Musings on Plutocracy

I trust readers don’t mind that we are a bit heavier than usual on the political-related postings tonight, since this is a slow news week. But that may be useful, given that the big new subtexts at the INET Conference were the importance of “political economy” (three years ago, that expression was seen as having a decidedly Marxist color to it) and the rising wealth and power of the top 1%.

One nagging question is how the increased concentration of income and wealth in the top strata came to pass. The story that this group and their hangers-on would have us believe is that it is all the result of merit and hard work. Two offerings raise doubts about that line of argument.

One is from Robert Scheer in “The New Corporate World Order,” which points out the too-often-ignored fact that US taxpayers support a very high level of military spending, which makes the world safe for US corporations. Do you think US companies would have put plants in China in the absence of a strong US military? Expropriation is always a possibility with an authoritarian government, particularly since they can use trumped up charges to make the process look legitimate (labor or environmental violations that lead a plant to be seized and auctioned to locals, for instance). As Scheer notes,

General Electric, which was bailed out by taxpayers and which stored so much of its profit abroad that it paid no taxes for the past two years, was forced to tighten up, but while cutting its foreign workforce by 1,000 it cut a far more severe 28,000 in the United States….consumer purchasing power is down in the U.S. thanks to the devastating collapse of a housing bubble GE Capital fed with suspect mortgage financing that provided the company with well over half of its profits before the crash…

Of course it will be argued that multinational corporations have the right to arrange their business as they see fit in order to maximize profit. But if that is the case, do beleaguered American taxpayers have to foot the bill? When those corporations run into trouble overseas because of financial hustles or hostile locals and need the diplomatic and military might of the U.S. government to protect their interests abroad, it is again the U.S. taxpayer who must pay to maintain this new world order….. If the companies don’t feel that way, let them operate under the flag of Liberia or the Cayman Islands.

No less important than U.S. military muscle is the power of the American government to construct and enforce a worldwide trade and finance structure to the advantage of U.S.-based multinational corporations. That is why the companies spend so much money lobbying Congress on matters ranging from regional trade agreements to international banking regulations. It is precisely the impact of trade agreements like NAFTA that has facilitated the erosion of well-paying jobs. And it was the deregulation of international banking standards, led by the U.S. Treasury Department under the past five presidents, that created the conditions for the recent disastrous housing and banking meltdown…

Corporate lobbyists attest with their every breath that big government and big business are bedmates in a bountiful venture that impoverishes the rest of us. It is time to admit that we are, in practice if not surface appearance, close to the Chinese communist model of state-sponsored capitalism that sacrifices the interests of ordinary workers, be they in the public or private sector, for the exorbitant profits of the superrich.

Many readers probably agree with Scheer’s assessment. But it does not tell us how we got into this situation where the very richest have gotten such a stranglehold on policy. The recent book Winner-Take-All Politics by Jacob Hacker and Paul Pierson offers an explanation. Per David Runciman in the London Review of Books (hat tip Michael Thomas):

The real beneficiaries of the explosion in income for top earners since the 1970s has been not the top 1 per cent but the top 0.1 per cent of the general population. Since 1974, the share of national income of the top 0.1 per cent of Americans has grown from 2.7 to 12.3 per cent of the total, a truly mind-boggling level of redistribution from the have-nots to the haves. Who are these people? As Hacker and Pierson note, they are ‘not, for the most part, superstars and celebrities in the arts, entertainment and sports. Nor are they rentiers, living off their accumulated wealth, as was true in the early part of the last century. A substantial majority are company executives and managers, and a growing share of these are financial company executives and managers.’

Hacker and Pierson believe that politics is responsible for this. It happened because law-makers and public officials allowed it to happen, not because international markets, or globalisation, or differentials in education or life-chances made it inevitable. It was a choice, driven by the pressure of lobbyists and other organisations to create an environment much more hospitable to the needs of the very rich. It was even so a particular kind of politics and a particular kind of choice. It wasn’t a conspiracy, because it happened in the open. But nor was it an explicit political movement, characterised by rallies, speeches and electoral triumphs. It relied in large part on what Hacker and Pierson call a process of drift: ‘systematic, prolonged failures of government to respond to the shifting realities of a dynamic economy’.

Yves here. I’m not certain I buy the drift theory; the push to the right, meaning for deregulation, less progressive taxation, a reduction in social welfare programs and weakening of labor bargaining power, was the result of an orchestrated effort by an extreme right wing long keen to dismantle the New Deal, and also got some support from large corporations. The big problem of the 1970s was that only a few Keynesian economists decried the big budget deficits of the late 1960s, which with the economy already running in high gear, was certain to cause serious inflation. And then two prominent Keynesians, Samuelson and Solow, further discredited the reigning orthodoxy by declaring that the Philips curve (which has limited empirical support) meant you could not have high inflation and high unemployment at the same time (note I am not a fan of Keynesians; Keynes himself would have been very opposed to a budget deficit in a boom). But such major errors in succession and the perceived severity of the malaise (compounded by the appointment of a particularly weak Fed chairman, Arthur Burns) opened the policy field to new ideas.

Back to Runciman:

One of Hacker and Pierson’s complaints about the way we usually regard politics is that we miss what’s really going on by focusing on the show of elections and the competition between parties. This is the theatre of electoral politics…‘This is no doubt why politics as electoral spectacle is so appealing to the media: it’s exciting and it’s simple…

It is easy to assume that if the rich have been winning in recent decades, the process must have started with the election of the pro-big business, anti-big government Ronald Reagan in 1980 (and concomitantly, Margaret Thatcher in Britain in 1979). But Hacker and Pierson argue that the real turning point came in 1978, during the presidency of Jimmy Carter. This was the year the lobbyists and other organised groups who were pushing hard to relax the burden of tax and regulation on wealthy individuals and corporate interests discovered that no one was pushing back all that hard. Despite Democratic control of the White House and both Houses of Congress, 1978 saw the defeat of attempts to introduce progressive tax reform and to improve the legal position of trade unions. Instead, legislation was passed that reduced the tax burden on corporations and increased the burden on their employees (through a hike in the payroll tax, a regressive measure). All this happened because the politicians followed the path of least resistance – as elected politicians invariably do – and the better organised and better-funded resistance came from the representatives of big business, not organised labour.

Yves here. ECONNED also depicted the Carter Administration as the where the policy shift took place. Back to the article:

What took place in the 1980s was therefore an extension of the Carter years, not a reversal of them. The process of deregulation and redistribution up the chain accelerated under Reagan, who was broadly sympathetic to these goals. Yet it happened not because he was sympathetic to them, but because his sympathies were allowed free rein in a political environment where the opposition was muted and the expected coalition of interests opposed to the changes never materialised.

Yves again. What they are missing is the concerted effort to change social values, which has started as a reaction to the 1960s. That was a big contributor to the lack of pushback. Adam Curtis’ four part BBC series, The Century of the Self, covers this nicely (I strongly recommend it, you can view it on Google Video), as does David Brock’s The Republican Noise Machine. Back to Runciman:

So where did the resistance go? This is the real puzzle, and Hacker and Pierson take it seriously because they take democracy seriously, despite its unhealthy fixation on elections. Democracies are meant to favour the interests of the many over those of the few. As Hacker and Pierson put it, ‘Democracy may not be good at a lot of things. But one thing it is supposed to be good at is responding to problems that affect broad majorities.’ Did the majority not actually mind that they were losing out for the sake of the super-rich elite?….Hacker and Pierson….see strong evidence that the American public do still want a fairer tax system and do still see it as the job of politicians to protect their interests against the interests of high finance. The problem is that the public simply don’t know what the politicians are up to. They are not properly informed about how the rules have been steadily changed to their disadvantage. ‘Americans are no less egalitarian when it comes to their vision of an ideal world,’ Hacker and Pierson write. ‘But they are much less accurate when it comes to their vision of the real world.’

Yves again. This actually does ring true. I was gobsmacked when I lived in Australia to see at all levels of income and education how much better informed people were about domestic and international politics. But many readers would probably disagree with the premise about democracies and instead argue that this is a classic Mancur Olson collective action problem. Back to the article:

Hacker and Pierson’s argument is really a return to a much longer-standing critique of democracy, one that flourished during the 1920s and 1930s but was supplanted in the postwar period by expectations of rational behaviour on the part of voters. This traditional critique does not see the weakness of democracy as a matter of the voters wanting the wrong things, or not really knowing what they want. They know what they want but they don’t know how to get it. It’s because they don’t understand the world they live in that democracy isn’t working. People aren’t stupid, but when it comes to politics they are ignorant, lazy and easily satisfied with pat answers to difficult questions. Hacker and Pierson recognise that it has become bad manners to point this out even in serious political discourse. But it remains the truth. ‘Most citizens pay very little attention to politics, and it shows. To call their knowledge of even the most elementary facts about the political system shaky would be generous.’ The traditional solution to this problem was to supplement the ignorance of the voters with guidance from experts, who would reform the system in the voters’ best interests. The difficulty is that the more the experts take charge, the less incentive there is for the voters to inform themselves about what’s going on. This is what Hacker and Pierson call the catch-22 of democratic politics: in order to combat what’s taking place under the voters’ radar it’s necessary to continue the fight under the voters’ radar. The best hope is that eventually the public might wake up to what is going on and join in. But that will take time. As Hacker and Pierson admit, ‘Political reformers will need to mobilise for the long haul.’

Yet time may be one of the things that the reformers do not have on their side…This, again, is one of the traditional critiques of democracy: while decent-minded democrats are organising themselves to make the world a better place, the world has moved on. In a fast-moving financial environment, it is usually easier to assemble a coalition of interests in favour of relaxing the rules than one in favour of tightening them. Similarly, it’s easier not to enforce the rules you have than to enforce them: non-enforcement is the work of a moment – all you have to do is turn a blind eye – whereas enforcement is a slow and laborious process.

This is a gloomy prognosis, but any realistic assessment is unlikely to be upbeat. I’d be curious to get reader input on both the Hacker/Pierson analysis and what remedies they see as viable.

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  1. Foppe

    “But many readers would probably disagree with the premise about democracies and instead argue that this is a classic Mancur Olson collective action problem. Back to the article:”

    Why wouldn’t it be both? I’m not sure what the situation in Australia is like, but it seems to me that the unions provided a way to organize and inform people of changes that were happening, and the US is probably the country with the weakest unions (apart from certain totalitarian countries) in the world. Thanks to things like Taft-Hartley, “right-to-work” legislation limiting the rights of citizens to organize politically, as well as the active dismantling of unions, it has become exceedingly hard to inform people in the US. Because the unions were generally trusted not to lie to you about what’s going on (although this is by now becoming problematic elsewhere as well, e.g. because a lot of Unions in Europe are now being led by Neoliberal/”third way” social climbers), this meant that people were more likely to believe the info they were provided with than when, nowadays, someone like Rachel Maddow tells you that something bad is coming your way. Because even if you are willing to act on that information, the organizational knowledge and communication structures that are necessary to organize, and to keep going (considering the fact that you generally need multi-week, rather than single-day, protests to convince the politicians to listen) are simply no longer there.

  2. attempter

    What they are missing is the concerted effort to change social values, which has started as a reaction to the 1960s.

    By that do you mean the Social Darwinist campaign which went back to the 19th century and had been newly recalibrated in the 50s at Chicago and elsewhere took advantage of middle class disgust with the 60s counterculture? Because certainly the corporatist effort to change values was not new, was 100% aggressive and not a reaction to anything, and would have gone ahead even if all the young people of the 60s had been Bible students.

    Nor are they rentiers, living off their accumulated wealth, as was true in the early part of the last century. A substantial majority are company executives and managers, and a growing share of these are financial company executives and managers.

    It’s just a different kind of rentier. What else can you call an extraction strategy based on oligopoly muscle and political corruption?

    I’m not sure what Runciman means by “democracy”. His skepticism toward elections is a healthy sign. Real democracy is direct, participatory, truly federated (all power is at the ground level), and is a daily way of life. In no other way could we earn the name citizen.

    By contrast the normal slovenly use of the term really refers to “representative” pseudo-democracy, which has been proven not to work, if the definition of to work is that it provides broad-based economic prosperity, social stability, and political participation. Pseudo-democracy has instead proven to be the most favorable environment for the corporatist assault on all of these. The neoliberal onslaught which commenced in the 1970s is the full development of this, and the ultimate logic of the bogus pseudo-democratic system.

    Why/how did it happen? As I mentioned, the intent and the ideology went back to the 19th century. The onslaught was put on temporary hiatus in response to 1930s revolutionary fears and the mid-century oil surplus. But the totalitarian intent and goal never changed. The 70s brought the US oil Peak and the full maturation of nearly all economic sectors, which would have terminated capitalist profits. So those were the two proximate reasons the elites decided then was the time to embark upon the end game. It was a comprehensive, conscious plan, as is demonstrated by documents like Powell’s 1971 corporatist strategy memo, Kissinger’s blueprint for petrodollar recycling, and David Rockefeller’s manifesto for the Trilateral Commission. Meanwhile, after a 25 year hiatus, the SCOTUS resumed expanding fraudulent corporate “rights” in the 60s. This was to become a landslide by the latter 70s starting with Buckley and Bellotti. The end of the Cold War removed the final restraint. In classical totalitarian fashion, neoliberal capitalism escalated its oppression, violence, and terrorism after winning the war. There was never meant to be a peace dividend, since peace is unprofitable.

    It is usually easier to assemble a coalition of interests in favour of relaxing the rules than one in favour of tightening them. Similarly, it’s easier not to enforce the rules you have than to enforce them: non-enforcement is the work of a moment – all you have to do is turn a blind eye – whereas enforcement is a slow and laborious process.

    Which is why reformism cannot work. We can’t reform rackets, can’t regulate them, can’t coexist with them. Either they or humanity must perish.

    1. Max424

      Good stuff.

      “We can’t reform rackets, can’t regulate them, can’t coexist with them. Either they or humanity must perish.”

      Agree. Unfortunately, the way contestants have been weighted, humanity is entering the paddock as a 100 to 1 long shot.

      1. attempter

        I don’t think the odds are quite that bad. We have their own policy insanity and unsustainable complexity, as well as the limits of growth, on our side.

    2. drb48

      @attempter – “Either they or humanity must perish.”

      Agreed. The problem is that for the former to happen it’s gonna take a revolution. Who’s going to fight it? Not the US public, that seems clear.

      “People aren’t stupid, but when it comes to politics they are ignorant, lazy and easily satisfied with pat answers to difficult questions.”

      Not sure what the difference is between that and stupid. At the end of the day the result is the same.

