The Rule of the Rich
HOWARD ZINN HELPED US see how big change can start with small acts. He championed grassroots social change and famously chronicled its story as played out over the course of our nation’s history. More, those stirring sagas have inspired and continue to inspire countless people to go out and make a difference. The last time we met, I told him that the stories in A People’s History of the United States remind me of the fellow who turned the corner just as a big fight broke
out down the block. Rushing up to an onlooker he shouted, “Is this a private fight, or can anyone get in it?” For Howard, democracy was one big public fight and everyone should plunge into it. That’s the only way, he said, for everyday folks to get justice—by fighting for it.
So let’s begin with some everyday folks.
When she heard the news, Connie Brasel cried like a baby. For years she had worked at minimum-wage jobs, until seventeen years ago, when she was hired by the Whirlpool refrigerator factory in Evansville, Indiana. She was making $18.44 an hour when Whirlpool announced in early 2010 that it was closing the operation and moving it to Mexico. She wept. I’m sure many of the other eleven hundred workers who lost their jobs wept, too; they had seen their ticket to the middle class snatched from their hands. The company defended its decision by claiming high costs, underused capacity, and the need to stay competitive. Those excuses didn’t console Connie Brasel. “I was becoming part of something bigger than me,” she told Steven Greenhouse of The New York Times. “Whirlpool was the best thing that ever happened to me.”
She was not only sad, she was mad. “They didn’t get world-class quality because they had the best managers. They got world-class quality because of the United States and because of their workers.”
Among those workers were Natalie Ford, her husband, and her son; all three lost their jobs. “It’s devastating,” she told the Times. Her father had worked at Whirlpool before them. Now “there aren’t any jobs here. How is this community going to survive?”
And what about the country? Between 2001 and 2008, about 40,000 U.S. manufacturing plants closed. Six million factory jobs have disappeared over the past dozen years, representing one in three manufacturing jobs. Natalie Ford said to the Times what many of us are wondering: “I don’t know how without any good-paying jobs here in the United States people are going to pay for their health care, put their children through school.”
In polite circles, among our political and financial classes, this is known as “the free market at work.” No, it’s “wage repression,” and it’s been happening in our country since around 1980. Economists Thomas Piketty and Emmanuel Saez have found that from 1950 through 1980, the share of all income in America going to everyone but the rich increased from 64 percent to 65 percent. Because the nation’s economy was growing handsomely, the average income for nine out of ten Americans was growing, too: from $17,719 to $30,941. That’s a 75 percent increase in income in constant 2008 dollars. But then it stopped. Since 1980 the economy has also continued to grow handsomely, but only a fraction at the top have benefitted. The line flattens for the bottom 90 percent of Americans. Average income went from that $30,941 in 1980 to $31,244 in 2008. Think about that: the average income of Americans increased just $303 in twenty-eight years.
Another story in the Times caught my eye a few weeks after the one about Connie Brasel and Natalie Ford. The headline read: “Industries Find Surging Profits in Deeper Cuts.” Nelson Schwartz reported that despite falling motorcycle sales, Harley-Davidson profits are soaring—with a second quarter profit of $71 million, more than triple what it earned the previous year. Yet Harley-Davidson has announced plans to cut 1,400 to 1,600 more jobs by the end of 2011—this on top of the 2,000 jobs cut in 2009.
The story noted: “This seeming contradiction—falling sales and rising profits—is one reason the mood on Wall Street is so much more buoyant than in households, where pessimism runs deep and unemployment shows few signs of easing.”
There you see the two Americas: a buoyant Wall Street; a doleful Main Street. The Connie Brasels and Natalie Fords—left to sink or swim on their own. There were no bailouts for them.
Or, as the chief economist at Bank of America Merrill Lynch, Ethan Harris, told the Times: “There’s no question that there is an income shift going on in the economy. Companies are squeezing their labor costs to build profits.”
Yes, Virginia, there is a Santa Claus. But he’s run off with all the toys.
Late in August, I clipped another story from The Wall Street Journal. Above an op-ed piece by Robert Frank the headline asked: “Do the Rich Need the Rest of America?” The author didn’t seem ambivalent about the answer. He wrote that as stocks have boomed, “the wealthy bounced back. And while the Main Street economy” [where the Connie Brasels and Natalie Fords and most Americans live] “was wracked by high unemployment and the real-estate crash, the wealthy—whose financial fates were more tied to capital markets than jobs and houses—picked themselves up, brushed themselves off, and started buying luxury goods again.”
Citing the work of Michael Lind at the Economic Growth Program of the New America Foundation, the article went on to describe how the super-rich earn their fortunes with overseas labor, selling to overseas consumers and managing financial transactions that have little to do with the rest of America, “while relying entirely or almost entirely on immigrant servants at one of several homes around the country.”
