Workers against Wall Street

President Obama’s “shock and awe” statism is failing. On the eve of the midterm elections, the US ec

Gary, Indiana

We're hurtling through downtown Gary at about 75 miles an hour but Officer Lilley, at the wheel of our car, remains relaxed. He's telling me languid stories about the AK-47s that the local teenagers carry, about the gangs, the drugs, the overtime. Then the city's "shot spotter" pings an alert on to his laptop, which is wedged right next to the handbrake.

He mutters a call for assistance into his radio and swings the police car on to the forecourt of a gas station where about 30 people are running, pointing, strung out, screaming recriminations. There's been a fight, but the fighters are gone, as is the kid who decided to let off his pistol. Nobody is dead. Everybody is shouting into the face of Officer Lilley, a black cop in a black crowd, who simply drawls soothing phrases back at them.

Eventually seven police cars arrive and the cops fan out to disperse the crowd of onlookers, many of whom they seem to know by name. Two years ago there were times when the city could field only five cars in total on a night shift, but federal dollars have paid for 96 new vehicles and allowed Gary Police to re-employ 11 laid-off officers. This short, sharp exercise in armed social work is possible only because of the fiscal stimulus.

Gary is a city where 84 per cent of the population is black and one-third of the people live in poverty. It is one of the most obvious places on earth where an influx of taxpayer dollars might do some good. It has 3,000 abandoned homes and a decaying infrastructure, and its public finances stand two years away from bankruptcy. Yet what is obvious, amid these wrecked streets and impoverished lives, is how little the stimulus has achieved.

Gary's urban texture - grass and ivy over broken concrete - is testimony to what happens when an economic model fails. In its deserted downtown district, the churches, the concert hall, the theatre, the ballet studio, the Gothic apartments from whose windows steel magnates once surveyed the city's pulsating wealth, stand ruined, unsecured against intruders.

Though atypical of America, Gary's broken landscape is spectacularly typical of what has gone wrong in the country at large. Its meagre progress, two years into the Obama administration, signals the president's failure to solve America's most basic problems and to deliver to the very people whose votes put him in the White House.

The problem for America today is that another economic model has failed: one based on globalisation, cheap credit, home ownership and mass consumption. Six million Americans have fallen below the poverty line since December 2007. The median income has fallen by 4.7 per cent. In the same period, more than 2.5 million homes have been repossessed. And that only compounds the long-term problems America hid beneath the financial euphoria of the boom years - but average real wages have stagnated since the 1990s; the number without health insurance has grown by ten million in a decade and stands at 50 million.

The most basic problem is this: in a system based on credit, the credit system is not functioning. It's easy to spot the malfunction in a city like Gary: I saw one home for sale at $7,900 cash, the scrawled street-corner placard adding, by way of explanation, the word "Foreclosure". The only part of the credit system that does function is the destructive part; the "payday loans" store on Gary's main street is the only thing left with working neon signs. Most of the other shops are closed for good.

With a swollen mass of people unable to borrow, save or spend, the great dynamo of the world economy - American consumption - is sputtering. And the stimulus has not yet managed to restart it.

Eighteen months ago, the mayor of Gary, Rudy Clay, told me that all the city needed was $400m. With that, said the dapper veteran of the civil rights movement, Gary would "fly like an eagle and once again make America proud". In the event, the city was given just $266m - most of that earmarked for education - and for spending not on current costs, but on reorganisation.

Of the $24m Clay applied for to knock down derelict homes, $2m was delivered - and most of the buildings are still standing. It took 18 months for the money to pay for new streetlights to filter through the system. And, with $266m, Gary has managed to create the grand total of 327 jobs. That is more than $800,000 per job.

“We were last in line," Clay complains. "We keep pressing the State of Indiana for more money - to fix our roads, for example - but the problem is they spent all the money. They probably thought, 'Well, Gary voted in large numbers for the president, so the president can take care of them.'" A glance at the city's finances reveals a more complex picture. Its financial controls are archaic, its debts to other agencies high; and its tax base is heavily dependent on one source - a property tax that brings in 80 per cent of Gary's revenue.

