…, And to the Oligarchy for Which it Stands
According to James McHenry, when asked by a lady if we have a republic or a monarchy, Benjamin Franklin replied, " a republic if you can keep it." Sorry, Ben, but for the last four decades, we haven't kept it. Today the average citizen of the United States has little or no political or economic power. A group of extremely wealthy individuals and the mega-corporations they control are the managers of the economy and the government and both are operated for their continued enrichment to the detriment of the remaining Americans.
In 1964, nearly two-thirds of Americans thought the government was operated for the benefit of all citizens. By 2013, 80% believed the government was run by and for only the wealthy.1 There exists a growing community that feels powerless and left behind. These people, along with many in the middle class, have the vague sense they are being screwed and find it increasingly difficult to maintain a lifestyle resembling that of their parents. When I grew up, in the 1950s and 60s, my father was able to support a wife and four children on his own and we did not lack for much. My mother only worked outside the house before the holidays, she needed extra money for the slightly lavish Christmases she imagined we rug rats deserved.
After the 1980s, it became increasingly rare for mothers to not work outside the home. Two incomes were then necessary to maintain a middle-class lifestyle. Ronald Reagan became president and decided that unbridled capitalism was what the county needed. It was a combination of the GI Bill and labor unions that built the middle class of the 50s, 60s, and 70s. The 70s showed the beginning of greed as a way of life. It was coined the 'me decade', or the Al Franken decade, depending on whether or not you were Al Franken. But, it was the 80s when the 'Gorden Gekko' wannabes came into their own and shareholder profit became the sole concern of corporate executives. Reagan adopted a part of the Chicago School philosophy of deregulation and union-busting. Reagan's handling of the air traffic controllers strike started the death spiral of union power. From 1973 to 2007 union membership dropped from 30% to 8% of private-sector workers. During that same period wage inequality rose by 40%.2
So, how did we get here? The economy doesn't have to be a zero-sum game but power does. For one party to increase its power, the power of other parties has to be proportionately decreased. That feeling of powerlessness is not an illusion. Due to relaxations in oversight, political power became for sale from 1980 to the present. And through political donations, dark money, PACs, and lobbyists, the top 1% wealthiest people in America, with the help of CEOs and their corporations, bought it all. Dueling billionaires are no substitute for democracy. The power of a Democrat billionaire is not offset by the power of a Republican billionaire. Despite any declared differences in political preferences, their priorities are different from the rest of us. According to a Pew Research poll, a large majority of Americans of both parties worry about jobs and wages. Researchers surveying Chicagoans with an average wealth of 14 million, found the issues that cause them the most concern are budget deficits and government spending. They also found that 40% had personal contact with one or both of their US Senators.4
The Glass-Steagall Act of 1933 was designed to stop the sort of reckless speculation that led to the Crash of 1929 and the Great Depression that followed. It specifically banned banks from engaging in speculative investment with their depositors' money. Needless to say, the emerging mega-banks of the 1980s sought to defang the act. The Reagan Administration did its part by looking the other way at not only violations of Glass-Steagall but also anti-trust legislation. By these and other means—he also looked favorably on corporate raiders—Reagan created the mythological Free Market.
With the attacks on labor unions and deregulation of banks and corporations, Reagan started the second rise of the oligarchs. Monopolies that were previously broken began anew. Large banks began to squeeze out small banks and savings & loans. By 1999, when Glass-Steagall was fully defanged, banks became investment banks and were allowed to gamble with depositors' money—perhaps they would use your money to hit the casinos if they could find a way to get a kickback. Win or lose, the risk is yours and the reward is theirs. CEOs changed their focus from stakeholders to shareholders and the decline of the working class began.
Establishing an oligarchy essentially involves three steps. First, either the politicians must be bought—make no mistake this involves both political parties—or an agreeable despot put in power. This is crucial to getting the laws and fiats necessary to neutralize or destroy opponents (labor unions and progressive politicians, for example). Second, take control of the financial institutions, such as banks, corporations, the stock markets—today the wealthiest 10% own 89% of the stocks5— and the financial regulators. Third, create division amongst the masses. Distract them with dog-whistle issues, discredit the fourth estate and get them to focus on dubious news sources, and throw in liberal usage of the dreaded S-word (socialism).
