The new gilded age


Jon Perr displays ten graphs that chart various economic measures over the last century or so. These include the share of total income by the top income brackets, CEO-to-worker compensation ratios, marginal tax rates for the highest income levels, effective tax rates, average incomes, and more. The graphs are spectacular in their clarity even if depressing in their implications. I reproduce just one because it is illustrative of a point that I wish to make.

1_piketty

What screams out loud and clear from the graphs is that the early 1970s marked the beginning of the new gilded age when the rapacity of the rich and their determination to get their hands on every single dollar they could started getting serious assistance from the government. Beginning with president Carter’s deregulation policies, we have seen both Democratic and Republican administrations conniving with the oligarchy to obliterate the middle class and the poor and benefit the rich, by freeing corporations from government restrictions that were working in the public interest and lowering tax rates for the wealthy and cutting programs that benefited the poor and middle class

Of course, maintaining these trends requires more coercive methods of governance and increased propaganda efforts and we have seen both those emerging too. We are told that increasing the wealth of a tiny few is somehow good for all of us, despite the absurdity of the claim. We are told that keeping people poor and hungry increases their incentive to work. We are told that providing free and universal health care is the precursor to totalitarianism. We are told how children should not be ‘pampered’ by giving them food stamps because to do so would reward their parents’ irresponsibility for not adequately providing for them. We are told that public school teachers are the villains in the educational system and that the problem is not poor funding. We are told that raising the minimum wage will reduce the incentive of workers to aspire to higher-paying jobs. We are told that we have to give up all our liberties and be monitored constantly in order to be free from the threat of terrorism.

Cartoonist Tom Tomorrow sees what’s in store for us if this trend is allowed to go on unchecked. His sardonic sense of humor captures perfectly the rapacity of the oligarchy and the way that our media has been subverted to serve their interests.

Which once again prompts the question that I keep asking: How long can a society built on lies continue before it implodes? Jared Diamond, who has studied failing societies in his book Collapse is also alarmed by what he sees happening (thanks to reader Norm for the link).

Jared Diamond, writing from the University of California, proposes that the United States is facing four existential threats to its democratic system.

“Our form of government is a big part of the explanation why the United States has become the richest and most powerful country in the world,” said Diamond. “Hence, an undermining of democratic processes in the United States means throwing away one of our biggest advantages.”

Diamond argues that political compromise has been deteriorating in recent decades, that restrictions on voting are reversing the positive historical trend of political enfranchisement, that the gap between rich and poor continues to grow, and that public spending by the government In areas such as education is declining.

“Large segments of the American populace deride government investment as ‘socialism,’ but it is not socialism. On the contrary, it is one of the longest established functions of government,” said Diamond.

Norman Ornstein, very much an establishment beltway pundit who works at the American Enterprise Institute writes:

“The state of our overall political process as the most dysfunctional I have seen in over 44 years of watching Washington and American politics up close,” writes Norman Ornstein, from the American Enterprise Institute. “If we are not in the most dysfunctional period in our history, we are certainly in the top five.”

What Ornstein should have noted is that what have now is a political system that is not totally dysfunctional. It is only so when it comes to serving the interests of those who are not wealthy. Dysfunctionality is the excuse that is used to hide the fact that the government is extraordinarily efficient when it comes to siphoning off the nation’s wealth towards those who least need it.

Comments

  1. raven says

    It’s well known that economically inequal societies become unstable. This is basic polysci

    We are becoming more economically inequal.

    As we saw with the Tea Party attempted government shutdown, we have become politically unstable.

  2. Chris J says

    Am I misreading something, or is that graph basically showing that the gains and losses of the 10% are nearly completely due to the gains and losses of the 1%?

  3. says

    Those who rationalize more and more wealth in fewer and fewer hands blather other idiocy:

    “economic growth without end”
    “there is no peak oil, keep digging”
    “climate change doesn’t exist”

    They are incapable of grasping environmental collapse except to deny it, so why be surprised that they are incapable of grasping economic collapse except to deny it too?

    “Dictators ride to and fro on tigers from which they dare not dismount. And the tigers are getting hungry.”
    – Winston Churchill

    The same could be said of greedmongering capitalists and tiger economies. Eventually, it will turn on them.

  4. DonDueed says

    Mano, I disagree with one thing you said. The rising trend in the curve you show begins in 1980, not the ’70s. It was Reagan’s policies that produced that trend, not Carter’s.

    The other thing I notice is the sharp drop in the 10%-er curve in the early ’40s. World War II and its aftermath were a great leveler in the American economy. But notice, the dip is much less pronounced for the 1%-ers. The filthy rich aren’t bothered by such trivia as a total war footing.

  5. readysf says

    Here is a cute counterargument I’ve heard. It is true that the rich are getting richer, but with the globe as market the landscape has changed. Everyone who makes $70k/year or more is in the top 1%….of the world!

    The implication being, if you want to feel richer, move elsewhere.

    There is limited relevance to this counterargument, and that derives from the free flow of capital. In the past, if I bought a share of IBM I owned a piece of an American company. Today I own a piece of a US domiciled company which does most of its business abroad.

    The super rich care less about borders. They see the US as being a “market” for their experiences. If people on the other side of the tracks are poorer, so what? The government can do little to reverse this.

    This is a change from earlier…

  6. Nick Gotts says

    DonDueed@4,

    I think Mano’s right in saying the trend began in the earlier 1970s – we saw the same thing in the UK, where the Thatcherite assault on the working class was prefigured by the Labour government of 1974-9 attacking the trades unions, truckling to the IMF and introducing the first charges for NHS services. The rich saw their opportunity in the economic problems of the 1970s, themselves caused primarily by the oil shocks and the attempt to fight the Vietnam war without raising taxes – although it’s arguable that there were deeper causes, and capitalism requires, as Marx said, a “reserve army of the unemployed” to keep profits up.

    The other point to notice in the graph is that the previous peak in income inequality came just before the Great Depression and the consequent rise of fascism.

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