In 2008 the Republican-controlled state government of Indiana brought in tax-capping measures that will, by 2012, halve the amount of property tax Gary can collect. While richer, whiter counties surrounding Gary have their own local income taxes, Gary does not - for the simple reason that there is very little income to tax. Within this system, redistribution is impossible unless the state and federal governments make it happen.

But that is where Gary's problems run into the culture war that has gripped America.The governor of Indiana is Mitch Daniels, a fiscal conservative who has made his reputation by balancing the state's books, privatising Indiana's major roads system in the process. Daniels - unlike some other Republican governors - agreed to accept the fiscal stimulus money, but on condition that the state retained control. He then decreed that the stimulus could not be used to fix the balance sheets of near-bankrupt city governments like Gary. Only major, one-off projects would receive federal dollars.

So, in the midst of the largest fiscal stimulus since the Second World War, one of America's poorest cities is being forced to cut taxes and cut spending. By 2012 its entire tax take will not be enough to cover the police, fire and ambulance services. Officer Lilley and his colleagues know that all the problems that fuel the crime - drugs, truancy, poor housing, unemployment - will remain unaddressed.

President Obama's stimulus was formulated with high hopes: two-thirds of the $787bn spent would be delivered not through the Bush-era mechanism of tax cuts, but through the overtly Keynesian channel of public spending. Jared Bernstein and Christina Romer, economists on Obama's transition team, predicted in January 2009 that the stimulus money would "create three to four million jobs" by the end of 2010, 90 per cent of them in the private sector. They projected that unemployment would peak at just 8 per cent in 2009.

The Romer/Bernstein forecast, like much of the Obama stimulus plan, was a triumph of optimism. Unemployment reached 10 per cent a year ago and has not been below 9.5 per cent since, even with the stimulus. Private-sector employment has shrunk. The money has been spent, but the jobs and growth did not follow.

The paucity of achievement is all the more remarkable given that, two months after the Romer/Bernstein report was published, the Federal Reserve was forced to launch its own, much bigger monetary stimulus package, known as quantitative easing (QE). By printing money and using it to buy a mixture of bank and government debt, the Fed pumped $1.75trn into the US economy.

Yet the combined results are poor. Growth is slowing. The threat of deflation is so clear that the Federal Reserve will, on the morrow of the midterm elections, be forced to throw several hundred billions more into QE.

In the housing market, there is already a double dip. Even with mortgage interest rates cut to their lowest ever, the sheer volume of un-sold properties - 1.5 million empty and a further five million trapped in a "shadow" market - has begun to push house prices down again. The banking sector has begun to shudder in turn at the prospect of another round of mortgage losses.

It is this tangible failure of economic strategy that is sapping the energy and credibility of the Obama administration. It has provided the American right with a convincing narrative to unite the plebeian conservative and "coastal elite" strands of Republicanism.

Governor Daniels, a mainstream Republican who is being tipped as the man to run against Obama in 2012, calls Obama's policy "shock and awe statism". But the real shock is how little has been achieved. Statewide, the whole of Indiana has managed to spend $4bn of stimulus money to create 10,000 jobs.

“It's not enough," the governor says, "and I would caution you that while I know the $4bn is real, I cannot say the same about the 10,000 jobs. We just don't know. They [the federal government] don't know."

Nationally, he says, "We've had this perverse outcome in which the private sector has continued to shrink and the public sector has gotten bigger. Frankly, it looks more like a way to take care of favoured constituencies than an economic policy."

So, for the mainstream American right, what explains the failure of the Obama stimulus is "crowding out": it is the size of the state that has prevented the private sector from responding to the crisis with fresh hiring and company start-ups. In addition, consistently large majorities polled by the Pew Research Centre believe that state intervention has benefited the banks and large corporations only - leaving the middle class, the poor and small businesses to rot. Finally, there is a growing fear that the size of the budget deficit will drag the United States into penury. Daniels tells me that the country faces a "survival-level threat".

It is in this context that the narrative of the Tea Party movement has emerged. And you have only to travel a hundred kilometres east of Gary, along the patched-up private motorways of Indiana, to hear it in full voice.

