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This is not a new story I've been covering factory closings since the 1970s but it has picked up momentum over time, and a compelling narrative is beginning to emerge about the human carnage caused by arrogant financiers. The same bankers who did the leveraged buyouts of the 1980s and '90s, which sold local factories to national conglomerates, which in turn closed those factories and sent the jobs overseas those same bankers turned to housing in the 1990s and 2000s, creating ridiculous mortgage products that encouraged people without the proper financial resources to buy homes they later defaulted on, causing the value of most middle-class housing to plummet. Everyone seems to "know" that now. The more sophisticated understand that homeownership was a program promoted by both Democrats through government agencies like Fannie Mae and Freddie Mac and Republicans. The most sophisticated understand that the financial community enriched itself obscenely by playing casino games with obscure, unregulated products like credit-default swaps, in which fortunes were made on tiny fluctuations in the value of those mortgages.
There is a visceral sense that the financial community's fundamental purpose has been perverted. It has made a killing off the death of American manufacturing; it has drained our best young minds away from industry and into the creation of new financial products that, as Paul Volcker has said, haven't added anything to our GDP. Indeed, a story Volcker told me haunted the entire road trip. It happened back in the 1980s, at the beginning of the mergers-and-acquisitions frenzy. A recent Ph.D. in aeronautical engineering from Princeton approached Volcker and asked him which Wall Street firm he should go to work for. "Why don't you go to work for Boeing?" Volcker asked. The young man replied that he could start at $50,000 per year at Boeing, on a career track that might reach $90,000. "I can make that overnight on Wall Street," he said. A generation of such decisions has diverted America's smartest young people from making new products to making new deals. Most Americans do not believe their political leaders are willing to discuss real remedies for these excesses; indeed, they are convinced the financiers have purchased the silence and acquiescence of both parties.
The disgust with Wall Street is accompanied by a growing skepticism about the free-trade argument that every President since Reagan has made. Bill Clinton argued persuasively that globalization was inevitable and part of a natural process. The more-advanced economies had to produce more-advanced products, which required a better-educated workforce. But that argument has fallen apart as countries like China and India have leaped past the U.S. in some high-tech sectors and the American education system has proved entirely incapable of taking students to a higher skill level. A recent Wall Street Journal poll found that 86% of the American people believe the outsourcing of jobs contributed to the recession. A majority expressed strong doubts about free trade. "How is a young person who isn't a genius nuclear physicist going to get a job?" asked John McGraw, an unemployed corporate executive in the Chicago suburbs (who, happily, found new work a few days after I interviewed him). "We need manufacturing jobs for the nongeniuses. I can't believe we've let this happen."
Clinton used to say that the manufacturing jobs that went away weren't coming back, and he was undoubtedly right about that. But Obama would be cheered by most Americans if he showed a little spine with China if, for example, he backed the recent House legislation giving him the right to slap tariffs on the Chinese for currency manipulation. "The great fear is about American supremacy," said Anne Mariucci, chair of the Arizona Board of Regents. "We all believed that if you followed the basic compact, worked hard and played by the rules, that we'd have the highest standard of living in the world. And we were always on the front edge of the next new technology but we're not anymore. We seem to be mired in mediocrity while China is steaming ahead."
A Mirage in a Tense Time
A reader named Bill Chavez invited me to dinner with his neighbors in Yuba City. It was a warm evening in the Central Valley. Bill and his wife Pattie set out tables on the front lawn of their home in the bankrupt Dunmore subdivision. The neighbors proved to be remarkable. On one side lived Hindus from Indian Punjab; on the other side lived Muslims from Pakistani Punjab. A Zimbabwean immigrant studying to be a medical technician wandered over; Jeannie Klever, the chair of the local Democratic Party, and her husband Dale dropped by. The Mexican Americans from across the street, a business manager and a bilingual schoolteacher, came after they'd finished feeding their kids. Bill who is half Filipino, half Panamanian told me that Yuba City had the largest Sikh population outside India (approximately 16,000). But the talk mostly turned on ordinary things: organizing a block party, the tyranny of constant soccer practices.
It was a perfectly American scene perhaps not Sarah Palin's America, but a demonstration of the nation's greatest principle and its greatest strength: that no matter where we come from, the things we have in common as human beings are more important than the things that divide us. Bill later took me to a community meeting that was filled with all the same complaints about the incivility of public discourse, about the loss of jobs to China. But my mind kept wandering back to the scene on Bill and Pattie's front lawn, which seemed as much a hope, and a dream, as a sunset reality the neighbors eating chicken and vegetarian spaghetti, a raft of kids playing in the street. I asked Boniface, the Zimbabwean immigrant, if this was how he'd imagined America, and he said, "Yes, this is how I imagined it. Exactly."
It was always how I imagined America, at its best, too. But it now seems almost a mirage in a terrible, tense time.