It’s been a while, but do you remember why we drive on the right side of the road here? Simple. The British drive on the left side of the road so we as a young nation decided to drive our horses on the right side. If the Brits, with their classism, elitism, hierarchy, monarchy, and titles, do it, we sure as hell won’t. We got rid the nobility with our Constitution and eventually got rid of those snobby types with Thomas Jefferson and Andrew Jackson. We invented public schools and colleges to allow people to rise above their station in what Jefferson called, “life, liberty, and the pursuit of happiness.”
It takes a long time to unlearn and methylate what’s encoded into the national DNA. Government for the people and by the people just sounds so good. It takes even longer to love its opposite, plutocracy, concentrated power, and a fear of freedom and enforcement of the Constitution. But we, the New American Oligarchy, finally did it.
Who are we? Well, it’s a bit harder to point us out than in the olden days of Communist Party memberships, titled nobility, and feathered chieftains. One writer called us “a loose affiliation of millionaires and billionaires”. We fight amongst ourselves over our interests so we aren’t a conspiracy. Our nature has changed as our fortunes have changed (from steel and cars to FIRE – finance, insurance, real estate). But we unite when it comes to Outsiders (i.e. you) threatening our one purpose: to soak up the majority of money, power, and prestige in the nation.
Liberals will say we are the product of crony capitalism and bad regulation. Leftists will say we are the product of capitalism period. Real conservatives (the William F. Buckley types) will celebrate our virtues and say we deserve our rewards. Misguided populist conservatives will confuse us with Hollywood actors and the NAACP. In our longstanding war between New York (capitalism) and Washington (republican democracy), we’ve won. Or at least money-bombed Washington into Leningrad.
One analyst of Communist nations in transition nicknamed us “flexians”: people with the ability to transition between the government, business, and academic sectors. Brother Lawrence Summers, for example, slithered between the World Bank (where he said polluting industries should outsource to Africa and India because they have lower life expectancies), to the Treasury (where he promoted the dismantling of the Depression-era separation of insurance, investment banking, retail banking, and stock brokerages), to the Harvard presidency (where he ran off Cornell West, gambled away the endowment, and said women can’t do math), to Wall Street (making millions at a hedge fund), and back again to the White House as Obama’s chief economic adviser. No matter how hard he fails, he just can’t fail! It’s a good life at the top.
Getting to love our particular version of Big Brother wasn’t easy, given the natural decency of the average American, but we managed to do it. How? It’s simple. Directly beneath us lays the Professional Tier. It directly services us and our children, and they functionally serve as our chief accomplices against the masses. Their politics (“conservative” or “liberal”) are irrelevant as long as they continue their services to us flexians at the top. The trick is to isolate the six-figure Professional Tier below us composed of lawyers, doctors, deans, politicians, and other experts from the rest of America. Without such well-connected spokesmen for the masses, Middle America hasn’t got a chance.
How did they opt out of society and the state? First, professionals opted out of the military by ending the draft in the 1970s. All those anti-Vietnam protests came from elite universities from Austin to Berkeley, remember? Take the rich kids out of the line of fire, and you can get that “Vietnam Syndrome licked” in the words of Dick Cheney too. Fifteen years after Vietnam, we got into our first significant war (Iraq I) and in thirty years time we were back to full-fledged wars of choice (Iraq II). In the other war on state and society, the professionals de-funded K-12 education while fleeing to the suburbs or going to private school because Lord knows Daddy didn’t want his children to go to school with black people. And to keep a lid on college protests, we put the kids into massive debt by shifting federal support from grants to loans while reducing state funding. The kids can’t protest too much when they are too busy working extra jobs and living at home.
Then we go to work on rebuilding that aristocracy that Jefferson and Jackson had such an issue with. You see, ol’ Andrew Jackson sure weren’t no economist, but he understood politics. Concentrated money would lead to a “financial aristocracy.” “The Bank is trying to kill me, but I will kill it,” he once told his running mate. In his case, that meant America’s first central bank, the Bank of the United States which was jacking up interest rates to 12% to economically blackmail him for his veto of the bank’s reauthorization. Slaying the Bank of the United States on behalf of the little people against the plutocrat bank president Nicholas Biddle (who kept many senators on payroll) hushed us up for seventy years.
A very different sort of Democrat sailed into the White House in 1913. An Ivy League liberal imperialist and white supremacist, Woodrow Wilson gave us the Federal Reserve. An “independent” institution (that is, independent of Congress and the President) and public-private hybrid, it is mainly works to serve the banks it regulates. The regional branches outside of Washington are controlled by local banks. New York’s branch is famously full of conflicts of interests.
Although we did well at the central bank, we still had a problem with this plucky institution called Congress. For decades, the populist Wright Patman (D-Texarkana) ruled over the Banking Committee and harassed us and our pet institution. After his overthrow and death in the 1970s, a bipartisan group of “moderates” pushed for the deregulation of banking. President Carter signed the first weakening of financial regulation in 1980. But our crowning achievement was the conversion of the Democratic Party from economic populism to Wall Street “centrism.” The ban on operating in more than one state was repealed, and “centrists” like Democrat Robert Rubin ended the separation between investment banking and retail banking with the assistance of Aggie economist/senator Phil Gramm (R-TX). By Clinton’s second term, finance was triumphant. The heartland wasn’t convinced of the need for big international banks, but it didn’t matter. We had the fancy private colleges convinced of our nobility and ex-socialists like Tony Blair fawning over our “wealth creation.” And only angry old farts like Sen. Conrad (D-ND) and Ralph Nader or Midwestern populists like Russ Feingold (D-Wisconsin) or Paul Wellstone (D-Minnesota) pointed out we didn’t have any clothes on. Who needs them when we can get Charles Schumer (D-Wall Street) to bat for us? A former International Monetary Fund economist called it “A Quiet Coup.”
Truth and Consequences
When Ralph Nader published Unsafe at Any Speed in 1965, it took nine months for the federal government to regulate automobiles. Nader’s criticism of the Corvair (“the one car accident”) led to public outrage, public hearing, and congressional action. Around the same time, when Sen. Estes Kefauver wanted the FDA to require proof of safety and efficacy before a drug could be marketed an expose of thalidomide vaulted the legislation through the Senate. Can such major reforms be attempted today?
Now, a dangerous drug like Avandia-rosaglitazone can be shown repeatedly to increase mortality without so much as a recall. But we in finance have it best because we can blow up the world economy, avoid bankruptcy, and still get paid the same. Just contrast our treatment with General Motors. The CEO got fired, the company was forced into bankruptcy, pay scales were split, the government nationalized GM, and everyone got a salary cut. Nothing spells oligarchy like double standards.
Michael Lewis’s Liar’s Poker and Oliver Stone’s Wall Street had the same purpose in the 1980s: to show the horrors and dangers of an out of control oligarchy. That those who don’t produce anything, own everything. And that the system needed to end. Instead, college kids became inspired to work for the bad guys (i.e. Us) or defend us as politicians and media commentators. America has changed as well (or at least its mental self-image), from a nation of proud, feisty blue collar workers and farmers and small businessmen to a nation of self-loathing Office Space workers.
America isn’t the egalitarian land of Jefferson and Jackson anymore. We’ve done our best to bury it. That the only political passion comes from the inverted Marxists (hate the workers, love the owners) known as the Tea Partiers shows that we’ve come a long way baby since 1776.
Thanks democracy. We’ll take it from here.
Letters at 3AM – Series on the American oligarchy. Parts 1, 2, 3, 4, and 5
Austin Chronicle – My Letter to the Editor
Simon Johnson – 13 Bankers and the Wall Street Takeover