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posted on 30 June 2016

The 1% Won A Counter-Revolution While We Played

by Fabius Maximus,

Summary: Campaign 2016 has taught us invaluable lessons, as we choose between a clown and a Clinton - a servant of the 1% (sponsored by Goldman). Somewhere in our future lies the Third Republic.

It's a fitting marker for their victory. But we do not yet see the hidden struggle that brought the 1% back to power, and cannot yet see how to reform America. Others will control our future until we see these things. Here's a cut at that. This is a revision of a post from April 2014.

(1) A different perspective on America

During the long halcyon days of the post-WW2 summer America forgot about economic and social classes - and their cousin, social mobility. A confluence of circumstances made a new America: the cessation of immigration by the 1930's, the New Deal's reforms to America's political and economic structures, the post-WW2 social programs (especially the 1944 GI bill and the Cold War-boosted funding to education (from primary to graduate-level), the 1960's civil rights legislation - plus the sustained growth of GDP and wages. All these created the rise of a middle class and provided a modest degree of social mobility.

We came to consider this wonderful new America (so different from the horror show of 19th century America) as the true America - not what it actually was, a hard-won victory after generations of oligarchy. We considered this to be our just due.

This summertime culminated in the long boom - the debt-fueled almost recession-free expansion of 1982 - 2007, supercharged by the fall of the Berlin Wall in 1989 and the late 1990's tech boom. America was exceptional, history's favored son, a new moment in history. Marx became a comic figure.

"The only Marxists live in Berkeley and Albania."

The Boomers inherited the New Deal coalition. But most of their political activism was to benefit themselves - such as ending the draft, opening the work world to women, and gaining rights for gays (issues about which the 1%, as a class, are uninterested).

We forgot the long slow low-violence revolution that began after the Civil War, laying the foundation on which the middle class rose. We forgot that we are the crew on the USS America, not passengers on the Love Boat. Too few of us bothered with the boring work of working the engine room and steering the ship.

Orphans of the Sky

Available at Amazon.

The Universe was 5 miles long, and 2,000 feet across. Men scoffed at the legends of such things as stars, or the demented idea that the Ship was moving... for the Ship was the Universe, and there could be nothing outside. Then one man found his way into a forgotten room, and saw the stars - and they moved...

- Summary of "Orphans of the Sky" by Robert Heinlein (1951), one of the first stories about a generation ship traveling to the stars. Like them, we are a crew on an endless journey who have forgotten who we are and . Like them we must retake control of the ship.

(2) Then came the counter-revolution

Not everybody enjoyed this summer in America, and the core New Deal and civil rights reforms with made it possible. The 1% planned a counter-revolution. They had patience, vast resources, and a long-term vision of how they wanted to reshape America.

(a) Starting with Goldwater, the Republican Party's "Southern Strategy" made respectable again the antebellum ideologies of racism and States Rights. With this they broke the New Deal coalition, forging a new political machine to wage the counter-revolution. There was no plan, just a "run to daylight" strategy of exploiting the internal contradictions and discontents that triumphant liberals had allowed to develop in their coalition.

(b) The Powell Memorandum: Sent by Lewis F. Powell, Jr. on 23 August 1971 (2 months before his nomination to Supreme Court) to Eugene B. Sydnor, Jr., Chairman of the Education Committee of the U.S. Chamber of Commerce. Titled Attack On American Free Enterprise System, it outlined a strategy for large corporations to rollback much of the New Deal reforms on business and crush the unions (perhaps the key brick in the New Deal coalition and the middle class structure).

(c) Economist Jude Wanniski's article creating the mythology of tax-cuts as the magic elixir: "Taxes and a Two-Santa Theory" in the National Observer, 6 March 1976.

(d) In his 14 July 1978 testimony to Congress (9 years before becoming Fed Chairman), Alan Greenspan first described the "starve the beast" strategy: "Let us remember that the basic purpose of any tax cut program in today's environment is to reduce the momentum of expenditure growth by restraining the amount of revenue available and trust that there is a political limit to deficit spending." The massive tax cuts of Presidents Reagan and Bush Jr. succeeded in this respect, at the cost of damaging the government's solvency.

(3) The result: a decisive win for the 1%

Decades of work have produced a decisive win for the 1%. Now the foundation of the middle class lies in ruins.

(a) The private sector unions are a shadow of what they were. Now blue collar work is again insufficient for a middle class life, and the political power unions produced for workers has been broken.

