You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland and I show you how deep the rabbit-hole goes. - Morpheus

Right-wing rhetoric is one of the most successful projects of our time. We know the numbers. Today 20% of Americans earn about 50% of the nation’s income, compared with the 3.4% earned by the roughly 15% of the population in poverty. Meanwhile the top 1% feast on a whopping 24% of the national paycheck. Playing out these disparities over decades has caused unprecedented concentrations of wealth. 1% of Americans own over 40% of the nation’s assets, compared to the bottom 80% who own a small sliver of the pie, less than 7%.

These inequities of American life are starkly visible. The vast majority of Americans holding the short end of the stick can see clearly how the rich live, especially the unfair advantages they enjoy through virtually unlimited access to capital, education, healthcare, leisure and powerful social networks. If the economy was a pick-up game of basketball, the rich would start with 20 of 21 points and the rules would require competitors to play on their knees.

As we think about the politics of inequality, the accomplishments of conservative rhetoric should impress us as truly audacious. It is no surprise that the 20% of Americans who own 93% of the country would vote for the system that created their spoils. But the Right has managed to convince a substantial portion of the American underclass that our grossly unfair system is just and works to their benefit. This hypnotic feat stands as our most formidable opponent in the next election cycle. How did they do it? Do we really know? Answering this question effectively is the political game changer of our time.

The trance results in part from a blue-pill story ("believe whatever you want to believe") about how and why the world is so screwed up. The story forms a unified mythological narrative across the entire right-wing political spectrum. A recent vivid example of it can be found in the introduction to Rick Perry’s political manifesto, Fed Up. There Newt Gingrich writes:

Faith, freedom, and free enterprise are the pillars of a strong, safe, prosperous society. Rick knows that when these principles are protected, America succeeds, and when they are undermined, America fails. But the Left has a different belief. The Left believes that most people are not capable of pursuing happiness and that a strong centralized government is best able to provide for them. While claiming compassion for humanity, the Left's policies are destructive to the human beings subject to them—as we have had to learn painfully again and again.

The Left's self-serving solution to every crisis, economic or otherwise, and many of their own doing, is always the same: inflict higher taxes on Americans to create more government programs with more rules and regulations that result in less freedom, less innovation, less safety, and less prosperity.

The problem with the Left’s one solution, as Rick forcefully explains in the pages that follow, is that it doesn't work. It's never worked, and it never will work. The record shows it.

But what the record also shows is that when power and freedom are returned to the people, when people are rewarded for work, and when government holds the line on spending, individuals and opportunity thrive. We have seen that result most spectacularly recently in Texas, and in the mid-1990s with the Contract with America Congress, when I served as Speaker of the House.

What makes this particular story compelling to so many of the 80% lacking the prosperity promised by the American dream?

First is the story’s utter simplicity. The problem is the federal government, period. The people do not have to comprehend the complexities of international economics, the American banking system, the equity and debt markets, etc. They just have to hate “Washington,” as if our national government were a singular, personified evil like Voldemort in the Harry Potter universe. (Shouldn't we be stunned that our government — the same one that ended real slavery, that secures clean air and water and safe foods, that provides for workplace safety, that protects civil rights and guarantees equal protection of the laws, and much more—should be considered a great evil by so many of our fellow citizens?)

Second is that the story harnesses the emotional power of a liberation narrative, drawing upon religious (e.g., flight from Egypt) and cultural (Revolutionary War) imagery deeply embedded in the American psyche. In this drama the people have been enslaved by their federal government through oppressive taxation, policies, regulations and programs. The people are desperately fleeing this slavery or waging a revolutionary war in which they assert their independence once and for all.

Third, the story insists that its heroic protagonists (the American people) are innocent, inherently talented and good. Once they have thrown off their oppressor, liberty and prosperity will unfold naturally without any kind of community responsibility, coordination or compromise.

