The ‘Winners’ Take Everything

Exclusive: Many Americans still wonder how it happened, how did a country admired for its Great Middle Class, which sustained strong democratic institutions, end up with Third-World-style wealth inequality and a democracy to match? In reviewing Winner-Take-All Politics, James DiEugenio seeks an answer.

By James DiEugenio

In the last year or so, I have been contemplating writing a book about President Barack Obama and how he reacted to the economic blowout of 2007-08, compared to how President Franklin Roosevelt grappled with the Great Depression.

In that comparison, I thought, one could gauge not only the character and politics of the two men, but also how the Democratic Party had lost its way and why. After all, Obama said on 60 Minutes that — prior to taking office but after being elected — he had read several books about FDR and the Depression in preparation for handling a similar collapse.

Winner-Take-All Politics, the book under discussion in this review, strictly speaking, does not fit under the rubric of the Wall Street collapse at the end of George W. Bush’s presidency. But it takes pains to describe why Obama and the Democratic Party could not mount the kind of program necessary to revive the economy.

And consequently, why, in 2012, five years after the first phase of the collapse, many Americans still find themselves in the throes of this recession, an economic disaster which, unlike any since the Great Depression, has impacted almost every aspect of American public life: cutbacks in municipal and state services and employment, teacher layoffs which have raised some student class sizes to well over 40, a collapse in real-estate prices in many states, leading to a foreclosure and bankruptcy rate that has been unprecedented.

For instance, in the state of Florida, the abandonment rate of homes and condominiums is over 15 percent. That is, the rate of occupiers who have simply walked away from their dwellings and left them empty. And Nevada is not very far behind. Further, there is no end in sight to this housing debacle, which many people think is the key to reviving the economy.

How It Happened

The authors of Winner-Take-All Politics, Jacob Hacker and Paul Pierson, have put together a thesis that tries to tell the great untold story of the last 30 odd years. That is, how did the redistribution of wealth in this country become so concentrated in the highest echelons, to the point that, in the wake of the collapse, the middle class, or what is left of it, simply does not have the purchasing power to recharge the economy?

Hacker and Pierson spend the first part of the book proving this is so. And they do that in a very convincing manner, through an array of statistical charts that show that the concentration of wealth today is at a point unsurpassed since the Gilded Age, the Age of the Robber Barons — like Jay Gould, Cornelius Vanderbilt, J. P. Morgan and John Rockefeller Sr. — the days when there was no middle class and when these men essentially owned the government through outright bribery.

That was also a time when there were no strong unions to hold the Robber Barons in check. There also were no real laws regulating banking and the stock market. Because of all this, the Robber Barons were allowed to do as they wished with no regard to anyone else. According to Teddy Roosevelt, they even arranged economic downturns to hurt presidents who were opposed to their total dominion. There really was no democracy, since elections were bought and sold.

As notorious Republican campaign manager Mark Hanna once said, “The single most important thing about winning elections is money. I forgot the second thing.” Therefore in the key election of 1896, Hanna backed William McKinley against the full-throated populist William Jennings Bryan, who crisscrossed the country by train, hitting as many as four cities in a day. McKinley sat on his front porch with his mother and wife, while Hanna brought the media to him. Bryan got more votes than any previous candidate for president, but McKinley still won.

What Hacker and Pierson are arguing here is that, for all intents and purposes, the USA is now back in the Gilded Age. Even though we have a president who is a Democrat, and even though Democrats control the Senate, it does not matter. The intent of the book is to show why the top 1 percent really does not care about party affiliation.

Flooding the Rich with Money

The authors say the real story behind the bail-out begun by George W. Bush and completed by Barack Obama was not the amount delegated to TARP (with its original $700 billion price tag though later scaled back considerably). That was just the amount handed over in daylight. The amount handed over secretly, through the Federal Reserve (an amount estimated in the trillions of dollars), dwarfed TARP.

The excuse of these combined bailouts was “to save the system,” but the appearance was that the money was going into the wallets of Wall Street swindlers who had created the crisis in the first place. Rather than suffering for their greed and recklessness, they simply were allowed to get to their feet and dust off their top hats or rather have the taxpayer dust off their top hats.