So the answer to the question “Do the Rich Need the Rest of America?” is as stark as it is ominous: Many don’t. As they form their own financial culture increasingly separated from the fate of everyone else, it is “hardly surprising,” Frank and Lind concluded, “that so many of them should be so hostile to paying taxes to support the infrastructure and the social programs that help the majority of the American people.”
When Howard came down to New York last December for what would be my last interview with him, I showed him this document published in the spring of 2005 by the Wall Street giant Citigroup, setting forth an “Equity Strategy” under the title (I’m not making this up) “Revisiting Plutonomy: The Rich Getting Richer.”
Now, most people know what plutocracy is: the rule of the rich, political power controlled by the wealthy. Plutocracy is not an American word and wasn’t meant to become an American phenomenon—some of our founders deplored what they called “the veneration of wealth.” But plutocracy is here, and a pumped up Citigroup even boasted of coining a variation on the word—“plutonomy,” which describes an economic system where the privileged few make sure the rich get richer and that government helps them do it. Five years ago, Citigroup decided the time had come to “bang the drum on plutonomy.”
And bang they did. Here are some excerpts from the document “Revisiting Plutonomy”:
“Asset booms, a rising profit share, and favorable treatment by market-friendly governments have allowed the rich to prosper . . . [and] take an increasing share of income and wealth over the last twenty years. . . . The top 10 percent, particularly the top 1 percent of the United States—the plutonomists in our parlance—have benefited disproportionately from the recent productivity surge in the U.S.
. . . [and] from globalization and the productivity boom, at the relative expense of labor. . . . [And they] are likely to get even wealthier in the coming years. Because the dynamics of plutonomy are still intact.”
I’ll repeat that: “The dynamics of plutonomy are still intact.”
That was the case before the Great Collapse of 2008, and it’s the case today, two years after the catastrophe. But the plutonomists are doing just fine. Even better in some cases, thanks to our bailout of the big banks. (To see just how our system was rigged by the financial, political, and university elites, run, don’t walk, to the theater nearest you showing Charles Ferguson’s new film, Inside Job. Take a handkerchief because you’ll weep for the republic.)
As for the rest of the country, listen to this summary in The Economist—no Marxist journal—of a study by Pew Research: “More than half of all workers today have experienced a spell of unemployment, taken a cut in pay or hours or been forced to go part-time. . . . Fewer than half of all adults expect their children to have a higher standard of living than theirs, and more than a quarter say it will be lower. For many Americans, the Great Recession has been the sharpest trauma since the Second World War, wiping out jobs, wealth, and hope itself.”
Let that sink in: For millions of garden-variety Americans, the audacity of hope has been replaced by a paucity of hope.
Time for a confession. The legendary correspondent Edward R. Murrow told his generation of journalists that bias is OK as long as you don’t try to hide it. Here is mine: Plutocracy and democracy don’t mix. Plutocracy too long tolerated leaves democracy on the auction block, subject to the highest bidder.
Socrates said to understand a thing, you must first name it. The name for what’s happening to our political system is corruption: a deep, systemic corruption. The former editor of Harper’s, Roger D. Hodge, brilliantly dissects how democracy has gone on sale in America. Today, he says, voters still “matter,” but only as raw material to be shaped by the actual form of political influence—money. Hodge’s new book, The Mendacity of Hope, describes how America’s founding generation especially feared the kind of corruption that occurs when the private ends of a narrow faction succeed in capturing the engines of government. James Madison and many of his contemporaries knew this kind of corruption could consume the republic. So they attempted to erect safeguards against it, hoping to prevent private and narrow personal interests from overriding those of the general public.
They failed. Hardly a century passed after the ringing propositions of 1776 before America was engulfed in the gross materialism and political corruption of the First Gilded Age, when Big Money bought the government right out from under the voters. In their magisterial work, The Growth of the American Republic, the historians Morison, Commager, and Leuchtenburg describe how in that era “privilege controlled politics,” and “the purchase of votes, the corruption of election officials, the bribing of legislatures, the lobbying of special bills, and the flagrant disregard of laws” threatened the very foundations of the country.
As one of the plutocrats crowed: “We are rich. We own America. We got it, God knows how, but we intend to keep it.”
And they have never given up. The Gilded Age returned with a vengeance in our time. It slipped in quietly at first, back in the early 1980s, when Ronald Reagan began a “massive decades-long transfer of national wealth to the rich.”
As Roger Hodge makes clear, under Bill Clinton the transfer was even more dramatic, as the top 10 percent captured an ever-growing share of national income.
The trend continued under George W. Bush—those huge tax cuts for the rich, remember, which are now about to be extended because both parties have been bought off by the wealthy—and by 2007 the wealthiest 10 percent of Americans were taking in 50 percent of the national income.
Today, a fraction of people at the top earns more than the bottom 120 million Americans.
