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The 1% won a counter-revolution while we played. We forgot that we are the crew of America, not passengers.

28 April 2014

Summary: Now inequality has become too extreme to ignore. Now that the 1% has crushed all opposition, we begin to see the results of their successful counter-revolution. But we do not yet see the battle. Until we understand our past others will build our future. Here’s a first cut doing so.

The Universe was 5 miles long, and 2,000 feet across. Men scoffed at the legends of such things as stars, or the demented idea that the Ship was moving… for the Ship was the Universe, and there could be nothing outside. Then one man found his way into a forgotten room, and saw the stars – and they moved….

— Summary of Orphans of the Sky by Robert Heinlein (1951; based on two 1941 short stories), one of the early stories about a generation ship

Phoenix

Somewhere in our future lies the Third Republic

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(1)  A recap of the plot so far

During the long halcyon days of the post-WW2 summer America forgot about economic classes — and their cousin, social mobility. The reforms of the New Deal, the post-WW2 social programs (especially the GI bill, the ample funding to education (from primary to graduate-level), the civil rights legislation, and sustained growth of GDP and wages — all these fertilized the rise of a middle class and modest degree of social mobility. We came to consider that our due as Americans. We came to consider that as America.

All this culminated with the long boom (the debt-fueled expansion from 1982 – 2000, the fall of the Berlin Wall in 1989 and the late 1990’s tech boom. America was exceptional, a new moment in history. Marx became a comic figure. “The only Marxists live in Berkeley and Albania.”

We forgot the century-long struggle that laid the political foundations for the middle class, a slow low-violence revolution.  That meant we forgot that this was an unnatural state requiring work to maintain. We forgot we were the officers and crew of America, not passengers on the Love Boat.

But not everybody was happy with summer, and the core New Deal and civil rights reforms with made it possible.  They planned a counter-revolution. They had patience, long-vision, and vast resources.

(a)  Starting with Goldwater, the Republican Party’s “Southern Strategy” slowly returned the antebellum ideologies of racial separatism, States Rights, etc — to break the New Deal coalition, forging an instrument to wage the counter-revolution. There was no plan, just a “run to daylight” strategy of exploiting the internal contradictions and discontents that triumphant liberals had allowed to develop in their coalition.

(b) The Powell Memorandum: Sent by Lewis F. Powell, Jr. on 23 August 1971 (2 months before his nomination to Supreme Court) to Eugene B. Sydnor, Jr., Chairman of the Education Committee of the U.S. Chamber of Commerce. Titled Attack On American Free Enterprise System, it outlined a strategy for large corporations to rollback much of the New Deal reforms on business and crush the unions (perhaps the key brick in the New Deal coalition and the middle class structure).

(c) The article creating the mythology of tax-cuts as the magic elixir: “Taxes and a Two-Santa Theory“, Jude Wanniski, National Observer, 6 March 1976

(d) In his 14 July 1978 testimony to Congress (9 years before becoming Fed Chairman), Alan Greenspan first described the “starve the beast” strategy: “Let us remember that the basic purpose of any tax cut program in today’s environment is to reduce the momentum of expenditure growth by restraining the amount of revenue available and trust that there is a political limit to deficit spending.”

The great New Deal coalition built a new America. But the flower children of the boomer generation forgot that they were in a vessel. They thought they were frolicking in a meadow. Their political activism was limited to groups working to benefit themselves — such as ending the draft, opening the work world to women, rights for gays. Issues the 1%, as a class, don’t care about. Nobody bothered with the boring work of staffing the engine and control rooms, and running the ship.

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The rest is history. Now all that produced the middle class lies in ruins.

  1. The private sector unions are almost gone. Now blue collar work is again insufficient for a middle class life, and the political power they generated for workers has been broken.
  2. Corporations have shifted the expense of training onto workers. Increasingly jobs are contingent (eliminated on whims of the business cycle or corporate mergers and reorganizations), part-time, seasonal, minimum wage, temporary, without benefits.  For most of the population, people scramble to provide security for their family, with no time for political theory — let alone political activism.
  3. The education system lies in tatters. The inner city schools barely produce literate workers. The colleges have become so expensive — and aid so small — that young people work long-hours to fund it, then enter their working lives groaning under the debt. They lack the security, resources, and time to become politically active.

Now the battle is over. The 1% has won. Now begins the “pursuit” phase, in which they exploit their victory to crush their foes (preventing subsequent conflict), and begin the post-bellum restructuring of law and society to accommodate the appetites of our ruling oligarchy. The changes to date were on the gentle rise of the first part of the “S Curve”. Now we enter the steep part, as the 1% makes large obvious changes, without fear of effective opposition.