But the authors explain this galling reality as part of a longer-term favoritism toward the wealthy. They ask, “Why have politicians slashed taxes on the rich even as the riches of the rich have exploded?” (p. 5)

This is one of the main tenets of the book. As the Wall Street denizens had their taxes lowered, they also successfully lobbied to be deregulated, a process that, in turn, caused the collapse. But then, because of their lobbying connections, they were bailed out of the consequences of their own actions, mostly with tax money from the dwindling middle class which has had to shoulder a larger share of the tax burden or watch the costs get passed on to future generations.

To compound the injury inflicted by the rapaciousness of the rich, the middle class also has suffered disproportionately from the severe recession: the widespread layoffs, the stagnating wages, the loss of home values and the decline in public services. A key point of the book for Hacker and Pierson is to figure out how democracy got so undemocratic.

Not Always This Way

Hacker and Pierson compare the contemporary economic scene to America after World War II. From about 1945 to about 1975 the American economic system was much more evenly balanced, both in taxes and in wealth. (p. 11) In those years, overall, the benefits of the economy were distributed more to the middle class and working class than to the upper classes. (p. 15) This changed dramatically from 1979 to 2006, when the top 1percent received 36 percent of all the income growth generated in the American economy. (p. 290)

The authors then bring out an economic study which shows just how this curve was reshaped in the last 30 or so years. For example, in 1974, the top 1 percent earned 8 percent of the income. In 2007, that more than doubled to 18 percent. If one includes capital gains and dividends, that rate goes up to 23.5 percent. So 1 per cent of the population was getting almost one-quarter of the wealth. Since these records were recorded, beginning in 1918, in only one year has this distribution been more extreme: in 1928, the year before the great Wall Street Crash of 1929, it was 24 percent.

The authors then dissected what was happening inside the 1 percent by examining the top one-tenth of the 1 percent. This group now averages $7.1 million per year in income, yet in 1974, they averaged $1 million per year, or to put it as a percentage, in 1974, the top 0.1 percent earned 2.7 percent of the nation’s income, while in 2007, they earned 12.3 percent, a huge statistical increase.

Then, the authors go one better. They break down what the top one-hundredth of the top one per cent earns. In 1974, it was $4 million per year. In 2007, it was $35 million per year, which is the highest rate in recorded history. (All these figures are adjusted for inflation, p. 16)

Putting these gains on a graph, the concentration of wealth in the hands of the top 1 percent has more than doubled from the Kennedy/Johnson years to the last years of George W. Bush. (p. 18) Or as the authors put it, America has gone from a nation in which most of our growth went to the bottom 90 percent, to one in which more than half that growth goes to the richest 1 percent. And this acceleration has been sustained over three decades, not significantly altered by the business cycle or who occupies the White House.

The One Percent Paradigm

The theoretical underpinning of this enrich-the-rich paradigm was first postulated back in the 1920s by Treasury Secretary Andrew Mellon, himself one of the key Robber Barons of the Gilded Age. In the 1970s, Arthur Laffer recast it as “supply-side economics” for Ronald Reagan, who as president proceeded to slash the top marginal tax rates on the rich by more than half.

In comparing incomes adjusted for inflation (and for benefits from employment), the authors conclude that the magic elixir of Mellon and Laffer has not worked as advertised, that is, it did not create an economy that broadly boosts living standards by having the wealth trickle down. To the degree that this paradigm has worked at all, it’s worked for the upper classes, not the middle classes, and certainly not for the poor and working class. (p. 20) The standard of living for the latter two groups has gone down.

Plus, there are more Americans in the lower-income groups, and the only way the middle class has avoided taking a major hit is, unlike the Sixties, most middle-class families have both parents working.

To put it another way, from 1979 to 2006, the top 1 percent saw a gain of 256 percent in their after-tax income. (p. 23) No other percentile even approached that rise. The second highest gain was the top 20 percent with a 55 percent rise. In other words, trickle-down economics was really trickle-up. Or, as Reagan’s disillusioned budget director David Stockman said, supply-side economics was a gift of a Trojan horse from the wealthy to everyone else.

At this point, the authors stop and zoom in for a very dramatic comparison. They ask: What if they altered the chart by using the rate of wealth distribution that existed in the Sixties? How would the wealthy be doing then, versus everyone else, (sort of an It’s a Wonderful Life alternative reality, speculating on how the various classes would have done if “supply-side” or “trickle-down” economics” had never been born)?

