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Broken

from David Ruccio

DL

Over the years, I’ve reproduced and created many different charts representing the spectacular rise of inequality in the United States during the past four decades.

Here’s the latest—based on the work of Thomas Piketty, Emmanuel Saez, and Gabriel Zucman—which, according to David Leonhardt, “captures the rise in inequality better than any other chart or simple summary that I’ve seen.”  

I agree.

The chart shows the different rates of change in income between 1980 and 2014 for every point on the distribution. The brown line illustrates the change in the distribution of income in the 34 years before 1980, when those at the bottom saw larger growth than those at the top. In contrast, in the decades leading up to 2014, only those at the very top saw high levels of income growth. Everyone else experienced very little gain.

broken

Lest we forget, however, the U.S. economy was already broken by 1980: the bottom 90 percent only took home about 65 percent of national income, while the top 1 percent managed to capture 10.6 percent of total income in the United States. There was nothing fair about that situation.

A bit like a car that looks good, when shiny and new, but is designed with cheap parts to fail as soon as the warranty expires.

Well, the warranty on the U.S. economy expired in the late 1970s. And then it really began to break down.

By 2014, that already-unequal distribution of income had become truly obscene: the share of income going to the bottom 90 percent had fallen to less than 53 percent, while the share captured by the top 1 percent had soared to over 19 percent.

Leonhardt is right: “there is nothing natural about the distribution of today’s growth — the fact that our economic bounty flows overwhelmingly to a small share of the population.”

Yes, as Leonhardt argues, different policies would produce a somewhat more equal outcome. And, it’s true, “President Trump and the Republican leaders in Congress are trying to go in the other direction.”

But a different economy—a radically different way of organizing economic and social life—would eliminate the conditions that led to unequalizing growth in the first place. Both before 1980 and in the decades since then.

The fact is, the supposed Golden Age of American capitalism was based on a set of institutions that allowed the boards of directors of large corporations to appropriate a growing surplus and to distribute it as they wished. At first, during the immediate postwar period, that meant growing incomes for those in the bottom 90 percent. But, even then, the mechanisms for distributing income remained in the hands of a very small group at the top. And they had both the interest and the means to stop the growth of wages, get even more surplus (from U.S. workers and, increasingly, workers around the globe), and distribute a greater share of that surplus to a tiny group at the very top of the distribution of income.

Those are the mechanisms that need to be challenged and changed. Otherwise, inequality will remain out of control.

  1. August 14, 2017 at 2:38 pm

    Well dressed pirates will drive life on Earth to extinction in their quest for more.

    Statistics are often used weirdly in economics to explain a mirage economic system designed around infinite growth on a finite planet.

    Statistics also point to the lack of communication from other planets and may very well indicate that, so far, when life evolves to this point the humans destroy their planet.

  2. August 14, 2017 at 3:58 pm

    Garrett:

    You’re tarnishing the egalitarian aspects of piracy in the Caribbean in the 17th and early 18th century. Didn’t you watch the Starz series “Black Sails,” a better guide to our times at least in full context than “Game of Thrones,” with about equal levels of ruthlessness and betrayals? “Stabbed in the back” features prominently in both series, a haunting prelude to that phrase’s use in Germany after World War I.

    Seriously, has there been any greater gap between underlying reality, and the mood of the public, than between the facts in this posting’s graphics, and the two dominant “official” statistics of low unemployment and low inflation?

    As the events in Charlottesville, Virginia over the weekend demonstrate, beneath the rationality of the top 20%, there are “seething” forces, cultural and racial, driven by the harsh reality of the economics in Red State America. Those angry white working class citizens are not being steered to the graphs of Messrs. Piketty and Saez, but to uglier role models from the U.S. in the 1850’s, and in Weimar Germany, 1919-1933.

    In more than a few ways, Donald Trump is playing, a little more subtly, the role of the “fire-eaters” of South Carolina in the 1850’s.

    And this is all before “the next” economic crisis.

  3. robert locke
    August 15, 2017 at 12:17 pm

    The turning point came in the 1970s, when Henri Ford III, visiting the Ford Plant in Cologne, spoke out vehemently against the co-determination laws that Helmut Schmidt and the SPD government successfully sponsored the expansion of the system set up, after the US (McCloy) vetoed co-determination in occupied Germany after war. Germans had to await the founding of the German Federal Republic, and regaining their independence, to get the co-determination laws through in the early 1950s. Co-determination was popular outside Germany as well, and is important, because in this context it is a way to take decisions about the distribution of money away from the boards under director capitalism and give employees a voice in the distribution. 1970s are important because co-determination, if it did not disappear, lost impetus under the CDU,CSU, and FDP governments in Germany, and completely disappeared as a serious basis of reform of firm governance after 1980 in the US as financial capitalism took hold. It isn’t seriously discussed on this blog by people who decry maldistribution of income by the top one percent.

  4. August 16, 2017 at 12:40 pm

    There are two intertwined issues here. First, upon what story will the economics and economies for the next 100 years be based? If the old capitalist story is ending, mostly from its own failures, what is the story to replace it? Second, in this story who will be the story teller, spokesperson if you will, and who will be the one to whom the story is told? The answers for these questions tell us the shape of the world in the next 100 years.

    Personally, I favor some form of the democratic economy that Robert describes. While never a big part of the American economy in the past, it could be part of this guiding story.

