GOODBYE, MIDDLE CLASS: Part 16: Recap and Conclusion
Continued from Part 15: The Psychology of Ideology
“There are two sets of principles. They are the principles of power and privilege and the principles of truth and justice. If you pursue truth and justice, it will always mean a diminution of power and privilege. If you pursue power and privilege, it will always be at the expense of truth and justice.” -- Norman Finkelstein, Scholar
The purpose of this blog series has been to explore and understand exactly why the American Middle Class has been decimated over the last 35 years.
Because of the overwhelming amount of information, statistics, and analysis, this recap provides a more abridged overview.
Please click on any of the links below for further information, sources, and stats.
We learned just how bad America's growing inequality has become. Today the Lower Class, Middle Class, and Upper Class look like this:
The 99% consists of:
Lower Class: < $30,000 a year.
Middle Class: $30,000-$150,000.
Upper Class: > $150,000, unless you are in a large city.
The 1% consists of:
1%: > $500,000.
0.1%: > $1,000,000.
0.01%: > $8,000,000.
When we refer to the 1%, we are generally referring to the “1% of the 1%”, or the 0.01%.
The 1% now lay claim to nearly 1/4 of the total economic pie. The last time their share was this high was on the eve of the 1929 stock market crash. “In 2007, according to the IRS, the richest 400 taxpayers had an average income of more than 10,000 times the average income of the bottom 90% of taxpayers,” writes The Nation editor Christopher Hayes in Twilight of the Elites.
A vibrant Middle Class with disposable income once equated to "mass affluence," essentially driving the U.S. economy. Today, the Middle Class has deteriorated so much that Madison Avenue concluded if you don’t make at least $200,000 a year, you no longer matter to marketers.
Thus, the American Middle Class has now become irrelevant.
The long post-war period of the 1940s to the mid-1970s is known as the Great Compression because differences in incomes and living standards were compressed, with Americans from the top to the bottom of the income scale closer together than ever before or since. This was our most democratically shared prosperity in U.S. history, and a direct result of FDR's New Deal.
Sadly, this is no longer the case. Explains Hedrick Smith in Who Stole the American Dream? “We have fallen from being the envy of the world, with the most widely shared economic prosperity and the most affluent middle class of any place on earth, to losing our title as the land of opportunity. It is now easier, in fact, to climb the economic and social ladder in several Western European countries than it is in the United States. Americans work longer hours, often for lower pay and benefits, and make up the difference with the highest ratio of two-income households of any advanced economy in the world.”
This means the pay of a typical male worker is lower today than in the 1960s and 70s, and not a single county in the U.S. has a minimum wage that matches the local cost of living. In many places it's $20 less an hour than needed to live.
The only way the middle class has maintained its income is because women entered the workforce to compensate.
As Elizabeth Warren stated in Divided: The Perils of our Growing Inequality:
American families spend 32% less today on clothing than in the 70s.
American families spend 18% less today on food than in the 70s.
American families spend 52% less today on appliances.
Owning a car today costs 24% less than in the 70s. This money (purchase/repairs/insurance/gas) has gone to spending 23% more on electronics.
Families must now have two cars, as both parents must work. This creates a need for childcare.
In one generation, mortgage payments have doubled.
While we like to blame people for not living within their means, when you adjust for inflation and consider where our money goes, the statistics tell a different story.
We’re living like we always have; it’s the money that’s not going as far.
According to the Social Security Administration, 51% of workers in the U.S. earn less than $30,000 a year. (The federal poverty level for a family of four is $24,250.)
During the Great Compression, “from 1960 to 1970, as the New Deal expanded into the Great Society, the number of Americans in poverty declined from 40 million to under 25 million… During the 1980s, as Reagan and George H. W. Bush reigned, those in poverty soared to 35 million… Following the Great Recession that marked the end of George W. Bush’s presidency, over 46 million Americans were in poverty,” writes Professor of Law Ian Haney Lopez in Dog Whistle Politics.
There are roughly 50 million people in poverty in the U.S. alone, and there are tens of millions of Americans in a category called “near poverty,” states Pulitzer Prize-winning Journalist Chris Hedges in Empire of Illusion.
Shockingly, the US has the highest rate of childhood poverty of any major country, ranking 34 out of 35.
According to the U.S. Department of Labor, the official unemployment rate is only 5.6%, meaning 5.6% of the work force is jobless and actively seeking work. The Clinton Administration stopped counting those who had given up looking for work, or those who wanted full-time jobs but could find only part-time work. Thus, the actual unemployment rate is 11.3%.
According to Gallup, “Right now, as many as 30 million Americans are either out of work or severely underemployed. If you perform a minimum of one hour of work in a week and are paid at least $20... you're not officially counted as unemployed in the much-reported 5.6%.”
Gallup defines a good job as 30+ hours per week for an organization that provides a regular paycheck. Right now, the U.S. is delivering at a staggeringly low rate of 44%, which is the number of full-time jobs as a percent of the adult population.
As for the sociological impact of unemployment, each 1% rise in unemployment correlates to:
495 more deaths from liver cirrhosis
628 more homicides
920 more suicides
3,440 more inmates in prison
4,227 more admissions to mental hospitals
20,240 more fatal heart attacks and strokes
Social class doesn’t just determine the kind of life you live, but how long you live.
“Big government was not stripped away in the Reagan years; it was just redirected to the needs of private enterprise,” writes William Kleinknacht in The Man Who Sold the World. “Reagan unleashed or greatly accelerated the huge transfers of wealth, the vast restructuring of American industry, the disappearance of business ethics, and the insecurity of workers, communities, and corporate shareholders…It would generate vast new fortunes for some while leaving the majority of Americans, wide swaths of the poor and middle class, struggling to make ends meet.”
“No other advanced economy has such a hyper-concentration of wealth," explains Hedrick Smith in Who Stole the American Dream?
According to Jeffrey D. Sachs in The Price of Civilization, “This has been an era of soaring CEO pay combined with a grinding squeeze on the wages and working conditions of production and clerical workers. Job security has plummeted for relatively low-skilled workers. The working class has been caught in the pincers of low-wage competition from abroad combined with the technological obsolescence of many traditional low-skilled jobs. The top CEOs have cashed in as never before. At the start of the 1970s, average top 100 CEO pay was roughly 40 times the average worker’s pay. By the year 2000, it had reached 1,000 times the average worker’s pay.” Even though there is zero connection between CEO pay and how well they do their jobs.