This one graph, more than any page in the book, shows us how the political system has been turned upside down. For if the Sixties’ rate of wealth distribution were applied, today’s top 1 percent would see a decline in their annual income by more than 50 percent! The income of the top 10 percent would drop by about 12 percent, and everyone else would gain significantly. For instance, the middle fifth would see a rise in income of about 16 percent.

Skewed Wealth

But today’s reality is quite different. There is no way around it: America has become a country with one of the most skewed rates of wealth distribution in the Western world. (p. 28) And it has happened in the last three decades, under the doctrine of supply-side economics.

According to the authors, the worst time period for this economic imbalance was the presidency of George W. Bush, under whom the rise in income for the top 1 percent went up on average about 10 per cent a year. As if they really needed the money!

Also, contrary to supply-side propaganda, trickle-down policies have not created a dynamic meritocracy that rewards the enterprise of the hardworking downtrodden who then soar into the upper classes. Instead, social mobility in the United States has stagnated. Today, there is much more opportunity to climb the economic ladder in other Western countries, like Australia, Sweden, Norway, Germany, Spain, France and Canada. In fact, the only two countries that have a worse mobility rate than the U.S. are England and Italy, whose rates are just slightly lower. (p. 29)

Even benefit packages for employees have worsened as a result of trickle-up economics. Employers today give much less to retirement packages than in the Seventies, and Americans pay much more for health insurance than, in say, Canada, while getting less in return. (p. 31) And today, the ratio of people not covered by health insurance is higher than in 1979.

After producing all this impressive data, the authors conclude that America has the worst income inequality in the industrial world. (p. 37) In fact, in the last 30 years, the United States has literally left its cohorts in the dust in this dubious category.

How Did It Happen?

So, how did this remarkable transformation happen? The book offers three main reasons:

–The gifts given to the rich in taxes and benefits.

–What the writers call “drift,” the inability of government to adapt to a new economic landscape.

–The freeing up of market regulations while minimum wage laws and the ability of unions to provide a check on corporate power were lessened.

In regards to the gifts to the rich, Winner-Take-All Politics contains a very telling chart about who has benefited the most from the lessening of stock market restrictions. This depicts the occupations of those within the top one-tenth of the 1 per cent.

Over 40 per cent of these people are from the world of corporate managers and CEOs who have benefited as rules limiting compensation, such as stock options, were gutted, especially in comparison to other countries. The next largest group, about 20 percent, is from the financial speculation sector, or Wall Street.

No other group has even 7 percent representation. (p. 46) In other words, while much of American business has been declining, corporate chieftains and investment bankers have become, by far, the most well-off personages in American society.

Gutting Progressive Taxation

One way this transformation has occurred was the gutting of the idea of progressive taxes. Today, the top 1 percent pays a full third less in taxes than in 1970.  The top tenth of that 1 percent pay less than half of what they did then. In other words, the rich do not just get a larger cut of the pie, they pay less for it. (p. 48)

The steep progressivity of the American income tax code, which existed from the post-World War II era through the start of the Reagan era, is gone today. The 90 percent rate applied to the top tranche of a rich person’s income in the 1950s was trimmed to 70 percent in the 1960s, but the biggest change occurred in the last 30 years, resulting from the Reagan tax cuts of the 1980s which lowered the top rate to 28 percent (before they were raised somewhat under George H.W. Bush and Bill Clinton and then dropped again by George W. Bush).

The supposed goal of Reagan’s tax cuts was to spur the economy by having the rich invest more in the productive sector and thus create more jobs, with the benefits then trickling down to working people. But the tax cutting spree mostly diverted the nation’s wealth into the hands of the upper classes without achieving the promised productive investments inside the United States.

Not only did Reagan’s tax cuts help out rich people who didn’t need the help, but many of the investments that the upper classes did make went to finance overseas factories that exploited cheaper labor and caused more unemployment for working-class Americans. Those lost jobs, in turn, put more pressure on cities and towns — with shuttered factories, decaying neighborhoods and depressed U.S. living standards.

