The Economic Merry-Go-Round

My fellow poor folks,

I know it hasn't been long since I sent you the last letter, but I had to let you know about the dream I had last night, or should I say nightmare.

Right away, you'll know I'm getting to be an old geezer when I tell you that it was about a merry-go-round. Back when I was a kid, we didn't have i - pods and x - boxes or even g - strings. We had to find our thrills in the real proton/neutron/electron world around us rather than in virtual reality. We were so hard up that it was quite a thrill to whirl around on the merry-go-round that most of us had in the school playground. Here's a picture of one in case you don't know what they are. (I'm the kinda dopey looking one with the hat.)

I don't know whether our school's sixth-grade boys were any more perverse than the rest, but they did have a mean game they liked to play when I was a second-grade runt. They'd put as many of us little kids on the merry-go-round as they could squeeze, then the speediest and strongest six-graders would push that old merry-go-round as fast as it would go. Those big kids never jumped on. Once they had it whirling they just stood back and laughed as we little ones first opened our eyes wide in terror and then turned green with dizziness. Occasionally, some little kid would get so disoriented that he would fall completely off the merry-go-round. That produced quite a roar from the bullies.

Now later on, I got so I really enjoyed a fast ride on the merry-go-round, and trust me, I never did pile little kids on and turn them around fast enough to make them sick, even when I was a sixth-grader. That experience of getting thrown off the merry-go-round must have made a deep impression on me, though. (Yeah, I was one of the ones who was thrown off.) Last night, my brain made some connection between what happened back then and my situation now.

When you think about it, our American economy has become a lot like a merry-go-round. It's not the sixth-graders who are making people whirl around so fast that it terrifies them and makes them sick. It's guys named Lewis and Blankfein and Dimon who have things spinning so fast that six million of us have been thrown completely off the economic merry-go-round in the last eighteen months. I don't know if they're laughing at all of us like those sixth-graders did, but they sure don't seem to give a damn about our predicament either.

And they're sure not doing anything to slow down that merry-go-round so that we can climb back on if we want to.

But I didn't want to write you about how bad things are and how they got that way. I wanted to write about what started out as a nightmare but ended up as a dream.

See, I felt myself back on that grade school merry-go-round with those sixth graders in control. It was whirling faster and faster, and I was getting sicker and sicker. I felt myself lose my grip, but before there was time to adjust, I was flying onto the gravel of that playground. My elbows were bleeding. My head was spinning. My ears were filled with the laughter of those sixth-graders who were all looking and pointing at me.

Now I'm sure those Freudians could come up with some real interesting explanation of that dream, something to do with my mother and my father and my penis. I don't need to go there. To me, that dream was about finding myself without a regular job, without a house, without a car, and without health insurance in a country where you're on your own, brother.

In that dream, all I could think about was how I wanted to get back on that merry-go-round to show those bastards that they hadn't beaten me. I was determined to stop their laughter. That damn thing was spinning so fast, though, that I couldn't figure out how I could ever get back on. It was at that point in the dream that I transformed from the boy of nearly 50 years ago into the late middle-aged guy I am today. My bad shoulder was telling me that that merry-go-round was turning fast enough that it would rip my arm right out of its socket if I tried to grab on. When I asked my achy knees if they could get me up to speed so that I could jump on, they reported back that there was no way. There I was, dusty and bloody and hopeless. A real nightmare.

It was at that point that things changed. I heard a voice coming from beyond those guffawing sixth graders. It came from someone who was dusty and bloody too, but standing straight and proud. It invited me to come play another game, to forget that damn merry-go-round, to let those sixth graders find someone else to mistreat.

That's the voice I'm listening to from now on. To be honest, I've been off and on that economic merry-go-round several times. A time or two, I stepped off, but responsibilities kept pushing me to get back on. A few other times, I've been thrown off against my will, but I always summoned whatever strength and savvy I possessed to get back on.

The thing is, I never enjoyed the ride. That merry-go-round for grownups was never any fun. The material benefits it brought were some consolation and mind-altering substances after five helped, but at the core it was just terrifying and sickening. At my age, I have no desire to climb back on that whirling nightmare.

That dream made me realize that I'm ready to live out here among the dusty and bloody for the rest of my life. There are some things about life out here that aren't great. Trying to keep a roof over your head is tough. The prospect of getting sick or worse, having a family member get sick, is something too terrible to contemplate. Hell, getting groceries is even a challenge without a car in America.

But I'm not alone. There will soon be sixty million of us dusty and bloodied, and if we work together, there's a lot we can do to improve our lives. My guess is that we can accomplish a lot if we just let go of the fantasy of jumping back on that merry-go-round.

