Packer: Inequality creating ‘Unwinding’ of America

Benjamin Hoste | Staff PhotographerGeorge Packer, staff writer for The New Yorker and author of The Unwinding, speaks Thursday morning in the Amphitheater.
Benjamin Hoste | Staff Photographer
George Packer, staff writer for The New Yorker and author of The Unwinding, speaks Thursday morning in the Amphitheater.

“The Iraq War was bad for just about everyone, except private contractors.”

George Packer’s summary of the war on terror, concluded from years of research in the Middle East, set the scene for his Thursday morning lecture in the Amphitheater. Packer, a writer at The New Yorker and author of the bestselling book The Unwinding, spoke about America’s failure to fight a war and win. He said the same systemic failure of institutions caused the failure of the war, resulting in Americans suffering under a “broken contract.”

“The Iraq War was a kind of stress test, applied to the whole American body politic, and every major system and organ failed,” Packer said. “You could call it the arteriosclerosis of American institutions.

“And I don’t think that Iraq was an exceptional case.”

Packer saw the war as a symptom of a long-term disease that he noticed everywhere upon his return to the U.S. It permeated the executive and legislative branches, the media, the intelligence community, the for-profit companies and the nonprofits. The disease, he said, was a broken system of institutional failures.

In his lecture, Packer didn’t blame these failures on a certain person or action, but on a slew of trends that all began taking place in the late 1970s — trends like deindustrialization, the decline of unions, globalization and the creation of a more financial and information-based economy. Though some of these trends have had positive results, such as the inventions of the Internet and of cellphones, Packer said their main effect has been wage stagnation for the middle class, extensive growth of lobbyists and special interest groups and the birth of a class of CEOs who no longer believe they have any duty to act for the public good.

The climate in Washington, D.C., hasn’t helped, he said. Top federal politicians such as Newt Gingrich have helped create an atmosphere of hostility toward bipartisanship. Gingrich, who served as speaker of the house from 1995 to 1999, used C-SPAN cameras to connect with American audiences and used aggression to tear down his rivals.

“He turned opponents into enemies, and once your opponent is an enemy, compromise is unthinkable,” Packer said. “It’s immoral. You don’t compromise with evil.”

Gingrich’s list of buzzwords, which he circulated to countless conservatives running for office, included “betray,” “pathetic,” “radical,” “shame,” “unions” and “welfare.” By making these words common in political discourse, Gingrich and others helped to foster hatred toward those on the other side of the aisle.

“This polarization of our political discourse served a particular purpose,” Packer said. “It served a philosophy which didn’t believe in government. And it became a self-fulfilling strategy. If you can make government unworkable, government won’t work, and then Americans will turn against it.”

How is income inequality and wage stagnation related to lobbying groups and partisan aggression?

Packer said they have all contributed to the undoing of the American “deal.”

That deal was “an unwritten social contract among Americans, our institutions, and our government,” Packer said. “That deal gave everyone a place at the table.”

In the years following World World II, this “deal” brought together government, business and labor leaders to solve national problems. Inequality was low, as seen through the CEO-to-employee earning ratio of 40-to-1. (Today, that ratio is 800-to-1.) From Franklin D. Roosevelt’s presidency through Reagan’s, there were no economic collapses. Political activity reached an all-time high. CEOs saw themselves as heads of public interest, not as profit-cranking machines. Partisanship was evident in every major law enacted in Congress. And though there were certainly groups that did not have full social equality, the post-war years offered opportunities to fix those injustices, Packer said.

The top 1 percent of Americans have seen their incomes increase by 256 percent from 1979 to 2007, while the incomes of the middle class have grown by 21 percent. In what may be one of the most telling examples of wealth inequality, the six heirs of the Sam Walton family own the same amount of wealth as the bottom 42 percent of Americans.

“Inequality is the ill that underlies so many others,” Packer said. “It creates a lopsided economy. It hardens into a class system that imprisons people in the circumstances of their birth, a rebuke to the very idea of the American dream.”

Packer said institutions that underpin a healthy, democratic society have fallen “into a state of decadence,” and Americans’ once-functioning social contract has fallen into a state of ruin.

“All around, we see dazzling change, but no progress,” he said. “We can upgrade our iPhones, but we can’t fix our roads and bridges. We invented broadband, but we can’t extend it to 35 percent of the public. We can get 300 TV channels on our iPads, but in the past decade, 20 newspapers have closed down all their foreign bureaus. Solving fundamental problems … seems to be beyond our reach.”

