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“The Political History of American Inequality”

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Inquality.org, which is a portal for news and data about income inequality, has published a particularly well-presented paper, The Political History of American Inequality, by Colin Gordon, a professor of history at the University of Iowa who has focused on 20th century American public policy and political economy. I’ve sampled it, and it’s clear and engagingly written and has great interactive chart porn, as you can see (you can play with the charts below).

So how did we get here? Gordon’s overview:

This shared prosperity of the postwar years was no accident or lucky combination of circumstances. A “rising tide” of robust economic growth does not necessarily lift all boats. Political struggle and policy choices determine whose boats rise. The inequality of the 20th century’s early years actually began closing before economic growth took off in the 1940s, as a consequence of the political response to the Great Depression.

Thanks to this response, federal support for collective bargaining rights sustained a surge in labor organization that dramatically improving the bargaining power of America’s workers. Other political innovations of the New Deal—ranging from social security to the minimum wage—secured a floor for working class incomes. Postwar social movements, especially civil rights and “second wave” feminism, then girded that floor by closing off avenues for discrimination.

The nations’ tax system. meanwhile, and new regulatory obstacles to speculative finance erected something of a ceiling for higher incomes. And substantial public investments—the GI Bill support for access to higher education, mortgage subsidies for veterans, housing projects, the interstate highway system, and the Cold War—would kept the rest of the structure in pretty good repair.

Since then, that structure has essentially collapsed. The conventional wisdom describes this collapse as an unfortunate but necessary response to changing economic conditions. The world has become a leaner and meaner and more competitive place, so the argument goes. As a result, the policies of the New Deal—and the costs they imposed on business—had to go.

But there is little evidence to actually support this account. Indeed the initial handwringing over American economic decline came at a time when our principal competitors, Japan and Germany, boasted both higher wages and more expansive social programs than the United States.6

Political choices, not economic necessity, dismantled the New Deal. Future Supreme Court Justice Lewis Powell would first sketch out the organizational and ideological dimensions these choices in a now infamous 1971 memorandum to friends at the American Chamber of Commerce. The conservative ascendance in state and national politics then etched these choices across the political landscape. The policy consequences have been dramatic: steep cuts in social spending, the political abandonment of organized labor, deregulation and privatization, tax cuts, punitive cycles of unemployment—all justified in the name of lowering business costs, capturing economic efficiencies, and unleashing markets.

But these lofty aims camouflage the real policy goal of the pushback against the New Deal: a redistribution of income upwards via the erosion of the hard-earned bargaining power of ordinary Americans. Rising inequality was not a lamentable side effect of America’s new policy framework. Rising inequality was its intent.

Gordon shows how unequal the US is by world standards:

And the paper drills down into issues like wage structure and benefits (one of multiple data arrays):

… mobility, race and gender gaps:

He also includes a short talk on how America’s wealth distribution stacks up relative to what Americans think is desirable:

Mind you, I’ve only give you some tidbits from this paper. It manages the difficult task of being well argued, accessible, concise and data rich. I strongly encourage you to share it widely.

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50 comments

  1. psychohistorian

    OT but interesting.

    After I posted the comment I got a CloudShare??? page that said that NC was offline and prompted me for a retry. What is with that? I was glad to see I had not lost the comment……..

    Hey you, get off my cloud! Isn’t that how it went?

  2. psychohistorian

    Ok, so now I do a refresh and the comment I posted is gone even though it showed above the OT one…….Gawd Bless WP….wonder if I can go back and grab it?….bye

    1. psychohistorian

      Nope.

      My comment was just my ongoing rant about inheritance after seeing the Change In Real Wages summary for 1973 – 2012.

      If those with inheritance had to struggle with life’s insecurities w/o their trust fund cushion I think that the world would be a better place.

  3. Kokuanani

    ****Future Supreme Court Justice Lewis Powell would first sketch out the organizational and ideological dimensions these choices in a now infamous 1971 memorandum***

    See the movie “Heist: Who Stole the American Dream,” now available on Netflix.

    See also Hedrick Smith’s book of the nearly identical title ["Who Stole the American Dream."]

