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This excerpt was cross posted by the Raging Chicken Press and written by Glenn Richardson.  The rest of the excerpt can be on the following link.  (more after the fold)

The Occupy Wall Street movement has trained the nation’s and the world’s attention on the stark disparity of wealth and privilege that has come to characterize the early 21st century. Yet that inequity has been incubated over the course of several decades, and to fully understand it, we must explore its genesis and development over a nearly half-century period.

The first wave of attention to emergent income inequality came during the Reagan era in the 1980s, spurred by best-selling works such as New Politics of Inequality by Thomas Byrne Edsall (1984) and The Politics of Rich and Poor: Wealth and the American Electorate in the Reagan Aftermath by Kevin Phillips (1990). These authors documented how the nexus of power and policy had come to be dominated by affluent and corporate interests at the expense of the poor and working classes. Not only was wealth flowing toward the top at nearly unprecedented levels, it was increasingly being converted into political power.

Edsall argued that the balance of power between the very wealthy and the rest of America was also tilting toward the have-mores within various social institutions such as the two major political parties, “the business lobbying community, organized labor and the intellectual establishment” (Edsall 14). The tilt was fueled by changes in the nation’s economic performance (the “stagflation” of the 1970s which simultaneously eroded the financial underpinnings of the redistributive state and contributed to the hegemony of the owner class). Economics had become, in the words of Lester Thurow, a “zero-sum game.”

Edsall’s analysis is particularly poignant in documenting the resultant political shifts that would amplify growing inequality. He contrasts voters’ overwhelming rejection of Barry Goldwater’s plan for major cuts in domestic spending combined with increases in military spending in 1964 with voters’ embrace of essentially the same agenda when championed by Ronald Reagan in 1980.

Several forces combined to undermine moderately redistributive policies dating back to FDR’s New Deal, including the hyperpoliticization and growing power of the business community and its fusion with the Republican party, the fissure between labor and the emergent left-wing of the Democratic party, the corrosive effect political reformers had on the strength of Democratic politics, and the class-bias of voter turnout.

Edsall’s indictment of the political reform movement is particularly telling. A large class of freshman Democrats elected in the wake of Watergate during the midterm elections of 1974, representing suburban, upper-middle income, formerly Republican districts, would launch an assault against the old-style politics that had sustained New Deal policies for decades. The reformers viewed the deal-making and vote-swapping essential to forging broad political coalitions with the disdain. While this view had long been a part of the American political landscape, during this period it briefly enjoyed majority support in Congress, (not surprisingly given the evident excesses of Watergate and fall from grace of urban ethnic machines).

Yet in seeking to secure a neutral politics free from favoritism, Edsall argues, the reformers codified the inequities of the private sector. “New class” Democrats, born of the anti-war and civil rights movements, saw the transactional politics of “old guard” pols like Chicago’s Richard J. Daley and AFL-CIO president George Meany as corrupt, special-interest bargaining. Reformist initiatives like increasing the role of direct primaries in the selection of delegates to the party’s presidential nominating conventions served to shift power from the hands of the working class voters who constituted the core of the machine vote in general elections toward the upper-middle class voters who dominate primary elections, and who contributed the funds needed to buy the TV ads necessary to communicate with voters in mass primaries. This shift toward a more affluent electorate led to a party more liberal on social issues but one less so on policies affecting the working- and lower-middle class.

At the same time, the class composition of the Republican party was changing as well. Edsall notes that in the 1950s, the proportion of the party in what could be considered the upper-crust was just over a third, but it had risen to a majority of the party by the 1970s. The party also drew increased strength from the South, from social conservatives, and from ideological interests claiming outsized influence owing to their ability to fund new-style capital-intensive political campaigns. Further, Edsall argues, increasingly hostile coverage of government in the mainstream media contributed to voter apathy and cynicism, especially among the low-income, low-information voters so key to the Democratic party.

At the very moment when organized labor’s momentum was stalled, the business community was launching a multi-front political assault. Business became increasingly willing to violate labor law in an attempt to suppress organizing. Edsall points out that between 1970 and 1980, the total number of union representation elections in the U.S. remained relatively constant (at about 8,100). Yet the number of workers re-instated by the National Labor Relations Board after being illegally fired jumped from roughly 2,700 to roughly 8,500 during that period. Business also benefited from the emergence of a plethora or right-leaning think tanks and foundations, including the Hoover Institute, American Enterprise Institute, and Heritage Foundation.

