History Lessons

History repeats itself. Cliche. Truth. Or, perhaps, we repeat history. That seems to be the lesson I am learning as I continue to delve into the darker corners of inequality, which is, undoubtedly, the issue of our age.

Before I go any further I have to note – it is relevant – Paul Ryan’s extraordinary speech last week, here’s a key paragraph:

“We have got this tailspin of culture, in our inner cities in particular, of men not working and just generations of men not even thinking about working or learning the value and the culture of work, and so there is a real culture problem here that has to be dealt with.”

This is a direct racial reference to the plight of inner city minorities. Only it isn’t a plight to Ryan, it is a self-inflicted wound. Naturally it is all the government’s fault for trying to help. A little dose of self-help and individual responsibility along with a few visits to church will no doubt cure it all.

Ryan has been criticized heavily for what he said. Rightly so. We ought to be, but are not, beyond such venal racial politics. Indeed, as Paul Krugman has pointed out, race is the central thread running through what can often appear as contradictory thoughts in contemporary American right wing politics. According to the right we have, apparently, a big problem with “them”. They are the ones who loiter and live off of those government programs like food stamps, Medicaid, and various other social bailouts. They mooch off of the hard working white middle and working class.

This nasty undertone of race has a long history in the American right, but really came to the fore with Reagan’s election. He, after all, spent a goodly amount of time attacking handouts whilst on the stump in the deep south. He was well aware of the implications, in that setting, of his words. He was issuing a coded rallying cry to southern whites, the echoes of which are heard in recent efforts to make voting more difficult throughout those states.

Much of the toxicity in our political discourse issues directly from such tactics. Our inability to deal with, or even recognize, inequality as a pervasive and crucial issue is partly, if not mainly, rooted in the moocher mindset acting as cover for the racial antagonism the polite society is supposed to have eradicated. After all if we set out to deal with inequality we have, by extension, to help “them” because they are disproportionately represented in the lower levels of our income strata. And dealing with inequality implies raising taxes on the upper levels in order to redistribute incomes and re-set the balance lost in the wake of Reagan’s anti-social programs.

The failure of the left to maintain a connection with the white working class sits squarely in this same space. Reagan and his heirs were able to convince that group to abandon their own self-interest because of the imagined unfair redistribution and thus higher taxes it became associated with. That the white working class suffered nearly as much, or that its tax burden was comparatively light, was overlooked Or it became overlooked in the context of the quasi racist tones of modern right wing politics.

So here we have Paul Ryan situating himself plum inside that recent and sordid tradition. He is trying to rally white voters ahead of this November’s elections. So a few alleged indiscretions or unfortunate wordings that still a mange to get the message across are fair game.

America really hasn’t progressed as far as many of us had hoped.

Another history lesson, again associated with inequality, is that of the ‘Kuznets Curve’. I re-read the original paper, “Economic Growth and Income Inequality”, which was actually a speech Kuznets gave to the American Economic Association in late 1954. His basic idea, which took form in other work also, was that the inequalities engendered by capitalism fade away naturally as an economy matures. Early on as a nation moves out of an economy dominated by agriculture and into one dominated by industry, capital is relatively scarce, regulation lax, labor abundant, and opportunities for ‘rent-seeking’ widespread. So inequality rises rapidly. A new wealthy class emerges and social divisions open up. Discontent and competition, however, start to close the income gap. Capital becomes less scarce. Labor markets tighten. Governments act to regulate business and limit rent-seeking opportunities. The game shifts and slowly, but surely, the early income gap is reduced.

This was an easy reading of history back in the early 1950’s. The data seemed to confirm it. And economists were eager to produce a narrative that was both in line with the data and had capitalism triumphant. It was, after all, in the context of the Cold War, urgent that the American version of capitalism be portrayed in a humane and socially beneficial light. Thus, I suspect, the economics profession was willing to delve only so far as to confirm wheat it wanted to say for ideological purposes.

The next few decades, through to the late 1970’s, seemed to conform to this Panglossian perspective. America boomed. The middle class in particular became the model of American economic power, and its constant accretion of income and material well-being stood as testimony to the benefits bestowed on us all of mature capitalism as explained by Kuznets and his ilk.

But this was radical misreading of history. We now know it. A happy confluence of events created an illusion of perpetually rising living standards for the great middle class. A rapidly growing population, diminished foreign competition, abundant cheap oil, and a massive indigenous market all conspired to make it look as if mature capitalism was benign. Business was good. Wages rose. The future was assured.

Then stagflation hit, foreign entanglements and setbacks undermined confidence and the newly empowered middle class needed to be told its gains were not temporary. Something and someone had to be blamed. Changes needed to be made.

Enter Ronald Reagan and the right wing counter revolution.

The package Reagan sold and the revised political trajectory he set us upon, and which successive presidents of both parties have hewn closely to, lead directly to today’s extraordinary levels of inequality. The line connecting the two is direct and clear. Reagan’s genius was to convince the white middle class to destroy itself all whilst being convinced it was helping itself. The hypocrisy and ethical indifference of the course he set out on have epic lessons we need urgently to learn. And to teach once learned.

Reagan, Clinton, and Bush each contributed to the inversion of the Kuznets curve. They drove us backwards to a society where deregulation, anti-labor activity, and rent-seeking became the norm once more. Only this time the discontent was managed carefully and government neutered. The triumph of neoliberal politics and its incessant attachment to pseudo-free market economic theory, led us to reverse the Golden years and to undo the middle class. It produced an economy dependent upon bubbles to create the illusion of growth. It papered over a great shift in income distribution. It argued that the return to a more basic capitalism would ‘lift all boats’ even though most boats were palpably taking on water. Only now that they’ve sunk is the message tainted sufficiently that a few, a precious few, on the left are organizing resistance.

We are indeed repeating history. We ignored or mis-learned the key lessons of those post-war decades. Capitalism may produce great wealth, but that wealth has to be distributed democratically in order for a middle class to prosper. And it is democracy that we have undone.

Meanwhile it is arrant nonsense to argue that all we ned to do is open up a few doors of opportunity and all will be well. No it won’t. Income inequality limits opportunity. It prevents it being real. It has ramifications on health and longevity. It has anti-social effects that prevent a united political response to the greed of the 1%.

Which, naturally, is the goal of our elite.

This isn’t an argument over economic theory so much as bare knuckled politics. Those of us who care are going to have to get angry to get attention because the cognitive capture of the elite is near complete. Let’s hope we can make a difference soon.

What’s the American analog to the Bastille anyway? What do we storm?