By Robert S. Becker
August 19, 2009
Despite recession, Americans continue to believe progress is sustainable, even if resources aren’t – and that growth of total wealth generates prosperity for all. Heck, we’ve chiseled these mythical linkages into fabled founding documents. Doesn’t our Declaration affirm “life, liberty, and the pursuit of happiness,” for the first time dangling “happiness” as political carrot? We even boldly link happiness to life, which logically forecasts universal healthcare to sustain it? More pie in the sky opens our Constitution, promoting “the general welfare” by which we secure “the blessings of liberty to ourselves and our posterity.” Not just the greatest good for the greatest number, but for offspring, too. Lucky devils.
Thus, we enlist majority rule: this goofy nation officially broadcasts the welfare of the majority matters. Yet, what if that hallowed majority shoots itself in the foot, elevating one minority of schemers above all others? What if voters, prone to error and demagoguery, misplace their economic self-interest, and an invisible plutocracy sabotages the “general welfare” for the welfare of corporate generals?
By the way, “welfare” shares word roots with the following: well, will, (common)weal, and wealth, itself a linguistic cousin to health. Wealth still fosters health, underpinning hidden Social Darwinism at work, literal survival of the fittest fatcats. One federal researcher showed “most affluent” oldsters outlive poorer brethren by four years.
The U.S. of Plutocracy: Wealth Rules!
What would happen were the plutocracy to become less invisible? Unsettling research from UC Berkeley Professor Saez reinforces the three-decade trend that divides rich from everyone else, across all key measures. First, this stunner: by 2007 the top .01% population captured 6% of America’s total earned income, the highest ratio since the Roaring Twenties. The super-rich are not only much richer, but the rich have captured almost all national productivity gains since the early ‘90s. Second, the top 1% of families take home 23% of all income – after CEO-friendly deductions. In shock yet?
Do you still believe the correlation of total national wealth with majority prosperity? Superficially, it’s true: all boats rise when the top tier thrives. From ‘93 through ’07, total income increased 2.2% per year. But income for the top 1% surged 5.9% each year, leaving 99% of us averaging up 1.3% annually. Let’s not forget that 14 years of inflation, at 3% a year, totaled 46% – wiping out phantom improvements. Average middle-class families with only one income thus suffered a double whammy – less cash plus less purchasing power. What has been and remains “just around the corner” isn’t prosperity but paucity and loss – unemployment, foreclosures and tarnished golden years.
Big spenders, especially Reagan Republicans, worship this correlation not just to defend their present affluence but the limitless abundance dreams are made of. Paul Krugman verifies the magnitude of this gap is an American phenomenon, paralleling three decades of union-busting, resulting in reduced group bargaining power. Union workers are now only 11% of the workforce vs. 30% two decades ago; Canada, by comparison, is still 30% unionized. Wealth disparity reflects not only weaker unions but corporate welfare (farm, mining and energy subsidies, lax or no regulations, or no-bid defense contracts) and sustained tax policy (income and estate loopholes) that act as the great “unequalizer.” This is not about low economic growth, but political leverage that favors the ruling oligarchy (so powerful liberals struggle to distinguish Obama’s Wall Street policies from Bush’s). Despite a shift leftward in opinion polls, wealthy ultra-conservatives in power favored the upper crust with cake and everyone else with crumbs. Forget majority rule: rightwingers like Cheney glory in abysmal approval rankings because they reject majority opinion, whether about taxation, leaving Iraq or ending abusive, secret prisons.
Cream Rushes to the Top
Even more telling than income flow are overall capital asset gaps: American capitalism has concentrated more wealth in fewer households than any place but Switzerland (a special case, with 1/50th our population). Thanks to FDR, from the ‘30’s through the mid-‘70’s, family asset parity actually improved: the top 1% “bottomed” out in ’76, owning but 20% of everything (back lately to 40%). Worse still, 10% today own 70% of American assets. 70%! In the UK, the top 10% owns 55%; in Canada, 53%; in Germany, only 44%. This “richest” nation on earth spreads wealth like a robber baron skinflint: if 10% own 70%, that means 90% of us own 30%, with gapping trends intact.
