Iowa City, IA, October 11, 2011. Originally posted at ZNet.
The mostly youthful Occupy Wall Street (OWS) activists camped out in Zucotti Park in New York City’s financial district (and in other key locations across the United States) to protest the undue wealth and power of “the top 1 percent” have put their sleeping bags and tarpaulin tents at the heart of American hypocrisy. From one U.S. presidential administration to the next, the American political and intellectual class portrays the United States as noble champion and defender of freedom and democracy. Never mind Uncle Sam’s longstanding and continuing sponsorship of authoritarian regimes and structures across the planet, his arrogant maintenance of more than 1000 military bases in more than 100 “sovereign” nations, and his longstanding promotion and enforcement of a global neoliberal agenda that subordinates the common good of humanity to the interests of multinational corporate and financial elites. And never mind the related control of domestic U.S. politics and policy by “the unelected dictatorship or money,” which “vets the nominees of the Republican and Democratic parties, reducing the options available to U.S. citizens to two candidates, neither of whom can change the foreign or domestic priorities of the imperial U.S. regime” (Edward S. Herman and David Peterson). The hidden senate of concentrated wealth holds a many-sided, top-down grip on daily life, mass culture, politics and policy in the “homeland” of the nation that claims to be the global homeland and headquarters of popular governance. It’s the American version of plutocracy: government for and by the wealthy. The American sociologist William T. Robinson has correctly defined the reality of what passes for democracy in American foreign and domestic policy as polyarchy: “a system in which a small group actually rules and mass participation in decision-making is confined to leadership choice in elections carefully managed by competing elites.”
Q1 How concentrated is wealth in the U.S.?
A. It’s quite remarkable. The United States is by far and away the most unequal and wealth-top-heavy nation in the industrialized world. Last August the “Public” Broadcasting System’s “News Hour” reported that the top 20 percent of Americans own 84 percent of the nation’s wealth. Four out of every 5 Americans are left to fight it out for just more than a sixth of the nation’s net worth. The bottom 40 percent of the U.S. has 0.3 percent of the nation’s wealth, basically nothing.
The “P”BS story understated the problem of wealth mal-distribution in the U.S. As of 2007, the leading wealth and power analyst G. William Domhoff notes, the top 10 percent owned 90 percent of American stocks, bonds, trust funds, and business equity, and more than three fourths of non-home real estate. “Since financial wealth is what counts as far as the control of income-producing assets,” Domhoff observes, “we can say that just 10% of the people own the United States of America.”
The top 1 percent – the top one hundredth – owned more than a third (34 percent) of the all the nation’s privately held wealth, including 43 percent of the nation’s financial net worth, 38.3 percent of all privately held stock, 61 percent of financial securities, and 62 percent of business equity. It possesses more net worth than the bottom 90 percent, which owns just 29 percent of the nation’s private wealth.
The really super-rich are found in the top thousandth. In 2007, the top thousandth received 6 percent of all U.S. income. The top five hundredth – the upper 0.2 percent, with incomes of $1 million or more – got 13 percent of all U.S. income. The top 400 “earners” averaged $344.8 million per person.
Last year, by sharp contrast the quantity of Americans found to be living in officially defined poverty was the largest number in the 52 years for which poverty estimates have been published: 46 million. It should be noted that the federal U.S. poverty level (based on an arcane formula: the minimum adequate cost of food multiplied three times) is an open joke amongst serious poverty researchers: try to maintain a family of four at the official poverty threshold of $21,954 in any major U.S. metropolitan area today. Also important to observe is the fact many millions of the officially poor live in what those researchers call “deep poverty” – at less than half that level. A record-setting 19 million Americans were mired in deep poverty in 2009.
This wealth pyramid has become steeper and its poverty base wider since 2007, thanks to the Great Recession that began at the end of that year. The collapse of home values beginning in 2006 and the epidemic of foreclosures since particularly hit the net worth of the middle and working classes, whose wealth possession is far more tied up in home ownership than in financial assets when compared to the rich. From 2005 to 2009, a Pew Research Center study shows, inflation-adjusted median wealth plunged two-thirds among Hispanic households and 53 percent among black households, compared with just 16% for white households, leading to an expansion of the black-white median household wealth gap to 5 black cents on the white dollar – yes, 5 black cents for every white dollar. Millions have been thrown out of work by the epic capitalist slump, fueling destitution across the land.
