America’s biggest problem is not illegal immigrants, or radical Islamic terrorists. It’s not Planned Parenthood, it’s not guns, it’s not even religion. These are issues that powerful special interests use to divide us and pit us against one another so they can further tilt the economic and legal playing field to their advantage.
Our biggest problem? The political structure of the United States has become (once again) a plutocracy and most recently has devolved into a kleptocracy.
A plutocracy? A government by the wealthy (Meriam Webster). Ploutos is Greek for “wealth”.
A kleptocracy? A government or state in which those in power exploit natural resources or steal; rule by a thief or thieves (Dictionary.com). Klepto is Greek for “thief”.
Most of the significant problems that exist in American society today are at least in part attributable to the Plutocracy: income inequality; excessive money dominating our elections; voter suppression; social inequality; criminal injustice; corporate welfare over human welfare; environmental pollution; our contribution to carbon dioxide waste and climate change; lack of a comprehensive immigration plan; the suppression of women’s reproductive freedom; a ridiculously expensive and horribly inadequate health care system; reductions in essential social services; our outrageous level of military spending; and war.
We haven’t always been a plutocracy but it has happened many times before. It could be argued that our country started out as a plutocracy — after all only white, male landowners could vote and run for office. During the Industrial Age of the late 1800’s , the “Robber Barrons” (powerful and wealthy corporate monopolists) controlled and manipulated many essential U.S. markets and exploited cheap labor. J.P. Morgan was so wealthy that he famously rescued the U.S. economy in the Panic of 1907 when asked by Pres. Theodore Roosevelt.
The Roaring 20’s were a time of unprecedented monetary gains for the wealthy. They were also a time of high anti-immigrant sentiments, alcohol prohibition (that went over well!), low taxes rates (see chart below) and rampant stock speculation. It was the Great Gatsby decade — our most recent fling with a plutocracy.
And how did things end? With the Great Depression of 1929 that brought this country to it’s knees.
The really scary part is the similarities between the ’20’s and the 00’s. (See the chart Figure 1 below. )
Middle America, wake up. When the plutocrats start talking about cutting taxes; what they really mean is they give us a little “teaser” cut and their tax savings will be HUGE. Significant reductions in income tax rates, creates an even bigger and wealthier plutocratic class. The chart below (Figure 1) shows who benefited most from the 1920’s tax cuts (represented by the column on the left).
70% of income growth went to the top 1%. The bottom 90% split up 17%.
Notice too that after the Great Depression and well into the 60’s and 70’s, we were able to neutralize the plutocracy and produce income gains amongst the 90% that well out-stripped gains for the upper 1%. Income tax rates went back up too; in the 1950’s & 1960’s the highest income tax bracket was 80-90%. In the 1970’s, it had dropped a little to 70%.
Then came the so-called Reagan Revolution. The top tax rate, paid by the fattest of cats, fell from 70% in 1980 to 31% in 1992 (see chart below) after 12 years of Republicans in the White House. The fat cats were keeping over 2 times as much income!
It was a revolution all right, a wealth windfall for the richest and most powerful people and corporations in the country. They called it “Trickle down” economics. And that’s exactly what it did, wealth gushed in for the top income earners and everyone else had to live on a “trickle”. The Plutocrats had returned to power!
Once the economic playing field becomes tilted to the rich and powerful, it’s very hard to level it out again. Power and money generate more laws favorable to the wealthy: caps on interest rates are lifted; restrictions on financial institutions are dropped; corporate tax loopholes multiply; tax rates are cut; politicians are bribed with dark money; lobbyists and lawyers run amok; safety net programs are defunded; environmental consequences are ignored in favor of profits; huge advertising and PR budgets are used to mask corporate and political crimes and lies; CEO’s of receive huge bonuses even while crashing the economy. Plutocrats rarely go to prison.
After Reaganomics, the next big coup for the Plutocrats came in 1999 with the passage of the Gramm-Leach-Bliley Act or the Financial Services Modernization Act. It removed prohibitions on financial and insurance institutions to acquire or merge with commercial banks, investment securities firms and insurance companies. This opened the floodgates for banks to move into higher risk security trading, investments and insurance on security transactions.
When you give plutocrats an inch they will, through their armies of lobbyists, lawyers, friendly politicians and other henchman, take a mile. Within a few years the financial industry was playing fast and loose with a whole array of new, lucrative investment “toys” such as derivatives and hedge funds. But it would be the sub-prime mortgage market (mortgages issued to borrowers whose credit was less than perfect or who could get a mortgage with no income documentation) that would ultimately create the next big blow to the U.S. economy.
The chart (above Fig 1.11) illustrates how subprime mortgages were a relatively minor part of the overall mortgage industry before the Gramm-Leach-Bliley Act (1999). But within a few years after the Act was passed the subprime market exploded from just over $100 million dollars in 1999 to $600 million in 2005. Many of those loans were short-term adjustable rate loans, meaning that 2-3 years after origination, the interest rates on these loans would jump as much as 2-3% instantly. On the chart above right, we can also see that in fact, mortgage delinquencies took off by 2007.
The Great Recession of 2008 was, by far, the most dangerous, most threatening event in our country in recent memory. It cost America 8.5 million jobs and trillions of dollars in lost wealth. The NY Times reported in 2010, that the loss in wealth was equivalent to each and every American losing $20,000. No other problem facing the United States has had anywhere near that kind of negative effect on the entire population. What caused the Great Recession? A de-regulated and insatiably greedy financial industry run by?….. you guess it, plutocrats. If you haven’t read or seen The Big Short, it’s a must.
In the years following the Great Recession, laws were passed by a Democratic Congress regulating the thieves and shysters that had robbed middle America of its wealth, retirement funds, homes, stock and real estate portfolios. The Consumer Financial Protection Bureau was established to protect the general public from the predatory practices of the financial industry. Many economists (Thomas Friedman amongst others) warned that these laws and regulations hadn’t gone far enough and we could easily see a repeat once the economy rebounded. None the less, the Republicans refused almost unanimously to vote for these regulations and attempted to obstruct this legislation at every turn. After financial companies took us to the brink of another Great Depression, Republicans staunchly refused to reign them in. If you can’t count yourself as one of the 1%, you should be mad as hell.
The latest blow to economic opportunity and greater income equality for 90% of America came with the disastrous Supreme Court ruling in the Citizens United vs. the Federal Election Commission case (2010). The case itself was a relatively narrow challenge concerning the rights of a corporation or organization to use its funds to criticize a candidate running for office. But the Conservative Justices on the Court saw the case as a bigger question of campaign donations, political action committees (PAC’s), and free speech. The 5-4 (Conservative majority) ruling that was handed down was a huge win for the Plutocrats for it basically stated that “money = free speech” allowing unlimited amounts of money to flow into PAC’s with very few restrictions on what they did with that money. Now the wealthy Plutocrats of America could set up their own PACs, and raise, in some cases, $100’s of millions of dollars to spend on almost any cause and for or against any candidate, with very little accountability or transparency. Prior to Citizens United there was massive amounts of money spent on political campaigns. After Citizens United the amounts of money became obscene. You and I can’t afford to donate hundreds of thousands or millions of dollars to a cause or campaign. But the Plutocrats can. How is this possibly a fair way to run and finance an election?? Free speech should also be relatively EQUAL speech, otherwise the rich can drowned out everyone else. Then it’s not really free speech for the 90% at all. And at what point do unlimited donations become bribery?
Unfortunately the attention span of the average American voter is very short — a fact upon which Plutocrats rely. In the 2016 Presidential elections the Republicans ran the biggest, baddest Plutocrat in recent memory. He easily bamboozled the Republican middle class by convincing them he was a “populist” and using rough, tough language and a 4th grade vocabulary. He distracted these voters with bullshit, knee jerk slogans such as “Make America Great Again“, “Build The Wall”, “Ban Muslims”, “Drain The Swamp”, Fake News Media”, “Only I Can Solve It” to cover up the fact he was snake-oil salesman, pathological liar, provocateur, predatory scum-bag named Donald Trump. Those voters drank his Kool-Aid.
The Trump Administration has not only brought back the bad-old-days of Plutocracy, they have, with the help of the Republican Party, devolved our political system in to an outright Kleptocracy. The simple act of refusing to release his income taxes defines Trump as a kleptocrat. He does not want us to know how much he makes, how much he owes and to whom, where he has his investments, nor who his partners might be. This has already raised conflict of interest questions in regards to his ties with other kleptocracies such as Russia, Ukraine and Azerbaijan to name a few. He refuses to completely divest himself from his various companies and investments that are making more money now that he’s the Predator In Chief.
Instead of “Draining the Swamp”, he has brought in super-sized Alligators and Snakes in the form of the wealthiest cabinet in American history. But wealth isn’t necessarily the worst of it. As Brooke Harrington points out in a 1/19/17 Washington Post article titled “Yes, Trump’s Cabinet is super rich. That’s not why we should be worried.”:
“On the whole, Trump’s picks are more renowned for enriching themselves than for giving to needy causes or serving others. For secretary of labor, we find the chief executive of a fast-food company who opposes a higher minimum wage and other labor regulations that cost him money. For leader of the Department of Health and Human Services, the nominee is an orthopedic surgeon who as a member of Congress built a track record of opposing policies that cut into physicians’ profits — including programs such as Medicaid and the Affordable Care Act, which limit reimbursements for medical services.”
Trump has now been in office for almost three months. His “Populist” Kool-Aid voodoo is wearing off even to some of his base. Now we can judge the man-child by his actions not just his bombast. He’s making money off of being President: higher membership fees at Mira Lago; higher prices at Trump Tower; and countless businesses and financial entanglements that he refuses to reveal; his sons, Uday and Qusay (Bill Maher’s nicknames for them) are travelling the world, making deals with oligarchs and kleptocrats alike because the Trump brand is now worth even more — and we, the taxpayers are picking up the tab, so far $100,000’s, for their Secret Service contingent while the family enriches itself. If this isn’t illegal it sure as hell should be.
Back on the homefront, Trump and his fellow Republican Plutocrat lovers are passing legislation to aid and abet his wealthy friends and donors: removing environmental regulations so energy companies can pollute more and profit from it; attempting, but failing, to pass a health care bill that would strip health care from some of the neediest 24 million people, while giving huge tax breaks to the wealthy; defunding and neutralizing the Consumer Financial Protection Bureau whose one and only goal is to protect us, the consumers, from predatory lending practices, payday loans and risky investment schemes; Defunding Planned Parenthood that offers a variety of women’s health services and tests to an estimated 4,000,000 mostly middle and lower class, women. And coming soon a income tax overhaul that will include big tax cuts (remember the real meaning of that word when it comes from a Plutocrat).
The 90% is getting completely shut out of the big wealth transfer planned by the Republicans. We can’t take this sitting down. Stop making excuses for these pricks. Don’t let them distract you with wedge issues while they pick your pockets, toxify your air and water and steal our future.
There are two ways to stop a Plutocracy/Kleptocracy:
1) In the 1920’s the Plutocracy came to a screeching halt because of the Great Depression. After the collapse, government policies, laws and programs (like the New Deal) were created to aid the real victims and the neediest and most vulnerable in society. Thanks to these measures, it took 50 years before the Plutocrats could gain the upper hand again. So, one way to end the Plutocracy is total economic collapse. This is not the preferred solution because while the Great Depression hurt rich and poor alike, middle and lower income earners always suffer more and endure economic hard times longer.
2) The second way to end a plutocracy can be done without an economic meltdown — it requires a massive shift of voter consciousness. The 99% of us must suspend our ideological war against one another over zero-sum wedge issues and vote as the cohesive economic block that we are. Economic conditions that deny minorities decent wages, health care and wealth accumulation also deny white Americans from similar economic status the same opportunities. Remove consumer protection regulations from the financial/insurance industry and it won’t be long before they are raiding and pillaging the middle class again. Cut funding and enforcement for clean air and water and the 90% gets it the worst. The recent Michigan water crisis happened in Flint, a prototypical middle class city, not in well-to-do Bloomfield Hills. Deport undocumented workers and prices on many staple goods and services will go up. That hurts the 99%, not the 1% that pass the laws.
We are the 99% and despite Citizens United, unlimited contributions, dark money to political entities and a Kleptocrat in the White House, we can absolutely overwhelm the Plutocrats with voting power. This is exactly why the Republicans (the more pro-plutocratic party) depend upon spreading unsubstantiated fear, exploiting racial issues and using wedge issues to divide the 99% and dupe roughly half of us into voting against our own economic self-interests. See my previous posts “The Successful Republican Election Strategy Parts 1 & 2” — 1/23/17 and 3/14/17 for a more detailed report on this phenomenon.
A prophetic quote from the movie “The Big Short” (2015): “I have a feeling, in a few years people are going to be doing what they always do when the economy tanks. They will be blaming immigrants and poor people.”
I encourage all voters earning under $250,000 to set aside their never-ending battles over social issues and in 2018 (or before if there are special or local elections) and 2020, VOTE TO END THE KLEPTOCRACY!. Hold elected officials and candidates accountable for their positions on vital issues such as health care, reasonable environmental regulations, tax cuts and budgeting that hurts us and aids the wealthy, full disclosure of their financial entanglements and tax returns, their stance on reasonable Consumer Protection Laws, ethics laws, Citizens United and dark money in politics and the power and influence of lobbyists and foreign governments.
We have tried “Trickle Down” economics and it has been a complete failure for everyone except the super rich. A Plutocracy is not a stable way to run our country. Sooner or later it will produce a catastrophe of greed and avarice. It weakens America, not make it stronger. A Kleptocracy is even worse. We, the 90-99%, are allowing thieves, swindlers and sociopaths to run roughshod over us, manipulating markets, bilking tax payers, destroying our environment, and selling us hot steaming shit and telling us it’s caviar.
We can stop them. And all we have to do is vote. Vote smart, vote your pocketbook, vote for the 90-99%. The way America becomes stronger and ‘greater’ economically is from the middle class out — the exact opposite of “Trickle Down”. The tax laws, economic opportunites, job growth, health care, educational decisions must be designed to help the middle class first and foremost. Should we be successful, the fat cats won’t suffer too much. But just remember, the Plutocrats will always be lurking, waiting and watching for us to drop our guard, become too apathetic or easily distracted. For a better, more prosperous America, we can’t let that happen.