Jacob S. Hacker adds in Winner-Take-All Politics, "CEOs have been able to take advantage of a corporate governance system that allows them to drive up their own pay. It creates ripe conditions for imbalanced bidding wars where executives hold the cards and prevent all but the most privileged insiders from understanding what is actually going on."
To put things in the proper perspective:
CEOs can earn in one day what most workers earn in a whole year. And while CEOs' taxes have decreased, the average workers' have increased. (Truthdig.com)
If the minimum wage had risen as fast as CEO pay since 1990, the lowest paid workers in the U.S. would be earning $23.03 an hour today, not $5.15 an hour. (Thom Hartmann, Screwed: The Undeclared War on the Middle Class)
If the median household income had kept pace with the economy since 1970, it would be nearly $92,000, not $50,000. (Mother Jones, August 2011)
The demise of the middle class is a direct result of government policy, and the unfair tilt of wealth works against our economic growth. As Nick Hanauer has stated, "The trillion-dollar elephant in the room…is the transfer of wealth from workers to owners.”
"The top [1%] has persuaded those in the middle to see the world in a distorted way, leading them to perceive policies that advance the interest of those at the top as consonant with their own interests.”
As Justice Louis D. Brandeis once remarked, “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both.”
In The Tyranny of Dead Ideas, Fortune editor Matt Miller explains that much of our thinking about the current economy is outdated. One such example: The idea that our kids will earn more than their parents. This no longer holds true.
When we changed economic policy from FDR's New Deal in the 1970s and 1980s, we also changed our intergenerational economic mobility. So while we often chastise the poor for not living within their means, the reality is that we are simply trying to maintain the same standard of living as our parents.
Today’s college grads have amassed more debt than any generation of graduates prior, earning less than the college grads of thirty years ago, reports Tamara Draut in Strapped. This is because our government stopped investing in education.
According to Devin Fergus at The Washington Post, “Today’s student aid crisis has its roots in the 1980s. In 1981, the Reagan administration, with a coalition of congressional Republicans and conservative Democrats, pushed through Congress a combination of tax- and budget-cutting measures. No federal program suffered deeper cuts than student aid. Spending on higher education was slashed by some 25% between 1980 and 1985. In raw dollar figures, cuts totaled $594 million in student assistance and $338 million in Pell grants. Effectively, these changes shifted the federal government’s focus from providing students higher education grants to providing loans.” To quote a snide Ronald Reagan, "Why should we subsidize intellectual curiosity?"
Most young adults leave college with student loan debt, compounded by extra expenses, the most common being car repairs, travel (primarily home for holidays and out-of-town weddings), and apartment furniture, replacing computers, and dry cleaning.
Since we are earning less and spending more on basic necessities, there is little money left to save for retirement.
As Hedrick Smith explains, “In 1980, 84% of workers in companies with more than 100 employees were in lifetime pension plans financed by their employers. By 2006, that number had plummeted – only 33% had company-financed pensions. The rest got nothing or had been switched into funding their own 401(k) plans with a modest employer match.”
Our salaries have shrunk, the cost of living has increased, our taxes have increased, and corporations keep wages stagnant.
“The starkest indicator of mounting middle-class distress has been the sharp rise in personal bankruptcies, now an integral feature of the new economy,” explains Smith. The #1 reason homes are foreclosed in this country is because of bankruptcy. The #1 reason for bankruptcy is because of rising healthcare costs (62% of bankruptcies). And 78% of those bankrupted people actually had health insurance, demonstrating just how ineffective the American insurance industry is.
Insurance providers were formerly nonprofits, which meant they just passed on the actual cost of health insurance to employers. But Reagan deregulated the healthcare industry, so insurance providers could now earn profits from denying coverage to the sick and dying. Within a decade, the entire industry fell apart for everyone but the super wealthy.
Hospitals became for profit and started charging higher rates. Drug companies realized they could raise prices exponentially if they bought out their competitors with Reagan’s lax merger-and-regulations laws. And pharmaceutical companies became the most profitable business in the U.S.
We are the only industrialized country that does not provide universal, government-run healthcare.
And according to the Credit Suisse Wealth Report of 2015, the U.S. is now the biggest debtor nation in the world, even though before Reagan took office, we were the greatest creditor nation in the world.
According to Michael Goodwin in Economix: Because tax brackets didn’t creep up with inflation, incomes kept creeping up into higher and higher tax brackets. This meant that salaries didn’t buy more, as the standard of living increased as well. It only meant that the middle class was soon paying double what it had only two decades prior. This was still less than most of Europe paid, but Europe also got better schools, free healthcare, and cheaper college. Our government didn’t fix the bracket creep because it needed to take more from ordinary people, as it was taking less from rich people and big businesses.
According to the IRS, in 1955, the 400 richest households with the highest income paid 51.2% of their income in federal taxes. In 2007, the 400 richest Americans paid 16.6% of their income in federal taxes, reports investigative journalists Donald L. Barlett and James B. Steele in The Betrayal of the American Dream.
How taxes have decreased for the 1%: 1980 TODAY
1% salary and wages tax rate 51.2% 39.6%
Unearned dividend/interest tax rate 70% 15%
Capital gains tax rate 28% 15%
Smith explains, "Two trends are primarily responsible for today's hyperconcentration of wealth in America - the collective decisions over time by America's corporate power elite to take a far bigger share of business earnings for themselves, and the increasingly pro-rich, pro-business policy tilt in Washington since the late 1970s... the tax code...has been tilted so heavily in favor of the super-rich that many millionaires and billionaires today actually pay lower tax rates than many people in the middle class. The key driver of this lopsided outcome is the sharp cut in the capital gains tax... [that] go primarily to the people at the top of the economic pyramid... The top 0.1% garner half of all capital gains in the United States."
1%-ers aren't paying the Upper Class salary and wage tax rate of 39.6%. They are paying the capital gains tax rate of 15%. And while the government lost a considerable amount of income from these tax breaks, Reagan practically doubled the federal government’s budget spending, particularly on the military industrial complex and bailing out Wall Street. Reagan borrowed money to make up for tax breaks. By the time he left office, we were trillions in debt. Because the 1% still pays record low taxes, our debt practically doubled by 2000. Add in the Iraq and Afghanistan wars, and the debt doubled again, now over 10 trillion dollars.
