Saturday, April 26, 2014

On The Death Of American Democracy: It's The Capitalism, Stupid

It took generations for historians to understand that the Civil War was a great deal more than a struggle over slavery, and that there were economic and social factors of arguably equal importance that shaped that bloody conflict and the last half of 19th century America.  Similarly, it will take historians many years -- if not necessarily generations -- to conclude that the defining event of the early years of the 21st century was not the 9/11 terror attacks, the wars in Iraq and Afghanistan or the election of Barack Obama.  It was the death of American democracy. 
This catastrophe has not occurred because of those events.  Yes, the attacks, wars and election all have had enormous ramifications, but the death of American democracy, a slow-motion process that has taken years to become apparent, is a result of the corruption of capitalism by powerful oligarchs who have been enormously successful in milking the positive aspects of that once vaunted economic system for their own gain while not just allowing, but encouraging the negative aspects to run rampant. 

This has happened with the acquiescence of both political parties, a news media busy chasing its own tail, and a big assist from a U.S. Supreme Court majority that values wealth over everything near and dear to our red, white and blue hearts.  Special scorn must be reserved for docile Democrats who have talked the talk about protecting the middle class, patching holes in the social safety net, and making sure those oligarchs and their business interests pay their fair share, but have not walked the walk because they are just as beholden to the corrupting influence of big money that has rotted politics to its very core as have their Republican partners in crime.

What are the positive aspects of capitalism?  Unfettered competition.  Free and competitive markets.  Using fair means to determine the prices of goods and services.  Capital accumulation and fair taxation for all wage earners.
What are the negative aspects of capitalism?  Rigged competition.  Fettered and anti-competitive markets.  Rigging the prices of goods and services.  Capital accumulation for only top wage earners, who do not pay their fair share of taxes.
Twin cancers have killed American democracy:

* Accumulation of most of the wealth by a tiny percentage of the population.  Yes, those One Percenters, many of whom use the financial markets as feather beds.

* A widening gap between the rich and everyone else that has brought a large segment of the middle class to its knees and increased the level of poverty.
So what, you may wonder, do oligarchs and income disparity have to do with democracy?
This is because these oligarchs and the powerful corporations and other organizations they control exert a far greater grip on government policy than middle-income and poor Americans, who no longer have much impact at all.
"Our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts," say academics Martin Gilens and Benjamin page in a new study.  "Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association . . . But we believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America's claims to being a democratic society are seriously threatened."
In other words, the majority no long rules, undercutting the very foundation of democracy. 
Or to put it another way, the class war is over and the working class lost.  Any doubt about that should have been dispelled during the Bush Recession when the political system responded to the gravest economic downturn since the Great Depression by extending a helping hand to the rich and to corporations and by screwing the middle class.
Gilens and Benjamin built a statistical model with several variables to test their hypothesis.  It revealed that when the economic √©lites support a given policy change, it has about a one-in-two chance of being enacted, or about 45 percent.  When the √©lites oppose a given policy change, its chances of becoming law are less than one in five, or about 18 percent.  These numbers reflect a discouraging reality: Getting anything enacted in our hyper-divided government is very difficult, while the study confirms that that the rich exercise an effective veto if they are against something.  This blows to smithereens another important aspect of democracy --  that policy outcomes reflect voters who represent the ideological center.
John Cassidy of The New Yorker hammers that home in citing the failure to eliminate the "carried interest" deduction, which allows hedge-fund managers and leveraged-buyout bigs to pay an artificially low tax rate on much of their income. "In 2012, there was widespread outrage at the revelation that Mitt Romney, who made his fortune at the leveraged-buyout firm Bain Capital, paid less than fifteen per cent in federal income taxes," Cassidy writes. "But the deduction hasn’t been eliminated."
The Supreme Court's 2010 Citizens United decision was a perfect storm. As in the destructiveness of a Category 5 hurricane.

In one fell swoop, the court's conservative activists put a stake through the heart of our most cherished civil right -- freedom of speech -- in a ruling that conflated spending with speech and was the court's most twisted ruling since
Dred Scott in 1857, which found that African-Americans were not citizens and therefore had no standing in federal court.  In Citizens United, the justices in the majority tacitly acknowledged that America is now ruled by oligarchs who in some respects are even more powerful than the federal government, a vampire elite that with the court's blessing can use corporations and so-called Super PACs to buy elections. 

That was just the start.  Last month's McCutcheon v. Federal Election Commission decision was the coup de grace to judicial sanity in not just striking down campaign contribution limits, but allowing oligarchs to increase their reach by making unlimited contributions to an unlimited number of federal candidates anywhere they choose.