    Each has a comprehensive discussion of the Powell Memorandum and how its goals have been realized by the CofC crowd.

    1. rob

      I think the movie “who stole the american dream”, ought to be required viewing.
      The powell memo, so neatly lays out the desires of the same people who have moved this country in that exact way for the last forty years.
      People talk too much about things “just happening”.This has to stop. If we wait for good things to “just happen”.They won’t.The bad track this country is on didn’t “just happen”.And There are groups aligned against anything good happening.And couple that with their total corporate control of all the branches of gov’t. and the press.
      The situation looks hopeless.That is how it is supposed to look.Like any bad dream, the answer is to wake up.

  4. middle seaman

    Inequality afflicts most if not all affluent societies. The degree may differ but earning difference by factors 100 and more are found in Germany, China, Korea, Israel and many other countries. Unions are still quite strong in some of these countries. Common to unequal modern societies is modern finance and high tech.

    Hopefully, this facet of inequality is addressed by the paper.

    1. Gerard Pierce

      While your comment specifically referred to “modern” societies, I’ve been curious for a number of years how the super-rich (the top 1%) in China (after the unification of the warring states) wound up with 90% of everything worth owning. They didn’t have anything approaching our kind of government but inequality worked out similarly.

      On specific example: The peasants in wet-rice provinces had to “hire” the Mandarin to supervise dredging of water canals. They couldn’t do the job for themselves because they couldn’t trust each other to share the costs fairly.

      The Mandarin took a big cut of the proceeds (Mandarins had no paychecks) but theoretically he was responsible to the Emperor for growth of rice and the Emperor’s share of taxes on what was grown.

      I guess my comment means that inequality seems to be build into any society with anything that could be called a government.

      There’s some kind of rule that governs this kind of stuff, but our modern society has no clue how it really works.

      1. from Mexico

        You might be interested in the research done by Peter Turchin in War and Peace and War in this regard. Or even better yet is the book he co-authored with Sergay A. Nedfedov, Secular Cycles.

        Their theory of history is not linear and progressively upward as theorized by Positivism and Modernism, but cyclical. They marshall a great deal of evidence to demonstrate that inordinate inequality is universal in societies in their twilight years. They then theorize as to what causes inequality, and why this destroys once great socieites and civilizations.

    2. Lafayette

      Unions are still quite strong in some of these countries.

      Indeed they are, but membership is highly comparative. For a disappointing comparison of the US vesus the rest of the world, download this Excell sheet from the ILO (International Labor Organization) here.

      For those too lazy (or indifferent) to do so, the US has a total percentage of wage earners who are unionized at around 11%, whilst in Germany it is just above 50%, and France is 31%.

  5. from Mexico

    Colin Gordon said:

    A “rising tide” of robust economic growth does not necessarily lift all boats. Political struggle and policy choices determine whose boats rise.

    This heretic should be burned at the stake for this blasphemy.

    Everybody knows that free markets produce meritocracy because of the workings of the “invisible hand.” This has been known for over 200 years. Those who contribute most to society see their boats rise. Those who don’t see their boats sink. And this is just the way it is. Nothing can be done about it, because it is the law of nature. “Nature really is red in tooth and claw.”

    And if you don’t believe it, just ask Ayn Rand or any number of eminent scientists from Harvard to Oxford.

    1. from Mexico

      Colin Gordon said:

      But there is little evidence to actually support this account.

      Don’t bother us with this idle talk of evidence. Everybody knows that eminent scientists these days don’t do evidence. They only do theory.

      1. Thor's Hammer

        I’m shocked Mexico. You of all people falling into the cynicism that is my normal mode of thinking—-.

        Any society that doesn’t undergo a revolution every two generations is bound to suffer from calcification of the arteries.

        Delusion is the opium of the masses now that God has relocated from Heaven to a televised drive-in church in the South.

    2. Inuit Man

      Great snark. The thought has occured that if we really allow the free market, then we’ll have equal distribution of wealth.
      Unfortunately, inequality means just that. The wealthy will write the laws to suit themselves, such as the Bankruptcy code, or so-called contract law exists today, will own and control systems of social control that are useless against their own antisocial behavior, and will buy politicians if we can be so cynical. The author could have correlated rising prison populations, soaring home prices and so on into inequality formulae.

