Are hippies the cause of our problems?
Huge deficits, massive government debt, high unemployment, bleak future—who is to blame for our current mess? Is it the boomer generation? Boomers have certainly mortgaged their children’s future, no? Or, is it the hippies? Hippies grew up with everything and took responsibility for nothing. Or, perhaps it’s just the 1960s, that decade that we have yet to come to grips with.
“Generation Zero: The Truth about the Financial Meltdown” is a documentary produced by Citizens United and is a staple on the Tea Party circuit. The film lacks a narrator but moves seamlessly between political commentators such as John Bolton, Charles Krauthammer, Newt Gingrich, David Frum, Dick Morris, Lou Dobbs, Shelby Steele, and many more. It’s a well-made, compelling film, one that I showed at the 1st Annual Free Thinking Film Festival in Ottawa last November.
The starting point is September 18th, 2008, when the economic meltdown seemed at its worst. So, how did we get to the so-called abyss? Generation Zero weaves a story that starts in the summer of 1969 with two events: the moon landing followed by Woodstock. Here are two basic images of America, one derived from World War II (according to Newt Gingrich), and one that represented a “self-indulgent, wealthy elite turned into bohemians.”
We have misunderstood the 1950s, that generation traumatized by war that then decided their kids would never have to go through it again. The boomer generation grew up getting their own way, and when they rebelled, and substantive issues were superseded by narcissism asserts the film. Eventually the boomers worked their way onto Wall Street and brought their focus on self with them. And that brought on the destruction of our system; hippies became yippies who became self-absorbed yuppies just after money.
So, we can blame everything on the hippies!
I oversimplify, but the film’s basic contention is that once-staid bankers were displaced by narcissistic hippies who did everything they could to over-leverage the system in their insane drive for profits. Early on in Generation Zero, the left-wing activist Saul Alinsky appears. The film claims his book, Rules for Radicals licensed “extreme practices” because he believed society was evil. And thus, it raises the point that perhaps the “real” strategy was to bankrupt society. To buttress this claim, they supply this quote: “the first radical known to man who rebelled against the establishment and did it so effectively that he at least won his own kingdom – Lucifer.”
I always thought the left had some wacky conspiracy theories but the idea that Wall Street executives were following Alinksy (in secret) and then made conscious decisions to ruin the economy is nuts.
However, there are lots of things we can blame on hippies; certainly David Horowitz and Peter Collier in their 1989 book Destructive Generation: Second Thoughts about the Sixties were scathing in their indictment. But, I don’t believe for an instance that our debt crisis was a deliberate plot, and I am also sceptical that we can blame that on the boomers.
And, not everything about Woodstock, the hippies, and the 1960s was evil. Woodstock wasn’t all bad. Nor were the 1960s, but we’ll get to that.
Not that Generation Zero doesn’t have a lot of good stuff. It makes important points about the confluence of power between Washington and Wall Street, issues of trade with countries like China and Japan, the massive de-industrialization of the United States, and the horrendous impact of the Community Re-Investment Act which forced banks to lower their standards to allow more minorities to buy houses (which helped start the housing bubble).
These are all worthy topics for documentaries on their own.
Interestingly, Generation Zero spends much time talking about privatized profits and socialized losses; the nationalization of risk; major giveaways to corporations; the marriage of big government and big business, and so forth. These arguments are right out of the Sixties playbook; it shows how much we have internalized the messages from that decade, whether we are from the right or left, and whether or not we are of that generation.
But, while these are important points, the film makes other claims I don’t buy. For example, near the end, the film argues moral hazard went by the wayside because of the various bailouts (AIG, GM, etc). Moral hazard arises when we insulate people or corporations from risk. By not allowing large corporation to fail (they’re “too big to fail”) they then make riskier decisions knowing that they will be bailed out: “Capitalism without bankruptcy is like religion without hell.”
