There was a big high wall there that tried to stop me.
Sign was painted, it said “Private Property.”
But on the other side, it didn’t say nothing.
That side was made for you and me.
– Woody Guthrie, “This Land is Your Land“ (1940)
In this week’s Sift:
- The Sift Bookshelf: Winner-Take-All Politics. The extreme concentration of wealth didn’t just happen. It’s the result of policy, and the policy is the result of political changes that started in the Seventies.
- Anti-Crazy is not a Winning Political Platform. Pointing out that Tea Party candidates have said crazy things in the past isn’t going to do it. We have to call them to account for the extreme things they want to do in the future.
- Restore Sanity With Jon Stewart. October 30 in D.C. — the Million Moderate March.
- Short Notes. Fractal wrongness. A mini-mart for time travelers. Krugman on the angry rich. And Jay Rosen’s definition of journalistic authority.
Very suddenly over the last month, the liberal side of the blogosphere has started buzzing about the concentration of wealth and income, and how the United States has become much more stratified over the last few decades.
Of course this is nothing new: You’ve been seeing articles about the disappearing middle class for many years. (The Barlett and Steele best-seller America: What Went Wrong? was on the story in 1992, and the libertarian magazine Reason felt it necessary to deny the trend in 2007.) Lots of us have been talking about this for a long time, but recently we’ve all been talking about it at the same time. Why?
I think it’s due to two new popularizations: the book Winner-Take-All Politics: How Washington Made the Rich Richer — and Turned Its Back on the Middle Class by Jacob Hacker and Paul Pierson which came out September 14, and Timothy Noah’s 10-part series The Great Divergence on Slate, published September 3-14. Both draw from research published over the last five years by two French economists: Emmanuel Saez and Thomas Piketty.
Winner-Take-All-Politics is a marvelous connect-the-dots book. It makes not just one point, but a series of points that fit together like train-cars.
Inequality is really happening, but not how you think. This is the part that relies on Saez and Piketty, who looked at U.S. tax data to paint a finer-grained portrait of inequality than we used to get from census data. The old statistics typically cut the country up into five 20% chunks (quintiles) or ten 10% chunks (deciles). If you do that, you can see the top quintile or decile pulling away from the rest, but it doesn’t look too bad.
Saez and Piketty showed that something much more strange and scary is going on: The real action isn’t in the center of the economy, it’s on the extreme where the very rich live. What the rest of us are experiencing is just the trailing edge of a wave that starts there.
Within the top decile, the top 1% is pulling away even faster from the other 9%. Within the top 1%, the top .1% is pulling away faster yet, and so on. If the United States were 1000 people, the richest guy would have made 2% of the money in 1973. By 2008 his share was up to 8%. (Factoring in capital gains, it goes from 2.7% to 12.3%. In a village of 1000 people, one guy makes nearly 1/8 of the money.)
And that screws up a lot of the benign explanations. Yes, globalization and immigration force our unskilled workers to compete with the unskilled workers of the world. Yes, automation is replacing factory workers with machines. Yes, women and minorities are competing in labor markets that used to belong to white men. Yes, the educated fare better in the modern world than the uneducated. But that can’t explain why the effect is most pronounced at the wealthy extreme, why we increasingly have a winner-take-all economy. None of those factors apply to the moderately rich, or explain why they can’t keep up with the super-rich.
It’s the government, stupid. We usually picture the economy as a natural phenomenon, and see government coming in after-the-fact to “redistribute” income. The recent decades’ changes in government “redistribution” — mainly tax and benefit cuts — clearly benefit the rich, but aren’t enough to account for the changes, so we think government is off the hook and look for larger forces like globalization.
In fact, government shapes the “free” market at every level: what can be owned or sold (your patented idea is a marketable asset, your liver isn’t), who has a seat at the negotiating table (unions are represented on corporate boards in Germany, and boards have much more control over CEOs), who absorbs risk (that’s what the bailouts represent: private interests transferring their risks to the public), what costs are externalized (pollution), and so on.
In the United States (and not nearly so much in Europe) government policy since about 1978 has consistently shaped the economy towards a winner-take-all structure. As a result, the U.S. used to be more egalitarian than Europe, and now is much less so. And that’s not because Europe exists in a different global economy.
What about democracy? Hacker and Pierson take seriously the paradox of an elected government systematically favoring the few over the many, even when Democrats have been in power. How is that possible?
The short answer is that when a complex bureaucracy governs a complex economy, organization matters more than numbers. The rich and their corporations have gotten much more organized in the last generation, while organizations that focused workers’ power (i.e., unions) have declined. Both of these patterns are embedded in vicious cycles: the government can make it harder or easier for various interest groups to organize.
The organized few beating the disorganized many explains how polls can say that 60% favor a public option in health care, but the public option doesn’t even come up for a vote in the Senate. A clear majority favors letting the Bush tax cuts expire for the wealthy, and it makes no sense to extend them, but even some Democrats are ready to.