President Harry Truman once observed, "Socialism is the scare word they have hurled at every advance the people have made in the last 20 years" and " Socialism is their name for almost anything that helps all the people."7 Whenever the oligarchs face a perceived threat from the 90%, they play the socialism card. This isn't the nation's first brush with oligarchy. In what is called the "Gilded Age" of the late 19th and early 20th centuries, wealth inequality and the power of monopolies were at historically high levels and communism was the bogeyman. Workers worked 70 or more hours a week only to die in debt. There were no protections for workers. If a father lost a leg or was blinded on the job, he and his family were just SOL. All this took place in the era of the 'robber barons", J.P. Morgan, J.D. Rockefeller, Cornelius Vanderbilt, et al. Then as today they used philanthropy to distract from their ruthless characters. Rockefeller was famous for passing out dimes on the street, but he would have needed to passed out 900,000 of them to equal 1% of his wealth.
Socialism exists in this country, just not in the manner they want us to believe. The oligarchs and their lackeys want us to believe that all government programs that help the bottom 90%, like Social Security, Medicare, and unemployment insurance, are socialism. In reality, the wealthy and corporations are the beneficiaries of socialism in America. When investment banks make bad investments, the taxpayers bail them out—this is one of my big disappointments with the Obama Administration they did not hold those responsible for the Great Recession accountable. Despite the investing and lending practices that that were part of the losses of 8.7 million jobs and $11.1 trillion in total household worth, the banking firm, J.P. Morgan Chase, received a $25 billion bailout and paid its CEO, Jamie Dimon, $20 million.1 The fossil fuels industry receives $20 billion annually in government subsidies, not because they needed it but, as your parents used to say when you asked too many follow-up why questions, just because. While all this is happening, a report by the Federal Reserve Board found that in 2018 61% of adult Americans would run into financial difficulty if faced with an unexpected expense of $400.3
In a 1951 address, Frank Abrams, CEO of Standard Oil of New Jersey, stated, "The job of management is to maintain an equitable and working balance among the claims of the various directly affected interest groups … stockholders, employees, customers, and the public at large." His attitude was typical of executives at the time. Managers wanted to keep their workers and the community happy. Great corporations remained anchored in the same place they were founded. The middle class thrived and the wealthy were taxed at a rate high enough to fund projects as large as the interstate highway system. The ratio of average CEO compensation to average worker pay was 20:1 then, compared to 351:1 in 2020.
Things changed in the 1980s. The focus of corporate management shifted from stakeholders to shareholders and themselves only. Short-term profits and increasing shareholder value became the whole reasons for the existence of new and established corporations. As the power of labor unions declined workers became debits to the bottom line to be reduced or eliminated. Mass layoffs and terminations became common. Jack Welch, once named "Executive of the Century," raised GE shareholder value from $13 billion to $500 billion during his 1981-2001 tenure. He accomplished this by moving GE operations to wherever he could negotiate the lowest tax rates and laying off over 260,000 employees in the US while doubling foreign employees (who were paid much less). He was praised by business magazines and newspapers for actions that probably would have made even Thomas Edison squeamish.
To cope with the rising oligarchy, the rest of America engaged in three primary coping mechanisms: 1. Women moved into the workforce because a single income was no longer enough for the average family. 2. Both men and women began working longer hours. Whether to keep an increasingly demanding job, create more billable hours, or expand overtime pay, average working hours increased to over 50 hours/week for men and over 40 hours/week for women—to be fair women also had to work once they got home. 3. Draw down savings and borrow.1
In contrast, oligarchies retain power without the use of brute force by: 1. Using belief systems, like religion, dogma, or ideology, to legitimize their wealth and power, i.e. the rich are worth it and the poor are not. 2. Bribe the most influential people to gain their support, whether this is through donations, lobbies, or even less legitimate means. Also, get industry leaders appointed to regulate their own industries. 3. Manufacture threats, the aristocracy of the old south did this by convincing poor whites that negroes were what was holding them down—the KKK was financed by the aristocracy but they let the ignorant masses do the dirty work. Today it is Antifa, immigrants, BLM, and demonic Democrats who are the pseudo threats.