However, what the film leaves out is that the Bush administration did allow Lehman Brothers to go bankrupt. It was the largest bankruptcy in American history; it folded with $613 billion in debt. But, look what happened after it filed: the Dow dropped more than 1,000 points in a single day. Avoiding moral hazard led to a panic.
Would we honestly be better off if GM, Chrysler, AIG, Bank of America and a host of other large companies had gone bankrupt? Given what happened after Lehman Brothers went bankrupt, could anybody have really believed we’d be better off? Generation Zero says we would—easy to say, but who would ever take the risk? But, given the many bailouts, have we completely lost all safeguards against moral hazard?
I don’t think so. The important lesson for policymakers is that there should be consequences for any firm that gets rescued. Their shareholders should lose big time, their bondholders should suffer and there should be consequences for management. It is certainly arguable as to whether we got all of this correct in previous bailouts.
<Generation Zero then moves to the financial state of the United States. And, it’s bleak: huge deficits, trillions in debt—a literal financial death spiral. A Maclean’s article (“Generation Screwed”, December 6, 2010) makes much of the same points, that the current generation is being literally screwed by the boomers.
And, while the current financial mess is a huge problem, is it the fault of the hippies? Can we really lay the blame at the feet of the boomer generation?
Is it even possible to blame an entire generation? It’s all very tempting to blame it all on George Bush, that ex-hippie, ex-yippie who then morphed into an irresponsible chief executive. (I’m only partially kidding.) But, when Bush came to power in 2001, he inherited a surplus from Bill Clinton.
To be fair, that surplus was largely driven by the huge internet stock bubble which poured billions of dollars into the treasury from NASDAQ stock options. And, what did Bush do? He pushed through an enormous income tax cut, and then went on to fight two wars (rightly, in my opinion). Isn’t that a formula, in itself, for massive deficits? Bush accelerated the pedal on spending and cut government revenues.
And then, the crisis hit.
Many of the seeds of this crisis were born in the 1980s with the rise of Drexel Burnham Lambert (DBL), a Wall Street investment firm run by Michael Milliken. DBL invented the junk bond and went on in the mid-1980s to earn unheard-of-amounts of money on Wall Street. In fact, they turned The Street on its head, and one important lesson was learned: no need to be staid, respectable banker; we can now use sophisticated models, excessive leverage, and the irresponsible bundling of securities to make obscene, never-before-heard-of profits.
Other seeds were planted by technology. The first users of the personal computer in the business world were the investment banks. In the mid-1980s, I worked in New York City for a company that installed local area networks and we did work for JP Morgan, Merrill Lynch, Goldman Sachs among others. Computers allowed bond and equity departments to develop extremely sophisticated models; it thus gave a “scientific” underpinning to a variety of crazy strategies. Complexity became the norm and that led to the rise of hedge funds like Long-Term Capital Management, who, if you can believe it, once leveraged their fund 250-1 and went on to a spectacular bankruptcy as a result.
The other seed of the crisis lies in fashion. A herd mentality has always existed on Wall Street, and once firms started packaging mortgages (particularly since they were “covered” by Fannie Mae and Freddie Mac) the pack went ballistic. The financial models said “bingo”, the risk was minimized, and the herd—which are never easy to stop—ran towards financial disaster. I find this far more satisfying as an explanation than pop psychology of the baby-boomer generation, or Alinksy-style conspiracies.
Of course, financial crises are not new. But let’s not completely absolve the 1960s. Destructive Generation showed how our culture and politics was irreparably harmed by the 1960s radicals. That book was a clarion call to have a second look at a decade we tend to remember fondly.
The major strength of Destructive Generation was that Horowitz and Collier were terrific storytellers. They were there and they talked to the people involved. Three amazing case studies—the activist Fay Stender, the Weather Underground, and the Black Panthers—show where the New Left, full of hope, and idealism, eventually went off the rails.
These stories are so well-told that it’s surprising no one has yet used them for feature films.
