The Rich Took Over in the 1970s
Monday 13 September 2010
by: James Kwak | The Baseline Scenario | Op-Ed
Cover image of the book by Jacob S. Hacker and Paul Pierson, "Winner-Take-All Politics: How Washington Made the Rich Richer - and Turned Its Back on the Middle Class." (Image: Simon & Schuster)
It isn’t often that I read two books in a row that both cite Alexis de Tocqueville, probably my favorite Social Studies 10 author (although he was far from my favorite at the time). In Third World America, Arianna Huffington cited Tocqueville’s observation that democracy should promote the interests of “the greatest possible number”; as I pointed out, this is clearly no longer true in America (if it ever was). In Winner-Take-All Politics,* Jacob Hacker and Paul Pierson explain why.
In 13 Bankers, Simon and I argue that the key forces behind the transformation of the financial sector and the resulting financial crisis were political, not simply economic. To this argument, at least two good questions spring to mind: Why finance? And why then? Hacker and Pierson have good answers to both of these questions. Their answer to the latter question is better than (though not inconsistent with) the answer we gave in our book.
To the former question, their argument is simple: business interests in all sectors organized a takeover of political power that pushed organized labor and other groups protecting middle-class interests to the sidelines and made possible decades of policies that have enriched the super-rich at the expense of everyone else, including the merely affluent. Finance was simply the biggest and most profitable of these sectors–and, we would emphasize, the one best able to hold the government hostage in a financial and economic crisis.
The answer to the second question is a bit more involved but particularly important. Many people, including Simon and me, have observed that American politics and the American economy reached some kind of turning point around 1980, which conveniently marks the election of Ronald Reagan. (We also pointed to other factors such as the deregulation of stock brokerage commissions in 1975 and the high inflation of the 1970s.) Other analysts have put the turning point back in 1968, when Richard Nixon became President on the back of a wave of white, middle-class resentment against the 1960s. Hacker and Pierson, however, point the finger at the 1970s. As they describe in Chapter 4, the Nixon presidency saw the high-water market of the regulatory state; the demise of traditional liberalism occurred during the Carter administration, despite Democratic control of Washington, when highly organized business interests were able to torpedo the Democratic agenda and begin the era of cutting taxes for the rich that apparently has not yet ended today.
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Why then? Not, as popular commentary would have it, because public opinion shifted. Hacker and Pierson cite studies showing that public opinion on issues such as inequality has not shifted over the past thirty years; most people still think society is too unequal and that taxes should be used to reduce inequality. What has shifted is that Congressmen are now much more receptive to the opinions of the rich, and there is actually a negative correlation between their positions and the preferences of their poor constituents (p. 111). Citing Martin Gilens, they write, “When well-off people strongly supported a policy change, it had almost three times the chance of becoming law as when they strongly opposed it. When median-income people strongly supported a policy change, it had hardly any greater chance of becoming law than when they strongly opposed it” (p. 112). In other words, it isn’t public opinion, or the median voter, that matters; it’s what the rich want.
That shift occurred in the 1970s because businesses and the super-rich began a process of political organization in the early 1970s that enabled them to pool their wealth and contacts to achieve dominant political influence (described in Chapter 5). To take one of the many statistics they provide, the number of companies with registered lobbyists in Washington grew from 175 in 1971 to nearly 2,500 in 1982 (p. 118). Money pouring into lobbying firms, political campaigns, and ideological think tanks created the organizational muscle that gave the Republicans a formidable institutional advantage by the 1980s. The Democrats have only reduced that advantage in the past two decades by becoming more like Republicans–more business-friendly, more anti-tax, and more dependent on money from the super-rich. And that dependency has severely limited both their ability and their desire to fight back on behalf of the middle class (let alone the poor), which has few defenders in Washington.
At a high level, the lesson of Winner-Take-All Politics is similar to that of 13 Bankers: when looking at economic phenomena, be they the financial crisis or the vast increase in inequality of the past thirty years, it’s politics that matters, not just abstract economic forces. One of the singular victories of the rich has been convincing the rest of us that their disproportionate success has been due to abstract economic forces beyond anyone’s control (technology, globalization, etc.), not old-fashioned power politics. Hopefully the financial crisis and the recession that has ended only on paper (if that) will provide the opportunity to teach people that there is no such thing as abstract economic forces; instead, there are different groups using the political system to fight for larger shares of society’s wealth. And one group has been winning for over thirty years.