Q2. So what? Why does this remarkable economic inequality and wealth concentration matter?
It ruins lives and offends basic moral sensibilities. Poverty cripples, wrecks, and shortens human experience, generating incalculable misery and despair. Poverty for many millions (billions on a global scale) alongside grotesque opulence for a comparatively tiny aristocracy that generates and profits from that misery (see below) adds egregious insult to that injury. It is a slap in the face of basic human fairness and decency, which recoils at the notion that one group is somehow entitled to prosper, accumulate, thrive, and luxuriate while another group is cursed to struggle, sicken, and waste away. As the old working-class folk song “The World Turned Upside Down” runs:
‘The sin of property we do disdain
The rich they have no right and sell the Earth for private gain
By theft and murder that’s how they took the land
Now everywhere the walls spring up at their command
They make the laws to chain us well
Their clergy praise us to heaven while they damn us down to Hell
We will not worship the God they serve
Who feeds the rich while poor folks starve
…You poor take courage, You rich take care
The Earth was made a common treasury for all to share’
Morally offensive in and of itself, such extreme inequality undermines the economic health of any nation in which it exists by restricting effective market demand for goods and services. It’s a vicious “Keynesian” circle. Vast swaths of that nation’s population cannot afford to purchase goods and services to the degree required for the investor class to put everyone to work.
Inadequate effective demand is hardly the only or even necessarily the main cause of modern capitalism’s recurrent crises and bouts of mass unemployment, but it is generally a significant contributing factor. Since non-affluent people spend a considerably higher portion of their income than do the rich, the best way to re-spark demand is to put more money and purchasing power in the hands of the ordinary Many, not the wealthy Few.
Equally or more important, inequality on the current savage U.S. scale makes functioning democracy impossible. Economic wealth and political power are dialectically entwined. As Domhoff explains:
“Wealth can be seen as a ‘resource’ that is very useful in exercising power. That’s obvious when we think of donations to political parties, payments to lobbyists, and grants to experts who are employed to think up new policies beneficial to the wealthy. Wealth also can be useful in shaping the general social environment to the benefit of the wealthy, whether through hiring public relations firms or donating money for universities, museums, music halls, and art galleries….certain kinds of wealth, such as stock ownership, can be used to control corporations, which of course have a major impact on how the society functions. … [and] just as wealth can lead to power, so too can power lead to wealth. Those who control a government can use their position to feather their own nests, whether that means a favorable land deal for relatives at the local level or a huge federal government contract for a new corporation run by friends who will hire you when you leave government.” (G.W. Domhoff, “WhoRulesAmerica.Net” at http://sociology.ucsc.edu/whorulesamerica/). Domhoff could have more directly highlighted media ownership – a critical, reality-framing, populace-deadening, and mass “consent-manufacturing” asset of the rich.
When these processes of elite domination are seen against the background of extreme wealth concentration in the U.S., the shocking disconnect between majority progressive public opinion on numerous key policy issues and the regressive reality of policy on those and other issues becomes un-mysterious. So what if most Americans believe that job creation should be a bigger government priority than deficit reduction, that social protections should be expanded (not contracted), that the rich are under-taxed, that wealth inequality and poverty are the nation’s leading moral issues, that big business and the wealthy exercise far too much influence over government, that government dollars should be significantly transferred from military to social programs, the corporations exercise too much influence in America, that Social Security and Medicare benefits should be protected and expanded, and that public sector workers deserve and require full collective bargaining rights? None of this sort of longstanding majority progressive opinion ever seems to matter in the U.S., where, as the American philosopher John Dewey noted more than a century ago, “politics is the shadow cast on society by big business.”