  5. Tomonthebeach
    August 16, 2017 at 8:21 pm

    As economist Dean Baker points out in his book “Rigged,” we live in a very politically controlled “free?” market with numerous federal and state agencies whose purpose is to regulate every financial transaction – even money itself. So-called liberal, Bill Clinton, supported some of the worst legislation that has given us TV, Internet, and telecom monopolies that have jacked prices for services sky-high, while also deciding what we may or may not see.

    The point worth understanding is that the infamous .01% (the top 10th of the 1%) are in that rare socioeconomic niche because laws were passed by Congress to enable the huge shift in wealth away from the bottom 80%. The only reason that there is a top 20% is because it is difficult to push billions up that steep curve in the wealth graph without spilling a little.

    Why did Congress pass all these loopholes that bleed money from our GDP to feed the wealthy rather than improve our quality of American life? Because it is easy to get re-elected if you only have to court a few billionaires to finance your campaign. Of course, that gift only keeps giving if you obey their lobbyists and earn them more billions.

    Thus, it would seem just based on logic, that the US distribution of wealth problem is a self-inflicted, politically-created wound. and until we get corporations out of politics for good, we will see no change.

  6. August 18, 2017 at 1:24 pm

    The US has never been fair, economically or any other way. While the number of poor in the US during the its first century is impossible to calculate precisely, estimates run as high as 70%, and higher in the immigrant communities. Unemployment routinely exceeded 25%. When industrialization, and then financialization became the dominant models for American society, the US became even more unfair. We are, per the textbooks and the Constitution a nation of laws. But who creates those laws and what purposes do they serve? Ruccio shows here, and many times before that the rich are getting richer, legally (or at least legally mostly). Is this the intended result of the laws? If untended, the events depicted in these graphs and the history that precedes them are highly unlikely. So, we can assume the laws intended these results. The important question for me is why was there a break in this pattern during the period 1945-1975. Two reasons, I think. Hatred of the rich and fear by the rich. During this period being rich was not considered honest. The rich were often depicted as immoral parasites. And after the sacrifices and costs of WW2 accepting large disparities of wealth became unpopular. So, the wealthy became, like the Kennedys and Rockefellers benefactors and philanthropists. The “good” rich as they were called. They funded medical research, anti-poverty programs, universities, etc. By the 1970’s the failures of the US to modernize its economic arrangements and systems was taking a huge toll on the country. New thinking was needed. Unfortunately, as with Trump today that new thinking was just old thinking. Ronald Reagan, neoconservatives, neoliberals, and those who wanted to be the “new” rich took the country back to 1895. That lead to US back to high poverty, high illiteracy, racism, and the “Nouveau riche.” And these created entire structures to get rich quickly using primarily tax money. Really, a beautiful scheme. Based on the graphs it worked impeccably.

    The US is exceptional in many ways. In how much it helps the lesser well off among us, the US is exceptionally bad. Sad to say, many, if not most Americans would be better off elsewhere. The US ranks highest on poverty, childhood poverty, elderly poverty, long-term poverty, permanent poverty, and income inequality among “advanced” nations. As a result, and because of this the US ranks high among these nations in rates of incarceration, health-care costs, CEO pay, average hours worked, and infant mortality. Yet, seven “advanced” nations have higher productivity than the US, many with shorter work weeks. Using Donald Trump’s favorite term, the US is a “loser.” This is not new. The US has been a loser from its start. Historian Richard Hofstadter was correct when he called the power and might of the US an historical accident. Mostly, the US did nothing to earn it. The form of the US’ future, and the future of much of the world, including the rise of China depends on whether Americans are able to address this reality realistically and effectively.

    • robert locke
      August 19, 2017 at 8:38 am

      What you say is indisputable. But it is not clear how, effectively, Americans can go about achieving social justice in a free market economy. Most Americans are leery of government. And there are good reasons to be so. My wife lived under Communism in Poland, where government intervention in people’s lives, although not violently oppressive, (As she said there were only 4 policemen in her town, and they were mostly drunk.) But government bureaucracy often led to a dysfunctional society. To offset the effect, people in the building, a high rise, where she lived would take care of problems without recourse to government. For example, if a man was sent to prison for bootlegging, the state would sent the children to foster homes and break up the family, to avoid this the people in the building took care of the children and their schooling while the father was in jail.) Americans understand this kind of community action, with their anti-government traditions

      After years of thinking about the subject of social justice in a free market society, I concluded, using the German model of co-determination as an inspiration, that we would not need government managerialism in our society to achieve social justice in our economy, if we gave a voice to people who work in firm in matters of pay and benefits, by setting up compensation committees. This leaves decisions about such at the local level, in the firm more as a community, and avoids most of the pitfalls of government bureaucracy.

      • August 20, 2017 at 12:05 pm

        Robert, government was created by humans about 8,000 to 10,000 years ago as a resource to ensure secure towns and resources needed for survival. It served the town’s population. It failed when it failed these tasks. Later government became detached from the people who depended on it. Often government served only parts of the population or even one single family. Forcing government to serve the entire town or village is the only way to ensure government is relevant, effective, and legitimate. Since humans invented it in the first place, they can certainly ensure it functions as needed and intended. They shouldn’t accept dysfunctional government.

