by wjw on March 30, 2011

The world is going through some staggering changes.

As I write this, it looks as if Libya may be in for a long period of civil war, despite its seemingly being pummeled by every country in the world– including Qatar!— which has an air force.  Saudi Arabia has sent armed forces into Bahrain to help suppress dissent.  The government of Yemen seems shakier by the day.  Egypt has voted on a new constitution, and will elect a new president in June.  Tunisia is trying to establish a new democratic order.

And Syria!  Good lord, there are mass demonstrations in major Syrian cities!   Their entire government has resigned!  The president, who is the son of the previous president, has promised reforms!  The Emergency Law, which has been in existence since 1963, is being questioned!  People are tearing down pictures of the president!

I never thought this would happen in Syria, not for another generation anyway.  It’s a national security state, it’s a place where you can’t escape the security police and the Ba’ath party.   Syria’s record on human rights is among the worst in the world.  The last major revolt, by the Muslim Brotherhood in 1982, was suppressed by the military at the cost of tens of thousands of lives.   Arbitrary arrest, murder, and torture are widespread, not only in Syria but among Syrians living abroad and in Lebanon, a nation which Syria is doing its best to annex.  They support terror, and if pressed can bring in their Hizbullah clients to  help crush any rebellion.  Yet the demonstrations are getting bigger and bigger, and the government keeps retreating.

It’s too early to predict how any of this will turn out, but it’s clear that the region has turned a corner.  People who have known nothing in their lives but a corrupt, despotic government are now willing to become heroes in defiance of that government.  They’re looking for a more open society and a chance to live in dignity.  Though they’ve never lived under a democracy, they say that’s what they want.

And now they have a model for rebellions that are shown to work, a model developed in Serbia, of all places.  (Check Foreign Policy for a somewhat self-congratulatory article on that model.   The short form: Burma’s next.)

The rebels probably have a better idea of democracy than we think they do.  They see foreign films, television, and news reports.  Their telephones show them what’s available in a world beyond their immediate horizon, in a world where they don’t have to hide from the secret police, where their political activity isn’t monitored, and where they don’t have to pay off the government every time they want to start a business.

Whatever new government emerges, they’ll face incredible challenges.  Massive unemployment among the young.  Major increases in the prices of food and fuel.  Here in the US, we’re seeing the biggest rise in food prices in 36 years, and the situation is worse in the Third World.  Climate change has been savaging crops all over the planet— last year alone saw colossal damage in Australia, Russia, and Africa—  and the only way a lot of regimes can stay in business is to subsidize food for their masses— except that with a single-party state demanding payoffs and a huge expensive security apparatus sitting atop the productive economy, they can’t afford those subsidies.  Jordan attempted to take subsidies off food and fuel, and after riots the subsidies were reinstated.

Can a new democracy fare any better?

And democracies are . . . complicated.   If you’re a statesman or a businessman, say, there are certain advantages in dealing with an autocrat.  When the Big Man says yes, everyone else falls into line.  When the Big Man says no, he’s the only person you need to argue with.

Democracy is more sticky.  Democratic leaders are subject to more pressures, and even if they say yes, their courts or parliaments can say no.  And vice versa.  To evolve toward democracy is to evolve toward complexity.

In this country, ironically, we’re evolving in the opposite direction.  We’re becoming less democratic and more unequal.

Back in 1915, people were shocked to discover that the richest 1% of Americans took home 15% of its income.  This was, remember, the tail end of the Gilded Age, when robber barons like Rockefeller and Carnegie and Morgan were living in castles and employing thousands of servants and not paying any taxes at all.

Income equality increased following the Great Depression, when Roosevelt betrayed his class by making them pay taxes, and reached a high point in 1974, when the richest took home a mere 9% our nation’s wealth.

Right now, the top 1% of income earners take home 24% of the nation’s income, well past the figure that shocked America in 1915.  We have greater income inequality than Nicaragua and Guyana, which are not exactly known as bastions of equality.

There are banana republics that have greater equality than we do.  I don’t know about you, but I’m deeply ashamed about that.

Egypt, where they just had a revolution, has more income equality than the U.S.  So does Tunisia.  So does India.

Now admittedly we start at a higher plateau.  No poor person in the US would want to change places with a poor person from Nicaragua, even if the chances of getting ahead are greater.  The Champion of the People, Daniel Ortega, is just another third-world despot now, with a constitution that allows him to run indefinitely for president, a personal fortune in the hundreds of millions of collars, and a hand out for bribes.

But you have a better chance of being successful in Nicaragua than you do in America.  Just think about that for a moment.

In fact, the richest 400 American individuals— the folks who once upon a time would have filled Mrs. Astor’s ballroom— now have more money than the poorest 150 million.

These guys (397 of them are male) are richer than the pharaohs.   Any one of them has more money than any Roman emperor.   They could buy whole countries, except why bother?  Then they’d have to run them. It’s much easier and cheaper to buy all the politicians instead.

Now how did they manage that vast increase in income?  Lower taxes, for one thing— those 400 doubled their income under Bush.

But they took advantage of another trick.  The American worker is the most productive in the world.  American productivity has doubled in the last twenty years or so.

Wow!  You’d think the American worker would be stuffing his pockets with the money his labors have brought in, right?

Well, no.  Not at all.   Wages have been stagnant in the US for a long time, or declined.  (Wages for male Americans peaked in the 1970s.)  What happened was that the wealthiest tier took all the extra wealth their workers had created and paid it to themselves.

