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
(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.
The rest is history. Now all that produced the middle class lies in ruins.
- 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.
- 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.
- 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.
(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%.
(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:
- A great, brief analysis of problem with America’s society – a model to follow when looking at other problems, 4 June 2009
- Why Americans should love Tolkien’s Lord of the Rings – we live there, 13 December 2011
(c) Posts about our falling social mobility:
- America, the land of limited opportunity. We must open our eyes to the truth., 31 March 2010
- A modern conservative dresses up Mr. Potter to suit our libertarian fashions, 17 November 2011
- Why Americans should love Tolkien’s Lord of the Rings – we live there, 13 December 2011
- Another view of New America: inequality, low social mobility, rising heroin use. Fun, but not for all., 28 September 2013
- Growing inequality powers the rise of New America, 15 December 2013
- Consequences of growing inequality in wealth, income, and power, 16 December 2013
(d) Posts about inequality:
- A sad picture of America, important for us to understand, 3 November 2008 — About social mobility
- An opportunity to look in the mirror, to more clearly see America, 10 November 2009
- Graph of the decade, a hidden fracture in the American political regime, 7 March 2010
- Modern America seen in pictures. Graphs, not photos. Facts, not impressions., 13 June 2010
- Jared Bernstein examines the economic impact of raising taxes on high-income households, 30 April 2012
- How clearly do we see the rising inequality in America? How do we feel about it? Much depends on these answers., 27 September 2012
- Ugly truths about income inequality in America, which no politician dares to say, 2 October 2012
- Glimpses of the New America being born now, 18 June 2013
- Why Elizabeth Bennet could not marry Mr. Darcy. Nor could your daughter., 12 July 2013
- For Thanksgiving, Walmart shows us the New America, 19 November 2013
- Back to the future in New America: our new class structure, 27 November 2013
- Learning not to trust each other in America, and not to trust America, 4 December 2013
- The state of the American middle class: are we thriving or sinking?, 15 January 2014