We played while the 1% ran a revolution, quietly

Summary: In Campaign 2016 we chose between a clown and a Clinton – both serving the 1%. very two years I run this post after Memorial Day. It is one of the most important on the FM website.

Phoenix
In our future lies the Third Republic

Clearly seeing America

During the long halcyon days of the post-WW2 summer America forgot about economic and social classes — and their cousin, social mobility. A confluence of circumstances made a new America: the cessation of immigration by the 1930’s, the New Deal’s reforms to America’s political and economic structures, the post-WW2 social programs (especially the 1944 GI bill and the Cold War-boosted funding to education), and the 1960’s civil rights legislation. These fueled social cohesion and economic growth with positive reinforcement. The result: the rise of a large middle class for the first time in US history, along with a modest degree of social mobility.

We forgot that this America was different from the horror show of late 19th century America. We forgot the long slow low-violence revolution that began after the Civil War, laying the foundation on which the middle class rose. We considered this to be our just due, not what it actually was – a hard-won victory after generations of oligarchy.) For more about this see Much of what we love about America was true only for a moment.)

The Boomers inherited the New Deal governing structures, but forgot the progressive-populist coalition that made it work. Instead the boomers indulged in political activism to benefit themselves — such as ending the draft, opening the work world to women, and gaining rights for gays. Issues about which the 1%, as a class, are uninterested.

This summertime culminated in the long boom — the debt-fueled almost recession-free expansion of 1982 – 2007, supercharged by the fall of the Berlin Wall in 1989 and the late 1990’s tech boom. We believed that America was exceptional, history’s favored son, a new moment in history. Marx became a comic figure. “The only Marxists live in Berkeley and Albania.”

We forgot that we are the crew on the USS America. Too few of us bothered with the boring work of working the engine room and steering the ship. We forgot that America is a ship, not a vacation resort.

Orphans of the Sky
Available at Amazon.

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), one of the first stories about a ship on a multi-generational voyage to another star. Like them, we are a crew on an endless journey who have forgotten who we are. Like them, we must retake control of the ship.

Then came the counter-revolution

The 1% did not enjoy this summer in America, and especially not the core New Deal and civil rights reforms that made it possible.  They planned a counter-revolution. They had patience, vast resources, and a long-term vision of how they wanted to reshape America.

(a)  Starting with Goldwater, the Republican Party’s “Southern Strategy” made respectable again the antebellum ideologies of racism and States Rights. With this they broke the New Deal coalition, forging a new political machine 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) Economist Jude Wanniski’s article creating the mythology of tax-cuts as the magic elixir: “Taxes and a Two-Santa Theory“ in the 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 massive tax cuts of Presidents Reagan and Bush Jr. succeeded in this respect, at the cost of damaging the government’s solvency.

The result: a decisive win for the 1%

Decades of work have produced a decisive win for the 1%. Now the foundation of the middle class lies in ruins.

(a)  The private sector unions are a shadow of what they were. Now blue collar work is again insufficient for a middle class life, and the political power that unions produced for workers has been broken.

(b)  Corporations have shifted the expense of training onto workers. Increasingly jobs are some combination of contingent (eliminated on whims of the business cycle or corporate mergers and reorganizations), part-time, seasonal, minimum wage, temporary, and without benefits. It is the “gig” economy, constant scrabbling and insecurity. Few people have time for political theory — let alone political activism.

(c)  The education system lies in tatters. The inner city schools produce barely literate workers. The colleges have become so expensive — and financial aid so small — that young people work long-hours to fund it, then enter their working lives groaning under the debt. Careerism is good sense; a liberal arts education is a luxury. Most students lack the security, resources, and time to become politically active (except at elite schools).

(d)  Massive immigration, supported by both major parties, depresses wages.

(e)  Both of the major political parties are subsidiaries of the 1%. In 2016 the Democrats ran a Goldman-financed candidate and defeated an attempt to put opposition to the TPP on the platform. The major candidates in the GOP presidential primaries were all devoted to the 1%, as seen by their proposals for massive tax cuts for the 1% (implemented by Trump as one of his top priorities).

