Belaboring the Obvious

Thursday, January 14, 2010

Musings on wealth, entitlement and privilege....

One common theme runs through most of the problems facing the country today, but is notable for its absence in the discussion of those problems, and that is the inclination in the U.S. to defend wealth and to refuse to tax wealth at rates necessary to address those problems.

This shows up in myriad ways, some of egregious proportions, some a lot more subtle. Republicans scream about government "stimulus" programs as wasteful (as if there were no truth in the Keynesian necessity of additional spending to get the country through bad economic times), and then take credit for stimulus spending in their districts, while at the same time noting (along with Democrats) the absolute necessity of providing equally large bailouts to selected large investment banks that gambled wildly with other people's money, and now want to expand their power to do so.

There's hypocrisy in this, surely, but, it's one that's uniformly tilted toward the one-percenters, the people who view wealth as an entitlement to be protected. At the same time, so-called government entitlements, Social Security and Medicare, which are largely not entitlements, but, rather, are insurance accounts into which the not-wealthy pay into throughout their working lives, are seen as an existential threat to the well-being of the country by the minions of the likes of billionaire Pete Peterson.

Why? Because there may be shortfalls in the decades ahead? No, quite frankly, the implicit threat is that an increase in taxes may be necessary to meet those shortfalls, and that those increases may slow the accumulation of wealth by Peterson and his peers in the privileged class.

The curious thing in recent decades is that ordinary working people seem to think that taxing the wealthy is a singularly bad thing, even though there's a mountain of evidence that many of the country's problems are intimately associated with the failure to do so. The wealthy have always been able to use the power of the government and the press to convince the working class that they share the same fears and concerns as the wealthy, a very large fiction on its face. It's not a new phenomenon--the Horatio Alger stories of the 19th century sent a powerful but largely untrue message to the economically downtrodden that hard work, pluck and determination were the means to wealth, and promoted the fiction of the "self-made man," the rugged individualist who by sweat and hard labor "pulls himself up by his bootstraps," and succeeds on his own terms. Today, that message has been amplified by the economic fictions of Milton Friedman to suggest that anyone can succeed if the so-called "free markets" could only prevail over the forces of government regulation and interference, and that the accumulation of wealth by the few ultimately benefits everyone (this latter view is even older, and is a conscious distortion of a few of Adam Smith's basic tenets of market capitalism).

The current economic meltdown--and the response to it by both government and Wall Street--should have prompted widespread reevaluation of the country's reverence of the rich, along with some serious contemplation of the means required to blunt the damaging effects of wealth concentration. And yet, even vague suggestions of increasing taxation on the rich--even very marginal and minor increases--are routinely ignored or are never considered as viable alternatives to the status quo.

Quite the opposite seems to be occurring. If one goes by the signs and slogans and speeches of the Tea Party protests, a central theme is that the Obama administration is raising taxes, where, in fact, the administration has marginally cut taxes on those making much less than ~ $250K a year, and has pretty much abandoned any determination to get legislation to raise taxes on those making more than that. The theme persists, though, because the Tea Party movement, to a considerable degree, is being guided and funded by wealthy corporate interests operating in the background in classic astroturf mode. This is one of the more sophisticated ways in which the wealthy induce the working class to adopt the fears and desires of the wealthy.

As mentioned, I think this general tendency on the part of the lower and middle classes to exalt the rich has been with us for a very long time, but, it really went into hyperdrive beginning with the Reagan adminstration, and the populace has been bombarded with messages to that end ever since, mostly through the press picking up the talking points of the major right-wing think tanks such as the Heritage Foundation, AEI and the Cato Institute, all directed toward less and less regulation and much less oversight, thus setting the stage for the egregious risk-taking, speculation and outright fraud which characterized the major investment bank failures. The "invisible hand" of the unfettered financial services market, unrestrained by government regulation and oversight, started picking everyone's pockets.

The beneficiaries of that pickpocketing were the wealthy, and contrary to the conventional wisdom, they weren't putting the proceeds into useful investment. They were, in cooperation with hedge funds and similar entities, using that money to further corrupt normal market processes, and were very likely moving the excess gains into offshore secret accounts and reinvesting in speculative schemes, instead of into traditional investment opportunities. The results are obvious, if one only cares to look--there's a reason why manufacturing accounts for only 11% of GDP (and much of that defense-related), why the Fortune 500 now account for only 7% of U.S. jobs as compared to 22% in the 1950s, why the aftermath of recent recessions is uniformly described as "jobless recovery," why unionization--the demonstrated key to a solid middle-class--continues to be under attack by both the wealthy and government, why Democratic and Republican administrations alike paid no heed to the lessons of the savings & loan mess and proceeded to further enable massive economic bubbles and the rampant speculation that fueled them.

Beyond all that, there's been little discussion of the political effects of encouraging and accommodating a class of the super-wealthy, especially in the last few decades. It's pocket change (millions over a few years) for the Walton family's corporation to buy the services of their own dedicated lobbyist in Washington, DC, to push for their interests (such as favoring private over public education and the repeal of the estate tax), and yet, this is seen as normal--even though such opportunity is not available to all but perhaps the top 1/5th of one percent of the population. That is the virtual definition of the sort of "artificial aristocracy" of which Jefferson and others warned against. The corporate interests which predominately serve the wealthy, directly or indirectly, also have financial and legal resources to obtain favors from government that are wholly out of the reach of ordinary citizens, and those resources are used, relentlessly, toward one end--further increasing wealth concentration, even when that very wealth concentration undermines the health of the economy and the nation. Moreover, the massive increases in wealth of the top 1/10th of the population--effected by both hobbling government oversight and tax cuts for the rich--has enabled them to direct more money to the right-wing think tanks that influence the press and popular opinion, to undermine campaigns and politicians (through contributions from the very wealthy to operations such the Arkansas Project, the laughably-named Swift Boat Veterans for Truth, and more recently, the Tea Party movement), without any personal sacrifice whatsoever--in fact, the taxpayers at large, in effect, subsidize their efforts.