Welcome to America’s gaping “democratic deficit,” a significantly greater problem than the nation’s much bemoaned and overplayed financial deficit. As Noam Chomsky recently noted, “Since the 1970s, [Dewey’s] shadow has become a dark cloud enveloping society and the political system. Corporate power, by now largely financial capital, has reached the point that both political organizations, which now barely resemble traditional parties, are far to the right of the population on the major issues under debate.” (N.Chomsky, “American Decline: Causes and Consequences,” Alakhbar English, August 24, 2011).
The recent history of politics and policy in the Age of Obama provides a telling case study. Millions of hopeful liberals and lefties thought that the ascendancy of nominal Democrat Barack Obama and Democratic Party majorities in both houses of Congress would combine with popular anger to create a wave of progressive policies on behalf of the common good and the working majority over and against the aforementioned unelected dictatorship. Consistent with Obama’s longstanding neoliberal and pseudo-progressive “business liberalism” (Kevin Baker) and with the record-setting corporate and Wall Street campaign contributions Obama received in 2007 and 2008, however, the Obama administration has been a great monument to the old French saying plus ca change plus c’est la meme chose (the more things change the more they stay the same). With its stupendous escalation of the bailout of hyper-opulent financial overlords, its refusal to nationalize and cut down the parasitic “too-big [too powerful]-to-fail” financial institutions that paralyzed the economy, its passage of a health reform bill that only the big insurance and drug companies could love (consistent with Rahm Emmanuel’s advice to the president: “ignore the progressives”), its cutting of an auto bailout deal that rewarded capital flight and raided union pension funds, its undermining of serious global carbon emission reduction at Copenhagen, its refusal to advance serious public works programs (green or otherwise), its green-lighting and reckless offshore drilling and numerous other dangerous anti-environmental practices, its cold disregarding of promises to labor and other popular constituencies, and other betrayals of its “progressive base” (the other side of the coin of promises kept to its corporate sponsors), the “change” and “hope” Obama presidency helped give Americans what the liberal left journalist Bill Greider aptly called “a blunt lesson about power, who has it and who doesn’t. They [have] watched Washington run to rescue the very financial interests that caused the catastrophe. They [have] learned that government has plenty of money to spend when the right people want it.” Along the way, arch-plutocratic Republican and hard-right corporate elites like Charles and David Koch and Dick Armey gained the cooperation of the dominant corporate mass media in the creation of a fake-“grassroots” “protest” “movement” called “the Tea Party.” Claiming in full Orwellian absurdity that the deeply conservative state- capitalist Obama was advancing a “socialist” and “radical left” program meant to bring about the downward distribution of wealth, this reactionary Astroturf “movement” wrapped a rancid version of the right wing business agenda in the false rebel’s clothing of the common people and popular insurgency. It helped the Democrats and Republicans tilt yet further right, leading to the surreal debt-ceiling crisis of July and August 2011 – a plutocratic spectacle that disgusted and scared the majority populace.
The ever harsher money-fueled rightward drift of U.S. politics is furthered by Citizens United v. Federal Election Commission, 558 U.S. (2010), a landmark decision in which the United States Supreme Court held that the First Amendment protects unlimited and anonymous corporate funding of independent political broadcasts in candidate elections.
Dewey’s shadow and Chomsky’s dark cloud now threaten the very existence of the human race. That the continued power of the moneyed elite – the “1 percent” that OWS activists target or the top tenth that Domhoff highlights – will lead to the destruction of a natural environment fit for humanity (and other living things) is becoming more and more apparent every day. I will return to this topic all too briefly at the end of this Q and A.
Q3. Do most Americans know about the depth and degree of American inequality?
A. No, they do not. As business professor Michael Norton and psychologist Dan Ariely show in a recent study, most Americans think that ideal distribution would be one in which the top 20 percent owned between 30 and 40 percent of the privately held wealth and the bottom 40 percent had between 25 and 30 percent. That’s the “good news” on mass inequality perceptions (though many of us on the left, me included, see no just basis for any but the smallest disparities in wealth and income). The bad news is that most Americans have no idea what’s really going on when it comes to the actual distribution of wealth in the U.S. When shown three pie charts representing possible wealth distributions, more than 90 percent of 5,522 respondents – regardless of gender, age, income level, or party affiliation – thought U.S. wealth distribution most resembled one in which the top 20 percent possesses 60 percent of the wealth. Most people in the survey guessed that that the bottom 40 percent had between 8 and 10 percent (Norton and Ariely, “Building a Better America One Wealth Quintile at a Time,” Perspectives on Psychological Science, 2010).