In the 1970s, the corporate tax rate was 53%. Today, it’s 35%. Additionally, 7 out of 10 multinational corporations operating in the U.S. today pay NO taxes.
Thomas Hartmann explains in The Crash of 2016: “Corporations are taxed because they use public services; they are therefore expected to help pay for them… They use water, sewer, power, and communications rights of way paid for and maintained with taxes. They demand the same protection from fire and police departments as everybody else, and they enjoy the benefits of national sovereignty and the stability provided by the military and institutions like the United Nations and NATO, the same as all residents of democratic nations… Corporations are heavier users of taxpayer-provided services and institutions than are average citizens. Taxes pay for our court systems, which are most heavily used by corporations to enforce contracts. Taxes pay for our Treasury Department and other government institutions that maintain stable currency... Taxes pay for our regulation of corporate activity, from ensuring safety in the workplace and a pure food and drug supply to limiting toxic emissions in our air and water…”
Granted, no one likes to pay taxes. But no one wants society to fail them either. And the cost of governance should not be left to the working poor, but returned from those who earn the most wealth from our system.
The lower the taxes the wealthy and the corporations pay, the less money our government has to function. The Lower and Middle Class are already maxed out. The majority of our wealth accumulates at the top. Therefore, private affluence = public squalor.
But tax cuts are only half our problem.
Part 7: Slashed and Spent
“Supply-side theory, which promised that a reduction in taxes would spur investment and actually increase tax revenues, turned out to be a fallacy," William Kleinknecht writes in The Man Who Sold the World. Ronald Reagan "had promised to reduce the size of government [but] had instead produced unprecedented deficits that would dominate fiscal decision making for the next two decades.”
This increase in military spending has only grown. It is by far the largest slice of our nation's discretionary spending. The War on Terror boosted military spending back to Cold War levels. The $1.7 trillion spent on the Iraq War conspicuously included NO FUNDING for police, firefighters, and hospitals; tracking terrorists’ offshore money; making city, state, or nation-wide evacuation plans; weaning ourselves off Persian Gulf oil to dry up the source of their money; terror-related emergencies; or healthcare for 9/11 respondents [Over 2,620 have cancer-related illnesses, a total nearly equal to the 2,753 people who died at the World Trade Center during the attacks.]
Instead, Iraq became an immediate threat overnight and deliberately became a showpiece of conservative ideology. The war redistributed wealth from American taxpayers to our political elite and their multinational corporations in unprecedented levels while leaving the Iraqis literally in the dark.
Naomi Klein proves in The Shock Doctrine that the primary economic role of these wars “was as a means to open new markets that had been sealed off and to generate postwar peacetime booms. Now wars and disaster responses are so fully privatized that they are themselves the new market; there is no need to wait until after the war for the boom – the medium is the message… thanks to the model of for-profit warfare.”
Journalist Chris Hedges explains in Empire of Illusion that “The U.S. has become the largest single seller of arms and munitions on the planet... Since the Second World War, the federal government has spent more than half its tax dollars on past, current, and future military operations. It is the largest single sustaining activity of the government. [It’s] especially lucrative to corporations because it offers a lavish form of corporate welfare."
The U.S. spends more on military than the next 10 countries put together.
In The Crash of 2016, Thom Hartmann explains, "when our manufacturing base is military, we produce things that don’t produce any lasting benefit for our society. When we build a school or a bridge, or a high-speed rail system, years, decades, sometimes centuries of use and value come from it. They produce for us over time far more than they cost us. Even consumer goods, from homes to washing machines to computers increase our personal ability to be productive, thus producing a return on investment... But when we spend $100 million on a bunker buster bomb, and that bomb is dropped somewhere, that $100 million went up in smoke, never to be seen again... Military spending is the least productive and sustainable way to build an economy. In fact, a quick inspection of previous world super powers reveals that they all met their demise by economic collapse following binges of military adventurism, often after a desperate campaign was launched to protect the last vestiges of their empire. It’s what happened to the Romans, and also what happened to the Soviet Union.”
But the military-industrial complex isn’t the only example of our government funneling tax dollars away from its constituents and outsourcing its responsibilities to the private sector. It’s just the biggest.
The Powell Memo was written on the heels of President Nixon’s regulatory initiatives and new tax laws. Powell, who was chair of the Chamber of Commerce, postured that the government had reached a dangerous precipice that would destroy free enterprise. “Business was being victimized, he said, by government regulations, consumer activism, and politically powerful trade unions.” It was a call to arms for a more “aggressive attitude” to change Washington’s policies through “confrontation politics.”
In essence, he was encouraging political mutiny with an ardent anti-union, anti-government ideology.
This gave rise to corporate think tanks, looking for new ways to produce and package conservative ideas that were pro-business in nature. The think tanks, like the Heritage Foundation, the Manhattan Institute, the American Enterprise Institute, and the Cato Institute, concoted their own research. As one critic quipped… ‘they don’t think; they justify.’”
These business interests recruited Reagan because he was a ready-made salesman after years of hawking for G.E.
William Kleinknecht writes in The Man Who Sold the World, “the image of Reagan as a man who never wavered from the small-town values... is far off the mark. His values were actually quite malleable. He shifted his core beliefs depending on what he became convinced was in his own self-interest at the moment. He was a leftist until he felt duped by Hollywood communists and became an FBI informant. He was a committed labor leader until his own interest required self-serving deals with management. He was a New Dealer while the philosophy was benefiting him personally, but switched to Republicanism when the social welfare tab was coming out of his taxes. Since his mind disdained nuance and complexity, he could believe passionately in whatever one-dimensional viewpoint he held at any given time, and his boyish enthusiasm and disarming manners had a way of winning over doubters. The man who saw big business as an unalloyed evil and government as the savior of the people could believe the complete opposite a few years later without ever entertaining the possibility that the truth might lie somewhere in the middle.”
