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Civic Revolution: Targeting the Dictatorship of Wealth

 

By Richard D. Vogel

Copyright © 2012 by Richard D. Vogel
at http://combatingglobalization.com

Permission to copy granted

 

Targeting the Dictatorship of WealthThe withering away of democracy under increasing economic inequality and growing poverty is a central fact of political life in the 21st century.  In the face of this global (and national) megatrend, breaking the stranglehold of the Dictatorship of Wealth is a central task of Civic Revolution.  The vanguard of the 99% -- united and using its collective knowledge, skills, and resources -- can be a revolutionary force to challenge the ruling 1% and reshape political processes in the interest of the majority.


A Rude Introduction to a Harsh Reality

Tear Gas and Rubber Bullets i

The demonstrators who assembled on a downtown street to protest chronic unemployment and austerity measures that had been imposed on the majority of the population were quickly surrounded by a battalion of well-armed riot police backed-up by armored vehicles.  Although the situation was tense, nothing happened until after rush hour.

Through a bull-horn the police commander announced that the demonstration was unlawful and protestors who refused to disperse were subject to arrest and possible injury.  Many left.

Those who remained faced a line of officers armed with heavy batons and protected by fiberglass helmets, Plexiglas shields, and gas masks.  Police fired tear gas projectiles into the ranks of the demonstrators and advanced.  Several of the protestors who broke through the line were shot with rubber bullets fired by a second line of police armed with shotguns and assault rifles.

The scene was watched over by police snipers with live ammunition who had been strategically placed on surrounding rooftops in case things got out of hand.  In this action, they were not needed.

The operation was completed in minutes without a hitch.  Scores of protesters were arrested and secured with plastic handcuffs.  The injured were transported under guard to local hospitals and the rest were sent to an auxiliary detention center set up to process mass arrests.

Public sanitation workers were called in to clean up the debris and wash down the streets, and the city returned to normal.

(Click here for images of tear gas and rubber bullets being used against demonstrators.)

The use of “non-lethal” force to suppress dissent has become a signature event of the 21st century in the developed as well as the developing countries of the world as inequality grows and police action becomes the standard response to civil unrest. 
The violence will continue until the stranglehold of the Dictatorship of Wealth is broken.

Extreme Inequality

Increasing inequality and growing poverty is one of three global megatrends shaping the events of the 21st century ii.  It has already produced clear winners and losers in the USA.  The biggest winners are the richest 1% of the population that now possesses 35% of the total national wealth and the biggest losers are the bottom 60% that owns less than 5%.

Believe It or Not

The US Central Intelligence Agency keeps track of the inequality of income in countries because it is a major indicator for identifying failed states.  Its findings are reported online at CIA World Factbook.

Table 1 presents the CIA ranking of selected countries, beginning with the least unequal.

Table 1

The measure of inequality used in table 1 is the Gini index, the standard measure of family income inequality within a country.  The Gini Index ranges from zero (every family in the nation has the same income) to 100 (one family in the country captures it all).

According to the CIA the United States with a Gini score of 45.0 ranks 95th out of the 136 countries analyzed.  Sweden has the lowest inequality with a score of 23.0 and Namibia is the most unequal at 70.7.  The US ranks below all of the developed countries of the world and, incredibly, it has greater inequality than Pakistan (25th), South Korea (29th), India (58th), Venezuela (71st), Russia (85th), and Iran (92th).

The extreme wealth inequality in the United States is not generally recognized because most Americans embrace the myth that the USA is an egalitarian country.

Chart 1 explodes the myth.

Chart 1

Chart 1 compares the actual distribution of wealth in the US with what most Americans thinks it is and what they think it should be.
The first bar in chart 1 which depicts actual wealth illustrates the stark reality of extreme inequality in the United States.  It shows that the richest quintile (20%) of the population owns 85% of the wealth of the nation, while the bottom 80% shares the remaining 15%.