In terms of numbers, the authors described it this way: the total after-tax income of the top tenth of 1 percent was 1.2 percent of the national total in 1970.  In 2000, it was 7.3 percent. Yet if the tax rate had remained the same as it was in 1970, that figure would decline to 4.5 percent. In other words, the gulf in inequality would be much narrower. And the government would have much more revenue to spend reviving the American economy and putting teachers and policemen back to work.

Undemocratic Results

What is so remarkable about this skewing of benefits to the rich is that the majority of Americans don’t agree with the idea of simply letting the rich have more of the nation’s wealth. In 2007, even before the Wall Street crash that required the unpopular TARP bailout, 56 percent of the public believed that the government should redistribute wealth by imposing taxes on the rich. (p. 50) But it’s not happening, not by a long shot.

One reason that the tax code has been all but gutted of progressivity is that the political and social counterweight of union membership has declined so much. Indeed, among private businesses it has all but collapsed. In 1947, in the wake of Franklin Roosevelt’s union-building policies, one in every three Americans was in a union. Today that figure is one in nine. But in the private sector it is even worse, at 7 per cent . (p. 56)

And as we have seen of late, the Koch brothers and other wealthy Americans are investing in politicians and policies with the intent to eliminate the last bastion of union membership, public sector unions.

Yet, historically speaking, unions have been a powerful balance to the power of corporate money in Washington. Unions were one of the few groups interested in things like health care, pensions and adequate pay, in other words the standard of living for average people. As the authors point out, it is no coincidence that as the influence of unions has waned, the upper classes have become a political juggernaut.

Again, Winner-Take-All Politics makes a telling comparison. This steep decline in U.S. union membership is not matched in other Westernized countries. For example, in Canada and the European Union, union membership has slipped very little in recent years.

And, the book points out that American public opinion isn’t onboard with the marginalizing of unions. In a 2005 poll, more than half of the respondents in the non-unionized private sector replied that they wanted to be in a union. In 1984, that number was 30 percent.

Reagan’s Union-busting

The authors note here the great public milestone in union-busting: Reagan’s firing of the air traffic controllers in 1981. But they also note that Reagan began to stack the National Labor Relations Board, which is supposed to assure fair play in union-company relations, with pro-management people. The NLRB then began to accept more company dodges to union organizing and reduced fines for abusive management tactics.

As a consequence, organizing in the private sector has become much more expensive for unions, one reason organizing has now spread more to the public sector, explaining why the Koch brothers are now taking aim there.

Another way that the corporate managers have weakened unions is with “right-to-work” laws passed by state governments, preventing “union shops” where all workers must join the union. By ensuring weaker unions with fewer dues-paying members, “right-to-work” states, especially in the South, have attracted businesses seeking cheaper and more compliant workers.

The bottom line for this three-decade-long “class war” has been the increasing disparity between what the average worker makes versus what the average CEO makes. In 1965, that CEO made 24 times what the worker made. Today, the CEO makes 300 times what the average worker makes.

And again, this huge disparity ratio is not prevalent in other countries, where unions have organized to monitor executive pay and pushed back against huge increases in compensation packages. (p. 65) In the United States, however, top executives have faced much less pressure against lavishly rewarding themselves with the help of friendly corporate board committees.

Another way companies have weakened American unions is by getting out of U.S. manufacturing and conducting domestic operations that have very little union influence. For example, in 1980, General Electric derived 90 percent of its profits from manufacturing. In 2007, GE got over 50 percent of its profits from its financial business, which was much more lucrative for managers since there was so little regulation as to what they could do and there was even less of it as time went by.

Making Money with Money

In the financial sector, potential rewards were staggering. For example, in 2002, a hedge fund manager had to make $30 million a year to be in the top 25 in his field. In 2005, just three years later, he had to make $130 million to be on that list. In 2007, just two more years later, the top 25 hedge fund managers averaged over $360 million a year.

That “greed-is-good” philosophy was driving the markets headlong into the crash of late 2007 and 2008 when the losses far exceeded profits of previous years. (p. 67) Just north of the U.S. border, Canada, with much stronger laws on real estate and stock market transactions, Canada did not endure anything like the economic meltdown in America. (p. 68)

Hacker and Pierson also address the corollary to the concentration of wealth in the United States, the concentration of political power that money makes possible.