“The organizational counterattack of business in the 1970s was swift and sweeping... The number of corporations with public affairs offices in Washington grew from 100 in 1968 to over 500 in 1978. In 1971, only 175 firms had registered lobbyists in Washington, but by 1982, nearly 2,500 did. The number of corporate PACs increased from under 300 in 1976 to over 1,200 by the middle of 1980. On every dimension of corporate political activity, the numbers reveal a dramatic, rapid mobilization of business resources in the mid-1970s,” writes Jacob S. Hacker and Paul Pierson in Winner-Take-All Politics.
A new era of campaign finance was born: Not only were corporate contributions growing ever bigger, politicians had to work harder for them. More and more, to receive business largesse, they had to do more than hold power; they had to wield it in ways that business liked.
As a result, few Americans have a voice when it comes to political representation in modern America. Professors at Princeton and Northwestern University determined that the opinions of the bottom 90% of income earners in America has essentially NO impact whatsoever on Congress. However, the 1% carry MAJOR influence. This is in part because of lobbying.
In Who Stole the American Dream? Hedrick Smith explains that “laissez-faire philosophy of the past three decades promised that deregulation, lower taxes, and free trade would lift all boats. It argued that sharply reduced taxes for the rich would generate the capital for America’s economic growth. Its disciples asserted that the free market would spread the wealth. But this is not what happened. The middle class was left behind.”
The bogus idea was if society was rearranged so that the wealth of the rich grew suddenly, they’d use the money to build factories and hire more people, thus allowing their wealth to trickle down to the workers.
“This assertion of Regan’s was new – it had never before happened in the history of the world.” Despite this, the public willingly endorsed it. Instead of create income, we created the greatest debt in the history of the world.
To solve this problem, instead of raising tax rates back to earlier levels, the government borrowed all the money in the fund from 1982 to today to help cover the voodoo economics budget deficit.
The Organization for Economic Co-operation and Development disproves the myth of “trickle-down economics,” claiming that it has not fostered economic growth as promised, but stymied economic growth significantly, and only made the rich richer. Reaganomics is now widely recognized for increasing levels of inequality, stagnating wages, and hollowing out decent, middle-income jobs, as reported by the Center for American Progress.
Today, workers’ wages as a percentage of GDP are at an all-time low, yet corporate profits as a percentage of GDP are at an all-time high.
New York Times columnist Paul Krugman, quoting a Northwestern University research study says that between 1972 and2001:
Income at the 99th percentile (1%) rose 87%.
Income at the 99.9th percentile (0.1%) rose 181%.
Income at the 99.99th percentile (0.01%) rose 497%.
Meanwhile, the median household incomes declined. The rich got richer, and the poor got poorer.
“Much of the safety net carefully woven over the previous five decades to help distressed communities was left in tatters by Reagan’s budget cuts: housing assistance, food stamps, and legal assistance for the poor were all cut to the bone.
Reports Thom Hartmann in The Crash of 2016. “Just as we learned during the Gilded Age…it’s impossible to build a healthy stable economy on the backs of a few billionaires. That’s because billionaires are not job creators... If vast fortunes are being hoarded in the hands of very few people, who can’t possibly spend that much money in their lifetime, then it’s essentially being wasted. ‘There can never be enough superrich people to power a great economy... The typical billionaire doesn’t buy thousands more pairs of pants or thousands more ties, or thousands more cars than the typical working class American.’”
In other words, when high concentrations of wealth accumulate at the top, the economy suffers. The billions that sit in offshore accounts in the Caymans are not funneled back into the U.S. economy. If this money were put in the hands of the lower class, it would be used immediately at malls, grocery stores, and car dealerships. When everyone has disposable income, the economy soars. When only the 1% has disposable income, money sits and accumulates, creating dynasties with unparalleled power and influence.
Put simply: trickle-down economics does not lift all boats. Wealth can only trickle-up.
Explains entrepreneur Nick Hanauer, "Jobs are a consequence of a circle-of-life feedback loop between customers and businesses. And only consumers can set in motion this virtuous cycle of increasing demand and hiring. In this sense an ordinary consumer is more of a job creator than a capitalist. We’ve had it backwards for the last 30 years… The true job creators are Middle Class consumers. Taxing the rich to make investments [in order] to make the middle class grow and thrive is the single shrewdest thing we can do for the Middle Class, the poor, and the rich.”
Part 10: Tear Down this Myth
In The Man Who Sold the World, William Kleinknecht writes, “In public policy, as in science, there are truths and there are untruths, and the wrong actions can have dire consequences. It has proven untrue that deeply slashing income taxes promotes investment and creates an increase in tax revenues; it has proven disastrously untrue that deregulation in the financial sector benefits the consumer; it has proven tragically untrue that abandoning social-welfare spending and locking up millions of young black men solve the problems of the inner city. The fervency with which Reagan believed these things, and the riches they brought to certain Americans, did not make them true.”
The entire history of our country can be seen through these untruths, deliberately spun into myths to hide their brutal reality, to ease a public conscience, and to self-delude. But given a choice between harsh truth and a comforting myth, we have been inclined to embrace the latter.
Some of our greatest American myths include:
The Confederate states seceded during the Civil War because of states rights rather than slavery.
The Wild West was a noble place threatened by savage natives rather than the white man's genocide of the Native Americans.
American Exceptionalism is the idea that we as a nation are superior to other nations instead of mere hubris - an arrogant pride used to justify questionable actions.
Myths are used to deflect introspection and curb critical analysis. As a nation, we’ve lost our critical thinking skills. We are all victims of the marketing machine – the myths sold to us by Madison Avenue, Pennsylvania Avenue, Wall Street, and Hollywood.
Reagan may be our biggest myth yet - he conveyed an all-American sense of loyalty and solidarity, all the while selling off our national parks, ending nutrition programs for children, cutting development grants to struggling rural communities, gutting food stamps, and rolling back regulations necessary for the betterment of society.
According to William Kleinknecht in The Man Who Sold the World, Reagan “laid the foundation for a new global economic order... He enacted policies that helped wipe out the high-paying jobs for the working class that were the real backbone of this country... Reagan propelled the transition to hyper-capitalism, an epoch in which the forces of self-interest and profit seek to make a final rout of traditional human values. His legacy – mergers, deregulation, tax cuts for the wealthy, privatization, globalization – helped weaken the family and eradicate small-town life and the sense of community… Because of corporate consolidation, businesses are no longer owned locally and Main Street is gone. Companies made over many times by mergers and forced to tailor every decision to stock market prices have little loyalty to communities or people... Plants are closed and companies are downsized, families uprooted, communities left without anchors. Without his tax, regulatory, and antitrust policies, there would have been no savings-and-loan bailout, no frenzy of mergers in the 1980s and 1990s, no unseemly scramble for overnight fortunes by arbitrageurs and raiders, no destructive obsession with quarterly earnings at the expense of long-term investment, no wholesale abandonment of ethics on the part of corporate executives. Nor would there have been an Enron or a subprime mortgage crisis.”