From now on, I'm sticking to the swings and the teeter-totters. Screw that merry-go-round.

A Letter to the Poor

My sisters and brothers living in poverty,

You're probably surprised to receive this since we don't get much mail other than foreclosure and eviction notices, but it's important for us to begin talking to each other, and I'm hoping this is one way to get the conversation started.

I don't have to tell you that we can't expect to receive much help from anyone these days. The politicians have spent all the government money on fighting wars and helping bankers, so there's nothing left for health care or public works jobs or college for our kids. At least that's what most of the Democrats and all the Republicans claim, and they're backed up on this by all the radio and cable TV talkers.

Big surprise, huh? Nobody ever pays attention to us except when they claim we all drive Cadillacs. It makes them feel better when they cut what little help we do get if they can claim we're all lazy, drug-addled and sexually loose. The millions who are joining our ranks these days because they've lost their jobs, lost their houses and lost their credit will soon learn what it's like to live poor in America. Not only do you have to struggle to keep a roof over your head and food on your table, but you also get to hear constantly that you're inferior as a human being in every respect.

I know some of us had great hopes that things would be better with this new President, but I think it's starting to sink in that he's not going to be able to do much even if he wants to. Early on, he and his advisors decided that it would be better to keep things pretty much as they were with the banks and insurance companies and all the rest. Otherwise, they feared, tens of millions of the "middle class"--those people who are two or three paychecks away from being poor like us--would be thrown onto the trash pile with us. They paid the ransom money to Wall Street, backed off making any real changes in the system and prayed that things wouldn't go completely to hell.

What the government has done wasn't aimed at us. Cash for Clunkers was a bust for us. They're trashing the only cars we can afford and making parts more expensive for those of us lucky enough to own some piece of shit that we try to keep running. I, for one, don't begrudge those auto workers who might get to keep their jobs because of Cash for Clunkers, but why do they have to crush cars that we could use to get around? How things affect poor people just never enters into the calculation.

The cavalry ain't comin'. In fact, it's getting worse. There are a lot more abandoned houses in our neighborhoods that are increasing crime and shame, two things we already have too much of. We lost our butcher shops and bakeries a long time ago. Now the supermarkets and even the convenience stores are gone, and the cuts in public transportation--if we even had any to begin with--are making us walk miles to get something to cook for dinner.

More and more, you are your credit score. It's not just that you can't buy a new car or take a trip on a credit card. We could never do those things. Now you can't rent an apartment or even get a job if your credit is screwed. How's that for a Catch 22? You can't pay your bills because you don't have a job, but you can't get a job because you aren't paying your bills.

That's enough weeping and moaning. We all know it's bad. The question is: can we make it better? I don't think we can unless we first shed some of the baggage that's been loaded onto us. Nobody reads Horatio Alger stories anymore, and there aren't many of us who still believe in the silly tale that hard work and a little luck will take you anywhere you want to go in America. Life is too hard to let you remain that naive. But living without hope is unbearable, so we've created our own myths. Some of us get by day to day hoping for a lightning strike-- getting drafted as a pro, becoming a celebrity or hitting the Powerball. Others have adopted the survival-of-the-fittest morality that the Wall Street types preach. Get in the game. Play hard and ruthless. Get rich. Since we don't start out with money and don't have access to a seat on the New York Stock Exchange, that "game" is usually limited to drugs, extortion and prostitution. It may work out for a while, but the product of a beef with your business partners isn't a law suit, it's a bullet. And when the government shows up, it's with handcuffs not a bailout.

Thoughts of a winning ticket may help you get to sleep at night when you're not sure how you're going to pay the gas company tomorrow, but those longshot dreams will never make your life better. The Wall Street types may spout that every-man-for-himself garbage, but we saw how quick they think everybody owes them help when they're in trouble. (Isn't it funny how people "born on third base" in America love to tell us how great our dog-eat-dog competitive system is?)

Look around at who does manage to get ahead. Most of them are foreigners: the Pakistani guy with the convenience store; the Vietnamese family with the restaurant; the Mexicans with the lawn service. (How's that for some stereotypes?) Did you ever think that maybe it was an advantage not to grow up in America? These people do things differently. They share housing until they can afford more room. They work for free in the family business until things get going. They cooperate with each other even while they're competing with the rest of the world. And it works.

A little cooperation goes a long way. If we poor people started working with each other instead of against each other, we could make our lives better. It might be possible to make sure that everybody had a roof over their head even if their credit rating sucked by filling up those abandoned house with people who would take care of them. We could band together to help someone buy and maintain a vehicle that could take a bunch of us to the store to shop. People in our own neighborhoods could help tutor kids in reading and math and self-discipline with the result that our schools could do their job better.