Q4. Why are most Americans Uninformed on the Level of U.S. Inequality?
A. Here we confront a viciously circular fact of ruling class power. The top 1 percent owns the major mass media that millions rely on for information about the world they inhabit. The wealthy Few are hardly eager to see the citizenry accurately informed about the distribution of wealth and hence power in the U.S. As a result, the problem of extreme wealth concentration and its negative, even deadly consequences does not receive serious and sustained treatment by the five giant media conglomerates that own more than half the nation’s media print and electronic. (The aforementioned “News Hour” story on wealth inequality was something of an anomaly, crafted for “P”BS’ relatively affluent audience in connection with wild stock market volatility last August). People who seek to substantively expose and resist wealth inequality and the power of the top 1 percent are predictably marginalized, under-reported, deleted, and mocked as frivolous and lacking serious proposals or alternatives in “mainstream” media. (This is largely true of the corporate media’s coverage and commentary of OWS and its offshoots). With relatively few exceptions, moreover, the nation’s intellectual and ideological classes beyond the media – professors, teachers, ministers, academic and school administrators, book publishing executives, chain bookstore purchasers and marketers, public relations managers, personnel managers, non-profit chiefs and the like – are unwilling to help expose or resist the depth of disparity. This reflects their privileged status (generally near or close to the top quintile) , the deeply conservative and mind-disciplining nature of the dominant patterns of discourse and conduct in their professions, and their sense of dependence on the good will of the really rich. It also reflects deep cowardice and moral failure. Such cowardice is endemic among major party political candidates and office holders, who (with very rare partial exceptions like U.S. Senator Bernie Sanders – I, VT) are loathe to buck the “hidden primary of wealth” (the moneyed class’s hegemony over electoral outcomes through campaign contributions and many other means) in seeking and keeping elective office.
A great task and potential contribution of the Occupy Wall Street (OWS) and its offshoots is educational – to spread knowledge and appropriate anger over the longstanding and deepening takeover of American society and government by the very rich.
Q5. But Didn’t the Rich “Earn” Their Wealth with Hard Work…and Don’t They Therefore Deserve to Do Whatever They Want With that “Private” Wealth?
A. This is what the Republican presidential candidate (and former Godfathers’ Pizza CEO) Herman Cain wants us to believe when he says the following when asked about OWS: “Don’t blame Wall Street. Don’t blame the banks. If you don’t have a job and you are not rich, blame yourself.” Shame on you, lazy lumpen-proletarian! You didn’t work hard like Cain or like, say, JP Morgan Chase’s CEO Jamie Dimon, who has an estimated net worth of $200 million. So go get a job, work hard…and get rich, like Jamie Dimon.
Mass ignorance aside, plutocrats also rely on powerful myths to lend the pretence of justification to America’s spectacular economic inequality. One especially significant fairy tale in their arsenal of mystification holds that the rich deserve their wealth because they “earned” it on their own and that it is therefore “none of anybody else’s business” what they do with the riches they obtained because of their own special talents and efforts. It is “robbery,” then, to tax the 1 percent’s wealth and “give it someone else.”
This longstanding fable of the elite is so full of holes it is hard to know where to begin in tearing it apart. In terms of the egregious negative and (I would have to now say) deadly (in light of current environmental trends) and fundamentally public consequences that current “private” wealth inequality hold for American “democracy” and social experience more broadly, it really doesn’t matter if the rich worked hard or well for their wealth. It is very much “our business” what they do or don’t do with their fortunes either way. A moneyed class that poisons the air and water, rapes the land, drowns morality and human solidarity in “the icy waters of egotistical calculation,” resolves “personal worth into exchange value” (Marx and Engels, 1848) and ruins livelihoods (and hence lives) is no less toxic and sociopathic if its members had once individually worked their ways from the lower classes into the financial aristocracy like characters in a Horatio Alger novel.