Reagan slashed the U.S. Department of Housing and Urban Development’s budget by 57%, from $33.4 billion in 1981 to $14.2 billion in 1987. $1 billion was cut from Medicaid. The Women, Infants, and Children food Program was cut by 1/3. Child nutrition programs were cut by 42%, with the administration changing the classification of ketchup to a vegetable. Funding for legal services for the poor was eliminated entirely. Unemployment insurance was cut from 39 to 26 weeks. Public funding for job training was cut from $13.2 billion to $5.6 billion.
Reagan was a P.R.-scripted, publicity-directed, strategically-honed product, sold to the American public by big business to distract us from the corporate takeover of our government. And as a result, we are no longer able to tell corporate interests from our own, deceptive politicians from authentic, and reality from myth.
“Genuine intellectual inquiry...challenges cultural and political assumptions. It critiques structures. It is relentlessly self-critical. It explodes the self-indulgent myths and stereotypes we use to elevate ourselves and ignore our complicity in acts of violence and oppression. And it makes the powerful, as well as their liberal apologists, deeply uncomfortable,” writes Chris Hedges in The World as It Is: Dispatches on the Myth of Human Progress.
“In an age of images and entertainment, in an age of instant emotional gratification, we do not seek reality...We are incapable of handling...its confusion. We ask to be indulged and comforted by clichés, stereotypes, and inspirational messages that tell us we can be whoever we seek to be, that we live in the greatest country on Earth, that we’re endowed with superior moral and physical qualities, and that our future will always be glorious and prosperous... Reality is not accepted as an impediment to our desires. Reality does not make us feel good.”
In You Are Not So Smart, psychology journalist David McRaney explains, “The beneficiaries of good fortune often do nothing to earn it, and bad people often get away with their actions without consequences… In reality, evil often prospers and never pays the price… The randomness of birthright means people often suffer adversity and enjoy opulence through no effort of their own.”
Self-made men often subscribe to a “narrative fallacy” – flawed stories of the past shape our views of the world and our expectations of the future, arriving from our continuous attempt to make sense of the world. “The explanatory stories that people find compelling are simple; are concrete rather than abstract; assign a larger role to talent, stupidity, and intentions than to luck; and focus on a few striking events that happened rather than on the countless events that failed to happen… we humans constantly fool ourselves by constructing flimsy accounts of the past and believing they are true,” writes Daniel Kahneman in Thinking, Fast and Slow.
In Outliers: The Story of Success, Malcolm Gladwell debunks the myth found in every celebrity memoir – that an unlikely hero born in humble circumstances fights his way up using only his grit and talent to eventually find fame and success. Gladwell explains how these personal narratives are false: “People don’t rise from nothing. We do owe something to parentage and patronage...they are invariably the beneficiaries of hidden advantages and extraordinary opportunities and cultural legacies that allow them to learn and work hard and make sense of the world in ways others cannot.”
A leg up can come from many places – parents, peers, institutions. Often, we are equally qualified, but through sheer luck, fortitude, connections, alma maters, social class, or birthright, doors are open to us that are not to others.
Upward mobility is now lower in the U.S. than in most of Europe. It is indeed a sad fact that 99% of Americans will die in the same tax bracket we are born into.
Sadly, the wealth divide only creates a greater divide. Privilege sustains privilege; poverty begets poverty.
Professor at Harvard University and American political philosopher Michael J. Sandel observed in his book Justice: What’s the Right Thing to Do that “The more we regard our success as our own doing, the less responsibility we feel for those who fall behind.”
As Paul Buchheit confirms at AlterNet, “As they accumulate more and more wealth, the very rich have less need for society. At the same time, they’ve convinced themselves that they made it on their own, and that contributing to societal needs is unfair to them. There is ample evidence that this small group of takers is giving up on the country that made it possible for them to build huge fortune."
As our inequality grows, and society becomes more stratified, so will it be with our levels of empathy.
In Dog Whistle Politics, law professor Ian Haney Lopez explains 'dog whistle' language as “coded racial appeals that carefully manipulate hostility toward nonwhites. Examples of dog whistling include repeated blasts about criminals and welfare cheats, illegal aliens, and sharia law in the heartland. Superficially, these provocations have nothing to do with race, yet they nevertheless powerfully communicate messages about threatening nonwhites. In the last 50 years, dog whistle politics has driven broad swaths of white voters to adopt a self-defeating hostility toward government, and in the process has remade the very nature of race and racism. American politics today – and the crisis of the middle class – simply cannot be understood without recognizing racism’s evolution and the power of pernicious demagoguery.”
It’s an open secret the GOP relies on racial appeals to help win elections. In 2005, Ken Mehlman, former Chairman of the RNC, admitted to the NAACP that the GOP had exploited racial divisions for the last 40 years by alienating many minority voters by focusing on the white male vote in the South – otherwise known as “Southern Strategy” – provoking racial animosities in order to gain votes and power.
Disgustingly, the Southern Strategy was a direct result of the civil rights movement. Racism didn’t disappear overnight. It simply changed clothes. And parties. According to Mother Jones, by the early 60s, "Southern whites who wanted to keep Jim Crow intact... began a massive exodus from the increasingly black-friendly Democratic Party... This made the Republican Party more and more appealing to Southern white racists, and by 1968 Richard Nixon decided to explicitly reach out to them with a campaign based on states' rights and "law and order."
According to Jeffrey D. Sachs in The Price of Civilization, “Before the civil rights era, federal social spending was mainly for white voters… With the success of the civil rights movement and the rise of anti-poverty programs in the 1960s, federal benefits increasingly flowed to minority communities. The political reaction was a sharp turn of the many white voters away from government’s leadership role.”
