Saturday, April 8, 2017

American Exceptionalism Rests on the Middle Class

What happens to our country when the middle class disappears? Review of Ganesh Sitaraman's "The Middle Class Constitution".

We are in a crisis right now in the US. Our government has been taken over by plutocrats who are busily reversing every progressive and public-spirited policy they can get their hands on. The worst nightmare of the nation's founders, revolving around demagogues, rule by extreme wealth, deepening political corruption, and mass immiseration, is coming to pass. Thomas Piketty's work on the nature and growth of economic inequality was the first major intellectual shot against this development, from an econometric perspective. Sitaraman's new book is the second, putting our economic inequality and its political consequences into historical and legal perspective, as a far greater matter than mere economics- rather, as a constitutional crisis.

The US has been since its founding exceptional on the world stage, not for our apple pie or iPhones, but for our democratic social system. Now the world is filled with democracies, so our position as one of the more mediocre ones in terms of governance, public services, health status, and overall happiness is perhaps not such a surprise. But at the beginning, we were truly revolutionary, and Lincoln was not far off when he posed the Civil War as a test whether government by the people would survive globally. (Switzerland, however, probably would have pressed on with its own experiments).

Why did this experiment happen here? According to Sitaraman, and to Toqueville, and to many of the founders themselves and other observers, it happened because the economic condition of Americans was substantially one of equality. Immigration put most people on a similar footing, which is to say, poor. The availability of land to all who wanted to work it provided a base of subsistence to these immigrants, and a foundation of modest wealth. The ideology of the early colonies and Republic was one of severe allergy to class distinctions, titles, and the like. There were some wealthy people, but nothing like the disparities that we would see later, either in the guilded age, or today.

Our constitution reflects these origins, and depends on continued rough equality with a predominant middle class. Sitaraman makes it clear that historically, constitutions have always reflected the economic conditions they sought to rule. Where feudalism and serfdom was the rule, so was autocracy. And oligarchy or autocracy have been the rule through the vast majority of human history, with democracy only possible at the lowest levels of rural and small-town society, where equality was likewise occasionally possible. Golden-age Greece, our democratic ideal, was more like an oligarchy of the free men of the city. Karl Marx had a point when he maintained that ownership of the means of production controls the nature of the class system, and thence the political system. Even Aristotle recognized, that while a true middle class polity was impossible in the power-economics setting of the ancient world, it would be the ideal polity, composed of that class of people who are neither so greedy and power-mad that they would factionalize and corrupt the system, nor so poor that their only wish would be to revolt and overthrow it.

Our rough equality continued through the frontier era, when anyone could pull up stakes and get land out west. Conditions were increasingly difficult the farther west one went, until the coastal paradise of California and Oregon gave one last great frontier of fertile land. This availability of land amounted to a job guarantee for its day, allowing any willing person to work and make money regardless of the willingness of an employer to hire. Farming certainly had its own terrible risks, between the weather, pests, and fluctuating markets. But no able person had to be destitute.

Now, we are neither an agricultural society, nor have any frontiers left. We exist in a new form of feudalism where employers have no governance responsibility to their employees. Employees are purely at will, and may be fired at any time for any reason. It is ironic that we so fetishize political freedom and legal equality, while practicing, in our corporate culture, the most retrograde feudalism. For all the regulations that modestly ameliorate this condition, most workers are in a dramatically assymetric and powerless position. It wouldn't be so bad if the economic system were not also unstable, experiencing crises of demand and investment that force millions of workers into destitution. Additionally, the closing of the frontier and other restrictions have made land, housing, and rents increasingly subject to scarcity costs far above their construction costs. This makes destitution a far more probable and chilling prospect.