Wealth distribution of USA

(2)  Suddenly, too late, we discover inequality

Now that we’re broken, we discover the concentration of wealth and income that shows our defeat. Few people as yet see the policies — such as 1%-friendly taxes, and lax enforcement — that produced this inequality. But the result has become too obvious to conceal. The lavish spending of the 1% has become too great to ignore — seen at the Versailles across America — such as Manhattan, Silicon Valley, Beverly Hills.

A wealth of studies show the responsiveness of the government to the 1%, the shift of our national income from workers to owners, and the concentration of wealth.  But these social scientists have lost the language to describe the situation. The Bourgeoisie (the 1%) and their key servants, the Petite Bourgeoisie (the next 9%), own everything — and control what they don’t own.

We have forgotten Marx’s analysis, and must now slowly and painfully recover them (his prescriptions were a first cut at the problem, as good as such things usually are).

Marx tells us a hard truth: what matters is not income distribution, but wealth. And that’s far worse than we’re told. For example, the below graph is wildly misleading. The primary asset of the middle class (the lower classes have trivial net wealth) is their homes, which in a slow growing — in terms of money and population — America are a near-zero real return asset (after expenses). Unlike the businesses, natural resources, stocks, and bonds owned by the 1%.

Inequality of Wealth and Income

(3) Future chapters in our story

After defeat comes the dreamland (see America enters the dreamland, March 2012). Now come the story tellers, with comforting tales. Do nothing, eventually technology will bring us to the promised land!  Do nothing, eventually the brutal rule of the 1% will force people to arise and bring down the temple! Do nothing, it’s hopeless, eventually the system will crash from inevitable economic or ecological disaster.

Note the common element. We want stories that relieve us from the burden of responsibility, that eliminate pressure for us to do anything. That erase from our minds our duties as citizens.  So long as we refuse to see, refuse to work for a better world, then the 1% will win.

I have phrased this many different ways, but the first step must be to awaken the American people. For ideas about ways to do this see the 50 posts about Reforming America: steps to political change.  At best this will be a long, slow journey. We have yet to take the first stop on this road.

(4)  For More Information

(a)  What to do? See the 50 posts about Reforming America: steps to political change.

(b)  Posts about wealth inequality:

  1. A great, brief analysis of problem with America’s society – a model to follow when looking at other problems, 4 June 2009
  2. Why Americans should love Tolkien’s Lord of the Rings – we live there, 13 December 2011

(c)  Posts about our falling social mobility:

  1. America, the land of limited opportunity. We must open our eyes to the truth., 31 March 2010
  2. A modern conservative dresses up Mr. Potter to suit our libertarian fashions, 17 November 2011
  3. Why Americans should love Tolkien’s Lord of the Rings – we live there, 13 December 2011
  4. Another view of New America: inequality, low social mobility, rising heroin use. Fun, but not for all., 28 September 2013
  5. Growing inequality powers the rise of New America, 15 December 2013
  6. Consequences of growing inequality in wealth, income, and power, 16 December 2013

(d)  Posts about inequality:

  1. A sad picture of America, important for us to understand, 3 November 2008 — About social mobility
  2. An opportunity to look in the mirror, to more clearly see America, 10 November 2009
  3. Graph of the decade, a hidden fracture in the American political regime, 7 March 2010
  4. Modern America seen in pictures. Graphs, not photos. Facts, not impressions., 13 June 2010
  5. Jared Bernstein examines the economic impact of raising taxes on high-income households, 30 April 2012
  6. How clearly do we see the rising inequality in America? How do we feel about it? Much depends on these answers., 27 September 2012
  7. Ugly truths about income inequality in America, which no politician dares to say, 2 October 2012
  8. Glimpses of the New America being born now, 18 June 2013
  9. Why Elizabeth Bennet could not marry Mr. Darcy. Nor could your daughter., 12 July 2013
  10. For Thanksgiving, Walmart shows us the New America, 19 November 2013
  11. Back to the future in New America: our new class structure, 27 November 2013
  12. Learning not to trust each other in America, and not to trust America, 4 December 2013
  13. The state of the American middle class: are we thriving or sinking?, 15 January 2014

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16 Comments leave one →
  1. doug p permalink
    29 April 2014 12:57 am

    “So long as we refuse to see, refuse to work for a better world, then the 1% will win.”

    There are many folks who are “active politically”, who believe the 1% winning is a good thing. Whether they believe in trickle down, or some other fairy tale is hard for me to determine. But most of the Tea Party and most of the Ron Paul/Libertarians seem to be of this mind. And they are generally not even in the top 25% of either income or wealth. What if anything can be done to change their perception?

    Liked by 1 person

    • 29 April 2014 1:11 am

      Doug,

      That’s a powerful point. We have the equivalent in the US of the conservative “crown and gown” parties that for so long prevented political reform in Europe (I.e., people who gave their loyalty to the aristocracy and Catholic Church rather than their own economic interests).

