Two-thirds of the way through George Packer's harrowing and magisterial account of post-2008 America, we meet a Florida boat builder named Jack Hamersma – a rough-hewn, working-class guy who'd climbed up the economic ladder only to find himself drawn into the maelstrom of the real-estate speculation that destroyed huge tracts of suburbia in the wake of the Lehman Brothers collapse.
Like thousands of naïve speculators – the 1920s-era shoeshine boys with the hot stock tip – Hamersma's savings were tied up in a heavily mortgaged house that lost most of its value after the bubble burst. With repo men circling and foreclosure looming, he retained Matthew Weidner, a small-time Florida lawyer (think Paul Newman in The Verdict) to defend him against the venality of a banking sector that imploded after an orgy of deregulated and frequently fraudulent greed.
The lawyer was able to keep the lenders from foreclosing on Hamersma. But as lawsuit dragged on, Hamersma's life unwound into insolvency and costly cancer diagnoses. "That happened a lot to Weidner's clients – the job, the house, their health, usually in that order," writes Packer, a New Yorker staff writer, novelist and playwright. "Weidner watched Jack shrink before his eyes, dropping a hundred pounds until, three years after that first consultation, he limped into the office one afternoon to discuss his case, wasted legs sticking out of his shorts, a canvas bag hanging over his shoulder, from which a drip tube extended under a bandage on his chest."
Weidner fought off the creditors and Hamersma, astonishingly, retained hope amidst the ruins. Yet he died two months later, in a house with no value.
Much has been written about the "deleveraging" in the long shadow of 2008 and the ever-widening gap between the 1 per cent and the rest in the world's wealthiest nation. Economists such as Joseph Stiglitz and Paul Krugman have fiercely attacked the policy architecture (or lack thereof) that decimated not only the "boomburgs" in the southern U.S. but seemingly prosperous economies such as Iceland, the U.K. and Spain.
British sociologists Richard Wilkinson and Kate Pickett cross-referenced national data on income disparity in OECD countries against a range of social indicators – drop-out rates, drug use, heart disease – and concluded, in The Spirit Level (2009), that more equal societies tend to be healthier and more cohesive (America ranks way down on the list; Canada is about in the middle). An inverted version of the same ideas is explored in Chrystia Freeland's recent book Plutocrats: The Rise of the New Global Rich and the Fall of Everyone Else, in which she concludes that billionaires' abiding faith in the wealth-creating power of globalized trade and finance is not merely self-serving, but also self-destructive.
Packer, in this book, elegantly reveals the human face of inequality by following a handful of Americans whose stories bring us deep inside the centrifugal forces that laid waste to the huge and prosperous middle class which took root after World War II. In short chapters, he intimately tracks the lives of his cast: a hard-scrabble Appalachian entrepreneur determined to rise above poverty; an African-American woman trying to survive in a depressed rust-belt city; a Florida newshound who uncovers the scandalous subprime scandal; a Democratic lobbyist confronting the hypocrisy of his political tribe; and a wealthy, libertarian Silicon Valley tycoon. He rounds out the collage with a series of snapshot profiles of figures such as retailer Sam Walton, rapper Jay-Z and TV celebrity Oprah Winfrey.
While Packer says he drew his inspiration from John Dos Passos's U.S.A. trilogy, I found the book to be Dickensian in the breadth of its scope and depth of its conscience (although it also reads a bit like a non-fictional re-telling of Tom Wolfe's 1987 potboiler, Bonfire of the Vanities). With his focus on ordinary Americans, Packer hasn't merely sought out sound-bites to put a human-interest gloss on the 1 per cent story. Rather, he brings a novelist's sensibility to the messy humanity of his characters – their mistakes, their contradictory opinions, and their struggle against implacable forces.