The hall is swaying to the tune of "God Bless the USA" - a song for which everyone except the journalists stands up, many clenching fists against chests. The crowd is 99 per cent white and 100 per cent Christian. Of those to whom I speak during the interval, several believe that the president is neither American nor Christian. One is selling a set of playing cards depicting Obama as a "Kenyan-born, lying, arrogant Muslim communist that hates America".

What the Tea Party objects to is the president's policies of state intervention. What it adds to conventional fiscal conservatism is the idea that all state intervention into economic life is immoral, un-Christian and unconstitutional. The plebeian right is convinced that a city like Gary neither deserves stimulus money nor can use it to any good effect.

Jackie Walorski, a Republican who sits in the Indiana legislature and is standing for the US House of Representatives on 2 November, tells me: "We are watching a freight train of spending in this country. Americans don't live that way. We're the land of capitalism; we're not the land of taking people's public tax money and throwing it into a concept that isn't proven, that has not produced jobs."

Does she begrudge the money spent in Gary? Would she have blocked the cash for schools, more police and police vehicles?

“It's not a question of begrudging," says Wal­orski, a 47-year-old former TV journalist. "Just because it's gone to education, police and fire doesn't mean the money has done anything in those areas. That's not what the key is in this country. You can continue to write cheques but recovery comes from private-sector jobs and holding a line on spending."

What is sapping the energy of Democratic Party supporters, even in a place like Gary, is that if you strip Walorski's words of all the rhetoric, economically they ring true. America's governance system, lacking the basic capacity, and in some places the will, to spend the money, looks ill suited to delivering maximum bang for 787 billion bucks.

But the rhetoric itself has material impact, and way beyond the worried Christian faces assembled to hear it. It is a rhetoric that - intentionally or otherwise - identifies the recipients of state spending as the enemies of the American constitution. From Indiana to the Gulf of Mexico, that means the public sector, migrants and the African-American poor.

When Walorski takes the stage at a Tea Party rally in the small rural town of Angola, Indiana as warm-up act for the Fox News commentator Glenn Beck, she points to a giant US flag behind her and whips the audience to its feet with the warning that they have just days "to fight for who we are in America".

She continues: "If we don't fight for freedom, liberty, individual destiny, they are redefining this country out from underneath us. The battle we're facing is to defend this flag on our turf, our soil. When our soldiers came out of the boats in Normandy they literally walked over the bodies of other soldiers to fight for our freedom. The battle we face today, the ideological war that we're fighting, is for standing up for a constitution. The land of the free and the home of the brave is under assault today."

It is worth unpacking this statement. In the literal text, Obama and the Democrat-voting Congress are the "they" Walorski refers to. But America's airwaves are alive with the angry voices of enraged white Christians, channelled towards coherence by the right-wing commentators. No one on the stage in Indiana needs to assert that Obama is "a racist" with “a deep-seated hatred for white people or the white culture" - because Beck already said so on TV, on 28 July 2009.

Back in Gary, for the black community activists trying to hold things together, it feels as if the word "they" has another meaning.

“When you turn on the TV and hear all this anger, all this vitriol," says Ben Clement, who helps run a community theatre group for teenagers, "well, it's culture-based, race-based, and it's frightening. And it shows that there's a disconnect - it's almost like we're living on two separate planets."

Clement, like many Obama-supporting black professionals, rues the complacency of a generation that has drifted out of activism. "Our parents went through the civil rights movement, but for our generation it's been a time of rest, where we didn't think those were going to be issues. Now, when I see Obama vilified, my stomach tightens up, because he is the best of us, the best of what we have to offer. If they feel like that about him - how would they treat me?"

This is the real culture war - an artillery battle of words in which the two sides never meet.

It has blindsided America's political commentators. The polling organisations record no perceptible increase in the numbers of extreme right- and left-wing views. But distrust and fear are tangible once you get where the American media dare not venture - into the honest and considered thoughts of ordinary people.

So, where does the battle go after 2 November? Economists on the Keynesian left of the Democratic Party are now clamouring for a further fiscal stimulus as they frantically try to recover ground in the ideological war they have essentially lost. Judging by the polling on all possible outcomes, the Congressional arithmetic makes another fiscal stimulus impossible. And even if it were possible, it is difficult to see how a second stimulus could overcome the institutional problems that Gary typifies.

