It’s Time to Radically Redistribute Social Wealth
by
The U.S. is a very rich country. The Federal Reserve estimates household net worth at $94.8 trillion at the end of the Q1 2017, with the nation’s overall total assets at about $225 trillion.
In the World Inequality Report 2018, a study by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, “Distributional National Accounts: Methods and Estimates for the United States,” makes a sobering point: “Income inequality in the United States is among the highest of all rich countries. The share of national income earned by the top 1% of adults in 2014 (20.2%) is much larger than the share earned by the bottom 50% of the adult population (12.5%).” The authors note that while there is a 1-to-19 ratio between the income of the “lower class” (bottom 50%) and the “upper class (top 10 percent) in the U.S., the divide between the bottom and top classes in China is – at least for now – a 1-to-8 ratio.
In the face of the “recovery” from the Great Recession of 2007-08, Naomi Klein’s notion of “disaster capitalism” was implemented. The Federal Reserve reports that in 2016, the richest 1 percent of families controlled a record-high 38.6 percent of the nation’s wealth. The recently Congressionally-approved Republican bait-and-switch tax scam will only further increase inequality.
The truth of America’s deepening socio-economic inequality is obvious to all who choose to see, to know, what’s going on. This condition exacerbates such ongoing conditions as deepening poverty, increased crime, growing drug addiction, failing health and overall social malaise. The super-rich — whether defined as 0.1 percent, the 1 percent or the 10 percent — rule. The government serves their needs.
Not since the rule of the Robber Barron’s during the fin de siècle era a century ago has the nation witness such tyranny of the 1 percent. Today, they are back, but packaged as hip sophisticates and tasteful plunderers. However hyped by the media, they truly rule.
In the face of such tyranny, the only way of preventing the nation becoming a 21st century feudal state, with robber barons become lords of the manor, is to radically redistribute America’s social wealth.
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In a very revealing study, “Top Incomes and the Great Recession: Recent Evolutions and Policy Implications” (2012), Thomas Piketty and Emmanuel Saez layout a very clear trajectory of wealth aggregation during the 20th century. They note that “the share of total market income going to the top decile was as large as 50% at the eve of the 1929 Great Depression ….” In the face of recovery and WW-II, it “stabilized below 35% between the 1940s and the 1970s.” This was the era of the American Dream – the era that Trump seeks to invoke in his campaign slogan, “make American great again.”
They point out, “the top decile income share has risen from less than 35% during the 1970s to about 50% in recent years. This comes mostly from the very top. The top percentile income share itself has more than doubled, from less than 10% in the 1970s to over 20% in recent years.” They conclude in no uncertain terms: “Again the key point that needs to be stressed from our viewpoint is the magnitude of the aggregate income shift that has occurred in the US since the early 1980s. The bottom 90% has become poorer, the top 10% has become richer, with an income transfer over 15% of US national income.”
The economist Stanley Stasch provides additional insight into how this economic coup de grâce was pulled off. “From 1980 to 2005 the policies of President Reagan, the first President Bush, House Speaker Gingrich, and the second President Bush essentially destroyed the purchasing power of the bottom 60% of U.S. households (the bottom three quintiles),” he argues, “their share of national income declining from about 32% down to about 27% (a 15-16% reduction).”
Stasch notes that Reagan implemented three key developments that shifted national wealth: (i) secured the tax cuts the benefited the wealthy combined with tax increases for the non-wealthy, (ii) successfully attacked and, ultimately, severely weakened labor unions and (iii) federal spending adopted a new, more punitive approach dubbed “starving the beast” that shifted monies away from the middle and lower classes to the upper classes.
These policies had long term consequences. “From 1980 to 2007, the top 0.01% of earners enjoyed a 408% growth in their income, the top 0.1% of earners enjoyed a 308% increase in their income, the top 0.5% enjoyed a 214% growth in their income, and the top 1.0% of earners enjoyed a 177% increase in their income,” Stasch points out. He reminds readers, “During this same time period, the bottom 99% had to struggle with only a meager 8% increase.”