Like Dickens writing about the harsh industrial transformation of the mid-19th century, Packer is devastatingly precise in his judgment of the neo-liberal commercial ethic that has gripped the U.S. since the 1980s. "Over the years," he notes in a chapter about Wal-Mart founder Sam Walton, "America had become more like Wal-Mart. It had gotten cheap. Prices were lower, and wages were lower. There were fewer union factory jobs, and more part-time jobs as greeters. The small towns where Mr. Sam had seen his opportunity were getting poorer, which meant that consumers there depended more and more on everyday low prices, and made every last purchase at Wal-Mart and maybe had to work there, too. The hollowing out of the heartland was good for the company's bottom line." And then this bell-ringer: by the early 1990s, the six surviving members of the Walton family (Sam died in 1992) had as much wealth as the bottom 30 per cent of Americans combined. Marx, who warned about the internal contradictions of capitalism, would no doubt feel vindicated by such indictments.
Canadians have been smug about all this. We have lots of what the world's buying these days (rocks and energy), while our financial regulators somehow withstood the pressure to bend to the will of Bay Street. Yet right-of-centre politicians here are agitating to further erode the power of organized labour with a combination of punitive legislation and temporary foreign workers. The push to privatize public services and reduce government continues apace. Consumer debt levels are alarmingly high. There's plenty of speculation in urban real-estate markets. Lastly, Canadian corporations successfully lobbied for billions in tax breaks, but have refused to spend mountains of cash reserves creating new jobs to deliver on their end of the public policy bargain.
Social institutions – the legal system, central banks and regulatory agencies, and so on – don't automatically deserve the public's respect. But, as Packer points out, enduring laws such as the Depression-era Glass-Steagall Act – which separated lending institutions from investment banks and whose repeal in the late 1990s set the stage for the sub-prime crisis – existed for a reason, and were repealed merely in order to mollify Wall Street. The ensuing deluge of bankruptcies and foreclosures, he notes in a section on Senator Elizabeth Warren, the flinty but progressive Harvard law professor, were "the result of weak regulations. The more the banks pushed Congress to get rid of the rules, the more people went broke."
Indeed, the fall of 2008 may have marked the terminus of the historical arc that began with Michael Douglas's era-defining snarl – "greed is good!" – in Oliver Stone's Wall Street. Still, the idea that what's good for Wall Street is, ahem, good for America (and everyone else on the planet) has not disappeared, although the self-congratulatory yodelling from the canyons of finance is more muted these days.
Through the eyes of Jeff Connaughton, a Democratic lobbyist who makes his fortune on K Street but ultimately flees what he sees as the hypocrisy of his government, Packer shows how bankers succeeded in defanging Barack Obama's economic reforms. Connaughton, intuitively progressive in his politics, decided to burn bridges by writing a tell-all and completely disengaging from both politics and the lobbying industry. "As long as he had money it would be easy to insulate himself from the country's problems – to give up on changing Washington and enjoy his life far from the morass, while American went about its long-term decline," Packer writes.
What's interesting about the timing of this book is that the U.S. housing market is finally showing a pulse, with job growth even in the rust-belt cities that Packer describes so hauntingly. He finishes The Unwinding by returning to the subject of his opening chapter, Dean Price, who grew up in a poor farming family but fought all his life to build his own businesses. In recent years, Packer writes, Price became pre-occupied with alternative fuels such as biodiesel, and Obama's push – longer on rhetoric than actual support – for renewable energy.
The book ends with Price trying to launch a business selling used cooking oil to biodiesel refineries, which blend it into truck fuel. This is Packer at his absolute best – here's a guy dreaming of a bright future built on the grease that pours out of the fast food chains that have done more than their share to speed the unwinding.
But unlike the cathartic culmination of Tom Wolfe's Bonfire (in which justice is ultimately meted out to the swaggering bond trader who runs over a poor African-American kid and flees the scene), The Unwinding leaves the reader with a pronounced sense of foreboding about the trajectory of this next economic cycle. The plutocrats, as Freeland writes in her book, are richer than ever. Obama is no Roosevelt. And there's little reason to think the increasingly extreme boom-bust cycle of the global economy will do anything but serve up more of the same.
John Lorinc is a freelance journalist and the author of The New City.