Tuesday, December 3, 2013

Why I Do Not Vote: Part 2 - American Plutocracy

In addition to being a kleptocracy - and perhaps in some ways even because of it - America has also become a plutocracy.  A plutocracy is, to borrow Lincoln’s phrase, government of the wealthy, by the wealthy, and for the wealthy.  American historian Charles A. Beard certainly thought so. In his 1913 book, An Economic Interpretation of the Constitution of the United States, Beard Claimed the U.S. Constitution was written by "a "cohesive" elite seeking to protect its personal property (especially bonds) and economic standing.”[i]

Beard drew his ideas from the Historian Carl L. Becker who, in his work, History of Political Parties in the Province of New York, 1760-1776 (1909) formulated a Progressive interpretation that the American Revolution was, in fact, “two revolutions: one against Britain to obtain home rule, and the other to determine who should rule at home.”[ii]

To Beard, the Philadelphia Convention was a counter-revolution to fighting the British. In effect, Beard argued the Constitution was set up by rich bond holders (bonds were "personal property"), in opposition to the farmers and planters (land was "real property.") The Constitution, in other words, “was designed to reverse the radical democratic tendencies unleashed by the Revolution among the common people, especially farmers and debtors (people who owed money to the rich)." In 1800, the farmers and debtors, led by plantation slave owners, "overthrew the capitalists and established Jeffersonian democracy.”[iii]

At its core, Beard’s work attempted to test the hypothesis “that economic elements are the chief factors in the development of political institutions.”[iv] While it has been argued that Beard’s ideas have been decisively refuted by historians,[v] some, like Jackson T. Main,[vi] have argued that “Beard has survived the attack.”[vii] In either case, whether economic elements shaped the U.S. Constitution or not, it has become increasingly clear that, in our current American plutocratic system, economic interests are indeed “the chief factors” in the “development” of today's “political institutions.”


 One massive “economic element” responsible for shaping the “political institutions” of today comes in the form of lobbyists.  If you have ever seen professional tag-team wrestling on television, you’ve essentially seen how lobbying works. While one member of the team distracts the referee by arguing about the rules of wrestling, the other clobbers his opponent with a folding chair from ringside.  The referee in this match is Congress, the tag-team engaged in the ‘distract and destroy’ technique is the corporation, and the poor fellow getting clobbered repeatedly is John Q. Public.  The theory is that, somehow, the best thing for Mr. Public is for the tag-team to convince the referee to leave the ring altogether. The lesson is simple: in a capitalist system, everything can be bought. This includes the rules and more especially, the rule makers.

The wrestling match between big business and the public, however, is not two against two. It’s more like seven strapping power lifters against an invalid in a wheel chair.  The ratio of lobbyists employed by the healthcare industry alone, for example, compared with every elected politician, is six to one, according to one account. [viii] This is like six guys distracting the referee while one guy tries to sell the invalid's wheel chair on e-bay. In 2009, the Washington Post estimated that there were 13,700 registered lobbyists in Washington, which lead to the claim that the nation’s Capital was "teeming with lobbyists."[ix]  In 2011, The Guardian estimated that in addition to the approximately 13,000 registered lobbyists, thousands more unregistered lobbyists could exist in Washington as well. [x]

Those “economic elements” seem to be only growing along with, and are perhaps even contributing to, the federal deficit. Washington Correspondent for TIME magazine, Steven Gray explained:

Since 2000, the financial services industry’s spending on federal lobbying rose 102%, to $472.9 million last year, according to an analysis by the Center for Responsive Politics, a nonpartisan group that tracks lobbying. Spending by the pharmaceutical and health-products industries, meanwhile, rose 139%, to $240.3 million last year. The electric utilities industry increased its spending by 139%, to $191 million, while the oil and gas industry raised its spending by 184%, to $146.5 million, last year. Both increases can be attributed in part to the climate-change debate. And business groups in general got busier in the Obama era as well. The U.S. Chamber of Commerce, Washington’s wealthiest lobbying outfit, and the Business Roundtable, which represents corporate CEOs helped push spending in business associations’ sector up 203%, to $170 million, last year.[xi]

Companies only spend money like that when they know they can expect a handsome return on the investment.