The government isn't going to do those things, at least not the federal government. They don't have the time, the money or the imagination, and even if they did, it would take years, and we don't have years. We'll have to do it in our own neighborhoods. There's more wasted talent there than we can imagine. On top of that, there have been millions of people thrown into poverty over the past year-and-a-half with skill and experience but no place to work and no place to live.

There are barriers to this, I know. We may all be poor, but we come in different colors and speak different languages. We'd better get over that fast because if we don't hang together, we'll hang separately--or at least starve. That's for sure.

The biggest obstacle may be trust. There's not much trust left in America. We've become the land of the hustler and the home of the scammer, and everybody has been burned. It's even tougher for us because we can't afford to get ripped off, but if we don't start working together, daring to trust each other, life will only get harder for us and our children.

Well, that's it. I got it off my chest. There's no magic wand to put us all into new cars and fancy houses in the suburbs. There's no government "every man a king" program about to be signed by the President. What there is is us. We are America's poor and this society has said to us, "You're on your own." We're overboard in the middle of the sea in the midst of a storm. All we can do is to declare, "WE'RE on OUR own," and use cooperation to lift each other not out of a "poverty" that's defined by how much you possess but into a life that can still be safe and full of joy.

With hope for the future,

One of the Outcasts and Castoffs

Changing YOYO Into WOOO

This is the second in a series on how the poor in America can band together to make their lives better. The first, "America's Merry-Go-Round Economy," can be found here.

Eighty percent of Americans find themselves on a spinning economic merry-go-round whose ever-faster gyrations threaten to throw them off onto the hard ground of unemployment, bankruptcy and homelessness. A tiny minority are securely ensconced at the center of the wheel, shielded by their wealth and political connections from real danger, but more than 25% of those who consider themselves "middle-class" are just a lay-off, illness or divorce away from losing their place on the merry-go-round.

The Wall Street Journal reported on August 11 about one such couple:

David Olson, 47 years old, said last week he and his wife wound up under the Nashville overpass after he lost a job making cement pipes in Iowa four months ago. The couple came to Nashville for a remodeling job that turned out to be a scam. "I've got five years' experience in carpentry and 10 years' roofing and I can't find a job," he said.

Mr. Olson, his arms and shirt caked with dirt, said life is hard in the swampy woods. The couple woke up to mud after a night of rain. His wife said she is frightened by the dogs that roam around the encampment.

As mosquitoes buzzed, they tried to set up camp on higher ground. They struggled to secure a tarpaulin over their tent to keep out the rain. Mr. Olson's wife, holding onto a pole to prop up the tarp, cried. "I'm not used to living like this."

For a powerful video presentation of the plight of the recently homeless, view "Scraping By," a New York Times video about life in a tent city a few miles from Microsoft's corporate headquarters.

A YOYO Society

For the poor will never cease to be in the land; therefore I command you, saying, "You shall freely open your hand to your brother, to your needy and poor in your land."

Deuteronomy 15:11

The sad truth is that American society is not inclined to provide significant assistance to its poor. Even the mildest of proposals to extend federal unemployment benefits in the midst of 10% unemployment is met with concerns from the Right about the "disincentive" to find work--even when there is no work to be found.

Most of us have internalized a strict "capitalist discipline" that moves us not only to say, "Yes sir!" when the boss says jump but also impels us to consume far beyond our real needs. Those who neither work for a capitalist nor shop in his stores are seen as outcasts and castoffs, a drag in a world which is focused entirely on producing ever greater returns on capital. The poor, even if they have recently fallen into such circumstances through the failure of capitalism to provide full unemployment, are to be whipped and punished rather than helped. Otherwise, the American "work ethic" says, our society will degenerate into a gang of freeloaders.

How ironic that the "capitalist discipline" still constitutes the real moral imperative of American society even though changes brought about by globalization and financialization have greatly reduced the need for American workers. For the past three decades, Americans' role as producers has declined as first manufacturing and then services were outsourced overseas. Americans' preeminence as consumers was temporarily preserved by a succession of financial bubbles that covered the reality of mushrooming trade deficits and personal debt until that cover was blown last fall. Now the capitalists will have to look elsewhere for consumers because the American species of buyer is tapped out.

Still, American society has little but contempt for those who don't have "regular" jobs even though there are none to be had, and who drive old cars (if they're lucky) and wear old clothes even though there is no way to buy something new.

What little effort that is made by government or private charities is all directed toward assisting the poor in climbing back on the economic merry-go-round. Lyndon Johnson's 1964 State of the Union saw poverty as an illness that could be cured not as an ever-present reality to be ameloriated:

Very often a lack of jobs and money is not the cause of poverty, but the symptom. The cause may lie deeper in our failure to give our fellow citizens a fair chance to develop their own capacities, in a lack of education and training, in a lack of medical care and housing, in a lack of decent communities in which to live and bring up their children.

