The Unwinding by George Packer: How America became like Walmart

An impressive piece of work – but not a happy one.

The Unwinding: an Inner History of the New America
George Packer
Faber & Faber, 320pp, £20

George Packer’s vivid account of the American invasion of Iraq, The Assassins’ Gate, won him prizes and attention when it was published in 2005. The Unwinding is following suit. It is an inner history of the destruction of what Packer aptly describes as the “Roosevelt Republic”, a process that is far from complete, unstoppable by politicians or the public that elects them, and unlikely to be curbed by the financial elite who are its main beneficiaries. The outer history of the great unwinding is a familiar story: the destruction of US industry and the collapse of the industrial towns of the Rust Belt, the collapse of small-town commerce at the hands of Walmart, the rise of a politics dominated by rich donors and the arrival of a new elite of the super-rich of Wall Street and Silicon Valley who measure their success by how many billions they have made.

What makes this an “inner history” is its form. The book is structured by the lives of four characters, three of whom Packer follows all the way from 1978 to 2012: Tammy Thomas, a black woman from Youngstown, Ohio, and a victim of deindustrialisation and a dysfunctional family; Jeff Conaughton, a southerner from Alabama, drawn into politics by the mesmerising (if sometimes plagiarised) rhetoric of Joe Biden; and Dean Price, from the tobacco country of North Carolina, a typical small-store-owner victim of the competitive advantages of big business, but still pursuing utopian dreams of success in the biofuel business. The last is Peter Thiel, the immensely rich and successful creator of PayPal and investor in Facebook, who seems at the age of 45 to be possessed of megalomaniac ambitions and not much idea how to realise them. The conquest of death is his most recent preoccupation.

Recurrent chapters on their successes and failures – Conaughton made his money as a lobbyist in a line of work he would have despised as an idealistic teenager – are surrounded by short set pieces on such heroes and anti-heroes of our time as Newt Gingrich, Jay-Z, Colin Powell, Alice Waters, Oprah Winfrey, Colin Powell and Robert Rubin. And because both the housing boom and bust and the collapse of Lehmann Brothers were features of the first decade of the 2000s, they get chapters of their own, as does the Occupy Wall Street movement. The town of Tampa, Florida, is almost a character in its own right even if, strictly speaking, it is more of a shelter for the hard-luck stories of the victims of the bust, acid portraits of venal politicians and crooked developers and their financial backers, with a little over 20 pages on two heroes of the scandals.

One of these is the journalist Michael Van Sickler, who began by exposing the crimes of the developers and local crooks who profited from the boom in sub-prime mortgages, and bit by bit saw the way the money trail ran all the way back to respectable bodies such as Citibank and HSBC, a connection that struck him shortly before the collapse. The other is a foul-mouthed lawyer, Matthew Weidner, who has been fighting a holy war against the kleptocracy, one foreclosure at a time.

Like other books that originate in essays in the New Yorker, The Unwinding sometimes makes you wish that the author would just get on with it and stop providing ever more redundant detail. But Packer is an artful writer; he knows that the unravelling of the Roosevelt Republic is a messy process and wants a literary form that reflects that.

Every so often he presents us with a single page of quotations from a particular year – 1978, 1984, 1998 and so on – culled from politicians, newspapers, broadcast reports. I’m not sure they add much to the book. They hardly need to, because Packer pushes three uncomplicated thoughts, and nails villains big and little, with a deeply engaging passion. The first is that what has “unwound” is the institutional structure that allowed ordinary individuals to have a moderately prosperous, predictable and stable existence for 30 years after the Second World War. This was the achievement of the Roosevelt Republic, which did a strikingly good job of achieving FDR’s “four freedoms”, especially freedom from want and freedom from fear.

The second is that, as a consequence, individuals find themselves on their own, with nothing to rely on but their wits. The new world is Margaret Thatcher’s world: the operating principle is the devil take the hindmost. The third is that America has suffered a moral collapse. It has always been true that financial and political elites can predate on the worse-off, the less educated, the less well connected. Unless they practise self-restraint, the only limit on how much they will take for themselves is the fear that their victims will finally rise up against them. Some time in the late 1970s, the elite took off the shackles of moderation and decided that there was no such thing as enough.

Oddly, two of the characters for whom Packer seems to have the deepest loathing are far removed from Gordon Gecko and his mantra of “Greed is good”. The chapter on Sam Walton, the founder of Walmart, is a fairly plain piece of narrative, though the observation that all his life he got a five-dollar haircut from the local barber and never left a tip signals the unfriendly tone. Packer’s conclusion is sobering: “Over the years, America had become like Walmart. It had gotten cheap. Prices were lower and wages were lower. There were fewer union factory jobs, and more part-time jobs as store greeters.” Meanwhile, “six of the surviving Waltons would have as much money as the bottom 30 per cent of Americans”. Robert Rubin, on the other hand, has never looked like one of the plain, everyday folks Walmart employed and sold to. Harvard, Goldman Sachs, the Treasury, Citigroup are his territory. What enrages Packer is Rubin’s disavowal of responsibility for the meltdown of the financial industry. He taught Goldman Sachs how to profit from risk-taking of a wholly novel sort, he encouraged the deregulation of the industry and he was chair of the executive committee of Citigroup when it loaded up with, it turned out, worthless derivatives. Even Alan Greenspan confessed that he had made mistakes. Rubin not. The Unwinding is an impressive piece of work – but not a happy one.

