What I found in researching housing is that [the post-WWII Levitt housing developments, which essentially created the suburbs were] a small part of a specific social contract, one in which a house would be the focal point for a white community, a school, a neighborhood, as well as a forced savings vehicle. Income growth, aka raises, would structure the middle class, which was rooted in producing things. The Federal Reserve, though the banking system’s connection to housing, could control swings in the economy, connecting the financial elite to the middle class directly. This contract existed because working class people had power, and were willing to seek other social organizational forms if they did not have their needs met.
Ronald Reagan shifted this social contract, by making the home a financial asset more than a bulwark of community. People no longer really got raises, but they were able to continue consumption by drawing down on savings and borrowing, a substitute of credit for income. The 1980s saw mass offshoring, as America turned increasingly into a rentier economy. The connection from the Fed to the real economy was weaker, but it still held. It was in this era that black people were finally able to buy homes, and so they never were able to build wealth as white people had. And most people were falling behind.
The housing crisis of 2007-2012 snapped the spine of the Reagan-era weaker social contract. Bankers and politician not only didn’t stop the foreclosure crisis, but began asserting that homeownership wasn’t an important social goal. The Federal Reserve’s strategy turned entirely towards buying or selling the financial assets of the wealthy as a means of engaging in macro-economic stabilizing. And so, leaving aside the moral validity of any particular movement, popular radicalism returned, on the right and the left. in the the form of the Tea Party, Occupy Wall Street, Black Lives Matter, Trump, right-wing anger at lockdowns, and now protests over police brutality, as well as riots.
To take just one issue, and not the only one at issue, reducing police brutality is a question of leadership, of bureaucratic management, and it requires the ability to come together as citizens and do politics. But since the 1980s, predatory financial elites have worked aggressive to break our public institutions so that we can’t collectively do politics. In some cases, they adopted the rhetorical form of racial tolerance while fighting its economic underpinning, in other cases they adopted the rhetoric of racial backlash. Either way, they have destroyed the ability of citizens to come together and do politics to foster needed social change.
Senate Majority Leader Mitch McConnell, for instance, has dedicated his whole career to blocking democratic institutions from functioning, with the goal of putting conservative judges on the bench so they can write the law, immune from popular social pressure. That’s a brilliant strategy for maintaining rigid social hierarchies, but it doesn’t allow for any release of social pressure except despair and popular explosions.
We now have two paths. Restoring a stable social contract broadly will mean restoring the ability to do politics, to rearrange our productive capacity in ways that are safer, more efficient, and more fair, which will necessarily mean a reorganization of power. Or it will require a far more authoritarian society, one in which we accept a much higher level of security spending to protect a narrow elite from a disempowered and angry populace.
Either way we go, William Levitt understood that people without a stake in society tend to rebel. And that is what we are seeing play out.
Source: Corporate Power, Protests and the Breakdown of a Social Contract