* I got a free advance copy. The book goes on sale tomorrow.
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Comments
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One big example of workers'
Tue, 09/14/2010 - 11:32 — MR (not verified)One big example of workers' rights taking a massive hit was in the early-mid 80s when Reagan ordered the striking air traffic controllers back to work. They acquiesced, and perhaps sounded the final death nell of unions.
It sounds as if fascism did begin in the 70s but it wasn't until Reagan took office that it went wild.
We have to make a
Tue, 09/14/2010 - 15:22 — Anonymous (not verified)We have to make a distinction between European fascism and the native US ultra-right-wing project, which is really a hybrid of assorted long-standing American authoritarian tendencies., including the Ku Klux Klan.
In the more than forty years since Nixon, we have yet to see a candidate Fuehrer or Duce, nor is there any kind of mass movement preparing young men and maidens to sacrifice the flower of their youth in the interests of the state.
Far from securing lebensraum, our wars seem to add little to the actual inventory of empire--even the mineral wealth of Iraq and (maybe) Afghanistan appears to be tangential to the aims of our wars there, which in many respects seem merely purposeless.
The entire operatic narrative arch of Nazism and Italian fascism has no counterpart in this country.
What we have here is a lower-growing but far tougher and more durable plant--one that in the long run may prove far more poisonous.
Nobody understands this thing very well, least of all those who strive blindly to bring about its triumph.
The one certainty is that this enemy cannot be conquered by any army now known actually to exist. Whatever it is, it is proving much harder to cure than fascism ever was. We had better stop groping for a solution in the narratives of the past; this is something new and uniquely threatening.
The inequities of today's
Tue, 09/14/2010 - 15:23 — NAP (not verified)The inequities of today's America will continue. As long as there are heads talking (yelling) over the rational, free and critical thinkers of this society, then the status quo will remain.
The Yellers and haters will continue to stir up the fear filled passions of the poorly educated in order to maintain their riches. They laugh at the middle class and poor of America all the way to the bank.
Are there any Politicians in Washington willing to support the creation of open minded critical thinking citizens through higher standards of education (not standardized testing that only promotes rote thinking and teaching)?
Anybody without money has no
Tue, 09/14/2010 - 16:26 — Anonymous (not verified)Anybody without money has no right to talk. Remember, money talk. Legally corporations have been elevated to the category of human beings. They have the money they can talk. Government by the corporations and banks, for the corporations and banks. Corporations select their representatives and we elect them though “democratic elections”. Corporate representatives and Government legislate to protect and maximize the profits of the corporations and banks and make the life miserable for the rest of us. Corporations and banks promote a small state, zero benefits for the people, but a generous government for the rich and the corporations. People want low taxes or no taxes at all and the Government and Congress say YES, we heard you, cut taxes, for the rich. The people want to reduce the deficit and irrational expenses, and the Congress will say YES, you are right, cut the Social Security, Medicare, Medicaid and other “unnecessary expenses”. And so on and so forth. And the election is coming and people are already being hinted that is the turn of the republicans to make some reforms. Obedient people will happily comply. And money will still be talking.
If you haven't read it
Tue, 09/14/2010 - 16:49 — Motorod (not verified)If you haven't read it already;:
http://www.conservativenannystate.org/
Many of the people in these
Tue, 09/14/2010 - 17:27 — Anonymous (not verified)Many of the people in these commentaries share a sense of dread coupled with impotence. The system is, almost absolutely, broken, Now we have to organize. Decide on a plan. Let the people of the United States who care about all the things that are mentioned here (there's a good deal of agreement about Obama, etc) - let all of us choose targets. One month it could be GM, the next, certain banks (I'm opting out of Wells Fargo, a totally corrupt institution), the next an insurance company. We the people, have real power, we can vote, and we can say ENOUGH, YOU DO NOT OWN US AND WE CAN BRING YOU DOWN!. The targets in themselves don't matter critically. But we have to act in concert. That's essential. Any suggestions? I would start with McDonald's I think. Let's stop eating that garbage for a month, and see what happens. They need us but we keep on thinking we need them. We don't, and we can show it. We can vote with our (admittedly rather diminished) wallets.We have real power and mustn't forget it. What do you think?