Packer sought to illustrate the unwinding of America through three real-life examples of people he had spent time with while writing his book.

One was Robert Rubin, who served secretary of the United States Treasury under President Bill Clinton. Rubin moved on to a $15 million salary at Citigroup; but at the time of the financial crisis, he removed himself from the public eye, saying, “I don’t feel responsible.”

The second was the Hartzells, a poverty-stricken family of four living in Tampa, Fla. The Hartzells, who suffer from a nearly complete lack of education and money, are continuously resigned to a cycle of part-time jobs, hunger and lack of medical care.

His final example was a man named Dean Price, the son of a tobacco farmer who dreams of making his fortune in the biofuel industry after losing most of his wealth in the financial crash of 2008.

“There’s this dream he has, which is his own dream, and which he has to pursue alone,” Packer said. “Because the institutions that used to support the aspirations of people like Dean Price don’t work very well anymore.

“Until we can rebuild them, along with a new sense of public-spiritedness, Dean Price will have to go it alone.”


Q: You were quoted in the Daily this morning, talking about that there have been prior periods of unwinding and which we have then built back up. Do you see that beginning to happen in this country now?

A: I wish I could say yes because it would send everyone to lunch with a slightly better feeling than I probably have done. We’re still in the thick of it. And what I see when I travel around the country are, everywhere I go, there’s a Dean Price. There’s some guy or woman — and there’s another character in the book named Tammy Thomas, from Youngstown, Ohio, who very much fits this description — who are, without even thinking of themselves as heroes, trying to change things where they live, finding solutions that make sense for the abandoned houses and vacant lots of Youngstown, for the fallow farms of the Carolina Piedmont, or wherever they may be. And this is an American quality I think, this resilience, this resourcefulness, this constant remaking of oneself, and I see that everywhere. And so when I’m with those people, I feel some sparks of hope. When I’m thinking about the bigger picture — the institutions, the power centers from Washington to Silicon Valley, from Wall Street to the media capital where I live and work — I get a little more discouraged, because I don’t see either a compelling idea or something more like a social movement that seems to have it in it the seeds of a transformation. But you know, those things happen very slowly, and they’re hard to see when they’re happening. If you want to compare our time to another, I would say go back to the Gilded Age. We’re sort of living through a Gilded Age today, with those polarities, with the elites, the celebrities living this kind of Olympian god-like existence above us. Who would have thought that even amid the age of robber barons, the progressive movement was beginning to be seen in the work of social workers, journalists, small-town businessmen, muckrakers and clergymen, but that became the seeds of what I call the “Roosevelt Republic,” so something might be happening as we speak that we’re just not aware of.

Q: Can you comment on how the spike in the price of oil following the ’74 embargo may have influenced “the unwinding?”  

A: I think it was hugely important. There’s another person in my book named Peter Thiel, who you may have heard of — he’s the founder of PayPal, he was the guy in “The Social Network,” the movie, who writes the big check for Zuckerberg. He’s a billionaire, he’s done extremely well by the information revolution, but he’s a skeptic. He once took out his iPhone, and this is like heresy today, he held it up to me and said, “This is not a technological revolution.” His idea of a technological revolution was like the space program. And he says that 1974 or 3, the first oil shock, was the last year of the ‘50s, by which I think he means the beginning of this period of economic turbulence that we’re still living in today, when all those old ties that held workers and companies together began to dissolve, and I think we’ve been living with periodic oil shocks ever since, which if you’re Dean Price, he thinks that’s because there’s this thing called peak oil — we’ve actually begun to max out our oil reserves. Recent events might suggest he’s wrong, but we do seem to be living in an age of perpetually high energy costs, which tells you something about the fragility of the way in which we extract and use energy.

Q: This feels like an appropriate follow-up to that, that Emily just gave me. The questioner says: I thought the press was to alert us to upcoming problems and foster solutions. What happened? Why didn’t the free press work?

