November 9, 2011
“I argue that the right has quite deliberately structured markets in a way that have the effect of redistributing income upward. The upward redistribution of the last three decades did not just happen, it was engineered.” - Dean Baker, co-founder of the Center for Economic and Policy Research
Though many on the right , especially within corporate-friendly GOP ranks, are accusing the OccupyWallStreet (OWS) movement of inciting “class warfare”, it was Warren Buffet who affirmed back in 2005 that class warfare did indeed exist, but it was his side that was winning. In a CNN interview with Lou Dobbs Buffett suggested that we should raise taxes on the wealthy to fix the projected shortfalls in Social Security that were sure to occur as the aging baby boomers retired. Dobbs called this a “progressive idea” and made sure that what Buffet was saying was that he (Buffett) supported rich people paying more.
BUFFETT: Yeah. The rich people are doing so well in this country. I mean, we never had it so good.
DOBBS: What a radical idea
BUFFETT: It’s class warfare, my class is winning, but they shouldn’t
The reality though is that class warfare started long before Buffett’s comments 6 years ago and the evidence heavily favors the position that the wealthy interests in this country formally initiated it.
If we work from the premise that grievances toward the excessively wealthy result from a failure of many to benefit from the resources that they helped produce or are willing to produce and that tax rates for lower income groups are higher than many in the top 1%, a case can be made to uphold who is in fact really guilty of generating class warfare between the haves and have-nots. It is deprivation and hoarding that leads to class warfare. Most in the 99% are deprived of things like quality health care and education while those in the 1% hoard much of the wealth that was generated by the labor and energy of many in the 99%.
A Paradigm Shift From Meeting Sustainable Actions to Greed
The capitalist concept that what my labor produces belongs to me and me alone is justifiable, primarily when what your labor produces sustains you and your family. Any excess you gain beyond this to a point is also justifiable so you can put some aside for future needs to stave off conditions that negatively impact your productive capabilities, such as illnesses, physical deterioration, “acts of God” and social conflicts such as wars.
Beyond these fundamental needs we reach a point where wanting more for the sake of having more is an unnatural behavior, a sickness of sorts, that has manifested itself in our contemporary way life. It is not only detrimental to those who hoard great amounts (wasting resources and time to protect their gains) but its accumulation reduces the available resources for others to meet sustainable levels. When this imbalance occurs the natural animal instinct is to fight and take what is needed to survive. In the corporate world this often meant that you had to suppress competitors from all directions, be it a fellow entrepreneur or the government representing the general welfare of its citizens.
This turn for grabbing more of what was out there seems to have escalated as the country expanded Westward and the technology from industrial revolution made heretofore men of modest means very wealthy. The fact that there were vast resources in this country to be exploited and that men who had dreams of capitalizing from it were encouraged by our new government and a new spirit of the people who sought to free themselves from a system where only a few were in control. Americans benefitted from improved forms of transportation like the railroads and mass production of goods that impacted economic growth.
Ultimately though resources started to diminish and as is usually the case, control of what there was became concentrated in the hands of a few, leaving the rest of us dependent on them. With less competition the captains of industry strengthened their positions through monopolies and other non-competitive forms of behavior, which included payola to elected officials to enact and support policies that enhanced corporate wealth.
There evolved a capitalist view of Herbert Spencer’s theory of evolution where only the fastest, strongest and smartest succeeded in working their way to the top. which like most superficial statements first appear to be common sense. But this “survival of the fittest” concept that Spencer coined seven years before Darwin’s theory of evolution was published, tended to skip over the ruthless nature of free-marketers in their haste to get to the top.
Herbert Spencer based his concept of social evolution, popularly known as “Social Darwinism,” on individual competition. Spencer believed that competition was “the law of life” and resulted in the “survival of the fittest.”
“Society advances,” Spencer wrote, “where its fittest members are allowed to assert their fitness with the least hindrance.” He went on to argue that the unfit should “not be prevented from dying out.“ SOURCE
In real Darwinian evolution though those species that succeed do so on conditions that tend to favor them not of their own creation. One bird species may succeed where others fail because the color of their plumage does a better job of camouflaging them from predators. Corporate Barons that evolved in the late 19th century manufactured their own camouflage by manipulating our legal system to enhance their opportunities, which in many cases granted them predatory powers in the business world. The legal system, where there was supposed to be justice for all, began to favor those who had the greatest wealth that would influence the self-interest of legislators rather than promoting a level playing field for everyone.
Missing also from the corporate view of “survival of the fittest” was the human compassion that had become a learned trait as man evolved but which has been forced into the background, and even demonized by some free marketers like Ayn Rand, who placed competition above everything else and all that that can entail.