In "Democracy in America",
Tue, 09/14/2010 - 19:58 — pewilson (not verified)In "Democracy in America", deTocqueville warned of the dangers of corporate capitalism. The rich would get richer, own and control the economy and the means of production, influence the government, become better educated, and have a broader understanding of the world and how it works . The working classes would become more narrow in their understanding of their condition. They would become better at doing their jobs, more efficient, and dependent. They would not be better educated. They would be easier to manipulate and control. He noted that if tyranny ever entered the world again, it would be through this manufacturing class.
Kwak leaves out the Clinton
Tue, 09/14/2010 - 20:03 — Anonymous (not verified)Kwak leaves out the Clinton administration, "Democrats" simply became a new "Republican" party. If Clinton deserves any credit, it's because he was maligned for triviality,his greatest crimes were faithfully executing relentless attacks on the middle class and followed with a dash of police state. Robert Rubin, Larry Summers - the names are all there. The greatest neo-liberal conservatives we'd seen.
If we're to use such simplistic "party" jargon. then let's hurl these perjoritives at the whole system and attempt at least some intellectual analysis. Obama wants to be Reagan, and you know it.
To put the matter in a
Tue, 09/14/2010 - 20:45 — Paul Breslin (not verified)To put the matter in a limerick:
Our pretense to have a democracy
Is merely transparent hypocrisy:
Though the polity balks,
It’s the money that talks—
Our “leaders” bow down to plutocracy.
THE issue in politics is the
Wed, 09/15/2010 - 07:45 — Anonymous (not verified)THE issue in politics is the distribution of wealth.
When you spend time and effort on other issues you are often falling for the diversions that are used to keep your attention away from THE issue.
You need to learn how to prioritize or you (and especially your kids) need to learn how to live poor.
Recently, the mainstream
Wed, 09/15/2010 - 07:55 — Anonymous (not verified)Recently, the mainstream media in Boston - including NPR - tried to block Green candidate Jill Stein from the debate because she hadn't raised over a 100,000 dollars in contributions. While they reversed themselves for a subsequent debate, this decision reflects the elitist desire to substitute campaign contributions for votes. Effectively stripping one-man-one-vote for an older electoral system that gives greater voting power to those with land or wealth. This attitude is also reflected in the sole criteria the Democratic National Committee has for determining which candidates to back: their ability to raise campaign contributions. At a point when the Presidential election is now a billion dollar industry, all we have is a system of institutionalized bribery that has morally bankrupted the entire political class and both parties.
That system in 18th and 19th century Britain led to 'rotten boroughs' where one person could effectively install whoever they chose in Parliament.
For the purposes of elite control over political decisions, this is the desired outcome, whether grossly implemented as in the case of Britain or more subtly in the case of 21st century America.
We have a lot of work to do to wrest our government from the hands of K-Wall Street and the political bagmen who serve their interests, not ours.
Let's start by starving both parties of our campaign contributions, because its clear they only serve their corporate contributors. Then let's organize to force real political change.
Time is short we cannot wait for tomorrow.
It is time to stop politely
Wed, 09/15/2010 - 11:34 — Professor Smartass (not verified)It is time to stop politely protesting within proscribed lines and start looking for ways to non-violently block and stop who and whatever it is that is turning America into a Third World country.
@Professor Smartass, I agree
Wed, 09/15/2010 - 12:02 — MR (not verified)@Professor Smartass, I agree with your sentiment. While I'm not sure what could be done (non-destructively, that is), I do think it starts at determining who is the core problem. It isn't politicians or other elected officials; they're just puppets. In my mind it is Corporate America that is the puppet master.
While so many in our country are threatening to "throw all those bastards out", the fact is it won't matter who you replace them with if the underlying corrupt corporate structure remains intact. They'll just corrupt and buy off the newbies and we'll all be back to square-1. That underlying structure must be destroyed, and because politicians can't/won't do it, guess who has to?
Regular people like us.
