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Sunday, July 15, 2012

Swimming in a River of Wealth (Part One)

(Note: This is the first segment in a two part series.)

Does US capitalism have a soft, human face behind its tough exterior shield? In the mad rush to the top of the pile, does it allow for a safety net for those at the bottom, or for the elderly, or the sick? Do its rules of engagement provide the game’s participants with a level playing field in the land of opportunity?

Main Street is convinced that there are some on Wall Street, perhaps but a precious few, who are swimming in a river of wealth. Through the forces of our system of US capitalism, they have mastered the rules of the game, manipulating them both within and outside the bounds of the law where necessary. The consequences are an acute concentration of wealth in the hands of a few. As a result, they control American society.

The disparity in wealth in present day America is presently as great as at any time since the start of the carbon-based Industrial Revolution, more than a century ago. Over successive generations, these wealthy few have continued to devise new, creative ways to use their financial resources discreetly, subtly, even covertly. They exert a degree of influence over lawmakers and politicians to maintain their extremely powerful, yet artificial, status. To quote Yogi Berra, it seems like Hamilton vs. Jefferson, “déjà vu, all over again.”

These wealthy few are strong swimmers, controlling the flow of capital spending upon which the American economic structure is based. They control banking, including interest rates, money flow, equity and bond prices, debt service and derivative financial investment vehicles. They control taxation policies in their various forms, including income, property and estate taxes. They control insurance and financial services companies. They control spending on political candidates and campaigns and thus have a direct effect on the outcome of democratic elections. They control the media, what ordinary Americans see and don’t see on television stations like Fox News and CNN. They control energy use and energy “policy” and are virtually the invisible force behind a lack of a concerted national energy policy. All these factors are in play.

Since these wealthy swimmers control elected representatives, they also control the political appointment process. This includes judicial and law enforcement appointees. They also set the agenda and control both the enactment and enforcement of laws relating to all the institutions of daily life that ordinary Americans more or less take for granted.

Their reach extending to the laws of inheritance, they can even control human behavior from beyond the grave. Their wealth is cemented into the status quo, but only flashed to the masses. They build monuments to themselves. Ordinary citizens pejoratively label them McMansions, in a second Gilded Age that mirrors a familiar pattern from Mark Twain’s Industrial Revolution era. In short, the precious few who are swimming in a river of wealth control the myriad of rules and regulations which were designed to ensure a level playing field for all citizens.  They use their considerable power to prohibit the kind of change that would be their undoing.

Through the influence of “market” forces, the Great Depression itself reversed and leveled the disparity of wealth between the very rich few and the masses of the poor. Both were wiped out simultaneously, finding themselves on the same bread lines. Both sought warmth by the same smoky, trash bin fires and shelter in public common areas. Begun in 1929, the leveling process would take a full 10 years to run its painful course. But by 1939, the US economy had largely recovered, thanks to a sharp increase in the manufacture of munitions for the World War II combatants. Though dry for a decade, the river of wealth was slowly returning to normal, as were the swimmers, who were regaining their general health.

At the same time, the social safety net polices of F.D.R.’s New Deal positioned the government in an active role as the very agent of reform.  Ordinary citizens would come to expect the support of their government, especially in time of need.  With cornerstone examples like the 1935 Social Security Act and National Labor Relations Act, the New Deal restored America’s faith in its system of capitalism by making it seem more humane.  Additionally, it ensured, at least theoretically, that an economic calamity of the Great Depression’s magnitude would never happen again.

(The second segment in this two part series brings us forward from the time of the Great Depression to the current economic upheaval in the aftermath of the Great Recession of 2008. How did we let it happen again?)

-Michael D’Angelo

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