Monday, May 24, 2010

Arthur Brooks. of the American Enterprise Institute [originally and more accurately named the Keep the Ultra Rich Rich and Screw Everybody Else Institute] published a screed today in which he declares [apparently ex cathedra] that the new culture war is between those who believe in free enterprise and those who believe in an “expanding and paternalistic government”. He continues this forced choice false dichotomy at length. This is rather like the salesman at a used car lot offering customers a choice. “You can buy this junk heap of a car at my price or destroy the American auto industry.” At least some of his customers might realize that there are a few other alternatives available to them.

What the anti regulation crowd really want is quite simple, and for them, quite attractive. They want to turn America into Mexico. In Spanish, an old saying goes, “Los ricos son los ricos y los pobrecitios son los pobrecitos.” In English, "The rich are the rich and the poor are the poor." The operative word here is the verb, son. It refers to a permanent state. In other words, the rich are rich forever and the poor are poor forever. In spite of Mr. Brooks Olympian declarations, this is not what made America a great and wealthy nation. Economic mobility is what made us great and wealthy. Fixing the system so as to create a new class of nobles who are entitled to their wealth forever is not a good idea. France attempted this with the ancient regime and you know what happened there..guillotines anyone?

Jefferson’s idea of a natural aristocracy was iffy at best, but at least he intended that those who were able to rise would, and those who were above their ability would sink. No government by, for, and of the rich.

In the dreams of the American plutocracy, the very few ultra elite will form a new aristocracy while everyone else will become their peasant class of illiterate workers. No thanks. I prefer a well regulated free enterprise system in which naked greed and corruption are least somewhat controlled. This is much like a well regulated militia. Somehow, the advocates of unbridled gun ownership and heavily armed, self appointed “patriots” overthrowing the government whoever they feel like it, miss the “well regulated” part of "militia". It applies to free enterprise too. There is a world of opportunity between zero regulation and socialism, but that’s hard work and takes effort. It is so much easier to rant and howl about only two extremes and not have to work at actually thinking about the situation.

It appears that the American Enterprise Institute sends its headhunters to beer bashes at American universities and colleges. Imagine what would happen to their mindless ideology if a studious or scholarly recruit arrived. God forbid anyone working there actually thinks things through or offers a realistic set of alternatives.

Think I‘m exaggerating? Check this out: a confidential report that Citigroup initially circulated only to it's wealthiest customers. Those reports, since leaked, plainly discuss the power of the Plutonomy in America, and how it would only strengthen, as long as "the rest us" (the non-plutonics) could be kept in the dark about the Plutonomy existence, its role, and its over-arching control in the American Economy.

A brief excerpt: v4) In a plutonomy there is no such animal as “the U.S. consumer” or “the UK consumer”, or indeed the “Russian consumer”. There are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the “non-rich”, the multitudinous many, but only accounting for surprisingly small bites of the national pie.

The report goes on to exult over the control the Plutonomy has held and expects to continue to hold over the government of the United States .

Now, generally despise the conspiracy theorists, but this report is from Citigroup. And no, its not like the Protocols of the Elders of Zion, that is, a fake. This is the real thing. why did Citigroup publish such a thing? They are so confident that they have nothing but contempt for the rest of us. They probably aren't even worried that it did leak. After all, they control both houses of Congress and even have an in with center left Obama. What do we think we can do? Maybe we can eat cake.


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  2. Great piece! There exists a popular myth wedded deep in the American narrative that anyone can rise up and become wealthy (ah wealth, the American dream); if you don't, it was for lack of will and fortitude. This, sadly is demonstrably false. It turns out that there is very little movement between household income brackets, within and over generations. People pretty much stay in the socioecon bounds which bore them. Rich and poor alike. This is the norm, the movements are statistical outliers.

    I'm no advocate of a paternal state or nanny state (a cola sin tax? really?), but it rests within the ambit of the state to recognize that with the massive aggregate growth, productivity, and wealth that comes from the free market, they must handle the pathologies in it. Any human system involving exchanges of value creates structural winners and losers. Free markets definitely provide allocative efficiencies for all market players, but those groups/individuals lacking in capital (physical or human) have no natural mechanism to enter the game. The state has a stake in bringing marginalized (poor mostly) into the game, thereby building it own long-term output efficiency. More, it has a moral obligation to all its citizens that can barely participate in the very system that has brought our the bulk of society (not all) into relative affluence.
    I'm less worried about the plutocracy personally. Provided they're paying their tax receipts, they're consuming a crapload of goods and services, they can push the engine of long-term growth and fund the state's projects of mass education, training, healthcare, and social services for the poor. Gulp, I guess I'm saying I don't care about income inequality in our country, but the poverty line and the portion of society below it. Do I expect plutocrats to be enlightened self-identifying vanguards of our society? ... Well, I'll leave the dirty work of enforcement to the bureaucracies to kill loopholes, evasion, and elite tomfoolery!

  3. Stimulating comment! I will make a new entry to discuss it at length.