The second bar, estimated wealth, comes from a widely-recognized study which shows that most Americans are unaware of the degree of wealth concentration in the US.  Derived from a national online survey, the estimated wealth distribution bar in chart 1 shows that Americans grossly underestimate the amount of wealth owned by the richest one-fifth of the population by a full 25 percentage points (60% estimated v. 85% actual).

The third bar in chart 1, showing what Americans think the ideal wealth distribution in the United States should be, comes from the same online survey.  Most Americans believe the wealth of the top 20% of the population should be limited to 35% of the total.

Chart 2 presents a detailed breakdown of wealth ownership iii in the US.

Chart 2

Chart 2 highlights the extreme inequality that dogs the USA.  This pie chart, like the actual wealth bar in chart 1, shows that the richest 20% of the US population owns the lion’s share of national wealth – an astounding 85%.  In addition, chart 2 breaks down the distribution of the remaining 15% of the wealth among the bottom four quintiles. 

Chart 2 shows that the bottom 40% shares just 0.3% of the national wealth.  The shares of wealth of the two lowest quintiles are so small (the bottom quintile owns just 0.1% while the second-lowest owns 0.2%) that, together, they appear as a mere sliver on the chart.  Most of the families and individuals in the bottom two quintiles actually have a negative net worth and will live in debt throughout their lives.  Discussion of the inequality and absolute poverty that plagues a significant number of Americans is generally avoided by both Republicans and Democrats.    

Chart 2 indicates that the middle quintile owns just 4% of the national wealth and the second highest quintile fares a little better at 11% of total wealth – statistics that refute another prevailing myth in America – the existence of a broad economic “middle-class”. 

Chart 2 vividly documents the extreme inequality in the United States.  An analysis of the richest 10% of the population reveals the increasing concentration of wealth at the top.

The Top 10%

Chart 3 zeros in on the net worth of the top 10%.

Chart 3

Chart 3 reveals more details of the concentration of wealth in the USA with the richest 10% owning 73% of all net worth while the remaining 90% own only 27% of the total.

The additional information in chart 4 that highlights financial wealth leads to a deeper understanding of how the Dictatorship of Wealth in America works.

Chart 4

Financial wealth (net worth minus the value of owner-occupied housing) is a more accurate indicator of the power of wealth than net worth alone because it represents the working capital of the country.  Chart 4 shows that the share owned by the top 10% jumps to 83% of the total.  The top 10% own 80% to 90% of all stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate.  Since financial wealth is the ownership of income-producing assets, it can be said that the richest 10% of the population effectively controls the production of new wealth in the US.  

And even the immense wealth and power of the top 10% of the population is skewed toward an even smaller economic elite -- the richest 1% of households in the US that owns 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity.  It is this top 1% that dominates the political processes in America.

The Top 1% and the Super-rich

The wealth and power distribution of the top 1% of the US population is also skewed toward the top with radical disparities within the group.  Currently one enters the 1% with a net worth of about $1.2M (million) to $1.8M, the top 0.1% with $5.5M, and the top 0.01% with $24.4M.  The ranks of the super-rich include about 1,000 Americans with a net worth of $1.0 billion or more.

While a net worth of $1.2M seems like a lot of money to most Americans, the corridors of power in Washington are only open to those in the top 0.1%.  It is this select few who are the major funders of the two political parties (the majority of them backing Republicans) and who finance the political campaigns of the candidates that support their political agendas at all levels of government.  They also fund the political action committees (PACs) and super PACs that write and promote model legislation that often becomes the law of the land.

To be sure the top 10% of the US population steadfastly supports the status quo, but it is the top 0.1% that dominates the Dictatorship of Wealth that controls the economic and political life of the United States.

The Dictatorship of Wealth

Putting the Dictatorship of Wealth in historical context clarifies the political tasks of Civic Revolution today.