A: You know, parts of it still work, but part of the story I’m telling in The Unwinding is of what happened to the media during this period. Its old economic basis began to erode: advertising. The Internet began to tear away the best work that old media did without paying for it. Today far more people than when I was coming into the profession can be journalists, you just can’t get paid to be a journalist. You can work for free for [The] Huffington Post, which doesn’t seem to me like much of a career. In a way, what’s happened is in place of reporting we have a million opinions, because opinions are cheap. It costs a lot of money to send someone like me to Iraq over and over again, and to keep me alive there and to get me back home, whereas to get someone to spend every night telling you half-truths on Fox or three-quarters-truths on MSNBC is cheap. It hardly costs a thing. And it’s profitable too — just ask Roger Ailes. So all these trends have, I think, begun to hollow out the media. And a very interesting thing happened recently:  Sean Parker got married. Do you know who Sean Parker is? He invented Napster, the — you could call it file-sharing, you could call it music-stealing — company back in the late ‘90s. He’s an Internet impresario. He also was the first president of Facebook. He, too, is a billionaire. He’s one of these young poshes in Silicon Valley with more money than they know what to do with it. So he decided to spend his money, part of it, a tiny fraction of it, on his wedding. He got married in Big Sur, Calif., near where I grew up, a place that I love, and that he claimed to love too, so much that he brought in some bulldozers and starting moving earth and rearranging the landscape in order to create the perfect magical setting for his wedding, and then he had to pay about $2 million in fines to the California Coastal Commission. Now, all of this does have a relation to your question. He began to get criticized for this. It seemed like the perfect example of Silicon Valley decadence and out-of-touchness, like what has Facebook really done for us that Sean Parker should be able to move around Big Sur? He took great offense at this criticism, but he also made an incredible discovery. He realized people don’t know how to report anymore. If they had really reported his wedding, they would have learned that he didn’t move any Redwood trees and he didn’t do this and that, but instead they just used Twitter and Facebook and repeated what other people wrote on those social media platforms and got it wrong and did him and his new wife an incredible injustice. And he realized, and he was brave enough to come to this conclusion, he had created a media world that didn’t work. New media is wonderful for sharing pictures of cats with your friends. It’s not so great for getting a difficult story right, and Sean Parker has finally come to realize that.

Q: There are a lot of people out there who are asking what it is that people such as those who are in the audience ought to be doing to correct the situation you describe?

A: You know, I am not a politician, I’m not much of a pundit, I’m not much of an orator. I do shy away from telling people how to live and from pointing them in the direction of the Promised Land. I think simply paying attention is what I would say. This is what I do for a living, and it’s what you have to do in order to even grapple with the magnitude of the breakdown that I’ve been describing. You have to pay attention. It’s so easy to live with it every day and to forget there’s another social arrangement that we got rid of, and maybe a version of that that could come back, because it’s very hard to stay aware of how one lives in a historical context. So I would just say, pay attention, and read, and talk, and Chautauqua is a wonderful place for all of those things. And I’m really glad that it was this week that I got to come here, because it seems like these issues are very much in the air this week.

Q: Have you seen any evidence that our society is likely to engage in a more violent reaction to this discrepancy and inequality?

A: This is something I asked everyone I interviewed during the research for The Unwinding, and often I heard an apocalyptic vision: There’s going to be people out in the streets, if the electric grid goes down in Tampa, you’re going to see food riots. If the trucks stop bringing groceries to Greensboro and Winston-Salem, you’re going to see armed militias forming. And these are almost satisfying — I mean it’s terrifying — but satisfying to think of, like, some release of all this tension, some sort of explosion that could clear the air. It’s not going to happen. I don’t think Americans are revolutionary people. We had our revolution a long time ago. It was, I think, the most successful one in the history of the world. But it was so successful that it kind of killed the revolutionary impulse forever. Americans muddle through. We put up with a lot. We always imagine it’s going to correct itself, it’s going to get better, even when year after year goes by, and as dramatic an event as the financial crisis and the second depression that followed doesn’t do anything to turn away these trends, we still muddle through. So I think the people I was talking to had a kind of a vision that was melodramatic, and we’re gonna muddle through. There will be school shootings, there will be isolated terrible instances of violence, but our violence is the violence of loners much more than organized violence.

Q: What’s the impact of the privatization of public institutions? 