Sitaraman cites disturbing research into our political system that makes the case that we are already living in an oligarchy/plutocracy. The fact is that each of our politicians is for sale, the media system is run by corporations, and much of the governmental regulatory apparatus that was supposed to protect us from the predatory special interests have instead been captured by them. This latest research shows that the actions of our political system accord essentially none of the time with the preferences of the lower 90% of the population, and all of the time with the preferences of the rich and super-rich. Our so-called leaders, thanks to various forms of legal corruption, are steeped in the social melieu of the rich, its super-PACs, and its propaganda organs, from cable channels, to think tanks, to lobbyists. The rest of us hardly stand a chance. Even at state and local levels, the rich have been funding dramatic new advances in corruption and propaganda, which have turned our nation into a sea of red.

This is how wealth translates to power, and the US may have entered a terminal loop where the plutocracy is so entrenched and so shameless about leveraging that power into yet more power, that there is nothing further to do, short of revolution. The breathtaking nepotism, incompetence, greed, and immorality of our current administration merely puts an exclamation point on a decades-long process that has not only reshaped the political system into a frank plutocracy, but reshaped the economic system as well into one that freezes out the middle class, by dramatically lowering taxes on the rich and reducing public facilities and services, among many other policies.

Middle classes do not happen by accident. The natural course of events, given the Malthusian pressures documented so dryly by Thomas Piketty and many others, is towards competitive differentiation, with winners gathering more power and wealth, which, once it reaches a high level, grows by natural accretion and compounding (where it is not more actively leveraged) far beyond anyone's needs, and losers finding it ever more difficult to find a way into a brutally rigged system. Classically, this was expressed by ownership of land, to which the answer has been land reform, which is to say, expropriation. Sitaraman provides a fascinating aside on the sequel to the Civil War.
"The most eloquent advocate for confiscation and redistribution was Thaddeus Stevens. The clubfooted Pennsylvania congressman proposed confiscating the estates of the top 10% of wealthy rebel planters, which at the time amounted to those with more than $10,000 or more than two hundred acres of land. With that land, which he pointed out would leave 90 percent of southerners untouched, every freedman could be given forty acres. The remainder wold be sold at auction and used to fund veteran pensions, compensate the injured, and retire the war debt. Steven's reasoning acknowledge that this ction would be revolutionary, but he also deemed it necessary for preserving republican government. "The whole fabric of Southern society must be changed," he declared in a speech to constituents in 1865: 
"Without this, this government can never be, as it has never been, a true republic. Heretofore, it had more the features of aristocracy than of democracy. The Southern States have been despotisms, not governments of the people. It is impossible that any practical equality of rights can exist where a few thousand men monopolize the whole landed property. ... If the South is ever to be made a safe republic, let her lands be clutivated by the toil of the owners, or the free labor of intelligent citizens. This must be done even though it drive her nobility into exile. If they go, all the better."

The book ends with a relatively standard plea, in the Bernie Sanders/Elizabeth Warren frame of argument, for higher consciousness of these facts and trends, in order to frame a new phase of social activism. Sitaraman has great respect for the Progressive era of the late 19th century, which brought us the progressive income tax, anti-trust, and the regulatory state, among other innovations. Thinkers and movements of this time took a fundamental look at our system and recognized that one more agency would not be enough- we needed constitutional amendments and deep reform. Today, with the Supreme Court wielding the First Amendment like bludgeon against the very citizens it was designed to protect, drowning them in corporate doublespeak, and with our politico-economic power system declining into bannana republic levels of dysfunction and disparity, it is time again to crank up the volume of protest, and direct it to fundamental and radical aims, such as taking money out of politics, remaking corporate governance on a more democratic model, and restoring a tax and public financing policies that sustainably strengthen the middle class.

  • A clown is in charge of our economic policy.
  • Pay should not be a big secret.
  • Another lie ... and another.
  • We need a new privacy regime.
  • China is the last country to want any change in North Korea.
  • They really are better than everyone else.
  • Corrupt enrichment.
  • Health care is one of the bigger drivers of inequality.
  • Economic graph of the week. Corporations are saving more, growing fatter, while everyone else grows thinner.

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