“He Who Controls The Money Supply of the Nation …
In words that could well fit into today’s narrative with those active in the Occupy Wall Street (OWS) movement, Mary Elizabeth Lease, an American lecturer, writer, and political activist stated back in 1890 that “Wall Street owns the country…. Money rules…. Our laws are the output of a system which clothes rascals in robes and honesty in rags. The [political] parties lie to us and the political speakers mislead us.”
Lease’s words reflected the mood of the American public during the period we call the Gilded Age, where Robber Barons dominated all facets of life. This was the era where sweat shop labor worked for pennies a day making it nearly impossible to afford available health care or support a family to provide basic nutrition, clothing and housing needs. Too often this required using the children to work in the unsafe conditions to supplement the family income instead of allowing them to get a basic education. The dream of moving West and finding land to make a life for yourself was slowly disappearing.
Many of the social and economic reforms won by the efforts of people like Mary Lease elevated many people out of utter poverty but little reform had been done to control the captains of the financial industry and their connections with those in Congress. Without reasonable regulations to rein in the excessive greed on Wall Street, the stock market crashed in 1927, allowing the Great Depression to sweep away the financial gains that had been made only a few short years earlier, leaving one-fourth of all wage earners unemployed.
Once again, reform was necessary to correct the abuses foisted on the nation from a self-serving corporate mindset.
In the 1930s, Franklin Delano Roosevelt saved American capitalism from its own self-inflicted wounds by erecting a new financial infrastructure—often over the vociferous opposition of the bankers and investors whose poor judgment had helped precipitate the Great Depression. During the New Deal, the government reacted to a disastrous systemic failure by creating the sort of backstops, insurance, and risk-spreading mechanisms the market had failed to develop on its own, such as deposit insurance, federal securities registration, and federally sponsored entities that would insure mortgages. SOURCE
…Controls the Nation”
Today, history is repeating itself and the class warfare initiated by those who fought these earlier reforms are back in force and have assimilated themselves in our culture in ways that many do not even recognize. The ramifications have been disastrous for most of the working population.
In 1970, CEOs made $25 for every $1 the average worker made. Due to technological advancements, production and profit levels exploded from 1970 – 2000. With the lion’s share of increased profits going to the CEO’s, this pay ratio dramatically rose to $90 for CEOs to $1 for the average worker.
As ridiculous as that seems, an in-depth study in 2004 on the explosion of CEO pay revealed that, including stock options and other benefits, CEO pay is more accurately $500 to $1.
If our income had kept pace with compensation distribution rates established in the early 1970s, we would all be making at least three times as much as we are currently making. How different would your life be if you were making $120,000 a year, instead of $40,000? SOURCE
In an excellent essay by Bill Moyers we learn that two men were responsible for inspiring class warfare as a reaction to government efforts intended to protect the health and safety of millions of Americans.
The first of these was Lewis Powell, a board member of the death-dealing tobacco giant Philip Morris and a future justice of the Supreme Court. It was the new decade of the 1970’s.
Big business was being forced to clean up its act. Even Republicans had signed on. In 1970 President Nixon put his signature on the National Environmental Policy Act and named a White House Council to promote environmental quality. A few months later millions of Americans turned out for Earth Day. Nixon then agreed to create the Environmental Protection Agency. Congress acted swiftly to pass tough amendments to the Clean Air Act, and the EPA announced the first air pollution standards. There were new regulations directed at lead paint and pesticides. Corporations were no longer getting away with murder.
To conservatives like Powell, these actions were viewed as an “attack on the American free enterprise system.” Lewis Powell didn’t see the environmental threat that commercial industries, their wealthy executives and investors were creating for everyone as they sought to increase profits and dividends. Powell saw the actions of people demanding that their government promote environmental quality posing a threat to the profit margins and investment income of those at the top of the income pyramid.
Using the services of the U.S. Chamber of Commerce, Powell spurred his fellow corporatists on in a memo dated August 23rd,1971, urging them to fight back hard.
Build a movement. Set speakers loose across the country. Take on prominent institutions of public opinion—especially the universities, the media and the courts. Keep television programs “monitored the same way textbooks should be kept under constant surveillance.” And above all, recognize that political power must be “assiduously [sic] cultivated; and that when necessary, it must be used aggressively and with determination” and “without embarrassment.”
Powell imagined the Chamber of Commerce as a council of war. Since business executives had “little stomach for hard-nosed contest with their critics” and “little skill in effective intellectual and philosophical debate,” they should create think tanks, legal foundations and front groups of every stripe. These groups could, he said, be aligned into a united front through “careful long-range planning and implementation…consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and united organizations.”
