Spring Break
Greed and corporate power created American plutocracy
Robert Zaller
Issue date: 5/23/08 Section: Ed-Op
Kevin Phillips' new book, "Bad Money," details what he calls the "financialization" of the American economy in the past generation, by which lending instruments, whose purpose is - or ought to be - to facilitate productive investment, became themselves the principal source of investment and profit in the economy.
Phillips can claim a considerable share of the credit for the disasters he now deplores. He was one of the chief ideologues of the Nixon and Reagan revolutions that systematically denuded the middle class, destroyed regulatory oversight of the economy and, manipulating the civil disorder and racial anxieties of the 1960s, persuaded the American working class to buy into social reaction, corporate tax exemption and the creation of a new "gilded age" of plutocracy, speculative frenzy and licensed criminality. It is good that Phillips now repents his former sins, and paints the devil in his true colors. But he has a lot to answer for.
Forty years ago, when the country elected Richard Nixon its president, the United States was already a declining power. If a society be judged, as Aristotle suggested long ago, on the size and strength of its middle class - that is, its relative egalitarianism - then the United States was headed full steam in the wrong direction.
The plutocratic revolution of the past 40 years, if we may give it its proper name, has stripped the gears of what was once the most powerful and in some ways the most hopeful society on earth. The size and so-called "productivity" of the American economy has grown, a natural consequence of population increase, technological change and the increased efficiency of worker exploitation (more hours worked at declining rates of compensation), but its nature has become more markedly predatory, as a narrower and narrower elite claims a greater and greater share of its wealth and the political power that goes with it.
A single statistic may serve to indicate how uphill the battle against corporate power was through much of the 20th century. In 1980, when Ronald Reagan was elected president, the relative income distribution in the United States was approximately the same as it had been in 1910, when champagne still flowed in the bathtubs of our first Gilded Age. In between, the 16th Amendment had created a progressive income tax, which reached a nominal rate of 91 percent on the super-rich during World War II and 50 percent on corporate earnings in the Eisenhower '50s. Social Security had underwritten the retirement and disability income of working Americans, employer-based health care had been written into the social contract, and Lyndon Johnson's "War on Poverty" had reduced the official poverty level in half, from 22 percent to 11 percent. In other words, the collective result of seventy years of progressive social policy, federal trust-busting and union activism had been to keep America exactly as inegalitarian as it had been when J. P. Morgan and John Rockefeller still ruled the land.
Phillips can claim a considerable share of the credit for the disasters he now deplores. He was one of the chief ideologues of the Nixon and Reagan revolutions that systematically denuded the middle class, destroyed regulatory oversight of the economy and, manipulating the civil disorder and racial anxieties of the 1960s, persuaded the American working class to buy into social reaction, corporate tax exemption and the creation of a new "gilded age" of plutocracy, speculative frenzy and licensed criminality. It is good that Phillips now repents his former sins, and paints the devil in his true colors. But he has a lot to answer for.
Forty years ago, when the country elected Richard Nixon its president, the United States was already a declining power. If a society be judged, as Aristotle suggested long ago, on the size and strength of its middle class - that is, its relative egalitarianism - then the United States was headed full steam in the wrong direction.
The plutocratic revolution of the past 40 years, if we may give it its proper name, has stripped the gears of what was once the most powerful and in some ways the most hopeful society on earth. The size and so-called "productivity" of the American economy has grown, a natural consequence of population increase, technological change and the increased efficiency of worker exploitation (more hours worked at declining rates of compensation), but its nature has become more markedly predatory, as a narrower and narrower elite claims a greater and greater share of its wealth and the political power that goes with it.
A single statistic may serve to indicate how uphill the battle against corporate power was through much of the 20th century. In 1980, when Ronald Reagan was elected president, the relative income distribution in the United States was approximately the same as it had been in 1910, when champagne still flowed in the bathtubs of our first Gilded Age. In between, the 16th Amendment had created a progressive income tax, which reached a nominal rate of 91 percent on the super-rich during World War II and 50 percent on corporate earnings in the Eisenhower '50s. Social Security had underwritten the retirement and disability income of working Americans, employer-based health care had been written into the social contract, and Lyndon Johnson's "War on Poverty" had reduced the official poverty level in half, from 22 percent to 11 percent. In other words, the collective result of seventy years of progressive social policy, federal trust-busting and union activism had been to keep America exactly as inegalitarian as it had been when J. P. Morgan and John Rockefeller still ruled the land.
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