      1. attempter

        I was going to make that same point: Stupid is as stupid does.

        It looks like the US public as a whole will never rouse itself even for its own survival, let alone for the sake of justice and democracy.

        Luckily, we don’t need the whole public or even a majority. Just a critical mass of actual citizens.

        1. Otter

          I thought you have made several times arguments that “the corporatist effort to change values was not new”… that citizens have been made stupid, ignorant, lazy, etc by a purposeful barrage of disinformation and social grooming.

          I have also been waiting, with unbated breath, for somebody to connect the often asserted statements that the Fathers did not trust the Rabble to a probability that the Democracy written into the Constitution was designed not to work, at least not for the Rabble. Indeed thare was a post the other day wherein it was stated that one of Mr Hamilton’s purposes was to create a strong Federal Government further removed from the influence of said Rabble. (Mr Hogeland does not state it so directly, but at least one of the comments does.)

      2. reslez

        ‘Most citizens pay very little attention to politics, and it shows. To call their knowledge of even the most elementary facts about the political system shaky would be generous.’

        I suppose I must ask the obvious question: Why have we constructed a system that requires citizens to monitor the actions of an elite so remote from their ordinary lives? Why have we made it necessary for citizens to police an empire at all? The problem is the empire itself, constructed to glorify a few power mad elites.

        Ordinary citizens perceive correctly that (1) they have no real power to change the system, (2) if they even attempt to change the system they will pay enormous personal costs, (3) much of the system that elites consider so important has no real impact on their lives, and (4) elites have no desire to listen to them anyway.

        1. sierra

          Your ideas are from what revolutions are made. Unfortunately too many Americans are too ignorant of world history to know the difference between periodic elections of officials that are almost totally unresponsive to a quality of life (not lifestyles) for all citizens, a progressive society and the focus on their own needs for money to continue in office. As long as we allow “money” to govern who gets elected we’re really “screwed” in the long run.
          Can you imagine if Ralph Nader had been put on a ticket back in 2000 at the least to be in the national debates what we might not have been rendered into today?
          And, history will tell you that all revolutions (or revolts) produce unknowns. But, what is known is that the system we embrace is not working for the common folk.

    3. john

      > recalibrated in the 50s at Chicago and elsewhere took advantage of middle class disgust

      Which seems to be what they’ve done again with the Tea Party, no?

    4. nonclassical

      If we read William Blum’s, “Killing Hope”, we see it as “imperialism”…which is I think accurate..

    5. Cyrus Rex

      This is an excellent analysis of the issues brought forward in the post. It only misses one critical point. That is the central role of foundations and think tanks in the power process. Up until the collapse of the Soviet Union in 1989, most major foundations pursued liberal to socialist agenda to insure that the society was safely middle class, satisfied and unlikely to adopt anti-capitalist or pro-communist mass movements.

      With the collapse of the Soviet empire and a changing of the guard of the elite ruling order, came the shift of right-wing neo-conservative foundation sponsorship of academic and private institutional think tank messages. The simultaneous ascendency of Milton Freidman, et. al. and the ideology of “free markets” as god marked a seisemic shift in both ideology and behavior. Government was now the evil force out to destroy the incentive to greed. Markets were deemed to be perfect self-regulating institutions if only government would stay out of the way. And so, it did as the new ruling class bid — politicians were both purchased and convinced that financial might makes right and we are where we are as a result.

      But the source of this shift in values and ideals rested with the funding of the idea factories of the elite universities by foundation money and the control of the main stream media by the corporate interests behind the foundations. It is a perfect prescription for power. Control the ideas and ideals of society without anyone realizing that control is being exerted. Just don’t look behind the curtain to see who is actually pulling the strings. Keep in mind that foundations will never fund studies of foundations and how they work to manage beliefs and asperations.

  3. Mark

    The Philips Curve has “limited empirical support”? Absolutely not true. You know the Philips Curve was an empirical observation, not a theoretical one, right? Also, the Philips curve doesn’t say that “you could not have high inflation and high unemployment at the same time.”

    Seriously, Yves, this is Macro 101.

    1. Parvaneh Ferhadi

      From Wikipedia:
      In economics, the Phillips curve is a historical inverse relationship between the rate of unemployment and the rate of inflation in an economy. Stated simply, the lower the unemployment in an economy, the higher the rate of inflation. While it has been observed that there is a stable short run tradeoff between unemployment and inflation, this has not been observed in the long run.
      Has not been observed in the long run=limited empirical support.

    2. Yves Smith Post author

      You really need to go back and read the history on this one. No one now takes the Phillip curve seriously. Even though NAIRU is now also seen to be questionable, that was Friedman’s response and was seen as a big breakthrough and helped increase his and the Chicago School’s credibility and stature.

  4. Three Wickets

    Not sure about the comparison to state capitalist economies like China. The top 0.1% wealth thing for us is mainly about the financial economy that exploded with Reagan post Volcker. Boomers entered the workforce in mass accumulating savings in real estate and retirement accounts over three decades. The banking sector and all manner of ancillary financial businesses began gambling with those savings for higher returns. Ultimately investment bankers, private equity and hedge fund managers tilted the casinos in their favor and they all became multi-millionaires. And it continues today, pretty much unchecked. The multinational corporate sector with overpaid executives is a related story, but it has its own narrative which I’m too fed up to think about right now.

    1. Three Wickets

      Just realized how silly it sounds to say, they all became multi-millionaires. They became billionaires.

  5. DownSouth

    There are a couple of other things one might throw into the mix.

    First, there were cultural politics that surely played some role in the nation’s “political economy” taking such a hard turn to the right starting in the 70s.

    To begin with, there was the Southern Strategy at work beginning in the 1970s. More than some “brilliant” Republican strategy, it might more accurately be explained as Republican operatives taking advantage of a favorable hand that had been dealt them. Here’s how Senator Dick Russell (D-Georgia) put it as LBJ was wrangling with him to push through the Civil Rights Act of 1964:

    Johnson: I want this civil rights bill passed and you and no one else is going to stand in my way.

    Russell: Well Mr. President, you may do it, but I’ll tell you what. It’s going to cost you the south, and it will cost you an election.

    Of course cultural politics do not stand separate and apart from economic politics, as this passage from Robert Hughes’ Culture of Complaint makes clear:

    Working-class Americans distrusted the “limousine liberals” with their fixation on the environment, women’s rights, abortion rights, busing and affirmative action. To talk about blue-collar racism was too simple—-it was just another way of schematizing real people from above, and the younger, more ideologically liberal Democrats constantly fell into this trap. American workers saw their jobs and their neighborhoods threatened by politics from above.

    And so the Republicans could present themselves as the tribunes of the disparaged values and symbols of the ignored middle, the blue-collar voters who believed in America, mistrusted affluent radicals, and hated flag-burners. It was not immediately apparent that the Republicans cared very little for the economic interests of these people… At least the GOP seemed to have an economic policy, though it failed. It was nicknamed the trickle-down theory: the rigidly ideological prescription that a free ride for the rich would generate money for the middling and poor. The Democrats had none that they could sell to an electorate. They didn’t like talking about nuts and bolts and jobs. Instead, they mainly talked about rights. They were off in what struck many millions of American voters as a Cloud-Cuckoo land where every pornographer could drape himself in the Jeffersonian toga of the First Amendment, and any suggestion that a child might stand more chance of happiness and growth if it was raised by two parents who loved both it and one another could be pooh-poohed by some ideologue on the left, fresh from the beansprout commune in Vermont. Thus, in Dione’s words,

    “The moralism of the left blinded it to the legitimate sources of middle-class anger. The revolt of the middle class against a growing tax burden was not an expression of selfishness, but a reaction to the difficulties of maintain a middle-class standard of living. Anger at the rising crime rates was not a covert form of racism but an expression of genuine fear…. Impatience with welfare programs was sometimes the result of racial prejudice, but it was just as often a demand that certain basic rules about the value of work be made to apply to all. Those who spoke of “traditional family values” were not necessarily bigots…”

    This was a value-gap you could barrel a truck through, and the Republicans did so, thus splitting off a large and useful voting-block or “Reagan Democrats.” But this realliance is proving unstable, now that the actual results of the Republicans’ push to unconstrained laissez-faire are in: the largest deficit, the most crippling load of debt to foreign lenders, and the widest gap between high and middle income ever to afflict America.

    I believe the election of Obama was a rejection of 1) The politics of race, 2) trickle-down economics and 3) laissez faire. However, Obama betrayed the voters on 2) and 3).

    Hannah Arendt in Crises of the Republic also spoke of how inextricably intertwined the politics of economics is with the politics of racism, as well as other cultural issues:

    It has turned out that in the eastern and northern parts of the country integration of the Negroes into the higher-income groups encounters no very serious or insuperable difficulties. Today everywhere it is really a fait accompli. Dwellings with relatively high rentals can be integrated if the black tenants belong to the same upper level as the white or yellow (especially the Chinese, who are everywhere especially favored as neighbors). Since the number of successful black businessmen is very small, this really applies to the academic and liberal professions—-doctors, lawyers, professors, actors, writers, and so on.

    The same integration in the middle and lower levels of the middle class, and especially among the workers who in respect to income belong to the upper level of the lower middle class, leads to catastrophe, and this indeed not only because the lower middle class happens to be particularly “reactionary,” but because these classes believe, not without reason, that all these reforms relating to the Negro problem are being carried out at their expense. This can best be illustrated by the example of the schools. Public schools in America, including high schools, are free. The better these schools are, the greater are the chances for children without means to get into the colleges and universities, that is, to improve their social position. In the big cities this public school system, under the weight of a very numerous, almost exclusively black Lumpenproletariat, has with very few exceptions broken down; these institutions, in which children are kept for twelve years without even learning to read and write, can hardly be described as schools. Now if a section of the city becomes black as a result of the policy of integration, then the streets run to seed, the schools are neglected, the children run wild—-in short, the neighborhood very quickly becomes a slum. The principal sufferers, aside from the blacks themselves, are the Italians, the Irish, the Poles, and other ethnic groups who are not poor but are not rich enough either to be able simply to move away or to send their children to the very expensive private schools.

    This, however, is perfectly possible for the upper classes, though often at the cost of considerable sacrifice. People are perfectly right in saying that soon in New York only the very poor and the very rich will be able to live. Almost all the white residents who can do so send their children either to private schools, which are often very good, or to the principally Catholic denominational schools. Negroes belonging to the upper levels can also do this. The working class cannot, nor can the lower middle class. What makes these people especially bitter is that the middle-class liberals have put through laws whose consequences they do not feel. They demand integration of the public schools, elimination of neighborhood schools (black children, who in large measure are simply left to neglect, are transported in buses out of the slums into schools in predominantly white neighborhoods), forced integration of neighborhoods—-and send their own children to private schools and move to the suburbs, something that only those at a certain income level can afford.

    To this another factor is added, which is present in other countries as well. Marx may have said that the proletarian has no country; it is well known that the proletarians have never shared this point of view. The lower social classes are especially susceptible to nationalism, chauvinism, and imperialistic policies. One serous split in the civil-rights movement into “black” and “white” came as a result of the war question: the white students coming from good middle-class homes at once joined the opposition, in contrast to Negroes, whose leaders were very slow in making up their minds to demonstrate against the war in Vietnam. This was true even of Martin Luther King. The fact that the army gives the lower social classes certain opportunities for education and vocational training naturally plays a role here.

    Second, the implosion of Communism might have contributed to America’s political economy taking a hard turn to the right. The right-wingers took advantage of this to throw out the good elements of Marx’s thought along with the bad. Here’s how Martin Luther King described the good and the bad of Marx in My Pilgrimage to Nonviolence:

    In short, I read Marx as I read all of the influential historical thinkers-from a dialectical point of view, combining a partial “yes” and a partial “no.” In so far as Marx posited a metaphysical materialism, an ethical relativism, and a strangulating totalitarianism, I responded with an unambiguous “no”; but in so far as he pointed to weaknesses of traditional capitalism, contributed to the growth of a definite self-consciousness in the masses, and challenged the social conscience of the Christian churches, I responded with a definite “yes.”

    As to “Hacker and Pierson’s…return to a much longer-standing critique of democracy,” I don’t buy into that at all. Daniel Yankelovich puts forth a thorough rebuttal to this argument in his book Coming to Public Judgment: Making Democracy Work in a Complex World. Here’s an example:

    Opinion research in the U.S. does reveal a public strikingly inattentive to the details of even the most consequential and controversial policies. This suggests a potential for manipulation. But the research also indicates great stability and coherence in the public’s underlying attitudes and values. Americans show themselves perfectly capable of making the distinctions needed to determine what Harwood Childs called “the basic ends of public policy,” and of pursuing these logically and clearly. There is a persisting structure to American opinion that belies the picture of a populace helpless before the “engineers of consent.”

    1. attempter

      What’s misleading about the Hughes discussion and similar treatments of those issues is that:

      1. Democrats/liberals (by definition) haves always embraced trickle-down just as much as Republicans/conservatives, especially during the period we’re talking about. The John Rawls difference principle was always intended to be applied within the framework of trickle-down.

      2. The Democrat/liberal emphasis on social issues was an intentional misdirection away from the class struggle, at the same historical moment the neoliberal onslaught was beginning. This was not a coincidence. Aggressive identity politics (as opposed to the negative removal of discrimination barriers) was intentionally divisive, since there’s no way to engage in such social engineering other than by practicing it on the lower classes only, and by pitting them against one another. Perhaps for some liberals that was worthwhile collateral damage, but the real goal was to give the economic elites an even freer hand vs. labor and the people as a whole.

      1. DownSouth

        Doing God’s work and promoting one’s material self-interest become so intertwined that it’s often difficult to tell what one’s true motivations are.

        As J.H. Elliott wrote of the Spanish Conquistadores:

        The dedication, however, required a cause, and the sacrifice a recompense. Both were described with disarming frankness by Cortés’s devoted companion, the historian Bernal Díaz del Castillo: ‘We came here to serve God and the king, and also to get rich.’

        It’s a theme that runs through history like a thread, whether we’re talking the conquest of the New World, witch trials, the Inquisition, the crusades or religious wars. Here’s Michael Allen Gillespie speaking of the religious wars that waged across Europe and England from 1546 to 1651:

        In would be a mistake to believe that the question of religious orthodoxy was the sole factor in the Wars of Religion. Charles Tilly has argued, for example, that these wars were in fact more the consequence of efforts to consolidate the new national states than wars of religion. While there is much to be said for this argument and while it is certainly true that the consolidation of state power was part and parcel of the process, there is also little doubt that most of the leading participants in these wars and many of the most violent among them thought that they were doing God’s work and not that of their sovereign. Thus, while we cannot attribute the wars simply to religious differences, there can be no doubt that religion in many different forms and ways contributed to the fanaticism and slaughter that distinguish those wars from so many others.

      2. Darin London

        I would agree with the ‘Democrat’ part, but not the liberal part. This has been one of the more successful strategies the right has had in galvanizing opinion against liberals is to tie them together with Democrats as an identity. There were countless liberal voices decrying these ideas, but in a world in which you were either a Democrat (center right), or a communist, it was hard for these voices to be given credit.

        1. Tao Jonesing

          I don’t think anybody knows what a liberal really is any more. The liberal label is something liberals have avoided for years, thereby leaving the conservatives the opportunity to imbue the word with all of their deepest fears and resentments.

        2. attempter

          Not every liberal has been a Democrat, but by definition they support capitalism. Otherwise they’d be socialists of one kind or another.

          It’s false that one’s only choices were the Democratic party or Communism, i.e. two forms of economic elitism. One can always renounce such elitism completely and embrace economic democracy, AKA anarchism.

          But as I said, since economic elitism is part of the definition of liberalism, that’s what they’re least inclined to do. (They’re also fundamentalists of representative pseudo-democracy and kangaroo “elections”.) That’s why most of them have moved steadily rightward since the 70s.

          And as we’ve seen with the total moral collapse of most liberals/progressives since January 2009, it didn’t take any distortion from the outside to conflate liberals with the Democratic Party. They happily herded themselves into that slaughterhouse.

          1. Dan

            The mass of people still don’t understand that the democratic party represents a faction of corporatism. Our form of “Capitalism” has merely evolved into corporatism. You can make the argument that they are one in the same

            Liberals do not have a choice. The current democratic party wont change because they are still advocating wealth distribution without challenging the marriage of a government and big business.

            I would argue in the long run we are all better off supporting far right corporatism because that will get us to critical mass much, much sooner.

      3. propertius

        I believe the election of Obama was a rejection of 1) The politics of race, 2) trickle-down economics and 3) laissez faire. However, Obama betrayed the voters on 2) and 3).

        He betrayed the voters on 1), as well, the day his acolytes branded Bill Clinton as a “racist”.

    2. drb48

      @DownSouth – You’re right and so [mainly] is attempter. The problem the country has is that 90% of the population doesn’t know what you know. Nor are they likely to bestir themselves to make an effort to learn it. And a media controlled by the plutocracy isn’t going to explain it to them. Nor, in their ignorance, would they listen if it did. This is a nation of people too stupid to govern themselves – which is the fundamental reason why it’s governed by the plutocrats.

      1. NOTaREALmerican

        Re: This is a nation of people too stupid to govern themselves – which is the fundamental reason why it’s governed by the plutocrats.

        It’s not really stupidity it’s the story. Cause and effect is meaningless for most people (which is why intellectuals are always confused about politics). The refined Red and Blue Team stories are designed to pit one group of true-believers (the nice people with lots of guilt) against another group of true-believers (the mean people with lots of, well, meanness) leaving the true-believers battling to the death while the sociopaths run off with the loot. THE important thing is having a simple story that sticks in the brains of the believers to cover the actions of those “above” the story.

        Nothing is more powerful than a “new story” that is repeatable (and transmittable) in the brains of the obsessive believers.

    3. MsnDc

      I agree totally and the Democrats are to afraid to admit that they lost most of the country by not speaking out against abortion and for family values which most people understand make their neighborhoods worth living. And I’d further posit that they failed to understand that most black Americans are socially conservative regardless of what’s popularly portrayed. They looked at black America as poor and disadvantaged. What they needed to do was to enforce equal protection laws.
      Anyway, its water under the bridge, this country’s fu**ked, black, white, blue, orange.

    4. nonclassical


      not to bicker with your usual fine work, but the “hard turn
      right” was a matter of secrecy regarding imperialism perpetrated largely in South and Central America…resource

      Now they are more obvious, and have hit home…

    5. SqueekyFromm

      I like a lot of what you said. One thing that I read on a forum somewhere was that the Democratic party has catered to its own 1% or 2% of the population. For example, on Gay Marriage, this person said maybe 3% of the population was Gay, which is 9 million, and out of that perhaps one gay couple in 10 would get married, of about 900,000 people. Yet to cater to this issue and the small number of people affected alienated 10’s of millions of people who were conservative type Democrats and religiously opposed to Gay Marriage.

      I had never thought of things that way, but it makes sense. Then I notice that some schools are trying to teach Gay Tolerance which is even going to chase more people out of public schools. Sooo, it is kind like what you said above where there is a disconnect between the Democrats and the majority of people, the same way there is a disconnect between the Wealthy Worshipping Republicans and the majority of people.

      Squeeky Fromm
      Girl reporter

      1. DownSouth


        Let me begin by saying that I’m gay, so I’ve got a dog in this fight and may not be the most objective person to listen to on the issues you raise. That said, let me make a stab at being objective.

        It seems that, beginning in the 60s, racial and cultural issues gained dominance in the popular mind. The political battles that garnered the most attention had to do with race, abortion, gay rights, feminism and religion. Anyone who wanted to interject class issues was immediately branded a socialist, Marxist or Communist, which seemed pretty effective in shutting them up. Meanwhile, the bankers and financiers quietly and inexorably toiled away, destroying the legal and regulatory framework put in place during the 30s to protect the rank and file American.
        Was this all intentional? I don’t know. But along the way the notion that elected representatives should represent the interests and values of those that live in their districts seems to have slipped away.

        I think it’s important to acknowledge that liberals are as much to blame for the vitiation of American democracy as conservatives are.

        Peter Skerry, writing in Mexican Americans: The Ambivalent Minority, calls the type of politics practiced today in America “elite-network” politics. “Network” refers to the national grid of wealthy benefactors which politicians are plugged into. “Elite” refers to the politicians’ aloofness and weak community ties—-the fact that they don’t represent the interests or values of the people that live in her district.

        The key ingredient of elite-network politics is money, and lots of it. Campaigns whose principle tools are direct mail and television advertising necessarily imply big-spending campaigns. “State-of-the-art computerized mailings” are especially useful, Skerry says, because they “permit politicians to address narrowly targeted groups of voters without relying on high-visibility media campaigns or public forums.” “From the politician’s perspective,” he explains, “this approach has the great appeal of reducing the risk that contradictory positions will be exposed, or that voters will come together physically and thereby become aware of their collective interests and strengths.”
        The other ingredient elite-network politicians require are relatively unorganized, passive constituents that place few demands on them.

        We of the liberal persuasion of course all love to hate politicians who betray their constituents to bankers and businessmen. But, as Skerry goes on to show, this tells only half the story. For in the majority Mexican-American districts, the politicians also sell out their constituents to wealthy advocates of a number of other issues, including feminism, gay rights, increased defense spending, abortion rights, bilingual education, affirmative action, and open-border immigration policy (At the time—-1993—-a majority of Mexican-Americans, unlike Mexican-American elite-network and protest politicians, favored restrictive immigration policies. I think that now has changed, most Mexican-Americans now having taken a defensive position in response to what they perceive to be the overt racism of the Tea Partiers and militant anti-immigrationists. In politics, abuse begets abuse.) Skerry cites extensive polling information showing these are all issues that Mexican-Americans are either ambivalent to or outright opposed to, and yet the elected representatives he analyzes promote them as if they were the most salient issues of the day for their constituents.

        So I’m not sure what I’m trying to say here, other than to point out that the destruction of American democracy is a complex issue, that we all had a hand in it, and we all should shoulder our share of responsibility for it. We all get bent out of shape when the banksters utilize elite-network politics to scam people out of their money, at the same time we ourselves are utilizing elite-network politics to further our own pet interest or ideological agenda.

        And there’s also this issue of what happens when democracy doesn’t yield the results we want. We get ourselves into these hypocritical situations like George Bush did with Palestine. He was all fired up about promoting democracy, until in the legislative elections of 2006 Hamas gained the majority of seats in the first fair and democratic elections held in Palestine, defeating the ruling (US- and Israeli-backed) Fatah party. Then in May 2006 the US and other governments imposed sanctions on the Palestinian territories for voting for Hamas.

        1. DownSouth

          Another place where those of us who hail from the left get all tripped up is with the concept of punishment.

          Punishment has its roots in Tory/conservative thought. And yet we have people like Bill Black who hail from the left side of the aisle calling for prosecuting and punishing bankers (a position, by the way, that I’m 10,000% in favor of). But this sets those of us on the left up for internal ideological conflicts.

          Here’s how Amitai Etzioni describes the rift between the Whig and Tory positions in The Moral Dimension:

          The centuries-old tug-of-war between these Whig and Tory worldviews, and their effects on social science paradigms, are far from defunct. See, for example, the treatment of trust. Trust would seem at first to be one of those typical Tory social-scientist concepts that Whigish economists may assume exist but need not bother to explain (Luhmann, 1979). Trust, of course, is pivotal to the economy, and not merely to social relations, as, without it, currency will not be used, saving makes no sense, and transactions costs rise precipitously, in short, it is hard to conceive a modern economy without a strong element of trust running through it. But when one asks what accounts for the extent to which individuals do trust one another, and for the level of trust in society, the differences between the two worldviews come into sharp relief.

          Tory social scientists have a simple answer: Trust is a value with which youngsters are inoculated by their “socialization agents” (parents, educators, peers). Those who violate the value are either re-educated to embrace it, or punished until they abide by it, and others are deterred from transgressing. Whigish economists see trust as arising out of previous transactions, based on rational calculations and efficient “rules of thumb.” For example, if A is your customer, and you verified his credit worthiness for the last N transactions, it is rational to skip checking it the N+1 time (assuming the transactions are relatively small and the costs of checking are relatively high). Thus, to Whigs a high level of trust reflects not successful socialization but either numerous prior reiterations, small stakes, or high verification costs. The differences in perspective, illustrated by their perspectives on trust, hold for a myriad of other such concepts encompassed by the two paradigms.

          I don’t think it takes too much imagination, especially for NC and Econned readers who are knowledgeable of the events of the past 45 years, to see that what we now have is a situation of Whigs—-that is “liberals” in the sense of the 18th-century use of the word—-gone wild.

          So are Bill Black and me Tory/conservatives? Or are we liberals?

          Of course we’re not either, for I don’t think either one of us subscribe to the dominant 18th and 19th century Tory-conservative value system where the upper (“respectable”) classes had assumed that the varied and numerous lower (“unfortunate”) classes “knew their places”, and could, if necessary, be kept in those places by social pressure of some kind. I think Black and I both would agree that it is no longer, as Stephen Toulmin put it, “the business of the poor to stay poor, of blakcs to stay deferent, of women to stay home, of the handicapped to stay in the back room, and of homosexuals to stay in the closet.”

        2. SqueekyFromm

          You make a lot of good points. I read somewhere (I wish I kept track of all this stuff!!!) that Jim Crow laws were just a way to split the poor Blacks away from the poor Whites, even though the two groups had more in common than either did with the wealthier class.

          Living in Texas, I meet a lot of Mexicans, legal and a lot named Juan Doe, and they are usually very hard working, family oriented and conservative. Yet, the Republicans are trying to chase them out.

          It just looks to me like both parties are more interested in the fringe issues than jobs. Because all these little charts showing for egs. Employment as a percentage of population going down for years, are not made up of numbers that have just been found in a clay pot over in the Dead Sea or something.

          But it all seems to have just snuck up on the Democrats. The GOP, which I am one of now since Obama klept’d the nomination from Hillary Clinton, have been screwed up apparently since Atlas Shrugged got popular and still don’t seem to get it. So I blame them less, because they sincerely believe that kind of stuff, but OMG, where have the Democrats been???

          You seem to have the right answer, but I wonder if it is even possible to change things.

          Squeeky Fromm
          Girl Reporter

  6. financial matters

    It seems like it takes pain to induce change. When the stock market is going up, most don’t seem to really care how much management is making. When it goes down then people get more interested in things like exorbitant management pay with little real controls. And when housing prices are going up most don’t really want to look too closely under the hood. When many are underwater it becomes a different story. When the system froze we were like deer in the headlights and ended up getting robbed blind. But the bankers made a big mistake by blatantly paying out huge bonuses on the taxpayer dime. A lot of structural problems have been papered over rather than fixed but I think the populace has been primed to act in a different manner to the next big downturn. Also when the government loses its ability to provide adequate social safety nets people become much more interested in why the top 1% have it so good…

      1. Parvaneh Ferhadi

        No, Capitalism is a crisis driven system, whereas democracy ist not.
        «The conditions of bourgeois society are too narrow to comprise the wealth created by them. And how does the bourgeoisie get over these crises? On the one hand by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.»

  7. Stephen Liss

    As regards the catch-22 of democratic politics, I think it’s unrealistic to require the wilfully ignorant to smarten up. Perhaps a better approach in the USA would be something along the lines of what Lawrence Lessig wants to see – Call a Convention( He is organizing a convention to amend the constitution, to permantly reverse the effect of the US Supreme Court ruling in Citizens United v Federal Election Commission. In other words, get corporate money out of politics once and for all by making it clear and firm that only people have political rights. Since corporations are not people, corporations would not have political rights to buy advertising in mass media. I would like to see organized labor money treated the same as corporate money, i.e. both types of money banned from political ad buys. The deeper effect of this sort of constitutionally enforced ban would be to transform our currently mass media based sound bite politics, where the unwashed masses vote as they are told and swamp the votes of the literate. With corporate/labor political ad buys prohibited, only inexpensive media (print and Internet) that literate people rely on would be influential.

  8. purple

    Globalization has little to do with wealth inequality; we are approaching inequality levels last seen in the 1920’s an era when globalization – in terms of outsourcing – didn’t exist.

    What the 189-1920 era has in common with now is polices which cater to the wealthy.

    1. Parvaneh Ferhadi

      Not so, the following was written in 1848:
      «The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere.

      The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilised nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.»

      Globalisation is not new, it’s just a new name for something that has been going on for a while.

      1. DownSouth

        In the grand sweep of history, I wonder if the phenomenon Marx describes is not more ubiquitous than even Marx realized. His theory seems to fit very neatly within the broader and more encompassing historical theory formulated by Carroll Quigley:

        Like all instruments, an instrument of expansion in the course of time becomes an institution and the rate of expansion slows down. This process is the same as the institutionalization of any instrument, but appears specifically as a breakdown of one of the three necessary elements of expansion. The one that usually breaks down is the third—-application of surplus to new ways of doing things. In modern terms we say that the rate of investment decreases. If this decrease is not made up by reform or circumvention, the two other elements (invention and accumulation of surplus) also begin to break down. This decrease in the rate of investment occurs for many reasons, of which the chief one is that the social group controlling the surplus ceases to apply it to new ways of doing things because they have a vested interest in the old ways of doing things. They have no desire to change a society in which they are the supreme group. Moreover, by a natural and unconscious self-indulgence, they begin to apply the surplus they control to nonproductive but ego-satisfying purposes such as ostentatious display, competition for social honors or prestige, construction of elaborate residences, monuments, or other structures, and other expenditures which may distribute the surpluses of consumption but do not provide more effective methods of production.


        The process that we have described, which we shall call the institutionalization of an instrument of expansion, will help us to understand why civilizations rise and fall. By a close examination of this process, it becomes possible to divide the history of any civilization into successive stages. We have said that these divisions are largely arbitrary and subjective and could be made in any convenient number of stages. We shall divide the process into seven stages, since this permits us to relate our divisions conveniently to the process of rise and fall. These seven stages we shall name as follows:

        1. Mixture
        2. Gestation
        3. Expansion
        4. Age of Conflict
        5. Universal Empire
        6. Decay
        7. Invasion


        The Age of Conflict (Stage 4) is a period of imperialist wars and of irrationality [or in some cases it is a period of rationality, as was the case with the decline of Classical Civilization, where “rationalism became allied with oligarchy and shared in its victory over both science and democracy.”] supported for reasons that are usually different in the different social classes. The masses of the people (who have no vested interest in the existing institution of expansion) engage in imperialist wars because it seems the only way to overcome the slowing down of expansion. Unable to get ahead by other means (such as economic means), they seek to get ahead by political action, above all by taking wealth from their political neighbors. At the same time they turn to irrationality to compensate for the growing insecurity of life, for the chronic economic depression, for the growing bitterness and dangers of class struggles, for the growing social disruption and insecurity from imperialist wars. This is generally a period of gambling, use of narcotics or intoxicants, obsession with sex (frequently as perversion), increasing crime, growing numbers of neurotics and psychotics, growing obsession with death and the Hereafter.

        The bested interests encourage the growth of imperialist wars and irrationality because both serve to divert the discontent of the masses away from their vested interests (the uninvested surplus). Accordingly, some of the defenders of vested interests divert a certain part of their surplus to create instruments of class oppression, instruments of imperialist wars, and instruments of irrationality. Once these instruments are created and begin to become institutions of class oppression, of imperialist wars, and of irrationality, the chances of the institution of expansion being reformed into an instrument of expansion become almost nil. These three new vested interests in combination with the older vested institution of expansion are in a position to prevent all reform. The last of these three, the old institution of expansion, now begins to lose its privileges and advantages to the three institutions it has financed. Of these three, the institution of class oppression controls much of the political power of the society; the institution of imperialist wars controls much of the military power of the society; and the institution of irrationality [or rationality] controls much of the intellectual life of the society. These three (which may be combined into only two or one) become dominant, and the group that formerly controlled the institution of expansion falls back into a secondary role, its surpluses largely absorbed by its own creations. In this way, in Mesopotamian civilization, the Sumerian priesthood, which had been the original instrument of expansion, fell into a secondary role behind the secular kings it had set up to command its armies in the imperialist wars of its Age of Conflict. In the same way in Classical civilization the slaveowning landlords who had been the original instrument of expansion were largely eclipsed by the mercenary army that had been created to carry on the imperialist wars of the Age of Conflict but took on a life and purposes of its own and came to dominate Classical civilization completely. So too the Nazi party, which had been financed by some of the German monopoly capitalists as an instrument of class oppression, of imperialist war, and of irrationality, took on purposes of its own and began to dominate the monopoly capitalists for its own ends.
        ▬ Carroll Quigley, The Evolution of Civilizations

        1. Tao Jonesing

          Whenever financialism becomes the mechanism of economic “progress” within a country, there will come a point where the economy of that country MUST expand beyond its borders. The primary way to manage finite resources to simulate perpetual, infinite growth is to subjugate more of those finite resources.

          The key to Marx’s insights are distilled in his “money making money” construct of M-M’. Using M-M’ as the engine that drives the economy is financialism, and that’s what we have in the U.S. right now.

        2. jake chase

          “The vested interests encourage the growth of imperialist wars and irrationality because both serve to divert the discontent of the masses away from their vested interests (the uninvested surplus).”

          Fortunately, today we have professional sports.

  9. jake chase

    It doesn’t take much serious thought to realize that nothing will constrain the looting except perhaps an international military crisis. Nearly all social progress occurred as a result of WWII. It created jobs, upgraded education, destroyed overseas productive capacity, empowered organized labor, in effect a real, massive trickle down. Absent a shooting war, nothing will change until shortages compel reliance on renewable energy. Of course, the plutocracy will do everything possible to pursue the nuclear option, the only one capable of being monopolized. As for the public being unable to grasp the subtlety of these issues, bankruptcy and unemployment does tend to concentrate the mind. I think the reason most Americans pay no attention to political choices is the knowledge that such choices offer them nothing.

  10. john

    The other important changes that happened in the 1970s & 80s not mentioned in these critiques were Buckely vs Valeo where the Supreme Court found spending money is a form of speech and the end of the Fairness Doctrine.

    Buckely vs Valeo was the beginning of a process of codifying a political marketplace. Before the ruling, a bribe was a bribe and graft was graft. After the ruling a formal structure was established in law whereby bribery and graft executed according to court protocol became “campaign finance”. Each successive piece of legislation on this issue and its’ court reaction has further codified and structured the forms in which bribery and graft are now legal.

    And of course the Fairness Doctrine did not in itself prevent the transubstantiation of “news” into “propaganda”, but it reduced the cost of the change by roughly half. Yves mentions the degree to which Australians are more politically informed, I’ll wager their government is more protective of what it allows to parade itself as “news”.

    These two changes in the US are mutually reinforcing where as politicians raise more and more bribes, the ultimate beneficiary is media companies where those cash piles end up at the end of election cycles. Tyler Cowan belittles this line of inquire because there are not adequate peer reviewed articles on it, but the stocking of the regulatory infrastructure with anti-regulators has prevented the aggregation of useful statistics in this area. It is a lot like classifying Alt-A Mortgages by FICO score rather than by the absence of underwriting, while the data is collected it is tailored to be useless.

    1. readerOfTeaLeaves

      Great points. And

      The other important changes that happened in the 1970s & 80s not mentioned in these critiques were Buckely vs Valeo where the Supreme Court found spending money is a form of speech and the end of the Fairness Doctrine.

      becomes even a larger milestone in our post-Citizens United world.

      As for Aussie media, it’s been awhile since I was there, but I recall being amused, regaled, and wildly entertained by the sort of sleazy, sexed up tabloids, which I’m sure is where the nefarious Murdock got his start.

      Murdock being a big tax haven fan, the other shift we might note since the 1970s and 1980s is the phenomenal rise of tax havens. Because places to store that wealth away from tax collectors, but still be able to spend money on political ‘speech’ is a triple-whammy and guts any real hope of democratic society.

  11. jane hay

    @ purple:

    Yes, but outsourcing beginning in the eighties was a strategy to accomplish the same goal, by an end run, at a time when unions were powerful enough to oppose domestic policies that cater to the wealthy. The unions were present, but not enough so to be a counter-factor in the teens and twenties.
    Unfortunately, it will take a lot more pain to wake up the “masses” to their current skinning, and the unions are too weak to provide the organizing.

  12. john

    Key typo in second paragraph corrected, post in haste, repent in duplication….

    The other important changes that happened in the 1970s & 80s not mentioned in these critiques were Buckely vs Valeo where the Supreme Court found spending money is a form of speech and the end of the Fairness Doctrine.

    Buckely vs Valeo was the beginning of a process of codifying a political marketplace. Before the ruling, a bribe was a bribe and graft was graft. After the ruling a formal structure was established in law whereby bribery and graft executed according to court protocol became “campaign finance”. Each successive piece of legislation on this issue and its’ court reaction has further codified and structured the forms in which bribery and graft are now legal.

    And of course the Fairness Doctrine did not in itself prevent the transubstantiation of “news” into “propaganda”, but –its’ repeal– reduced the cost of the change by roughly half. Yves mentions the degree to which Australians are more politically informed, I’ll wager their government is more protective of what it allows to parade itself as “news”.

    These two changes in the US are mutually reinforcing where as politicians raise more and more bribes, the ultimate beneficiary is media companies where those cash piles end up at the end of election cycles. Tyler Cowan belittles this line of inquire because there are not adequate peer reviewed articles on it, but the stocking of the regulatory infrastructure with anti-regulators has prevented the aggregation of useful statistics in this area. It is a lot like classifying Alt-A Mortgages by FICO score rather than by the absence of underwriting, while the data is collected it is tailored to be useless.

  13. DV

    People might be interested in Robert Fitch’s book, Solidarity for Sale, about the crippling problems of the US labor movement. Fitch believes these problems had a lot to do with the rollback of the New Deal and the other things discussed by Ms. Klein.


  14. lambert strether

    As far as remedies…

    From the Barcalounger:

    I think the way forward is new social patterns (non-violent protest and persuasion method #174, alternative communications systems (#180), including alternative currencies, culminating in a set of parallel institutions (#198).

    The current system isn’t “broken”; it’s very resilient and highly optimized for the rentiers and fraudsters who own it, as electing Obama and getting Bush III shows. So we need to seek another way.

  15. lambert strether

    Oh, and while I do understand what ad hominem means, Hacker was also the academic responsible introducing the so-called “public option” into the discourse — a neo-liberal approach to health care reform that allowed the health insurance companies and the market to remain at the center of the “solution,” vitiating it. Career “progressives” used Hacker’s proposals to put forward an ever-shifting and ever-shrinking series of “public option” proposals, which acted as a roach motel for progressive energy, and also kept the proven solution of single payer “off the table.” (Hilariously, though career “progressives” pride themselves on their savvy, Obama had betrayed them from the very beginning, secretly telling his allies that the public option, however defined, would not make it into legislation, as indeed it did not). See:

    The health care reform battle is a cautionary tale for anybody who might think the current legacy party system can be reformed.

    To return to Hacker: Based on the HCR experience, I’d read anything he has to say with “a dose of salts,” as Sam Goldwyn would say.

  16. Norman

    Jake has a point here, though I would expand upon it. It will take WWIII, before this change takes place. It’s really that simple. The people in this country, the U.S.A. lost all after Vietnam. The steady erosion of rights, freedoms, were replaced by fear. One only has to look at where we stand today, to understand that there is no easy answer. Everyone can argue till the cows come home, but in today’s atmosphere, the only practical solution is either electing a benevolent Dictator, which I believe is an oxymoron, or a Revolution, with I might add, violence to go along with it. Until the people stand up for their collective rights, and I don’t mean the Naderites, Greens, the extreme Left/Right, choose your poison, but do so carefully. Until the U.S. Military returns home and is cut back in size, as well as expenditures for its War Making, this country stands as much chance of change as the proverbial “snowball in hell.

  17. F. Beard

    How did the very rich get so? That’s easy. What are our banks? They are a government enforced counterfeiting cartel. Who do they lend to? They lend to the “credit-worthy.” Who are the credit worthy? Mostly those who already are well-off.

    So being somewhat rich is a ticket to becoming very rich at the expense of the “non-credit worthy.”

  18. Nicholas Shaxson

    I think that what’s missing from this analysis here is a strong stress on the international dynamics of tax and regulatory competition between jurisdictions, led by the tax havens. This goes a very long way towards explaining why politicians felt (rightly or wrongly) that they had to give in to pressure for ever lower taxes on mobile capital or ever looser regulation, or at least why they felt constrained to act against these trends. There’s a whole lot on that – and with some partial remedies – discussed in that OTHER book reviewed by Runciman in that excellent London Review of Books article you mention.

    1. readerOfTeaLeaves

      Holy cats! THE Nicholas Shaxson, or just some random person claiming to be Nicholas Shaxson?!

      I commented up above, with a reference to tax havens (and the nefarious Murdock). I did so because I am part way through “Treasure Islands”, and wow… it is quite a book.

      Looking forward to the FireDogLake Book Salon on TI this Saturday, hosted by Yves.

      It’s simply not possible to read “Treasure Islands” and fail to see a key role of offshore money in concentrating wealth, as well as having profound political implications for all forms of government.

  19. Mickey Marzick in Akron, Ohio

    Let me begin by stating that I don’t believe a definitive account or explanation can be provided because too much of it is still “living” history, too personal for many of us who have experiened/participated in this history which we are still trying to come to grips with. Perhaps when the “dust” has settled a more cogent explanation will be forthcoming.

    That said, there are three things that come to mind in offering an explanation for the rightward drift of the past 40 years or so which, as Attempter has already alluded to had historical antecedents deeply rooted in American history.

    But the first is what we mean by the 60s as that seems to be the fulcrum on which much subsequent hand wringing analysis flows. For me, it is not just that decade but a much broader swath of American history encompassing 20 years or more, beginning with the landmark case Brown vs Board of Education in 1954 and “ending” with the resignation of Richard M. Nixon on August 9, 1974. Tumultuous is an understatement for this period as it not only involved issues of race but clearly demarcated social and generational differences as well. When the 60s ended, America was POLITICALLY exhausted. The old had been so discredited and the new had yet to take its first steps, that many Americans retreated into other pursuits, creating a political vacuum on the left into which the reactionary right was only too willing to fill. Similar to Islamic fundamentalism that began in the aftermath of the 1967 Arab-Israeli War, the appeal to more “traditional” values had much appeal to many Americans who had lived through the psychologically wrenching 60s.

    But explaining the demise of the “left” is more important than retracing the emergence of the right. Organized labor is the natural soil for the Left and might be deemed the TRADITIONAL left as opposed to what came in its wake, but its failure to become a social-political movement in its own right is a crucial part of this story. To understand this it is necessary to go back to the 60s [my broader def] out of which sprang the civil rights movement, the feminist movement, and the environmental movement – each of which often worked at cross purposes to those of labor. Yes, the roots of all three movements have distinct lineages with longer historical time frames, but it’s their impact on the traditional left – organized labor – that is crucial to understanding what has unfolded.

    As the Vietnam War escalated unemployment dropped to 3.4% in late 1968 – its lowest point in the entire postwar period! Tight labor markets put labor in a more advantageous position that in itself fostered a kind of militancy on the shop floor. Younger workers now returning from ‘NAM were a bit more spirited, affected by the social turbulence then stirring in the country at large. Dazed and crazed, absenteeism, and wildcat strikes became more frequent to the consternation of staid union leadership and management. George Meany and labor leaders of his ilk epitomized big labor with plush headquarters and limousines – increasingly out of touch with the younger generation. [Orwell’s Animal Farm?]

    Organized labor back then was largely a white, male dominated club in which Black membership was tolerated, if not welcomed. RACIST is one word that can be used. But the use of Blacks as strikebreakers and “scabs” by management to thwart unionization tainted solidarity across racial lines from early on. And black militancy the likes of Malcomb X and the Black Panthers – Eldridge Cleaver, Huey P. Newton – didn’t sit well with white ethnic workers, many of whom had fought in WWII and/or Korea and wore their patriotism on their hard hats. Recall “All in the Family” and Archie Bunker. Hence, this “militancy” was both racial and generational.

    Likewise as more women began to enter the labor force, the feminization of the labor force put many a male worker on the defensive. Male, chauvinist pigs found themselves “competing” with women for the same jobs. At first it wasn’t taken too seriously but as women acquired the requisite skills and brainpower supplanted “brawn”, it acquired a certain momentum of its own. Computerization leveled the playing field and since women usually worked for less and still do, this was another nail in labor’s coffin. Moreover, as women traversed the corporate ladder and proved that they could be just as ruthless as their male counterparts, many males lost their enthusiasm for “feminism”. No longer the primary source of income left many a male ego bruised.

    Finally, the environmental movement, the Clean Air and Clean Water Acts, and formation of the EPA/OSHA all resulted in a situation in which the costs of manufacturing became prohibitive – at least from the standpoint of management – the consequences of which were borne by organized labor. As plants began to close, blue collar workers lost their jobs by the thousands, then by the tens of thousands. Union membership and its strength declined in direct proportion to one another. As membership declined the traditional electoral support of labor for the Democratic Party became less important to the latter. The emergence of the SLC and likes of conservative Democrats – Carter and Clinton – only exacerbated the role of labor in national politics. So much so that Bill Clinton signed NAFTA into law in spite of organized labor’s opposition. After all, where else was it going to go?
    Many environmentalists, largely white upper middle class, university educated, supported policies and tactics that came at the expense – jobs – of the working class as well. As this movement acquired momentum and financial support it became “professionalized” and coopted by the very forces it initially opposed. PBS’ documentary celebrating ‘Earth Day’ captured this antagonism and subsequent cooptation by corporate America very well.

    Organized labor – the traditional Left – was caught in the grips of the new left – civil rights, feminism, and environmentalism – and was unable to incorporate each under its umbrella, alienating the constituents of all three who often found themselves working at cross-purposes. Finally, when management went on the offensive, labor was already bleeding from job losses, many of which were blamed on the progress made by Blacks, women, and environmentalists. White male ‘Reagan Democrats” already on the defensive defected en masse to the Republicans. And the rest is history….What was once a progressive force in American politics had degenerated into a reactionary, narrowly-focused special interest group that was only interested in protecting the special privileges of its members. [Mancor Olson’s Logic of Collective Action?] Whether its portrayal as such is accurate or not doesn’t matter as two-tiered wage systems and subsequent behavior by “organized” labor have done much too alienate younger workers fueled by a chorus of antiunion bile spewed from the RIGHT.

    This polarization of the traditional left from the new left was first documented in a book written by Ronald Inglelhart, The Silent Revolution: Changing Values and Political Styles among Western Publics [1977?] and subsequent works. Initially pilloried and dismissed as wishful thinking and methodologically-flawed by many social scientists, it warrants further scrutiny. Beginning with Maslow’s hierarchy of needs, Inglehart posited that as the postwar generations in both the United States and Western Europe enjoyed the benefits of better education and became more affluent their value systems would shift to what he first labeled ‘post-bourgeois’ and later ‘post-materialist’. Their new found affluence would make the values of thrift and hard work of their parents that laid the foundations for this affluence less relevant. That such affluence would, in effect, come to be taken for granted and would enable them to pursue more self-actualizing behavior unrestricted by economic circumstances. The emergence of feminism and environmentalism – both largely upper middle class movements in their infancy – would appear to lend a certain credence to this line of argument both in the US and Western Europe. And ironically, as blacks have become more “integrated” into “post-racial” America, the struggles of their parents and grandparents now seem less relevant to their everyday experience. And clearly, large segments of White America are tired of hearing about it.

    But this begs the question: was the very success [economic, political, and social] of the traditional left during the long 60s [1954-1974] what gave birth to the movements that made for its undoing? The confluence of these various forces compressed “change” into a tumultuous period that created a vacuum in which a politically exhausted electorate withdrew from politics to recuperate, thereby leaving the field open, if not initially receptive, to the policies of the RIGHT. That this depoliticization of the electorate has been encouraged/promoted by the “cult of the expert” is undeniable as well. But 40 years after the revolution that devoured so many of its children the “success” of neoliberal thinking has now acquired a momentum of its own.

    If history is any guide, then reform is out of the question until this neoliberal experiment collapses. It was only in the aftermath of 1929 that New Deal legislation was enacted by Roosevelt but only because the traditional left – socialists and communists – was perceived as a viable threat to the regime. Yet, this time IS different because the traditional left is prostrate with organized labor on the defensive and many a “progressive” turning a deaf ear to it, eschewing class politics. And I must admit, the constant flurry of emails from the AFL-CIO about attacks on the middle class – as opposed to the working class – leave me asking myself “Where have you been for the past 40 years?” Not a deaf ear on my part but a very, very tired one.

    Perhaps the very success of the neoliberal experiment in concentrating wealth in even fewer hands will result in “The Making of the American Working Class” but I wouldn’t bet on it. The forces making for MARKET TOTALITARIANISM are firmly entrenched and total collapse is about all that will derail them. The train to the Finland Station is moving in the other direction…

    1. Jackrabbit

      Thanks for that awesome summary.

      Your conclusion seems bleak. I am an optimist at heart but I’ve been turning more pessimistic as it seems to me that the center can not hold when the center is largely a mirage used as a device for manipulation.

      Yves is on top of this issues, but I recall a Barry Ritholtz that made it starkly clear where we stand today: The Left Right Paradigm is Over: Its You vs. Corporations, where he noted:

      The new dynamic, however, has moved past the old Left Right paradigm. We now live in an era defined by increasing Corporate influence and authority over the individual. These two “interest groups” – I can barely suppress snorting derisively over that phrase – have been on a headlong collision course for decades, which came to a head with the financial collapse and bailouts. Where there is massive concentrations of wealth and influence, there will be abuse of power. The Individual has been supplanted in the political process nearly entirely by corporate money, legislative influence, campaign contributions, even free speech rights.

      1. Masonboro

        Replace “Corporate” with “Empire” and Barry’s meme makes even more sense. As Jack Welsh said years ago ; (1) GE is not an American company but a company that does business in the US as well as many other places and (2) Americans shouldn’t expect a higher standard of living purely on the basis of an accident of birth. I suspect he was speaking for the majority of Imperial leaders.


      2. Mickey Marzick in Akron, Ohio


        Wouldn’t Ritholtz’s thesis suggest that the the old Left-Right paradigm is more than alive and well? Before individual workers banded together to resist exploitation by corporations – ORGANIZED unions – how did the past differ from the present? Wasn’t it an individual worker against the company? We’re simply reverting to the days BEFORE workers were organized and better able to resist exploitation.

        Sometimes I have to ask myself who benefits the most when “we” are told to move beyond the old LEFT-RIGHT paradigm? How does such a position benefit working people? Or does it do more to facilitate defeatism, demoralization, and depoliticization of working people? And once again, who benefits by trying to bury the ghost of Karl Marx? It certainly isn’t working people, is it?

        One might criticize Marxism and Marxists [a camp to which I belong] for their inability to explain the lack of class-consciousness in this country, but that doesn’t mean Marxism is irrelevant… only that it hasn’t been able to use European contructs to explain the plight of American workers. But that might be more the fault of the analysts more than the tools of analysis and/or their unwillingness to adjust the latter to provide a more adequate explanation of a given situation.

        Class formation is not clearly understood in this country because upward social mobility has been an indisputable fact for much of our history. Only in the past 40 years has this sociological phenomenon begun to stagnate as class lines have become more fixed. But that doesn’t mean it will play out like it did in Western Europe. This is a historical process that may span several generations, making it difficult for anyone individual caught up in the midst of it to understand it fully. We’re not at the end of this road …

        So while the present may seem less than auspicious for positive change, neither of us can rule it out.

        1. Jackrabbit

          I don’t think Ritholtz was/is advocating moving beyond a left-right paradigm. I think he is making the point that, in fact, the political system (run by and for rich elites and corporations) has already done so (to the detriment of everyone else).

          Thus, the relevant issues are individual vs. corporate (corporate = proxy for wealthy elite). Certainly some percentage of individuals (the wealthy and those who are connvected to them) will not be too bothered by this new paradigm, but most ordinary people have still not caught on to how the money has warped what how their representatives think and act.

          Very few people ordinary people have even heard of Citizens United. Yet that ruling effectively makes (or ratifies) a fundamental change in how our democracy works.

    2. DownSouth

      Mickey said: “Beginning with Maslow’s hierarchy of needs, Inglehart posited that as the postwar generations in both the United States and Western Europe enjoyed the benefits of better education and became more affluent their value systems would shift to what he first labeled ‘post-bourgeois’ and later ‘post-materialist’. Their new found affluence would make the values of thrift and hard work of their parents that laid the foundations for this affluence less relevant.”

      I do not see how it is possible, in the nature of things, for any revival of religion to continue for long. For religion must neccessarily produce both industry and frugality. And these cannot but produce riches. But as riches increase, so will pride, anger, and love of the world in all its branches.
      ▬John Wesley, founder of the variety of Christianity known as Methodism

  20. Jennifer Hill

    There piece lacks an explanation of how the right moved the entire conversation about individual identity to the right. The corporatists and elitists did not just structurally change the government to meet their needs they also set about on a large marketing campaign to convince the public as well. TV and advertising tells folks what to want, how to act, where to live. And then the elite bought the news media and all of the information that regular people get is filtered through their lens. Messages given to regular people are that being a good citizen means getting in debt, not arguing about that debt, and if you do everything right you will get to be a millionaire.
    Strategically absent are the messages about a participatory democracy and how vital genuine input is to our system. Messages about the value of equal pay, equal rights and valuing the unpaid work done – that makes us stronger and more united are considered subversive and Marxist.
    This is where most regular folk get their information. As long as the elite control TV its likely the masses will be entranced.
    There are ways to change the dialogue but such talk in the face of all the corporate messages we’ve been told makes changing how you think and talk difficult. Many of us, not just the regular folk are unwilling to change, instead opting for incremental reasonble change.
    Some things we can say are, for example; Rent don’t buy, corporations are parasites not persons, live well without mass produced goods from China, you deserve to be safe, have all your basic needs met and be able to live on a modest income, we the people are the democracy – all of us matter.
    I personally believe that we must make the institutions that oppress us irrelevant. Forget credit scores, forget installment loans without interest caps, lose corporate food, and above all turn off the TV and turn on your family, your neighbors and community. Stop paying your bills take bankruptcy and get on with a life that you can manage. You will be able to sleep at night and really enjoy that grilled hotdog.

  21. Greenguy

    Yves, as a graduate student in political science who has just finished writing a dissertation on this topic, I think it is worth mentioning the sociological effect of participation in mass organizations as a direct cause of this situation. We need to go back and read Robert Michels, Max Weber, James Bryce, Ostrogorski, Luxemburg, and Pannekoek.

    Large organizations tend to produce leadership cliques (oligarchies) and self-sustaining rationales for existence that only sometimes have to do with their ideological covers. Rank-and-file members of organizations are socialized, assuming the organization is successful in achieving any of its goals, to follow the orders of the leadership and the information they put out. This leads to “party machines” which used to function very explicitly as vote-buying and patronage providing businesses. Voters/party members are not “stupid” or “ignorant” but rather are incentivized to follow the lead of their particular organization’s oligarchic leadership clique.

    While I don’t agree with Michels that this is unchanging (the “iron law of oligarchy”) it is more difficult to create a structure whereby revolts and grassroots control are common. When you have *no* political parties whose interest is primarily the working class, and when the only other political organizations for workers are unions whose leadership has made a deal with one of the two capitalist parties (Democrats), then you have a recipe for disaster as the business leadership begins to wholeheartedly embrace free-trade dogma, outsourcing, and the destruction of social programs.

    So yes, our current situation has a lot to do with the groups in the 60s started by the most conservative wing of the capitalist class – Thomas Ferguson described this nicely in “Golden Rule – but it also has to to with the general tendencies of voters in an electoral government.

  22. Gaius Gracchus

    Perhaps the most fundamental change occurred in the early 70s with the introduction of changes from the Kennedy Round of GATT, which effectively made America a real free trade nation.

    Finance, which represented a mere 10% or so of US corporate profits in the 50s, ballooned in the wake, as firms shifted jobs overseas, with the execs and owners pocketing the “savings”.

    Much like a game of prisoner’s dilemma, maximizing profits by exporting jobs ultimately led to increased inequality and the death of middle class. Wages have been stagnant since 1972 in large part due to the Kennedy Round and subsequent free trade efforts. The gains go to the few, while the rest languish.

    Of course, as noted above, US corps need the US military and US hegemony to protect their looting of the US and the world. They just don’t want to pay for it…..

  23. krb

    Excellent piece!

    I’m short of time and haven’t read all comments so apologize if it’s been covered, a couple quick things come to mind…..

    Depending on time frame, we shouldn’t be too surprised by our regression. Our rise and fall is following the same pattern as any other former “empire”, Asia of 1000 yrs ago, Europe of 300 yrs ago, et al. We progress from an age of optimism, opportunity, you can achieve whatever you want or whatever you’re willing to work for… an age of perpetual victim, my predicament isn’t my fault, it is because someone else screwed me, oppression at the hands of the elite and moneyed class.

    How to stop the regression and not follow the path of others into oblivion is challenging. I agree with the view somewhere in the above piece that the “voters aren’t aware of what is happening to them”, or something to that affect. In my view, it’s largely the byproduct of the major sources of education (schools, colleges, media) having become players within the system, as opposed to informers about the system. I want to quickly add I don’t feel this is about left or right, both are wrong, its the system that is polluted. We’ve allowed a system to take root that advocates class warfare and the managers remain in control so long as the warring classes remain in balance.

    How to address it on a wide scale seems overwhelming, so I’ve just chosen to do the best I can in my own household, by having our kids try to make the argument for both sides while their own view takes root. They still usually settle on one side or the other on an issue, but the exercise of arguing the opposing point is enlightening, we have great discussions!

    To achieve better understanding on a broader scale, I think the blog world offers opportunity. Our existing institutions (education and media) are hopelessly dug in and part of the problem. But our youth do everything on line. If blogs perpetuate the mistakes of the older institutions however, by catering to sides, they won’t help break the cycle. If on the other hand, blog sites were developed that specifically tried to offer concise, neutral, well-balanced education about opposed views on issues, they would be immensely popular, in my view. Who wants to spend twice as long, and have to view multiple sites to get all sides…..I know my kids don’t because we’ve tried it, I don’t for that matter either. Current blog sites tend to cater to sides, audiences tend to seek out blogs that will reinforce our pre-existing beliefs….who doesn’t want to be right after all! But in doing so blogs run the risk of having the next generation of media just perpetuate the mistakes of old media, and remain part of the problem instead of becoming part of the solution. We do get opposed views now, but it is within the hundreds of comments following a piece……that doesn’t align with all of our, and especially our youth’s, “I want it fast” view of everything they do.

    Lastly, I’m not hopeful of any quick recoveries from our condition….I would place this in the aircraft carrier category…….long time to get here, long time to turn it around. But it starts by talking about it……again, excellent piece! Thx, krb

  24. ep3

    Yves, I believe this is how things transpired since the Great Crash, because before that I will

    assume for the most part the middle class had been kept suppressed as a minority.

    First, the crash. Elites panicked. They saw this as larger than the normal dip. Then, in

    Europe, Hitler came to power and started flexing his muscle. He quickly began conquering

    Europe and showing that he was someone not to be messed with. The elites said, ‘we need to do

    something to rescue the U.S. from this economic crash because before long people might start

    sympathizing with Hitler and then he will overthrow us.’ (when i say ppl, i mean other wealthy

    persons. Remember Ford, Prescott Bush, etc. All supporters of Hitler.) So they said ‘we agree

    to these new regulations, we will let unions gain some power and then begin a buildup to fight

    an upcoming war with Hitler’. So they go to war and win. All these new regulations and

    wealthy middle class are now in positions of “power”. Then, there is a tremendous population

    boom (baby boomers). In the decade after WWII and the Korea war, there is a lot of demand in

    the economy that feeds itself into tremendous economic growth. Then there is significant

    investment by the gov’t in infrastructure to thawart another Hitler and also competition from the Soviet Union. This all fuels the fire of economic growth. By the end of the 1950s, the veterans now have stable middle class lives and they begin to do other things besides work 24 hours a day. They begin to demand things from democracy. By the beginning of the 1960s, their children are also coming of age in this new perspective. They are freed from having to work (in the sense of children in coal mines) so they also begin to spread their optimism. They begin to question the way their world works. And now there are so many of them (baby boomers) that they are a political threat. They could vote the elites out of power. So many are sent overseas. The rest are able to find very good work in all kinds of jobs that provide extensive benefits with promises that once a person works a given time, they receive a pension for life, as well as all those other benefits. Those that want to work can find it and the work provides a way to support oneself. This, combined with the war, creates chaos. The elites do not like the threat to their power. They decide this must end. But they cannot upset the baby boomers for they are a strong political force. So a plan is developed to slowly eliminate the middle class. And over the course of the last 45 years, all the middle class jobs are eliminated as well as the benefits. But this is done to make sure the baby boomers do not lose their cushy lifestyles. And with globalization, companies that needed to sell their goods to 10 million people to make a good profit, they don’t need to depend upon the U.S. to sell those goods because they have 7 billion people to choose from. With the cost of living rising dramatically, and wages stagnating, all the wealth accumulated by the baby boomers will be used by their children to pay off debts and pay expenses that aren’t keeping up with wages. If a child goes into a serious debt spiral, where he racks up a huge mortgage, car payment, student loans, and credit card bills. Then the child hits a period of unemployment (because that will become the standard. There are no more “30 year” jobs. remember all those buzz words about “the average person will change jobs every 3-5 years in the new economy”. but with 10% unemployment, a person will land a job for awhile until the owner cashes out to a large multinational, where the person gets let go in the downsizing. ) and any financial gains that were made will be wiped out by the period of unemployment. So mom and dad dip into their savings to bail them out. Before long, mom and dad either are tapped out or die. When they do pass on, the kids go on a spending spree. “Once I get those student loans paid off, things will be better.”

    I could go on. But I went farther than I had planned.

  25. don

    To conceptually come to terms with what is being discussed here it is helpful to separate out market/economy, state/political, and civil society, as formulated from a Hegelian Marxist view.

    Jurgen Habermas long ago wrote a book (in the 60’s that was his Ph.D dissertation) examining the history of the public sphere. in the 70’s he published two volumes that indicated the degree to which the public sphere and civil society had been colonized by the power(state) and money(market). The withering away of the public sphere can be attributed to not only the consequences of mass consumption but beyond that, the growth of systems (power and money) in shaping societies. For this he relied in part on the systems theory of Luhman as well as borrowing from Weber.

    As forms of social integration (and accompanying psychological formations of autonomous individuals) weakened, forms of system integration increasing dominate. As a result, motivational and legitimacy that underpin society fail to support said systems, thus the very colonization of civil society leads to crisis in political economy.

    1. Susan Truxes

      We do live in a world with so many problems that only state capitalism can address them. State capitalism will probably also be forced to maintain human fairness because statism is extremely vulnerable. Just look at China. If it doesn’t pour all its resources into improving the lives of its 2 billion people there will be hell to pay. If plutocrats are crony capitalists then they too are vulnerable. There won’t be a clean harbor let alone a safe one. With 8 billion of us on the planet. Yuk. We need to get down to basics. They say monkeys, cats, dogs and some birds (I’m sure all animals) have a sense of fairness. I propose a universal tax on everyone above and beyond income tax: a hefty toilet paper tax. This money will be kept in a secure fund to mitigate our destruction and pollution of the planet and this mitigation alone will improve our state of abject misery and brighten our spirits. And it will be imposed on all – because even the Hamid Karzais of this world no longer use the hem of their robe.

      1. NOTaREALmerican

        Re: This money will be kept in a secure fund to mitigate our destruction and pollution of the planet and this mitigation alone will improve our state of abject misery and brighten our spirits.

        I would propose that FIRST (before creating this fund of yours) that the nice people (like yourself) ask themselves WHY do the worst people on the planet ALWAYS get control of “your fund” and use to for their own gain and HOW will YOUR FUND prevent the worst people on the planet from getting control of “the fund” next time.

        If you don’t figure out THIS problem, the “nice people fund” will (yet again) be looted by the sociopath who looted the CURRENT fund.

        1. Susan Truxes

          I agree that will have to be addressed. Maybe we can figure out a way to transmogrify money digits into pollution digits. So it cannot be pilfered and squandered. And to carry this even further, why is money so generic? Why isn’t all “money” specific, that is specified to be spent on a clear purpose and therefore manufactured, issued, only for that purpose?

          1. Externality

            That was the idea of building up a surplus in the Social Security Trust Fund, and investing the money in Treasury Bonds that could only be used by the Trust Fund. (They cannot be traded or redeemed by anyone but SSA.) Now that they are coming due, the elites are suddenly claiming that the bonds cannot be redeemed because the money is needed elsewhere. The elites in DC have decided that it is not a ‘serious’ idea to even consider using the fund for its intended purpose.

            The same will happen with a pollution-based scheme. Your idea of a trust fund, while innovative, would similarly be looted. If the elites want a war, or to bailout a company that bet badly in the pollution-credit markets, they will simply take the credits using the same arguments as are being used to dispossess SSA recipients.

          2. Externality

            To clarify, the bonds in the Trust Fund cannot be traded, only redeemed by SSA. Regular Treasury bonds obviously can be, and are traded on the market.

    2. Mickey Marzick in Akron, Ohio



      Have you read “The Fiscal Crisis of the State” [1981]by James O’Connor? It was recently reissued with a new foreword.

      It linked Habermas’ theory of legitimation to the fiscal crisis of the state. As the state is no longer able to provide goods/services it once did, its legitimacy comes into question. Written in 1981 it now seems almost prophetic!

      Of course, the withering away of the state now envisioned by some has nothing to do with that predicted by Marx which raises important questions:

      Does the private sector with its global reach need the state? Has it become a fetter on the capitalist accumulation process?

      And if the state withers away are we evolving into a neofeudal world order “governed” by corporate fiefdoms in which the atomized individual confronts the corporation without the intermediation of the state?

      A technopeasantry happy to have a job on the corporate manor, knowing that beyond the jurisdictional boundaries of the manor life is solitary, brutish, and all too short. In other words, the Hobbesian war of all against all in which legitimation is the iron fist?

  26. NOTaREALmerican

    The nobility won because to two simultaneous events which took place over 40 years.

    1) “Those people” were declared human and the white people when nuts and started voting fascist to “get even”.
    2) The liberals threw borrowed money at everybody in an attempt to calm down the white people.

    The resulting debt explosion caused a 40 year faux prosperity that allowed the nobility to completely capture the government while the peasants were happily buying Bling and living the good life thinking that the only political issues that mattered were alleviating guilt (Blue Team true-believers) and being as mean as possible to those who you despise (Red Team true-believers).

    As a result, the democracy is gone. There’s no going back. Oh well, still not a bad run for a democratic government: roughly 1780 -> (let’s call it) 1980. A good effort.

  27. Cog

    Three things destroying democracy:

    One – We’re evolving into a self-centered culture, no cold war, no “we”. There is no immenent threat bringing us together. 9/11 and all of the flags was both a fleeting moment of unity and a surreal display of how shallow we’ve become over the last several decades.

    Two – The invisibility of plutocracy, where the .1% knows not to be seen and the botton 80% are hopeless at figuring out what the top 1%, or 2% did.

    Three – We’re innoculated from curiousity by the media. Certainly on its own trajectory, pacifying most with the limited exception of robust debate on the internet. Biggovernment took the baton of an alleged Obama statement on the microphone the other day suggesting Americans are “slugs”. Hacker and Pierson appear to agree. I disagree and think the clear insanity of both sides is what has driven 11 states to become majority independent.

    We’re angry. We’re losing a battle against risk, caused by complexity and the missguided notion that our country actually hasn’t changed in recent decades.

  28. John Merryman

    What goes around, comes around. The powers that be are riding the wave and the bigger it grows, the harder it falls. Which isn’t to say those at the bottom are not going to get screwed as well, but as Keynes said, in the long run, we are all dead.
    The real issue to focus on is how to affect what rises from the ashes. First off we have to understand money is a contract, not a commodity. If you trade tangibles for a piece of paper, the paper is not a commodity, but a contract. Since capitalism is founded on the principle that money is a commodity, it has naturally produced as much as the system can be manipulated to hold. Well guess what? The bubble on all that paper is breaking down and those plutocrats are going to regret having been quite so single-mindedly greedy.
    We are going to go through some chaos, but eventually humanity will emerge in a slightly more educated and hard-nosed reality. We will realize that a publicly guaranteed monetary system is a public utility.
    Not to say is will be some eternal utopia, but people will realize that converting value into a currency means it becomes a form of public property. Much like roads are public property, even if we have sole possession of whatever part we currently occupy.
    So people will naturally seek to invest their efforts into strengthening local economic networks, rather than draining value out to invest in some global ponzi scheme, that requires ever expanding indebtedness to survive.
    From this, larger economies of scale can emerge, to whatever extent this foundation is willing to support them.
    Time goes much faster that we personally sense and in a few generations, this will hopefully be just one of those remarkable times in the history books.

  29. Dikaios Logos

    I would concur with Yves assessment of Australian’s political knowledge. But I add that in the developing world many, many people have a better grasp of the political situation then folks in the U.S. do. Since these people are so much poorer, I really wonder why the U.S. electorate has such deficient political knowledge. Perhaps democracy forces elites to use Byzantine shenanigans and obfuscations to get their way, whereas elites in say, Syria, just use brute force?

    1. NOTaREALmerican

      Re: I really wonder why the U.S. electorate has such deficient political knowledge.

      Political knowledge is only necessary IF you think political solutions are meaningful/useful to your own life. The US has a large paid professional class of people that are VERY knowledgeable about politics, that are called lobbyists. These people work for other people that NEED political solutions to enrich themselves.

      The peasant class hasn’t needed “politics” EXCEPT to push various upper-class agendas on other people (politics as mommy or daddy on the children). Real issues (like who is getting all the country’s loot) have been hidden by a smokescreen of debt which has made the peasants feel wealthier than they actually were. Why would a “debt wealthy” peasants CARE about politics. And worse, if he didn’t how would his children learn about it (please don’t say school).

    2. Jason Rines

      The U.S.A. has a massive, highly trained media department and Syria doesn’t. Syria has smaller weapons and ability to project power beyond it’s own people. That is why they are more barbaric on the people. Fear-based societies that attempt to spur growth past a realistic limit (no I don’t have all the answers either) discourage innovation. That leads to collapse.

      The elite can encourage competition. Let’s face it fellas, by the time the seedlings can challenge as competitors, you’ll be long gone. Immortality delusions are making you miss out on interesting final ventures.

      The cocktail parties bore me to tears, may as well have one last hurrah and fill in areas of failure. There were real success too. For all the criticism, progress was made in many areas. Hey, each generation only gets to kick a Field Goal, not the TD. Reinvestment using I.T. to rapidly identify underutilized value (Warren Buffett on steroids) is a good means of redemption and profitable as well. Our universal goal should be to feed 10B people. Time to choose some successors gentlemen and ladies instead of merely pontificating about all these things at dull cocktail parties.

  30. Hugh

    There are three salient facts about our current world that any political or economic explanation must address if we are to understand what is really happening in our world. These are

    1) Kleptocracy

    2) Class Warfare

    3) Wealth Inequality

    Hacker and Pierson dance around these. As in all other current descriptions, the absence of integrating these 3 core concepts leads to a kind of otherworldly, things just sort of happened conclusion.

    I have said much of this before but kleptocracy is a system but it did not arrive fully blown upon the scene. It is a 35 year construction. It permeates not just the financial world, our politics and government, but academia and the media. It run of, by, and for our elites.

    Yes, it benefits in particular the top 0.1% but it also benefits the top 10% too. If it was just the top 0.1%, you could characterize it as a conspiracy. But it needs an extended network of enablers, legitimizers, apologists, abettors, and propagandists to promote and cover up its lootings. This is not a cabal. It’s an army, an army of our elites, and they are waging a class war against us.

    You may find the term “class warfare” too extreme. That it is too redolent of Marxism and the Russian and Chinese Revolutions. It isn’t really appropriate for us. It couldn’t happen here. But consider that the very media and universities which informed and educated you are run by the same elites who are stealing from you. Remember too that distraction is the primary weapon of class warfare. Keeping you away from that term delays any effective response you, and we, can mount. That is if you don’t understand the problem, then your chances of finding a viable solution are negligible. Failure to understand also opens you up to all the alternate explanations our elites are willing to supply you. It’s the fault of the minorities, or the illegal aliens, or public sector employees, or the Moslems, or big government, or big deficits, everyone and everything but them.

    Hacker and Pierson, much like Krugman, are Establishment and really part of the problem. They play to a particular segment of the population, one a little more informed and critical, but their role is still distractive. They admit that the system has difficulties but they won’t finish the analysis and say that the system is the problem. They won’t call it by its true name, kleptocracy. They won’t assign blame where it belongs: to our elites, because they are members of those same elites. And so, in their own way, they keep the criminal enterprise of kleptocracy going just that much longer.

    There is nothing innocent or mistaken in what they do. Kleptocracy has stolen money out your pocket everyday of the working lives of most here. It has warped and diminished the lives of hundreds of millions, in our country alone. It has ruined the lives of tens of millions and killed hundreds of thousands. We see its effects everywhere from the economy, high unemployment, decaying infrastructure, millions of families foreclosed upon or with underwater mortgages, decimated retirement accounts and pensions. Poor education. Worse healthcare. There is nothing benign about it or its practitioners.

    And kleptocracy has no brakes. It will keep accelerating until it crashes. We have already seen this. If resuscitated, as it was, at our expense, it will crash and crash again. And in each of these crashes, we will be the primary victims. Not Hacker or Pierson or Krugman, nor the vast majority of our looting elites.

    1. Hugh

      Two corrections:

      It is run of, by, and for our elites.

      Kleptocracy has stolen money out of the pocket every day of the working lives of most here

  31. Jim

    Much of the commentary on Yves musings on Plutocracy have used such words as “limousine liberals” “politics from above” “social engineering…on the lower classes” “professonalized” and “cult of the expert”

    Such terminology captures another important but relatively unanalyzed portion of the present ruling elite.

    This privileged social segment with links to Big Government, Big Capital and Big Bank deploys cultural
    capital or Big Knowledge to also help dominate most of the rest of the population.

    Consequently, to me the term–Plutocracy–seems too narrow to properly capture the present structure of power.

    Is it completely accurate to argue that concentrated corporate power alone led to the corruption of government?

    The history of the past 200 years has been interperted primarily in terms of the logic of capitalist expansion.

    Is it possible that this capitalist lens of analysis misses at least 2 other key phenomena:

    1. The nation-building process(from federation to Security State)as a political project which cannot be reduced exclusively to an economic component.

    2. The rise of a new post-industrial professional strata which uses its linguistic and technical skills to help manage both large public and private bureaucratic structures (it might be interesting to trace the careers of many former participants of the New Left of the 1960s along such a trajectory).

    Most of us are quite comfortable with the assumption that capitalism has indeed tended to reduce all values to exchange value–and reduce citizens to consumers. But is it also possible that the development and creation of the modern nation-state in the U.S.,in itself, created its own system of domination–resulting in the homoginization of more and more citizens into clients of the national state as well as capital.

    And is it also possible that the rise and increasing power of professional experts(i.e. many careerist academics) took place during a profound shift to a service economy during an era of a dramatic decline in U.S. manufacturing?

    It now seems to be the accepted narrative that only State Power, Capitalist Power and Expert Power are sufficiently competent to manage our society.

    1. NOTaREALmerican

      Re: It now seems to be the accepted narrative that only State Power, Capitalist Power and Expert Power are sufficiently competent to manage our society.

      Yup! Good post.

      And this power can ONLY be managed by VERY professional and committed politicians who have YOUR best interests at heart and will ALWAYS be keeping a watchful eye on the power people. Red Team Blue Team… Gooooooo TEAM!

    2. DownSouth

      “The intellectual history of Western thought since the Enlightenment is characterized by one utopian vision after another,” Robert H. Nelson wrote in Economics as Religion, “each finding fault with its predecessors, but then holding out the prospect of yet another, truer—-more scientific—-path to heaven on earth.”

      Even as Paul Samuelson—-the “apostle of scientific management” as Nelson dubbed him—-was formulating his grandiose economic theories, Reinhold Niebuhr was warning that this ain’t gonna work, forever earning him the enmity of American progressives. “Scientist-kings” is what Niebuhr called the Nobel Laureate and his fellow utopian dreamers. No easy solutions to these problems exist, Niebuhr cautioned, that do not involve the conflict of interest pitted against interest, value against value.

      “In the liberal versions of the dream of managing history, the problem of power is never fully elaborated,” Niebuhr wrote. One “version of the dream assumes some kind of elite. Beginning with Compte modern social scientists and geneticists frequently hint vaguely at the necessity of Platonic philosopher-kings, transmuted, of course, into scientist-kings. The least that seems required is that the men of power should have social and psychological scientists at their elbows to prevent ‘irrational prejudices’ from entering into their calculations.”

      It wasn’t until much later, after it became apparent that there were problems in paradise, that scientists finally figured out what the theologian Niebuhr had warned of decades before. “Human beings are a species splendid in their array of moral equipment,” Robert Wright wrote in his masterful book The Moral Animal, “tragic in their propensity to misuse it, and pathetic in their constitutional ignorance of the misuse.”

  32. Philip Pilkington

    “The big problem of the 1970s was that only a few Keynesian economists decried the big budget deficits of the late 1960s, which with the economy already running in high gear, was certain to cause serious inflation.”

    Hmmm… dunno about that. Ah reckun that JK Galbraith’s thesis was probably the most satisfactory for the ’70s inflation. He claimed that it wasn’t just too much aggregate demand but the very institutional structures that had come into existence.

    On the one hand, you had the corporations who, for all intents and purposes, controlled prices. On the other you had the unions, who — although they may have had slightly less power — had significant pull over wages. As the corporations raised their prices, the unions raised the wages — resulting in a wage-price spiral. This was then exacerbated by the oil spikes — especially in that they raised input costs which the corporations passed on to their customers resulting in a larger wage-price spiral.

    I think this is the correct interpretation because in places like Sweden they were able to hold the welfare-state model in place after the ’70s. They did this by informally controlling wages — they negotiated with the unions on this issue and because Sweden had higher levels of social solidarity the workers agreed.

    On Swedish wage settling:

    “The contribution to flexicurity in the decentralised collective bargaining process in Sweden is primarily concentrated to a relatively flexible wage settling process. The flexicurity approach is also implemented in agreements of severance pay and outplacement services negotiated in the collective agreements. Working time is regulated in legislation but can under some circumstances be negotiated in collective agreements. The rate of membership in unions in Sweden is high, around 80%, and collective agreements cover 90% of the labour market. Labour market policies negotiated in the collective agreements therefore practically involve the whole labour market.

    More than 80% of employees in Sweden have part of their wages determined by local level negotiations, and 7% have their entire wage determined locally. The number of employees with local agreements has increased in the 1990s and 2000s. White-collar workers have a much higher rate of local level negotiations on wage. A type of wage allocation that has become common in the past ten years is a model with a partly guaranteed wage increase but also a pool that should be negotiated locally (Confederation of Swedish Enterprise).”

    1. Philip Pilkington

      Almost forgot — one more quick point on this.

      In ‘Stabalizing an Unstable Economy’ Minsky gave the example of the recession that occurred in 1975. There [in chapter 2] he gives a convincing argument that had government spending not and the ‘lender of last resort’ function not performed by the central bank, a depression may have resulted instead of a recession.

      I think Minsky is on the money (har-har, I did a funny). And if this is true it makes the government debt = 1970s inflation thesis problematic because it would imply that there were still underlying problems with aggregate demand — and if that’s true then the inflation probably wasn’t demand driven, strictly speaking.

  33. Paul Tioxon

    Theories do not make political decisions, people do. The aggregate behavior may be described, more or less adequately by theory, but by the readings including the comments here, there is universal understanding about the nature of the system we live under. It has been more than adequately described as a system of ceaseless capital acquisition, more than fatally debunked as inadequate to protecting a social order that is sustainable through reasoned response to a changing environment, and has the capacity for ruthless inhuman brutality in times of peace as well as open warfare.

    But what are we transitioning to? Joseph Wharton founded the school named after him as The Wharton School of Finance and Political Economy. Needless to say, the Cold War ended that nomenclature to culturally demonize certain pursuits of knowledge. The crime of thinking about the collective economic activity of the nation state was too much to bear. But here on NC, what was once a punishable radicalism is a necessity for survival amidst economic catastrophe that is ongoing as the leaking radiation from Japan. Banks are still failing and unemployment is redefined to a statistical shadow of the reality of impoverishment of more and more of the middle class. Let’s not call it hollowing out, economic ruin is turning into outright poverty. As food, gas, home ownership, medical care and college education disappear as public goods, it can only be called poverty. And the people who have the capacity to force millions of their fellow Americans into poverty, against organized opposition have more power than those opposing them. Maybe, if they succeed, there is counter punching until there is one left standing. That is the political struggle, and that is why political economy was always used to described the economy of the nation state. At that level it will always be about power.

    What can be done? It is a fact the USA is a Democratically controlled Republic. The corruption of the political process is not a structural change. It is not an impossible situation. If anything, the relentless social and cultural revolution has made America a better to place to live in 2011 than it was in 1911. That is a fact. The fact that it is under assault by what I will term the Homeland Security Capitalists proves that there has been much more power sharing and much more equitable access to social resources than previously. If Social Security, Medicaid, Pell Grants, Unions, Unemployment insurance and other economic gains are diminished, so is the Democratic party and the coalition it built to acquire and consolidate these gains. Remove these items and there is no reason to vote for Democrats, they do nothing at all. Mistakenly, instead of taking over the pre-existing infrastructure of the Party, some foolish strategists want a third party. Our system is not designed for power sharing and coalition governments. It is a winner take all system. It is what it is. It is not the only form of democracy or the best, but it is what he have right now.

    The Great Society Capitalists want to do well by doing good. They are not trying to make a socialist state, but a better capitalism that can survive with them in charge for the most part, with some power sharing to keep the whole enterprise moving forward with pragmatic course corrections. If there is to be any power, individuals will have to join with others in organizations that specifically seek power., the Democratic Party, The ACLU, The NAACP, ACORN, in its resurrected iterations have all played a role in making material progress in the improvement of the lives of people affected by the issues they worked on.

    There is no other alternative in our Democratically controlled Republic to acquire the power to control our lives other than joining in organized political activity and organizations that work towards that goal. All of that in addition to working to run a business, earn a living, support a family, and pursue religious, cultural and other obligations. It not easy, it will not fall from the sky like rain. But it is human made social order that we live in and it is of our making. We can plan or be planned for, we can decide or be decided for, not only our silence but our political inactivity is consent to capitulate to whatever someone else leaves for us to pick up, like the crumbs falling from a table.

  34. Masonboro

    A little note to compliment the readers and commentators of this blog on an excellent discussion without trolls or ranters and to compliment Ms Smith on such an informative blog.

    Great job boys and girls !!


  35. Stephen Vernon

    Them Producers–We Parasites

    Perhaps it is the right’s article of faith that low taxes have magical effects on the economy. But it is a faith untested by conflict. A conflict of concern for those immediately (and on-goingly) hurt. They just don’t care about those people. After all They are the Producers and “those people” (the 95-99% that constitute the “rest of us”) are the Parasites.

    Why else does boy genocidist genius Paul Ryan require his staff to read Ayn Rand? It is her Objectivism that celebrates the separation of the anointed and to be pampered (and socio-pathic) Producers from the Parasites of the rabble who want to hold them back.

    This is a central reality we must understand in our dealings with the right. At core they are a “Me” culture and some hide it very well even from themselves. We are, and always have been, a “We” culture. While recognizing that we may compete, it is in the crucible of a culture that provides concrete and intangible support to each and all of us.

    The right, either honestly or dishonestly, will provide themselves with the talking points about caring for the people, doing what is best for the people. Really, at heart , they promote what is best for the Producers (the haves) whether or not they truly believe that will have a positive impact on the have-nots (Parasites.)

    This leads to what Robert Scheer says—“It is time to admit that we are, in practice if not surface appearance, close to the Chinese communist model of state-sponsored capitalism that sacrifices the interests of ordinary workers, be they in the public or private sector, for the exorbitant profits of the superrich.”

  36. steelhead23

    “I’d be curious to get reader input on both the Hacker/Pierson analysis and what remedies they see as viable.”

    Me too. But let me take a stab at it.

    First, I believe the psychological attraction to group identity should be considered. Group identity does not just mean political affiliation, it includes union membership, professional organizations, etc. If you are a realtor and often go to realtor rah-rah camps, you are unlikely to learn of the weaknesses in MERS, or the social responsibility of agents. Instead, you will learn how to close a deal, etc. Indeed, rather than any concern for ethical responsibility, the goal of such camps is to alleviate any ethical concerns through group identity – everyone is doing it and being just a tiny bit unethical makes the world go round. Through group affiliation and loyalty one is excused from the difficult job of independently developing opinions or ethical standards – one simply adopts the group’s positions. In my experience, such groups often go out of their way to create a “decision-free environment” for members. There is a leadership tree which selected members are encouraged to climb. Loyalty is valued and current leadership chooses its successors – thereby maintaining the status quo.

    Second is the appeal of the status quo. The status quo is safe and familiar – change is scary. I believe this bias toward the status quo is very common in finance and shows up in old saws like “house prices always go up.” This bias is very strong and for some folks, a mountain of empirical evidence is not sufficient suasion.

    And there is something else here that is hard to define – hatred of government. Not just hatred of specific policies or government officials, but hatred of government across the board. Libertarians may be a small fraction of the U.S. electorate – yet Libertarian principles guide much of the anti-regulation rhetoric. Anti-governmentism also alleviates the individual of the need to develop opinions – if an issue is favored by the government, or would “grow the government”, it is bad. It is a sad irony that the nation that introduced the notion of government of, by, and for the people, is increasingly dominated by individuals who distrust the government, meaning they distrust themselves.

    But the litany would be incomplete without acknowledging the role that media has played in this. Increasingly, the media does not present facts, it presents opinions and carefully selected facts that support that opinion – and those opinions are increasingly right-leaning. Indeed dear lady, aside from the internet, there is virtually no left-leaning media left in this nation – and the rightward lean of the media seems to be strengthening.

    As regards fixing it, I haven’t a clue.

    1. Jackrabbit

      There are efforts to get money out of politics. That’s one possible solution, but it doesn’t seem to be gaining any traction.

      There are also some efforts to educate people about what is happening (e.g. Ratigan’s tour, various blogs, etc.). Wisconsin was a wake-up for many.

      But any change won’t be fast or easy, and we may already be beyond a critical point (where TPTB would rather take extraordinary measures to consolidate/enhance their power than give any up any real power).

  37. Rycoka

    I think the anaysis that the flow of capital out of the US is a result of US military preeminence makes sense. The other factor that makes government compliant is the need to fund military adventures through debt. I’d argue that this has created banks that feel very much empowered to behave badly (creating too much bank money in all its forms) knowing that the government is dependent on them to continue funding their military adventures.
    The solutions are difficult but obvious. Withdraw from military adventures as rapidly as possible, focussing on global diplomatic efforts (however weak) over unilateral military action. Establish an aggressive timeline for the reestablishment of transparent bank asset valuation. Set in place strong governance systems (use some of the “homeland security” budget) to allow for an orderly wind-up of insolvent corporations and financial institutions (however large). Though I don’t know that much about him (being Australian) I suspect the real key would be to elect Ron Paul as the next US president

  38. fattigmann

    “it’s not that our institutions are too big, but that we are not big enough to fill them.” Thomas Wolfe. I believe our cultural DNA holds the potential for sustainable and orderly living, just as it holds the causes of our current crisis. I date the turning point to two ideas from one man, Ronald Reagan. The first is that gov’t is the problem. This is disastrous in a system built on checks and balances. The public is to watch guard the private and vice versa. The move toward full privatization is just as dangerous as full nationalization. Unfortunately a call for a more nuanced reform and streamlining of gov’t was not forthcoming b/c of reagan’s 2nd fatal idea, implicit in our national DNA but rarely articulated. We are manichaens. Good or bad. Black or white. Rich or poor. Private or public. With us or against us. Smart or dumb. Unfortunately we chose the latter with Reagan. Add to that a bunch of overeducated liberals who ar actually quite dumb people and you have or current situation.

  39. Fattigmann

    P.S. “I believe we are lost in America, but I believe we will be found.” Thomas Wolfe (1930s)

  40. readerOfTeaLeaves

    I fear that my own analysis is too simplistic, but:
    — agriculture didn’t need as many people on the farm, so a lot of them moved to cities to work in factories and too many ended up in finance, resulting in a too-large financial sector that was privileged (falsely) as some kind of ‘economic engine’ because it dealt with the management of capital.
    — by the 1970s, the world’s resources began to dwindle as the population began to explode, which put a great deal of pressure on controlling resources (which required concentrations of capital, which in turn used the services of all those people who’d moved from the farm to the cities).
    — the accounting rules were altered (at least in the US) to protect and concentrate capital, over and above other forms of wealth (and wealth creation).
    — because capital was regarded as the key factor in ‘growth’, it was privileged in legislation, court decisions, and academic studies.
    — because capital was reverenced as some kind of Primeval Force, everyone wanted it and the forces who controlled it began to play governments against one another (see also: tax havens), which meant there were increasing numbers of capital hideaways, which in turn drove a lot of people working in financial services to help acquire, manage, manipulate, ‘service’, and hide capital; in this process, the rules of capital acquisition superceded the older, more traditional rules of democratic institutions.

    It’s my view that we are currently at an historical moment of great confusion, but I don’t view that as necessarily a bad thing.

    I do, however, view commodities speculation on food as a dangerous issue, and one that kind of represents the apotheosis of a world ruled by capital that is unhinged from any social or moral responsibility.

    1. Rycoka

      Hi reader,
      speculation on food prices is what farmers do when they plant a crop, its very necessary – no point growing food at a loss. Financial speculators can help farmers by doing the speculation for them – guarateeing them a return on their crop that exceeds the cost in producing it.
      In a world where commodity prices are rising pretty much uncontrollably (please refer to my favourite chart if food prices fail to respond then farmers will no longer be able to farm at a profit and people will go hungry.
      The current US president’s attack on food price speculation looks on the face of it either an embarrassing display of ignorance or a deliberate attempt at disinformation.
      The central issue that needs to be addressed is the fountain of liquidity that is driving all commodity prices higher. My personal pet theory is that this is a result of loose US monetary policy undertaken to support fundamentally insolvent banks. For a neat explanation of cleft stick that the Fed finds itself in at the moment I recommend this article

      1. Rycoka

        Actually – I was wrong about the President targetting food price speculation – it was oil price speculation. I apologise for this error.

      2. readerOfTeaLeaves

        Thanks ;-)
        I agree that there is a role for commodities speculation on foods, but the escalation is going to have some serious implications.


        The central issue that needs to be addressed is the fountain of liquidity that is driving all commodity prices higher. My personal pet theory is that this is a result of loose US monetary policy undertaken to support fundamentally insolvent banks.

        I think you’re identifying the underlying problems that manifest as people speculating on food products. My own perspective is that the food prices are ‘externalities’ of the underlying monetary policy. Like you, I view them as symptoms of deeper, troubling problems.

  41. john

    So…this online poker bust. Relatively small potatoes, sure, but kinda runs against the trend as described, no?

  42. krb

    I have doubts about claims that our current condition is a byproduct of shifts in philosophy or strategy by voting blocs within a democracy. During my life time I’ve witnessed political parties completely exchange positions on issues ranging from the domestic economy to foreign policy in order to maintain their opposition to each other. That would seem to be inconsistent with the persistent, steady movement of “wealth” from the hands of many into the hands of a very, very small minority.

    I suspect bigger, more “enabling” events in history. Two that come to mind are….

    1. creation of the federal reserve bank, its mandates, and use of fractional reserve banking
    2. un-pegging of the dollar to gold by Nixon

    The first institutionalized the protection of, and wealth generation schemes of, the banker class.
    The second enabled the political class to play perpetual Santa Claus without consequence (at least noticeable consequence).

    We can debate the impacts of all the other events cited here in this string, but aren’t most if not all enabled by one or both of these two events? We can argue tax policy, entitlement programs, wars, govt handouts, bailouts, bubble blowing, endless debt, etc etc. All can trace their enabling roots back to one or both of these two event.

    Just another view….
    Thanks, krb

  43. slothrop

    “One nagging question is how the increased concentration of income and wealth in the top strata came to pass. The story that this group and their hangers-on would have us believe is that it is all the result of merit and hard work. Two offerings raise doubts about that line of argument.”

    I’m beginning to feel like we’re criticizing Nero for playing out of tune.

  44. William R Neil

    I agree with Yves assessment, that you can’t leave out the power of “The Right,” either in American politics or in the intellectual realm, in the academy, esp. the economics “profession,” as well as in shaping the business response to the traumatic decade of the 1970’s.

    If you’re going to read Hacker and Pierson then by all means you must consider several books which preceded them, by just a “few years”:

    William Greider’s “Who Will Tell the People: The Betrayal of American Democracy,” 1992, which has the “classic” Chapter on “Citizen GE,” as well as an introduction entitled “Mutual Contempt” and chapters headed by “Bait and Switch, The Grand Bazaar, Who Owns the Democrats and Rancid Populism,” to name just some.

    And the second would be Kevin Phillips’ “Arrogant Capital: Washington, Wall Street and the Frustration of American Politics,” from 1994.

    It would be wonderful to have someone sponsor a very public debate between these four to see where they agree and don’t, although it appears that Kevin Phillips has entirely retreated from the public’s eye (I’m assuming retirement) since the publication of his last book, “Bad Money,” in 2008…

    Whatever has happened since 1992 and 1994 has really only been an intensification of the trends and troubles they laid out in the first half of the 1990’s.

    Readers are more than welcome to Google my review of “Arrogant Capital” from 2010: “What Officials Can’t Face in 1994 or 2010: A Great Power in Decline.”

  45. Glenn Condell

    ‘The problem is that the public simply don’t know what the politicians are up to. They are not properly informed about how the rules have been steadily changed to their disadvantage.’

    I started to become politically aware of the US in the late 90s as the internet opened new info gateways; this was the era of the Clinton-hunt, and I quickly found myself in awe of the ignorance of most Americans (not those I came across on the web so much as the obvious majorities in favour of silly things and against sensible ones). I was gobsmacked if you will by how easily they ate the ordure being fed them by the media. David Brock was ironically in the van of this avalanche of bullshit, adroitly aiming spigots of well but obscurely funded misinformation, until he found the Road to Damascus. His defection remains unique so far as I know.

    I had an inkling that the US was more comfortable talking rather than walking genuine freedom and democracy, from newspapers, TV, documentaries, the odd essay in a highbrow mag, but once online hit it’s straps, it was possible to wallow in miasmic American delusion and ignorance 24/7. It was reality TV on the info superhighway and compelling like a slo-mo train crash.

    I hasten to add that I have come across thousands of sensible, well informed, highly moral and even brilliant Americans virtually every day ever since, but (a) you aren’t ‘most Americans’ and (b) your intelligence and independence seems to disqualify you in the US from ever getting within a bull’s roar of the corridors of power, the
    password to which is ‘I submit’.

    The US was founded in large part in reaction to the limitations and injustices of a traditional hierarchy of wealth and power, but it has ended up with a specious version of freedom where fealty to strongly enforced cultural norms (involving some quite explicitly elite-friendly politico-economic preferences) is mandatory for any public office, leaving no room for new thinking, political innovation, broader solutions, etc.

    Not only that, but there is a curious meekness in political debate, especially the media dealing with the Beltway. It is not quite tug your forelock territory but it is not far off. Here in Australia (and it seems to me Britain too, to a degree) there is a long and still strong tradition of a confrontational political media, prepared to ask hard questions bluntly, even to snark or ridicule or abuse if the occasion calls for it.

    ‘Yves again. This actually does ring true. I was gobsmacked when I lived in Australia to see at all levels of income and education how much better informed people were about domestic and international politics.’

    There are a few reasons for this. One is that, like all non-hyperpowers, we quite simply have to be better informed. It’s a survival mechanism; when you are aware that your existence (in the middle of a region full of people who are not like you) may be conditional upon the favour of one or more larger entities, you trim your cloth accordingly with one eye on the horizon and an ear to the ground.

    Americans have not for a very long time (perhaps never) been familiar with this feeling. On the contrary, they would have to be historically one of the world’s most secure populations, prosperous and well fed, marinating in a culture which emphasised this Arcadian splendour, their right to it, and how virtually every facet of it was the best not just in the world but of all time. Fat and happy, if ill-informed.

    The fact that much of this may have been true did not prevent it from metastasizing into a sort of massive national conceit, which helped to hamstring real critiques of, let alone real challenges to it.

    The other thing is that we have managed (with great difficulty at times) to keep genuine public broadcasting relatively healthy and accessible to all citizens, wherever they are. Australians fiercely resist any political interference or financial nobbling of ‘Our ABC’. We do get the standard rightwing mantra of lefty bias, but most of us are aware what hot air that is when the right (specifically Murdoch) controls the vast majority of our media.

    I believe that if the US had a counterpart of the ABC’s reach and independence, the invasion of Iraq would not have occurred. There was no bulwark against the tsunami of lies and warmongering. Our ABC has brought down corrupt state governments and any pollie who tries to gut it comes off second best. Politicians are respectfully wary of the voter-power it represents and must balance this against the magnate power the commercials represent, but at least there is something on the public side of the ledger.

    It seems to me there is a far more numerically significant portion of the public in the US willing to accept biased rightwing tropes about biased leftwing public broadcasting, and this critical mass is unaware of the benefits that would accrue to them if they did have a corner in the media not under elite control.

    Really, the natural allies of progressives in the US are the Tea Partiers, but while progressives could read what I have written and (perhaps with the odd cavil) largely agree without getting upset, wingnuts could not. They are the ‘numerically significant portion’ and unless and until a good many of them can lose the scales from their eyes, there will be more of the same.

    I have been taken to task making this argument before by people who say ‘well, Australia and lots of other places have ignorance in abundance, why just pick on the US’ and I agree we have rednecks aplenty, but the point is that given our non-hyperpower status, our or indeed anyone else’s critical mass of fools does not matter (even to ourselves) as much as yours does. Just as your President is to a large degree our president too (I mean, how far does Aust sovereignty really extend; if one of our prerogatives bashed heads with one of yours, who wins?) so too are your critical masses of swinging voters important to us and our future.

    I’m not hopeful; for enough minds to change things need to get worse before they get better, and even then you can imagine blame being enthusiastically misdirected one again from above. It seems to me the right wing ‘hive-mind’ with it’s emphasis on dogmatic solidarity, on belief rather than evidence, will almost always trump left wing or progressive forces which are more scientific than religious in character, and like science cherish the virtue of different opinions and the value of doubt, which while admirable and effective in arriving at considered opinions, are in a denuded public and mediasphere, electoral death.

    It’s even worse than that of course, because the Democrats, so far from providing this type of honourable, considered alternative, have decided to join rather than beat them, leaving nothing but faded hopes and broken American dreams between the governed and those who govern them.

    I and millions of others around the world will be watching that space, even if most Americans don’t.

  46. Andrew Z

    Peak oil will take care of a lot of these issues. Things will have to be produced and consumed in a more regional/local manner. That shift in production and consumption will result in a shifting political environment. What that environment is, and whether it will be better than the current kleptocracy and plutocracy obviously remains to be seen.

  47. buy and sell

    This article was without a doubt an excellent read and I respect quality blog posts out there because so much is the same thing. I recognize that in the area of site material it is for the most part King for the matter of making a webpage ranked and what not (most likely the reason I found this). I’ve done some websites back when and am putting time on an internet micro jobs marketplace kinda website for people to go on and buy and sell services to one another. That being said I need to spend some time on writing some blog posts and other stuff on the webpage and what not. Anyway take it easy and keep handing out good posts.

  48. Tough Enough

    Citizens in the US are complacent and those that are not spend too much time on blogs and not enough time on direct action. In the spirit of shunning and shame, I propose a website that lists the top 50 or 100 or 200 for direct action. Post their “offenses”, their photo, their home address and their church address so the angry citizens have a place to demonstrate and share their frustration. The site could be similar in theme to the US Military Iraqi Most Wanted Playing Cards.

    Such information easily obtained would cause many to pause and perhaps some to reconsider.

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