      Thomas Frank wrote about this in “What’s the matter with Kansas?” (2004). As usual these days, the problem is clear. I am not clear if there is a solution.

      Liked by 1 person

    • Matt D permalink
      29 April 2014 5:14 pm

      Yes, unfortunately they believe the same things as the 1%. They don’t blame the dissolution of unions for falling wages, they believe the unions caused the wage drop because they demanded too much, which forced companies to send their jobs to other countries. They believe that the only people who can create jobs are the rich, and the only way they can do that effectively is with less taxes and regulation. And of course, that most of your neighbors are lazy moochers.

      The unions and government have, for their part, encouraged this thinking through many ill thought out practices. They’ve both become as corrupt as the companies they sought to reign in, now working for them (or themselves) instead of the workers. They show their incompetence through one overly long bureaucratic process followed by another overly expensive seemingly simple task, followed by another and another.

      Much of this comes from corruption and collusion with the oligarchy itself, who use red tape to tie up competition and have little to gain from a transparent and effective government. Still, this means we need better people heading up our unions and our government so we can regain the trust of the population. But where are these leaders? Do they exist? Can anyone escape being coopted and corrupted?

      Liked by 1 person

  2. Ben permalink
    29 April 2014 2:00 pm

    Some good points, but I would question the generalization of midcentury social movements as only self-interested. That elides the solidarity and fleeting sense of a global youth revolution that actually existed in moments but was eventually overwhelmed by the liberation of desire among privileged classes that was easily coopted by high-tech cool capitalism. The commitment within some corners of identity-based freedom movements to solidarity with anti-colonial struggles and especially with Viet Nam should not be forgotten.

    Like

    • 29 April 2014 2:17 pm

      Ben,

      I suspect you have romanticized the Boomers’ youth.

      “The commitment within some corners of identity-based freedom movements to solidarity with anti-colonial struggles and especially with Viet Nam should not be forgotten.”

      Perhaps so. But that movement faded fast when Nixon drew down the US troops in Vietnam (see the numbers) and shifted the draft to a lottery (first lottery 1 December 1969). By 1971 the movement was shrinking fast.

      Liked by 1 person

  3. Jonnaz92 permalink
    29 April 2014 2:22 pm

    Great article as always FM. I agree with Ben that you’re perhaps a little too harsh towards the identity politics crowd. I hope you don’t mind that I posted a link to the article on reddit, specifically r/politics. So far the link appears to be attracting mainly positive attention.

    Liked by 1 person

  4. 29 April 2014 4:02 pm

    Wow this really blew my mind. Excellent post!

    Like

  5. 29 April 2014 4:51 pm

    The 1% took over the banking system a long time ago and that’s when they took control of the government.

    When the Congress granted a charter to the Federal Reserve System and granted the wealthy oligarchs the power of creating and distributing the currency, they were really surrendering us all to the economic slaughter.

    Now, a little more than 100 years later, we’re all debt slaves. Like free-range cattle to be milked and sacrificed when convenient. Locked up and destroyed by their guard dogs (militarized police), when we put up too much of a struggle.

    The only politician in my lifetime to actually voice these facts to the public has been Ron Paul, and even here in the comment section I see people railing against his words, apparently without ever having listened to what he’s been saying.

    Like

  6. 29 April 2014 5:49 pm

    Reblogged this on AlternativeMedicineFreedom and commented:
    Very good article! I think everyone should read this!

    Like

  7. 29 April 2014 5:51 pm

    Awesome article! Thank you!

    Like

  8. 29 April 2014 9:31 pm

    I’m sorry to see a basic economic analysis attracts ronpaulers and alternative medicine nuts. Shall we say ‘at least some have seen the problem’? No, we don’t want to combine our cause with the lunatic fringe. Even if they are able to correctly say ‘I suffer’, we don’t accept the solutions they suggest.

    I think you’ve made some offhand references to radicalism here, where you reference marxist fatalism or determinism: “Do nothing, eventually the brutal rule of the 1% will force people to arise and bring down the temple!”. This is an unfair slur. Marxism does not believe the revolution is inevitable, and gives us concrete action points both for organizing our principles as well as organizing our people. I’d be happy to discuss them with you.

    Like

    • 29 April 2014 10:54 pm

      L,

      “This is an unfair slur.”

      It would be an unfair slur, but I did not attribute this often seen on the Left viewpoint to Marxists. The Left has many schools of thought other than Marxism.

      “Marxism does not believe the revolution is inevitable”

      I haven’t read Marx for 35 years, but I recall that Marx did say (in his voluminous and not always consistent) works that the revolution was inevitable. A form of historical determinism.

      Liked by 1 person

    • 29 April 2014 11:00 pm

      L,

      “No, we don’t want to combine our cause with the lunatic fringe. Even if they are able to correctly say ‘I suffer’, we don’t accept the solutions they suggest.”

