickled down. It’s time to try some flow out economics.

In Rolling Stone, Matt Taibbi recommends five demands that the Occupy Wall Street protesters ought to set as their agenda:

“1. Break up the monopolies. The so-called “Too Big to Fail” financial companies – now sometimes called by the more accurate term “Systemically Dangerous Institutions” – are a direct threat to national security. They are above the law and above market consequence, making them more dangerous and unaccountable than a thousand mafias combined. There are about 20 such firms in America, and they need to be dismantled; a good start would be to repeal the Gramm-Leach-Bliley Act and mandate the separation of insurance companies, investment banks and commercial banks.

“2. Pay for your own bailouts. A tax of 0.1 percent on all trades of stocks and bonds and a 0.01 percent tax on all trades of derivatives would generate enough revenue to pay us back for the bailouts, and still have plenty left over to fight the deficits the banks claim to be so worried about. It would also deter the endless chase for instant profits through computerized insider-trading schemes like High Frequency Trading, and force Wall Street to go back to the job it’s supposed to be doing, i.e., making sober investments in job-creating businesses and watching them grow.

“3. No public money for private lobbying. A company that receives a public bailout should not be allowed to use the taxpayer’s own money to lobby against him. You can either suck on the public teat or influence the next presidential race, but you can’t do both. Butt out for once and let the people choose the next president and Congress.

“4. Tax hedge-fund gamblers. For starters, we need an immediate repeal of the preposterous and indefensible carried-interest tax break, which allows hedge-fund titans like Stevie Cohen and John Paulson to pay taxes of only 15 percent on their billions in gambling income, while ordinary Americans pay twice that for teaching kids and putting out fires. I defy any politician to stand up and defend that loophole during an election year.

“5. Change the way bankers get paid. We need new laws preventing Wall Street executives from getting bonuses upfront for deals that might blow up in all of our faces later. It should be: You make a deal today, you get company stock you can redeem two or three years from now. That forces everyone to be invested in his own company’s long-term health – no more Joe Cassanos pocketing multimillion-dollar bonuses for destroying the AIGs of the world.”

Put me down in favor, especially points 1,2 and 5. Throw in the recommendations that Nouriel Roubini, Daniel Alpert and Robert Hockett have prescribed in The Way Forward, their paper for the New America Foundation, and there’s a platform I wish some candidate would get behind for 2012.

Writing in The New York Times today, Martin Feldstein, who was the chairman of the Council of Economic Advisers under President Reagan, argued for “permanently reducing the mortgage debt hanging over America.” Failure to do so, he writes, “ means that further declines in home prices will continue, preventing the rise in consumer spending needed for recovery. As costly as it will be to permanently write down mortgages, it will be even costlier to do nothing and run the risk of another recession.” In taking this position, Feldstein puts himself in at least one-third agreement with Nouriel Roubini, Daniel Alpert and Robert Hockett, authors of The Way Forward: Moving From the Post-Bubble, Post-Bust Economy to Renewed Growth and Competitiveness, a white paper commissioned by the New America Foundation that has been getting a lot of attention. Predicting dire consequences for the economy if their prescription is not followed, the trio calls for massive restructuring of mortgage debt, huge investments in infrastructure, and a “global rebalancing” between creditor and debtor nations.

It all sounds good to me, particularly the part about the mortgage restructuring. To put it another way, what these experts are advocating is that the losses suffered in the subprime mortgage bubble have to be swallowed, and they all can’t be swallowed by the home owners alone. The lenders have to take a hit, and so does the public, through the government (which, given the number of mortgages guaranteed by Fannie Mae and Freddie Mac, is already on the hook.)

But anyone who has read Ben Tarnoff‘s recent book The Moneymakers, which I had the pleasure of reviewing for The Washington Monthly earlier this year. The Moneymakers tells the story of three counterfeiters from 18th and 19th century America, and what the three have in common is that they thrived during eras of financial innovation and loose (or non-existent) regulation. What we also learn–which is something we already kind of knew–is that the only way to cure the assault that is posed on sound money by counterfeit currency is to get it out of circulation. Authorities have to buy it out or yank it out, and force the poor farmer or the poor tavern owner or the poor banker who in this game of monetary musical chairs ended up holding the bill when the music stopped to swallow the loss–because that is the only way the overall health of the system can be restored.

What we have been suffering these last few years has been an attack by counterfeiters. Not counterfeiters of currency, which has meant less in the scheme of things since the US left the gold standard, but counterfeiters of credit–the mortgage writers who gave credit to unworthy customers, the banks who ignored their standards, the ratings agencies who abdicated responsibility, and the investment bankers who kept underwriting and leveraging the crooked practices. Our economy became awash in counterfeit credit, and even now we have not reached the bottom.

The mortgage restructuring that Feldstein and Roubini et al are calling for is simply a new way to perform the old time cleansing exercise that got counterfeit money out of circulation. But until we undertake the hard business of swallowing the loss, we’ll can’t get back to a fundamental sense of value.