Sigmoid curve

Now begins the “pursuit” phase of the class war, in which the 1% crushes its foes (preventing subsequent conflict), and begins the post-bellum restructuring of law and society to accommodate the appetites of our ruling oligarchy.

A sign of their victory is the candor of their courtiers, expressing anti-democratic sentiments that would have been hidden in better times. Such as this by journalist James Traub: “It’s Time for the Elites to Rise Up Against the Ignorant Masses” in Foreign Policy (the military-industrial complex is one node of the 1%’s power).”

The changes made to America so far are small. We are on the gentle rise of the early phase of the “S Curve”. Now we enter the steep part, as the 1% makes large obvious changes, without fear of effective opposition. Despite all the noise about political polarization, policies of great interest to the 1% (and the military industrial complex) often find bipartisan support.

Wealth distribution of USASuddenly, too late, we discover inequality

Now that we have been broken by the 1% – powerless and divided – we discover the concentration of wealth and income caused by our defeat. It has become too obvious to conceal. The lavish spending of the 1% is seen at the little Versailles across America — in Manhattan, Silicon Valley, and Beverly Hills (see Bill Gates’ mansion). But few people as yet see the policies — such as a 1%-friendly tax system with lax enforcement — that produced this inequality.

Many 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 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 terminology, and must now slowly and painfully recover it (Marx’s prescriptions were a first cut at the problem. They were as good as such first cuts usually are — i.e., not very good).

Marx tells us a hard truth: what matters is not income distribution, but wealth. And that’s far worse than usually shown. For example, the below graph is misleading. The primary asset of the middle class (the lower classes have little or no net wealth) are its homes, which in a slowly growing (in terms of money and population) America are a near-zero real return asset (after expenses). That is unlike the assets of the 1%, which are mostly income-producing investments in businesses, natural resources, stocks, and bonds.

Inequality of Wealth and Income

Future chapters in America’s story

After defeat comes the dreamland (see America enters the dreamland). We want stories that relieve us from the burden of responsibility as citizens, reducing the pressure on us to do anything. Storytellers come with the comforting tales we demand. 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; eventually the system will crash from an inevitable economic or ecological disaster. Do nothing; it’s hopeless (there are hundreds of comments saying this on the FM website).

So long as we refuse to work for a better America, then the 1% will continue to win.

I have written 50 posts about Reforming America: steps to political change. The first step must be to awaken the American people. At best this will be a long, slow journey. Perhaps in 2019 we will take the first stop on this road, so that in 2020 we can choose between two suitable candidates for President.

American Power

For More Information

Ideas! For shopping ideas see my recommended books and films at Amazon.

If you liked this post, like us on Facebook and follow us on Twitter. See all posts about increasing income inequality and falling social mobility, about steps to reforming America, and especially these…

  1. ImportantA picture of America, showing a path to political reform.
  2. Despair: so common these days, so good for the 1%.
  3. Learning not to trust each other, and not to trust America.
  4. American politics isn’t broken. It’s working just fine for the 1%.
  5. Watch the Left and Right move against America.
  6. Why Americans should love Tolkien’s Lord of the Rings – we live there.
  7. Why Elizabeth Bennet could not marry Mr. Darcy. Nor could your daughter.

Two useful books showing how we got here, and how to get back on track

Listen, Liberal: Or, What Ever Happened to the Party of the People? by Thomas Frank.

The Great Exception: The New Deal and the Limits of American Politics by Jefferson Cowie (Professor of History at Vanderbilt).

"Listen, Liberal" by Thomas Frank
Available at Amazon.
The Great Exception: The New Deal and the Limits of American Politics
Available at Amazon.

25 thoughts on “We played while the 1% ran a revolution, quietly

    1. Mandy,

      True, but women’s increased participation was not a result of public policy. Increased immigration was a direct result of public policy changes.

  1. Agreed with most of this, but a couple of reservations:

    “Instead the boomers indulged in political activism to benefit themselves — such as ending the draft, opening the work world to women, and gaining rights for gays.”