In his essay, Moyers informs us – through the writings of historian Kim Phillips-Fein – that, “many who read [Powell’s] memo cited it afterward as inspiration for their political choices.” Corporate lobbyists went from a small coterie of 175 registered firms in 1971 to today’s 11,195, spending $2.95 billion dollars in 2009 alone. According to Texas populist Jim Hightower, that’s “more than six times greater than the total spent by all consumer,environmental, worker, and other non-corporate groups combined.” SOURCE
Building a Class-Warfare Infrastructure
Moyers tells us that the next principal who elevated the class warfare was Nixon’s Treasury Secretary, William Simon. His book, A Time for Truth “argued that ‘funds generated by business’ must ‘rush by multimillions’ into conservative causes to uproot the institutions and the ‘heretical strategy’ of the New Deal.” Remember, the “New Deal” was the efforts of the Roosevelt administration to not only bring the nation out of the Great Depression through job creation but to create barriers that prevent the excesses of Wall Street to occur again while they helped construct a level playing field for what would later become the greatest middle-class culture the world had ever seen.
It was clearly Simon’s intention to escalate the hysteria generated by Lewis and incite wealthy business owners to engage in a type of warfare with those who were being exploited and deprived of the means to sustain themselves. In 1971 the Nixon administration imposed wage and price controls in an attempt to curb inflation. It was only supposed to last 90 days but wound up lasting nearly 3 years. After it’s failure was ended in 1974, wages dropped and stagnated for nearly two decades and by 1997 they were still lower than the average wage of 1967.
It was felt that the government role in wage setting during the years of controls had no lasting effect on labor wages but Economist Eric Nilsson with California State University’s Department of Economics disputes this notion. Nilsson found that it’s most likely that “the government-imposed wage-and-price-setting institutions in place from August 1971 to April 1974 shifted the balance of power between capital and labor. When these formal institutions were eliminated in April 1974, the government-caused shift in the balance of power between capital and labor was not reversed. Rather, this shift in the balance of power was maintained through informal institutions, and these informal institutions set in motion the decline in real wages that started after 1973. SOURCE
Were the heightened senses of corporate America initiated by the efforts of Lewis and Simon in play here in the form of “informal institutions”, such as The American Enterprise Institute, The Heritage Foundation and The CATO Institute, creations of the super rich Koch Brothers and Richard Mellon Scaife? In these early efforts were such people taking advantage of government imposed wage controls to offset those costs by environmental regulations that Lewis saw as an “attack on the American free enterprise system”? Were workers being penalized to compensate for cuts in profit margins from such regulations and were these efforts expanded to eventually eliminate organized labor altogether to keep wages low?
As a means of controlling the wealth in this country, keeping wages suppressed is useful in other, more political ways. Less money can go to causes that support grass roots movements and candidates who fight corporate abuses. Holding their paycheck and ultimately their jobs over their heads keeps potential whistle blowers in check.
Without a strong, well-funded middle class, the wealthy 1% can pretty much run rough shod over representative government as they buy candidates and their votes with larger campaign contributions than those grass roots organizations. Their ability to do this was enhanced with the pro-corporate Roberts Supreme Court decision that defined money as speech in the 2008 case of Citizens United vs The FEC. What then occurs is that the “survival of the fittest” changes to “might makes right” and as James Garfield pointed out during the heyday of the Gilded Age, “He who controls the money supply of a nation controls the nation.”
The actions of Lewis Powell and William Simon have come to fruition. All that they hoped to achieve in their class-warfare efforts have been put in place and are set to reverse the gains of the middle-class and likely replace any real democracy this country ever had with a plutocracy. As Bill Moyer notes:
[T]hey bought off the gatekeeper, got inside and gamed the system. As the rich and powerful got richer and more powerful, they owned and operated the government, “saddling Americans with greater debt, tearing new holes in the safety net, and imposing broad financial risks on Americans as workers, investors, and taxpayers.” Now, write Hacker and Pierson, the United States is looking more and more like “the capitalist oligarchies, like Brazil, Mexico, and Russia,” where most of the wealth is concentrated at the top while the bottom grows larger and larger with everyone in between just barely getting by.
The herd mentality of those who took Lewis’ and Simon’s exhortations to heart have twisted the simple concept I mentioned above about what your labor produces to sustain you into one that defends excessive hoarding. The healthy attitude of sharing the natural resources that all life is a part of, for the benefit of all, is now a diseased mentality that justifies the suffering and death of many so that a minority can fulfill that imperial fantasy that fanatics over the centuries have been infected by during the successive ages of Alexander the Great, Attila the Hun, Genghis Kahn, Napoleon, and Hitler. Today it is Corporate America and its global mentality that sweeps across the earth, consuming what they want and need, leaving tidbits and morsels for the rest of us to fight over and expecting us to be grateful for that.
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Posted by lbwoodgate in Business/Jobs, Corporate Influence, Financial Reform, History, Occupy Wall Street Protest Tags: Bill Moyers, class warfare, corporate control of Congress, corporate power, diminishing middle class, diminishing workers wages, distribution of wealth, Evolution, Herbert Spencer, middle income families, wage and price controls, Warren Buffett, Wealth, wealthy 1%