In fact, however, the wealthy classes are loaded with people who are rich independent of any special effort or skill on their part due to the simple fact of inheritance. The passing on of net worth and connections and other benefits (like legacy admissions to elite Ivy League schools) across generations covers up the stupidity, decrepitude, and/or laziness of many rich people. They offer stupendous advantages to more able and/or energetic elites who profit from the fact that success in the contemporary and future market depends significantly on how much accumulated economic, social, and political capital you bring to that market from the past. Bad behavior and poor skills have little negative economic impact on those born into wealth; they stay rich regardless, just as most born into the lower and working classes remain there regardless of how hard, honestly, and skillfully they toil. There is very little downward generational mobility out of the elite and into the middle and lower classes and (contrary to the Horatio Alger narrative) there is extremely little upward mobility into the upper class from the lower and working classes. The nation is now loaded with young, middle-aged, and senior people who complain with good reason that they “done everything [they] were supposed to, played by all the rules, worked hard, got educations, saved what money they could, invested modestly in homes and retirement, and now – thanks to the machinations of the supposedly superior and more hard-working and thrifty rich – have “nothing to show for it.”
But even in cases of remarkable first-generation ascendancy from the working or middle class into the wealthy elite (without the benefit of sizeable inheritance), moreover, the notion that the rich “earn” their fortunes on their own is fundamentally false. As the U.S. ultra-billionaire investor Warren Buffett has acknowledged more than once, people can accumulate large amounts of money only when they live under rare social circumstances that are favorable to such gain. They hardly create those circumstances by themselves like some sort of mythical Robinson Crusoe. Society, Buffett admits, is responsible for his wealth. “If you stick me down in the middle of Bangladesh or Peru,” he once said, “you’ll find out how much my [special talent for smelling market opportunities] is going to produce in the wrong kind of soil.”
The Nobel Prize-winning economist and social scientist Herbert Simon has estimated that “social capital” is responsible for at least 90 percent of the income that people receive in rich nations. By social capital, Simon means not only natural resources but also technology, organizational skills, and “good [wealth-friendly] government.” “On moral grounds,” Simon added, “we could argue for a flat income tax of 90 percent.”
Q6. But isn’t it worse than just the modern social context enabling fortunes for a few? Don’t the rich extract wealth from – exploit – others, society as a whole?
A. Yes! Simon and Buffett unsurprisingly understate the case for confiscatory taxation of the rich. The wealthy do not simply benefit from society; they accumulate fortunes at the expense of it. They profit: from mass unemployment’s depressive impact on wages, which cuts their labor costs; from regressive tax cuts and loopholes, which increase their wealth while shutting down social services for the poor; from the cutting and undermining of environment regulations, which reduce their business costs while spoiling livable ecology; from wars and giant military budgets that feed the bottom lines of high tech “defense” corporations they own, kill and cripple millions and steal money from potential investment in social uplift; from a hyper-commercialized mass consumer culture that despoils the environment while reducing human worth to monetary value and destroying peoples’ capacity for critical thought; from deals with corrupt dictators who provide natural resources at cheap prices while depressing wages and crushing democracy in “developing countries;” from the closing down of livable wage job in the U.S. and the export of employment to repressive and low-wage peripheries; from a health care system that privileges the profits of giant insurance and drug companies over the well being of ordinary people; from exorbitant credit card interests rates that lead to millions of bankruptcies each year; from predatory lending practices that spread and perpetuate poverty and foreclosure; from agricultural and trade practices that destroy sustainable local and region food cultivation and distribution practices at home and abroad; from the imposition of overly long working hours that keep employee compensation levels down while helping maintain a large number of unemployed workers; from exorbitant public business subsidies and taxpayer incentives and bailouts out to the rich that are paid out to the rich at the expense of the rest; and from….well, the list goes on and on. As the left political scientist David McNally notes, profits have been restored in the wake of the 2008 financial crisis “largely because working class people have paid for them, through layoffs, wage cuts, reduced work hours, and the decimation of social services. In the words of a poor rebel in Shakespeare’s Coriolanus,” McNally observes, ‘our misery’ is the source ‘their abundance; our sufferance is a gain to them.’”