In 1964, with its rapid economic growth and low unemployment, we might have agreed with Johnson that the near-elimination of poverty was possible. By the 1990s, however, our politicians were more openly concerned with applying capitalist discipline even if it was obvious that real full employment would never be achieved. Bill Clinton bragged about ending welfare as we knew it. What he meant was that any form of government assistance to anyone other than the oldest and youngest was to be temporary and conditioned upon the recipient making extraordinary efforts to join the mainstream economy. This has led to the foolish practice, chronicled by Michael Moore in "Bowling for Columbine," of busing single mothers dozens of miles to work in a minimum wage job while providing no child care for the family.

(the relevant portion of the video begins about 2:00 in--warning--badly synchronized)

Private charities, even the most open-hearted, are also captives of capitalist discipline. Habitat for Humanity has one of the finest records of helping the poor of any charity, but the way they provide help has turned recipients of their help into targets. Adopting the American maximum that home ownership lies at the core of the "American dream," Habitat for Humanity deeds the houses they construct to poor families. Capitalists always look for profits, preferably easy profits, and Habitat for Humanity families made a juicy target:

Charles and Ann Williams of St. Paul, Minn., are prime examples. He's a janitor, she's a home child-care provider, and they have three children. Their annual income is $18,187, supplemented by Social Security benefits. In 1995 they built a Habitat house and took a $64,000 mortgage. Since all original mortgages in the Habitat program are interest-free, their monthly payment was just $396.

That changed last year. A flyer advertising an offer to refinance with New Century Financial Corp. in Irvine, Calif., looked tempting. Within three weeks the couple signed papers. The good news was that they were able to unlock $28,000 in equity, money they used to cover debts. But their new $81,000 loan carries an interest rate of 9% and payments of $872 a month, more than half their monthly income. And the loan's adjustable rate can jump to 16% in two years. New Century says it has policies to ensure borrowers know what they're getting into and that it is negotiating with the couple for a new loan on better terms. The Williamses declined comment.

Habitat for Humanity itself has been foreclosing on homes as economic times worsened. The New York Times reported that it had issued notifes to 14 Detroit families:

''We erred too frequently on the side of compassion and sensitivity in the past, and we've got to take steps to rectify it,'' said Mr. Arcand, who joined the organization in January and has been trying to rebuild the Detroit office. ''We had to put the brakes on.''

A charity that is too compassionate and sensitive? Maybe the problem lies in trying to force poor people to live under a middle class paradigm.

Even if charities were to wake up to fact that the current capitalist system has no place for the poor, they will never have the resources necessary to make the lives of significant numbers of poor people better. Habitat for Humanity has built or rehabilitated housing for 30,000 families in the 30 years since its founding. Laudable, of course, but insignificant compared to the 5.4 million American families facing "worst-case" housing needs according to Habitat's own numbers.

More broadly, the dollars available to private charities to help the poor are tiny compared to the problem. While more than $300 billion was donated to charities by Americans in 2008, more than three-quarters of that went to local church congregations and educational institutions. Only $25 billion went to human service charities, of which perhaps half ever makes it to the poor themselves. That amounts to $250 per poor or near-poor person. And even that paltry number fell by 12% in 2008 just as needs were increasing.

The clear message to America's poor:

You're On Your Own --- YOYO.

We Must Transform YOYO to WOOO

Left to fend in a society whose message is YOYO, we poor must recognize that our only hope to better our lives is to work together.

We On Our Own --- WOOO

That doesn't mean that we refuse to accept government or charitable assistance, or that we stop pushing these institutions to do more. It does mean that we change our thinking in three ways:

• We quit seeing ourselves as clients of charities and recipients of government benefits and replace that self-conception with one that emphasizes our responsibility to help ourselves AND our neighbors while utilizing any and all resources that come our way.

• We discard the goal of climbing back on the merry-go-round and joining the mainstream economy--a goal that has been forced on us--with a new purpose of improving our lives, the lives of our neighbors and the lives of our children.

• We must learn to trust one another. That's difficult in an society that seems to have become that land of the hustler and the home of the scammer, but mistrust produces isolation, and we can't survive alone.
  

Let's apply these new modes of thought to a couple of practical circumstances.

Avoiding Foreclosure the WOOO Way

Let's say that you're one of the millions threatened with foreclosure or eviction because of a job loss, illness, family split-up or a jump in your house payments. You're a month or two behind, but haven't received a notice of default or eviction yet. What can you do to avoid getting thrown out on the street?