Over at the Federal Reserve, the chairman, Ben Bernanke, is inching towards a further round of quantitative easing. In September, he conceded that even if the Fed did opt for a second round of quantitative easing, the impact of this might be softened: though central bankers have no way of knowing how much increased demand they get from QE, they suspect it works best as an anti-panic measure, not as an additional boost. Once "QE2" is begun, the Fed has in effect fired the last bullet in the clip. It may signal the start of a unique period of policy stasis in which all conventional options have been used up.

One route out would be through a trade war and dollar devaluation - a route as popular among the Democratic grass roots as it is among the Tea Party activists.

Back in Indiana, Walorski swaps insults with the Democratic incumbent, Representative Joe Donnelly, whose support for the stimulus, she claims, has "exported jobs to China". Meanwhile, in the union hall of Local 1066, which represents employees of US Steel Corp in Gary, workers are calling for the government to impose tough trade sanctions against Chinese steel imports.

But, for now, the Obama administration is sticking to the economic doctrines that formed the shared belief set of both parties since the 1990s: globalisation and a strong dollar. Even as Bernanke's promise of further QE caused the dollar to slide against other currencies, the treasury secretary, Timothy Geithner, took to the airwaves to promote keeping the dollar strong. "It is very important," he said, "for people to understand that the United States of America and no country around the world can devalue its way to prosperity . . . It is not a viable, feasible strategy and we will not engage in it."

Another route out is the one offered by Governor Daniels: a new, national, one-year fiscal stimulus of between $400bn and $800bn, including suspension of payroll taxes, in return for equivalent cuts in state spending and a bonfire of business regulations. Though fiscally neutral, a tax cut on this scale could put money where neither state spending nor money printing has yet managed to put it - into the pockets of American consumers.

Yet the problem remains: without restarting the credit market, nothing can sustain growth. There needs to be some kind of defibrillating shock. The American patient, with all its problems of obesity and fast food, has to have its heart restarted before the rehab and the statins can get to work.

For two years, America's political cycle and its economic crisis have been parallel stories, the one played out on brash television shouting shows, the other handled by the super-brained east coast policy elite in the privacy of summits and retreats. After the midterm elections, the two cycles will collide. Either the Obama administration will find a new kind of circuit breaker for the economy, or America will face stagnant growth, deflation and the possibility of a further banking crisis.

In Gary, the people know what they want the president to do: to break with Wall Street, ditch the doctrine of free trade, end foreclosures and deliver jobs. There is, despite the political chasm between the union guys and the Tea Party activists, a parallel desire for politicians to break with the lobbying industry and speak for the people. "He [Obama] has to drive the agenda," says Steve Dunn, a steelworker. "If you ever listen to a speech by Franklin Delano Roosevelt, it's basically you against me; it's the working class against Wall Street. And that's the way things are today - but I don't hear that from President Obama."

The irony of American politics, on the eve of the midterms, is that if anybody owns the narrative of "workers against Wall Street", it is the ultra-conservative, free-market right.

Paul Mason is the economics editor of BBC Newsnight. His reports from the US can be seen at bbc.co.uk/paulmason. A revised edition of his book "Meltdown: the End of the Age of Greed" (Verso, £8.99) is out now.

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“The guards WANT you to mess up”: meet the prison wives of Instagram

How memes featuring Disney Princesses, Spongebob Squarepants, and saggy jeans have empowered women with incarcerated partners.

During a recent trip to visit her boyfriend in federal prison, 27-year-old Makenzie wore a floor-length black skirt and a grey shirt that completely covered the top half of her body. After a brief inspection, the guard on duty deemed her outfit appropriate and waved her through, and she was able to spend a happy eight hours with her incarcerated boyfriend and her six-year-old daughter. The next day, she came back to visit again.

“I wore the exact same outfit the second day of visitation because I didn’t want to fight with the guards about any other clothing,” says Makenzie, who had to drive five hours out of her home state, Texas, in order to visit her partner. “I was sent away by a guard who had seen me the day before.”