So much for fictions we are one, indivisible nation: many are no longer on the same cruise ship, let alone 3rd class. The American Dream is less available than in the 1970s, with mammoth inheritances reifying concentrations. This growing plutocracy undermines the ultimate, if fading American right: Freedom of Opportunity. Unfair taxation (including sales tax, the most onerous) is the key, and many rich view paying taxes as a sucker’s game. Further, if government is the ideological “problem,” the enemy of personal freedom, then more power to those who shrink public coffers.
Impeaching the Constitution
The inequality of income and asset ownership is not only the effect, but prime cause for less prosperity, especially promised “our posterity.” If what passes for majority rule fixes rigid class structures in place, what happens to our immigrant nation? Where is fabled economic mobility and subsequent innovations? Ironically, electing our first non-white president, with humble origins, reinforces a myth LESS true now than during Carter’s presidency: Obama is today’s statistical fluke, hardly proof we are economically a fairer, more open, or more equal culture. Sure, some poor person will again be president; some will win the lottery, too.
Short of a second New Deal to offset today’s Second Gilded Age, our vast majority is well within rights to sue prominent defenders of the sacred Constitution as welchers. If the Founders pledged a direct link between life, happiness and general welfare, let us hold responsible all those who have violated the spirit and letter of enduring covenants. How long will we sustain the fiction of equal opportunity, or that the majority still rules its destiny, or that everyone benefits, when an entrenched plutocracy owns 70% – lock, stock, and barrel. With the top 10% still earning 50% of all income, “lock, stock and barrel” fits all too well, however at odds with fostering a healthier democracy.
Guns and Warm Blankets by Malcolm Steinberg
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I am running a contest – $20 for the most convincing argument that the US is NOT a plutocracy — so far there have not been many takers ;*)
Good one, smendler, thanks for the link to your post.
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First of all the United States of America is ot a “Democracy” nor was it ever intended to be one.
It is a represenative republic which has alwas favored landower (i.e. the wealthy).
Until the Reaga years there was always less of a disparity between the wealthy and the rest of us. In the Eisenhower years corporation paid 45 to 50% of the national budget. They now contribute 6 to 9 percent.
The terrible 186 Supreme Court ruling in 1886 allowed corporations te rights of individuals. 125 years later it is obvious that corporatios have taken over. The Supreme Court ruling needs to be revisited, and “we the people” need to reclaim the country from the corporations and the people that cotrol them.
Awesome article thank you. These are the sad facts. Many kudos for this piece.
I would only point out that the Founding Fathers–it makes me a little nutty when the Left beats them up!–the Founding Fathers were wealthy males who came from a world where class disparity was a given.
The British even today are as ‘class-oriented’ as it gets. People must ‘know their station in life’ etc.
The Republic they set up has a road to equality and its called the voting booth.
That was their gift. They would be appalled that only 50% of these Americans who are getting so little of the pie still dont vote!! Media-Hypnotized self indulgent children they would probably say.
Remember Teddy Roosevelt stopping the Robber Barons in the first Guilded Age with the Supreme Court. The Liberty Party taking on slavery. FDR forcing the rich to break out some cash after the first Depression.
What we have are self-correcting mechanisms, and your excellent article points out we’re ripe for one.
We asked the Democrats to end these horrible, expensive wars. To revitalize the economy from the bottom-up. To close the loopholes, toss NAFTA, reign in the multi-national robber barons, and increase taxes on the wealthy.
To allow for organizing Labor. To enact single-payer health care for all. To ‘stimulate’ the economy by getting us off oil and foreign oil, reign in the oil companies, build a world of renewable energy, lots of jobs, a healthy working class and middle class.
Remember their speeches?
They have done none of these things. They are clearly lacking the will. They are but a wing of the plutocracy, all bought and paid for, There is no Change.
It’s time for the self-correct to kick in.
The Empire is about to crash….all hell is about to break loose…we have never been at a time when we can really ‘self-correct’ as now.
It’s time for the Left and the Libertarians to come together in a third-party alternative that many many unhappy people will embrace as the rich and the fascists who have had power for so long crash out….it’s time to FIX THIS MESS!
The Founding Fathers? Freethinkers of the Enlightenment? Thanks again for that voting booth thing guys, we appreciate it…..
I especially liked, “It’s time for the Left and the Libertarians to come together in a third-party alternative…”
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