Chart 5

Chart 5 tracks the share of national wealth owned by the top 1% versus the bottom 99% from the end of World War II through 2007.  Although a wide inequality of wealth characterizes the entire period, close examination of chart 5 shows three distinct periods and tracks the evolution of the Dictatorship of Wealth that rules America today.

The first period in chart 5 is characterized by the relative stability of the wealth ratio between the 1% and the 99% from 1945 to 1965.  This was the post-World War II era of prosperity where both capital and organized labor prospered iv.  The war devastated the economies of Europe and Asia, allowing US industries and businesses to capture the major world markets.  Any country that needed agricultural commodities, industrial supplies (steel, aluminum, petroleum products, and organic chemicals), capital goods (industrial and transportation equipment), consumer goods (automobiles, appliances, clothing, and medicine), or development capital had to rely on US sources.

Post-war prosperity in the USA came to an end in the mid-1960s when Western Europe and Japan finished rebuilding their industries and became serious competitors for world markets.

The second period depicted in chart 5 shows a marked decline in the proportion of wealth owned by the 1% during the stagnation of the American economy after 1965.  By 1976 the overall economy had contracted drastically and the proportion of wealth owned by the 1% had fallen to 19.9%, the lowest share in the second half of the 20th century.  To insure a sustainable future, Democratic President Jimmy Carter warned Americans that the nation was going to have to conserve resources and reorder its economic priorities.

The third period in chart 5 marks the rise of the fortunes of the 1% that almost doubled by 1995 (38.5%), dropped slightly during the recession of 2001, and then leveled off at almost 35% in the subsequent years.  It was during this third period that the 1% consolidated the Dictatorship of Wealth in the United States.  

How they did it – Reagan and the rise of the 1%

The rise of the 1% began in earnest when Republican Ronald Reagan challenged Jimmy Carter’s view of the future of America and won the 1980 election.  Reagan promised prosperity through “trickle-down” economics -- the richest 1% of the nation would be given generous tax breaks that would stimulate the economy and thereby benefit all Americans.

Labeled Reaganomics, what was actually instituted under the Reagan administration was a neoliberal program of supply-side economic policies v.  These policies, which depended on the installation of a neoliberal national government, included: 1) the reduction of taxes on the rich, 2) the further subordination of labor to the demands of capital, 3) the promotion of neoliberal globalization, 4) the deregulation of businesses and, 5) the privatization of social services

All five of these neoliberal economic policies instituted or consolidated under Reagan have been embraced by subsequent administrations, both Republican and Democrat, and have contributed to growing inequality and the consolidation of the Dictatorship of Wealth in the United States.

Matrix 1 offers a summary of the consequences of neoliberal economic policies for the 1% and the 99%.

Matrix 1

The impact of the policies of Matrix 1 is so profound that each element deserves a closer look.

The Political Prerequisite

The installation of a neoliberal congress and administration (including the courts) is absolutely essential to the Dictatorship of Wealth.  Since in an open republican democracy the 99% would never knowingly vote for a representative who stood against their economic interests, political subterfuge has become the overriding strategy of the 1%.  Neoliberal politicians publically call for limiting the role of government but resolutely defend the laws and government activities that serve the interests of the 1%.  Once a neoliberal government is installed, it can facilitate the economic policies in Matrix 1 that consolidate the Dictatorship of Wealth.  This political perquisite is the reason the outcome of national elections is of vital concern to the 1%, and why it is willing to spend hundreds of millions of dollars to influence the outcome of the political process at all levels of government.

It should be kept in mind that every US President elected since 1980 has supported all of the neoliberal economic policies listed in matrix 1.