This means that the direction of government is being skewed even further in favor of the interests of the wealthy elite--an extraordinarily small and fundamentally antidemocratic slice of the total population. And while heavy taxation of the wealthy is the most direct means of curbing the influence of the rich and wealthy corporations on government and society, it's not even on the national radar today--which is, in itself, an indication that the situation is beyond critical.

Further, that influence shows in ways one wouldn't expect in an open society, the first of which is that the average person isn't aware that high taxation on top-heavy income was the norm in this country for the five decades between the onset of the Great Depression and the first Reagan term, nor are they aware that the age of enormous deficits, rapidly accumulating national, corporate and private debt, grossly excessive national security spending and the transformation of the country from net exporter/creditor to net importer/debtor coincides precisely with preferential tax treatment for wealthy corporations and individuals. The deficit hawks--after maintaining radio silence during the horrible excesses of the Reagan/Bush/Bush Jr. years--are predictably emerging during the Obama administration, just as they did during the early months of the Clinton administration, and are taking dead aim not on the root causes for the deficits--tax breaks for the rich and drunken-sailor national security spending--but, rather, on the warp and woof of the social safety net.

The reasons for this are simple, of course. The obvious and necessary fixes to the deficit problem--reining in war and defense spending (which, combined with related interest on the debt, account for ~ 80% of discretionary spending), and heavy taxation of excessive wealth accumulation--are direct threats to further concentration of wealth (and, therefore, political power), while social programs do not directly generate wealth. As well, the continued existence of social programs is seen as a drain on income through existing taxation (even though the wealthy pay phenomenally low percentages of their income for Social Security and Medicare due to income caps on payroll deductions and the diversion of income to capital gains which aren't subject to SSI/Medicare taxation), and as an ever-present threat of increased taxation in the future--even though maintenance of the social safety net has direct benefits, by stabilizing the real (rather than the speculative) economy, by expanding educational opportunities and by reducing the societal costs of poverty and the poor health engendered by poverty.

Now, all this is readily known and understandable to most progressives, but, if one goes by the general tone of popular protest today, and by the regular exclusion of such notions in the popular press, it's not difficult to understand just how effective the right-wing noise machine has been in the last three decades. The mere fact that any respect at all for Reaganomics persists in the popular mind--even though there's plenty of evidence that the theories it offered were thinly-disguised programs to raid the Treasury and impoverish the bottom 90%--is further evidence of the power of sophisticated, modern propaganda and the ability of the Big Lie, repeated endlessly, to crowd out both common sense and actual experience.

Which, I suppose, brings me to the question of entitlement and privilege. Much of the real wealth (and, therefore, the power to increase that wealth) in this country is inherited and/or enabled by inherited wealth. There are exceptions, of course, but, in general, it is that inherited wealth that has subtly or overtly shaped the domestic and foreign policy of the country. Much of that wealth was generated with the assistance of government, rather than in spite of it, and it depended, more often than not, on extracting wealth from the common weal, often through legislation beneficial to extractive industries (think here, for example, oil depletion allowances and the Mining Act of 1872), preferential takings by government (for example, extensive state, county and local takings benefitting the railroads during their early expansion phases), corporate subsidies, and, certainly, by exploiting the value of public education, and, when advantageous, the use of federal military forces to ensure the profits of U.S. investors overseas. Examples of the latter abound throughout the country's history.

Over time, with successive generations of a wealthy elite generally insulated by their wealth from the everyday concerns of the bulk of citizens, it's no wonder that all the trappings of aristocracy would accrete around the wealthy, including a sense of entitlement to their wealth, along with the errant beliefs that wealth bestowed on them exceptional status in society and, consequently, that government, first and foremost, was obliged to accommodate and further their exceptional status and to ignore their excesses. Aristocratic inclinations are at the heart of privilege, the root meaning of which is "private law." (If anyone is under the mistaken impression that our contemporary system of governance is antipathetic toward private law, David Cay Johnston's books, Perfectly Legal and Free Lunch, will quickly disabuse a person of that notion.)

Again, everything old is new again (it was the first Supreme Court Chief Justice, John Jay, who reportedly said that the people who owned the country should govern it--a profoundly antidemocratic principle if ever there was one). The wealthy on Wall Street and the wealthy enabled by Wall Street are adamant that not only should their wretched excesses be ignored, but that government should indemnify them from their excesses, as well, and the right-wing noise machine is busily reinforcing those views among the people who can never hope to rise beyond the status of wage slave, on the foolish expectation that, like Horatio Alger, their hard work and industriousness will one day place them in the company of the Masters of the Universe, even though history shows that the Masters of the Universe club has always been a small, select body, and that even the prosperity gospel cannot ensure admission (with the possible and occasional exception of its preachers).

It's a kind of insanity, in that it does not respond to either fact or actual experience, an insanity egged on by the truly rich to protect them from the backlash, real and imagined, that might ensue were the hoi polloi, suddenly resistant to the sophisticated psychological coercion of modern advertising and to the seductive lies of right-wing think-tankery, to see the fog around them lift, revealing the whole sordid process for what it actually is.


  • Wow. What a great post. Thanks for writing it.

    By Blogger Spocko, at 5:41 AM  

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