The excesses of the Gilded Age were finally curtailed by people who stood up and said 'we aren't going to take it anymore'. The Progressive Era and the New Deal ended the dominance of the wealthy. Several movements were involved but collectively they realized the income inequality and deplorable working conditions had to end. The suffragettes, who had been active since the end of the Civil War were finally successful. The actions of Grangers, the Populists, and Bryan Democrats to regulate railroads and banks led to President Theodore Roosevelt's trust-busting. Laborers withstood police brutality and more to form unions with the assistance of individuals like Mary Harry "Mother" Jones. Suffragettes endured intimidation and persisted. Millions of Americans realized that wealth and power at the top were responsible for the social evils of the Gilded Age and became organized in opposition.6, 1
Although their monopolies were ended the wealth of the robber barons was passed on to their families, many of who are still actively involved in the new oligarchy. The American Dream is now no more than that. 40% of Americans born to poor families will remain poor as adults, while nearly 100% of the children born to rich families will remain rich. The wealth of the family into which you are born is the major indicator of your future success. In fact, if you were born into a middle-class family before 1980, there is a good chance you will be less successful than your parents.
A study done in 2014 found " the preferences of the average American appear to have only a minuscule, near-zero, statistically non-signiﬁcant impact upon public policy."4 We are not going to reverse the inequalities in power and wealth as individuals. The first phase in fighting an oligarchy is recognizing it exists. As recently as 2015, 80% of Americans polled said there was something wrong with wealth distribution. This may explain why the two candidates who generated the most interest among the working class were Bernie Sanders and Donald Trump. Hillary Clinton was viewed as the corporate candidate of the status quo, while the other two promised radical change. We may never know if Sanders could have accomplished the changes he proposed, but we do know that Trump didn't—and I suspected never intended to. His attempts to deregulate anything that could hinder corporate profits and his appointment of compromised individuals to cabinet posts indicate his intentions were the opposite of the populism he promised.
So the people had the basic knowledge but they were misled and misinformed as to the solution. The new progressive movement is too small and too elite to succeed. It is going to take a vast information campaign to build the coalition needed to overthrow the oligarchy. Only an alliance of the great majority of the middle and working classes can muster the necessary political power. It is going to take a lot more work than posting memes on social media. It will take events large enough to draw media attention and information that has been checked and supported by facts. It will take people with enough courage to seek the spotlight in the current political climate. It will take wisdom and compassion—even for Trump supporters. Though I remain the loyal Democrat I have been since 1968, and I still believe a mediocre Democrat is better than almost any Republican, I know this goes beyond the boundaries of political parties. We need to educate the portion of the 90% that aligns to the right. We need to meet conspiracy theories and memes with facts that we can support. We can still save democracy and the planet, but it is not going to be easy.
- Reich, R. B. (2021). The system: Who rigged it, how we fix it / Robert B. Reich. Vintage Books.
- Western, B. and Rosenfield, J., 2021. Unions, Norms, and the Rise in U.S. Wage Inequality. [online] Asanet.org. Available at: https://www.asanet.org/sites/default/files/savvy/images/journals/docs/pdf/asr/WesternandRosenfeld.pdf. [Accessed 8 November 2021].
- Federal Reserve Board. (2019, May). Report on the economic well-being of U.S. households in ... Federal Reserve Board of Governors. Retrieved November 9, 2021, from https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf.
- Page, B. I., Bartels, L. M., & Seawright, J. (2013, March). Democracy and the policy preferences of wealthy Americans. Weinberg College of Arts and Sciences Northwestern University. Retrieved November 9, 2021, from https://faculty.wcas.northwestern.edu/~jnd260/cab/CAB2012%20-%20Page1.pdf.
- Frank, R. (2021, October 18). The wealthiest 10% of Americans own a record 89% of all U.S. stocks. CNBC. Retrieved November 11, 2021, from https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-americans-own-a-record-89.
- Encyclopædia Britannica, inc. (n.d.). The Progressive Era. Encyclopædia Britannica. Retrieved November 11, 2021, from https://www.britannica.com/place/United-States/The-Progressive-era".
- Williams, T. (2020, September 3). What was Harry S. Truman's quote about socialism? History Hub. Retrieved November 12, 2021, from https://historyhub.history.gov/thread/8516.