Neoliberal Economic Policies

  1. Reduce taxes on the rich. “No new taxes!” is the standard battle cry of aspiring neoliberal politicians who defend and extend tax cuts for the rich after they get in office, shifting the tax burden to the remaining 99% of the population.  Cutting taxes for the rich also exacerbates the fiscal crisis in the United States today which is a product of tax cuts for the 1% and declining tax revenues coming from the 99% as their incomes shrink and their share of the national wealth declines.
  2. Further subordinate labor to the demands of capitalRonald Reagan fired the opening salvo of the neoliberal war of attrition on labor when he busted the air traffic controllers union in 1981, a war that has continued unabated until the present day.  And it is not just organized labor that has been subordinated – a full history of the neoliberal war on all working people is available in The Evolution of Neoliberal Labor Strategy and Decline of the American Working Class.  Because wages and salaries are the primary sources of income for the vast majority of the 99%, the subordination of labor is a major factor in the growing inequality in the nation.
  3. Promote neoliberal globalization under the banner of free trade.  Outsourcing jobs to cheaper foreign labor markets was the decisive strategy of the campaign to subordinate labor to the interests of the 1%.  With the help of neoliberal administrations from both political parties, jobs -- blue collar, white collar and professional jobs -- the sources of wealth for the 99%, were sent overseas.  The United States government has negotiated 19 free trade agreements (FTAs) that provide access to cheap labor markets for transnational corporations (TNCs).  In addition, the government has established 264 free trade zones (FTZs) in the United States that grant generous tax exemptions to TNCs on value-added work done on imports inside the country.  All free trade policies benefit the 1% while further undermining the economic foundation of the 99%.
  4. Deregulate business.  The deregulation of business is a defining feature of neoliberal governments.  Unrestrained by law, companies are tempted to engage in harmful and predatory business practices in order to maximize profits.  The most recent example of this is the Great Recession of 2008, the direct result of the deregulation of the financial industry.  The 1% stands united against any movement to restore government regulations on business and actively opposes any environmental protection measure that might restrict business.
  5. Privatize public property and social servicesPrivatization increases the accumulation of wealth by the 1% by transferring ownership of public assets to them and converting essential health, education, and social services into for-profit enterprises.  Although the fire-sale of mineral rights on large tracts of public lands to the 1% goes largely unnoticed, the impact of privatizing public education is glaringly obvious.  Because of the hollowing out of the American economy under neoliberal globalization, the 1% no longer sees a need for universal public education.  The abandonment of public education in the US is contributing to the trend of increasing inequality by closing the primary window of economic opportunity accessible to the 99%.  The privatization of Social Security and Medicare, priority projects of the 1%, will destroy the last vestiges of civic responsibility in the USA.

These five neoliberal economic policies and the laws, executive orders, and court decisions that have put these policies into practice have consolidated the Dictatorship of Wealth in the United States.

A broad-based Civic Revolution offers a way to break the stranglehold of the Dictatorship of Wealth.

Civic Revolution: Targeting the Dictatorship of Wealth

The Political Imperative

All the facts are in.  The United States of America, a nation founded and staunchly defended as a democratic republic “of the people, by the people, and for the people”, has been hijacked by the richest 1% of the population.  The future of democracy depends on zeroing in on the neoliberal economic policies that have consolidated and continue to sustain the Dictatorship of Wealth and replacing them with policies and politicians that serve the interests of the 99%.

The targets are clear:

