The inequality that ate American democracy

New York, NY – In July of 1936, Langston Hughes, the great black American poet first published in Esquire some lines that have never been forgotten.

Among them was this: “Let America Be America Again”, a salute to the American dream that had, until then, left poorer Americans and minorities behind.

So memorable was his phrasing that, in 2004, John Kerry adopted it as a campaign slogan in his failed bid for the presidency, Not to be outdone, none other than Rick Santorum used a variant on his website – “Fighting to make America America again”.

‘The Great Recession’

Sadly, the reality of the disappearing dream Hughes was challenging at the height of the depression is still relevant in this age of the Great Recession. According to two French economists, Emmanuel Saez and Thomas Pikettyn, who study inequality worldwide, America is back at Depression levels.

Reports the New York Times, “their work shows that the top earners in the United States have taken a bigger and bigger share of overall income over the last three decades with inequality nearly as acute as it was before the Great Depression.”

Financial journalist Max Keiser, a former stockbroker, who now does hard-hitting financial shows on TV says deep inequality has been building for many years but has not been acted on:

 …the inequalities in the US have been building up for decades, just recently they’ve reached really outrageous proportions – but you have to understand also that there’s the inequality between the 1 per cent and the 99 per cent, but within the 1 per cent there’s an inequality between the top 1 per cent of the 1 per cent and the bottom 99 per cent of the top 1 per cent and they’re also at each other’s throats trying to change laws and pass legislation to make it easier for them to make more money. So it’s not really the 1 per cent, it’s not there are a millions of people in the 1 per cent – you only need an income of something like $500,000 or $600,000 or $800,000 dollars a year to be in the 1 per cent.

Former Wall Street executive, and, briefly, President Obama’s “Car Czar”, Steven Rattner, goes even further, writing “New statistics show an ever more startling divergence between the fortunes of the wealthy and everybody else, and the desperate need to address this problem.”

“Desperate” is not a term that pops up in most writing about the economy.

“Still more astonishing,” he adds, “was the extent to which the super rich got rich faster than the merely rich… The bottom 99 per cent received a microscopic $80 increase in pay per person in 2010 after adjusting for inflation. The top 1 per cent whose average income is $1,018,089 has an 11.6 per cent increase in income.”

It is a deplorable situation, agrees Shamus Rahman Khan of Columbia University who says, “We’re at levels of inequality that we haven’t seen since the end of the gilded age. We’re about as unequal as we have ever been.”

Institutionalised inequality

Ironically, this inequality gap is becoming deeply institutionalised at a time when America has its most nominally progressive president in decades. Barack Obama has spoken out against economic inequality but appears to lack the commitment or political means to reverse it.

The folks at Occupy Wall Street are no doubt saying, “I told you so”, but even they may not appreciate how intractable the inequality is, and how it is fundamentally changing our society.

First, it is impacting on our politics where the super rich are controlling SuperPACs that, in turn, are dominating elections through extensive and expensive media buys.

Secondly, it is distorting the structure of the economy where a new form of serfdom is trapping millions in debts they will never crawl out of.

Third, it is changing the contours of the dominant consumer society. Economists used to brag about all the choices it offered, but today it is bifurcating into a world of pricey upscale shops versus the 99 cent stores.

That’s the real 1 per cent – 99 per cent divide that sustains the inequality.

Ad agencies and corporations increasingly recommend marketing to the super affluent because they will pay more for luxury items, thus, allowing manufacturers to retain more in profits.

Class analysis

Marketers used to talk about a category called “mass affluents”. Now they talk about “class affluents”, urging companies to upscale products and advertising.

A recent report in Ad Age, “The New Wave of Affluence”, reveals that the wealthiest Americans now drive nearly 50 per cent of all spending. No wonder they are catered to, while the majority gets poorer and marginalised.

Karl Marx and his followers would be shocked to learn how class analysis has caught on more among the rich than workers

Report editor David Hirschman sums up, “Simply put as the discrepancy between rich and poor becomes more stark, a small plutocracy of wealthy elites derives a larger and larger share of total consumer spending.”

The marketers see this as calling for a “massive reset” in thinking, recommending a disproportionate focus on luxury brands. A study by Digitas concludes that the threshold for being considered affluent is now $200,000 a year.

So, even as many rail at the way big money is taking over politics, it seems to be a logical outgrowth of structural shifts that have been years in the making and reflect a “new America” where the rich rule.

In that sense, Mitt Romney is a perfect representative of a rising oligarchy that puts Russia to shame.

The haves want to keep their economic and political power, whatever rhetoric they may use to disguise their interests; the have-nots are ignored.

Moreover, in age of globalisation, as Chrystia Freeland explains in the Atlantic, a new super elite of “hard working, highly educated, jet setting, meritocrats have more in common with one another than their countryman back home”.

So say goodbye to democracy, as an ideal, political process and culture. This avaricious and self-absorbed elite has little use for it.

In this world, acquisitions matter more than issues. It sad to think that whoever “wins” our next elections, we can all expect to lose because economics (and inequality) guides and trumps politics. 

If you can afford it, keep those acquisitions high. If you can’t, keep your expectations low. While you shop, they will drop.

News Dissector Danny Schechter blogs at NewsDissector.net. His new book is Occupy: Dissecting Occupy Wall Street (Cosimo Books) and his latest film is Plunder, about financial crime. He hosts a radio show on Progressive Radio Network. Comments to dissector@mediachannel.org

Follow him on Twitter: @dissectorevents