U.S. Class War By the Rich: “Trickle Up”

Previously, I asserted that the American people are in the midst of, and—in great part because they do not know they are in the midst of it—losing a class war. This is an extreme assertion that no doubt shocks most readers, though one may imagine it does not at all shock the several million who have recently dropped out of the hopeless job market. In any case, the assertion needs to be defended, so let’s look a little deeper.

Back in the Great Depression, the working class almost started a class war in the U.S. out of desperation, but the elite compromised and shared a bit with the rest of American society, which was in the end very conservative and quite willing to let the rich remain rich (not to mention alive). The filthy rich—those who got rich by cheating rather than working hard, and yes, the term applied to some of the rich then as it does today—were not attacked, jailed, or even removed from their positions of privilege. Too selfish to feel any gratitude, in the 1970s, the rich saw their chance and launched a campaign to shove what we now call the 99%, for their campaign targeted the middle class just as much as blue collar workers, back into the depressed state they had occupied in 1929. When you examine the details and see the moderation of the aspirations of American workers and the extreme nature of the demands of the rich, it is hard to find a better term for this new campaign than “class warfare.” That is, the campaign was not designed to protect the rich; they were hardly at risk in a conservative society where everyone just wanted to join the rich and  believed he might just do it. No, the counterattack of the rich against the New Deal compromise was designed to defeat, defang, and debilitate everyone else.

Curiously, this anti-social campaign, which we call the Reagan Revolution, began with Carter. Whether he was complicit or just steamrolled is difficult to judge and another story. The most reasonable interpretation appears to be that both Carter and Reagan were more surfers on an elite wave than leaders. In any case, what matters to American society is that the moderate post-Depression compromise known as the New Deal suddenly began cracking apart under a conservative counterattack intended to destroy the bargaining power of everyone except CEOs. The New Deal was  “moderate” because it not only did not punish the rich for causing the Great Depression but even went so far as to permit them to remain rich; “moderate” is a kind characterization, for it certainly was not balanced. A balanced new deal would have leveled pay; a “radical” new deal would have eliminated the ruling class. A generation later a moderate deal that allowed the rich to remain rich as long as the rest could see steady improvement proved unacceptable to those rich, strong evidence that their elimination in 1929 might have been a good idea after all.

Since Americans are now groping in utter confusion for a solution to the mess that this conservative counterattack produced, the details matter. They matter because it is hard to see how the 99% can effectively defend themselves unless they understand the subtle ways in which the rich, with their lobbying army, are fighting this war. Occupy! Citizens may be heroes, but their street protest tactics are only the first phase and can hardly accomplish anything unless “we the people” do our homework.

Carter era defeats for the American people included the failure to pass tax reform, the failure to get a stronger consumer protection agency, and the failure of health care reform, and the failure to update labor relations laws to protect unions, and a cut in the capital gains tax. [See Hacker and Pierson, Winner-Take-All Politics, pp. 98-100.] One might also mention a critical missing issue – even as TV was becoming the center of campaigns, no law was created to provide free TV time for candidates. The result of all these arguably small steps is, a generation later, about as hard to see as a tsunami: the electoral process has been so totally bought by the rich that democracy in the U.S. is more like gladiator games than anything related to government, American health care is scandalous as the worst in the developed world, we are plagued by poisonous consumer goods made by American companies but in China, unions are something old people can remember if they think carefully (with the final battle in the campaign to destroy worker rights now a cliffhanger in Wisconsin), and with the tax code punishing workers while rewarding Wall St. gambling, of course everyone who can is trying to gamble rather than work.

To many Americans, caught up either with daily lives or the drama of the Cold War, these initial battles under Carter of the class war by the rich did not seem all that dramatic, and, given the corruption of many labor unions at the time, also seemed somewhat justified. A generation later, with Wall St. having transformed itself from financer of American industry into a global casino for the rich to gamble with other people’s money and with some 15,000,000 unemployed (combining the unemployed looking actively for work and those who have given up in despair), those initial battles in the new class war appear far more significant than they did at the time.

Journalist Matt Taibi summarizes how the Class War by the Rich was being fought circa 2007:

Governor Kasich, yeah, and he was intimately involved with selling — getting the state of Ohio’s pension fund to invest in Lehman Brothers and buy mortgage-backed securities. And of course they lost all that money. And this, broadly, was really what the mortgage bubble and the financial crisis was all about. It was essentially a gigantic criminal fraud scheme where all the banks were taking mismarked mortgage-backed securities, very, very dangerous, toxic subprime loans, they were chopping them up and then packaging them as AAA-rated investments, and then selling them to state pension funds, to insurance companies, to Chinese banks and Dutch banks and Icelandic banks. And, of course, these things were blowing up, and all those funds were going broke. But what they’re doing now is they’re blaming the people who were collecting these pensions — they’re blaming the workers, they’re blaming the firemen, they’re blaming the policemen — whereas, in reality, they were actually the victims of this fraud scheme. And the only reason that people aren’t angrier about this, I think, is because they don’t really understand what happened. If these were car companies that had sold a trillion dollars’ worth of defective cars to the citizens of the United States, there would be riots right now. But these were mortgage-backed securities, it’s complicated, people don’t understand it, and they’re only now, I think, beginning to realize that they were defrauded. [Democracy Now 2/22/2011.]

Banks are, in moral terms, tools for society; they have no independent “rights.” When banks plot to defraud pension funds or behave with such abandon that they “just happen” to defraud pension funds on a regular and widespread basis, society needs to get itself new tools.

Now the mesmerizing (to the many naïve working class voters who supported Reagan while he ate their lunch, [not to mention the much more extreme gang under Gingrich that followed) the nonsense of trickle down has been exposed as the pure propaganda the small progressive sector claimed it was all along: cookie crumbs did not trickle down from the billionaire’s table for everyone else. That had actually been the New Deal “deal.” In reality, after Reagan, the rich became richer by stealing from the poor and by impoverishing the great middle class that personified the American dream. When a mortgage company CEO can skim a few thousand in excess fees off the top of hundreds of thousands of mortgages and then escape criminal responsibility by quickly selling those mortgages to…say, a Chinese bank, that CEO can do very well indeed, thank you, even in the midst of general disaster, and he can easily afford to contribute appropriately to the politicians who look the other way. That’s one good route for a rich man to get richer by stealing from the poor. It’s called “trickle up.”

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The Global View of Class Struggle - Immanuel Wallerstein

The world income squeeze is real, and not about to disappear. The structural crisis of the capitalist world-economy is making the standard solutions to economic downturns unworkable, no matter how much our pundits and politicians assure us that a new period of prosperity is on the horizon. [Common Dreams.]