Why the 1% is winning and we are not.

Summary: A cold clear look at the tactics and order of battle of us vs the 1%, plus some thoughts what we must do to win.

Motto of the 1%
Motto of the 1%.

 

What distinguishes the 1% from the rest of us? Many things, such as their fantastic wealth, income, and power. But perhaps the most important differences are that they have a clear view of the America, plus rational well-funded plans to reshape it into a form that better meets to their needs. It’s why they are winning.
.

(a) 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.

(b) Creating the mythology of tax-cuts as the magic elixir

Taxes and a Two-Santa Theory
by Jude Wanniski, National Observer, 6 March 1976.

“The only thing wrong with the U.S. economy is the failure of the Republican Party to play Santa Claus. The only thing wrong with President Ford is that he is still too much a Hoover Republican when what the country needs is a Coolidge Republican.

“These statements, seemingly absurd, follow naturally from the Two-Santa Claus Theory of the political economy. Simply stated, the Two Santa Claus Theory is this: For the U.S. economy to be healthy and growing, there must be a division of labor between Democrats and Republicans; each must be a different kind of Santa Claus.

“The Democrats, the party of income redistribution, are best suited for the role of Spending Santa Claus. The Republicans, traditionally the party of income growth, should be the Santa Claus of Tax Reduction. …”

(c)  Slash essential funding for the government

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.”

(d)  Building the infrastructure to win

As always, the people are more important than the actions. The 1% find, fund, and nurture the careers of people like Powell, Wanniski, and Greenspan. The Shame Project unknowingly documents this patient, well-funded construction of a counter-revolutionary movement. Find promising young people, fund and direct their careers. With them they built organizations to promulgate your ideological goals. This is patient investment, intelligently planned, of the kind that reshapes nations.

Plutocrat

There is no longer effective opposition to the 1%

The only organization opposition came from labor unions, which had the resources to do similar things (on a smaller scale). But our society consists of competition among factions, and organized labor has been crushed. infiltrated by organized crime, intellectually divided, too-often focused on narrow self-interest — they have been crushed by larger and smarter forces.

None of this implies conspiracies. Any more than for open-sourced software. Just an open-sourced insurgency, such as that described by John Robb (author of Brave New War, website here).

This does not make effective opposition to the 1% impossible to build. But it means the irrationality, emotionalism, and fecklessness that characterizes most opposition (eg, the Occupy Movement) are luxuries we cannot afford. Only a steely gaze on reality, a cold determination to see the truth — whatever it might be — will provide the basis for building organizations to oppose the 1%.

Emotional rhetoric has its place, especially when seeking mass support. In the later phases, not at the beginning. The 1% has the money. They have the team. They have the momentum. The clock is running. What will you pay for America to win?

For More Information

If you liked this post, like us on Facebook and follow us on Twitter. See all posts about the Republican Party, reforming America: steps to new politics, and especially these…

  1. Origins of what may become the 3rd American Republic (a plutocracy).
  2. Why Americans should love Tolkien’s Lord of the Rings – we live there.
  3. We’ve worked through all 5 stages of grief for the Republic. Now, on to The New America!
  4. Compare our New America to the America-that-once-was (a great nation).
  5. Watch as plutocrats mold us into a New America, a nation more pleasing to their sight.

We will need movies like this, too. Eventually.

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46 thoughts on “Why the 1% is winning and we are not.

  1. The reason the 1% has done so well is that they have developed/advanced/practiced the Black–Scholes economic model as well as the sundry associated financial engineering that has been associated with it.

    The problem with this model is that it is inconsistent with physical reality. The center of opposition – organized or otherwise – is Mother Nature. The 2008 collapse is but the first of many such pitfalls waiting for our financial engineers.

    The trick, nowadays, is how to align oneself with Mother Nature; while she does all the heavy lifting.

    Like

    1. Duncan,

      Can you explain that in more detail? I don’t see any relationship between the B-S model and the 1%’s gains.

      Tax policy has shifted since 1980 on all levels to favor the 1%: less progressive income taxes, higher regressive taxes, radical shift to favor capital gains over earned income.

      The destruction of organized labor and open-doors policy to immigration have shift the shares of national income from wages to profits.

