Sanders’ surge marks public outrage with rigged system

Bernie Sanders’ campaign is something that we have never seen: a candidate for president who is relying on small contributions from millions of supporters rather than corporate money and successfully challenging someone who has all the power and money of the Democratic Party establishment. It is a powered by a grass-roots movement of mostly young activists using social media. The Hillary Clinton campaign is in panic mode. No more is it looking ahead to the general election; the focus is on Sanders approaching in the rearview mirror. Clinton’s policy positions and speeches have become more calibrated for the progressive primary voter. She declared, after some pressure, that she “won’t cut Social Security” — an upgrade from the previous, equivocal “no plans to cut Social Security.”

Yet he is gaining on her every day. A Reuters/Ipsos poll released on Saturday shows the two in a statistical dead heat nationally, with Clinton at 48 percent and Sanders at 45 percent. And that was before his landslide victory in New Hampshire last night, by more than 20 percentage points, in which he won nearly every demographic.

Why is Sanders’ challenge succeeding now? Today’s mass movement arises not only from nearly four decades of upward redistribution of income and wealth — which he denounces tirelessly — but also from the increasing awareness of the rigged rules by which it has come about. Dean Baker has written several books on the problem, and he and the Center for Economic and Policy Research, where we both work, have published numerous papers on it. This research shows that what are generally perceived as market outcomes are really a result of the rich using institutional and legislative changes (including misnamed “free trade” agreements, patents and copyrights and other monopolies, bankruptcy and labor law) to, yes, rig the rules in their favor and against everyone else. But the conventional wisdom even on the liberal side has been that these were market outcomes driven by changes in technology, skills and the global economy and the only way to deal with them was to use the government to change the post-tax, post-transfer income distribution. This, of course, became increasingly difficult as income and wealth grew more concentrated, giving the rich even more power to rig rules in their favor. Only recently have more liberals and economists begun to talk about the deck being stacked.

In terms of stacking the deck, Bill Clinton’s presidency mostly continued the structural changes that began under President Ronald Reagan. It brought us the North American Free Trade Agreement, the World Trade Organization, welfare reform and financial deregulation. These were so important and regressive that it is fair to count the Clinton presidency as part of the Reagan-Bush-Bush era, a long march transforming the United States economically into a much more unequal society and politically into more of a plutocracy. It’s true that the macroeconomy, including overall employment, did well during the Clinton years. But this was mostly because of a stock market bubble and a change in Federal Reserve policy. (In late 1995, Federal Reserve Chairman Alan Greenspan rejected the prevailing economic theory that inflation would accelerate if unemployment went below a certain level, at the time believed to be about 6 percent, and therefore lowered interest rates and allowed for the rest of the record-long 1990s economic expansion.) The lasting legacy of the Clinton administration was the rigging of rules by powerful special interests and the negative consequences for the vast majority of Americans. Unless Hillary Clinton chooses to disassociate herself from that legacy, she is going to have a tough time with many Democratic primary voters. And her record as “the candidate of the war machine,” as economist Jeff Sachs describes it — on Iraq, Libya, Syria, Iran, Russia and more — won’t help her with these voters either.

The other historical moment that is driving this “revolution” (as Sanders calls it) is one that the U.S. is sharing with many other countries all over the world. From Malaysia to South Africa to Spain to Guatemala, corruption has sparked political unrest and upheaval. The forms of corruption differ by country — bribes, kickbacks, the siphoning of public funds to foreign bank accounts, the use of the legal system for private gain, etc.

But here in the U.S. we have a certain American exceptionalism: Our most damaging corruption has mostly been legalized. Many have pointed to the $153 million that the Clintons have gotten from corporate and other special interests for speeches or the more than $21 million in donations that Hillary has received so far from Wall Street for this presidential race. But the corruption is deep at every level. Of the members of Congress who left office in 2012, about two-thirds of those who found employment were working for lobbyists or for lobbying clients. It would be naive to think that these post-public-service incomes are anything other than a deferred bribe. In fact, they are in some ways worse than the kickbacks and outright stealing in developing countries because they have more influence on policy. Witness the financial deregulation and lack of oversight that caused millions of Americans to lose their homes and pushed the economy into the Great Recession. The officials who brought us this mess, in the executive branch and in Congress, were rewarded when they left office — but only because they did what their post-government benefactors wanted.

This corruption has fueled a vicious cycle that has increasingly disenfranchised the public, in which “wealth begets power, which begets more wealth,” as Nobel laureate economist Joseph Stiglitz put it. The spiral has led to an extraordinary discrediting of most of the nation’s political class as middle- and working-class Americans have been fleeced.

To break this cycle, the next president will have to be as bold about rewriting the rules as the corporations who wrote the rules of NAFTA, the WTO and the proposed Trans-Pacific Partnership. He or she will have to use the bully pulpit and mobilize millions of individuals to take on some of the most powerful people and corporations on the planet. And as Democratic Sen. Elizabeth Warren has pointed out, a committed president at the same time can produce some serious results using executive authority, even without Congress. Hence the appeal, once again, of a candidate who represents “the audacity of hope.”