"There is no right more basic in our democracy than the right to participate in electing our political leaders," Chief Justice John Roberts declared in
McCutcheon, of course failing to note that plaintiff Shaun McCutcheon, an Alabama businessman, did not merely want to contribute to candidates in his own state, but campaigns in every state where he wanted to try to influence the outcome.  The decision was not merely faithful to the twisted notion that money is speech, it accords out-of-district money the same First Amendment protection as in-district money.
The Koch Brothers and their oligarch ilk tried to buy the presidential election in 2012.  Will they succeed in 2016?
America's middle class was once the envy of the world and nothing less than the glue that held our society together.  You know, fulfilling the dream of home ownership, getting children affordable educations, working hard to earn decent retirement benefits, perhaps buying that second car, a modest vacation home or motorboat.
But America has been racing to the bottom for years and now ranks at or near the bottom among the 17 industrialized nations in quality-of-life and other social measures such as life expectancy (despite by far the highest health-care costs in the world), obesity, child poverty, commitment to infrastructure development, broadband access and arts funding, while it is first by other measures, all of them negative.  These include infant mortality, incarceration rates and anxiety disorders, as well as that gulf between the rich and everyone else that is devastating the middle class and making it even more difficult for the poor to cast off their economic shackles.
While the wealthiest Americans are outpacing many of their global peers, a new analysis shows that across the lower- and middle-income levels, citizens of other advanced countries have received considerably larger pay increases over the last three decades.  After-tax middle-class incomes in Canada, which were substantially behind the U.S. in 2000,  now appear to be higher than in the U.S. Meanwhile, the poor in much of Europe earn more than poor Americans.
This may come as a shock because per capita gross domestic product and other commonly cited economic statistics continue to show that the U.S. has maintained its lead as the world’s richest large country. But those numbers are averages that do not reflect income distribution, which is skewed to that small slice of the super rich as most Americans do not keep pace with their counterparts around the world. 
"The idea that the median American has so much more income than the middle class in all other parts of the world is not true these days," said Harvard economist Lawrence Katz.  "In 1960, we were massively richer than anyone else. In 1980, we were richer. In the 1990s, we were still richer."
That is no longer the case.
Median per capita income was $18,700 in the United States in 2010 (which translates to about $75,000 for a family of four after taxes), up 20 percent since 1980 but virtually unchanged since 2000, after adjusting for inflation.  The same measure, by comparison, rose about 20 percent in Britain and Canada between 2000 and 2010 and 14 percent in the Netherlands. 
The analysis found three factors at work behind these depressing numbers:

* Educational attainment in the U.S. has risen far more slowly than in much of the industrialized world, making it harder for the economy to maintain its share of highly skilled, well-paying jobs.
* Governments in Canada and Western Europe take more aggressive steps to raise the take-home pay of low- and middle-income households by redistributing income, while rich Americans pay lower taxes.
* U.S. companies distribute a smaller share of their profits to their workers.  Executives make substantially more money, the minimum wage is lower and labor unions are weaker.
Given the epic Democratic Party fail, if ever the U.S. needed a workers party like many European nations, it is now.
A French economist, of all people, has put the last nail in the democracy coffin, and conservative Republicans (are there any other kind?) who cling to the myth that we’re living in a meritocracy in which great wealth is earned and well deserved are in a panic. 
Capital in the Twenty-First Century is a bestseller, and author Thomas Piketty has written a discourse changer in arguing that the sharp rise in income inequality has ushered in a new Gilded Age in which oligarchs are anything but the job creators Republicans claim they are. 
About the best that conservatives have been able to come up with is that Piketty is a Marxist.  Name calling, of course, has long been their default position, and recalls to mind William F. Buckley's plea that teaching Keynesian economics be banned from universities because it was "collectivist."
"Now, the fact that apologists for America's oligarchs are evidently at a loss for coherent arguments doesn’t mean that they are on the run politically," writes Nobel economics laureate Paul Krugman in the New York Times. "Money still talks -- indeed, thanks in part to the Roberts court, it talks louder than ever. Still, ideas matter too, shaping both how we talk about society and, eventually, what we do. And the Piketty panic shows that the right has run out of ideas."
There are similarities between the United States today and Russia today some 25 years after the collapse of the Soviet Union that are exceedingly uncomfortable to contemplate: Oligarchs increasingly hog the wealth and power in both societies.  And the good aspects of capitalism have been discarded for the bad.  Yes, Vladimir Putin is a thug.  What he is doing in the Ukraine is a violation of human decency, as well as international law. 

But before you go postal on Putin, take a close look at what has happened to your country.

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