    Don’t think this is right. These things happened, but probably not because the boomers agitated for them in order to benefit themselves particularly. The boomers were not especially gay or female, and did not benefit any more than any other generation would have. I don’t really think the change in the role of women is a cause of the worsening trend for the middle classes. Here I’m afraid you are in danger of lumping all the things you find objectionable in contemporary society together, as if they were more causally related and more tightly bound than they really are.

    I am also not sure about the draft. The last thing most professional military people want is the draft. What they tend to want is a smaller long serving professional army. I doubt it was just the boomers who wanted it to go.

    Second, I don’t really buy into the 1% conspiracy. I am sure that people in this class have always wanted what is best for them. The really interesting and difficult question however has been why they were able to get it in this particular period of history.

    That there have been profound changes, and that they have resulted in the decline of the middle classes, and that the fifties and sixties of the last century seem in retrospect to have been far better times than what came after for many, all that is very true. We have seen totally dysfunctional financial and foreign policies which really are in the proper sense truly unsustainable. But I am not sure the implied explanation is correct.

    A big factor in the transition was that America lost its relative economic position, in a very similar way to the way Britain did in the 19c. Others caught up. The halcyon days of the fifties and sixties were in large part due to the US relative economic position, and it could not last forever.

    So I think causation is a lot harder and more complex than the piece recognizes. But the account of the phenomenon is spot on, and it is certainly alarming and disturbing. To put it mildly.

    1. George,

      (1) “I don’t really think the change in the role of women is a cause of the worsening trend for the middle classes.”

      Neither do I. In fact, you are disagreeing with something not said in this post. Not remotely said.

      (2) “you are in danger of lumping all the things you find objectionable in contemporary society together, as if they were more causally related and more tightly bound than they really are.”

      Here you are making stuff up and giving a rebuttal to it, as usual.

      • I don’t consider any of those things objectionable. There is nothing in this post even implying that I do. Your assumption that I do is personally insulting.
      • I don’t imply that they are “causally related” or “tightly bound”, since they obviously aren’t.

      (3) “I don’t really buy into the 1% conspiracy.”

      As usual, people use the word “conspiracy” as the stop button on their minds. Any group of people acting on the basis of their common interests can be called a “conspiracy”, but that communicates absolutely nothing. It’s just a substitute for actual thought about what’s happening.

      (4) I suggest you actually read the post, and attempt to reply to what it says.

    2. “Second, I don’t really buy into the 1% conspiracy. I am sure that people in this class have always wanted what is best for them. The really interesting and difficult question however has been why they were able to get it in this particular period of history.”

      The concept of a 1% conspiracy seems far too simplistic. Certainly many of the changes that have occurred over the past 40 years, destruction of the unions, changes in the tax law, mass incarceration, etc. were very purposeful. To ascribe this to a monolithic 1% is far too simplistic. There are a variety of viewpoints at the higher end of the income spectrum, probably more skewed to the “conservative”, but certainly not monolithic in that regard. I agree with George that there larger geopolitical and societal forces at play that have likely had significant impact on this. Demonizing “the rich” may play well in a revolution, but is not the best way to develop a national consensus around a fairer society for all.

    3. John,

      Got to love how these discussions in comments totally ignore the specific documents I cited. It’s must more fun to airly speculate!

    4. The entire thread of the article assumes that there is a malevolent force called the 1% unified in its thinking and coordinated to control the power strings of the United States. I don’t buy that. Despite all the data about lack of social mobility, I see evidence daily that the control of wealth in the U.S. switches regularly. Many of the wealthiest people in America today come from much more modest backgrounds and family wealth continues to be dissipated from generation to generation.

      The pillars of the American Dream were always the entrepreneurs who built the enterprises that created the jobs and drove the economy forward. Today’s winds drive toward the steady consolidation of entrepreneurially owned entrepreneurial firms into ever larger enterprises controlled by financial investors. This has the same impact on local civic leadership that Walmart had on the family owned stores on the town square. To the extent it makes it more difficult for the next generation of entrepreneurs to arise, gain financing and build their enterprises, this trend will ultimately sap the vigor of the American economy.

