Percolate-Up Economics

For populist leader Jim Hightower, a fundamental question underlies the S&L debate: Who holds economic power in this country?

As Texas Commissioner of Agriculture for eight years, Hightower wrested some of that power from agribusiness and the chemical industry and put it into the hands of small farmers. Setting up new financing mechanisms, he helped farmers diversify, process, and market their own crops. He also encouraged ecologically sound farming practices.

Narrowly defeated for re-election last fall, he now travels the country as national spokesperson for the Financial Democracy Campaign. He spoke to reporter Barry Yeoman this spring.

Southern Exposure: I’d like to ask you about the S&L crisis. A lot of folks have seen reports on TV or have read about it in the newspaper, and assumed that some folks at S&Ls in Texas and California just screwed up. . . .

Hightower: And certainly that happened. We had an embarrassment of thieves in Texas, for sure. But the real crisis is not a function of crooks.

There are two scandals really. One came under Voodoo One of Ronald Reagan, saying we really needed to deregulate savings-and-loans so that they can go into national and international enterprises. This would allow an infusion of wealth from Wall Street syndicates and international speculators into savings-and-loans, which could then go beyond pedantic little local housing loans and begin to build high-rises in Houston and condos in Aspen.

If ignorance is bliss, these guys were ecstatic to start with. This thing didn’t have a prayer of working. They weren’t very smart in their investments, corruption aside. What did they know about condos in Aspen? And so when that began to unravel, the whole thing came crashing down. A lot of innocent people got squeezed.

But the taxpayer got squeezed overall, because then comes the second scandal, which is the bailout itself. And it’s coming under Voodoo Two, which is George Bush’s notion that whatever happens, we have to take care of the super-wealthy. They come rolling in, and saying, “Oh my God, our house of cards has come down. Now we need to bail this out.”

SE: The S&L crisis is more than an isolated crisis. It’s a parable of our times. I take it that your struggle for a fairer approach to the S&L debacle is part of a broader vision.

Hightower: It raises the whole issue of money and puts it back into politics again, which is where it belongs.

The discussion about who controls money used to be central to our politics. It was a huge debate during the 1830s and ’40s, which is the time that the Republic of Texas was being formed. The Texas constitution outlawed banks. You could not create a bank in our state. We have a very strong populist streak in our history that believes money should be decentralized, not controlled by any central power.

And this resurfaced in our history, most recently in the 1920s and 1930s when Huey Long, Franklin Roosevelt, and other major political players talked a lot about who controlled our money.

It is, after all, our money that they’re using. We put our deposit in the bank, and that is the sole source of them being able to make humongous profits. These people don’t do anything. They move paper, or now it’s not even paper. It’s electronic manipulations. And they, as a result, have become the wealthiest people in our society.

That’s bad enough, except that we have gotten to the point that it is assumed only bankers can be trusted with money. Even progressive politicians assume, “Oh my, if we were really in charge of money, we could mess it up.” If we had practiced 24 hours per day, forever, we could not mess it up as bad as these bankers have messed it up.

People are mad because of this S&L debacle. Now here come the bankers saying, “Well, now, we’re gonna need $38 billion also and maybe more.” Then here come the pension funds and the insurance companies.

So people are beginning to say, “Wait a minute. All this comes from the money that I take down to my local S&L or credit union. I’d like to have more say in how that money is spent, how it’s being spent in my community. Right now, it’s not being spent in my community.”

NCNB — known as “No Cash for No Body” — is the largest bank now in the state of Texas. We are in an economic recession in Texas and we cannot recover unless we have capital to generate new enterprise at a grassroots level. But if you’re a small business, you can’t get in to see a loan officer at NCNB. We don’t control our own deposits. And that means we don ’ t control our own economic destiny.

SE: Helping people control their economic destiny was something you implemented as agriculture commissioner. Progressive politicians see the way you stepped out, the boldness with which you pursued a people’s agenda. You got too vocal and powerful, and the powers-that-be crushed you. Does that mean that there are limits to what populism can achieve?

Hightower: No, not at all. My defeat is the direct result of big money coming into my opponent’s campaign — $2.5 million — that was spent on television ads to tell lies to voters. One suggested that I am a flag burner, which I damn sure am not.

Even though I lost, things we put in motion in Texas, like a whole movement to sustainable agriculture, cannot be undone by the new administration. We showed people that we trusted them. We put tools of growth in their hands, and they took those tools and put them to work. Those people can’t be sent back now.

SE: What’s next for the populist movement?

Hightower: The populist movement is going on stronger and stronger. It’s expressing itself in this savings-and-loans issue. It’s expressing itself in housing and educational issues all across the country. If you go down to the Chat ’N Chew Cafe and talk to people, you will tap a very progressive streak.

People want to build, and they want to have the tools of self-help in their own hands. You know, “trickle-down” is a pernicious philosophy. Even if it worked, which demonstrably it does not, it says to people, “you don’t matter,” that we’re gonna invest in a few wealthy people at the top and if you be good and sit there with your bowl at the bottom, some of it will trickle down to you. We need a philosophy of “percolate up” economics.