The triumph of the plutocracy in America

“The term ‘plutocracy’ is formally defined as government by the wealthy, and is also sometimes used to refer to a wealthy class that controls a government, often from behind the scenes. More generally, a plutocracy is any form of government in which the wealthy exercise the preponderance of political power, whether directly or indirectly.”Bill Moyers begins a discussion on the super-rich in an AlterNet forum:

“Across America, [the] divide between the super-rich and everyone else has become a yawning chasm. Studies indicate it may stifle jobs and growth for years to come. At no time in modern history has the top one hundredth of one percent owned more of our wealth or paid so low a tax rate. But in neither of the two presidential debates so far has the vastness of this astounding inequality gap been discussed. Not by Mitt Romney, who is the embodiment of the predatory world of financial capitalism. And not even by Barack Obama, whose party once fought for working men and women against the economic royalists.

So just in time, if not too late, comes this definitive examination of inequality. Its author is Chrystia Freeland, whose journalism is steeped in years of covering robber barons from Russia to Mexico and India. In a recent New Yorker article, she describes the anger of Leon Cooperman, “The richest man in the room, a Bronx-born, sixty-nine-year-old billionaire,” who described being victimized by the tax policies of the ultra-rich advocated by the President. “Evident throughout the letter is a sense of victimization prevalent among so many of America’s wealthiest people. In an extreme version of this, the rich feel that they have become the new, vilified underclass.”

“Why do America’s super-rich feel so victimized? And what does their sense of being unjustly maligned tell us about their relationship with the rest of us? It has become almost commonplace among the wealthiest and most powerful capitalists in the United States to compare themselves to an oppressed ethnic minority, and to equate the President, their oppressor-in-chief, with Hitler.

“There is also a conviction among the plutocracy – not just the 1 per cent, but the 0.01 per cent who make at least $7-million dollars a year – that much of America is unfairly gaming the political economy.”
“This was the sentiment Mitt Romney expressed in his now infamous dismissal of the country’s 47 per cent – a gaffe, but only in journalist Michael Kinsley’s definition. ‘A gaffe is when a politician tells the truth,” he writes, ‘some obvious truth he isn’t supposed to say.’”

“Indeed, while the former governor eventually repudiated his comments, they are conventional wisdom among the super-rich. In 2002, an editorial in The Wall Street Journal coined a term for Americans too poor to pay federal income tax – “lucky duckies.” The piece went on to offer a Romney-esque warning about the dangers posed by this underclass: “As fewer and fewer people are responsible for paying more and more of all taxes, the constituency for tax cutting, much less for tax reform, is eroding. Workers who pay little or no taxes can hardly be expected to care about tax relief for everybody else. They are also that much more detached from recognizing the costs of government.”

Freeland continued, “I found the plutocrats’ attitude to the 47 per cent – call it disdain, or hostility, or simply distance – to be particularly striking when I spoke to U.S. bankers about the financial crisis. I expected an apologetic tone, or at the very least humility. Instead, I learned that the crisis had been “caused” by those lower down in the income distribution.

“There’s one obvious reason the super-rich feel so hostile toward the President, whom they see as the champion of those lucky duckies: self-interest. Mr. Obama has put a vow to raise taxes on “millionaires and billionaires” at the centre of his re-election campaign (although a similar pledge made in 2008 has not materialized). And it turns out that billionaires are just as averse to higher tax bills as the rest of us.

“Indeed, although the U.S. economy as a whole is still rather frail, the healing we have seen so far has been what you might call a 1-per-cent recovery. According to economists Emmanuel Saez and Thomas Piketty, in the 2009-2010 return to growth, 93 per cent of the increase in incomes went to the top 1 per cent. The top 0.01 per cent enjoyed 37 per cent of the total rebound in income, with an increase of $4.2-million per household.

“But material self-interest is not the only force stoking the plutocrats’ ire with Mr. Obama and his supporters. Part of what is going on is the contradictory consequence of meritocracy. Mr. Saez describes today’s 1 per cent as “the working rich” – a contrast to the inherited wealth of the plutocrats of the Gilded Age. . . . “[Many] of today’s super-rich. . . started out in the middle class. These are people whose identity is built around the conviction that they did it themselves – even if an affluent upbringing gave them a head start.

“What most defines today’s plutocracy, though, is how globalization and technology have changed the relationship between every nation’s rich and its middle class. [The 1 per cent] need to believe that the carried-interest tax exemption is moral, that it is good for the country,” says Nick Hanauer, an early investor in Amazon, technology entrepreneur and himself a plutocrat. “That is what makes them [believe they are] moral and not villainous.
“I feel their pain, because I remember how fun it was to believe that stuff. If this is true, then I don’t have to feel bad about driving past the guy standing next to the freeway exit with a sign that says, ‘Please help me, I have no food.’ ”

This essay has been adapted from Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else.© 2012 The Globe and Mail Inc. All Rights Reserved. Published Friday, Oct. 26, 2012 08:34PM EDT. Portions have been added from the New Yorker, October 8, 2012.