Ted McLaughlin : The Never-Ending Fight Against the Plutocrats

Sample plutocrat: William Henry Vanderbilt (1821 - 1885). Famous quote: "The public be damned." From Famous Person Caricatures / TradeCard.com. Inset image below: Modern day robber baron David Koch. Caricature by DonkeyHotey.
The never-ending fight against the plutocrats

"The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself or be ruled by a small elite." -- Thomas Jefferson

By Ted McLaughlin / The Rag Blog / September 4, 2012

The quote by Thomas Jefferson above is just as valid today as it was a couple of hundred years ago. When he said it, the choice was between being ruled by royalty and their appointees or a rule by the people. The Revolutionary War ended the rule by royalty, but it did not end all of America's problems or firmly establish a lasting democracy in this country.

Jefferson knew that democracy was a never-ending fight, and that there would always be those wanting to seize power away from the people.

In the United States, those who have wanted to seize that power for their own benefit have mainly been the robber barons -- and their preferred method of doing that has simply been to buy that power (although they have never shirked from using violence, mainly through their surrogates in the political establishment and the police).

By the early twentieth century, these robber barons had nearly succeeded in destroying democracy and establishing rule by themselves -- a plutocracy.

The United States was saved from that effort at establishing a plutocracy (rule by the wealthy class) -- but it took the greatest economic disaster of the twentieth century to wake up voters and spur them to seize their country back from the robber barons -- the Great Depression.

The greed of the robber barons caused them to overreach, and that overreaching  caused the most serious depression the country had ever seen. Voters replaced all (or most) of the politicians that had been bought by the robber barons with politicians that had the benefit of ordinary Americans as their primary interest.

These politicians (Roosevelt Democrats) began to reestablish economic justice through a variety of measures like government job creation, higher taxes on the rich, Social Security, and sensible regulations on banking and investment. The robber barons (and their Republican lackeys) whined that the measures would destroy America, but they only destroyed the plutocracy and reestablished democracy -- and the country began to emerge from the plutocratic depression.

After World War II, the economy had fully recovered, and through new measures like the GI Bill and increased union power, the country prospered like never before. And this prosperity was further enhanced by the War on Poverty, Medicare and Medicaid, and the Civil Rights Acts. The country was well on its way to establishing a strong democracy with equal rights and economic justice for all citizens.

But the robber barons had not gone away -- their names had simply changed. And they wanted back the power they had lost. But they were smarter this time. They knew they had to create a message that large numbers of voters could be fooled into accepting, so they couched their nefarious agenda into innocent sounding messages like patriotism (accusing those who opposed them as unpatriotic), spreading democracy (using American military power to steal the resources of other countries), law and order (misusing the law to attack those who disagreed with them), pro-life (an excuse to attack the rights of women), returning to traditional values (the new code for racism), and defending Christianity (using religion to achieve their political and economic goals).

But perhaps the most nefarious of these new political messages was trickle-down economics. Through a concerted propaganda campaign, they convinced many people that the way to economic prosperity was to deregulate corporations and the financial industry, and cut taxes on the rich.

The idea was that by feeding ever larger amounts of money to the rich and the corporations, much of that money would trickle back down to ordinary American in the form of rising wages and new job creation. The truth is that it was simply a return to the economics of pre-Depression era America -- and it didn't work back then and doesn't work today.

The rising wealth of the corporations and the rich didn't raise wages for anyone but the rich -- who have seen their income rise by over 270% since the trickle-down economic theory was put into effect under Reagan, while the wages of ordinary workers have remained stagnant (and in fact, have actually lost much of their buying power).

Instead of raising wages or creating jobs, the rich just fattened their own bank accounts. And this had the same effect it did in the early twentieth century -- it threw the country into a serious recession (depression?) and threw millions of Americans out of work (which was exacerbated by corporate outsourcing, which continues unabated).

Now we stand at the same place our forebears did in the Great Depression -- on the edge of greater economic disaster and plutocratic rule. Will we reestablish economic justice and democratic rule, or will we give in to the robber barons this time? The answer is anything but certain.

Many Americans still buy the lie of trickle-down economic theory, or have fallen for the diversions created to fool them into voting against their own economic (and democratic) interests -- like defending religion (against a non-existent war), pro-life (for the fetus only), patriotism (putting a pink sticker on a vehicle and continuing wars that can't be won), low taxes (but only for the rich), and traditional values (opposition to rights for anyone but white men).

Will Americans vote for democracy and economic justice, or will they cement the power of the robber barons? We'll find out in November.

[Ted McLaughlin, a regular contributor to The Rag Blog, also posts at jobsanger. Read more articles by Ted McLaughlin on The Rag Blog.]

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Ted McLaughlin : Trickle-Down Depression

Trickle-down depression:
Productivity gains are no longer shared

By Ted McLaughlin / The Rag Blog / September 12, 2011

From the end of World War II through 1979 the gains in productivity in the United States were shared between workers and owners -- and both benefited as wages rose along with company profits. It was recognized that both capital and labor were important in maintaining a healthy company, and a healthy economy. But with the election of Ronald Reagan in 1980 a different economic theory was put into effect -- "trickle-down" economics.

Trickle-down economics was actually not a new theory. It was just a new name for an old economic theory -- unregulated capitalism. It was a return to the economic ideas of the 1920's and before. Workers were no longer rewarded for an increase in productivity. Instead, all of the gains from the increased productivity went to the owners. Once again the 19th century idea of economics took root, which said that capital was the only important thing and labor was little more than a necessary evil (which reduced profits).


As the chart above shows, this resulted in a stagnation of wages in this country. This stagnation was actually a reduction in wages, since the price of nearly everything has risen since 1980 making the buying power of the stagnant wages much less than it had been in 1979. But while the buying power of workers was falling, the profits of corporate owners (the richest 1%) were skyrocketing -- an increase of over 240% since 1980.

It was no longer considered good enough to make adequate, reasonable, or even very good profits. The profits had to be massive, and they were created by refusing to let workers share in the productivity gains.

Now one might wonder how the workers let this happen? Why didn't they just organize and strike for their fair share as they had done in the past? The answer is they couldn't -- because of two things. The first of these is the weakening of unions by the federal and state governments. This started in the Reagan administration (with the busting of the air traffic controllers' union) and continues to this day. State "right to work" laws (a misnomer for the right to bust unions) have also played their part in the weakening of unions.

The second powerful tool used by capitalists to keep workers from getting their share of productivity gains is outsourcing. If workers unionized and tried to strike (or threatened to strike), the corporate powers countered this with the threat to outsource the jobs to another country (where they could legally abuse workers with poverty-level wages and no benefits).


And this was no idle threat. They began to outsource American jobs and that outsourcing is increasing every year (encouraged by government subsidies and tax breaks to companies that outsource). As the chart above shows, it has now reached the point where American companies are creating more jobs in other countries than they create in the United States.

This hoarding of productivity has resulted in a vast inequality in wealth and income in this country. In 2007, the top 1% of Americans owned about 34% of the nation's wealth, and the top 10 percent controlled more than 70% of the wealth. Meanwhile, the bottom 50% of the population had only 2.5% of the nation's wealth. And since 2007 this inequal distribution of wealth has gotten much worse.

There was only one place this unregulated capitalism could ultimately lead to -- the same place it lead to the last time it was tried. The Great Depression. This time it has led to what is currently being called the Great Recession (which is actually a second Great Depression). It seems that the American people and their leaders have an innate inability to learn from history, causing us to repeat our mistakes -- even the bad ones.

[Ted McLaughlin also posts at jobsanger. Read more articles by Ted McLaughlin on The Rag Blog.]

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