      The 1%s careful, intelligent, long-term base building (touched upon in this post) have vastly increased their political power.

      I believe these 3 factors explain most of the shift. These factors are mutually-reenforcing.

      Like

    2. What you are asking me to do is to recreate the intellectual scaffolding I used to conclude that the 1% have prospered because of financial engineering, the problem with which and the rebuttal to which is that it is unnatural. I went through all this some 10-15 years ago and proceeded to what is, to me the more interesting question of what, then, is natural?

      I’ll try to get back to you – but what it all boils down to is that derivatives and such enabled derivatives and such enabled the 1% to take off and to defy the laws of gravity for some time. This began in the seventies, flourished in the eighties and nineties, and began to crash in the 2000’s. The so-called “War on Terror’ has really been the increasingly frantic efforts of financial capitalism to control commodities. I’m sure I’ve said here and definitely have said else where that the “War on Terror” would be better understood as the “Revolt of the Commodities.”

      But to fully get back to you I will have to ponder weak and weary, over many a quaint and curious volume of forgotten lore.

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    3. What time cycle are you talking about, Duncan. The law of nature that works that way, that i can think of, is about 260 years. Many generations can live and die while suffering trough the end of it which is marked by wars. Lets say that speed of communication and technology sped up that cycle to 100 years that would make at least one whole generation living most of its life in downturn.

      Why let that be going on if it can be shortened. You presenting the problem as Law of Nature is akin to saying; Lets do nothing.

      Aren’t you, by doing that, taking the side of those that produce suffering and death?

      Like

  2. Fabio, how about suggestions for *action*? Should we support MoveOn, or MoveToAmend, or what? Do some due diligence for us. I ain’t giving money to candidates no more.
    Cheers,
    Benign

    Like

    1. Posts have to be brief in order to be read by many. So I focus each on one insight. There are hundreds of posts about this evolution of America, and how we are and might respond.

      For more see the For More Information section at the end every post.

      For even more, look at the Reference Pages listed on the right-side menu bar.

      An easy way to browse: use the “tag cloud” at the bottom of the right-side menu bar.

      Like

    2. “for us. I ain’t giving money to candidates no more”

      Your time and energy are more valuable cash! Lots of grass-root organization going on.

      Also, there are politicians who deserve your support. Find them, even if they have little change of election. Lots of losses before victory comes to any political movement.

      Like

    3. “for us. I ain’t giving money to candidates no more”

      I encourage you to give money (or time, if you have more of that) to good candidates. Problem is, there aren’t many and almost none at the congressional level.

      * Give checks to school board candidates who back merit pay for science, math and special education teachers despite union opposition.
      * Give to county/city council candidates that advocate affordable housing projects while their opponents take large bribes from real estate developers to boost luxury mansions.
      * Give to state delegates who want to preserve state parks against oil shale fracking while their opponents accept large bribes to poison groundwater.

      Often these people do not win. Better still, support the ones who DID get in by a quirk of statistics and back them enthusiastically.

      People focus on Congress, but we need to seed the field of candidates for Congress with noble civil service peasants in the “minor leagues”. These are the races good people can win. If they get our support, they may be able to stay good and win more power.

      Like

  3. On how to change…Don’t vote…Don’t like xyz corporation–don’t buy their products…Don’t like Seaworld’s abuse of Orca’s–don’t go….

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    1. I do not find passivity a broadly useful response.

      Not voting strikes me as an especially bad response. There is always a difference between the candidates, even if only bad and worse. A citizen is not a consumer, but a participant in the political process of self-government.

      Like

  4. ACLU Using Corporate Management Tactics on Its Own Workers

    [ 109 ] July 27, 2013 | Erik Loomis

    I was a union organizer for awhile. Most of this was volunteer work, but I was pretty good at it and there were professionals who encouraged me to go into it full time. I was committed to going on to the Ph.D. though. But right before I did so, an SEIU local took me on as a staffer for the summer, figuring they could get something good out of me.

    It was the worst job I ever had….”

    Oh boy, sign me up (not)!

    Like

    1. M Simon,

      “SEIU is just another criminal organization. They have figured out how to use government guns as a means of extraction.”

      The Service Employees International Union (Wikipedia) is a labor union representing about 1.9 million workers in over 100 occupations in the United States, and Canada.