The health of a nation’s democracy tracks closely to the distribution of wealth, a point that Walter Lippmann made in 1914 in his book Drift and Mastery, a book that was one of the hallmarks of the Progressive Era arguing that without a strong push-back to concentrations of wealth, society as a whole suffers and the quality of life declines.

Hacker and Pierson identify the political reform part of FDR’s New Deal as a model of reaction to a concentration of wealth and power, like what existed prior to the 1929 crash and helped cause it. (p. 88) This political reform program also strengthened the image of the Democratic Party among average people.

Roosevelt did not just look at the Great Depression as an economic collapse, but also as a political collapse, a failure of government to rein in the unmitigated greed of the upper classes. The authors call this understanding the politics of renewal, an approach that began to sprout in the Progressive Era of the early 20th Century and flowered from the New Deal and into the Kennedy-Johnson era of the 1960s.

But this recognition of government’s vital role in assuring a fair shake for the average American began to fade away amid the economic struggles of the 1970s and nearly disappeared under an avalanche of Reagan’s anti-government rhetoric of the 1980s. A resurgence of this reform movement has yet to emerge, even as the upper classes have looted the country.

Lost Opportunity 

The authors argue that Obama had the perfect opportunity to initiate such a renewal upon his election, but they imply that he failed to do it. I would be more forthright. I would say he utterly failed to do it. (p. 90)

Much of the rest of the book explores why there has been no politics of renewal to counteract the runaway upper classes. Though interesting, this part of the book is not as solid as the earlier sections. Hacker and Pierson are fine social scientists, but here they put on more of an historian’s hat and identify the rise of an invisible Third Party, consisting of giant lobbying houses that rose in the late Seventies, exemplified by Jack Abramoff’s influence-buying scandal.

As an historian myself, I found most of this useful but I disagreed with some of the analysis. For instance, the authors say that the imbalance between the upper classes and everyone else did not really begin with what most people consider the historical milestone of 1968, i.e. the assassination of Martin Luther King, then Robert F. Kennedy and the election of Richard Nixon. They chart the beginning as the famous letter by Lewis Powell in 1971 when the future Supreme Court justice told America’s corporate chieftains that the “American economic system is under broad attack” and that this attack demanded a response.

“Business must learn the lesson,” Powell wrote, “that political power is necessary; that such power must be assiduously cultivated; and that when necessary, it must be used aggressively and with determination without embarrassment and without the reluctance which has been so characteristic of American business.” (p. 117)

The authors argue that Powell’s call to arms started a powerful march by business interests to establish PR centers in Washington and gave rise to the lobbying giants of today, what is now a $3 billion a year industry known as K Street. Powell wrote his memo apparently as a response to Ralph Nader’s then effective role as a consumer advocate behind Citizen Action.

Giant War Chests

As Corporate America built up its Washington army, the number of registered lobbyists grew from less than 500 in 1970 to over 2,500 in 1982. (p. 118) Huge business organizations also sprang up, like the Business Roundtable. (p. 120)

Labor unions found themselves outgunned in campaigns. An alliance between Big Business and Republican National Chairman Bill Brock (1976-1981) enabled the targeting of key Democratic members of Congress, especially in the South where Republicans exploited white resentment against desegregation and other programs aimed at helping disadvantaged blacks.

The business-oriented groups also began searching for more conservative Republicans to run against what they perceived as moderates.  Key figures in this phase were Richard Nixon’s Treasury Secretary William Simon and neoconservative war hawk Irving Kristol. Both highly combative, Simon came from the business world and Kristol from intellectual circles. In the same time frame, well-founded conservative think tanks emerged, like the American Enterprise Institute.

The first target of this new alliance was Jimmy Carter’s attempt to get a bill through Congress to make it easier to organize unions. It was defeated by a powerful political drive fronted by Sens. Richard Lugar, R-Indiana, and Orrin Hatch, R-Utah. Later, Carter’s tax bill was changed to reduce the capital gains tax rate from 48 percent to 28 percent. (pgs. 131-34)

Winner-Take-All Politics argues that the Democrats, rather than fighting this new system of organized money, chose to imitate the Republicans by joining in the money chase. That approach left the middle class even more an orphan of the political system. For instance, Rep. Tony Coelho, D-California, became the Democrat’s chief emissary in pursuit of Wall Street donations.