      1. jake chase

        The primary author of inequality is our Federal Government, which keeps the poor poor and the rich rich. The income tax siphons off the lion’s share of any potential worker savings, and only a few successful worker speculators rise above the worker herd. Small business largely amounts to buying a temporary job that may be vaporized at any time. Corporate profits are now largely looted by the executive class, and dividends are microscopic. Big money is leveraged by bank money to continually recapitalize business assets, and the resulting debt overhang must be serviced by constantly rising prices which are steadfastly avoided by trumped up price indexes. Meanwhile, government initiatives are nearly always corporate boondoggles, and banker usury does the rest. Broad based prosperity is always temporary and always based on rising home prices and/or stock prices, but you have to get out of these “markets” in time to avoid being sheared.

        I am waiting for some economist to put all this into a model, but I am not holding my breath.

        1. allcoppedout

          Much to agree with Jake. The spreadsheet-database is possible. I suspect the snag is government – in the sense we don’t know what this really is. What has attracted a lot of my attention is that the people we get doing government are unfit for purpose. At various levels out politicos turn out to be Blairs, Browns, Thatcher, Mitterand, Sarkosy, Bush, Clinton and so on, our judges stick to their political ideology (mostly conservative-corporatist), and various regulators cover-up merchants (here cops, financial gawps and even care quality people).
          In writing any spreadsheet we’d have to get beyond what economists treat as the levers and what the current management jobs in the system are, how anyone gets them, our control of them and finance in which capital is not ‘neutral’ and can’t be used for political purposes by a few. We’d presumably be trying to write this in a manner that doesn’t try to re-invent Soviet Paradise or state capitalism generally.
          It gets much more complicated than this and I see why some opt out for libertarianism and (negative) freedom from the State – not that I agree with them (and would go for more structured positive freedom in a reformed democracy – sortition, new social contract on education, wages …)

          It’s so much easier to assess a few MBAs and look the other way!

          In the meantime we can imagine what a society that doesn’t threaten us with doom and black death solutions to labour surplus might be.

          1. Lafayette

            At various levels out politicos turn out to be Blairs, Browns, Thatcher, Mitterand, Sarkosy, Bush, Clinton

            This may seem correct but is also incomplete.

            Like it or not, in a democracy our elected leaders are reflections of the constituencies that voted them into office. If they then turn to be more concerned about their own well-being and not that of their constituencies, then, yes, they’ve gone off-track. And it is up to the electorate to change its representatives.

            Why do so many, therefore, have such long tenures in office? Because they are well-liked by their voters. It’s that simple.

            Meaning that the American electorate needs considerable education about the nature of politics, politicians and national policy-making.

            The problem, I submit, is the fact that far too many Americans have been indoctrinated into believing the Ayn Randian bullshit about “individual achievement”, without having read even one of her books. There is nothing wrong about individual achievement as a pursuit to well-being (for oneself and one’s family).

            Where the principle stumbles however is in the fact that we are a collective society. Humans have always been a collective grouping, out of the need of survival. As we became less nomadic and more sedentary, we noted that agricultural specialization produced more that we could then barter – which led us to a collective Market Economy that is our principle element of Social Organization this day.

            Now, pray tell, how many “self-made men” (or women) do you know who became millionaires on a deserted island? None, nada, niente, rien, nichts, tipota.

            It is our “collectivism” that describes us most, not our “individuality”. Individually, we are nothing. Collectively, we are an entity with which to be reckoned.

            This too is the reasoning behind the challenge of correcting the infamous Income Disparity in our nation. By nature of the fact that we all have various talents and levels within those talents, in a market economy, some talents will be exchanged for higher remunerations than others. But, that does not mean that only a select minor percentage of the population should do so.

            We must hold strongly the tenet that our Market Economy is one where prevails Equitability (fairness) in income share, but not Equality in Income Share. The words seem the same, but there is a world of difference between them in meaning.