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In 1873, Mark Twain and Charles Dudley Warner published, The Gilded Age: A Tale of Today, a satirical mockery of the greed and political corruption of late-19th century American life. This critical period of U.S. development lasted from around 1870 to 1900 and saw the nation transformed. Every aspect of American life was being remade – it was shifting from an agricultural to manufacturing nation, from east-coast enclaves to a true nation state, and from a relatively homogeneous Anglo population to one with increasingly diverse shades of white (e.g., Germans, Irish). However, what most captured Twain and Warner’s mockery was the glutton and self-adoration of the super-rich, those they dubbed “the robber barons.”
A century later, the only thing that’s missing from the portrait of 21st century robber barons – symbolized by Donald Trump — is a Twain and Warner to mock them mercilessly. A similar cabal of the superrich and their water-carriers control the Congress and succeeded, in late December 2017, with Pres. Trump signing the Tax Cuts and Jobs Act into law.
The cabal that pushed for the Congressional passage of the bill consisted of three very powerful forces, intimately tied to one another. First and foremost were the superrich, often referred as political donors. Most well-known among them are the Koch brothers and the Mercers, but there are hundreds of others throughout the country who use their wealth to lubricate Congressional – let alone local and state — office holders. In the run-up to passage of the tax act, two Congressmen revealing the underlying truth driving the bill’s passage. Rep. Chris Collins (R-NY) declared, “My donors are basically saying, ‘Get it done or don’t ever call me again.’” And Sen. Lindsey Graham (R-SC) was even more honest, reportedly saying that if the GOP didn’t pass the bill, “contributions will stop.”
The second force is the army of lobbyists that “assist” Congressional staff personnel drafting the legislation that became the law. In 2017, there were 10,963 registered lobbyists in Washington, DC, and, according to Public Citizen, 6,243 registered lobbyists were worked on the tax bill. It finds that there were more than 11 lobbyists per member of Congress working on tax reform.
Finally, many Fortune 500 companies aggressively backed passage of the tax bill through lobbying and other practices. According the Vox, four conglomerates played an oversized role in pushing the bill’s passage — Comcast, Microsoft, Altria Group (formerly Philip Morris) and NextEra Energy. (Vox notes that Comcast, through its NBCUniversal subsidiary, is one of several major investors in Vox Media.)
The Republican-controlled Congress is not yet satisfied with its efforts to further expropriate the income and wealth of the middle class, working class and poor. This year, they are seeking to reduce spending on Medicare, Medicaid and anti-poverty programs. For example, some Congressmen (as well as Republican-controlled state legislatures) are seeking to force welfare recipients to take jobs as a condition to receive benefits.
The sad truth of the decade-and-a-half marked by the Great Depression and WW-II was that it temporary uncut the ceaseless effort by the “ruling class” – capitalism — toward ever-greater expropriation of social wealth. During the grand-days of fin de siècle, the robber-barons controlled 50 percent of social wealth; during the mid-20th century era of social crisis, its control dropped to 35 percent; in the era of Trump, their share is back to 50 percent. One can only wonder if a series of catastrophes similar to those that took place in the 1930s-1940s is the only social force that redress the tendencies to ever-greater inequality?
The great challenge facing “progressives” in the upcoming elections of 2018 and 2020 is to acknowledge economic inequality and the need for a radical redistribution of social wealth. Every political issue is real and important, however without anchoring it within the context of growing inequality it will lose its specificity, of the real lives of ordinary Americans. Making matters worse, the ruling class controls not only the Congress, but the apparatus of state power, the federal bureaucracy, as well. In particular, they write the laws and they enforce them, through the judiciary and the law-enforcement apparatus.
An ever-growing number of ordinary Americans are coming to realize that they are being had by one of the greatest con-man of the last century, Trump. A host of not directly related social issues launched social movements. Police shootings of black males, male sexual abuse, a school shooting and teacher strikes turned into Black Lives Matter, #MeToo!, Never Again and a growing number of state-based teacher strikes. One can well image a deeply disturbing event taking place that galvanizes popular resentment against the superrich. Americans are realizing that their pockets are being picked, their social wealth (however little it is) is being expropriated to make the new robber barons ever richer.
Unfortunately, it might take too long for the electoral process of change the deeply in-grained, half-century long tyranny of ruling-class wealth expropriation. The condition of sustained legal theft is lived by many as the American way of life. It’s time for a new, 21st century version of The Gilded Age: A Tale of Today, one in which sharp critics heartedly mock today’s robber barons, but also offer meaningful examples of alternatives to a different American in which wealth is radically redistributed.
posted by Satish Sharma at
08:46
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