(b) Corporations have shifted the expense of training onto workers. Increasingly jobs are contingent (eliminated on whims of the business cycle or corporate mergers and reorganizations), part-time, seasonal, minimum wage, temporary, without benefits. For most of the population, people scramble to provide security for their family, with no time for political theory - let alone political activism.

(c) The education system lies in tatters. The inner city schools produce barely literate workers. The colleges have become so expensive - and financial aid so small - that young people work long-hours to fund it, then enter their working lives groaning under the debt. Careerism is good sense; a liberal arts education is a luxury. Most students lack the security, resources, and time to become politically active (except at elite schools).

(d) Both of the major political parties are subsidiaries of the 1%. The Democrats run a Goldman-financed candidate and defeat an attempt to put opposition to the TPP on the platform. The major candidates in the GOP presidential primaries were devoted to the 1%, as seen by their proposals for massive tax to the 1%.

Sigmoid curve

Now begins the "pursuit" phase of the class war, in which the 1% crushes its foes (preventing subsequent conflict), and begins the post-bellum restructuring of law and society to accommodate the appetites of our ruling oligarchy.

A sign of their victory is the candor of their courtiers, expressing anti-democratic sentiments that would have been hidden in better times. Such as this by journalist James Traub: "It's Time for the Elites to Rise Up Against the Ignorant Masses" in Foreign Policy (the military-industrial complex is one center of the 1%'s power) -

"The Brexit has laid bare the political schism of our time. It's not about the left vs. the right; it's about the sane vs. the mindlessly angry."

The changes made to America so far are small. We are on the gentle rise of the early phase of the "S Curve". Now we enter the steep part, as the 1% makes large obvious changes, without fear of effective opposition. Despite all the noise about political polarization, policies of great interest to the 1% (and the military industrial complex) often find bipartisan support. Expect lots of this during the Clinton administration.

Wealth distribution of USA(4) Suddenly, too late, we discover inequality

Now that we're broken by the 1%, powerless and divided, we discover the concentration of wealth and income caused by our defeat. Few people as yet see the policies - such as a 1%-friendly tax system with lax enforcement - that produced this inequality. It has become too obvious to conceal. The lavish spending of the 1% is seen at the little Versailles across America - in Manhattan, Silicon Valley, and Beverly Hills (see Bill Gates' mansion).

A wealth of studies show the responsiveness of the government to the 1%, the shift of our national income from workers to owners, and the concentration of wealth. But social scientists have lost the language to describe the situation. The Bourgeoisie (the 1%) and their key servants, the Petite Bourgeoisie (the next 9%), own everything - and control what they don't own. We have forgotten Marx's terminology, and must now slowly and painfully recover it (his prescriptions were a first cut at the problem, as good as such things usually are - not very).

Marx tells us a hard truth: what matters is not income distribution, but wealth. And that's far worse than we're told. For example, the below graph is misleading. The primary asset of the middle class (the lower classes have little or no net wealth) are its homes, which in a slowly growing (in terms of money and population) America are a near-zero real return asset (after expenses). Unlike the assets of the 1% - businesses, natural resources, stocks, and bonds.

Inequality of Wealth and Income

(5) Future chapters in America's story

After defeat comes the dreamland (see America enters the dreamland). Now the story tellers come with comforting tales. Do nothing; eventually technology will bring us to the promised land! Do nothing, eventually the brutal rule of the 1% will force people to arise and bring down the temple! Do nothing; eventually the system will crash from an inevitable economic or ecological disaster. Do nothing; it's hopeless (there are hundreds saying this on the FM website).

We want stories that relieve us from the burden of responsibility as citizens, reducing the pressure on us to do anything. So long as we refuse to work for a better America, then the 1% will win.

I have written 50 posts about Reforming America: steps to political change. The first step must be to awaken the American people. At best this will be a long, slow journey. Perhaps in 2016 we have yet to take the first stop on this road, so that in 2020 we can choose between two suitable candidates for President.

American Power

(6) For More Information

If you liked this post, like us on Facebook and follow us on Twitter. See all posts about increasing income inequality and falling social mobility, about steps to reforming America, and especially these...

  1. Despair: so common these days, so good for the 1%.

  2. Why Americans should love Tolkien's Lord of the Rings - we live there.

  3. Why Elizabeth Bennet could not marry Mr. Darcy. Nor could your daughter.

  4. Learning not to trust each other in America, and not to trust America.

  5. American politics isn't broken. It's working just fine for the 1%.

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