            And the best way to implement Equitability is by tweaking the Tax Code. Howzat?

            Look at what happened to the Gini Coefficient (here) around the 1980s. It had diminished slightly since WW2, allowing for more fair income sharing. But, strangely, in the early 1980s it slopes sharply upwards. What happened in the early 1980s?

            Who was elected PotUS in 1980 and continued the work initiated by the Johnson Administration (stupidly) in the 1960s? (See this info-graphic here.)

            Wretched Ronnie, was elected, who took a hatchet to the upper-level taxation and brought it tumbling down to the high-20s. (See total Effective Tax Rates in 2011 in this info-graphic here.) To this very day, upper-income taxation (after deductions) is rarely above 30% of the total Personal Income.

            If the above does convince that the incentive to take inordinate risk, which is what happened on Wall Street in the late first decade of this new millennium, then I, for one, do not know what will.

            And, since income becomes wealth, we should not be surprised who are the wealthiest amongst us as seen in this info-graphic here.

            Think you are being screwed? You are not alone. Final graphic, the percentage of Americans who think that the distribution of money/wealth can be better in America – here.

            ‘Nuff said … ?

    3. Lafayette

      Ayn Rand is long since dead, thankfully.

      Of course, some troglodytes do try to keep the torch burning in their caves.

  6. diptherio

    It might just be me, but I can’t see any of the promised chart-porn, just blank spaces :( I’m using Firefox, if that makes any difference.

    (when I check out the html source, I just see a bunch of p tags…

    1. Norman

      I use Firefox too, experienced the same problem at first, then it loaded. Perhaps rebooting might help.

    2. diptherio

      Hmmm…same problem this evening. I’m sure I don’t have my chart-porn-blocker turned on…oh well, it loads the graphics with Opera, so maybe I don’t have a plugin installed or something

  7. F. Beard

    Honest usury alone results in severe inequality over time. See Dr. Michael Hudson’s writings for more details. But add money lent into existence (“credit”) and it’s even worse for the less or non “creditworthy” since saving is precluded by negative real interest rates and because of the recurrent boom-bust cycle.

    Add to that that the workers’ jobs have been automated away with their own stolen purchasing power by their so-called “creditworthy” employers.

    If credit is correctly perceived as new purchasing power that dilutes, at least temporary but often permanently, existing purchasing power then it is evident that NO ONE is “creditworthy” UNLESS the credit created is 100% a personal matter with not a shred of overt or implicit government support.

    Common stock is an ethical form of endogenous private money creation. So why do we tolerate a government-backed counterfeiting cartel given an honest alternative?

  8. sleepy

    As the state’s capture by neoliberalism continues to drag most people down, I wonder how long before the right wing among the working and middle class catches on.

    At some point, the delusion of the free market and its political rhetoric is unsustainable.

    1. tongorad

      The problem is that the market is posited so firmly in the public mind as a state of nature, rather than a political arrangement. Unemployment is propagandized as individual failure. Who knows where the resistance will come from. I doubt it will in my lifetime.

      1. thesystemoftheworld

        tongorad, that’s putting it perfectly:

        “… market is posited so firmly in the public mind as a state of nature, rather than a political arrangement.”

        As seen with the common analogy to evolution and the survival of the fittest. It seems so closely woven into the national mythos I’m not sure how it can be dislodged. Maybe it’ll take a few more financial crises.

  9. Susan the other

    So to prevent the collapse of economic society, after 40 years of ransacking, the policy is now to practice economic life support via QE. Because it is more than clear that there is no economy left and so no long term investment in societal value is possible. A jobs program also is feared because it would set off inflation, kept down now by massive unemployment. However, long term jobs created by the government is the only answer because that is what an economy is. We need a better way to control inflation than simply promoting unemployment. China seems to be managing its inflation too. Like crushing the shadow housing market in favor of a long term government plan to urbanize 300 million rural Chinese. If it is done by the government it can be controlled. Here, QE keeps the economy from disintegrating but it only feeds the stock market – somehow that’s not considered inflation even though if and when the crash comes it is far more devastating. Inflation could be controlled with price controls and other mechanisms. But don’t expect this congress to pass that sensible kind of thing.