The rich, it should be recalled, are capitalists for the most part. And under modern marketplace and corporate capitalism, generator of contemporary fortunes, the wealth of the Few is more than just coincidentally related to the comparative impoverishment of the Many. Indeed, the exploitation of the latter by the former is the essence of what passes for reasonable and normal economic activity under the norms of the capitalist system. . Most of us engage with the market (primarily by renting out our core human capacity for work to more privileged others) to survive, to purchase simple use values that make life possible. Capitalists are very different. They care about nothing but exchange value and profit and engage the market to exploit the world and its people. There would be no point in their investment without exploitation. There would be no point in paying us wages and salaries without surplus value – extra labor value going to them beyond the commodity price of our labor power. When profit and its critical ingredient surplus value are deemed unattainable, they toss us into the gutter where, as members of the reserve army of labor, we help them bid down the commodity value of the labor
Q7. But don’t the rich have to get richer so that the rest of us can prosper, so that growth can “trickle down” to the rest of us?
A. No. Another great fable that serves the rich and powerful holds that making rich people richer makes the rest of us richer. It’s called, yes, “trickle down economics.” It is rich people, the argument runs, who smell out market opportunities and exploit them in ways that create wealth for the rest of us. Like it or not, poor people can become more well off in the long run only my making the already opulent yet filthier rich. When you give the wealthy Few a bigger slice of the pie, the pieces given to others shrink in the short term. In the long run, however, the poor benefit. They get bigger absolute slices because the rich expand the size of the piece through investment of the wealth granted to them by smart policymakers who get it that “populist” taxation of the rich to spread the wealth more equitably is “dysfunctional” – a drag on economic expansion.
As the clever liberal Cambridge (UK) economist Ha Joon Chang notes in his recent bestselling book 23 Things They Don’t Tell You About Capitalism (2010), recent economic history does not support the “trickle down” thesis. “Despite the usual dichotomy of ‘growth-enhancing pro-rich policy’ and ‘growth-reducing pro-poor policy,’” Chang observes, “pro-rich policies have failed to accelerate growth in the last three decades.” Thirty-plus years of “free market” policies that have given the rich an ever larger slice of wealth and income have only generated slow growth (the world economy’s growth rate fell from more than 3 percent in the Keynesian 1960s and 1970s to 1.4 percent in the neoliberal, “free market” years since 1980) and persistent high levels of structural unemployment within and beyond the rich nations.
“Trickle down” leading to increased jobs does not happen without the intervention of public mechanisms and institutions to compel the rich to take their increased wealth and invest in job-creating activities –mechanisms that have been assaulted and undermined by concentrated corporate and financial wealth and its political agents in the neoliberal era. Without such mechanisms there is nothing to prevent the rich from spending on their own luxury “needs” and using their surplus in other ways that do nothing to create jobs. As numerous media reported after Barack Obama agreed to extend George W. Bush’s deficit-fueling tax cuts for the wealthy last January, many leading U.S. companies have been sitting on capital and storing up liquidity like never before in the wake of the financial collapse. Firms who no longer believe they can borrow quickly have decided to keep a lot more cash on hand for precautionary purposes. At the same time, low interest rates produced by the Great Recession created an incentive for many firms to simply “exploit the spread between a zero funds rate and rates on Treasury bonds.” This permits corporations to “mark profits without selling much or hiring anyone.” (Michael Powell, “Profits Are Booming, Why Aren’t Jobs?” NYT, January 8, 2011).
Some big American firms have shown higher profits because their competition has faded. Following the financial collapse of 2008, for example, the financial giants Goldman Sachs and Morgan Chase no longer have to compete with Bear Stearns, Lehman Bros. and Merrill Lynch. Many jobs disappeared with the collapse of the defeated behemoths, of course.
And then there’s the simple fact that a large “reserve army” (Karl Marx) of unemployed workers is a great profits boon to corporate American in its ongoing top down class war on workers’ income and security. As Desmond Lachman, a former managing director at Salomon Smith Barney who serves as a “scholar” at the influential right-wing American Enterprise Institute, told the Times last January, “Corporations,” are taking huge advantage of the slack in the labor market — they are in a very strong position and workers are in a very weak position. They are using that bargaining power to cut benefits and wages, and to shorten hours.” (Powell, “Profits Are Booming”).
Sharing out wealth and income more equitably would do more to create employment. “In an economic downturn,” Chang notes, “the best way to boost the economy is to redistribute wealth downward, as poorer people tend to spend a higher portion of their incomes. The economy-boosting effect of the extra billion dollars given to the lower-income households through increased welfare spending will be bigger than the same amount given to the rich through tax cuts.” Give ordinary folks more money and they quickly buy necessities, stimulating the economy. Extra money for the rich funds numerous activities that have little stimulus effect and some that are quite contrary to the growth and wages promised: mergers and acquisitions that actually cut jobs, storage of surplus wealth in off-shore tax havens, the hiring of management consultants who advise on how to shrink payrolls and eliminate unions; the hiring of lobbyists who push for cutting public sector programs, jobs, and unions; the hording of cash reserves; the purchase of sophisticated financial instruments that cannibalize the economy; numerous other forms of parasitism that “mark profits without hiring anyone;” the purchase of back-stocked luxury items.
A telling daily New York Times was printed at the height of last summer’s elite-manufactured debt-ceiling crisis. One front page story in that issue reported House Republicans’ claim that increasing taxes on the U.S. rich would undermine productive investment in the jobs that American working people required. (The argument held the day when the White House agreed to a deficit-cutting budget deal that was all about reducing government expenditures and not raising taxes) A different front-page story on the same day reported what some of the rich were doing with the plutocratic tax cuts that Obama had agreed to pass on from George W. Bush: resuming their ways of conspicuous and opulent luxury consumption. “Even Marked Up,” the headline ran, “Luxury Goods Fly Off Shelves.” Further:
“Nordstrom has a waiting list for a Chanel sequined tweed coat with a $9,010 price. Neiman Marcus has sold out in almost every size of Christian Louboutin ‘Bianca’ platform pumps, at $775 a pair. Mercedes-Benz said it sold more cars last month in the United States than it had in any July in five years….Even with the economy in a funk and many Americans pulling back on spending, the rich are again buying designer clothing, luxury cars and about anything that catches their fancy. Luxury goods stores, which fared much worse than other retailers in the recession, are more than recovering — they are zooming. Many high-end businesses are even able to mark up, rather than discount, items to attract customers who equate quality with price….The luxury category has posted 10 consecutive months of sales increases compared with the year earlier, even as overall consumer spending on categories like furniture and electronics has been tepid…”
Q8. So we who oppose the power of the 1 percent are all about restoring growth?
A. Not exactly! Chang is empirically correct to note the conflict between policymakers’ declared expansion imperative and excessive inequality, but his critique of trickle-down mythology is far too kind to the rich. As indicted in Chang’s 23 Things, modern “free market” or neoliberal capitalism’s greatest crime is not its role in furthering capitalism’s inherent tendency towards inequality and concentration of wealth but rather its role in slowing growth. But “growth” has long been western capitalism’s false and environmentally (some would add spiritually) lethal “solution” for the inequality that capitalism creates. “A rising tide lifts all boats,” the conventional western growth ideology proclaims, supposedly rendering irrelevant popular anger over the fact that an opulent minority sails in luxurious yachts while millions struggle on rickety dinghies and in leaking rowboats. As the liberal economist Henry Wallich explained in 1972, “Growth is a substitute for equality of income. So long as there is growth there is hope, and that makes large income differentials tolerable.” (As a Federal Reserve governor, Wallich was defending western capitalism against ecological economists who warned about the environmental limits of unchecked growth.) “Governments love growth,” British environmental writer and activist George Monbiot noted in the fall of 2007, “because it excuses them from dealing with inequality…. Growth is a political sedative, snuffing out protest, permitting governments to avoid confrontation with the rich, preventing the construction of a just and sustainable economy.” As Le Monde’s ecological editor Herve Kempf noted four years ago, “the oligarchy” sees “the pursuit of material growth” as “the solution to the social crisis,” the “sole means of fighting poverty and unemployment,” and the “only means of getting societies to accept extreme inequalities without questioning them.” When growth stops, Greider notes, “the political system loses its cover. The safety valve is off. The comforting mythology about growth loses its power to distract the public from anger and to discourage critical inquiry into how the system actually functions.”
The pressure on business and political elites to keep the safety valve on – the secret behind the growth attachment that has snared even a clever economic critic like Chang – comes at an unsustainable price, setting up a devil’s choice between jobs and income for proletarianized masses on one hand and livable ecology for humanity (and other living things) on the other hand. The wealthy Few’s reliance on growth to cloak inequality and keep “populist” sentiments at by is at the heart of “How,” to use the title of Kempf’s most recent book, “The Rich Are Destroying the Earth.” The ruination of livable ecology seems to be nothing less than an “institutional imperative” (Noam Chomsky) for the capitalist elite, which spends billions of dollars on a propaganda war against modern science’s consensus findings and warnings on anthropogenic climate change.
As the current, ever-deepening ecological catastrophe should tell us, humanity is running out of time when it comes to carrying the rich and failing to seriously confront its dominant institutions and ideologies. The rich themselves do not need to be liquidated and distributed across society, but their wealth and power do and their profits system needs to come down if humanity is going to enjoy a decent, democratic, and desirable future on this glorious but far from endlessly forgiving planet we all inhabit.
The protestors in Zucotti Park and across other people-occupied zones in the U.S. and Canada (I have recently received an inspiring report from Halifax in Nova Scotia!) have not simply landed at the hub of global hypocrisy. They have zeroed in on the dark heart of the cancer that menaces worthwhile human existence in coming years. May their movement continue to spread at home and abroad, helping us move from an Arab spring to a European summer through an American autumn to a new global people’s spring that ends the fatal bondage of Earth and humanity to the richer sort. “You poor take courage, you rich take care. The earth was made a common treasury for all too share.”
Paul Street (www.paulstreet.org) is the author of numerous books, including Empire and Inequality: America and the World Since 9/11 (Paradigm, 2004), The Empire’s New Clothes: Barack Obama in the Real World of Power (Paradigm, 2010), and (co-authored with Anthony DiMaggio) Crashing the Tea Party: Mass Media and the Campaign to Remake American Politics (Paradigm, 2011). Street will speak on the last book (and on the OWS movement) at 57th Street Books in Chicago (Wednesday, November 7 at 6pm), the Third Unitarian Church in Chicago (Sunday, November 6 at 9 AM), and Prairie Lights Books in Iowa City (Monday, November 7 at 7pm). Street can be reached at firstname.lastname@example.org.
 Let me gently add here that a sophisticated class analysis of the American power system has to go beyond a simple dichotomy of the top 1 percent versus the rest of us (the 99 percent). Beneath the elite ownership and investor class and the working and lower class majority there is a significant bastion of elite power that leadingg left anarchist thinker Michael Albert calls “the coordinator class.” For a useful discussion of this category, see Michael Albert and DC Tedrow, “Parecon and Anarcho-Syndicalism: An Interview with Michael Albert,” ZNet (July 4, 2007) at http://www.zcommunications.org/parecon-and-anarcho-syndicalism-an-interview-with-michael-albert-by-michael-albert
 Truth be told, those relatively few number of super-rich who have clawed their way to the top from the working and lower classes are often more reactionary than the much larger number of aristocrats who were born into privilege. The experience of the rich who enjoyed significant upward mobility tends to confirm in their own minds the truth of the Horatio Alger fable that anyone can make it to the top if they just work hard and well.