Alan Ryan is professor of politics at Princeton

A closed-down factory in Waterbury, Connecticut. Photograph: Getty Images
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The Autumn Statement proved it – we need a real alternative to austerity, now

Theresa May’s Tories have missed their chance to rescue the British economy.

After six wasted years of failed Conservative austerity measures, Philip Hammond had the opportunity last month in the Autumn Statement to change course and put in place the economic policies that would deliver greater prosperity, and make sure it was fairly shared.

Instead, he chose to continue with cuts to public services and in-work benefits while failing to deliver the scale of investment needed to secure future prosperity. The sense of betrayal is palpable.

The headline figures are grim. An analysis by the Institute for Fiscal Studies shows that real wages will not recover their 2008 levels even after 2020. The Tories are overseeing a lost decade in earnings that is, in the words Paul Johnson, the director of the IFS, “dreadful” and unprecedented in modern British history.

Meanwhile, the Treasury’s own analysis shows the cuts falling hardest on the poorest 30 per cent of the population. The Office for Budget Responsibility has reported that it expects a £122bn worsening in the public finances over the next five years. Of this, less than half – £59bn – is due to the Tories’ shambolic handling of Brexit. Most of the rest is thanks to their mishandling of the domestic economy.

 

Time to invest

The Tories may think that those people who are “just about managing” are an electoral demographic, but for Labour they are our friends, neighbours and the people we represent. People in all walks of life needed something better from this government, but the Autumn Statement was a betrayal of the hopes that they tried to raise beforehand.

Because the Tories cut when they should have invested, we now have a fundamentally weak economy that is unprepared for the challenges of Brexit. Low investment has meant that instead of installing new machinery, or building the new infrastructure that would support productive high-wage jobs, we have an economy that is more and more dependent on low-productivity, low-paid work. Every hour worked in the US, Germany or France produces on average a third more than an hour of work here.

Labour has different priorities. We will deliver the necessary investment in infrastructure and research funding, and back it up with an industrial strategy that can sustain well-paid, secure jobs in the industries of the future such as renewables. We will fight for Britain’s continued tariff-free access to the single market. We will reverse the tax giveaways to the mega-rich and the giant companies, instead using the money to make sure the NHS and our education system are properly funded. In 2020 we will introduce a real living wage, expected to be £10 an hour, to make sure every job pays a wage you can actually live on. And we will rebuild and transform our economy so no one and no community is left behind.

 

May’s missing alternative

This week, the Bank of England governor, Mark Carney, gave an important speech in which he hit the proverbial nail on the head. He was completely right to point out that societies need to redistribute the gains from trade and technology, and to educate and empower their citizens. We are going through a lost decade of earnings growth, as Carney highlights, and the crisis of productivity will not be solved without major government investment, backed up by an industrial strategy that can deliver growth.

Labour in government is committed to tackling the challenges of rising inequality, low wage growth, and driving up Britain’s productivity growth. But it is becoming clearer each day since Theresa May became Prime Minister that she, like her predecessor, has no credible solutions to the challenges our economy faces.

 

Crisis in Italy

The Italian people have decisively rejected the changes to their constitution proposed by Prime Minister Matteo Renzi, with nearly 60 per cent voting No. The Italian economy has not grown for close to two decades. A succession of governments has attempted to introduce free-market policies, including slashing pensions and undermining rights at work, but these have had little impact.

Renzi wanted extra powers to push through more free-market reforms, but he has now resigned after encountering opposition from across the Italian political spectrum. The absence of growth has left Italian banks with €360bn of loans that are not being repaid. Usually, these debts would be written off, but Italian banks lack the reserves to be able to absorb the losses. They need outside assistance to survive.

 

Bail in or bail out

The oldest bank in the world, Monte dei Paschi di Siena, needs €5bn before the end of the year if it is to avoid collapse. Renzi had arranged a financing deal but this is now under threat. Under new EU rules, governments are not allowed to bail out banks, like in the 2008 crisis. This is intended to protect taxpayers. Instead, bank investors are supposed to take a loss through a “bail-in”.

Unusually, however, Italian bank investors are not only big financial institutions such as insurance companies, but ordinary households. One-third of all Italian bank bonds are held by households, so a bail-in would hit them hard. And should Italy’s banks fail, the danger is that investors will pull money out of banks across Europe, causing further failures. British banks have been reducing their investments in Italy, but concerned UK regulators have asked recently for details of their exposure.

John McDonnell is the shadow chancellor


John McDonnell is Labour MP for Hayes and Harlington and has been shadow chancellor since September 2015. 

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump