As is common this time of year, popular media has provided us with a large selection of year-end reviews and speculation as to what the future may hold, but this year's crop of reflections and predictions appear to have a common theme that, despite their gloomy assessment of our current state of affairs, might actually offer a bit of [dare I say it] hope for the future.
If this season's year-end summaries are any guide, it would appear that the Zeitgeist emerging in the second decade of the new century is crystallizing around the theme of plutocracy. This article published by Foreign Policy is representative of many such articles moving about the 'inter-tubes' right now. It clearly articulates what has become known as the Great Divergence and correctly pins its emergence to a dysfunctional political system.
The U.S. economy appears to be coming apart at the seams. Unemployment remains at nearly ten percent, the highest level in almost 30 years; foreclosures have forced millions of Americans out of their homes; and real incomes have fallen faster and further than at any time since the Great Depression. Many of those laid off fear that the jobs they have lost -- the secure, often unionized, industrial jobs that provided wealth, security, and opportunity -- will never return. They are probably right.
And yet a curious thing has happened in the midst of all this misery. The wealthiest Americans, among them presumably the very titans of global finance whose misadventures brought about the financial meltdown, got richer. And not just a little bit richer; a lot richer. In 2009, the average income of the top five percent of earners went up, while on average everyone else's income went down. This was not an anomaly but rather a continuation of a 40-year trend of ballooning incomes at the very top and stagnant incomes in the middle and at the bottom. The share of total income going to the top one percent has increased from roughly eight percent in the 1960s to more than 20 percent today.
This is what the political scientists Jacob Hacker and Paul Pierson call the "winner-take-all economy." It is not a picture of a healthy society. Such a level of economic inequality, not seen in the United States since the eve of the Great Depression, bespeaks a political economy in which the financial rewards are increasingly concentrated among a tiny elite and whose risks are borne by an increasingly exposed and unprotected middle class. Income inequality in the United States is higher than in any other advanced industrial democracy and by conventional measures comparable to that in countries such as Ghana, Nicaragua, and Turkmenistan. It breeds political polarization, mistrust, and resentment between the haves and the have-nots and tends to distort the workings of a democratic political system in which money increasingly confers political voice and power.
Lest you think that this is a concern for America alone, this article in the Guardian makes clear that the crazy that we must endure on this side of the pond is indeed a global phenomenon.
As the first decade of the 21st century ends, the further spread of representative democracy might count among its achievements. War-blighted Iraq has conducted elections. The incumbent president of the Ivory Coast faces eviction by fellow African leaders for ignoring election results. Even Burma's junta has freed Aung San Suu Kyi, raising the possibility of real elections. However fraught its exercise or outcome, millions across the world have the vote.
Yet 2010 was also the year when the limits of electoral democracy, its vulnerability to vested interests and its failure to represent the interests of ordinary citizens became clearer than ever. The iconic democracies of the world demonstrated this starkly. In the US a president elected on a wave of support for change extended his predecessor's tax cuts for the richest, placing the burden of deficit reduction on the less well-off. In India, the Radia scandal revealed how a state-run economy has been replaced by a corporate raj.
Meanwhile, in Britain a coalition no one voted for managed to cobble itself together by breaking key manifesto pledges, throwing its ability to represent wider society into question. Nick Clegg promised the "biggest shake up of our democracy" since 1832's Reform Act extended franchise beyond the landed gentry. Instead, his coalition has further narrowed democracy's benefits to the wealthy entities whose interests drive its fiscal agenda. As civil servants face unemployment, heads of corporations such as GlaxoSmithKline and Argos join the former BP chief Lord Browne and Topshop's tax-avoider, Philip Green, as government advisers. Such unelected influence leaves voters with little say in setting the agenda. A boardroom of millionaires makes decisions that benefit their class.
Yet, it is not only traditional journalists and opinionators at lefty British newspapers sounding the alarm... As this blog post penned by Wall Street trader Barry Ritholtz demonstrates, it is becoming increasingly clear that there is a class war afoot, and it is equally clear who is winning.
In 2009 and 2010, I learned that Corporate America took over the political process via their exhaustive lobbying efforts. What was once a Democracy is now a Corporatocracy. Just because I personally despised this result did not prevent me from profiting from it. Hardware, software, and research all cost money. I can promise you it is much easier to fight the powers that be when you have an unlimited Amex card — and cold hard dollars fiat printed Fed money — to help you.
Exactly how far has the takeover gone? The corrupt US Supreme Court provided a sympathetic venue for the creation of corporate rights never envisioned by the Founding Fathers; Congress has become a wholly owned subsidiary of America, Inc. The White House talks a good game of smack, but genuflects in order to beg for job creation.
Politicians do the bidding not for the people, but for the corporate establishment. Those people who want to blame the barking, snarling government for all the woes of the world do not want you to look further up the leash to see who is giving the commands. These corporate apologists pretend to be philosophers, but in reality they are mere Fellatrix, bought and paid for by their lords and masters.
Fearing a corporate takeover of the nation isn’t nearly as radical as it sounds. Thomas Jefferson reviled the idea of big corporations: “I hope we shall…crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and to bid defiance to the laws of our country.” Jefferson knew the influence bankers could have on a nation’s soul, and he was horrified by it.
No less a figure than Dwight D. Eisenhower — five-star Army general, Supreme Commander of the Allied forces in Europe during World War II, responsible for planning and supervising the successful invasion of France and Germany, who then became the 34th President of the United States from 1953 until 1961 — warned that “we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex.” He knew it was not just the military, but the entire existing corporate structure that sought to take advantage of their influence in order to thwart legitimate competition, skew Federal contracts, and exempt themselves from taxation and regulation.
What might Eisenhower have said about the bailouts, and enormous decrease in banking competition?
So where, you might be asking yourself, can one find hope on this apparently bleak horizon? Well, to start, it is important to know that we've been here before. Old Marx once [incorrectly] paraphrased Hegel saying: "All great world-historic facts and personages appear, so to speak, twice. He forgot to add: the first time as tragedy, the second time as farce." I believe that even a cursory review of the period between 1900-1910 would sound familiar to us today... Costly land wars in Asia; a speculative financial crisis brought the national economy to its knees; the emergence of right-wing populism built on the ideals of discipline, hierarchy, national solidarity, and the rejection of reason gained steam throughout the Western world; etc... Yet, despite all of this, the society that ultimately emerged from that chaotic decade rejected much of the craziness by building a national consensus of mutual responsibility and establishing the core institutions for what would become known as America's century.
To get to the point of this long post, the hope that I see for the future is in the recognition of the problem itself. In order to effectively solve a problem[s], it is necessary to correctly articulate the problem[s] itself, and it is for this reason that I can find hope in all of the despair floating about the inter-tubes this Jan. 1st. Of course, there are important caveats that must be acknowledged, such as the abysmal state of the political left. However, I must say that I do find some hope in the fact that our descent into plutocracy is gaining ground in the national conversation.
Happy 2011, ya'll! Live long and prosper!
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