You've tried finding a part-time job, any job, but there are none to be had in your area. You've considered borrowing from friends or relatives, but they're all as tapped out as you. If you're hoping that President Obama will come up with a magic plan to save your house, you're out of luck. It's not going to happen. Charities can't help either if you need more than a few dollars on a one time basis.

So consider renting out a room or house sharing. There are hundreds of thousands of people who need to find shelter every month, and many of them will end up homeless unless they have plenty of cash for deposits, a clean credit record and a "steady job."

"Who wants to take strangers into your own home," you might be thinking. But consider this. In a month or two, you may be living next to them anyway, only in a tent city rather than under your own roof. And if you could use a service, a free service, to publicize your opening, and if that service could ask prospective renters a few relevant questions, that would help too. There would no need for credit reports. Would you be happy if the renter wanted to see yours? Just a face-to-face to close the deal, and you could make your payments while helping someone else out.

In the longer term, you and your neighbors might try tackling the growing problem of abandoned houses in your neighborhood. This is more complicated than taking in a boarder, but working together and with some outside help, it would be possible to fill those houses with people who would fix them up and make good neighbors, and the rehabbed houses could be owned by a community-controlled coop that would be secure against anyone's personal creditors.

Buying Groceries the WOOO Way

As Walmart Supercenters have crowded out local markets and even supermarket chains, it has become more and more difficult just to find a place to buy fresh meat and vegetables in poor neighborhoods. The nearest groceries can be miles away and difficult to reach with inadequate public transportation and no car.

Chances are that somewhere on your block there is someone with both a large vehicle and a strong back. That person could take lists from people in the neighborhood who can't get to the store and pick up groceries for people once a week or so. In return, the people who were receiving the groceries could pick up the "delivery man's" grocery tab with a little extra for gas and time.

In the longer run, the community could work together to prepare a vacant lot for a community garden. They could even institute what used to be an American custom of a "common" where people in the community could graze animals like goats or a milk cow. If there was excess, it could be canned or sold to outsiders for a little money to buy seeds, tools, even power equipment.

Resetting Value

Such simple, even simplistic examples are useful to demonstrate these truths:

• Who we are, what we know and what we can do may be of no value to the capitalist seeking to maximize his profits, but we still have the ability to make better the lives of ourselves, our families and our neighbors.
• What we have, where we live, what we drive, as shabby and worn-out as these things are, may have no market value, but they can be used to improve the existence of ourselves, our families and our neighbors.

Rather than the shame induced by our built-in "capitalist discipline," we should be feeling pride. Whether they like it or not, nearly all Americans--all but the hyper-rich--will have to get used to living on much less. There's no one in the world left willing to loan our countrymen money so they can continue to live above their means. More importantly, the environment cannot sustain the way Americans have been living. We poor already know how to get by on little, and now we can lead the way in learning how to live better by cooperating with each other and respecting our environment.

New Frontiers

This new attitude can lead to the re-creation of the places where we live as no longer damned by the fact that we are poor but instead communities where life is made better by the skills, knowledge and love of those who live there. In fact, we poor can put ourselves at the vanguard of an effort to make American life both more humane and also more respectful of the environment.

America's poor communities, in the cities and in the farmlands, can be New Frontiers where those who already live there will welcome new residents--outcasts and castoffs like themselves--to re-populate shrunken neighborhoods and towns while bringing new skills, ideas and energy. The alternative is for these places to continue to dwindle, losing businesses, services and schools to the point that they will be vanish under the onslaught of wind and rain or be bulldozed into rubble.

America not only has tens of millions of people who are outcasts and castoffs but also has towns, cities and even entire states that have been cast off and discarded. The deterioration of urban neighborhoods brought on by de-industrialization has only been accelerated by the latest scheme to scam the poor: subprime mortgages. Houses abandoned because of foreclosure now sit empty by the tens of thousands, and the banks that now own these houses either unload them in bulk to absentee slumlords who will use them to further exploit the poor or sit on them as they continue to deteriorate.

America's "heartland," the rural Midwest and Plains states, has been shrinking since the Great Depression. The destruction of family farming brought about by corporate agribusiness has left many farmtowns resembling ghost towns. John Mellencamp writes:

Ghost towns along the highway
Guess no one wants to live around here any more
Ghost towns along the highway
Listen to the wind blow through the
Cracks on the boarded-up doors

First these towns lose population, then a bank and a doctor's office. When a Walmart springs up 30 miles away along some interstate, the closing of the local grocery and hardware stores soon follow. In the last stages, the town's schools close and the few children left there must be bused dozens of miles to get an education.

