There's a "new" kind of class warfare being waged in in the United States, but you have to look very closely to find it. Perhaps "warfare" is the wrong word, for a war must have two sides in active opposition to each other, whereas this time around we only have two sides. This "warfare" is creating conditions that more and more resemble those of the late 19th century when America did not yet have an extensive Middle Class. Mark Twain dubbed this corrupt era the "Gilded Age."
The great egalitarian (socialist) movements of the 20th century are long gone. In the decades after the Great Depression and World War II, the Democrats assimilated some of the socialist agenda, which faded away during the Cold War. In the 1960s, Lyndon Johnson could still wage a war on poverty. When I was growing up, Democrats stood for labor unions and rights of working people. Republicans ... did not. For years and years, everybody understood that this was how things worked.
In 2010 no political party or faction represents working Americans. However, the wealthy are very well represented on both sides of political aisle because they have the ability to pay the bribes the politicians depend on for their election. Robert Reich has noted that campaign spending in this year's election is completely out of control. This is the first election (of many to come) taking place after the Supreme Court lifted restrictions on campaign donations—
Hundreds of millions of dollars are pouring into advertisements for and against candidates — without a trace of where the dollars are coming from. They’re laundered through a handful of groups. Fred Malek, whom you may remember as deputy director of Richard Nixon’s notorious Committee to Reelect the President (dubbed Creep in the Watergate scandal), is running one of them. Republican operative Karl Rove runs another. The U.S. Chamber of Commerce, a third.
The Supreme Court’s Citizens United vs. the Federal Election Commission made it possible. The Federal Election Commission says only 32 percent of groups paying for election ads are disclosing the names of their donors. By comparison, in the 2006 midterm, 97 percent disclosed; in 2008, almost half disclosed.
We’re back to the late 19th century when the lackeys of robber barons literally deposited sacks of cash on the desks of friendly legislators. The public never knew who was bribing whom.
Reich refers obliquely to the Gilded Age in his remarks. In our comtemporary version of late 19th century class conflict, the wealthy are quietly taking over the country without opposition, a trend which has been going on for 25 years. Not only does the public not know who is bribing the politicians, they are long past caring who is bribing them. They might care if some vocal political faction represented them, but none do. Here is a description of the actual Gilded Age—
During the "Gilded Age," every man was a potential Andrew Carnegie, and Americans who achieved wealth celebrated it as never before. In New York, the opera, the theatre, and lavish parties consumed the ruling class' leisure hours. Sherry's Restaurant hosted formal horseback dinners for the New York Riding Club. Mrs. Stuyvesant Fish once threw a dinner party to honor her dog who arrived sporting a $15,000 diamond collar.
While the rich wore diamonds, many wore rags. In 1890, 11 million of the nation's 12 million families earned less than $1200 per year; of this group, the average annual income was $380, well below the poverty line. Rural Americans and new immigrants crowded into urban areas. Tenements spread across city landscapes, teeming with crime and filth. Americans had sewing machines, phonographs, skyscrapers, and even electric lights, yet most people labored in the shadow of poverty.
To those who worked in Carnegie's mills and in the nation's factories and sweatshops, the lives of the millionaires seemed immodest indeed. An economist in 1879 noted "a widespread feeling of unrest and brooding revolution." Violent strikes and riots wracked the nation through the turn of the century. The middle class whispered fearfully of "carnivals of revenge."
For immediate relief, the urban poor often turned to political machines. During the first years of the Gilded Age, Boss Tweed's Tammany Hall provided more services to the poor than any city government before it, although far more money went into Tweed's own pocket. Corruption extended to the highest levels of government. During Ulysses S. Grant's presidency, the president and his cabinet were implicated in the Credit Mobilier, the Gold Conspiracy, the Whiskey Ring, and the notorious Salary Grab.
I was reminded of all this by some recent articles and last night's 60 Minutes report The 99ers (video below). The income inequality data I've cited in the past has been updated to include 2008 tax returns—
- The average income of the top 1 percent of households fell by 20 percent from 2007 to 2008, after adjusting for inflation, wiping out almost half of the gains this group achieved between 2002 and 2007 (see the graph below).
- The average income of the bottom 90 percent of households fell 7 percent from 2007 to 2008, in inflation-adjusted dollars, the largest one-year drop for this group since 1938. The loss in 2008 more than wiped out the increase from 2002 to 2007, leaving the average income for the bottom 90 percent of households at its lowest level since 1996.
- Income remained highly concentrated, with the top 1 percent of households receiving 21 percent of total income, which is somewhat below recent peaks but still among the highest percentages since the late 1920s.
The "Great" recession has wiped out the paltry incomes gains made by the lower 90% of Americans during the economic "expansion" made possible by the Housing Bubble. The top 1% took a hit, but Fed policy has insured that this reversal is only temporary. During the original Gilded Age there was little doubt about who was rich and who was not, but that has changed in the early 21st century. The first row below shows the actual distribution of the wealth, while the second row shows what Americans think the distribution of the wealth is. The third row illustrates what Americans view as an "ideal" distribution of the wealth.
The actual United States wealth distribution plotted against the estimated and ideal distributions across all respondents. Note: Because of their small percentage share of total wealth, both the “4th 20%” value (0.2%) and the “Bottom 20%” value (0.1%) are not visible in the “Actual” distribution. From Building a Better America – One Wealth Quintile at a Time by Michael I. Norton of the Harvard Business School and Dan Ariely of Duke University
As I've said before, I don't expect to see real class "warfare" in the United States anytime soon. However, that may change if living conditions for many more millions of Americans deteriorate as badly as I expect them to over the next decade. In the 60 Minutes video below, you will not find any revolutionaries. Instead, you'll see shocked, formerly Middle Class Americans trying to cope with the Awful Thing that just happened to them. For these 99ers who have maxed out their benefits, there is only the abyss unless caring people come to their aid.
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