  • Support progressive taxationHistorically, progressive income taxes have been linked to the founding and preservation of democracy.  The United States has progressive income tax laws on the books but they are riddled with loopholes for the 1%.   All of the gaps in the laws must be permanently closed.  The USA also has inheritance taxes -- effective curbs on the concentration of wealth -- but they have been subverted by tax loopholes such as “dynasty trusts”.   Taxing the rich is central to breaking up the Dictatorship of Wealth and revitalizing democracy in the US. 
  •  Restore the rights of working AmericansA full discussion of the history of the subversion of the rights of all working people in America is available in The Evolution of Neoliberal Labor Policy and Decline of the American Working Class.  A key event was the passage of the Taft-Hartley Act of 1947 which restricted the political rights of labor and provided capital with a critical political advantage by encouraging states to pass “right-to-work” laws that outlawed closed union shops.  Repealing Taft-Hartley and the reams of anti-labor laws and court rulings on the books would be a major step in restoring the political rights of all working people.  Everyone involved in the production of wealth must have a voice in its distribution.
  • Combat neoliberal globalizationGlobalization, per se, is not bad – international trade has been going on for centuries.  However, neoliberal globalization, which permits the TNCs to pit the workers of developing nations against domestic workers has undermined the American working class and destroyed countless national industries.  Neoliberal globalization must be replaced by alternative forms of international trade that offer mutually beneficial and sustainable relationships between nations.
  • Strictly regulate businesses to prevent predatory and harmful business practicesToday the gigantic transnational corporations are beyond the effective control of any government and are actually larger than many of them.  Production, employment, profits, and taxes have been outsourced to foreign countries.  Half of America’s top 500 TNCs have their headquarters in foreign tax-havens and avoid any significant oversight by the US government.  Since 83% of all corporate wealth belongs to the top 10% of the population, bringing the mammoth TNCs under control is absolutely essential to breaking the stranglehold of the Dictatorship of Wealth. 
  • Guarantee the health, education, and welfare of the 99%The privatization of education and the dismantling of the social safety net are direct threats to present and future generations of the 99%.  Free public education must be revitalized and extended to the post-secondary level in order to provide the educated work force needed to build and maintain a sustainable economy.  A secure social safety net that provides for the health and welfare of citizens in need, children, and the elderly is a basic civic responsibility. 

 

Targeting the Dictatorship of WealthThe withering away of democracy under increasing economic inequality and growing poverty is a central fact of political life in the 21st century.  In the face of this global (and national) megatrend, breaking the stranglehold of the Dictatorship of Wealth is a central task of Civic Revolution.  The vanguard of the 99% -- united and using its collective knowledge, skills, and resources -- can be a revolutionary force to challenge the ruling 1% and reshape political processes in the interest of the majority.

 

To be successful the Civic Revolution must ultimately become global.  Because of the influence of the United States on world events, the Revolution needs to begin here and it needs to begin now.

(end)

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(Authors note:  This essay is the third in a series on Civic Revolution.  The other two are Civic Revolution: Securing Human Rights and Responsibilities in the USA and Civic Revolution: “to alter or to abolish”.

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iBoth of these terms are misleading.  “Tear gas” implies that it merely causes tearing.  Tear gas is actually a toxic chemical agent that poses serious health risks and can cause death by asphyxiation.  Likewise, “rubber bullets” is a misnomer.  These projectiles are made of dense plastics and some have a steel core for ballistic efficiency. Rubber bullets, with or without steel cores, are capable of producing fatal wounds when they strike the head or torso, especially when fired at close range.  Tear gas and rubber bullets, dangerous but cheap and effective tools of crowd control, are standard weapons in the armories of all modern police agencies.

iiThe other two are increasing neoliberal globalization and climate change.  For a discussion on the interrelationship between these three megatrends and their impact on the United States see CIVIC REVOLUTION: Securing Human Rights and Responsibilities in the USA

iiiWealthin chart 2 and the following discussion is expressed in terms of net worth, the value of all marketable assets such as real estate, stocks and bonds owned by a household minus all debts, such as home mortgages and credit card debt.

ivOf course, unorganized labor shared little of the post-war prosperity.  The 1950s and early 1960s witnessed the runaway shop movement during which many industries relocated from the heavily unionized Northeast and Midwest to the American South to exploit the cheap labor market there insured by “right to work” laws and racial discrimination.  See: The Fight of Our Lives: The War of Attrition against U.S. Labor.

vA neoliberal government was installed in the United Kingdom under Prime Minister Margaret Thatcher during the same period and consolidated the Dictatorship of Wealth in that country.  Most developed nations have followed suit.

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