On one hand, we have abandoned houses and towns left empty to rot or be torn down. On the other, we have the displaced newly poor locked out of most rental properties by the landlord's demands for a steady job and good credit before he'll rent. We can either watch the tent cities grow while perfectly good housing goes to waste, or we can take charge of our own situation and work together to bring in new people with skills, knowledge and a desire to be good neighbors.

A New WOOO World

Most of us didn't have much choice about being thrown off the American economic merry-go-round, but we can choose to pursue a new, more real American dream. If we can manage to leave behind the every-man-a-millionaire foolishness that has bombarded us from birth, it will be possible to employ cooperation and mutual respect to build better lives for ourselves and our families even as the old American dream evaporates for most Americans.

America's Merry-Go-Round Economy

On August 20, 1964, President Lyndon Johnson signed into law the Economic Opportunity Act, popularly known as the "War on Poverty." Earlier that year in his State of the Union, Johnson had called on Congress to enact an ambitious legislative program to end poverty, arguing that:

Unfortunately, many Americans live on the outskirts of hope--some because of their poverty, and some because of their color, and all too many because of both. Our task is to help replace their despair with opportunity.

This administration today, here and now, declares unconditional war on poverty in America. I urge this Congress and all Americans to join with me in that effort.

It will not be a short or easy struggle, no single weapon or strategy will suffice, but we shall not rest until that war is won. The richest Nation on earth can afford to win it. We cannot afford to lose it...

Our aim is not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it.

There was reason for hope in 1964 that poverty could be ended or at least shrunk small enough to drown in a bathtub. In 1959, more than 30% of the population in the U. S. received less than 1.25 times the poverty rate: the definition of the poor and near-poor. By 1964, that number, along with other economic data, was looking much better:

1964 Economic Data

Under 1.25 poverty level	26.3%
Unemployment	5.2%
Annual GDP growth	5.8%

During the next 9 years, the poverty rate dropped dramatically to half what it was in 1959 due to a combination of the poverty program, increased government transfer payments to those over 65, Medicare, migration from the poor, rural South to the industrialized North, and economic growth interrupted only by a brief, mild recession in 1970-71.

1973 Economic Data

Under 1.25 poverty level	15.8%
Unemployment	4.9%
Annual GDP growth	5.8%

For the Poor Always Ye Have With You

Since 1973, however, there has been no sustained progress in reducing American poverty. The percentage of those below 1.25 times poverty had actually increased from 15.8% in 1973 to 17% by 2007 before the current severe recession began.

In raw numbers, before the Great Recession of 2008-09 even began, there were 50.9 million people living below the 1.25 poverty level.

Government efforts to lift the poor have all but ended. Johnson's "War on Poverty" went into retreat under the Nixon administration. (Nixon actually appointed Donald Rumsfeld as director of the Office of Economic Opportunity.) Reagan further dismantled the social safety net, and even Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act in 1996.

Capitalism, especially the unbridled variety unleased during the 80s, has failed to reduce poverty as well. The long expansion during the Reagan 80s failed to regain the ground lost during the early 80s double-dip recession. The 90s "boom" under Clinton did manage to bring the percentage living in poverty back to the 1973 level, but no lower. And during the tepid economic growth under Bush II, poverty levels actually grew slowly, and deep poverty--those earning less than half the official poverty rate--increased rapidly.

Post-1973 recessions have brought increases of around 4% in the poverty rate. The data suggests that the mild recessions of 1990-91 and 2001-02 brought as large a jump in poverty as the more severe recessions of 1974-75 and 1980-83. It is safe to say that the current recession will bring the 1.25 poverty percentage to a post "War on Poverty" record in excess of 20%.

One Illinois agency predicts that the Great Recession will increase the population living in poverty in that state by 27%. If those numbers hold true nationally, we can expect that more than 60 million Americans will be trying to survive on less than $2,350 per month for a family of four.

The Merry-Go-Round Economy

As children, we may have been thrilled by riding on a rapidly spinning playground merry-go-round. It's a lot less fun to live in an economy that's driven by neo-liberalism, financialization, globalization and a fraying social safety net to the point that it "spins" out of control, throwing millions of us off into unemployment and poverty.

Imagine this economy for a moment as a merry-go-round, a huge version of the one you used to enjoy during recess in the third grade. In the center stand the wealthy and privileged. While they're spinning like everyone else, the pull of centrifugal force is not as severe on them, and their position at the center remains secure even if the merry-go-round is spinning madly.

Toward the outside of the merry-go-round--those living a paycheck or two from disaster--things are very different. Clinging to the merry-go-round with all one's strength and ability may not be enough to prevent being thrown onto the ground by the forces generated by the rapid spinning.

For those who have already been thrown clear of the merry-go-round--those in poverty, the unemployed, the uninsured, the foreclosed upon--it will be all but impossible to climb back on unless the merry-go-round somehow slows down.