Some of the biggest myths spun as a result of dog whistling include:
VOTER FRAUD - There have been only 10 cases of voter ID fraud in 15 years, or 1 out of every 15,000,000 prospective voters. In other words, less often than people are struck and killed by lightning. All voter I.D. laws serve the same purpose: to prohibit minorities from voting.
THE WELFARE QUEEN - Reagan claimed the welfare state was broken because of one welfare queen who "used 80 names, 30 addresses, 15 telephone numbers, to collect food stamps, social security, veterans benefits for four non-deceased veteran husbands, as well as welfare." He deliberately left out that she was involed in blackmarket baby trafficking, attempted murder, and was likely psychopathic and psychotic. But that wouldn't have helped to demonize a social program in order to rile up white voters against blacks.
The truth about welfare numbers:
Native American: 1.2%
THE WAR ON DRUGS - If Regan had really wanted to end the drug war, he wouldn’t have focused only on the criminal aspect of drug use by increasing funds for the FBI and DEA and by cutting funding for the National Institute on Drug Abuse from $274 million to $57 million as well as cutting the Department of Education’s anti-drug funds from $14 million to $3 million.
The administration’s priorities were clear: imprison the drug users, don’t worry about rehabilitation or prevention. The war on drugs was the ultimate symbol of what Reaganites viewed as all that was immoral in American culture, as drugs were associated primarily with a) counter culture (hippies, who Reagan loathed from the free speech days on college campuses), b) the ghetto (i.e., minorities), and c) gay culture. (Reagan's press secretary Larry Speakes' dismissively laughed when first asked about AIDS.)
The War on Drugs was the ultimate dog-whistle issue – the perfect way to instill fear in the populace and distract the public from the corporate agenda. Writes William Kleinknecht in The Man Who Sold the World, “Portraying the poor as criminals would also help win support for curtailing social welfare programs, one reason Reagan made spending on law enforcement one of two areas of government – the other being national defense – that would be exempt from budget cuts… Rather than fund programs for drug treatment, child care, job training, education, and housing, which might actually have made a difference in drug-abuse patterns, Reagan chose to militarize the cities.”
One of the greatest consequences of the War on Drugs has been mass incarceration. Even though the U.S. has only 5% of the world’s population, we have 25% of the world’s prisoners, and it’s extremely tied to race.
White men behind bars: 1 in 106
Hispanic men behind bars: 1 in 36
Black men behind bars: 1 in 15
There are more African American men are in prison now than were enslaved in 1850 before the Civil War.
Suffice it to say, there was near-zero efficacy in reducing drug trafficking. And when one compares crime rates across poor males in the high crime ages of 15-18, it turns out that poor youth of color almost across the board are LESS likely to commit crimes than their white counterparts. Poor whites typically report committing more crimes of all sorts than do minorities. But because blacks and Latinos are disproportionately poor and young, they are disproportionately likely than young white men to be swept into the maw of the American crime control system.
“Racial demagoguery convinces many whites to think about government help in terms of race,” warns Lopez, “Ameliorating racial inequality is a precondition to ending racial politics.”
If we are bombarded with messages enough times, we will believe them, regardless of their veracity. In this way, our political leaders are little different than Madison Avenue.
Exhibit A: “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’” –Ronald Reagan
This anti-government rhetoric was scripted for the sole purpose of fomenting dissent with those who are helped most by government services. And it works.
It’s easy to discount all of the ways in which the government works, especially when only examples of incompetence and disgrace linger in our minds. This is a confirmation bias – the result of years of paying attention to information that confirms what we believe, while ignoring information that challenges preconceived notions.
When we are primed to think of government as inefficient, we remember only examples that reinforce it, at the expense of all else. A prime example is how we view the post office as inefficient when they lose a package, yet not the airline when they lose luggage, even though the post office has successfully delivered mail hundreds of times more often than the airline has delivered our luggage.
Another example is the U.S. Military. We never think of it as an incompetent government service, even when in Iraq and Afghanistan, 45 of our soldiers died from friendly fire, and 757 soldiers died in accidents, and the number of civilian casualties is even higher: 132,000 innocent people.
Our conservative leaders drill into us how inept our goverment is - but only in the departments providing provisions for the poor and minorities. And these are NOT departments that result in unnecessary deaths. When do people die? When you take away healthcare, welfare, public hospitals, and weaken veteran affairs. When you cut school lunches and nutrition programs. When you defund stem cell research and scientific studies. When you allow our mentally ill to roam the streets homeless. Or in standard military operations in the Persian Gulf.
Perhaps the primary reason for public policy’s failure over the last quarter century is because we no longer trust the government to solve our problems. And why should we, when as long as “public officials are and remain inefficient, the public will sicken of incompetence and rely exclusively on corporate enterprise,” stated a former president of the U. S. Chamber of Commerce. “That means less competition and more profit.”
The decline in our faith in the government can be traced back to the Vietnam and Watergate scandal. The American public was wary with corruption and mismanagement. Conservative leaders and capitalistic opportunists seized on this growing discontent. William Kleinknecht writes in The Man Who Sold the World, “[Reagan’s] constant attacks on the inefficiency of government...became a self-fulfilling prophecy. The more money that was taken way from government programs, the more ineffective they became, and the more ineffective they became, the more ridiculous government bureaucrats came to be seen in the public eye.”
But the idea that government can’t do anything right is a myth. As Hedrick Smith writes in Who Stole the American Dream? “American history is replete with examples, from the Eerie Canal to the transcontinental railroad to the Apollo moon project to the Internet and the GPS, where the government has backed economic and industrial projects to build the nation’s transportation backbone or to create new technologies to enhance America’s competitiveness and then has handed them off to the private sector.” From laying telegraph lines to nationwide highways, to building the atomic bomb.
We have made a coerced choice that business should be the progenitor of all commerce, technology, and innovation, and this is historically not the case. Nick Hanauer reminds us, “Incompetence is endemic. You find as much incompetence in large private enterprises as you do in large public enterprise.”
Thus, government is little different from the corporate sector. The only difference is that big business can't prosper from government-run agencies. Which is why we need the government to fund scientific research, as they don’t stand to profit or debit from the study, so they do not affect the outcome.
As a people we have been so indoctrinated with capitalism and free market propaganda, that we no longer question if it’s working for us. But it's time we start.