      Simon’s comment ~#19 gives us sufficient information to draw a tentative conclusion: M Simon is a right-wing crackpot. Sad, as I don’t believe that was so a few years ago. He posted many interesting and useful comments.

      Like

  5. Not voting is an action even as passivity is…And how is it that voters are marketed/sold on a candidate? Or war for that matter? Alas as consumers. Candidates are products in these times. What is the critical difference between the republican and democratic parties these days. These two options: 0 and 1 or 1 and 0 are not options that are of much use…An election where 10 percent of the populace did not vote would be no mandate for any platform. Not buying a product that you may like is not a passive response….Capitalism needs to generate profits to be sustainable….Disrupt the profit flow to a business (boycott) and it’ll matter to the owners and, yes, workers too…The system wants you to volunteer–saves the hard core capitalists and politicians money…

    Like

    1. Americans are among the most creative people ever — at least when it comes to finding reasons to sit on their butts and avoid responsibility.

      This is, perhaps above all other factors, why the 1% wins. It is the harsh circle of life that nations are ruled by those willing to make the effort to do so.

      Like

  6. You know, this is not the first time the rich versus poor issue has come up.

    My mother’s parents were committed Communists, though this was back in the 20’s. The communists had a simple plan — find the rich people, kill them. Repeat until they’re all dead. What happened in practice, though, was that there were endless meetings and organizational discussions. They were always preparing for the big revolution that never came — then the USSR collapsed, the zeal faded. The true believers died of old age, and the younger generation wasn’t quite so dedicated. In the end, you have a club full of 70 year old guys singing the Internationale and talking about the good old days.

    Here in the USA, my grandfather was part of the trade union movement, and there were many battles with this, some of the quite violent, really. I know there was at least one massive labor strike here in Northern California where they brought in the national guard, and houses burned down and other chaos happened. I assume maybe he was part of this, though he died when I was a baby, so I don’t really know.

    My grandmother spent a lot of her later life as a maid for a rich family. She had no love for them. She mostly talked to me about their fabulous collection of stuff, and how they were dieing of colon cancer. Too much ‘Roast Beef’ she thought — maybe this was actually true, now that I think about it.

    So for me, I don’t know, this is an old fight, and yes, it stirs something deep in my genetic structure somehow. I imagine my grandmother as the ‘Guerilla in the food service industry’ like Tyler Durden, and that Fight Club movie, but, err, that’s just the romantic in me.

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    1. “You know, this is not the first time the rich versus poor issue has come up. ”

      Some battles are eternal, and can never be won. The great “nations” of the ancient world evolved largely through conflicts between the lower and upper classes. Esp Athens and Rome.

      Like

    2. This leaves out the fact that wealth diffuses. Takes about 3 generations. The rich will put their money to work if they can make a profit. I got a scholarship to a top tier University thanks to the money the Rockefellers “stole” in the late 1800s. If we count from 1890 to my scholarship in 1962 that is about 3 generations – give or take. My #2 son went to the same University on scholarship. So we got more money out of the Rockefellers.

      Your error is in thinking the money is put in a mattress. It is not. It is invested.

      And Ayres? A son of privilege. Look up his father. Bill is as black hearted as they come. He wanted change through murder. And now he gets it through the power of the government gun. He is as revolutionary as Lenin or Trotsky. Not very. Just a different kind of thief.

      You want to know the real revolutionaries of this age are? Bardeen, Brattain, and Shockley. And the countless engineers who put their discovery into practice.

      Like

    3. M Simon,

      Comment #18. More just making stuff up. This is like talking to one of the cultists handing out flowers in the airport.

      (1) “This leaves out the fact that wealth diffuses. Takes about 3 generations.”

      Outside Simon-world, these things are not so simple. They depend on larger political factors. Look at Latin America. Wealthy in 1915, income concentrated resulting in massive social unrest after WW2.

      (2) “Your error is in thinking the money is put in a mattress. It is not. It is invested.”

      Private investment rates in the US have fallen as income has concentrated.

      Like

  7. Fabius
    I have been following the discussion of the new America on this blog for several years. Keep up the good work. Generally, there is more sanity here than anywhere else. Found this link this morning and it seems related.