For a start, Fay Stender was a radical lawyer in California who set up the Prison Law Project to address the inherent “racism” in the justice system. Her organization worked to free black prisoners in California who were viewed as “political,” and they were very successful. The only problem is that many so-called “political prisoners” killed after they were released. Stender herself was ultimately shot by a follower of a murderer she had worked to get released from prison.
Their chapter on the Weather Underground is similarly instructive. The splintering of the SDS (Students for a Democratic Society) into the New Communist Movement, the Action Faction and various Yippie groups led directly to this mop-top group of, well, what else can you call them?—Communist criminals. Their interminable ideological arguments, the bizarre sexual escapades, the drugs, and ultimately the violence make for a compelling read, and some laughs.
Ultimately, the Weather Underground claimed responsibility for some two dozen bombings and then their leaders self-destructed in a home explosion. And, who can forget the controversy over Barack Obama’s relationship with Bill Ayers, one of the founders of the group? According to Ayers, ”I don’t regret setting bombs,” and ”I feel we didn’t do enough.”
And then there were the Black Panthers, violently criminal thugs mistaken for “liberationists”. Horowitz and Collier knew their subjects well; Horowitz worked very closely with them in his radical days. And, one of his better friends was murdered after she began to work for them.
Ironically, some of the positive messages from the 1960s were internalized by many conservatives. Take a look at the neo-cons; many of them former Marxists who now want to use America’s power to support freedom, democracy and human rights, including many in the Bush Administration who supported the war to oust Saddam Hussein. Whatever your feelings about the wars in Iraq and Afghanistan, one must admit that they are very different from the Vietnam War. The Sixties changed the way we look at war, and the way we work with indigenous populations.
On the other side of the ledger, it is the post-modern left who have internalized the worst excesses of the 1960s. There is the plain fact that “gay liberation”, “women’s liberation” and “black liberation” were more than just successful. All of these groups won their struggles! Gays have widespread acceptance; women are now more than equal; and African-Americans have entered the middle class in droves. Ultimately, feminism, black nationalism and gay liberation led to a “fetishization” of identity politics where all politics is subsumed by identity and ultimately turned multiculturalism into the ultimate politics of identity. (One effect from all this was the abandonment of the working man which is why so many working men vote for conservative parties.)
And with that victory, the struggle still goes on, but for what nobody really knows (one exception is same-sex marriage in the United States). And so, the modern has become the post-modern.
Also, look at how the post-modern left sounds echoes the 1960s, the slogans of “no blood for oil”, that 9/11 was either a myth or a payback, that Afghanistan is yet another Vietnam, and Sixties heroes like Castro, Fonda, Mao, Che and Ho have given way to George Galloway, Cindy Sheehan, Michael Moore, Julian Assange, and the like. Much of the New Left hung out with communists back then; now the post-modern left hangs out with Islamists.
Ron Radosh, in his book Commies: A Journey through the Old Left, the New Left and the Leftover Left, quotes Irving Howe: “It never was necessary to defend the Communist regime in Hanoi or the Vietcong guerrillas in order to oppose American intervention.” But, even Howe changed his mind as he endorsed the African National Congress in South Africa despite their communist ties. Now, post-modern leftists can’t wait to get to Gaza to meet Hamas strongman Ismail Haniyeh.
Perhaps the worst effect from the Sixties is how our universities, foundations and media are now over-populated with these leftover radicals from the sixties. And while they champion diversity, diversity of thought is not one of their strong points. As a result, we are fed (and our children are fed) a steady diet of stale slogans, irrelevant Marxist arguments, and stupefying inability to think critically. Even a radical like Ayers can see some of this. In 1976, he watched Emile de Antonio’s documentary on the Weathermen. He was “embarrassed by the arrogance, the solipsism, the absolute certainty that we and we alone knew the way…The rigidity and the narcissism.”
And so let’s revisit what Horowitz and Collier wrote about the good parts of the 1960s: “There was an expansion of consciousness, of social space, of tolerance, and of experience itself. It was exciting to be alive….”. Question: Does anybody really think that in 30 to 40 years we’ll be saying the same of today’s post-modern left?