After Reagan’s 1984 landslide win over Walter Mondale, Democrats created the Democratic Leadership Council (DLC), a think tank that sought to reposition the party in the “center” on defense and spending issues. The men who formed this group were largely southern Democrats who would soon dominate the party, including Rep. Dick Gephardt of Missouri, Sen. Al Gore of Tennessee, Gov. Bill Clinton of Arkansas, and Sen. Chuck Robb of Virginia.

What made the DLC’s influence even greater was the continuing decline in the size and influence of unions. Thus, Democrats began to support pro-business issues like “free trade” and NAFTA. In filling key government jobs, President Clinton turned to the same stable of Wall Street investment bankers that the Republicans traditionally relied upon, such as Goldman Sachs chairman Robert Rubin to be Treasury Secretary. The culminating image was probably Hillary Clinton’s service on the board of Wal-Mart. Angry voters at the polls might understandably think, “Who do we shoot?” (p. 286)

Meanwhile, other Democratic groups that sprang up focused on narrower issues, like EMILY’s List seeking to bolster the number of pro-choice women in elected government positions. These organizations contributed to a view of the Democratic Party that was becoming a collection of sub-groups promoting narrower issues, rather than a party predominantly fighting for the working and middle classes.

Pro-Business Democrats

With the Democratic Party redefining itself as more “pro-business,” Sen. Phil Gramm of Texas, a onetime-conservative-Democrat-turned-Republican, could pass one of the longtime heart-throb issues of the GOP, the effective repeal of the Glass-Steagall, a law from the New Deal that separated investment banking from commercial banking. The goal of Glass-Steagall was to ensure that if Wall Street crashed again, it would not take down the banks where small investors entrusted their money.

Amid the “boom” economy of the late 1990s, Gramm convinced majorities in Congress and key economic advisers to President Clinton that it was time to “modernize” American banking laws by jettisoning much of Glass-Steagall.

Then, Gramm went further. In 2000, he shepherded through the Commodity Futures Modernization Act, which essentially freed up the creation and trading of derivatives from any kind of real regulation. Indeed, if any single bill caused the crash of 2008, it was this one. After leaving the Senate in 2002, Gramm and his wife then made millions of dollars as financial sector consultants and lobbyists. (p. 198)

This analysis by Hacker and Pierson is a useful one and has some truth to it. But I would disagree with any historical survey which discounts the effects of Richard Nixon on a disintegrating polity. For example, the authors make much of the GOP power base in the South, yet it was Nixon who fostered the Southern Strategy to attract working-class whites to the GOP through thinly veiled appeals to racial animosities. There was also the political polarization caused by the divisive Vietnam War.

I also would question any analysis that does not mention the Democratic drift under Jimmy Carter in the late 1970s. Party stalwarts like Arthur Schlesinger and Tip O’Neill found Carter’s lack of passion for traditional party ideals like full employment and universal health insurance problematic. In fact, that was why Sen. Ted Kennedy ran against Carter in 1980. Kennedy did not think such a colorless leader could galvanize the Democratic base enough to defeat an ideological candidate like Reagan.

The authors mention the assassinations of leading progressives but only briefly. However, wouldn’t the likes of King, RFK and Malcolm X have fought the corporate greed as it sought to take over the political system? At the time of his death in 1968, King was preparing the Poor People’s March on Washington. I also question the book’s failure to assess the impact of political smear specialists like Terry Dolan and NCPAC in clearing the way for Ronald Reagan’s 1980 victory.

What Next?

At the end in recommending a way back from the current catastrophe, Winner-Take-All Politics seems to suggest that Obama and the Democratic Party need to curtail the ability of elites to block progressive change (as in reforming the filibuster); to facilitate more participation at the ballot box (by increasing voter turnout); and to encourage development of middle-class groups (to energize the political process).

The last point has already been more or less accomplished through the rise of the liberal blogosphere, but the vehicle would remain the compromised Democratic Party.

I disagree with this limited agenda. One of the great opportunities that the blogosphere had when it arose at the beginning of the millennium was to create a new opening with a new political potency and a new way of raising money. But the choice was: Do we try to reform a Democratic Party that has been corrupted to the point that it is now GOP-Lite? Or do we back an alternative to the Democrats thereby putting pressure on them not to rush to the center?