    You Say You Want a Revolution“, Chuck Klosterman, Esquire, 20 February 2007, — “Well, you know, it ain’t gonna happen. Not here.”

    “Modernity has created a cosmic difference between intellect and action, even when both are driven by the same motives; as such, the only people qualified to lead a present-day revolution would never actually do so. Contemporary leaders are not rock-throwing guys. And this is a problem, because it’s the rock throwers who get things done.”

    This seems to highlite the problems of remaking America. Do all the capable leaders have too much invested in the status quo? Is the system so complex that meaningful changes can only be brought about by violence or at least some form of radical upheaval?

    Like

    1. That is a fascinating article.

      My guess is that all revolutions are preceded by such articles. The status quo always looks strong until the winds break it open, showing the inside to be hollow — or rotted.

      We shall see!

      Like

  8. If you want to know to create change then listen to a real radical revolutionary who actually did it. Link to Bill Ayers interview on how to create change.

    Like

    1. slapout9,

      Now that’s innovative thinking — looking at the founders of the Weather Underground! They built an organization, founded 1969. There are probably some good lessons to be learned.

      But what was their effect? They blew up some government buildings and banks (without killing anyone). Nixon promised to end the draft the year before their founding, which largely gutted the anti-war movement as a mass project.

      The war ended due to failure to achieve meaningful military success despite Nixon’s expansion in terms of firepower and geographic scope.

      As for their other goals, my guess is that the WU was very counter-productive, poisoning the Left in the eyes of large sections of America.

      So I’d say the WU provides important lessons in terms of tactics and strategy — ones to avoid.

      Like

    2. “The war ended due to failure to achieve meaningful military success despite Nixon’s expansion in terms of firepower and geographic scope.”

      Well no. Nixon actually got the victory he promised. What happened is that the Democratic Congress of 1975 refused to support that victory with money and arms for the South. We got 500,000 Vietnamese going to sea to avoid the killing fields. Half of them died at sea. That soured me on Democrat politics and Communism for life. (I’m not enamored of Republican politics much either).

      These days Vietnam is begging us for entry into the system they reviled.

      ====

      And history repeats itself. We got a victory in Iraq in 2007. The war died down. So what has our pResident done? Pulled our troops (no longer fighting a war but still a stabilizing element) out of Iraq. South Korea is the opposite example.

      The Democrats of the last 40 years have a history of throwing away the fruits of victory. Pax Americana is waning because it is too expensive. Wait until we find out what a few months of nuke war costs. Pax Americana will look very cheap then.

      Like

    3. Simon,

      You have posted a dozen comments today. You have not cited a single authority for your long series of weird assertions. The few facts you have cited are mostly false.

      This is one of the worst cases of “Epistemic closure” I have seen. A near-total disconnect from reality.

      Thank you for posting these. They illustrate the peril facing the Republic as nothing I’ve wrote can.

      Like

  9. Fabius, yes that was the point I was trying to make. They failed as the Weather Underground (they should be in jail for life IMO) then they changed and became far more political and they became far more successful and far more dangerous IMO. So there should be some lessons to learn in all that, especially how they handled the 1% some say they actually have a great deal of financial support from them. I have not confirmed that so take that with caution.

    Like

    1. slapout9,

      That’s interesting. I know nothing about these guys since their WU days. Can you point me to something describing their subsequent success — other than the standard boomer story of abandoning their principles to find a comfy hole (eg, as attorney, as professor, as Puritan-like enforcer of language-diet-morals).

      Like

  10. Fab Max,
    He is still a devout revolutionary an makes no bones about it, but he did change to so called peaceful methods. Some of which are :
    1- he was an assistant to Mayor Richard M. Daily of Chicago
    2-1997 Chicago citizen of the year
    3-raised nearly 50 MILLION dollars in grants from some well established traditional 1% supported foundation types.
    4-He still travels and teaches Organizing for Social Justice at Colleges all over the USA.

    The link below to his Wki page lists many dereferencesfernces you may like to explore.

    http://en.wikipedia.org/wiki/Bill_Ayers

    Like

    1. Slapout9,

      So he is doing good work and integrated into the system. I don’t see anything revolutionary on that list.

