The Bursting Of The Southern Strategic Bubble

Those of us on the left have been indulging in our share of Schadenfreude since the reelection of Barack Obama–or, more specifically, the defeat of the Republican party and the associate shadow-money campaign newly authorized by Citizens United. The wailing and gnashing of teeth on conservative media, all looking for something to blame, seems to point to a recognition that something was wrong in the narrative conservatives had been telling themselves about the country for the last few months, years, and possibly decades.

It recalls the same sort of recognition that swept through the financial establishment four years ago. I never thought I’d like to see the day Alan Greenspan would use the words like

“[The] modern risk management paradigm held sway for decades. The whole intellectual edifice, however, collapsed…

in his explanation of the financial meltdown. Watching GOP strategists sputter on Fox and in print leaves the same impression, that they understand that a generational shift has occurred, marking the death of the Southern Strategy as a viable national campaign tactic for the GOP.

These are merely iterations of a larger fractal pattern of disintegration. Since the end of the Cold War and the beginning of globalization, American institutions (like Lee Atwater’s government-by-race-baiting) and American capital have sought growth by leveraging existing assets rather than bother with creating real value. Under Bush I, I recall watching as we sold off factories and shed union jobs while American auto workers flipped Japanese cars over in the streets. And under Clinton, they decided the short-term steroid shot of deregulation was enough to get us out of a recession, and it worked. And so we became addicted to financialization, because we had sold off the tools to manufacture a real economy to buy overvalued financial instruments.

Matt Taibbi recently noted that with the rise of junk-bond trading in the 1980’s, all of a sudden the ability to make stock deals became more valuable than the ability to build a company, in real dollar terms. The financialization of American (and global) capitalism has, at its base, an important assumption: perceived value is real value. Rather than relying on dividends to make money, Reagan’s deregulatory program (updated by his successors continuously over the next two decades) and new technologies made it possible to leverage relative value of the companies themselves via stock trading, potentially making far more than any dividend.

When executives can pay themselves in stock, the incentive to game the system with numbers becomes not only irresistible, but necessary to compete against other firms in the financial markets. There are the numbers for the quarterly reports and then there are the real numbers. There’s mark-to-market value and there’s a bank balance in the Caymans. Bifurcating public from private was merely about splitting off bullshit from truth; when perception is the actual good being traded there is no objective reality, or not for very long, anyway.

Mitt Romney embodied this so-called ‘engine of growth.’ A brave new world where perception actually is money, where stock prices move more on rumor than truth. And as long as we had real wealth lying around to be exploited, the games kept making money. Romney’s leveraged buyout firm* borrowed money to buy companies, then saddled those companies with long-term debt to cover not only the purchase price but hefty ‘management fees.’ His earnings, which he still receives to this day, were couched in a myriad of tax-evasion algorithms, smuggled past international borders and tax brackets. And you can profit from this vampiric scheme by trading company stock! His positions and their positioning weren’t flip-flops, per se, but were agile responses to the market. And the donors needed to be reassured that their investment was going to return the end of their Obama nightmare, produced and distributed by the right-wing echo chamber.

The same mechanism that allowed homes to be overvalued, junk-filled MBSes to gain real monetary value despite the fundamentals, quarterly earnings reports to be redacted after they’ve served their illusory purpose, is the prime candidate not for Romney’s downfall, but his obliviousness. And watching Karl Rove’s sputtering meltdown on Fox News underscores the crash of a very real market—the post Citizens United vote-buying market. Rove’s portfolio famously yeilded a 1.26% return on a $104 million-dollar investment on the part of conservative moneyed interests.

In retrospect it should have seemed obvious that a man like Romney ran on a platform that required heavy suspension of disbelief. I liked to call it the “magic Republican” theory, which Romney himelf explained to donors:

They’ll probably be looking at what the polls are saying. If it looks like I’m going to win, the markets will be happy. If it looks like the president’s going to win, the markets should not be terribly happy. It depends, of course, which markets you’re talking about, which types of commodities and so forth, but my own view is, if we win on November 6th there will be a great deal of optimism about the future of this country. We’ll see capital come back, and we’ll see—without actually doing anything—we’ll actually get a boost in the economy. If the president gets reelected, I don’t know what will happen. I can never predict what the markets will do. Sometimes it does the exact opposite of what I would have expected.