People like Markos Moulitsas, Arianna Huffington and Jane Hamsher chose the former and so far the results have been meager, as far as I can see. In my view, the choice should have been the latter, an independent-minded movement that puts external pressure on the Democrats not to cave.

That would have been a real politics of renewal. And the platform could be informed by the first section of this book regarding the huge transfer of wealth from the middle to upper classes. In that way, this new movement or party would have preceded Occupy Wall Street, although as a more organized, less guerrilla-style uprising, though just as threatening to the entrenched classes.

Still, Winner-Take-All Politics explains what went wrong with America and it offers a persuasive diagnosis that can inform anyone who believes in the necessity of taking action toward rebuilding a strong middle-class democracy.

James DiEugenio is a researcher and writer on the assassination of President John F. Kennedy and other mysteries of that era.

11 comments for “The ‘Winners’ Take Everything

  1. Dennis
    March 6, 2012 at 22:40

    Great article Jim. Derivatives are the key to understanding the current world situation. I do not know if the authors mentioned it but all derivatives were actually illegal in the US from 1936 to 1982 under the Commodities Exchange Act and did not take full form until 2000 or so with the Gramm laws you mentioned. There is no societal value to these things and they should be outlawed again. Another effective solution would be a 1% Tobin Tax on all derivatives. This would inherently insure regulation and have the effect of dramatically reducing them altogether, not to mention possibly give the US Treasury upwards of a few trillion dollars to start a WPA start work program for maglev train, nuclear power and/or stabilize the social safety net.
    The estimates I have seen of world wide derivatives-based debt is over $1.5 QUADRILLION! No one knows for sure because over-the-counter (OTC) derivatives are hidden and not reported to the public. That is the single biggest reason countries around the world continue to bailout their banks and attempt useless and brutal austerity. It is a faulty solution to a problem that cannot be solved in that way.
    Although I agree with your assessment of 1968 as being key to the fall of the FDR Democratic party, in really started with the death of FDR and the takeover of the Pendergast-hack Truman. FDR’s post WWII world Geo-political landscape looked much different than what happened with the British friendly Truman.
    In regards to Obama, he can only be understood as a Wall Street puppet. He is more or less controlled by direct Wall St assets and never makes any meaningful move against their interests. He makes his political life by saying what people want to hear and then betraying them with window dressing a useless version of what he should have done.

  2. March 3, 2012 at 13:24

    This is not what I meant. What I meant was there was a choice to stay within the Democratic Party and work at reforming it. The other choice was to try and either build another option, or back say The Greens. The blogosphere, including Hamsher, chose the former. Whatever she says she backed Hillary CLinton against Obama. There is also a famous photo of her giggling it up with Bill C. And let us not forget how she and Markos bitterly attacked Caroline Kennedy and ended up giving us the tobacco lady, Kirsten G.

  3. John Casper
    March 3, 2012 at 08:06

    “People like Markos Moulitsas, Arianna Huffington and Jane Hamsher chose the former and so far the results have been meager, as far as I can see.”

    Correct on the first two, wrong on Hamsher. Jane partnered with Ron Paul on torture and Civil liberties. The Vichy Dems have never forgiven her. Then she signed a letter with Grover Norquist asking for an investigation of Rahm Emanuel. That really made the Dems angry. Then Jane supported Obama care all the way up until the point where he threw the public option over the side. Everyone else in the veal pen, even Digby, caved into the industry written Obamacare. Jane has this annoying habit of always being right. She’s led the fight to keep around 50 Occupy settlements going throughout the winter.

  4. Steve Naidamast
    March 1, 2012 at 17:39

    I have to take issue with this article, though it is well written and most likely accurate in its statistical analysis. However, the underlying problem that led to the present inequitable situation has little to do with politics, class warfare, and the like. What it really has to do with is a basic axiom in Information Technology; “If you apply automation to a flawed process, the flawed output will only increase exponentially…”

    To begin with the United States had no such idealistic foundation at its founding as is constantly promoted. The United States was for and by the aristocrats at the time; the Constitution merely being some flimsy wrapping but mostly useless as a result of its ambiguity.

    And Americans as a whole were fed a load of nonsense about exceptional-ism and individualism that was designed to allow the wealthy to do as they pleased. For these reasons the American citizenry always found themselves at the losing end of some level of class conflict. However, the capabilities that the elites were able to bring to bare before the advent of technology was somewhat limited, which in turn allowed large-scale socially, conscious movements to make nominal changes to society in general.