Makenzie felt “belittled and humiliated” by the guard, who forced her to go to the nearest shop to buy a new shirt. “I wore the exact same outfit down to my shoes and earrings,” she explains. When she confronted the guard, Makenzie says he said: “I honestly don’t care.

“All I’m telling you today is you’re not going in there dressed like that.”

Being a “prison wife” can be isolating and confusing. When wives and girlfriends first go to visit their newly-incarcerated partners, the rules and regulations can be overwhelming. When visiting her boyfriend, Makenzie has to place her money in a clear plastic bag, go through a metal detector before a smaller metal detector is used on her feet, and be patted down by guards. If her clothing is too loose or too tight, she is sent home.

“The guards WANT you to mess up,” Makenzie tells me over email, emphasis hers. “They want to make you mad, make you get in trouble.” For wives and girlfriends isolated by these experiences, the internet has become a haven.

***

Makenzie’s Instagram account has 1,123 followers. Under the handle “Texas Prison Wives”, she has been posting memes, photographs, and advice posts for five years. After incidents like the one above, Makenzie can use her account to vent or warn other wives about changes in clothing rules. Followers can also submit text posts to her that she screenshots, overlays on scenic pictures, and publishes anonymously.

One, imposed on a city skyline, asks if anyone wants to carpool to a prison. Another, overlaying a picture of a nude woman, reads: “I’m wondering if I can get some ideas on sexy pics I can take for my man. I’m about 85lbs heavier than I was the last time he saw me naked.”

The prison wives of Instagram recently went viral – but not on their own posts. A Twitter user discovered the community and tweeted out screenshots of prison wife memes – which are formatted with an image and caption like all relatable memes, with the crucial difference being that not many of us can actually relate.

“The life that we live is not widely accepted by families, friends, and the general outside world because people hear ‘inmate’ and automatically assume the worst,” says Makenzie, whose boyfriend was sentenced to two fifteen year sentences for drug possession.

“This account has given women a safe space and anonymity to seek personal advice, ask questions, and seek other women within their area if they want to reach out.” Her account, Makenzie says, also allows prison wives to laugh during tough times. She both makes her own memes and shares those from similar accounts. One, from May 2016, features a collage of four celebrities rolling their eyes. The caption reads: “When you hear ‘Babe, we are going on lock down again…’”

To outside eyes, some prison wife memes can seem flippant or – to those who retweeted the viral tweet – laughable. “My Life As A Prison Wife” is an account with over 12,000 followers that posts a wide array of memes, often using stills from Disney movies to portray emotions. A post featuring an image of a crying Belle – from Beauty and the Beast –  is captioned “that feeling when… when your visits get suspended”. Yet though many online criticise what they see as the glorification or normalisation of a life choice they don’t agree with, Makenzie emphasises that memes – especially funny ones – are important.

“I think it’s fun to have so many people relate to funny memes even though the direct meaning behind it is about being lonely or the hard things we go through to make this relationship work,” she explains. “It’s a reminder we aren’t alone in our struggle and we can laugh through the pain.”

Jemma, a 22-year-old from London who runs an account called “Doing time too”, concurs. Her profile – which has 1,369 followers – showcases memes featuring puppies, Disney princesses, and stills from Spongebob Squarepants.“I'm sure ordinary members of the public would disagree with our light-hearted way of looking at our loved ones being in prison and I would totally understand that,” she says – also over email.

 

HAPPY VALENTINE'S DAY LADIES  #prisonwife #prisonwifelife #doingtimetoo #inmatelove

A post shared by doing time too (@doingtimetoo) on

“Before I was in the situation myself, I would have probably reacted in the same way to an account like the one I now own. But sometimes you end up in situations you never expected to and you deal with things in a way that others won’t understand.”

***

Prison wives don’t use Instagram just for memes. Makenzie’s account helps women in need in an array of ways: they can find out if there have been riots in their partner’s prison; get advice on gifts to send a loved one; and even find out how to appeal sentences. Alongside her Instagram, Jemma also runs a website called www.doingtimetoo.co.uk

Via @TexasPrisonWives

“I started the website because I was in a relationship with someone a couple of years ago who ended up going to prison. It was totally out of the blue for me and something neither of us saw coming,” she says. “I had no idea how to deal with it.” Her site provides information about individual prisons, what to expect from a prison visit, and what to do after release. She also provides tips on how to send creative gifts made out of paper to incarcerated loved ones.