        Co-determination is a narrow and limited form of “making the government function as needed and intended.” Aside from this worker partnership, overseeing and directing government requires cultural cooperation and democratic resources distribution. Making government work is difficult “work.” Otherwise government will, like all such institutions function as constructed, whether this fulfills its purposes of or not.

      • robert locke
        August 21, 2017 at 10:30 am

        Agreed. Co-determination is limited, but when I studied its implementation in Germany, I was surprised to find the U.S. occupation forces so much opposed to it, and US nongovernmental institutions representing US business interests in Europe oppose its implementation in West Germany. You know Gerd Hofstede’s book Culture’s consequences, and perhaps Philipp d’Iribarne’s La logique de l’honneur, Gestion des entreprises et traditions nationales, in which the voice of the employees varied so much in corporate governance in various countries, with the variance greatest between Northern Europe and the Mediterranean. This recognition of the interests of employees in the firm as legitimate, moreover, did not depend on democracy. Under the Kaiser, employee committees were given a voice in the firm in matters of work process, while Germany lived under an authoritarian state.

      • robert locke
        August 22, 2017 at 8:45 am

        A much more recent book on co-determination is Tore Hoie’s Ethical Management, which is just coming out. The following blurb is from the cover:

        “Management theory is becoming a compendium of dead ideas. Productivity growth is dismal in the West, companies are fusing at a furious rate, entrepreneurialism is stuttering, populism is on the rise and the old rules of business are being torn up. Management theories are organised around four basic ideas, repeated ad nauseam in every business book you read. Management theory is ripe for a Reformation. Schumpeter column, The Economist 17 December 2016.

        Høie observes that traditional management education no longer reflect the concerns of the modern globalized world. The book offers an original perspective, with contributions towards research, application, application and policy in management studies. For example, in Chapter five, he focuses on customers as key stakeholders, in Chapter 6 on employees as stakeholders, stressing the difference between USA and Nordic management models, in Chapter 8 the emphasis is on ownership models, e.g. financial engineering and ownership as a profession, in Chapter 9 he emphasizes the role of ethics in balancing the needs of stakeholders and in the development of principles of governance vital to a firm’s sustainability, and in Chapter 10 he presents a resume of management principles derived from the book’s discussions. The book, therefore, offers a balanced and complete presentation of the subject. There are no serious omissions. Robert Locke, Professor emeritus University of Hawaii, February 2017

        This is an important work in Management Science. It is partly based on Nordic Management that has experienced considerable success lately. In the process it criticizes established management theories, and the book may well cause a paradigm shift. I agree with the author, and his attitude encourages me. Few books cover the combination of ethics and organisation/management. Høie includes organisation structure, management philosophy, stakeholder theory, quality and service. This is strongly anchored in international standards like ISO 26000. This understanding of interrelations (context) is unique. The manuscript covers breadth and depth, with a number of important and updated examples. Some are related to current debate, and any well informed reader will feel at home. Also, examples are from business, government and voluntary organisations, expanding from a business­only scope. An instructive example is Red Cross, but even the World Bank has good initiatives. Finnish schools made a strategy in 1968, with empowerment to teachers and other unique innovations. Too few follow. Summaries and questions following chapters help the reader to understand better. Also useful is the comprehensive literature list and references. New literature is included. Links enable the reader to make own searches. The Glossary is unique in both management and ethics. It is a help to understanding, but also a way to see connections between subjects. Geir Lahnstein, senior lecturer Norwegian Business School, February 2017

      • August 23, 2017 at 5:28 am

        I’m familiar with Hoie’s writings. I agree with everything you say about him and his work. The thing I think you and he miss is that he believes and writes as he does, and generally Nordic businesses act as they do because these reflect Nordic culture. In the same way, American ethicists and corporations reflect American culture. Nordic culture is free higher education, full support for families, healthy work/life balance, active responses to climate change, high paying jobs for all. In whatever way you mean the phrase, standard of living, the Nordic countries stand at the top. But we need to remember that the Nordics began their international lives as pirates. That was over 1,000 years ago. Colloquially, we might say the pirates matured. They went through capitalism 600 years ago. The US on the other hand is a 250-year-old nation, based on values borrowed mostly from the largest late 19th century empire. It’s basic view of life might be summed by this from Robert Pagliarini on the Moneywatch blog, “Greed is good. Embrace it. Love it. Live it. In fact, greed may be the one thing that can save us. Don’t believe me? Greed was the foundation for this country. The brave souls who risked their life to settle in a new country did so out of self-interest. Our forefathers recognized the importance of self-interest in the Declaration of Independence where they emphasized our unalienable right to pursue happiness.” As distorted as you believe this is, it is the view that’s been in charge in the US for over 200 years. Hoie’s reflection that the US could and should learn from the Nordics is insightful and correct. But the adage is also correct. “The very young often to not do as their told.” In Nordic history, the US is still a pirate. 700 more years and it might be worth a damn. If the US doesn’t kill the world in the interim.

      • robert locke
        August 23, 2017 at 9:01 am

        Ken, my first PhD student came from a farm in Nebraska. He spoke of the mores in his community as follows: When it was harvest time, if my dad were sick and couldn’t work, he didn’t have to ask for help, they just appeared, his neighbors, no questions asked or pay expected, to pitch in to harvest our crop. That’s not greed. This same man, who was my Phd student at Fordham, told me that he, walking one day on the street in NYC, noticed an old man with a flat tire. He went over to help, jacked up the car, changed the tire, while the man looked on suspiciously as if my friend were going to steal the tire or the car. When he finished the tire change, the man offered him some money, which he refused. He was doing a good deed, but he added that he could have used a ride, which the man did not offer.