Even when good laws get passed, enforcement depends on a million little things happening correctly, and the organized power of wealth is there to see that they don’t happen. Loopholes get written into regulation. Regulators get appointed who don’t want to enforce the law. Penalties get set at levels so low that violators just consider them a normal cost of doing business, and so on.
Organization also shapes the outcome by misdirection: Exxon never gets confused about where its interests lie in the global warming debate, but ordinary people do.
Hacker/Pierson trace this trend to the Carter administration, when huge post-Watergate Democratic majorities were unable to make any progress on a liberal agenda. The initial conditions that get the vicious cycle started are: a decline in union membership, television increases the role of money in campaigns, and the wealthy started pooling their money to create a wide-ranging infrastructure. (In the old days, GM would lobby against car safety regulations and Standard Oil would try to hang onto special tax treatment for oil wells, but neither would do much to influence a Supreme Court nomination. Now, corporate and billionaire money supports a broad conservative movement through institutions like the Heritage Foundation or the Club for Growth.)
America in a parallel universe. I don’t really have the space to do the Hacker/Pierson case justice, so instead I’ll illustrate in my own way how relatively subtle changes in the economic/political cycle can have huge impacts over time. Let’s look at how early America could have developed differently.
America was founded not just on freedom and democracy, but also on high wages. In colonial times, the nearby western frontier worked like a minimum-wage law. If you paid people too badly, they’d go clear their own land instead of working for you.
As the frontier moved further west, the causality started working in the other direction, creating a virtuous cycle: High wages in the East allowed workers to raise the capital they needed to go west and homestead — enough for a horse, a wagon, some tools, and the wherewithal to keep a family going until a crop came in. In Democracy in America (1835) de Touqueville described it like this:
The European emigrant always lands, therefore, in a country which is but half full, and where hands are in request; he becomes a workman in easy circumstances, his son goes to seek his fortune in unpeopled regions, and he becomes a rich landowner. The former amasses the capital which the latter invests.
So the West was like college. You came to America and saved so that you could send your children there.
Whatever actually happened always looks inevitable. But it didn’t have to work that way. If the rich in the East could have beaten down wages for just a decade or two, they could have stopped this egalitarian cycle. Then the poor would be trapped working for them for subsistence wages, and never raise the capital to go west.
Picture how it plays out from there: As the western expansion fizzles, the wealthy make the case to Congress that the policy of selling public land cheaply in small parcels (going back to the Land Ordinance of 1785) has failed. The way to settle the continent, they claim, is in vast Spanish-style haciendas.
But America’s frontier isn’t the open country of Mexico. So how can the rich clear the forests of Ohio and turn them into tillable land? The same way they drained the swamps of Georgia and South Carolina and established plantations there: with slaves. The case might sound a lot like the one made by Charles Cotesworth Pinckney in 1787: “the nature of our climate, and the flat, swampy situation of our country, obliges us to cultivate our lands with negroes … without them South Carolina would soon be a desert waste.” ["desert" meant "deserted" in those days, not dry.]
So the first new states get settled like this: A plantation-owning family from Virginia purchases a 10,000-acre plot from the government and sends out a younger son with a slave workforce to clear it. Any law that might stop him is standing in the way of the nation’s progress, and needs to be repealed.
And this, of course, keeps the low-wage cycle going. If you want a job on the frontier, you’ll have to do it cheaper than a slave. Even in Ohio, a worker can’t raise the capital to move on and settle Illinois or Wisconsin. So the rich will have to manage that expansion too.
When coal is discovered in Pennsylvania and West Virginia, that also becomes a job that white (i.e. free) men won’t do — at least they won’t do it for wages that compete with slaves. That becomes common sense, just like our idea today that only Mexicans will pick lettuce.
And America becomes a very different place.
You see, an egalitarian society is a fragile thing. If power and wealth ever get too concentrated — even accidentally, even just for a little while — then the powerful can capture enough of the government, media, and intelligensia to make their vision of the future seem like common sense. Even if you theoretically have the votes to defeat them, you can’t, because any alternative vision seems too utopian to fight for.
If you want to see how the far Right responds to these ideas, look here. The vanishing middle class is Socialism’s fault. The fact that it’s not happening nearly as badly in countries that are more socialist than we are just doesn’t come up.
Now the primaries are complete: Christine O’Donnell of Delaware has joined Marco Rubio in Florida, Rand Paul in Kentucky, Sharron Angle in Nevada, Ken Buck in Colorado, Mike Lee in Utah, and Joe Miller in Alaska in a bloc of seven Republican/Tea Party Senate candidates.
Of that group, O’Donnell is both the newest and the most unlikely: Not only does she have no government experience, she barely has a resume at all. She founded the Savior’s Alliance for Lifting the Truth (SALT, as in “salt of the Earth”), a group that encouraged young people to live lives of Christian purity, particularly in regard to sex. (By now probably everyone has seen her denunciation of masturbation on MTV.) And she worked for the Intercollegiate Studies Institute (a conservative non-profit focused on college students) until that job ended in a gender discrimination lawsuit in 2005. Since then she has been running for the Senate and supporting herself by doing “odd jobs” — or maybe by illegally spending campaign funds for living expenses.
Democrats have treated O’Donnell’s victory over popular Congressman Mike Castle like an early Christmas present. Castle was a shoo-in to move Joe Biden’s old seat into the Republican column, but O’Donnell trails Democrat Chris Coons by double digits. Castle is refusing to endorse O’Donnell — maybe her campaign’s suggestion that he’s gay ticked him off — so the prospects for Republican unity are dim.
Still, I’m worried that the campaign against O’Donnell is off to a bad start. Despite their pro-rich, anti-working-class agenda, conservatives appeal to the working class by casting liberals as over-educated elitists who look down on people like you. So carelessly heaping scorn on O’Donnell just makes her the someone-like-you that liberals look down on.
In particular, problems in a candidate’s past only work if they are substantiated in the present. Here’s what I said about Obama/McCain in June, 2008:
Experience works as an issue only until the public can see the candidates side-by-side. At that point, the experience difference has to be visible in their performance — McCain needs to look like he knows what he’s talking about while Obama doesn’t. If the experience advantage is invisible — and I think it will be — the issue goes away.
Well, crazy works the same way. If O’Donnell on the campaign trail looks no more threatening than a young Sally Field, it won’t matter how many nutty things she’s said in the past. But if Democrats can make an issue of the nutty things she’s advocating now, then her past becomes significant again.
With that in mind, I think Rachel Maddow was on the right track Thursday when she called attention to the truly radical anti-abortion positions of the Tea Party candidates:
There are now at least five Republican Senate nominees — five — who not only think that the government should outlaw abortion nationwide, they think there should be no exceptions made for anybody who’s the victim of incest or is the victim of rape. … What these Republican candidates are talking about is not only the federal government monitoring every pregnancy in the country to make sure that it ends the way the government prefers, which is a live birth, but they’re also saying that the government should force rape victims -- the government should force rape victims, under pain of criminal prosecution — to give birth to their rapist’s baby.
In the world Sharon Angle, Cristine O’Donnell, Joe Miller, Ken Buck, and Rand Paul want to create, rape is a viable evolutionary strategy for men. We can put a rapist’s body in jail, but his genes will live on.
Similarly off-the-wall Republican positions are that to return all unspent stimulus money. In other words: All those half-done road repairs should be left the way they are. Rand Paul’s view that private business should be allowed to practice racial discrimination — that’s something he believes now, not some foolish idea from his benighted youth. And in the Senate, he’d have a vote on nominees for the Supreme Court.
And finally, the attack on health-care reform needs to be met head-on. Fifty million people now lack health insurance, and many of the rest of us are one lay-off away from joining them. The law that Democrats passed will cut that number in half, and give Americans security where Republicans offer them only risk. Repealing health-care reform with no plan for covering those 50 million is a truly wacky idea, and it needs to be called out as such.
If you follow the Rachel Maddow link, you’ll see one thing that I think she gets wrong. She quotes Sharon Angle responding to the no-exception-for-rape abortion question :
I’m a Christian, and I believe that god has a plan and a purpose for each one of our lives, and that he can intercede in all kinds of situations. We need to have a little faith in many things.
Rachel comments: “I don’t know what you’re supposed to have faith in” and makes a couple of guesses that miss the point. But anybody who speaks Fundamentalist knows immediately what Angle meant: You wouldn’t have gotten pregnant if God didn’t have a plan for your rapist’s baby.
Let’s be sure to call her crazy for the right reasons, and not because we don’t understand what she’s saying.
Jon Stewart is rallying in Washington to restore sanity. It’s on: Saturday, October 30 on the National Mall in Washington, D.C, sane people will get together to “take it down a notch for America”.
Not to be outdone, Stephen Colbert is having a counter-rally to Keep Fear Alive.
This is not a joke. Or rather, it is a joke, but it’s also really happening. Here’s hoping the Jon/Stephen combo can significantly outdraw Glenn Beck. Think about going. It will be fun.
Image of the Week: Fractal Wrongness.
Check out the Echo Park Time Travel Mart in Los Angeles. (“Whenever you are, we’re already then.”) If the slushy machine isn’t working come back yesterday. But don’t even think about buying fire if you’re pre-Neolithic. (“No upright posture, no mastery of tools — no fire.“)
Paul Krugman’s take on the folks who want the rich to keep their Bush tax cuts:
when the tax fight is over, one way or another, you can be sure that the people currently defending the incomes of the elite will go back to demanding cuts in Social Security and aid to the unemployed. America must make hard choices, they’ll say; we all have to be willing to make sacrifices. But when they say “we,” they mean “you.” Sacrifice is for the little people.
Jay Rosen’s lecture to French journalism students is well worth reading. Your authority as a journalist, he tells them, “begins when you do the work” of going someplace, talking to somebody, or reading something that your readers haven’t gone/talked to/read. “If an amateur or a blogger does the work, the same authority is earned.”
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