“I believe the internet has been a massive help in supporting prison wives,” says Jemma, who finds most people don’t understand or relate to her situation. Her boyfriend was charged with GBH (grievous bodily harm) and sentenced to two years in prison, after getting into a fight.

Jemma also feels that Instagram can provide prison wives with information that the prisons themselves withhold. “I can't speak for everyone but in my experience, prisons and the visit centres are far from helpful in providing any information, support or advice,” she says. “Sometimes people won’t hear from their husband when they expect to but through interacting with other ‘prison wives’ they may find out that that particular prison is currently on lock down, providing an explanation and reassurance as to why they hadn’t heard from their husband. Without the internet, this wouldn't happen.”

 

Advice! @mothafukn.irvin

A post shared by OFFICIAL N. CALI SUPPORT (@north_cali_prisonwives) on

When Jemma reached out to prison visitor centres in the UK to promote her website to those in need, she never heard back. When she emailed her boyfriend’s visitor centre prior to her first visit to ask what to do, what to wear, and what to expect, she also never received a reply. “There is no communication with family and no support offered… It’s important to remember that the families themselves did nothing wrong or illegal and so don’t deserved to be punished or treated like criminals themselves.” In such circumstances, information shared online is crucial.

Makenzie also believes that the US prison system has it faults when it comes to visitors. “While I know and understand that inmates are being punished for a crime they committed, the guards treat their families disrespectfully and unfairly almost as if we are being punished as well,” she says. “Being a larger woman, I have gotten in trouble for my clothes being too tight AND for my clothes being too loose. It’s a lose-lose situation.”

Makenzie explains that sometimes visitors are forced to wear gowns similar to those worn in hospitals if their clothes are deemed unsuitable. In the past, she has even been sent away to buy a new bra after she wore one without underwire in order to get through the metal detector. In one prison her boyfriend was incarcerated in, visitors had to wait outside to be signed in, one-by-one, regardless of the weather. “We had to wait two hours several times, sweating, drenched in rain, they don’t care…

“The guards degrade your loved ones right in front of your face, they are mean, hateful, and over the top rude, even to the inmates who are the most well behaved and respectful.”

For these women, Instagram has become an invaluable network of support.

***

There are hundreds of Instagram accounts just like Jemma and Makenzie’s. Many often take memes from each other, but Jemma explains there is no competition. In fact, she says, the network is incredibly supportive. “I spoke to one lady regularly about her situation and I remember counting down to her boyfriend’s release date with her,” she says. Jemma and Makenzie also use their accounts to help lonely prisoners find pen pals.

Instagram allows prison wives to find likeminded people, free from judgement. Yet the accounts can also be incredibly informative to outsiders. By using the “When…” format, memes provide a detailed insight into the lives of prison wives. “When you’re kissing baby towards the beginning/end of the visit and the CO yells ‘enough’,” reads one. “When you check your phone and see… not only did you miss 1 call, you missed two,” is the caption on an image of a crying child.

 

A post shared by doing time too (@doingtimetoo) on

“Nobody understands this long distance, no physical intimacy, and then the added stresses of dealing with prison politics, corrupt guards, and the worry of riots, lock downs, and retaliation like women who are living through the same thing,” says Makenzie. Yet thanks to these Instagram accounts, outsiders do have an opportunity to understand.

For prison wives, memes are an easy and fast way to talk about a topic that many deem taboo. The fact that Jemma and Makenzie wished to communicate with me over email, and the fact many more prison wives didn’t want to speak to me at all, shows how difficult it can be to talk about these issues. For many, memes are just a bit of fun. For prison wives, they can be a lifeline.

 

A post shared by doing time too (@doingtimetoo) on

 “None of us enjoy prison visits or being treated like we are criminals ourselves. We don't enjoy waiting for phone calls that never arrive or having to deal with situations all on our own but if we can laugh about it, that’s something,” explains Jemma.

“Memes allow us all to laugh at the situations we are in, rather than cry.”

Amelia Tait is a technology and digital culture writer at the New Statesman.