Conservatism, in essence, is the same kind of scam as financialization; trading on a promise of past greatness that never was, leveraging some warm-and-fuzzy memories—or in many cases, second-hand memories—of American greatness passed down by crotchety old white folks. It can be like it was, but better this time! And so that ruthless Republican campaign operative, Lee Atwater, had the brilliant stroke of leveraging the distant memories of Southern plantation life into an electoral strategy that defined the GOP’s national appeal for the whole of my lifetime and perhaps yours. For conservatives, American greatness is a birthright in every sense;

“Remembering is a type of forgetting,” Milan Kundera once wrote.

As I was writing this post, The Nation kindly unearthed the original audio from Atwater’s infamous 1981 interview, to wit:

You start out in 1954 by saying, “Nigger, nigger, nigger.” By 1968 you can’t say “nigger”—that hurts you, backfires. So you say stuff like, uh, forced busing, states’ rights, and all that stuff, and you’re getting so abstract. Now, you’re talking about cutting taxes, and all these things you’re talking about are totally economic things and a by-product of them is, blacks get hurt worse than whites.… “We want to cut this,” is much more abstract than even the busing thing, uh, and a hell of a lot more abstract than “Nigger, nigger.”

The GOP has been dog-whistling for generations. There’s just one problem: there are now generations of GOP pups who think the dog whistles are music. They don’t get that you’re not supposed to believe in the words (take, for example, “states’ rights”) so much as the racist sentiment behind them. Welfare for the urban poor is bad, welfare for corporations is good. States’ rights are paramount unless they have to do with gay marriage or drug legalization.

There’s a particularly obnoxious strain of Republican racism (the type preferred by Breitbart and Tucker Carlson, et al) promotes the idea that the Republicans are the party of Lincoln and the only people who are racists are Democrats for supporting affirmative action. Theirs is an America where Crayola still sells “flesh” colored crayons and being white and male and Christian is the national default. They accuse the president, of all people, of being “divisive” and waging some kind of race and class warfare. How are the Democrats divisive when Romney’s support is 91% white? When the Republican campaign spoke rather plainly about their absolute need to get more than 61% of the white vote? Obama’s coalition of support was diverse in every conceivable way.

Every nation, including America, is a story we tell ourselves. This is the triumph of Anderson’s “print capitalism” — countries are built by a shared culture. As the modern European powers emerged, the principal medium was the novel, a shared literature. As newer nations coalesced, radio and eventually television became the principal unifiers of nations, the enablers of a shared narrative that bound people together enough to believe they have a shared history with other citizens we’ll never meet.

A nation-state like ours, though, may be unprepared for the disruptions of new media. Instead of a shared media environment controlled or at least largely influenced by a single national government, there is now unprecedented choice in entertainment and even news, all of which presents a unique challenge to any national project. With the internet, you can now completely envelop yourself in a shared solipsism, a virtual echo chamber in the cloud, where you can more freely associate than anyone ever dreamed.

The irresistable force of delusion can, on occasion, run into an immovable object in reality. An unfavorable election result, for example, or an overhyped IPO fallen flat.

*At Romney’s Bain Capital, they practice a management philosophy called “Six Sigma” which focuses on a numbers-driven approach to achieving excellence or some such double-talk. One of the most accurate gripes with Six Sigma is its focus on arbitrary numbers, and it was also one of the hallmarks of Romney’s “I’m a numbers guy” campaign. For example, the insistence that we must be spending 4% of GDP on defence. Why not 4.1%? Or, heavens forbid, 3.95%? I dunno, it sounds like a real number—5% would sound too arbitrary, 3% insufficiently manly.


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