        Working class communities have always had this sort of help ethic. When I was a 9 year old, my mom used to keep a pot of beans on the stove, which she would feed to tramps who knocked hungry on our backdoor during the depression. I watched it happen more than one, not realizing at the time the danger to which my mom was exposed by taking in these total stranger down-and-outers into our kitchen.

        There has to be more to America than greed; the question is how are communities and the moral order that activates them envigorated. In Goerlitz, Germany there are a lot of cooperative agencies, trade unions, employer associations, local educational institutions, churches, etc. that do it. Our US leadership classes seem to have failed to offer the right values recently to do the same thing. Conservatives always seek out deep roots to explain human behavior, which is perhaps the case. But some kind of social engineering has to be done to get desired results. Confucius talked about the cake of custom being the basis of moral order in traditional societies; when that disappeared societies have to try to create a deliberate custom, primarily through education (Confucianism itself) to instill the moral order necessary for society to promote the general welfare.

      • August 23, 2017 at 1:07 pm

        Yes, Robert, I agree, there is more to America than greed. Sort of the like the good aristocrats of Russia who treated their serfs well. Giving them food and shelter well above the average. Or the Americans who worked diligently to save the American Indians from destruction. Or, the Germans who opposed Nazism. Motivated by duty, Christian faith, or just brotherly love, these all show what humans are capable of. None ought to be surprising, since for nearly 200,000 years humans based their lives and societies on such actions. But, and I’m sorry for this but, this does not change the basic moral structures held out for the past 200+ years by American culture as the best possible actions for humans. Culture is an amazingly subtle and flexible thing. Created from collective human imagination, it can, and has constructed a nearly endless array of life assemblies. The US culture is a collective structure that denies human life is collective. It contends all humans are innately “individuals” who can and should only enter “voluntary” commitments to other humans. This came over mostly from English philosophers like John Locke. It’s an ahistorical culture and inconsistent with human history. But still it exists. And it has dominated American life from even before the Declaration of Independence. We see its results in American economics, American law, and American popular “culture.” Every American cowboy movie has the stand-alone, individual hero – John Wayne, so to say. In business and corporations this culture produces unchallengeable markets and grab all the wealth you can robber barons and corporations. Except for several historical accidents, it’s likely the culture would have destroyed itself more than a century ago. These accidents: mostly temperate weather, almost unimaginable natural resources, sufficient open land to provide food and living space, vast open spaces to bury mistakes, a native population unable to offer effective resistance to conquest, a population of immigrants mostly European, and two wide oceans that until the middle of the 20th century kept threats from Europe and Asia away. As these accidents melt away or are no longer functional, the US must either mature or die. Don’t know which will happen. Right now with Trump looks like death is winning.

      • August 23, 2017 at 9:13 am

        Bob and Ken, really enjoyed this discussion.

    • robert locke
      August 24, 2017 at 8:41 am

      Ken, Tore wants to provide info about Ethical Management to you. His email: tore.hoie@vikenfiber.no>

      To my query, “when will the twittering twit leave office,” a friend in New Jersey replied, “after the atomic war.” The danger with such a simple minded man at the helm, is that death could win, and then all these discussion about maturing or introducing some sort of moral education into the ranks of the leadership will be pointless.

      In the 1960s I read a lot about elites (Pareto, Mosca, Tocqueville) convince me that the education of the leadership classes to a moral standard is essential to a well functioning society. If democracy fell victim to radical Rightism, explanations for the result had to be sought in the failure of the leadership groups to understand the necessity for them to promote the general welfare. That is the point we are making about the greed principle take-over of the owner-managerial class, but the same can be said in so many turning points in history which had catastrophic results for civilizations, the failure of he founding fathers to deal with the problem of slavery, the use of military force in 1860s to crush liberalism in Prussia, the machinations of the Weimar monarchists that brought Hitler and his thugs to power (Hitler never got a majority of Germans to vote for him in a free election). Traditionally, the education thought most appropriate did not bring knowledge or expertise (which is what we think of today in the US, with emphasis on economic and management), but on the moral education of the elites, so that they would, even In authoritarian regimes, be constrained by ethical considerations in their behavior. This has been true even in authoritarian regimes, when, for example, the liberator czar, unlike emancipationistsin America, understood that the freeing of the serfs had no meaning if the peasants were not given land along with their freedom, or the Bismarkian authoritarians, who recognized the rights of the working classes, not to govern, but to have health, accident, insurance and old age pension as a basic right, and even to have a voice in the management of firms when their interests were enjoined, Humbolt, in his educational reforms of Prussia, after Napoleon’s conquest of the country, understood the necessity for the leadership, the civil service, to be a general class that looked after the general welfare of the kingdom, which could not be accomplished if any special interest groups were permitted to run the country (especially businessmen who would be motiviated by greed). The education he designed for the civil servants, emphasized the classics, and the credo of the Christian gentleman, not managerial skills, because in a society the leadership classes fail primarily because of an absence of moral behavior not leadership skills.