      But his employer Mayor Daily and his disciple Obama demonstrate the limitations of this methodology. Not real reforms from either, just skillful servants of the 1%.

      We are like sheep in a pen. We can fix it up within narrow limits, but nothing more. Only structural change can do more.

      It is the difference between the abolitionist societies — working to free individual slaves and end slavery — and those working to regulate and improve the lot of slaves. Very different tracks, going to different goals.

      Like

  11. Personally, I think 1% is a bit broad. For example, should anyone own a few gas stations including land — that could easily put them the the top 1% zone. During the Rodney King riots, we had plenty of angry mobs going after 7/11 stores and things like this, but, I think even if someone owning 5-6 7/11 stores is in the top 1% wealth I honestly don’t think it’s really getting at the problem if the mob burns their businesses down. .

    Like

    1. Cathryn,

      Great point! Income and wealth are astonishingly concentrated in the US. The border for the top 1% is roughly $400,000 income and $9 million wealth.
      http://economix.blogs.nytimes.com/2012/01/17/measuring-the-top-1-by-wealth-not-income/?_r=0

      The “1%” is a label, and should (as you note) refer to the top 0.1%. But as one with long experience as a pedant, I find that excessively precise labels are a hinderance to effective marketing.

      Like

  12. There’s also a power law in the distribution of wealth in America, where the top 1% have ten times the assets of the top 10%, but the top 0.1% have 10 times the assets of the top 1% and the top 0.01% have 10 times the assets of the top 0.1%, and so on.

    Meanwhile, Real Estate Bubble 2.0 has now gotten underway with 84% of the monthly minimum wage now needed to pay for the median monthly rent in America. Rents have now hit record highs nationwide since 1995 according to the U.S. census bureau, and as you’d expect this has inspired Wall Street financial wizards to create a new class of rental-backed real estate securities.

    Counting down to another financial collapse in…3…2…1…

    Like

  13. Let us look at the premier New Deal system. Social Security. It takes about 15% of a paycheck (What? You think the mandate on the employer is free?). That 15% invested over 50 years might produce an income of $100,000 per year. Not to mention a larger economy. Instead it is invested in friction – government. So what do you get back from government? A fraction of that. Not to mention a smaller economy.

    I don’t know if you remember the dot com bubble. For a couple of years the economy was growing at around 7% or 8% a year. Wages exploded. At all levels.

    If you want to get more for those at the bottom get the economy growing at high rates.

    My prescription? Reduce the friction of government. Reduce its size so that rent seeking is no longer more profitable than actual production.

    Government is not the solution. Government is the problem.

    Like

    1. M Simon,

      (1) “I don’t know if you remember the dot com bubble. For a couple of years the economy was growing at around 7% or 8% a year. Wages exploded. At all levels. ”

      Wow, that’s daft! The operative word is “bubble”. Few people consider blowing over-investment bubbles a sane method of achieving economic growth.

      (2) “For a couple of years the economy was growing at around 7% or 8% a year.”

      At last you give a fact! And it’s FALSE. Annual change in US real GDP, per the Bureau of Economic Analysis:

      1. 1996: 3.8%
      2. 1997: 4.5%
      3. 1998: 4.4%
      4. 1999: 4.8%
      5. 2000: 4.1%
      6. 2001: 1.0%

      (3) “If you want to get more for those at the bottom get the economy growing at high rates.”

      I believe most people agree with that. The question is “how”. You advocate solutions contrary to both history and the patterns we see in today’s world. You give falsehoods in support. Hence my skepticism about your conclusions.

      Like

  14. Let me add that big cities – almost universally Democrat controlled are going broke. Chicago is next in line. Bill A. helped that along. What a revolutionary.

    http://classicalvalues.com/2013/11/behavioral-sink-behavior-and-thermodynamics/

    Democrats practice crony capitalism – what used to be called fascism in a different age. Very attractive on the way up. Detroit is what the way down looks like. What happens is that the cronies can no longer support the masses required to keep them in power.

    Like

    1. M Simon,

      “Democrats practice crony capitalism – what used to be called fascism in a different age.”

      As I scroll those your comments they get weirder. This is #17, and is quite ignorant. “Fascism” is a political ideology with specific characteristics, not some slur you can throw at your foes.

      Like

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