The era’s public policy consequences were stark. Tax law changes benefited high-income earners, while spending cuts hit the poor and working-class hardest. Full-employment gave way to inflation fighting as the nation’s principal economic goal. Republicans focused on discontent with tax and spending policies among white voters providing support for pro-wealthy policies like cuts in the tax rate on capital gains, a form of income limited to about 10 percent of the nation’s population.

If Edsall’s insights into the way changes within the Democratic party contributed to growing inequity have proven particularly discerning, so too were those of Kevin Phillips regarding the Republicans. Phillips analysis seemed to draw particular attention because he had been something of an architect of the “silent majority” and “Southern strategy” that put Republicans in control of the White House for the better part of a quarter-century following the election of Richard Nixon in 1968.

For Phillips, the Reagan era represented the third period of conservative capitalist overdrive in American history. (The first occurred at the end of the 19th century, the second in the 1920s.) By the end of the 1980s, America had become the most unequal of the advanced industrial democracies. Phillips cites analyses suggesting that between 1977 and 1987, the average after-tax income of a family in the lowest 10 percent saw a drop of 10.5 percent, while incomes for a family in the upper 10 percent increased by 24.4 percent. Incomes for the top 1 percent skyrocketed by 74.2 percent over the decade. Wealth distribution numbers are even more unequal. The share of wealth owned by the top ½ of one percent (420,000 households) rose to 26.9 percent of U.S. family net worth, after having fallen for the previous four decades. The top 10 percent held fully 68 percent of the all the wealth in America.

Phillips speaks with authority on the new GOP populism, belligerently anti-establishment and anti-elite, that flowered under Nixon, and the emergence of a new Republican elite under Reagan. It was that cultural populism that provided cover for the party’s regressive economic agenda (see also Thomas Frank’s What’s the Matter with Kansas?: How Conservatives Won the Heart of America).

For Phillips, the three eras of capitalist overdrive shared 10 common characteristics: conservative politics, a reduced role for government, difficulties for labor, large-scale economic and corporate restructuring, tax reduction, anti-inflationary praxis, a two-tier economy, concentration of wealth, increased debt and speculation, and a speculative implosion.

In the Reagan era, Phillips notes, tax law changes favoring the well-off combined with a shift in government spending away from programs benefiting the poor and working class and toward the military to exacerbate inequity. Making matters worse were deregulation and debt. Phillips would go on to argue in Arrogant Capital: Washington, Wall Street, and the Frustration of American Politics (1994) that the “finanacialization of America” and the speculative frenzy it engendered magnified inequality and created a “stocks up, jobs down” environment.

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Comment Preferences

  •  top .5% own 27% of US assets; that's a tax base (1+ / 0-)
    Recommended by:

    I can't believe the R's are cruising along behind the same tired song that we can't raise taxes 'cause 'we've got to save the rich'. Maybe its time for a one time tax on assets; as we reform the tax system that is. I guess I know how that would fare.
    Ultimately what we do need is a more progressive tax schedule to deal with the inequality borne of the present miss mash of deceptions, exceptions int he top brackets that seem to be counting on lax oversight built into our current scheme. You know those little loopholes that let the traders call income a capital gain saving millions in taxes. This has to stop. Let's get some investigators, pay them on commission and see if we can't get a better tax flow from the top.
    The GOP are liars. The rich haven't 'created jobs' they've socked away the resources needed to keep the middle class afloat. They are this country's enemy. They are holding the government hostage and should be regarded as anti-American and un-democratic.
    If either party is willing to cut Defense spending to avoid going 'over the cliff', they can have my vote. The social spending done by our government is the best use of our tax dollars. Our defense spending is offensive.
    Will 'for the good of all mankind' please re-enter the lexicon? The obscene fortunes held by the few at the top, the art, the houses, the million dollar toys, also bear a curse amplified by their amount of indifference to the plight of those who could be so easily helped by simple acknowledgment and empathy.

    •  We need more than a "one time" asset tax. (1+ / 0-)
      Recommended by:

      We should tax property rather than or much more so than income, especially if that property consists of luxuries, like mansions, exotic cars, etc. If the rich have no shame or decency about their wasteful consumption of luxury goods, then appropriately high taxes should be levied so society receives at least some benefit from such extravagant displays.

      Just doing my part to piss off right wing nuts, one smart ass comment at a time.

      by tekno2600 on Thu Nov 29, 2012 at 12:54:18 PM PST

      [ Parent ]

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