But the American economy merry-go-round has not been slowing down; it's been spinning faster and faster on average since the mid-70s. A shrinking manufacturing base, the decline of labor unions, offshoring of service jobs and the growth of low-wage, no-benefit, part-time and contract work has made an ever larger share of the U. S. workforce completely exposed to economic downturns. Combined with the increasing severity of boom/bust cycles, we now live in a country that can shed 6 million jobs in 18 months with little hope that they will be restored in the forseeable future.

Who is most likely to be thrown off the merry-go-round, and who is already being forced to learn how to survive in wilderness that exists outside the bounds of that merry-go-round? Here are some clues given by the numbers:

• people of color

Poverty rates for African-American and Hispanic Americans are roughly 3 times those of white, Anglo Americans.

• older workers

In the second quarter of this year, more than 22% of those involved in mass layoffs were aged 55 or older, double the percentage during the previous 2001 downturn. These workers also have a more difficult time finding comparable work once laid off.

• veterans

In March, the reported unemployment rate for veterans of Iraq II and Afghanistan was 27% higher than for the rest of the population (11.2% versus 8.8%).

• the less well-educated

More than 30% of those without a high school diploma are living in poverty compared to 5% of those with 4 years of college or more. (But note that more than 3 million people with a college degree or more are living below the 1.25 poverty level.)

Outcasts and Castoffs

Not only are people of color, older workers, veterans and the less well-educated being thrown off the American merry-go-round, but changes in the U. S. economic and social systems will make it more difficult than ever to climb back on even if and when the economy quits hemorrhaging jobs.

In the United States, the poor and unemployed are not just poor and unemployed, they are outcasts and castoffs. Lose a job and it won't be long before you miss mortgage, car, credit card and student loan payments. Miss a few payments and your credit score is destroyed. Apply for a job with a bad credit score and you'll be rejected. The Atlantic reports:

Employers are being pickier about credit backgrounds. Why? Because they can be. As the Bureau of Labor Statistics reported this morning, there are 14.5 million Americans looking for jobs. One way to shrink your applicant pool down from the flood of resumes you received is to check credit behavior...This does have some pretty grim implications for anyone unemployed with poor credit. If credit checks become standard practice for employers, then as long as the pool of the unemployed remains large, so will their selectivity based on credit. Only when the pool of unemployed shrinks will that selectivity also vanish. That means those with poor credit will be unemployed for even longer than those with good credit.

This increased focus on credit ratings in the job application process takes place in an environment where there were more than 3 million foreclosures in 2008 and another 2.5 million are expected in 2009.

Add homelessness to the cascading disaster of job loss. Lose a job, see your credit rating drop, and the next thing you know, you won't be able to find housing. A 2007 Anaheim, CA survey (PDF) found that 43% of those living in motels rather than permanent housing were doing so because of bad credit history. Put "rent with bad credit" in Google and see how a mini-industry--many seeking to prey on the newly poor--has grown up because of this problem. To make matters even worse, people who find themselves in this situation are unable to obtain what little public assistance is available because they can't prove residency.

Those who fall off America's economic merry-go-round are soon confronted by a plethora of Catch-22s that make it almost impossible to find a job, obtain housing or even buy groceries without a car. They must learn how to live outside the merry-go-round like the residents of a tent city located a few miles away from Microsoft headquarters in Washington.

Our "New Normal" Will Only Speed Up the Merry-Go-Round

Talk of recovery is rampant from the halls of Congress to CNBC, but will there soon be an extended period of growth that can shrink poverty and offer those who have been thrown off the merry-go-round a chance to get back on?

Not according to the best informed, most frank observers. They speak instead of a "new normal" of slow growth and high unemployment, and that means high, probably increasing levels of poverty.

Mohamed El-Erian is the CEO of PIMCO, the manager of the world's largest bond fund with over $750 billion under management. He projects:

Needless to say, many of us entered the discussions with priors and biases. After all, recent months have been dominated by unprecedented volatility in factors that have conventionally anchored market relationships. Indeed, some of you have already heard us argue that the world is traveling on a bumpy road to a new destination – or what PIMCO has labeled the “new normal....” This reflects a growing realization that some of the recent abrupt changes to markets, households, institutions, and government policies are unlikely to be reversed in the next few years. Global growth will be subdued for a while and unemployment high.

If El-Erian and other experts are right, the impoverished, the unemployed and the credit-damaged can expect little help from economic growth. The data suggest that it takes economic growth in excess of 4% and unemployment at or below 5% to have a positive impact on poverty rates. Such numbers are nowhere on the horizon. Instead, slow growth will mean further increases in poverty not only from job losses but also from wage and benefit cuts for those who keep their jobs.