      That is one of the big questions for reformers: choosing allies. The far right has many strains with widespread appeal, even on the Left. Political expediency suggests alliances, but the long-term strategic effects might not be worth it.

      The most common over-laps:

      Empire: against it. End foreign wars. End support for foreign tyrants.

      Banks: limit their political influence. End subsidies.

      Free speech: both social conservatives and radical feminists oppose pornography, often willing to accept government regulation of speech and media.

      Liked by 1 person

  9. 29 April 2014 11:13 pm

    apologies, i can’t seem to nest this reply any further. to address your points in order:
    you did not attribute it explicitly to marxism, but that is a major and well known criticism of marxism. it feels even if you didn’t intend it specifically that when you are addressing this complaint you are rehashing an old argument. does anyone actually believe revolution is inevitable?

    before you answer marx, no, he doesn’t; marx is explicit that the revolution will come about because of conditions and that capitalism creates those conditions. this may appear to be deterministic but he doesn’t think the conditions that create revolution will *necessarily* do so unless the people are aware of where they should be focusing their attention: on class, so therefore on capitalism, so therefore on private property. marx predicates the existence of the revolution on the work of the educated, otherwise many other outcomes can occur (including fascism).

    i agree 98% with the overlaps you suggest we focus on; we are anti-imperialist, anti-finance, and generally supportive of human rights. the 2% breaks down into two things, first, pornography is *not* a good thing, and although legalizing pornography and prostitution may in some circumstances be better than arbitrarily punishing people who will do those things anyway, this is not an endorsement. pornography and prostitution are degrading. we think society will have little to no use for them if they are not tied to incentives or wages. that isn’t to say we suggest a conservative, anti-sex society. some marxists are radically pro-sex but we wish to remove the forms of coercion that grow around it and that largely transform women’s bodies into consumable items.

    second, we believe that while all other effects deserve responses (i.e. racism, sexism, classism, etc.) the primary issue is the engine of class distinction, capitalism. while we remain in the capitalist mode of production you will fight a sisyphean and therefore unwinnable battle against these elements in society. you cannot turn capitalism into a peaceful, egalitarian society. all of marx’s writings were to that effect.

    Liked by 1 person

  10. OldSkeptic_2 permalink
    4 May 2014 11:22 am

    Worse than that, there seems to be a rough consensus amongst that US ‘elite’ that the majority of the US population is ‘optional’ and they would rather see them go away.

    I watch these things (and warn you and eventually you agree) and something that happened in one of ‘those ‘eilte’ meetings (in the late 1990’s) was the idea that the majority of the population was not necessary. The term ‘tittie socialism’ comes to mind, the ‘proles’ being given just enough not to cause any problems.

    Sadly the ‘elites’ are so greedy these days that they cannot stop. OK, here are some facts for you FM. Here in Australia, on the table are:

    The end of our social and very successful and cheap health system.
    The end of the armed forces pensions…..

    You guys are all military/etc people… your pensions are gone because your ‘elites’ are so stupid and so greedy that they automatically assume that you will still stay loyal to them.

    Or are they more logical in that can find other cheaper thugs that will do the required killing of the proles when they object? My bet, is that the US military will fold and sell out, especially since the top reaches seem to be already totally corrupt. The USSR one did, why should the Marines be any different?

    Therefore, it is a valid, for a short term at least, decision. When Wall St want’s its thugs to kill off protestors, then they can easily find them. Morphing the drug cartels (and the Mafia) into the US ‘national security state’ is a logical move, the (well documented) DIA/CIA ‘close relationships’ shows the way.. and how much money has been made by US military/CIA/etc people being involved with the Afghanistan drug trade???? Like lots….There are sargeants who are now millionaires now because if that..

    This is so “Shockwave Rider’ (John Brunner), where in the US it was a total monitored system (like now), where mega corporations, organised crime and the US Govt were a seamless system … like now.

    Noting that, as a counter example, in Russia the pensions are 4 times the Ukrainian ones…

    Boyd and the long game…. which to fair to them the ‘Wall Street’ Crowd and the organised crime cartels .. have done … very successfully to the US…….Crime in your country is simply a matter of money, if they have enough then it is not a crime. And if you think that Wall St and organised crime are not interlinked… well you haven’t done your research have you.

    As for that poor sod writhing in agony when he was supposed to being killed ‘cleanly;’… that is a feature, torture, which the US now loves, is never about ‘intelligence’, it is always about inflicting fear. Ask all those women raped at Abu Ghraib…. by the US…. arguably the single biggest torture system since the Phoenix program, at least some of them got out in Iraq, where zero did in Vietnam.

    Time to make a choice FM crew. You are loyal.. but to who? A paymaster .. but which one? Or the (who I admire, and in so many ways love, in so, so many ways for all their faults) the American people? The people, that in the end, that I’ll place my trust in.

    Like

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