According to Darryl Cunningham in The Age of Selfishness: Ayn Rand, Morality, and the Financial Crisis, novelist Ayn Rand promoted an economic system consisting of unregulated capitalism in which the undeserving poor suffered the consequences of their own inaction. “It was only right and proper that those who made no effort in life should live in poverty,” she rationalized. Conservatives, particularly disciple Allen Greenspan, injected this into the political mainstream, using her moral justification for their actions of deregulation and disregard for the lower and middle classes. “There is still a strong belief on the right that the free market can solve all problems and that the financial crisis was caused by the last vestiges of regulation and government interference.”
But if the last 30 years have shown us anything, it is that free markets lead not to personal freedom, but to corporate freedom – a freedom that has been embraced countless times in the past to pollute, steal, and oppress. The Ayn Randian Reaganomics of an unfettered, deregulated, free market of the last 35 years has given rise to America’s corporatocracy – a new political system controlled by big business.
Historically the elimination of the independent businessman has been the first step in the development of totalitarianism, and today, much of our country’s so-called “competition” is little more than monopolies, suggesting our market is anything but free. Monopolies allow companies to set their own prices, without dealing with competition. Like the Diamond industry, or these notable oligopolies:
BEEF – only four companies control 85% of the market.
CELL PHONES – only four companies with almost 90% of the market.
DEFENSE – five companies with almost ALL of the market.
This means that our income and wealth are being increasingly concentrated in the hands of a small, privileged elite, otherwise known as an oligarchy.
When anyone argues the free market always works, they are not describing the real world. They are saying it works for the rich and powerful, and no one else really matters.
As journalist Fran Lebowitz has stated, “In the Soviet Union, capitalism triumphed over communism. In [America], capitalism triumphed over democracy.”
In The Price of Civilization, Joseph Stiglitz explains, “there is no such thing as a “purely” capitalist system. We have always had a mixed economy, relying on the government for investment in education, technology, and infrastructure. The most innovative and successful industries in the U.S. economy (tech and biotech) rest on foundations provided by government research. A well-functioning economy requires a balance between the public and private sectors, with essential public investments and an adequately funded system of social protection. All this requires taxation. A well-designed tax system can do more than just raise money — it can be used to improve economic efficiency and reduce inequality. Our current system does just the opposite.”
In Democracy Incorporated, Princeton political philosopher Sheldon S. Wolin uses the term “inverted totalitarianism” to describe our current system of power. Unlike regular old totalitarianism revolving around one leader, as in Nazi fascism or Soviet communism, inverted totalitarianism is basically a corporate state that touts democracy and patriotism while actually subverting democratic institutions. Political candidates who must raise large sums of money from corporate funds are beholden to those very firms’ lobbying when penning legislation. Corporate media controls everything we read, watch, or hear and divert our attention with celebrity gossip.
Jeffrey D. Sachs believes that “our politics will work again when we overcome three crises. The first is ideological, the mistaken belief that free markets alone can solve our economic problems. Only markets and government operating as complementary pillars of the economy can produce the prosperity and fairness that we seek. The second is institutional, involving the political role of the large corporations. We must maintain a judicious view. Our major corporations are invaluable to society as highly sophisticated organizations that manage large-scale, technologically advanced operations all over the world. Yet they have become a threat to society by using their lobbying power to dictate the terms of legislations and regulations. The license to operate as a company does not include a license to pollute our politics. The third is moral, concerning the nature of modern democracy itself. In America today, there is little systematic public deliberation, and the public’s views are rarely taken seriously in the political process. One key policy decision after another is adopted behind the backs of the public, often in direction contradiction to public opinion.”
In Dog Whistle Politics, Ian Haney Lopez explains that “to ensure broad prosperity government has four crucial roles to play: first, to help people weather the vicissitudes that easily plunge families into poverty, for instance job loss or ill health; second, to provide escalators of upward mobility, such as quality schooling, higher education, and mortgage assistance; third, to build the nation’s infrastructure, thus laying the groundwork for the next great economic boom; and fourth, to rein in marketplace abuses through regulation, and to prevent excessive concentrations of wealth through progressive taxation.
In essence, the government writes the rules that define the market. Do we want those rules to benefit everyone? Or just the 1%?
Political scientists Green, Palmquist, and Schickler reveal in Partisan Hearts and Minds that the majority of us do not select a political party because it reflects our worldview. Rather, we inherited from our parents, peers, and cultural cues which political position we identify with.
Recent neuroscience reveals that political division originates from how we process information.
In On Second Thought: Outsmarting Your Mind's Hard-Wired Habits, Wray Herbert reveals, “Conservative tendency is to value tradition and authority over change, and the liberal tendency is to value equality over hierarchy.” This explains why conservatives cling to social systems that deny basic human and civil rights to blacks (slavery), women (suffrage), and gays (marriage equality)."
According to science journalist Chris Mooney in The Republican Brain, conservatives engage in more biased reasoning than those who are less authoritarian. Dr. Robert Altemeyer, retired psychologist from the university of Manitoba, found that they "like to consume information that agrees with their beliefs, and don’t want to consume evidence that contradicts them. In one series of studies, Altemeyer tested their penchant to commit what in psychology is called “the fundamental attribution error” – ignoring situational explanations for someone’s behavior, and instead assuming the behavior is reflective of who the person really is. A classic example would be blaming a person in poverty for being too lazy to get a job.”
"Liberals consistently rate higher on openness… a broad personality trait that covers everything from intellectual flexibility and curiosity to an enjoyment of the arts and creativity... They are tolerant of different perspectives and values. Conservatives rate higher on conscientiousness. They prize hard work, orderliness, and structure..." And they are more likely to categorize and divide people into either good or bad. In the conservative world there are no gray areas. Only the black and white of certainty. This creates a clash of realities.
"Conservatives are resistant to change. They have a need for stability and the desire to manage fear and threat. Tension arises between the two groups, because liberals are the people most likely to generate that dangerous change in the social, artistic, and scientific arenas. And this is not something conservatives want to see. The stability delivered by conservative values of order and structure can work well as a useful corrective for human society during chaotic times. But the dark side of these values is that the political right will instinctively resist changes, even if those changes are beneficial to them. Which is why liberals are often shocked to find that their well-reasoned and factually supported arguments are simply dismissed or even viciously attacked by the political right. Conservatives seem to have a gift for blocking out facts that threaten their worldview.”