What about the government? With a Democratic Congress and White House, there is surely hope for the poor?

Not likely. While SCHIP was aimed toward poor and near-poor children, the rest of the legislative agenda has been understandably aimed at trying to slow down the whirling merry-go-round so that even greater numbers of middle class Americans are not thrown into poverty. Some of the stablization efforts have even been harmful to the poor. "Cash for Clunkers" not only raised prices for low-end used cars, the only kind of vehicles affordable for those with little cash and no credit, but has increased the cost of used parts for the older vehicles already owned by the poor. Health insurance mandates will only add another burden unless accompanied by adequate subsidies. And the hundreds of billions of Treasury money and trillions of Federal Reserve dollars that flowed to the banks have done nothing for those in poverty. If anything, we have viewed that largesse as the death of the last hope that government would be able to come to our rescue even if it was so inclined.

State and local governments? They will not even be able to maintain the paltry level of services they have provided in the post-Reagan, post-"welfare reform" era. California is a harbinger of things to come.

We live in a nation that brags about its wealth but has failed to eliminate poverty for more than 1/6 of its citizens. Now the future looks even worse as a financial crisis spawned by the wealthiest, most powerful members of our society "trickles down" both to augment the numbers of impoverished and increase their misery. Bankrupted state and local governments are powerless to help, and the federal government is fully occupied just trying to keep things from getting worse for those still clinging to the middle class.

The message to the poor: You're On You're Own. YOYO.

For those of us who find ourselves among that 20+%, there is only one option left:

We're On Our Own. WOOO.

In the second of this series, we'll explain how poor Americans, both the newly poor and those who have all too much experience with poverty, can band together to make their lives better.

Next in the series: Changing YOYO Into WOOO.

The "New Normal"

Hundreds of thousands of people are being added each week to the growing pile of outcasts and castoffs in America. The laid off, the furloughed, the “discouraged” unemployed, the imprisoned, the consultants and freelancers with no income, the foreclosed upon, the part-timers. While the cable news commentary prefers to focus on a U3 unemployment number of 10%–that’s shockiing enough–real numbers that include those who have given up finding a job and those who are forced to work part-time are nearing 20%. When we include those who have been getting by with “consulting” and freelancing since being laid off in the last recession along with those who are in school primarily because they can’t find a paying job, it’s clear that more than 25% of our country’s able, adult population have been thrown on the discard pile.

If this were a temporary phenomenon that would return to normal in 12 to 18 months, it might be tolerable, but the reality is that this situation did not arise last fall or even at the beginning of 2007 when GDP began to fall. It has been building in spurts since the mid-1970s as median income fell. It has been covered first by converting American households into two-earner units and later by debt-fueled consumption. That all ended last fall, but can it return in the forseeable future?

Not according to Mohammed El-Erian. El-Erian, as a major mover and shaker in this economy, is in a position to know. He was a managing director of Pimco before leaving to rescue the Harvard Management Fund after Bob Rubin ran off its competent manager. After a brief stay, El-Erian had an offer to return to Pimco to assume a co-management role with Bill Gross, and it was from that position that he watched last fall’s drama and now plans Pimco’s future in this changed environment.

In a Bloomberg interview, El-Erian describes what he and others are calling the “new normal.” Employment levels will not return to what they were prior to last fall. Highly skilled and educated workers who have lost jobs will never find comparable employment. It will be up to America’s tattered safety nets to keep people from homelessness and starvation. Will a government close to bankruptcy itself and hobbled by corruption and antiquated procedures be up to the task? Unlikely.

At this blog, we intend to celebrate our shared status as outcasts and castoffs. For some of us, membership in this de-selected group came recently. Others have been dealing with being among the capitalist system’s undead for some time. This author, long an outcast, viewed the events of last fall as a vindication and an opportunity. My distaste for America’s consumerist society developed as a teenager in the ’60s, and my conviction that the system was corrupt and unproductive at the core came from my exposure to the power elite in college, law school and thereafter. The collapse of this degenerate, cruel system–and listen to El-Erian, the perceived stabilization should not be mistaken for long-term survival–has created openings for us who have been rejected by American capitalist society to create new communities and systems that are more human-centered, more peaceful, more just.

The first step is to acknowledge and celebrate the death of the old world. The second is to affirm one’s newfound value and worth in the new world that’s coming. The third is to find like-minded people with whom to cooperate.

I’m thankful that change has finally come. As Grace Slick wrote forty years ago:

Don’t change before the empire falls.

You’ll laugh so hard you’ll crack the walls.

The El-Erian interview (I have trouble viewing Bloomberg vids unless I use IE):

"Greasy Heart" by Grace Slick and performed by Jefferson Airplane: