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

The Organization of Labor (Part Three)

(Note: This is the final segment in a series introducing readers to the legacy of Theodore Roosevelt. Balancing the need for change against preserving the benefits of the status quo poses an intricate dilemma. T.R. believed under the concept of "noblesse oblige" (Part One) that citizens of wealth, power and privilege were balanced by public responsibilities to help those who lack such privilege or are less fortunate. The great issue was to reform the "unnatural alliance (Part Two) of politics and corporations” to enthrone privilege. "Conduct," not "size," was the overriding consideration. Labor was not only an economic, but also a moral, a human problem...)

Can a true, complex US industrial and political democracy exist, absent the ability for ordinary individuals to combine in a collective capacity to secure their basic human rights? Does the great entrepreneurial risk-taker who reaps large profits have any balancing obligations owed to American society and the law?

Individually, the worker was impotent to negotiate a wage contract with the great companies; they could make fair terms only by uniting into unions to bargain collectively.  Individual workers were thus forced to cooperate to secure their basic human rights, compelled to unite in unions of their industry or trade.  These unions “were bound to grow in size, in strength, and in power for good and evil as the industries in which the men were employed grew larger and larger.”

T.R. continued:

A democracy can be such in fact only if there is some rough approximation in similarity in stature among the men composing it.  One of us can deal in our private lives with the grocer or the butcher or the carpenter or the chicken raiser, or if we are the carpenter or butcher or farmer, we can deal with our customers, because /we are all of about the same size/.  Therefore a simple and poor society can exist as a democracy on a basis of sheer individualism.  But a rich and complex industrial society cannot so exist; for some individuals, and especially those artificial individuals called corporations, become so very big that the ordinary individual is utterly dwarfed beside them, and cannot deal with them on terms of equality.  It therefore becomes necessary for these ordinary individuals to combine in their turn, first in order to act in their collective capacity through that biggest of all combinations called the Government, and second, to act, also in their own self-defense, through private combinations, such as farmers’ associations and trade unions. (emphasis mine) 

A willingness to do equal and exact justice to all citizens did not, according to T.R., “imply a failure to recognize the enormous economic, political and moral possibilities of the trade union.”  T.R. concluded his discussion of the topic thus:

Just as democratic government cannot be condemned because of errors and even crimes committed by men democratically elected, so trade-unionism must not be condemned because of errors or crimes of occasional trade-union leaders.  The problem lies deeper.  While we must repress all illegalities and discourage all immoralities, whether of labor organizations or of corporations, we must recognize the fact that to-day the organization of labor into trade unions and federations is necessary, is beneficent, and is one of the greatest possible agencies in the attainment of a true industrial, as well as a true political, democracy in the United States. 

Not surprising, a balancing act, a weighing and mature contemplation of competing interests, was necessary.  The individual risk-taker took full advantage of the national security apparatus and the law of contracts, on the one hand, to protect and preserve his capital investment and vast profit potential.  Consequently, that same risk-taker had the resulting obligation, on the other hand, to permit the law to change to a sufficient degree to protect and improve the fundamental human rights of the workers who made those profits possible.

After completing two presidential terms featuring an agenda of activist, progressive reform along these lines, T.R. declined to run for a third term in the election of 1908.  He was maintaining the tradition of George Washington.  Instead, he threw his overwhelming popular support behind his then-Vice President and hand picked successor, William Howard Taft.

T.R. saw Mr. Taft as an able administrator under T.R.’s leadership and an extension of himself.  Essentially, it was understood that Mr. Taft would consolidate and expand T.R.’s activist, progressive agenda with all the necessary machinery of government already in place and smartly operating.

Unfortunately, events did unfold quite as T.R. had envisioned.  The powerful forces of conservatism fought back smartly, setting in motion an epic clash.  When the dust had finally settled, the political landscape had been transformed.  The ordinary citizen’s identification with the more familiar “Republicans vs. Democrats” of today had been born.

-Michael D’Angelo