      • August 26, 2017 at 12:16 pm

        Robert, Trump may be idiotic in many ways. But he’s not suicidal. It’s just a matter of making him aware of his impending suicide. Plus, his reputation precedes him. All those he might want to conquer and control already know he’s an imbecile. So, he’s more joke than threat to them. Domestically, however there’s little doubt he’ll hurt and kill many Americans before he’s pushed or pulled out.

        Historically there are at least two ways to pursue the goals of all societies (collective life) durability and stability. One, the members of the society hold identical or nearly identical beliefs and practices. This sort of society is known to exist in hunter-gather and other smaller groups. But even here there are many maintenance problems. Two, society may be based on balance and compromise. There are diverse cultures and subcultures in such societies, that work together to benefit themselves and one another, and the entire society by using paternalism and patronage. All members have the necessities for a useful and secure life, such as health care, old age pensions, and even a guaranteed right to have a voice in how and why they are employed and how their lives are controlled. But most society members do not play a significant role in governing society. This is mostly in the hands of professional bureaucrats, who specialize in the various aspects of governance. The US is this form of society, or has been for most of its history. Such societies fail when the paternalism and patronage compromises fail, either because of rejection by one or more groups within the society, or because the society abuses other societies beyond their willingness to accept. As a friend who teaches philosophy says, this is a form of pragmatic morality. By pragmatic she means “focused on effects” rather than cynically utilitarian. The US’ version of a pragmatic society is now collapsing. That collapse began with the US Civil War but was postponed first by FDR’s New Deal and then by WW2 and the Cold War. The collapse began to accelerate again during the 1960’s and is now close to its denouement. If it isn’t stopped soon, I predict the US will break into 3-5 separate nations. And that will dramatically change just about every nation and interest group in the world.

      • robert locke
        August 26, 2017 at 5:30 pm

        Your prediction of breakup is interesting and intriguing, because it certainly is a different route from Trump’s making America great again. But apres moi le deluge might only explain history in the short run. Few countries or empires that were breaking up were conscious of the danger when it was happening, just look at Europe in 1914, when Monarchies reigned.

        Americans are having a difficult time coping with decline, which is not unusual. An British historian named Musson once told me in the 1970s that he had trouble living in a post WWII world, explaining that when he served in the army during the war, everywhere he went there was “British presence” in the Near East, Asia, India, etc. Now it was gone. I heard a similar story from a German, former staff officer in the Wehrmacht, about the same time. I visited his house, and from him and his wife, heard a litany of dissatisfaction, which somewhat surprised me since he and his family were prosperous, successful people. So I asked, why are you so unhappy, what is missing, and both he and his wife, spontaneously and without hesitation, replied, what is missing is “Grossdeutschland.” Perhaps this is the fatal American disease.

      • August 28, 2017 at 6:17 am

        Robert, fascism has been on the verge of ruling America since at least the New Deal. Glen Yeadon’s book, “The Nazi Hydra in America: Suppressed History of a Century – Wall Street and the Rise of the Fourth Reich” tells some of the story. While Eisenhower’s troops defeated The Third Reich on the battlefields of Europe, the war against fascism was lost on the home front, to the very cadre of American plutocrats and industrialists who built and paid for Hitler’s war machine. In fact, the fascists won WWII, because they ran both sides. After the war, they recouped Nazi assets to lay the foundations of a modern police state, complete with controlled corporate media. To show just how far this conspiracy has gone Yeadon and others remind us of the close ties between American business and European fascists beginning prior to WWII. As a marriage between corporations and the government (per Upton Sinclair fascism is capitalism plus murder), fascism is revolution by corporate and other elites to gain total control over capitalist society. As revolution from the top down fascism has been slowly seizing America since the 1920’s. Prompted by the Russian Bolshevik revolution, unionization, and later by the New Deal and the struggle to expand civil rights for women and minorities, fascism is American capitalist elites’ response to these events, to these attacks on American capitalism. In America, fascists seize power and terrorize to save America. Sound familiar? The loss of “Grossdeutschland” (dominance in the world) may partly explain fascism in America. But mostly it’s explained as a defense of capitalism. Capitalism is the victim! Sound familiar?

      • Tomonthebeach
        August 28, 2017 at 7:10 am

        Whoa. Zimmerman’s remarks sound like alt-right radio personality, Alex Jones, connecting his random unexplainable historical events and asserting a deep state conspiracy. Zimmerman’s historical retrospective seems to conflate the narcissistic autocracy observed in some CEOs with good ole WWII fascism. Fascism, being nationalist by nature, seems rather incompatible with the international investment and business empires of those Zimmerman tars with his historical brush – what nationalist Trumpies deride as “globalism.”

        Granted, fascist control of ever-growing monopolies likely appeals to some 1-Percenters, but today, mega growth normally relies on a global strategy – not nationalism. Most likely US captains of industry and finance never think of their behavior in terms of advancing fascism, and certainly are unlikely to have shrines to their household gods donned with little swastikas. They are not all Henry Fords who want to control everybody’s behavior, right down to their hygiene. There are a lot of “Capitalist elites” who abhor racism, sexism, and unfairness generally. So characterizing fascism as their reaction to what Zimmerman seems to describe as socialist policies – even bereft of communism – seems like quite a stretch. I just cannot see Zuckerberg, Gates, and Musk arm-in-arm marching at a White Lives Matter rally in Silicon Valley.