    5. John,

      “The entire thread of the article assumes that there is a malevolent force called the 1% unified in its thinking and coordinated to control the power strings of the United States. ”

      Absurd. It assumes there is a movement of a class of people with similar circumstances and interests, working to gain power. You characterize it in a childish fashion as “malevolent” (too many Disney movies as a child?). It’s just human nature, omnipresent throughout human history in every society.

      I don’t say it is unified. The term “1%” is a short-hand, understood by pretty much everybody — but you.

      Try giving replies to quotes rather than making stuff up. You’re shadowboxing with yourself.

    6. “The term “1%” is a short-hand, understood by pretty much everybody — but you.”

      The term 1% was derived to reference the top 1% of the income distribution of the U.S. Sometimes it more broadly references the top 1% of the income distribution globally. Some use the term as a reference to a political class that has somehow been able to manipulate American society to their benefit. I interpret this and several other posts on your site as using the term in the latter context. I am quite confident that some, but not all readers understand the term the way you are using it, but many will consider it in its original economic context.

      I can agree that the current political parties seemed to both be controlled by a group of backers that have pushed public policy to favor wealth in the tax system, encourage the concentration of wealth in large corporate entities and disfavor those Americans who depend on their daily effort for their livelihood. Turning that into class warfare by crediting “the 1%” for those efforts is not productive.”

  2. Do nothing; and await your messiah to arrival to save the day for everyone so that no one needs to struggle to change everything because the burden is placed upon his shoulders.

    Obama right after he won his first election as an example. I want to put Clinton down but since she lost, all I can do is to put her down. Among a few examples.

    1. To clarify, the expectation that once Obama was elected into office, our national nightmare would be over.

  3. Since I routinely experience yuppies chiding me to “trust the teachers” rather than investigate what they are teaching my children, I can believe that the 1% think we’re dumb sheep. Americans want to be told what to do by “experts” like technocrats and bureaucrats instead of think. Don’t rock the boat!

  4. a long article from the atlantic about social mobility in usa: it’ s interesting to note that country with low social mobility and high inequality are where populist are growing: “The 9.9 Percent Is the New American Aristocracy” by Matthew Steward in The Atlantic, June 2018 — “The class divide is already toxic, and is fast becoming unbridgeable. You’re probably part of the problem.”

    1. Paolo,

      That’s a great article. It is important to remember that the 10% level is $108 thousand for individuals and $170 thousand for households — neither considered rich, especially in the coastal urban areas where most of these people live.

      See the income bracket calculators here.

  5. Larry,

    Here’s an article (see link below) that seems to indicate we are both right, i.e. that

    1) The majority of federal employees take their jobs seriously and work to enforce the laws they were hired to enforce, and
    2) That their supervisors may have other motivations which result in outcomes contrary to the stated purpose of the laws enacted by Congress.

    NYT: “When Guns Are Sold Illegally, A.T.F. Is Lenient on Punishment.

    I’m not prepared to go so far as to conclude conspiracy, but the implication is clear: the purpose of bureaucracy is to protect vested interests with significant lobbying power.

    1. John,

      “The majority of federal employees take their jobs seriously and work to enforce the laws they were hired to enforce”

      Duh. Does anyone disagree?

      “That their supervisors may have other motivations which result in outcomes contrary to the stated purpose of the laws enacted by Congress.”

      Nice that you at last recognize the obvious.

      “I’m not prepared to go so far as to conclude conspiracy”

      I have repeatedly said that we don’t know what is going on with these investigations. All we know is that something is going on, because of the lies and changing stories. Since the investigation involved multiple people in the FBI and DoJ, it obviously is a “conspiracy” — no matter how tightly you close your eyes to the obvious.

      To repeat what I’ve repeatedly said, and you ignore — Conspiracies are a dime a dozen, and done for both noble and ignoble motives. The designation of a something as a “conspiracy” is almost meaningless. Why you believe otherwise is a mystery.

    2. “Conspiracies are a dime a dozen, and done for both noble and ignoble motives. The designation of a something as a “conspiracy” is almost meaningless. Why you believe otherwise is a mystery.”

