“We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” –Louis Brandeis
By Jim Miller
In the wake of the McCutcheon decision, there was a brief flurry of outrage about the growing power of moneyed interests in our politics, but it predictably ebbed. One might reasonably argue that this is because the American public has become immune to such bad news.
Indeed, a cursory survey of the media over the last couple of weeks alone is enough to give any concerned citizen a depressing snapshot of where we are now with regard to wealth versus commonwealth.
The New York Times reports that “Corporate Profits Grow and Wages Slide” noting that, “Corporate profits are at their highest level in at least 85 years. Employee compensation is at the lowest level in 65 years.”
More specifically, the story tells us how corporate profits are now 12.5 percent of the total economy thus tying the previous record that was set in 1942. Why? Public policy, that’s why: “The trend of higher profits and lower effective taxes has been gaining strength for years, but really picked up after the Great Recession.” The result of this is stark:
After-tax corporate profits in 2013 rose to a record of 10 percent of gross domestic product, while total compensation of employees slipped to a 65-year low. Corporate tax rates — under 20 percent of pretax corporate income in three of the last five years — have not been that low since Herbert Hoover was president. During the Obama administration, profits have taken a higher share of national income than during any administration since 1929.
In short, the corporations’ gain has been our loss, and it’s dramatically reshaping our economy. Of course, all of this just adds fuel to the fire that is our present crisis of economic inequality. And as recent discussions of Thomas Piketty’s groundbreaking Capital in the Twenty-First Century indicate, the concentration of wealth in our society is far more severe and dangerous than even most concerned observers had thought.
Indeed as Daily Kos reported, a new study of American society and democracy indicates that the United States is now more of an oligarchy than a democracy. According to Martin Gilens and Benjamin Page of Princeton:
Despite the seemingly strong empirical support in previous studies for theories of majoritarian democracy, our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts. Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association, and a widespread (if still contested) franchise. But we believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened.
In his article on the same report in The Washington Post, Larry Bartels pulls out this striking piece of analysis from Gilens and Page:
“economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while mass-based interest groups and average citizens have little or no independent influence.”
That’s right average citizen, “little or no influence.” Read it and weep.
What about the Democrats? Aren’t they “the party of the people”? Historically, they have been the most open to “mass-based interest groups,” but as Joel Kotkin observes in “Concentrated Wealth or Democracy, but Not Both,” the lords of the new Gilded Age are far more bipartisan than we think because, “Once primarily middle-of-the-road Republican, the tech oligarchs have moved ‘left’ in their politics” and have begun colonizing the Democratic party where they are quite comfortable with social liberalism but have no taste for thoroughgoing economic populism.
Hence, Kotkin argues, it is not a Republican versus Democrat problem, but a Democracy versus Oligarchy problem. Kotkin astutely looks to a Supreme Court justice of old to address the sins of the court’s present inhabitants when he quotes Louis Brandeis’ famous declaration that, “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
In the same vein as Kotkin, Zoe Carpenter in The Nation points to how the rich have not just staked out a spot inside the Democratic tent but have, in some cases, moved to hijack the issue of economic inequality itself by putting forth “solutions that fail to address the structural basis of the inequality crisis” offering instead “a modified trickle down model.” This “passive voice populism” conveniently “elides talking about the deliberate policy decisions that have led to increasingly unchecked corporate power.”
By doing so, the corporate Democrats can happily avoid biting the hand that feeds them while pretending to address the plight of ordinary Americans with superficial policy solutions that blame workers for being insufficiently trained and/or educated. This tack also completely ignores the crucial role the decline of unions has in the growing wage gap. Better to leave that kind of thing alone at the Silicon Valley fundraiser, it might just offend those who Carpenter calls “the inequality opportunists.”
Another recent article, “In Plain Sight: The Rise of the Corporate Democrats in California” by Gary Cohn, reveals just how aggressively “powerful corporations, agricultural associations and other political high rollers have been turning away from their traditional Republican partners and placing more and more of their chips on the Democratic end of the table,” and how “[t]hese changes are only now catching the attention of Democratic electeds and activists, who see a coming fight for the soul of their party.”
So, surely, with all this going on, from the rise of corporate profits while wages slide to the concentration of wealth and political power in an increasingly small number of hands people must just be overwhelmed and cynical not to be in the streets, right? Perhaps not.
Interestingly, as Robert Reich recently observed, most Americans still don’t get how bad things have gotten and that’s why the outrage and activism is lagging far behind the stark realities that are emerging about our economy and democracy:
Social movements are fueled by the gap between a society’s ideals and reality. When the gap grows too large, people are moved to action.
What about the reality of who controls the nation’s wealth? The richest fifth of Americans now own almost 90 percent. The top 1 percent owns over 35 percent. The bottom fifth owns almost nothing.
Yet the American ideal is starkly different. According to polls, most would prefer that the top fifth own about a third, and the bottom fifth about 10 percent.
One reason there’s not more ruckus is Americans don’t know the reality. Most believe that the richest fifth own about 60 percent, and the bottom fifth owns about 4 percent.
So rather than being jaded about the present reality, Americans are still remarkably uninformed. And this ignorance, certainly fueled by the framing of these issues by the mainstream corporate media, is what is paving the way for the entrenchment of American oligarchy. How to solve this problem and take back our democracy is the central task of our age.
The role of the average American is to be a consumer and an indebted consumer as far as corporate America is concerned. First you should load yourself up with student loan debt while you consume a college education. Then you load yourself up with a mortgage. Interest on the student loan and mortgage debt is money that is shipped direct to Wall Street via local Wells Fargo, Citibank and Bank of America storefronts. Then you buy a car and ship that money direct to Wall Street. And let’s not forget credit card debt. All that interest goes direct to Wall Street so that Mr Consumer’s paycheck is totally taken up with payments most of which are for interest. Americans consume interest at a 3 times greater rate than the actual stuff that they buy. The American lifestyle of consumerism is killing us.
Americans need to wake up and stop consuming and going into debt. US GDP is 70% consumption. Americans need to start creating wealth for themselves instead of creating wealth for Wall Street CEOs and other large corporations.
We can hope that the highs reached by our elites have robbed them of any clear understanding of their own grotesqueries. We have a Supreme Court which has now commodified people and enfranchised dollars. Sitting Congressmen can propose voting suppression laws. Nevada ranchers form militias defying the IRS.
There can be only so much of this before we lose even the facade of democracy. We’re not far from being a banana republic without the bananas.
I will not vote for Clinton/Obama/Yalie Democrats, or their wannabes like Scott Peters. Let Peters lose to DeMaio. I’m not sending money to the national committee, but I will give my $5 to Grayson and Senator Bernie Sanders.
We all have to bear witness to the outrages and make some noise.
Thank you for this analysis Jim. I served with some of these “corporate Democrats” in Sacramento. It was disheartening.
They knew they could block the bills introduced by the members of the progressive, environmental, and women’s caucuses by simply refusing to vote. One or two withheld votes was enough for them to kill good bills.
These tactics show how insidious the “moderate movement” is in elected bodies. Candidates initially run as progressive, to get endorsements and encourage activists and volunteers to support them, then “become” moderate/corporate/Business friendly once safely in office and can run as incumbents with the moderate contributions in their coffers.
As democratic leaders increasingly go along with the idea that money trumps people, they support candidates with access to wealth vs good principles because “we have to keep the money people happy.” Yes, that is a direct quote from a party leader.
The result: A government bought and paid for by those with wealth, with representatives who craft laws that keep that wealth in their pockets and/or campaign accounts.
You’re a major voice, Lori Saldana. Keep writing, testify.
Just read the article you linked to about this Marin Assemblymember. His refusal to vote is exactly what I was describing.
FOr those who may not read the whole article here’s an excerpt:
“Marin County is one of California’s most liberal regions and, with its iconic redwoods and stunning coastline, it is also a power center for environmental activism. And so, when a bill to give the state Coastal Commission authority to levy fines against shoreline despoilers came for a vote in the state Assembly in 2013, it was taken for granted that Marin’s new Assemblyman, Marc Levine, would vote for passage. That didn’t happen. Instead, the San Rafael Democrat sat out the single most important vote for his constituents that year – which helped doom the measure.
“But Levine was not finished. In Sacramento he would abstain or skip votes on bills helping farm workers and creating a bill of rights for domestic workers. He has also voted against legislation requiring economic impact reports for big box stores and requiring more rate-increase disclosure from Kaiser Permanente. That Levine keeps at arm’s length the progressive values of the 10th Assembly District, which includes much of equally liberal Sonoma County, should come as no surprise. During his two Assembly campaigns he has received hundreds of thousands of dollars from some of the state’s largest business interests.”
You can call this benign neglect or a simple pragmatism. On the other hand you can call it institutional bribery: He understands he will be paid more for NOT doing his job (voting) then for doing it.