MR wrote - "While I'm not
Wed, 09/15/2010 - 14:48 — Anonymous (not verified)MR wrote - "While I'm not sure what could be done".
Are you serious ? This is not the first class-war. This has happened before. All the solutions have been found.
The most obvious are general strikes and large scale protests.
It's also obvious that none of the groups on the left are doing anything to mobilize and organize a response to this class-war. Where is Moveon, Code Pink, the unions and the rest ?
They should have come together to organize massive protests involving millions by now.
What are they waiting for ?
Re: 19:48 Anonymous - those
Wed, 09/15/2010 - 16:28 — mediasavy (not verified)Re: 19:48 Anonymous - those organizations you mention and many others are sitting on their activists for the benefit of the Democratic Party and President Obama.
They have no intention of organizing, except to herd us like sheep toward a Democratic Party that sold us out long ago.
You might be right about
Wed, 09/15/2010 - 17:03 — Anonymous (not verified)You might be right about that.
I just couldn't believe that somebody would say "I'm not sure what could be done".
Look at what the right and rich fear. They are not very good at hiding the threats to their power. They telegraph them in explicit terms.
They hate Unions. They hate strikes. They hate redistribution. They hate people that organize. So those are the weapons you use against them.
It's plain what needs to be done. If existing organizations won't do it start new ones.
We need to stop talking about it and do it.
WE vastly outnumber the rich.
@ 22:03 — Anonymous, you
Wed, 09/15/2010 - 20:08 — MR (not verified)@ 22:03 — Anonymous, you didn't read carefully enough apparently. I said I'm not certain what could be done outside of destruction/violence. Because it's been well written here and elsewhere that unions are dead (and have been for 25 years at least), picketing and other 'peaceful' protests are ineffective, and due to poor job market striking is really out of the question for many, especially since companies will just ship your job overseas if you speak out.
In other words, all the traditional forms of protest that were prolific in the 60s are ineffective today.
Unless Americans become more like Europeans regarding their views on activism (which they aren't even close), I don't see what law-abiding things can be done. Because I think those who still believe in picketing and whatnot are in for a rude awakening when they discover exactly how much they won't get accomplished.
So now you know why I said what I said.
You are wrong MR. Read your
Wed, 09/15/2010 - 21:05 — Anonymous (not verified)You are wrong MR. Read your Chomsky. He talks about how labor and unions were much more ruthlessly crushed during the 1920's and they rose back up. I don't believe in your message of hopelessness. All we have to overcome now is apathy.
While the state is not free of oppressive measures it is not nearly as oppressive as it once was. If they could do it back then under those conditions we can easily do it now.
Labor organizers were been murdered by management during the 1930s.
We have no excuses now.
BY the way i spearheaded a
Wed, 09/15/2010 - 21:19 — Anonymous (not verified)BY the way i spearheaded a unionization effort during the 1990's. I took a big hit and the effort did not succeed.
We did however change that boss mans whole way of looking at the world. You could see him aging by the day. He didn't look at his employees as the sheep he thought they were so we did succeed in one way.
I'd do it all over in a second. I don't for a second believe that experience showed me i should give up. We scared the crap out of a group of managers that originally thought they could treat us anyway they wanted.
@ Paul Breslin. I want to
Thu, 09/16/2010 - 01:00 — di (not verified)@ Paul Breslin. I want to borrow your great limerick. thnx
The new line is 'protests
Thu, 09/16/2010 - 06:35 — Anonymous (not verified)The new line is 'protests don't work'. It gets trucked out every time someone tries to get a protest going. Too many former 'activists' truck this line out. I guess they found their niche in the political funding machine and don't want to rock the boat.
Thankfully, the NAACP has finally broken through this militant anti-activist mentality among supposedly - or formerly - 'activist' groups and is organizing a rally on October 2nd in DC. Labor has given it symbolic support, but I'm not yet seeing any muscle brought to the room.
Anyway, One Nation Working Together is coordinating the event. See you there.