      • August 28, 2017 at 10:57 am

        All “extremist” social movements are nonlinear and inconsistent in their ideologies. Fascism is just more so. Fascists mostly reject dogmas and ideologies. The word fascist was invented by Italian socialists around the turn of the 20th century. It’s derived from the term “fasces” – a tightly bound bundle of rods, often used as the handle for an ax. I always emphasize the ax when I give talks about fascism. Fascists embrace the “naked” use of force. Per Robert Heinlein, an admirer of fascism in “Starship Troopers,” “Violence, naked force, has settled more issues in history than has any other factor, and the contrary opinion is wishful thinking at its worst. Breeds that forget this basic truth have always paid for it with their lives and freedoms.” Fascism also, per the bound rods is organized around a central group of elites (German Volk, Spanish aristocrats, capitalists, industrialists, etc.) who are opposed by vile “outsiders” who want to destroy them (Jews, non- Aryans, immigrants, Africans, capitalists, etc.) Fascists feel strong emotions of common cause with their comrades, and hated toward their enemies. It’s thus easy to support your comrades, and harm, torture and kill you common enemies. Fascism plays on the fact that humans are emotional creatures. Again, the words of Heinlein, “War is not violence and killing, pure and simple; war is controlled violence, for a purpose. The purpose of war is to support your government’s decisions by force. The purpose is never to kill the enemy just to be killing him . . . but to make him do what you want him to do. Not killing . . . but controlled and purposeful violence.”

        American fascists are not of one cloth. Some adopt what they see around them, such as neo-Nazis with swastikas and storm trooper garb. But the more dangerous fascists are the ones in business casual, at the local school or supermarket, or on the local news. And they are not limited by nationalism, but as the recent cooperation with Russia makes clear can be as the need arises internationalists. It’s unlikely that today’s CEO’s and financial traders consider themselves or what they do as fascist. But there is no business school today that does not emphasize “controlling risk.” The simplest and most direct way to control risk is to control as much of your surroundings as possible, e.g., government, unions, courts, finance, etc. Then, it’s just a question of methodology. Since American fascists operate from the top down, they look for methods that begin by controlling the top – Presidents, governors, Congress, state legislatures, Supreme Court, etc. And since the end of WWII have used violence mostly by proxy, e.g., white supremacists, militias, drug cartels, etc. American fascists are not opposed to “naked” violence but prefer it in controlled doses and with limited objectives. After all, they don’t want to harm the illusion of many Americans that the US is a democracy. The purpose of an American capitalist enterprise is to provide a profit. Zuckerberg, Gates, Musk, etc. are captives of this need. Mostly, they see racism, sexism, etc. as counterproductive to this goal. Forcing employees to work long hours of overtime, to choose work over family, to work under tight deadlines and great physical and psychological pressure are not consider counterproductive, however. Are there circumstances that would lead to even greater pressure on employees to meet this goal? I suspect there are. David Ruccio posted “Condition of the workplace in the United States” on this blog. This has many details and references on just how bad this situation has become.

      • Tomonthebeach
        August 28, 2017 at 6:55 pm

        Ken, you seem to impose a very broad characterization of fascism and fascists. I am not sure there is unanimity on that score. Your characterization of fascist is metaphorically like Ann Coulter’s definition of a “true conservative,” which is anybody who does not share her world view regardless of political party affiliation. It seems that your view involves non-Aristotelian logic; that because all fascists are bad, then all bad people are fascists.

        You and I apparently live in different worlds albeit on the same planet. I do not see a sleeping fascist dragon about to devour the world’s economic and political systems. Characterizing people capable of building multi-billion-dollar global empires as fascists or fascist enablers ignores that they are surely smart enough to avoid being unwilling dupes of anybody. I have no reason to doubt their sincere concern for equality, especially because their walk seems reasonably consistent with their talk.

      • August 28, 2017 at 8:07 pm

        There’s little unanimity on what fascism is, beyond the basics I mentioned. And even here fascists often downplay one or more of these. But this uncertainty did not stop fascism from becoming an international political movement and one of the greatest threats of the 20th century. It also spawned the greatest war thus far in human history. Modern capitalism is prime breeding ground for fascism and fascists. After all, if profit and growth are undisputed king, what wouldn’t the business “leader” do to secure them. They’ve shown themselves willing to overthrow governments, murder political leaders, imprison opponents, and sabotage regulations and regulators. They also circumvent and undermine law. As George W. Bush put it, business leaders (including presidents) are “deciders.” They don’t need or want the law. Even those can’t be a fascist because of fear or lack of resolve are forced to be collaborators to survive. If fascists were dragons, it would be better. They would be easy to spot and oppose. Instead they’re local politicians people have known all their lives who ensure them immigrants will not take their jobs and homes, and tell them they’re the only “real” Americans. Corporate leaders who provide large, very large amounts of money to get the “right” candidates into government office. 24-hour “news” media who tell us our rights are being destroyed and our country taken over by people who hate us (for our freedom per G.W. Bush). Government “officials” who tell us only the “right” people should be allowed to vote, and then do everything they can to enforce such bans. Fascism is pro-violence (physical and psychological), anti-law, pro-the elite, anti-outsiders, anti-democratic, and pro-control or elimination of those who oppose you. Anti-enlightenment and anti-liberalism are seen in most places where fascism exists.

