One of the mysteries in politics for decades now has been why white working-class Americans began to vote Republican in large numbers in the 1960s and 1970s. After all, it was Democrats who supported labour unions, higher minimum wages, expanded unemployment insurance, Medicare and generous Social Security, helping to lift workers into the middle class. Of course, an alternative economic view, led by economists like Milton Friedman, was that this turn toward the Republican Party was rational and served workers’ interests. He emphasised free markets, entrepreneurialism and the maximisation of profit. These, Friedman argued, would raise wages for many and even most Americans. But wages did not rise. And yet many in the working class kept voting Republican, still seemingly angered by Lyndon Johnson’s Great Society, which was dedicated to helping the poor and assuring equal rights for people of colour. In the 1980s, under Ronald Reagan, income inequality began to rise sharply; wages for typical Americans stagnated and poverty and homelessness increased. Capital investment remained relatively weak despite deep tax cuts (as it does today under Donald Trump). At the same time, antitrust regulation was severely wounded, and giant corporations began to monopolise industry after industry. But the presidential election of 2016 sent the sharpest message yet. Working-class voters in Michigan, Pennsylvania and Wisconsin opted for Trump, and apparently against their economic interests. Trump had succeeded in appealing to their anger and the Democrats were caught flat-footed. Two new books, The System, by the former labour secretary Robert B Reich, and Break ’Em Up, by the lawyer and activist Zephyr Teachout, a onetime candidate for New York State attorney general, are among the latest examples of an evolving set of explanations that try to make sense of the 2016 results. A powerful money-fuelled oligarchy has emerged in America that is an enemy of democracy, Mr Reich writes. The self-interested power of the nation’s wealthy often goes unnoticed by voters, and is partly misdirected by right-wing rhetoric about issues like immigration. But it leads to lower wages, less product choice and abusive labour practices. Mr Trump has harnessed the frustration of the working class, he says, but he was a “smokescreen” for the oligarchy. Mr Reich observes that the question is no longer Democrat versus Republican or left versus right, but “democracy versus oligarchy.” To Ms Teachout, what’s behind our rigged system is the close cousin of oligarchy: corporate monopoly. Teachout lists her culprits, among them familiar names: Amazon, Google, Facebook, Monsanto, AT&T, Verizon, Walmart, Pfizer, Comcast, Apple and CVS. These firms “represent a new political phenomenon,” she says, “a 21st-century form of centralised, authoritarian government.” Two dramatic related facts underscore the claims of both Reich and Teachout.
The much discussed rise of wealth among the top 0.1 per cent, which now has 20 per cent of the nation’s wealth compared with only 10 per cent 40 years ago, has been brought to light in recent years by the innovative economists Thomas Piketty and Emmanuel Saez. The flip side is that wages for the large majority of American workers have stagnated more or less over this same period.According to Mr Reich, the “anti-establishment fury” that is the result of such inequity supersedes racial prejudice as the cause of Mr Trump’s success. In 2001, more than three out of four workers were satisfied that they could get ahead by working hard. In 2014, only slightly more than one out of two thought so. Voters wanted badly to blame it all on the swamp Mr Trump promised to clean up. For Mr Reich, the big oligarchical companies have the lobbying and campaign-financing muscle to win enormous tax cuts, suppress financial and environmental regulations, acquire new patents and subsidies, fight for free trade — it is a long list. For years, they successfully battled against higher minimum wages and labour laws that restricted their union-busting efforts. Both authors say that Ronald Reagan led the way to the swift undoing of traditional antitrust regulation in the 1980s. But Mr Reich is almost as harsh on the Clinton and Obama administrations. Even when the Democrats controlled both houses of Congress, he writes, they allowed antitrust enforcement to “ossify,” let companies hammer away at trade unions and went easy on Wall Street. They were also soft on the issue of campaign contributions, failing to advocate for public financing of elections. Why? Mr Reich argues that the Democrats chose to turn their backs on the working class and pursue suburban swing voters. He knows, he tells us. He was there. Mr Reich makes an example of Jamie Dimon, the chairman of JPMorgan Chase. For Mr Reich, he is representative of the CEO class that talks about corporate social responsibility but rarely practises it. A lifetime Democrat, Mr Dimon was a major supporter of the Trump tax cut and does not support an increase in the minimum wage. These are valuable books, and the anger they will generate may prove politically energising. But Mr Reich’s claim that democracy will somehow prevail underestimates the dangers we face. As for Ms Teachout, more competition may help alleviate some problems, but it is in fact an idealised version of free market thinking. Meanwhile, the current president is promising cuts in social policies that may well increase middle-income and working-class frustration. He wants to rewrite the official definition of poverty to claim that there are fewer poor. He undermines the rule of law on a regular basis. Voter suppression is common. Is it any wonder that many fear democracy in America may not prevail?
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