Like all good fairy tales, the story involves magic. The magic is the free market. The free market is understood as a sort of supernatural energy with unlimited power. The magic spirit fights against the evil of totalitarian, central-planning control. Since the people lack the time and patience to wade through the complexities of economic reality, they justify their faith in the magic power of the free market through overly simplistic reliance upon famous thinkers such as Adam Smith:

Every individual necessarily labors to render the annual revenue of society as great as he can. He generally neither intends to promote the public interest, nor knows how much he is promoting it. He intends only his own gain, and he is, in this, as in many other cases, led by an invisible hand to promote an end which was not part of his intention.

Or Hayek:

The advantage of a free market is that it allows millions of decision-makers to respond individually to freely determined prices, allocating resources — labor, capital and human ingenuity — in a manor that can’t be mimicked by a central plan, however brilliant the central planner.

Or Ayn Rand:

America's abundance was not created by public sacrifices to the common good, but by the productive genius of free men who pursued their own personal interests and the making of their own private fortunes.

Or Milton Friedman:

The economic miracle that has been the United States was not produced by socialized enterprises, by government-unon-industry cartels or by centralized economic planning. It was produced by private enterprises in a profit-and-loss system. And losses were at least as important in weeding out failures,  as profits in fostering successes. Let government succor failures, and we shall be headed for stagnation and decline.

On this basis, the power, primacy and sanctity of the free market has become an article of faith to many Americans, like faith in God. Like other matters of faith, it congeals into stone within the mind and is no longer susceptible to reason, reflection or interpretation. Instead, belief in the free market becomes the ground upon which reason is deployed; it is the lens through which data becomes information, the laboratory within which arguments are tested.

If progressives are to move independents, and to gain (or regain) the allegiance of poor and middle class in voters in the center and slightly to the right, they must construct an effective answer to the right wing mythos. But how?

This question brings three quotes to mind. First from Albert Einstein:

"Make things as simple as possible but not simpler."

Next, from Shakespeare’s Hamlet:

 "There are more things in heaven and earth, Horatio, than our dreamt of in your philosophy."

 Finally, Upton Sinclair:

"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

Here is the central challenge: Progressives have responded to the Right’s myths by advancing a description of the real world. But reality is messy and complex. In reality there are no magic forces. In reality the protagonists are not blameless. In reality compromise and coordination and responsibility are necessary. In reality there is no catharsis in which the guilty are vanquished and the innocent ride off into the sunset of their dreams. To paraphrase Sinclair, it is difficult to get a man to understand something when it is complex and painful.

Can the masses in love with blue fantasy be emboldened to swallow red reality?

The difficult but fundamental truth told by progressives is that a truly free market is not free. A truly free market must be purchased through the development of an overriding system of fairness and justice. Without such a system, we don't have a free market. Instead, we have the rampant unfairness our current system has produced. This injustice is not the consequence of freedom; it is the distortion produced by systemic failure. The action required is the improvement of the system, not liberation from it. This is clear to progressives, but every obvious point in the analysis is something not accounted for or completely at odds with the Right’s compellingly simple free market fable. A few major examples follow, not meant to be exhaustive.

1.         Private property. The Right's myth is that property simply arises as a force of nature from hard work. But the fact is that property and its transmission depend upon public law. The free market requires a central government that protects private property and inheritance, not just land of course but complex business structures, financial assets and intellectual property holdings that may span the globe. The enormous complexity of property in the world today requires centralized systems of justice to resolve disputes as well as national and international law enforcement systems to protect against theft, damage and corruption.

2.         The Enforcement of Contracts. The Right's myth is that contracts precede the state, existing independently of it. But the reality is that a free market cannot function without a government that creates carefully managed rules allowing for the development and enforcement of mutual promises. These rules require controlling against ongoing efforts at fraud and deception and creating sufficient and accurate information to allow markets to function efficiently. The concept that any significant market can provide such protections without intensive public regulation is not grounded in reality.