    However, once advanced technologies became available the capabilities of the elites to muster their powers against social movements increased dramatically.

    Given that such technological power was provided equally to all people, not just the elites, the question is why hasn’t the US citizenry done a far better job of minimizing the proclivities of the wealthy that have become so detrimental to the nation. The reason is that the overwhelming majority of the US populace has no idea what it is fighting for since it willingly drank the propaganda “kool-aid” that has been delivered ad-infinitum , ad-nauseam from the beginning. And this is the reason why you see so many citizen organizations going in so many directions with their agendas and basically accomplishing very little.

    The idea that the system can be fine-tuned for better equality is the basis of so many of these institutions but it is a false premise because the US government was never designed to work for the average citizen. For example, most industrialized nations have re-written their constitutions approximately every 19 years but but not the US because practically all citizens are of the belief that our Constitution is something sacred that cannot be really improved upon.

    Well, guess what. If anyone actually understood the US Constitution (I have read it at least three times.) they would understand that it provides very little in terms of fairness and rights.

    However, not only is this Constitution long past its prime but the indoctrinated masses can’t see past their noses that something more equitable has to be designed and the entire rotten mess in Washington done away with….

  5. lYNNE
    March 1, 2012 at 17:02

    While the Democrats were moving along dealing with day to day issues the corporate right was making a long term investment in media (talk radio) and Evangelicals through social issues.
    Talk radio simply attacks the Government and always has an enemy to hate. Since they no longer had to give time to opposing opinions or facts once the Fairness Docrtine was repealed they could say just about anything. Then they bought up all the high wattage AM stations to saturate and repeat the message.
    Soon they had tens of millions voting against their own interests. It is no coincidence that the tide turned after 1986.

  6. lYNNE
    March 1, 2012 at 16:55

    All different types of people look for the answer to how we got this way. Pundits, economists, historians etc always state the facts, but seem puzzled as to how America became a plutocracy with a touch of theocracy in the mix.
    The answer is simple. The big industry tycoons (oil, finance,war,pharma etc) all realized the power to control a people is through controlling the message. W

  7. February 29, 2012 at 22:12

    Eric, thanks for that comment. I did not know Rocky had started this party, but he is a good guy. One of the few Dems to call out Pelosi for putting the impeachment of Bush off the table. And you are right, he is not getting any exposure on the media. This was another criticism I should have made of the book, it gives short shrift to the rightward drift of the MSM. See David Brock started his book on that subject, “The Republican Noise Machine” with the Powell memo. And the fact is, the rightward drift of the media has covered for the government participation in the redistribution of wealth toward the top.

  8. chmoore
    February 29, 2012 at 20:03

    One of the problems in building an alternative to power-run-amok, is the hard-core backlash when doing so.

    For the Romans, the method of choice was crucifixion.
    In the middle ages, the Catholic Church preferred Inquisition.
    etc. etc.

    The fact that the ‘Occupy’ events suffered relatively less than the above, could be seen as evidence that they may not have been seen as too high a threat.

    There is in fact a class war in motion. Although physical violence does happen, it’s essentially a war of ideas. Ultimately the only thing that beats an idea is a better idea.

    We in the U.S. do still have the popular vote, so it’s a matter of having real choices of better ideas to vote for, and an effective media to let people know about those choices as well as motivate them to actually vote, and an effective education system where people learn the critical thinking skills to tell the difference.

  9. rock anderson = communist
    February 29, 2012 at 17:09

    Why do we talk about left/right in the Political Spectrum? Why can’t we talk about freedom/tyranny? Ron Paul is for freedom- yet he doesn’t fit anywhere on this left/right spectrum the media has created. Right = warmongering fascism. Left = Socialist Collectivists. Senator Orrin Hatch is a part of the Big Government takeovers, he wears a Conservative cloak.

  10. Eric Thompson
    February 29, 2012 at 13:03

    That candidate and corresponding party are already here, but, not surprisingly, rendered invisible by the mainstream media. Rocky Anderson has formed the “Justice Party,” and it boasts the ideals of a working class party. I hope there is some way to get his campaign into the mainstream.

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