How long can America stand a weakened economy?

The stock-market crash in 1929 happened in one day. The social consequences lasted for years. It was the prolonged, grinding economic weakness in the aftermath of that one-day event that framed Nazism’s political takeover in 1933 and the rise of lesser-known but comparably deadly racist regimes throughout Europe. In the US, the ranting Detroit priest Father Coughlin spewed anti-Semitism on his national radio show while Dr. Townsend of California promised a crackpot anti-banker social-insurance scheme, and everywhere, the dispossessed were urged to blame the Jews for all that was awry. Henry Ford fanned that flame. Plenty of “respectable” people did. Not until one reads transcripts of some of the radio speeches of the mid-1930s does one see how widespread the Jew-blaming was.

Some calm but wary heads see a reprise of anti-Semitism as the inevitable consequence of the ongoing sense of economic distress in America. Lloyd Blankfein of oil-speculating Goldman Sachs is hardly a sympathetic figure. Richard Fuld of once-great Lehman Brothers didn’t even have the decency to be contrite like the skinny Twittering Anthony Weiner with his bulging u-trou. Most of Bernie Madoff’s victims were Jewish charities and Jewish family businesses, but no matter—in the Tea Party’s anger, in defenses of Sarah Palin’s garbling of history, in the low swamps of American nativism, there is a lingering ghost of anti-Semitism, and everywhere there are stories about financial manipulation, evocations of Shylock are nearby.

But of course it was the Quaker president, Richard Nixon, who began the process that led to most American manufacturing jobs moving to China. It was the Baptist president Bill Clinton who insisted on a “free trade” regime that cemented our American disadvantage of having to trade with nations that scoff at environmental regulations, fair labor standards or even copyright and patent law. The geeky, nerdy kids who are smart at math and who can grind it out at the Wall Street firms are not chosen by ethnicity, but by their adeptness at serving a paradigm—one that was empowered by WASPs more than a century ago. My fellow Episcopalians, who sneer at everybody who is not a member of their own little tribe, are happy to use anybody’s brains to tend Muffy and Biff’s trust funds.

The new economic demons and scapegoats are public employees, not ethnic or religious minorities.

Democrats are whistling past this graveyard. Newly emboldened by Kathy Hochul’s victory in the thoroughly, ancestrally Republican 26th District, some Democrats are thinking that a new progressive spirit is winning, and that populism will at long last be progressive. Not bloody likely. The trouble lurking in Upstate New York is that a tiny bit of self-interestedness among aging white voters has been sprinkled onto the toxic stew of economic anxiety, resentment of elites and anti-intellectualism that has long been bubbling in the heartland. As last week’s US Department of Labor statistics show, the American economy has not really recovered from the 2008 financial crisis. Nobody is getting jobs. Nobody’s kids are getting jobs. Tens of millions of homeowners who bought the myth that real estate was their ticket to security are upside-down on their mortgages, and are at risk to default. More than 40 percent of those who took out home equity lines of credit are behind on those loans, too.

The consumer culture, however, chugs along. TV ads that touch every demographic invite us to buy iPads at $800 a crack plus $25 a month for the internet service, but Fareed Zakaria is not the only person who has figured out that Apple employs 50,000 brainy nerds and geeks in the US, while Apple’s Chinese manufacturer employs more than a million maybe less-brainy people—none of them Americans—to actually make them. Fewer employed Americans means more experience of defeated consumer aspirations.

The stew of anxiety, anti-elitism, and mistrust bubbles permanently among the not-so-well educated. That stew gets thicker when news items like the following cross heartland thresholds: On June 4, 2011, the CEO of Xerox Corporation announced in Rochester that 250 of the company’s American engineers will be given the choice of losing their jobs or of going to work for a company based in India, which means a slow-motion job loss, as the transferred employees will be employed training their replacements. This story is not lost on families who are in debt for their kids’ college loans, nor on those recent grads for whom there are no jobs, and the gist of it is this: Even when you play by the new rules, in the new financialized global economy, American workers still get screwed.

It seems to many that the only folks not getting screwed are Wall Street bankers, CEOs, sports pros and entertainers, and public employees. Especially teachers.