      We’re finally at our point of disagreement. Per Wikipedia the common understanding/dictionary definition of a conspiracy is “a secret agreement by people to commit something wrong or illegal”. You appear to be defining conspiracies far more broadly than this common understanding. People work together every day to accomplish a common goal. That is not by itself a conspiracy. In the current situation, it appears that a variety of government employees may have been working at conflicting purposes. Some of those employees may have been working together in a way that constitutes a conspiracy or they may all have been confused as to the proper purpose of their organizations without any intent to do something wrong or illegal.

    1. Rando,

      That is great! Thanks for posting.

      These memes are our times version of the now-classic political cartoons that helped shape early 20th C politics. As one machine pol said after an unsuccessful attempt to bribe on of the cartoonists — “My constituents can’t read, but they understand the pictures.”

      History repeats itself.

  6. Interesting article. The 1% (at least for the moment) are more on the back foot over here on this side of the pond. The Elites in the UK are like an ant’s nest that have been kicked as they run around wildly in circles trying to defend their imminently to be lost EU perquisites. So far the defense of the status quo has been vigorous but fruitless. Why? Maybe because the elites are divided. Not all of them supped at the EU’s trough and indeed some of them never subscribed to the concept because of nationalist, aristocratic or business self-interest. The referendum gave a voice to the 99% and they said what they thought in the first opportunity for the Great Unwashed to pass a review on the progress of the EEC/EU since the previous one in 1974. As the results made clear to both the Left and Right that the masses were not happy with the arrangement both sides are running scared of what the 99% (or rather the 52%) might do to them at the polls if they are betrayed again. We shall see…

    The EU Elites have responded badly to this challenge with Big Stick being much in evidence and Big Carrot being one concession too many as the EU edifice cannot be shown to be responsive to the masses. The Big Carrot would be the thin end of the wedge… to mix a metaphor.

    Then there is the recent Italian election. The Elites tried to stage a counter-coup last week and it failed miserably rebounding nastily on the EU itself. Even more than in the UK the Italian elites showed their hand against the masses and the masses bit it. How it all pans out is unclear but the Great Unwashed have got what they unwanted. The commentariat are currently predicting climbdown by the populist government in the face of Brussels subversion of the program but once again this may not go to plan.

    And then there is Germany. The smug have chuckled about how long it took the shambolic Italians to form a government but it was as nothing compared to how long the Merkel crew took to form their’s. This again was a result of an uprising against the Elites with the AfD and other refuseniks having denied Merkel a majority that worked, short of forming an anti-99% coalition which would/will ultimately prove suicidal for the Social Democrats in particular in eschewing the working classes dissatisfaction with the current policy direction.

    So one might say that Elites are fighting a rearguard action, and fighting it badly, in Europe.

    1. Chris,

      Good to hear from you, and thanks for the news from Europe!

      I have not followed those stories closely, but am skeptical that the populist revolts in Europe will turn out to be elite vs. masses. As you note, it might be a factional fight among the elites. Rightly so, given the disastrous management of the crew running western and northern Europe.

      Interesting times!

  7. In Italy it is definitely Elites versus the rest. In the UK there was always a section of the Elites that did not like the EU. Quite a lot of the corporate sponsors of the Leave campaign were the “self-made men” type of entrepreneurs. Most blue chip corporates were (ostensibly) Remainers even if they put the cross somewhere else in the privacy of the polling booth.

    One might even now be able to parse New Elites versus Old Elites, a categorisation that might get traction in the US context as well.

    In Germany though the Elites are corporate (e.g. the car makers) and they have been bulldozed by Merkel’s orthodoxy in the “Punish Britain” campaign which essentially involves them shooting themselves in the foot for the greater EU cause.

    All this talk of the 0.1% seems actually enormously exaggerated. The Brussels elite are numbered in their hundreds. They see themselves veritably as Spartans fighting the good fight in minuscule numbers against the barbarous hordes. Brexit however has sown the seeds of doubt and the peasants are now revolting…. in all senses of the word.

    1. Chris,

      This is modern liberalism: “World Ends! Upper middle class women hurt most.”

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