All-American Oligarchy

Deconstructing “free-market” economic ideology is why I started blogging. It was hard to miss that economic ideology was being employed much like religious dogma in an effort to justify conservative neo-feudal policies.

These neo-feudal policies, best exemplified by the bi-partisan push for austerity, are being pushed by what Northwestern University, political scientist, Jeffery Winters, describes as an American oligarchy.

“Oligarchy is not inconsistent with democracy; that oligarchs need not occupy formal office or conspire together or even engage extensively in politics in order to prevail; that great wealth can provide both the resources and the motivation to exert potent political influence.”

Economics, despite all the blather about efficient markets and free trade, is really about who gets the rewards and who pays the costs in an economy. Just remember the old adage–follow the money. During the New Deal, the amount of wealth the rich controlled was reduced dramatically. Since 1980, wages for most American’s have stagnated and all the gains in productivity have gone to the top 1%, as this Congressional Committee report makes clear.

“In September of this year, the U.S. Congress Joint Economic Committee released a report called Income Inequality and the Great Recession. A statement from that report summarizes the problem. “Over the past three decades, income inequality has grown dramatically.…” Most of this inequality was observable in “…the share of total income accrued by the richest 1 percent of households. Between 1980 and 2008, their share rose from 10.0 percent to 21.0 percent, making the United States as [sic] one of the most unequal countries in the world.”

This amazing turnabout is the result of decades of tireless effort. Ever since the ink was dry on New Deal legislation, our wealthy elite have worked assiduously to return to the robber baron era, where they had all the money and the average American worker had to bow and scrape.

In 2009, Simon Johnson, former IMF chief economist, wrote an essay in The Atlantic, entitled The Quiet Coup, where he described the US as a banana republic, and our financial elite as parasitic oligarchy.

“The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform.”

We had the chance to break up this financial oligarchy in the wake of the Wall Street Crash in 2008, but chose not to. In the article, Johnson discusses how an oligarchy can stymie reform.

“Elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.”

Our oligarchic elite always wins when it comes to economic issues. Republicans and Democrats trip over each other to enact economic policies favoring the wealthy. Even our erstwhile, Kenyan, Muslim, Socialist President is onboard. After all, when he leaves office he will want the Clinton treatment.

President Bill Clinton was not a wealthy man when he left office. However, the policies he enacted as President, primarily the repeal of the Glass-Steagall Act, permitted him to rapidly become a millionaire by giving speeches to banks and wealthy foundations for handsome fees.

Economic ideology plays an enormous role in enabling these destructive, oligarchic policies that Republicans and Democrats politicians enact. Dr. Johnson says both parties have drank the kool-aid.

“The American financial industry gained political power by amassing a kind of cultural capital—a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world.”

Our leaders are all true believers in oligarchy. More than that, they seem determined to carry out the policy recommendations of the oligarchy, which are largely the agenda of Fix the Debt.

The true believers in this poisonous economic ideology are like the Aztec high priests; they need someone to sacrifice to the gods.

Who is it they intend to sacrifice?

Look in the mirror.

 

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