A: Well, we could go back to the beginning of my lecture and those two contractors in the green zone. They’re an example of the privatization of public institutions, just as a tiny little thread of that very big question. We used to have something called the Agency for International Development which, although it was a tool of American foreign policy and was a tool in some cases for bad policy, it was also an organization of professionals and it did its work very well. It sent Americans overseas for a long period of time. They knew the countries where they were working. They spoke the language. They knew development work. Well, in the last 20 or so years, AID has become an outsourcing agency. We no longer have a large cadre of trained and professional development workers. Instead we have people in Washington, bureaucrats, who are writing up contracts for private companies to go off and do the job that they used to do, companies that have no stake in the outcome other than to get paid. And I saw this in Iraq over and over again, everything from the security of our diplomats, to the handing out of textbooks in schools, to building electric power projects, was in the hands of these contractors. And they, let’s just say, were not the best of the best. And that’s I think one thing that happens: When efficiency and cost-saving is the main goal, which is what led to this state of affairs, you lose sight of the higher interest. And in Iraq, there was no sense of a higher interest. That is to say, our own efforts and the lives of our soldiers depend on getting the reconstruction right. That was not foremost in the minds of the contractors, and I think you could go across the board in domestic government functions and see the same thing happening. Prisons is a good example.

Q:  Are there new wise men or public figures who are working this issue and trying to bring solutions?

A: I mean, I’d love to meet them. There are good people in government, there are good people in business, there are good people in news, there are good people in academia. But the incentives are all short-term, they’re all more narrowly focused in interest, more self-interested. The Senate is one example, Wall Street and its pay incentive structures are another. So it’s hard to imagine someone in that role, because they’re operating in circumstances that are actually working against the idea of a certain amount of self-restraint. Self-restraint gets you nowhere. It means you’re falling behind your peers and your colleagues. And I don’t see it often. Here’s an example from the news the other day. David Petraeus, who in some ways I admire very much, one of his post-government jobs, he was hired by the City University of New York to teach one class, and for that he was offered $200,000, because he’s David Petraeus. And this is part of something I wanted to talk about a little bit more, which is kind of a celebrity star system, where if you reach a certain threshold, you become an Olympian god. Oprah, to me, is the Juno of this world. She is the presiding goddess. Petraeus is now up there, which means CUNY wants him, they want his prestige, and they’re willing to pay him $200,000 to be an adjunct professor, teach one course with two TAs, 16 students. Interestingly, the word got out, and there was such an outcry, and Petraeus is perhaps a bit sensitive these days to public disapproval and scandal, that he decided he would do it for $1, which reminded me of the old dollar-a-year man coming to Washington during World War II. Petraeus seemed to remember an older idea of what it means to be a public figure. Maybe you should only teach for $1 every now and then. Maybe you don’t need to pack it in every last bit you can, because he’s also got a gig at Colbert-Kravitz-Roberts, the private equity firm, he’s got a gig at USC, he’s got a gig here, there. But he would not have refused the money without the outcry. The outcry is interesting. It tells me … there’s a bit of a sense of “enough!” Our celebrities, we worship them, they’re our household gods, we live through them, we give them our own aspirations and say, “Here, take it, live for me, live instead of me.” That’s a very un-American thing to do. We should live for ourselves. So I think there may be a bit of a point at which you can no longer just snap your fingers because you’re a star and get $200,000 for teaching one class at City University.

Q: Is the decline of religion, the post-denominational age, does that contribute to “the unwinding?”

A: That’s a great question. I don’t belong to any religious denomination or institution, so I’m speaking very much as an outsider. I think two things have happened during my lifetime. One, America has become like Europe, more secular, that’s been happening a lot recently. Fewer and fewer people attend religious institutions. And at the same time, our politics has become more and more infused with religion. How have those two things affected what I’ve described? I think religion does give people a vision of higher interests than their own, and of a commitment to something higher than themselves. Dean Price is a great example. I mean, he’s a businessman; he really wants to make money. He thinks it’s very American to pursue his own financial fortune. He wants to be a 19th century rags-to-riches story. But he also has this spiritual thirst, and he got hold of a writer named Napoleon Hill. Does anyone here know the name Napoleon Hill? He was this early 20th-century business success writer and ended up as an aide to FDR, a speechwriter for FDR. It’s the power of positive thinking, which may be the American religion. Sometimes it’s in the form of a theism, sometimes it’s more secular. Dean believes in positive thinking. I would say — it’s hard to answer the question directly — I would say in ages like ours, where the normal channels of upward mobility are blocked and where people no longer believe their children are automatically going to have a better life than they are, they turn to a kind of magical thinking. And Oprah, every day on TV, preaches that gospel: If you think it, you can achieve it. Dean Price in North Carolina believes that, too — I think a lot of Americans do, and it can be a great comfort. And obviously religious faith gets people through the terrible travails of life. It doesn’t change the structures with which we live. I think of it as something more private. That’s not a good answer, sorry.

—Transcribed by Kaitrin McCoy