Avoiding a 1930s replay

The CEO of Xerox is an African-American woman with a multi-million-dollar pay package. She serves on an economic advisory council that President Barack Obama set up to shepherd the creation of two million export-oriented jobs over the next five years. Ursula Burns broke the glass ceiling and crossed the color barrier, too, and her achievements would be compelling were not the realities for American workers who are not CEOs so different from hers. Here in the Buffalo media market, the highly compensated CEOs are all white males, including the $7 million CEO of the local natural gas company—which is a regulated monopoly in a region where pretty much everybody heats their houses with natural gas. In the case of Xerox, there is bitter international rivalry for engineering new imaging solutions, where a company that was once at the cutting-edge could be eclipsed tomorrow. Here, there’s only the old-ruling-class-versus-everybody-else story. The median household income in New York State is just over $48,000, and seven out of 10 households here make less than that, but the guy who runs a company that controls the entire market for heating fuel makes more than 145 times the median household income. His hoard comes out of your pockets, here. And faraway bankers, or the competitive international technology marketplace, can’t be blamed for that.

Our business culture, however, can. Unlike in Silicon Valley or in Boston’s Route 128, the main business culture here is not about entrepreneurship or technological innovation but about bashing the public sector while grabbing public money with both hands. Xerox and the gas company are both members of their respective Upstate chambers of commerce, which together run an advocacy outfit called “Unshackle Upstate,” which is doing the coordinated messaging for all the Upstate chambers. The chambers’ main agenda items are breathtakingly cynical. The chambers call for reducing state spending, especially on public employees whose unions are the last voices for middle-income wage-earners. The chambers call for enabling local-government mergers and consolidations, despite the Buffalo chamber’s leader personally having worked with the head of the largest foundation here to thwart city-county merger. And they want state economic development programs to be run by local elites, who are so conflicted and so deeply into self-interested dealings that Upstate is gaining a reputation for corruption as bad as the former Soviet republics of Central Asia.

Until the Hochul victory, the chambers’ political messaging had been working very well. In communities devastated by deindustrialization, blaming the public employee unions has become normal. Every local newpaper story about underperforming poor city kids who don’t graduate or get to become Xerox engineers feeds the blame engine against the union of all those teachers, mainly women, who only have to work 180 days a year. People here wake up one morning to find that their gas bills are going up, courtesy of the Buffalo company that pays its CEO $7 million, or 145 times what a teacher makes—but they are told by the only newspaper and the largest radio station that their real problem is school taxes.

The political surprise of the new decade is that President Obama and Governor Cuomo use this same chamber of commerce language to criticize public school teachers. Had it not been for Republican overstepping on Wisconsin public employees, we might even have heard Obama criticize civil service more sharply than he and his cabinet have already criticized the unionized teachers.

It is a stretch even to suggest similarities between the nasty American anti-Semitism of the 1930s and this bipartisan American crankiness about teachers and their unions. (There is simply no comparison at all between what the murdering Nazis, Ustashe, Arrow Cross, Iron Guard, et. al. did and what happened, and didn’t happen, here.) But the resentment of “rich” public employees is stoked daily as part of a kindred political process of demonization and obfuscation, even as the reality becomes starker: Public sector workers generally have better employee benefits and more job security than private-sector workers, who are getting less and less of the pie.

The blaming will grow more intense in 2011 and 2012, because local governments, especially school districts, will be short of money, due to the lingering and now redoubled recession, all just in time for Obama to run again. Teachers will be bashed by both Republicans and Democrats, but it will get even uglier because of the Sarah Palin factor. Soon, no doubt, she will blame her teachers for having misinformed her about Paul Revere.

If there is a Democratic awakening, it’s going to have to come with more assertiveness, and more competence, from the Left. Teachers should be at the vanguard of calling for true universal healthcare. So should police, fire, civil engineers, and other civil servants who can’t be outsourced to India. They should point to insanely disproportionate executive pay, and turn the right-wing tactics of ethnic scapegoating on bankers, CEOs, and their income-class mates, and say, “Every American worker deserves the contracts we fought for.” They’d best hurry, before large and growing anxiety reprises the politics of the 1930s. What we need is an aristocrat like FDR, one who is willing to undermine the interests of his income class in favor of the national interest. As we are fresh out of aristocrats, it’s up to the lords and ladies of labor.

Bruce Fisher is visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.