    1. neo-realist

      I also suspect that a jobs program is discouraged by the people with the gold so that they can get as much of the government largesse in their pockets as possible.

      Furthermore, and I believe this has been mentioned by a few other NC posters, keeping the unemployment rate high is being utilized as a political tool of control over the populace so that they become satisfied with the crumbs and don’t fight the present arrangements of oligarch control less they lose access to the limited opportunities available to them or have what they gotten taken away with no way back to it. In the 60′s and 70′s when a lot people were living high off the hog with too much education, and too many good paying jobs, too many of them were making trouble in the streets and making demands for even better deals from the system and the TPTB decided that if we can get them back on their knees (pre-depression era?), we’re going to keep them there.

  10. washunate

    It’s a great website. I highly recommend the comparison of what Americans think inequality is versus how much inequality actually exists.

    That is one of my core problems with educated people who undervalue the importance of inequality. No matter how strongly you emphasize the problem, reality is even worse than you think.

    We have a distributional challenge in our society. We are quite wealthy; the only question is who gets the wealth.

  11. be'emet

    seems to me, movement to equality is the price the OPOOP (One Percent Of One Percent) pay for warring. In and after the 40′s, OPOOP rewarded concessions to hoi poloi for expending lives to save their skins. Since then, OPOOP has rediscovered methods to beggar the rest, so ever less reason for concessions. Vietnam brought the last scary confrontation. Lately, they try to make Obama look scary, but he doesn’t cooperate, just switches sides to abort the challenge, lets the beat go on. Occupy hasn’t the basis to claim rewards, only damages, accordingly can’t get traction.

  12. Alejandro

    “A common denominator runs throughout recorded history: a rising proportion of debts cannot be paid. Adam Smith remarked that no government ever had repaid its debt, and today the same can be said of the overall volume of private-sector debt. One way or another, there will be defaults-unless debts are paid in an illusory fashion, simply by adding the interest charges onto the debt balance until the sums grow to so fictitious a magnitude that the illusion of viability has to be dropped.

    But freeing an economy from illusion may be a traumatic event……”
    —-Excerpt from “The Bubble and Beyond” by Dr. Michael Hudson

  13. Michael Jones

    The embedded video on American perceptions of inequality reminded me of a poll conducted a few years back in which 40% of the respondents thought that they were in the top quintile in terms of income. Once again we are reminded that perception is not reality.

    1. Michael Jones

      Oh, and those are truly remarkable graphs embedded in the paper and this post. Thanks for sharing.

  14. Klassy!

    Why have countries such as Slovenia, Poland, Czech Republic, and Slovakia had less growth in inequality than say Denamark or Sweden? Does anyone know the answer. I suppose you can’t generalize for all the countries listed. On the other hand there might be commonalities.
    Also, does the graph with the gini coefficient compare inequality after transfer payments?

  15. Jim

    One historical task of the American State was to create the new collective forms of industrial labor, personal consumption and social services that managerial capitalism required for its growth and productivity.

    Before 1933 most American workers basically remained craft-oriented in their skills. Partly broken by the scientific management movement and the assembly-line system after 1910, American workers were still politically restive and largely collectively unorganized up to the 1930s

    Beginning with the NRA and its section 7A, however, the American labor movement was gradually integrated into a national State structure to assure that labor militancy would not short-circuit the national industrial recovery.

    The principle of federally mandated collective bargaining was established as a firm precedent and slowly recognized by business elites. For example, the passage of the Norris-La Guardia act, the National Industrial Recovery Act, the National Labor Relations (Wagner ) Act and the Fair Labor Standards Act all contributed to placing American labor firmly under the control of the national State. In addition, the passage of the Employment Act of 1946 and the Taft-Hartley Act of 1947 reaffirmed the partnership of Big State and private Big Capital to directly bureaucratically the internal processes of American labor and our emerging mass consumer society.

    A return to a New Deal Paradigm in 2013 and beyond would only accelerate growing inequality and the collapse of democracy and accountability.