Throughout history, political thinkers such as Winston Churchill, Alexis de Tocqueville, and today Noam Chomsky “have condemned plutocrats for ignoring their social responsibilities, using their power to serve their own purposes and thereby increasing poverty and nurturing class conflict, (as well as) corrupting societies with greed and hedonism.[xii]

One way elites use “their power to serve their own purposes” is through tax laws.  Political scientist, Jeffrey Winters explains in his article Oligarchy and Democracy, how elites in America do this by using what he calls “the income defense industry” to greatly reduce their taxes.[xiii]  As Winters further points out:

The income defense industry is comprised of lawyers, accountants, wealth management consultants, revolving-door lobbyists, think-tank debate framers and even key segments of the insurance industry whose sole purpose is income defense for America’s oligarchs. The industry is wholly funded by oligarchs, and it would simply not exist if oligarchs did not have massive fortunes to defend. There is no parallel (much less countervailing) industry serving the material interests of the mass affluent, the middle class or the poor. The activities of the income defense industry extend far beyond mere “interest group” lobbying over policies. Its salaried specialists assist oligarchs in exerting a form of power that is unique to the ultra-rich: the defensive redeployment of their money and income across a global geography of jurisdictions, banks and offshore havens through the use of tailor-made tax instruments, evasive trusts and shell corporations.[xiv]

This system of ‘income defense’ operates “almost exclusively by referral” and serves individuals with a net worth of $2 to $30 million or more; and since the most strategic theater for implanting such defensive measures is that mercurial labyrinth called the tax codes, according to Winters, the elite fight those codes on “two fronts”:

The first is the effort to lower the published top tax rate as much as possible and also to set the income threshold for the top bracket low enough that large numbers of relatively modest income earners feel the oligarchs’ pain. The second front is making the spread between the published tax rate and actual (or “effective”) taxes paid as wide as possible. This is one of the most important and costly fights the income defense industry wages on behalf of its oligarchic patrons. In the 1970s, oligarchs paid an average effective tax rate of about 55 percent, which was almost 80 percent of the top published rate. By 2007, the top 400 income earners in America paid an effective tax rate of 16.5 percent, which was barely 50 percent of the top published rate. Thus, the industry delivered lower tax rates on which oligarchs paid a lower proportion. The richer the client, the wider the income defense spread achieved.[xv]

All of this is done off the political radar screen and there is no countervailing lobby or parallel income defense industry for the average Joe. The few public interest organizations arguing for “tax justice” on behalf of average citizens are vastly out-staffed and out-funded.[xvi]  In fact, the Senate estimates that the industry helps the wealthiest Americans avoid paying nearly $70 billion in taxes a year through "abusive offshore tax avoidance schemes" alone. The number is much higher if corporations are included.[xvii]

Of course, all of this effort to skew the political process is done – the elites will argue – with only the best of intentions.  Chrystia Freeland, author of Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else, says that the present trend towards plutocracy may not be a power grab by elites bent on destroying the underclasses, but instead, quite the opposite:

You don't do this in a kind of chortling, smoking your cigar, conspiratorial thinking way. You do it by persuading yourself that what is in your own personal self-interest is in the interests of everybody else. So you persuade yourself that, actually, government services, things like spending on education, which is what created that social mobility in the first place, need to be cut so that the deficit will shrink, so that your tax bill doesn't go up. And what I really worry about is, there is so much money and so much power at the very top, and the gap between those people at the very top and everybody else is so great, that we are going to see social mobility choked off and society transformed.[xviii]

Freeland commented on the dangers to America from the effects of income inequality that such practices promote in an interview with Bill Moyers. For her, one of the biggest problems comes from what she called, “an increase of the political capture.” Political capture is the problem of people at the “very, very top, capturing the political system,” and using it for themselves. Freeland continued:

 Willem Buiter, who's the chief economist at Citigroup, he calls it "cognitive capture." Where he says, look, it's not like this vast conspiracy. It's not as if … everyone is on the payroll of the plutocrats.

Buiter’s argument, Freeland went on to explain, “was that part of the reason the financial crisis happened is the entire intellectual establishment, not just people inside investment banks, but regulators, academic economists, financial journalists, had all been captured by the financial sector's vision of how the economy should work. And in particular, light touch regulation.”

Freeland concludes that, as cognitive capture increases, so too will elites “think of themselves as acting in the collective interest, even as they act in their personal vested interest.” Social mobility, as a result, which is already decreasing in the United States, will become “increasingly squeezed” even as “particularly powerful sectors, (such as) finance, oil,” and even possibly “the technology sector” will be standing in line to get “lots of government subsidies.” The reason “the plutocracy is so enthusiastic about cutting entitlement spending” Freeland concludes, “is because they don't need it. “But they're very worried about their tax dollars funding it.”[xix]


Putting aside the carnival of lies and manipulations that our political system necessarily engenders and relies on, as someone once pointed out, “The idea of an election is a joke; it’s not an election, it’s an auction.” Candidates deliberately steer clear of any major issues during a campaign because they know elections are won not by explaining positions but by gloating about qualifications.  Trying to bypass the best smoke screens money can buy and marketing campaigns can design by voting for a particular political party is no use either.  While politicians love to talk about their differences, the truth is that Democrats and Republicans vote alike 84% of the time.  They do so because America does not have a two party political system but instead, as Noam Chomsky has pointed out, “America has a single business party comprised of two factions.” 