      • robert locke
        August 28, 2017 at 8:47 am

        Ken, in your comments about fascism, your seven league boots permit you to jump right over subjects that I discussed in my book: The Collapse of the American Management Mystique (1996), To wit:

        “The post-1945 version of managerialism, moreover, cobbled together elements of a partnership between the management caste, big labor, and government first hammered out during the New Deal and World War Two. Heralded collective bargaining agreements provided for better wages and working conditions; they introduced company retirement plans, medical plans, and other social benefits. Between 1948 and 1953, an Inter-University Labor Relations Program sponsored the publication of a significant academic literature on industrial relations. These monographs, written by industrial labor relations people who were soon to be renowned (Clark Kerr, Frederick Harbison, John Dunlop, Charles Meyer, and others), emphasized “the extension of democracy in industry through collective bargaining permitting both sides of industry … to mold good relations” (Carew, 1987, 56). Well might George Meany, of the AFL-CIO, have reasoned in 1951: “Where you have a well-established industry and a well-established union, you are going to get to the point where a strike doesn’t make sense” (Bell, 1951, 86). And well might Walter Reuther, the head of the United Auto Workers, after reaching agreement in 1950 with management at General Motors, have echoed that the five-year contract, which called for an annual wage increase, pegged on anticipated productivity gains, cushioned against inflation by a cost-of-living bonus, was truly historic.

        More significantly, after World War Two, for the general public the success of the country’s core corporations and the well-being of individual citizens seemed for the first time in US history inextricably bound. This environment converted the sharpest critics of management to pro-management stances. David Lilienthal, a former New Deal planner, in a 1953 book Big Business: A New Era, expressed the sentiments of the American people, the vast majority of whom, in a public opinion poll that same year, approved of big business. The gap between rich and poor closed. The share of national income of the top one percent of income earners fell from 19 percent in 1914 to 7.7 percent in 1946. By the mid 1940s, almost half of all American families fell comfortably within the middle-income group (Reich, 1992, 49). Although there remained plenty of dissenters, because of these achievements US managerialism cemented a bond of trust between the management caste and the American people based on material success. Never in their sweetest liberal dreams, however, did the managerial caste think of sharing governance with employees or with labor in a regime of codetermination.”

        It is the collapse of this postwar consensus that began in the 1980s that I am talking about in my Collapse of the American Management Mystique. And I compare it with the success of codetermination in a postWWII German new deal. Your fascist scenario doesn’t explain anything in this context.

      • August 28, 2017 at 10:59 am

        Robert, your conclusions are quite correct. During the period 1945-1970 American fascists were forced into the background, and forced to stop proselytizing. Even the KKK was forced to pull in its horns. Touting even mildly fascist ideas was frowned upon. Not even Senator McCarthy could get a pass to browbeat and deny the rights of Americans. Even so, HUAC still hurt or ruined many Americans’ lives. But the fascists didn’t go away. In his 1967 book, “The Farther Shores of Politics,” George Thayer makes two important points. First, American fascist organizers and propagandists didn’t give up and still had access to significant money from many American business persons. Second, they all were certain they were spied upon, plotted against, persecuted, betrayed and undoubtedly destined for total ruin. After coming back into power with Reagan, Bush, etc. many wanted revenge. We see that still today.

      • robert locke
        August 29, 2017 at 8:08 am

        “Modern capitalism is prime breeding ground for fascism and fascists. After all, if profit and growth are undisputed king, what wouldn’t the business “leader” do to secure them.”

        Schumpter in his essay “On Imperialism” considered it an atavism, that the persistent presence of militarism in German society supported, in associations like the Navy League, supported by the officer classes. The Historisn Alfred Vagts, who wrote about German militarism in 1937, considered it atavistic as well. Businessmen were not included, because Schumpter thought they needed peace and cooperation to make money. When the war broke out in 1859 between France and Austria, Denys Benoist d’Azy, whose factory in Ales (the Gard) produced iron rails that were being installed in lines being built in various Mediterranean countries, was appalled. Although he noted that they might get orders to manufacture canons, his orders for iron rails, the backbone of his business, plummeted in the uncertainty. People often make a case for how business profits from violence, but I’m not convinced that any business leaders favors this disruption.

      • August 29, 2017 at 1:25 pm

        Robert, I’m not talking about disruptions of business. But, rather the opposite. Businesses profit when they sell their products or services. Experience since WWII shows that businesses have taken all the actions I list to ensure sales, and increase profits. Peter Chapman writes in his book “Bananas” about how for much of the 20th century, the American banana company United Fruit dominated portions of almost a dozen countries in the Western Hemisphere. Using the US Marines and then the US CIA to change governments, murder elected officials, etc. to ensure Americans had bananas on their breakfast tables and the company’s profits remained high. The origin of the term, “Banana Republic.” On the 60th anniversary of the event (August 19, 1953) the CIA publicly admitted for the first time something well known even without the admission. That it was behind the 1953 coup against Iran’s democratically elected prime minister Mohammad Mosaddeq. The released documents that also show British government involvement, and its efforts to cover that up. The coup was done for oil and the giant American and British oil companies that wanted Iran’s oil. There are hundreds of other examples I could cite. In the view of these businesses and hundreds of others using the US and UK governments as described was accomplishing precisely what you suggest businesses want – certainty, security, and controllability.