  16. Hugh

    Just to briefly summarize, the first chart is one way of showing that since the flexion point in 1979, real wages went flat, indeed have decreased slightly, even as real GDP steadily increased during this time up to the disasters of 2007-2008 (the housing bubble bust, the recession, and the meltdown). It’s really the most important of the five. My only quibble is that a better measure would be real weekly wages, not hourly wages.

    The gini chart doesn’t specify which gini coefficient is being used, but we already know that wealth and income inequality in the US however it is measured is extreme, and greater than many other industrialized countries due to its weak safety nets.

    The third chart is also important because its take home message is that only one in four jobs in this country still qualifies as “good” by what look to be reasonable parameters of pay and benefits (healthcare and retirement). There are, however, 3 kickers here. There is no measure of overall job satisfaction. We don’t know how many of those retirement plans have been switched from defined benefit to defined contribution. And lastly we don’t know how good the health plans are and how expensive to employees they are. So as bad as the findings in this chart are, the reality is worse.

    The fourth chart recapitulates the work of Saez and shows that the benefits of the “recovery” from the December 2007 recession went to the top 10% and per Saez the top 1%. For the bottom 80%, the recession never ended.

    The last chart shows that Americans do know that wealth inequality is bad, but they don’t know just how bad it is.

    Much of this has been discussed here in the past, but it is good to see these representations. They simply strengthen the case we have been making.

  17. Lafayette

    What is often remarkable about Union Movements is that, despite low membership numbers, the indirect support in the population is nonetheless considerable.

    Any French union movement to strike in France will bring thousands upon thousands of poeple down into the streets.

    In America, would there be a “million-man march” in Washington over Labor Rights, it would surely get the media attention it deserves. But, more so, America needs to boost the number of progressives in Congress. Along with a progressive PotUS, that could change matters regarding labor rights considerably.

    For instance, the requirement for any public company to reserve at least two slots on the Board for staff-elected representatives and at least two elected at large from equity owners. It could go a lonngggg way to ending the cosy relationship of Board Members who are all cronies of one another and simply perpetuate the current status-quo in unequal Income Sharing of bonuses and stock-options for “merit”.

    Why should TopManagement necessarily merit bonuses/stock options and the rest do not? Where was that rule made? It isn’t a rule. It’s just a hand-me-down notion that has existed over time, within a class of people who “look after their own” …

  18. allcoppedout

    It’s worth saying the ideologies of inequality are of barking quality. The worthless unemployed person quickly becomes a valued soldier when war comes. People with loads of money ‘require’ even more as motivation (suggesting money is an addiction). Bankers are worth their bonuses in the good times, but not for claw-back in the bad (which performance is related to what pay?)- and chronic numbers of wrongs like obscene celebrity pay make a right.
    Animals don’t work when they don’t need to, yet ‘hard work’ is our mega-ideology, even now there is a shortage of work. Terms like ‘growth’ are about an economy producing fewer and fewer bread-winner jobs, more and more poor quality stuff and entertainment, computers made into mobile toys and farcical situations in health and care we ‘cannot afford’.

    An interesting thing in presenting the likes of these graphs to university students is in the tests one can give before – hardly anyone knows the reality. Sad to say, I test afterwards too and knowledge and attitudes, except in about 20%, seem unchanged.

    1. James Levy

      I’m coming to the conclusion that the cry “if the people only knew” is like the old notion “if the Czar only knew” or “if Stalin only knew”–a crutch we have, an imaginary notion that somebody cares about the situation and would do something if they knew. Let’s face facts: nobody who warned us against the Iraq invasion prospered; no one who warned us about the looming financial crisis has risen to positions of authority. Knowledge is not power. Power is power, and the powerful reward those who tell them what they want to hear and punish those who don’t. American elites today just happen to be so spectacularly rich and militarily powerful that they can ignore reality and not be hurt by the fallout. They can walk away like Tom and Daisy Buchanan, which was the point of the novel, not the fate of that sad-sack dreamer Gatsby.