WE HOLD THE KEYS. yes, the
Thu, 09/16/2010 - 11:35 — Anon (not verified)WE HOLD THE KEYS. yes, the oligarchy has won, they guard the gates, but we still hold the keys: one solid 3rd party that pulls the supermajority from both sides of the political seesaw that goes nowhere, and we escape their stranglehold. 1 party that speaks to basic human decency, like ending exploitation at home and abroad to secure jobs & country, eliminating corp welfare & the lobbyist's cash for laws program so the little guy once again has a chance.
3 things in our favor: 1. the plutocrats have overplayed their hand - it's now so obvious, even a teabagger can see it. their credibility is dead - they're done. 2. we now have a way to communicate directly w/ each other, the internet, bypassing their choice btwn tweedledumb vs tweedledick. also, 2 feet to reach round our own blocks & speak. 3. we outnumber them. eventually, using true representative democracy, we can overcome. we as a supermajority are 300 million, 95% vs. their puny 5%. and sadly for them, it is still 1 person, 1 vote. (eVoting machines another issue...)
let's call it the Rescue Party, cuz that's what we need to save us from this unchecked beast.
meantime, vote according to your conscience, but vote. apathy is justified, but a losing option. violence is never an option. and MARCH on October 2nd in DC with progressives/peace movement/unions/etc: http://www.onenationforpeace.org/
Just wanted to add my voice
Thu, 09/16/2010 - 12:00 — Ruth Elkin (not verified)Just wanted to add my voice to the chorus of praise for Paul Breslin's limerick.
@ 02:19 — Anonymous, you
Thu, 09/16/2010 - 13:18 — MR (not verified)@ 02:19 — Anonymous, you do realize you proved my point with your admission that your effort did not succeed in its goal, correct?
But you felt good in the end? Your boss man's beliefs somehow changed but never manifested into tangible results for you? Come on, man. Consolation prizes don't count. Results have to matter.
Say what? I've suggested a
Thu, 09/16/2010 - 20:19 — Sayward (not verified)Say what? I've suggested a national workers' strike in these pages twice in the past couple of weeks, and nobody's responded.
They want us peasants to produce the goods, then buy them, to keep making them richer. A 2(say)-day strike of not working to produce their goods and also not buying their goods---bringing the economy to a standstill---would get their attention.
Also, more info on the planned demonstration in DC: it's supposed to be on October 2---Saturday---in Washington, DC. I'll be there. Will you?
Why would my freshly written
Fri, 09/17/2010 - 11:40 — Art S (not verified)Why would my freshly written post be considered spam and blocked?
Which was also when Ronald
Sat, 09/18/2010 - 03:38 — Anonymous (not verified)Which was also when Ronald Reagan did his time as governor allowing the big money interests to realize he'd be their perfect president so they could start taking over the government too.
I am committed to "taking to
Sat, 09/18/2010 - 09:42 — Richard Bluhm (not verified)I am committed to "taking to the streets" as I have attended a weekly anti-war vigil in Denver, CO for the last five years. Participants are not the average marginalized citizenry but we're marginalized like the rest of America. I have no intention of quitting because I consider it a matter of honor. Nonetheless, the support of the public is noted by the number of people who honk their horns as they drive by. How well we know by now that there is a great void between honking and protesting.
I might suggest though that these are "interesting" times. The "Four Horsemen" seem to be at a gallop. The equestrians I refer to are: economic predation, environmental degradation, NBC issues (nuclear, biological, chemical) and an ungovernable number of people on planet Earth. The "fit is already hitting the shan" on so many levels. The status quo in NOT an option. Scary!
While O'Donnell and Palin
Sat, 09/18/2010 - 12:00 — Anonymous (not verified)While O'Donnell and Palin might come up short in comparisons to a Jefe, Fuehrer, or Duce (Franco, Hitler, or Mussolini), they sure sound a lot like McCarthy or Wallace. It is rather amazing that so many Working Class Americans can't think enough to figure out that class warfare is being waged on them by the Korporatists, and they are being duped into joining that phony, Korportist-backed organization parading as a grass-root rebellion Tea Party.
Sayward, the times are gone
Thu, 09/23/2010 - 13:52 — Frances in California (not verified)Sayward, the times are gone that regular people can hit the streets safely; that worked at another stage of Empire but we are farther along in the decline. The time has come for only one remedy, the most practical, the one that will have the greatest benefit for the most: Seize. The. Means. Of. Production.