3.         Externalities and Torts. The Right's myth is that markets naturally balance individual rights and interests. But the reality is that market actors produce damage in the form of externalities (e.g., pollution, nuisance, consumption of public goods and other system and network effects). The cost of these damages must be imposed upon the producers who cause them or otherwise managed by the system for the market to stay free and fair. A free market also requires public enforcement of a base level of responsibility and prudence to protect market actors from harming one another through negligence or other forms of irresponsibility.

4.         Protecting Innovation and Open Competition. The Right's myth is that markets naturally encourage innovation and competition. But the reality is that without public regulation, market actors begin to collude and/or to establish monopoly power. Such anticompetitive forces (i.e. price fixing, threatening destabilizing innovations, raising barriers to entry, hoarding goods and supplies, using monopoly power to extract unreasonable profits etc., etc.) threaten all the benefits promised through the free market.

5.     Money. The Right's myth is that money as a medium of exchange arises naturally without the state. But the reality is that the state defines and regulates currency as the medium of exchange and creates the systems and infrastructures that allow for expansions and  transfers of currency within and among global economies. Without currency and regulated central banking, the market would revert to incoherent and unworkable systems of bartering.

The realities of creating a truly free market pose tremendous challenges not only to collective interests, but to the individual actors in the system. It is an error to suggest (as the Right often does) that these public facets of the free market somehow involve transfers of wealth from haves to have nots. Every individual actor in a free market requires these facilities and protections in order to be able to benefit selfishly from a functioning market system.

What is obvious to progressives is that a flexible, powerful and innovative central government is essential to and the sine qua non of the free market itself. Central government is not the antithesis of the free market, it is the premise. This is why the largest and most robust economies (inequitable as they may be) also have the most powerful and effective governments.

The most compelling example is the case of intellectual property itself, without which we would lack the heralded computer, software, internet, and bio-pharmaceutical industries among many others. Were there no federal and international patent and copyright protections, these industries could not exist at all. Of course also the capital markets themselves could not function without the presence of regulated exchanges.

The above (and much more) is of course painfully obvious to progressives, yet these truths are strained from the intoxicating right-wing Republican mythology guzzled by so many our ever-increasing underclass. The elite know all too well that strong government is essential to wealth. They understand how much public cost is required to maintain the security of their vast possessions against the horde. They see through the right-wing nonsense, but they know how crucial it is in bewitching large portions of the have-nots. Don’t worry about all of this complexity, say the spin doctors to the common man. Just use your common sense. The simple problem is evil Washington. All we need to do is liberate ourselves from those bastards in Congress and the White House. Then we can ride free to the Promised Land on the open plains of American exceptionalism!  

But the singular evil is not the President or Washington; it is the simplistic right wing myth itself. Progressives need to create a red pill. When ingested, the pill would awaken a thinker, allowing him to see through the free market mythology to the ugly reality beneath, the one where he observes exactly whether and how his life blood and energy are sucked from him as if he were merely a battery for a gigantic, unfeeling machine. He would see that, yes, our system is productive, and likely better than the best known alternative. But he would also see that our system is inherently unfair, that it does not adequately serve the real interests of most Americans. He would understand that the system needs ongoing perfection and reform. He would transcend the childish fantasy that the good within the world exists in spite of the system, has nothing to do with it. He would know that Washington is not the personified enemy of the people but rather a meeting place—our sole center for public action upon the entire system. He would grasp that freedom is not simple, but requires the courage and patience to navigate complexity, uncertainty and ambiguity. He would develop not common sense, but uncommon sense.

He would have the capacity to imagine a truly free market in which crushing inequities did not deprive so many of its fruits.

Are there enough Americans willing to see through the right-wing matrix?

And where is our red pill?

12:43 PM PT: Thank you so much to those who republished this diary.  Thank you!

Originally posted to DavidMCastro on Wed Aug 24, 2011 at 07:03 AM PDT.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement, Income Inequality Kos, and Community Spotlight.

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