Cunningham elaborates: “The lack of empathy shown by people on the political right toward those who are disadvantaged or different from themselves is at the heart of the gulf that separates liberals from conservatives. "Research shows conservatives are comfortable with inequality. They are quick to judge others and have little problem dismissing any science that runs counter to their beliefs, no matter what the evidence is, or how well argued. Whereas liberals tend to be more empathetic, see more complexity in the world, and are more likely to change their opinion when presented with evidence that they are wrong."
Denying uncomfortable truths that cry out for acknowledgment, debate, action, and change is known as willful blindness.
There are "two strands of knowledge or ways of trying to understand existence: the tension between knowledge based on observation and experience, and knowledge grounded on faith and belief – the tension between fact and faith,” explain journalists Bill Kovach and Tom Rosenstiel in Blur: How to Know What’s True in the Age of Information Overload.
It is our responsibility to be aware of the difference between information that is factual and ideas that are taken on faith. The majority of the debates of our time often boil down to reason and empirical evidence versus belief. Or, put simply: FACT versus FAITH.
FACT: Global warming is man-made.
FAITH: Global warming isn’t man-made and will correct itself.
Regardless of the evidence, many of us refuse to be swayed by the facts, clinging to a gut feeling – our belief. Stephen Colbert coined a term for this – truthiness – things people know intuitively, without regard to evidence, logic, intellectual examination, or facts.
Therein lies the problem of ideology: it gives you an answer before you ask the question.
In the 21st century, this remains the key difference between the two parties: One places ideology over information. Ideology should never serve as a source of authority. It is no less than a shortcut for people who don’t have the courage or the time for independent thought.
The conservative tendency to discount intellectual inquiry by discounting all who disagree usually results in their dismissal on the grounds of “liberal bias" - a term coined by military propagandists from the Vietnam War to discredit the media as part of an agenda to build support for Nixon's Vietnam policies.
This manufactured version of reality is better known as propaganda, and often in the form of myth.
Fox News and partisan airwaves have condemned the public to no longer differentiate between information and propaganda - outright deception with no basis in fact. Conservative media doesn't employ journalists, they prefer proselytizers. Researchers have found that someone who watched only Fox News was less informed on both national and international news than those who watched no news at all, while those who listened to NPR were the most informed.
The true challenge of the Information Age will be to decipher what is truth and what is myth.
When an uncomfortable truth challenges our most sacred myths - particularly our social, political and economic identity - we must find the courage to shed our preconceived notions, regardless of how convenient they may be.
If you are one of the few dedicated enough to have read all 16 parts of this 40,000-word blog series, I congratute and thank you!
You have likely noticed a recurring culprit at the heart of our economic condition.
Our problems of the last 35 years do not rest solely on the Republicans or the Democrats, who have both equally failed us – but on the pro-business, anti-New Deal conservative movement.
"’Devotees of capitalism are often unduly conservative,’ wrote John Maynard Keynes in 1926, ‘and reject reforms in its technique, which might really strengthen and preserve it, for fear that they may prove to be the first steps away from capitalism itself,’” explains Matt Miller, in The Tyranny of Dead Ideas. “History and common sense suggest…corporate America’s reflexive anti-government ideology now stands in the way of its self-interest.”
This insidious conservative ideology that promotes unfettered capitalism at the expense of society has wrecked the middle class by putting profits over people, private enterprise over the public good, and the 1% above the 99%.
"Conservatives assert that the key to our economic future is simple: close our eyes, click our heels three times, and say ‘tax cuts,’ and the pie will miraculously grow," writes Thomas L. Friedman in That Used to Be Us.
But that is - and has always been - another conservative myth. And it has eroded our traditional American values that once underpinned our public and commercial life.
Conservative rhetoric is deliberately steeped in racism, distortions, and inaccurate mythology. It whitewashes our disreputable past, euphemizes our textbooks, and systematically peddles misinformation.
It stokes the flames of intolerance, promotes bullying nationalism, and seeks to dismantle the Great Society.
It mislabels a hand-up as a handout. It misconstrues the poverty-stricken for moochers. And it condemns our mentally ill to live as homeless in our new feudal caste system.
It expects our brave men and women to fight for our country in a time of war, then denies them healthcare when they're no longer politically expedient.
And it ignores the warnings of experts, scientists, economists, philosophers, journalists, and Cassandras the world over who desperately try to sound the alarm.
Pro-business ideologues have eviscerated the Fairness Doctrine with the sole purpose of polluting the airwaves with propaganda, replacing journalists with indoctrinators and news with gossip, and dismissing intellectual inquiry as character deficiencies.
The question we should be asking ourselves is not if we are Democrat or Republican, or if we live in a blue state or a red state, but do we stand for progress? Or regress?
Do we wish to return to the Gilded Age where the American people are little more than indentured servants to our ruling class? Because we are halfway there.
One could argue that our entire history is one of progress battling the forces of inertia, or worse, obfuscation, i.e., those who are trying to change the world for the better through moral, legal, or humanitarian grounds (civil rights, freedom, equality), while the power structure fights like hell to maintain the status quo (plantation owners, corporations, monarchs).
Many of these issues may only have clarity in retrospect, but for those who know their history, it can be pretty obvious when it repeats.
Conservative ideology has fought against every positive social change in American history: ending slavery, giving women and blacks the right to vote, stopping child labor, establishing a minimum wage, instilling a 40-hour work week, setting an 8-hour work day, workplace safety regulations, unemployment insurance, workman’s comp, social security, Medicare, integration, interracial marriage, gay marriage, anti-discrimination laws, equal pay for women, Obamacare, global warming, and the list goes on…
William F. Buckley, Jr. was correct when he said, “A conservative is someone who stands athwart history, yelling STOP!”
Well, it is time to stop subscribing to these conservative myths.
Myths are for children. For those who lack the maturity for introspection. For those who lack the courage to face the truth. For those unable and unwilling to empathize with the less fortunate.
If that’s you, then sit back and distract yourself within our vast wasteland of infotainment.
The rest of us are trying to change the world.
As quantum theorist Niels Bohr said, “Conformity to old ideas is lethal; it is rebellion that is going to change the planet.”