How the Shadow Elite Is Shorting 'Third World America'

In Arianna's new book, she details the growing the ranks of "Third World Americans." With a small group of self-interested players at the helm, "democracy goes on the auction block."
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"Not only is the fox guarding the henhouse, it's doing blow and sleeping with the hens. But it's middle-class Americans who are getting screwed."

-Third World America, Arianna Huffington

That riotous metaphor should give you a sense of Arianna Huffington's engaging and insightful call-to-arms -- her new book, Third World America. In it, she catalogues the alarming signs of decay in American life -- the "better life" she admired so deeply as a child in Greece now seems in dire straits: the vanishing industrial base, the crumbling infrastructure, the failing schools, the economy battered by rogue corporations, and the political system controlled by a small elite -- the foxes, if you will -- dominating both parties.

In my book, Shadow Elite, I have another name for the foxes -- flexians -- the most agile of a new breed of movers and shakers who glide effortlessly in and out and around government, corporate, media, and think tank roles. The cachet of these new power brokers is in information: their access to and control of official (or should-be official) information, their ability to use information gleaned in one venue in other venues, their skill at getting their own version of the truth branded as the most authoritative one and using the media to promote it.

In pressing personal agendas regardless of the broader impact, these power brokers, who've risen over the past few decades, have been "shorting the middle class," as Arianna aptly puts, to devastating results. In the economic arena alone, she demonstrates, the decisions made by this new breed -- from those who ruined Enron to those who wrought more recent Wall Street wreckage -- have had a huge impact on the lives and futures of Americans. They have shown disdain for shareholders and ordinary people, and by extension, the American dream. To quote an anonymous email called "We Are Wall Street" that circulated this spring, directed at Main Street America: "We eat what we kill, and when the only thing left to eat is on your dinner plates, we'll eat that."

The 21st century power brokers -- less stable, less visible, more peripatetic, and more global in reach than their elite forebears -- are potentially more insidious and dangerous to democracy. Their maneuverings are largely beyond the reach of traditional monitors. Unlike the rest of us, these players are virtually immune to accountability to voters or government or corporate overseers, because the full range of their activities and their true agendas are more difficult to detect.

And, without the accountability and transparency that a well-functioning first-world democracy demands, they are, as Arianna details, growing the ranks of "Third World Americans." With a small group of self-interested players at the helm," democracy goes on the auction block," she writes. Middle-class Americans are deprived of the livelihoods and benefits that should rightfully be theirs as citizens of a democratic, free-market nation, and they have been summarily shut out of the process on policy decisions that would affect not just us, but also our children and grandchildren.

Some examples:

The Neocon Core: a tiny circle of longtime ideological allies used their interlocking relationships across government, think tanks, business, and national borders to achieve their vision of asserting American power, and firepower, to remake the Middle East. These players helped created an alternative version of the truth -- that Saddam Hussein posed an immediate risk to American security and abetted the 9/11 terrorists -- branded it as the most authoritative and sold it to the American government, media, and public. The result was that they helped take the United States to war in Iraq, with consequences for the budget, America's international standing, and world stability that will be reaped for generations to come.

The BP Oil Disaster: With a high-powered advisory board peopled by some top Washington players, BP was well-placed to ensure that safety standards remained lax. Its regulator was a perfect specimen of the shadow elite era: the Minerals Management Service was so embedded in the industry and its mission so conflicted that it is sometimes hard to tell who was the regulated and who was the regulator. As Arianna writes, "the problem isn't a shortage of regulators. It's the way we've allowed the regulated to game the system... if you want to see 'overly cozy' run amok, look no further than the Minerals Management Service."

The Wall Street Collapse: Ironically, there were few policymakers more capable of understanding exotic derivatives and their real world impact than Clinton Treasury Secretary (and former Goldman Sachs chief) Robert Rubin and his deputy Lawrence Summers. And both were there when derivatives could have been at least partially reined in before they became, to quote Warren Buffett, "financial weapons of mass destruction." Instead these officials did exactly the opposite, blocking a key piece of derivatives regulation in 1998. Both players would go on to enjoy the fruits of their advocacy in Wall Street jobs after leaving Clinton-era policy roles.

Since the collapse, have these two figures quietly left roles of influence to "spend more time with their families?" Hardly: Summers is President Obama's Director of the National Economic Council. And Rubin, who Arianna calls "the state-of-the-art modern powerbroker" is co-chairman of the Council on Foreign Relations and founder of the economic policy think tank the Hamilton Project.

This last point goes to one of the more infuriating aspects of the shadow elite: that they are seemingly impervious to failure. While the rest of us walk an economic tightrope with no net, the power brokers of the shadow elite "fail upwards." Not only can they always find one more think-tank job, academic role, or corporate board to sit on, they often advance in their opportunities and standing. As Arianna writes: "The members of this shadow elite keep morphing into their next incarnation no matter how often their conflicts of interest and their undermining of the public good are revealed."

And as she notes, they're often impervious to shame as well. Witness the executives who preside over the worst economic calamity since the Depression and then still ask for billions in bonuses. Reflecting on "how short our collective memory is when it comes to holding the powerful accountable," Arianna quotes Milan Kundera in The Book of Laughter and Forgetting: "The struggle of man against power is the struggle of memory against forgetting."

What can be done about such "low people in high places"? For, as Arianna points out, "there are no lobbyists for the American dream." She says in the preface, "One of the characteristics I've come to love the most about my adopted country is its optimism. In fact, it melded perfectly with my own Greek temperament... The only downside of the optimistic spirit is that it can sometimes prevent us from seeing what is unfolding until it's too late." Her final chapter, "Saving Ourselves from a Third World Future," provides a litany of thoughtful innovations -- from experiments that bring technology and government together now being tried at the local level to fixing the broken educational system, creating jobs, and "closing down the Wall Street casino."

And she implores us as individuals to "look in the mirror" -- to break up with the big banks that failed us; to find happiness not in instant gratification, but in serving others; to use social networking and new technologies to help people connect and pursue service that befits their aspirations and abilities.

To do this, Americans will have to reclaim the best of that can-do spirit that so impressed Arianna as a child in Greece. Going to school, she would pass daily by a statue of President Harry Truman. And as Truman once said: "A pessimist is one who makes difficulties of his opportunities and an optimist is one who makes opportunities of his difficulties." With all the difficulties facing a potential Third World America, it would seem to be a great time to be an optimist, but one with eyes wide open.

Linda Keenan edits the Shadow Elite column.

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