Today, that single minded yet two-headed political party increasingly serves what Adam Smith referred to as the “masters of mankind.”[xx]   Those masters are the check writers, and they determine who will become the law makers.  These “principal architects of policy” as Smith called them, make certain that their own interests are "most peculiarly attended to.” The “vile maxim” those architects live by, which Smith says, “seems true in every age of the world,” is “all for ourselves and nothing for other people.”[xxi]  

While one of the more obvious ways of achieving that “vile maxim” is through commerce, another more surreptitious yet effective method is through politics. As a result, politics is simply, as the social philosopher John Dewey put it, “the shadow cast on society by big business." Voting, therefore, is like trying to move a mountain of economic dogmatism by pushing on its political shadow with the feather of a ballot, once every couple of years. It is to believe that all the problems we face today can be remedied by the very political system that has not only helped create all the problems we face today, but is itself one of the biggest victims of those problems. It is to believe that politicians serve those who cast a ballot instead of those who pay the campaign bill.   Hence, voting for a political candidate today is like betting the Chicago White Sox will win the 1919 World Series,[xxii] and for the same reasons. Simply put, the game is fixed.  

 When Ralph Waldo Emerson visited his friend Thoreau in jail, he is said to have asked, “Henry, what are you doing in there?” To this Thoreau replied, “Waldo, the question is, what are you doing out there?” While Emerson felt the imprisonment was pointless, Thoreau, rather than trying to reform society as a whole, was simply trying to distinguish right from wrong. Failing to do so, Thoreau felt, would eventually lead people to lose the capacity to make the distinction at all, leaving them morally numb. Like Thoreau, my decision not to vote is not intended to reform the political system or change society. It is simply an attempt to prevent myself from becoming as politically numb as our system is democratically indifferent. Having seen the forest for the fraud that it is, and the many trees it relies on to maintain that fiction, the question is not why I choose not vote, but why anyone would. 

[i] http://en.wikipedia.org/wiki/An_Economic_Interpretation_of_the_Constitution_of_the_United_States
[ii] Id.
[iii] Id.
[iv] An Economic Interpretation of the Constitution of the United States (New York, 1913), p. 6.
[v] Peter Novick, That Noble Dream (1988) p 336. Ellen Nore, Beard’s biographer, concludes his interpretation of the Constitution collapsed due to more recent and sophisticated analysis. Ellen Nore, "Charles A. Beard's Economic Interpretation of the Origins of the Constitution," This Constitution: a Bicentennial Chronicle 1987 (17): 39-44
[vi] Jackson T. Main is a member of the History Dept. at San Jose State College, San Jose Cal. His Manuscript on the Antifederalists in American Politics, 1781-1787, won the Institute’s manuscripts award in 1959.
[vii] Omohundro Institute of Early American History and Culture, Williamsburg, Va. The William and Mary Quarterly, Third Series, Vol. 17, No. 1,  (Jan., 1960)
[viii] Paul Harris (19 November 2011). "'America is better than this': paralysis at the top leaves voters desperate for change". The Guardian. Retrieved 2012-01-17.
[ix] Brad Plumer (Nov. 8, 2011). "Corporate lobbying is a very exclusive club". The Washington Post. Retrieved 2012-01-13.
[x] Id.
[xii] Conservative thinkers: from John Adams to Winston Churchill. New Brunswick, New Jersey: Transaction Publishers. 2006. pp. 19–68. ISBN 1412805260.
[xiii] http://en.wikipedia.org/wiki/Plutocracy
[xiv] http://www.indybay.org/newsitems/2012/03/26/18710102.php
[xvi] http://www.huffingtonpost.com/jeffrey-winters/americas-income-defense-i_b_772723.html
[xvii] Id.
[xviii] National Public Radio (October 15, 2012) "A Startling Gap Between Us And Them In 'Plutocrats'"
[xix] Chrystia Freeland (October 2012) [1] Moyers & Company
[xx] The Wealth of Nations, Chapter IV, p. 448
[xxi] Id.
[xxii] That series is often associated with “the Black Sox Scandal,” when several members of the Chicago franchise conspired with gamblers to throw (i.e., intentionally lose) the World Series games.

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