Book Review: The Crash of 2016

By Thom Hartmann

The year 2016 I still so young I catch myself saying it´s 2015 out of familiarity. Yet the global economy is already looking decidedly shaky, with disappointing growth numbers from China and whispers about a possible emerging market crisis. Given this grim economic climate, what could be more suitable than starting off this year with a book that predicts it will end in such dramatic fashion? If the crisis doesn´t happen, however, I expect you will be able to find The Crash of 2016 in the bargain bin come next year. That would be a shame, since it´s a highly thought provoking read that deserves attention.

Thom Hartmann is an internationally syndicated progressive radio and talk show host who is never afraid to debate his ideological adversaries on air, whether they are a former grand master of the KKK or conservative intellectual Dinesh D´Souza. He has previously written many books about a wide range of topics and narrates The 11^th Hour, an upcoming documentary about climate change, together with Leonardo DiCaprio. In The Crash of 2016 he lays out his case for what´s wrong with America and why an economy built on an unsound foundation might find itself in dire straits during the coming year.

The child of a middle class household who grew into adulthood during the golden years of postwar prosperity, Thom´s view on politics and economics is invariably linked with his upbringing. His father served in World War II and went to college thanks to the GI Bill, a part of Franklin Delano Roosevelt´s domestic program known as the New Deal. After his wife got pregnant with their first child (Mr. Hartmann, that is), he was forced to abandoned his studies but found a good paying union job at a metal machining company. This enabled him to support a family of four children, buy a home through a government guaranteed mortgage and go on vacation for two weeks every year. His father´s generation, Hartmann says, benefited immensely from the New Deal and its policies that helped build a middle class. Today, however, it is no longer possible for a working family, even with the wife working as well, to afford anything near the same lifestyle. Why is it, Hartmann asks, that this is the new normal?

One of the main themes of the book is that major economic crises occur about every eighty years or so. That timespan is long enough time for those who lived through the previous crisis to die off and for everyone else to forget the lessons they should have learned. This “great forgetting” is advantageous for the powerful and unscrupulous, fittingly referred to by FDR as the economic royalists, since it enables them to enrich themselves while acquiring even greater influence and privilege. The so called “progressive era” in the US ended when Warren G Harding was elected in 1915. He promised “less government in business and more business in government”, and delivered handsomely on that promise. Deregulation and massive tax cuts for the well to do fueled a speculative binge on Wall Street that culminated in the Great Depression when the stock market collapsed in 1929. After FDR and his New Deal bailed out the economy and America had enjoyed a quarter century of solid economic growth, the stage was set for another coup by the economic royalists when the seventies was running to a close. With Ronald Reagan in the White House and new-fangled conservative think tanks influencing hearts and minds, the policies that led to the Great Depression were exhumed from their dusty crypt and implemented once more. Things got even worse this time around, however, when blue collar jobs started to be exported to low wage countries like China. This was done under the guise of “free trade”, and served to further enrich the economic royalists while thousands of manufacturing plants closed every year (and still do) in the US. When he appeared on Hartmann’s show, Dinesh D´Souza chided him for his resistance to free trade and exclaimed regretfully “So this is the face of modern progressivism”, before praising international trade as the world´s most effective anti-poverty program.

The policies of Reagan and his cohorts, especially pertaining to trade and deregulation, were carried on during the democratic administration of Bill Clinton, whom Hartmann argues was a democrat in name only, until the economy eventually collapsed like a house of cards in 2008.

Since the fundamental problems that caused the crash were never properly addressed by the Obama administration, he argues that we should get ready for part two of that same crash. The narrative is a familiar one from my perspective, since I reviewed Robert Reich’s Inequality for All on the blog last year, which raised very similar concerns and came to more or less the same conclusions as Hartmann does.   

To remedy this situation Hartmann suggests that the recipe for having a prosperous middle class consist of four simple points, all of which have been under assault in America during the past four decades: progressive taxation, a social safety net, protections for working people and rules in the marketplace. Getting money out of politics and getting more Americans to show up at the polling booth would also help, he reasonably points out. We disagree, however, when he raises the topic of Greece. According to him, the economic royalists are getting away with murder while they fleece the country out of every single olive farm. Herbert Hoover and Ronald Reagan´s policies are sneakily infiltrating the birthplace of democracy and the booze cruise. As a European, and a northern one at that, I quite naturally have a somewhat different perspective. It wasn´t Goldman Sachs who tricked Greece into cooking their books and hiding the mountainous extent of their debt from their European comrades. The Greek government asked the infamous investment bank to do it for them, so that they could ditch the drachma and join the Eurozone. Austerity might not be a magical remedy for financial crises, far from it, but Greece must bear a share of the blame for the predicament they find themselves in. 

The Greek matter aside, I find Hartmann to be more or less correct and to the point. You certainly won´t find anyone in the so called mainstream media raising any of these concerns. Whether we actually get to see a crash in 2016 or not, and I certainly hope we don´t, The Crash of 2016 lays out a credible blueprint for restoring broadly based prosperity.