People say, “Come on, this is the way the world works.”
No, it’s the way the world is made to work.
This vast inequality is not the result of Adam Smith’s invisible hand; it did not just happen; it was no accident.
As Hodge drives home, it is the result of a long series of policy decisions “about industry and trade, taxation and military spending, by flesh-and-blood humans sitting in concrete-and-steel buildings.” And those policy decisions were paid for by the less than 1 percent who participate in our capitalist democracy by making political contributions.
Over the past thirty years, with the complicity of Republicans and Democrats alike, the plutocrats (or plutonomists, as Citigroup calls them) have used their vastly increased wealth to assure that government does their bidding. Looking back, it all seems so clear that it’s amazing that we could have ignored the warning signs at the time.
Yet here we are at a moment, says the new chairman of Common Cause and former Labor Secretary Robert Reich, that “threatens American democracy: an unprecedented concentration of income and wealth at the top; a record amount of secret money flooding our democracy; and a public becoming increasingly angry and cynical about a government that’s raising its taxes, reducing its services, and unable to get it back to work.” We are losing our democracy, Reich says, to an entirely different system, one where political power derives from wealth.
Its ratification came in January 2010, when the five reactionary members of the Supreme Court ruled that corporations are “persons” with the right to speak during elections by funding ads like those now flooding the airwaves. It was the work of legal fabulists. Corporations are not people; they are legal fictions, creatures of the state, born not of the womb, not of flesh and blood. They’re not permitted to vote. They don’t bear arms (except for the nuclear bombs they can now drop on a Congressional race without anyone knowing where it came from). Yet thanks to five activist conservative judges, they have the privilege of “personhood” to “speak”—and not in their own voice, mind you, but as ventriloquists, through hired puppets.
Our government has been bought off. Welcome to the plutocracy.
Obviously, Howard Zinn would not have us leave it there. Defeat was never his counsel. Look at this headline from one of his articles he published in The Progressive prior to Citizens United: “It’s Not Up to the Supreme Court.” The Court was lost long ago, he said. Don’t go there looking for justice: “The Constitution gave no rights to working people; no right to work less than twelve hours a day, no right to a living wage, no right to safe working conditions. Workers had to organize, go on strike, defy the law, the courts, the police, create a great movement which won the eight-hour day, and caused such commotion that Congress was forced to pass a minimum wage law, and Social Security, and unemployment insurance. . . . Those rights only come alive when citizens organize, protest, demonstrate, strike, boycott, rebel, and violate the law in order to uphold justice.”
So what are we to do about Big Money in politics buying off democracy?
I can almost hear him throwing that question back at us: “What are we to do? ORGANIZE! Yes, organize—and don’t count the costs.”
Some people already are mobilizing. There’s a rumbling in the land. All across the spectrum, people oppose the escalating power of money in politics. Fed-up Democrats. Disillusioned Republicans. Independents. Greens. Even tea partiers, once they wake up to realize they have been sucker-punched by their bankrollers who have no intention of sharing the wealth.
Veteran public interest groups like Common Cause and Public Citizen are aroused. There are the rising voices, from Web-based initiatives such as freespeechforpeople.org to grassroots initiatives such as Democracy Matters on campuses across the country. Moveon.org is looking for a million people to fight back in a many-pronged strategy to counter the Supreme Court decision.
In taking on Big Money, we’re talking about something more than a single issue. We’re talking about a broad-based coalition to restore American democracy—one that is trying to be smart about the nuts-and-bolts of building a coalition, remembering that it has a lot to do with human nature.
Some will want to march.
Some will want to petition.
Some will want to engage through the Web.
Some will want to go door-to-door: many gifts, but the same spirit. A fighting spirit.
As Howard Zinn would tell us: No fight, no fun, no results.
Let’s be clear: Even with most Americans on our side, the odds are long. We learned long ago that power and privilege never give up anything without a struggle. Money fights hard, and it fights dirty. Think Karl Rove, the Chamber of Commerce, the Brothers Koch. And we may lose.
But hear out Baldemar Velasquez on this. He and his Farm Labor Organizing Committee took on the Campbell Soup Company—and won. They took on North Carolina growers—and won. And now they’re taking on no less than R. J. Reynolds Tobacco and one of its principal financial sponsors, JPMorgan Chase.
“It’s OK if it’s impossible,” Velasquez says. “It’s OK! The object is not to win. The object is to do the right and good thing. If you decide not to do anything, because it’s too hard or too impossible, then nothing will be done, and when you’re on your deathbed, you’re going to say, ‘I wish I had done something.’ But if you go and do the right thing NOW, and you do it long enough, good things will happen.”
Shades of Howard Zinn!
Bill Moyers is the veteran PBS broadcaster. This article is adapted from remarks he made on October 29, 2010, at Boston University as he inaugurated the Howard Zinn Lecture Series.
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