      In a war of information versus dreams, information wins when choices are stark, immediate, and survival hangs in the balance (and then only if the person has the strength to avoid self-deception). I’m afraid that most of the time comforting illusions beat out hard facts in the minds of most people. The implications of this for the Enlightenment Project are most disturbing.

  19. denim

    “What History Teaches Us

    Any conservatives who have any doubt about how corrupt Wall Street has become … please skim this and read these quotes:

    “If the people only understood the rank injustice of our Money and Banking system, there would be a revolution before morning.”
    - Andrew Jackson

    “A power has risen up in the government greater than the people themselves, consisting of many and various powerful interests, combined in one mass, and held together by the cohesive power of the vast surplus in banks.”
    - John C. Calhoun, Vice President of the United States

    “There is an evil which ought to be guarded against in the indefinite accumulation of property from the capacity of holding it in perpetuity by…corporations. The power of all corporations ought to be limited in this respect. The growing wealth acquired by them never fails to be a source of abuses.”
    - James Madison

    Any liberals who have any doubt about how corrupt government officials have become … kindly glance at this and read the following quotes:

    “Since I entered politics, I have chiefly had men’s views confided to me privately. Some of the biggest men in the United States, in the Field of commerce and manufacture, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they better not speak above their breath when they speak in condemnation of it.”
    - Woodrow Wilson, The New Freedom, 1913

    “There exists a shadowy Government with its own Air Force, its own Navy, its own fundraising mechanism, and the ability to pursue its own ideas of national interest, free from all checks and balances, and free from the law itself.”
    - Senator Daniel K. Inouye, 1987

    “The real rulers in Washington are invisible, and exercise power from behind the scenes.”
    - Supreme Court Justice Felix Frankfurter, 1952″

    http://www.ritholtz.com/blog/2012/08/roosevelt-to-dissolve-the-unholy-alliance-between-corrupt-business-and-corrupt-politics-is-the-first-task/

    Actually, did it not begin in America with that entity called the British East India Company?
    http://www.tea.co.uk/east-india-company

    And now, where are their decendants? Where?

    1. Lafayette

      “The real rulers in Washington are invisible, and exercise power from behind the scenes.”

      Interesting comments and, even if exaggerated, not far from reality.

      Such is a product of a two-party system encrusted into power by gerrymandering (that began late in the 19th century and exists to this day) and largely voter apathy. (The T-Party was put into control of the HofR by a minority of the popular vote, around 38% of the total that bothered to vote in 2010.)

      We piss and moan about those “basterds in Washington”, but, who put them there? We, the sheeple, did …

      If we want smarter people representing us, we must first elect them. Not so?

      I’ve lived in Switzerland, and was amazed at the number of times annually that the Swiss voted in referendums. At least 3/5 times a year. A law permits them to rescind, by popular vote, any law made by the Swiss Legislature. It does wonders to keep their legislature (relatively) honest.

      Referendums are available at a state level, but rarely nationally. That is a shame.

      We keep bitching-in-a-blog about how awful is the present situation, both economically and politically. But what do we really want to do about it personally.

      Not much … we prefer to accept our system of governance, however rotten it may be, because we are, in effect, apathetic about reforming it.

      1. James Levy

        The very size of the nation and the entrench power of the two parties disuades us more than apathy. Even during the de facto Constitutional crisis of 2000 and the economic meltdown of 2007-8 the Power Elite was never even close to being challenged and had its hands tightly on the reins of control. To reform the two-party system would require a complete meltdown and total deligitimization of the economic, political, and media elites in this country. That only happens when you are facing a 1932-33 economic catastrpohe or humiliating military defeat and occupation. The United States isn’t really close to either, and although a repeat of 1932-33 is possible, the apparatus of control, the army, police, and secret police (NSA, CIA) are so vastly larger and more formidable than they were in 1933, and the technology advantage of the State (no more guys with Springfields versus guys with Winchesters) so much greater (one helicopter gunship could brush away a thousdand men with AR-15s in a matter of two or three minutes) that outside of total collapse, the system is probably unalterable by those on the outside of the 7% that I think make up the People Who Count.