      • robert locke
        August 29, 2017 at 4:26 pm

        “In the view of these businesses and hundreds of others using the US and UK governments as described was accomplishing precisely what you suggest businesses want – certainty, security, and controllability”

        As long as the wars are “won.” But do you realize that the US has not won any of the major conflicts into which it has entered since WWII, not Korea, not Vietnam, not Iraq, not Afghanistan. I’m not even sure that US businesses as opposed to the American people have gained anything from these “lost” wars. From what I understand China not the US is the rising business power in areas where the US intervened.
        .

      • August 30, 2017 at 12:58 pm

        Winning in relation to war is a political term. It’s difficult to identify the moment or circumstances that constitute victory in most armed military conflicts. In the conflicts you mention, I suggest that the corporations and other commercial interests involved generally got what they wanted. A strongly capitalist S. Korea, an anti-China Vietnam, a western oriented Iran, and a pro-business Iraq. These solutions were not permanent in most of these cases, but they provided at least a dozen or so years of at least partial security. Even the catastrophe in Afghanistan has increased both the profits and political influence of military contractors and the American religious right.

  7. August 23, 2017 at 1:39 pm

    Well done Ken. Yes, death is winning now. I just finished reading Nancy MacLean’s “Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America, and it pivots off your comments on hyper-individualism and denial of collective action perfectly.

    I think that for a historian, Nancy MacLean’s handling of the political economy developed in the imaginations of James McGill Buchanan, Charles Koch, Henry Manne, the central actors in her drama (Tyler Cohen appears towards the end), and others on the Libertarian right is top notch – I didn’t find any major faults in her handling of any of the economic concepts.

    I hope to be writing soon to connect the dots between her work and what happened in Charlottesville recently…since the book opens with a description of a meeting in the president’s office of the Univ. of Virginia in Charlottesville in 1956, and Buchanan is about to propose a stealthly but highly political think tank, institute to begin the intellectual campaign to overturn the New Deal order in the U.S., which will work closely with the Mt. Pelerin society more rooted in Europe, working to overturn social democracy there. It’s not a coincidence that the meeting in 1956 will key off of the state of Virginia’s defiance of the federally driven school desegregation efforts…the big bad federal state…and how to prevent egalitarian democratic movements from “persecuted” the earners, the entrepreneurs who are the heavenly saints on earth, the climax of our striving individualists. I’d better stop here.

    To paraphrase from the title of Norman Orenstein and Thomas Mann’s description of the where the Republican Right-Libertarians have taken the American political process, “It’s Even Worse than it Looks.” That’s MacLean’s message, both the methods and the goals of the libertarian right driving the Republican Right today…it’s chilling that Buchanan was awarded a Nobel Prize in economics for his “public choice” work, in the fall of 1986, the medal handed out arguably near the peak of Reagan-Thatcherism’s Neoliberal best decade, and well on the road to vast inequality for the rest of us. The domestic side is almost as chilling as the consulting work that Buchanan delivers for the Pinochet regime in Chile…a “dress rehearsal” to build “a constitution with locks and bolts” to prevent anything like another Salvador Allende or American New Deal. Yanis Varouvakis ought to love this book.

    • August 24, 2017 at 1:22 pm

      Gracchibros, The “attempt by the billionaire-backed radical right to undo democratic governance” to “reverse engineer all of America, at both the state and the national levels, back to the political economy and oligarchic governance of midcentury Virginia, minus the segregation” has a long history in the modern world. Democratic government, democratic life has been at risk since some humans first imagined it 5,000 years ago. If you are an aristocrat like the Darden’s of Virginia democracy is your enemy because it allows your “inferiors” to have a voice in governance. While segregation and slavery may be wrong, this in no way means allowing those of inferior mental abilities and morality to have a part in choosing the way our collective lives are governed is not only wrong, but senseless. If you are a libertarian economist like Buchanan or a believer in “economic freedom” displacing political freedom like David Koch, then you want an oligarchy of people just like you in charge of the political choices of America. These two joined in conspiracies against the US even before the new nation was created. That continues today. Neither of these groups could ever or would ever support democracy. But both are adept at using the paraphernalia of democracy to destroy it. Let people vote for small government and lower taxes. Both beneficial for the oligarchs, aristocratic and plutocratic. Let people fight bravely in foreign wars, so libertarians can praise liberty and accumulate untold wealth. I like MacLean’s book. She just needs to expand the history she examines.

      The role economists play in the current versions of these schemes are more than just interesting. They are crucial. The social sciences were invented during the 19th century to replace the humanities dealing with social studies, civics, government, and political economics. Generally, the new sciences supported the status quo – elite intellects and the plutocrats. But there were and are rebels. Economics is different, however. It not only supported the political and economic elites but really constructed its science around this support. While the other social sciences began to question their origins and consider new directions, modern economics dropped ever more deeply into the mania of economic growth and markets. This brings up the question of rewarding ideas and practices considered by some as authoritarian or in some way harming culture in general or large parts of the human population. Or, to put it in political terms, would Allende or Pinochet be the proper candidate for the Nobel Peace prize? Or, is it neither?

      Finally, how do libertarianism and plutocracy fit within the evolutionary development and cultural adaptations of humans? Succinctly, not well. Humans evolved for collective consciousness and decision-making in relations with other humans. Culturally, humans created adaptations over the last 5,000 years that emphasize human teamwork and verification of knowledge and actions through feedback from fellow humans. Both libertarianism and exclusive pursuit of wealth run counter to evolution and existing cultural adaptations.

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