Former New York Times reporter Hedrick Smith was at the New America Foundation last week, kicking off a tour for his new book – Who Stole the American Dream (Random House, 2012.)
Smith opens his book with a discussion of the infamous Powell memo.
The August 23, 1971 memo was written by then corporate lawyer Lewis Powell for the Chamber of Commerce.
It was titled: “Confidential Memorandum: Attack of American Free Enterprise System.”
The Powell memo was a call to arms to Corporate America to fight back against what Powell perceived as an all out attack on the free enterprise system.
And in the early part of his talk at the New America Foundation, Smith says this:“Lewis Powell is an embarrassment to me.”
But Smith doesn’t explain how Powell embarrassed him, so I e-mailed Smith and asked him what he meant.
“I meant simply that when I was reporting on the setbacks to labor and consumer movement during the 1978 Congress and in the Jimmy Carter era, I was unaware of the Powell memo and the very deliberate corporate political rebellion that the Powell memo triggered,” Smith wrote.
“I didn’t know about it. Neither did any other reporters. We only learned about it years later, when academic historians got into the nitty gritty of what had gone on in the late 1970s.”
“So my confession was about my own shortcomings in chasing the daily and weekly stories and not understanding the long-term trends at the time. That is typical of us journalists. We write history on the fly – history in salami slices. Only when we go back and take a harder look, a deeper look do we discover some of the hidden beginnings of the trends that we later write about. Lewis Powell’s memo is one of those hidden beginnings – hidden from reporters and others at the time that it happened.”
At his appearance at the New America Foundation last Friday, Smith said he knew of Powell as a Supreme Court Justice appointed by Richard Nixon, “a man with an aristocratic background of old southern Virginia, a man of modest temper and demeanor.”
“But he was no mild mannered guy,” Smith said. “Lewis Powell, to my surprise, was extremely distraught in 1971 before he was appointed to the Court, that the American free enterprise system was under assault – under assault from Ralph Nader and the consumer movement, under assault from the labor movement, under assault from the environmental movement, under assault from the regulatory regime – ironically of the Nixon administration, not the Johnson administration.”
“Powell says business have to get organized, they have to get tough, they have to get aggressive, they have to play hard ball politics the way labor does,” Smith said. “They have to pull together. They have to pool together. They have to have a long term plan. And he laid out the plan.”
“And what is interesting is that unbeknownst to us, this Paul Revere manifesto that Powell wrote set off an enormous reaction.”
“In 1971 when Powell wrote, there was no Business Roundtable, the most potent political force in America. It formed within a few months after the Powell memo was distributed by the Chamber of Commerce. The National Association of Manufacturers decided to move its headquarters to Washington. The National Association of Independent Business went from 3,000 members in 1971 to 600,000 members in 1980. There was an enormous explosion of political activity. Fifty thousand people by the end of the 1970s were working for trade associations. There were 9,000 registered corporate lobbyists and another 9,000 corporate PR people. There were 130 registered lobbyists or PR people for every member of the Congress of 1978.”
Smith ended up writing a book titled “Who Stole the American Dream?”
“But this is not the book I started out to write,” Smith said.
Smith said that he was under contract to write a book titled “The Dream at Risk.”
“I started out with the notion that the middle class is in a lot of trouble,” he said.
“Jobs are being shipped over seas. People are losing their homes. They are worried about whether or not they are going to be able to pay for their retirement. Whether they can support their kids college education. Whether their kids are going to be better off than they are.”
“How did we go from an era of middle class prosperity and power. . .to an era of starkly unequal democracy dominated by super PACs and well heeled lobbyists and grossly gaping inequalities in the economy with the middle class stuck in a rut.”
“I started out looking at that. I looked at the housing crisis, the housing bubble, I looked at pensions and off-shoring – I have three chapters on off-shoring – off-shoring blue collar, offshoring white collar, and on-shoring H1B visas.”
“As I got into it, I said – this didn’t just happen to the middle class. This was done to the middle class.”
“I began to see the people and the forces,” Smith said. “I don’t mean that there were a half a dozen guys that Guy Noir could have found, they were in some room in a dark building in a city that knows how to hide its secrets. I don’t mean that. I mean that there were people who deliberately set out to achieve what they wanted to achieve – the business leadership, people on the political right – and they set out to do it. And the middle class lost in the process.”
“But it was deliberate. It wasn’t accidental. I don’t buy the argument that this was just impersonal market forces. There is evidence to the contrary.”
Smith said that “middle class power and middle class prosperity go hand in hand – they are not disconnected.”
“If the middle class wants to regain its prosperity, it has got to start to exercise its political power.”
“If you want to go back to the heyday of the middle class, there were people marching in the streets because they found the state of the environment intolerable,” Smith said. “They were outraged and they acted on their outrage. Ralph Nader said – General Motors is building cars that are defective – we’ve got to fix it. People said there is not truth in labeling. You walk into a grocery store today and you can find all kinds of things about the content of those products. That’s the result of the consumer movement back in the 1970s. Same with the women’s movement. Same for the peace movement that got us out of war. Iraq Afghanistan? What happened?”
“There is a lot of anger in this country. Anger is a useful thing politically. But we don’t know what to do with our anger.”
“I don’t believe the situation is going to change until middle class people say – we are going to set up tents on the mall and we are not going away until Congress forces the banks that got $700 billion in bailouts to bail out the 20 million families that are now sitting with bubble era high interest mortgages which they are paying off and the banks are profiting from – but the banks are denying them consumer spending that they could be spending somewhere else.”
Smith said that “Americans have become passive.”
“I think it is outrageous. And we have a lot of blame here.”
“You can blame the liberals, blame the banks, blame [former Federal Reserve chairman Alan] Greenspan, blame on the guys who ran the ship, but we are partly to blame too because we are not doing anything about it.”
“Ernie Cortes – an organizer among Latinos across the Southwest – said something to me that’s profound.”
“Lord Acton said – power corrupts, absolutely power corrupts absolutely.”
“But Cortes’ amendment to that is – powerlessness corrupts. Powerlessness corrupts the very core of our democracy. When we don’t believe we can have an impact on our government, our democracy is dying.”
“As soon as I say that, people say – where are we going to get the leader?”
“But if we stand waiting for another Lincoln to solve our problems, it’s not going to happen.”
During the question and answer session, Smith was asked about the impact of the Occupy Movement.
“Occupy did something very important,” Smith said. “Occupy changed the dialogue in this country. If you say the one percent and the 99 percent today, nobody needs an explanation for what they are talking about. Occupy raised a salient issue that resonated with the rest of the country.”
“But it stopped there. If you ask Martin Luther King what he wanted, he said – drink from the drinking fountain, sit at the lunch counters, equal jobs for blacks and whites, ride on the buses, stay in the hotels. You knew what his goals were.”
“Did you know what Occupy’s goals were? I don’t. I read damn near every story I could find about it. They very studiously avoided a short list of goals. Do you know who their leaders were? There were leaders – they named a camel or a monkey in Denver. That’s not a serious movement.”