        1. Lafayette

          To reform the two-party system would require a complete meltdown and total deligitimization of the economic, political, and media elites in this country.

          Balderdash. Reform can and will happen when a sufficient number of Americans wake up to what is known as Social Democracy. That is, a set of rules that institutes fairness and equitability progressively in the way we govern the nation, thus enhancing our collective well-being.

          And the way that happens is to vote more progressives into the Congressional Progressive Caucus, which already constitutes about 15% of the vote in the HofR. Were that percentage to increase to 20/30/40%, think of the reforms that could be undertaken under a similarly progressive PotUS.

          Is that likely to happen any time soon? Not bloody likely. Americans are still befuddled politically, having put too much faith into first the Great Society and then Trickle-down Economics, both of which have failed them miserably.

          It will take a very long-haul of political education on the part of some very intelligent people. There is no magical overnight solution. And what you suggest is calamitous, tantamount to great suffering by the America people.

          You have no idea whatsoever of what a “complete meltdown” means in terms of total Economic Dysfunction.

          Where would you get your BigMacs?

          1. Gordon Gman

            “You have no idea whatsoever of what a “complete meltdown” means in terms of total Economic Dysfunction.
            Where would you get your BigMacs? ”

            You’d be surprised what it is like out there, how many homeless people are ‘officially’ in New York for example, 20-30K?
            Many people were losing their homes after their jobs, and they were going to get food at still functioning pantrys.
            Apologies for the past tense, this is real today, as is indifference.

            1. Lafayette

              You’d be surprised what it is like out there, how many homeless people are ‘officially’ in New York for example, 20-30K?

              That’s simply not true. I live in France, and we have the same phenomenon here. What ever did you think would happen in a bubble, given the consequential reality before your eyes?

              Americans were playing with fire and they got burnt … badly.

              They went binging in a get-rich-quick realty bubble that burst all over them. It wasn’t the first time that happened, but in a frenzy of collective forgetfulness they forgot (or never really learned) the lessons of history.

              American philosopher George Santayana, “Those who refuse to learn from history are condemned to repeat it”.

              Money can’t buy your happiness, but it sure can get a country into one helluva lotta misery.

              Wakey, wakey … !

    2. Banger

      Thanks for giving us that perspective–we need constant reminders of this situation. Unless we begin with the concept of an “invisible” government that operates through a series of fixers and PR people in Washington (I’ve seen it up close) on the one hand, and the security services on the other, we cannot understand the political (including economic) arrangements we live under. This is why, as I’ve often said, the left is always failing. Without that understanding all attempts at understanding our situation are built on sand.

      1. Lafayette

        (I’ve seen it up close) on the one hand, and the security services on the other, we cannot understand the political (including economic) arrangements we live under.

        But what, ever, were we THINKING?!?

        The Reaganites had been in power for the past thirty years – and even under an 8 year period of Clinton, we still did not understand the wicked consequences of Unbridled Greed on both Wall Street & Main Street that was at work.

        A country cannot reduce upper-income taxation and expect people to be motivated, in a crazed fashion, to take advantage of it.

        If the above data shows anything, it demonstrates that the best fairness possible (in Sweden) comes in the form of high taxation, and an equitable redistribution of income in Public Services. Sweden has plenty of millionaires, more than enough for any economy.

        Don’t believe the bullsh*t about High Taxation diminishing Entrepreneurial Risk. It doesn’t! It does, otoh, curb excessive risk-taking and the fact that most of the booty goes to a select minority.

        Especially in a nation that immaturely glamorizes the rich as celebrities and adulates a bling-bling world out of pure escapism from ordinariness.

        America’s problem, I never tire of reiterating, is not just economic. It is one of a fundamental lack of cultural values.

        Get the cultural values set in the right direction, and the economy will take care of itself.

  20. impermanence

    I used to have a partner that always said, “the best way to help the poor is to not be one of them.”

    I think this sentiment pretty much sums up how the top 1% feels about 99%.

    The good news is that the illusion, that they are apart from the whole, is just that.

  21. live

    What’s up, after reading this awesome paragraph i am also delighted to share my familiarity here with mates.

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