The richest people in this country used to make their money by owning things.  Now the richest people get their wealth as salary, and that’s because they award it to themselves.  Back in 1960, the highest level of pay among top executives was maybe 30 times the amount of money of their average employee.  In 2007, the ratio was 344 to  one.

Explain to me why any executive is worth that much.   Please.

(And yes, I know that these salaries have to be approved by corporate boards.  But name me any major corporate board that regularly refuses to award this kind of pay to top executives.)

Can we now declare trickle-down economics to be dead and buried?  We’ve waited thirty years for the money to trickle down and we haven’t seen it.

Oh, maybe in a few areas of the economy.  Luxury jets.  Manhattan penthouses.  Yachts.  But if we’re waiting for the rich to actually do something useful and productive with their money, it seems we’re going to wait a long time.

Corporate taxes used to constitute 33% of government’s income.  Now it’s down to 17%.    In fact, most American corporations don’t pay taxes at all.

Even conservatives like Francis Fukuyama are pondering the possibility that the US has become a plutocracy, run by and for the super-rich.

Can I just say at this point that the idea of revolution by guillotine seems more and more attractive?

What I can’t quite work out is why there isn’t more outrage over this.  Why aren’t we seeing ordinary people packing the Washington Mall the same way the Egyptians packed Tahrir Square?

But apparently we can’t talk about class politics in America.  We’re supposed to be classless, and anyone who points out that our entire economic and political establishment has been purchased by the ultra-rich will be viewed with suspicion and distaste, as if he farted in church.

But guess what?  We do have classes.  Class barriers are growing ever more rigid, more rigid than in places like Egypt and Nicaragua.

And there’s a class war going on.  It was declared by the rich against the rest of us some time ago.  It’s time we noticed.

Cosma Shalizi March 30, 2011 at 12:26 pm

“Why aren’t we seeing ordinary people packing the Washington Mall the same way the Egyptians packed Tahrir Square?” Well, we sort of are, aren’t we?

E James (Jim) Brennan March 30, 2011 at 7:23 pm

An article on that subject is scheduled to be published 4/1/2011 on Ironically, since I am a labor economist, I only visited here because I did a double-take seeing Bellingham (where I live) mentioned on p. 56 of Deep State and was wondering if you picked it for a similar reason that Jerry Pournelle did in Footfall.

wjw March 31, 2011 at 12:30 am

I don’t know why Jerry picked Bellingham, but I picked it because I had a very pleasant weekend at the university a number of years ago, as a guest of their science fiction club. I just reached into my brain for a town with a university, and that one popped up.

Sean March 31, 2011 at 6:45 am

Having recently been turned on to ‘conspiracy documentaries’, nothing said here comes as Earth shattering; I receive only dumb stares and blank looks when I try to share what is transparently obvious to me: We are but cogs in the wheel of the great money making machine! I have no idea what I (we) can do to change things in Western Society…I only know that I hate being a part of it, and that I need that paycheck! BTW, I’m a Canadian that has been to Bellingham several times (once on a Seattle Mariners tryout) and it is a beautiful place! Oh, to be a Bilderberg!

Dave Bishop March 31, 2011 at 9:48 am

I suppose that ordinary people in western ‘democracies’ won’t start fighting back until food really starts to become scarce and really expensive. It’s worth remembering we’ve just gone through a time when food was cheap and, perhaps, it’s now more ‘realistically’ priced.

Still the conjunction of Peak Oil and the effect of the Japanese disaster on the nuclear industry suggests to me that a ‘perfect storm’ may be building. I just wonder how democratic and concerned about human rights our glorious leaders will be when the shit really hits the fan? I wouldn’t mind betting that some of them will ‘do a Gadaffi’.

Bruce Cohen (Speaker to Managers) March 31, 2011 at 7:20 pm

As I recall, Jerry Pournelle stomped Bellingham flat at the beginning of his climactic space battle. You treated it much better in Deep State; I live a little over 200 miles from there, and I much prefer your treatment.

Class war, oh yes, it’s over and the rich won. The only real option for change those of us on the poor side of the line have now is non-violent revolution, exactly what happened in Tunisia and Egypt (not so much in Libya, unfortunately). Violent revolution is tempting, but when the rich have a near-monopoly on the use of military force (imagine an armed and angry militia organization being attacked by a battalion or two of the 101st Airborne Infantry; numbers and equipment and training and battlefield experience all count, and anger and righteousness won’t stand up to them). What made those revolutions effective was organization and leaders trained in the techniques of the Serbians who threw out Milošević; they learned the techniques in part from Gene Sharp of the Albert Einstein Institution. There are already a lot of people willing to go out and demonstrate against the class war; one of the primary weapons against them so far has been the deliberate lack of attention by the media. Raising visibility is the first task for a real revolution.

Dillo April 1, 2011 at 3:30 am

“The greatest trick the devil ever pulled was convincing you he didn’t exist”—The Usual Suspects.

The greatest trick of the SuperRich was convincing the lower/middle-class that the problems of the SuperRich were theirs too. Any minute now you could win the lottery. Any minute now that thing you’ve been building in your basement will be the NextBigThing and make you rich. Some day, if you work hard enough(and your job doesn’t get transferred to China or India or you’re not laid off or your savings don’t get wiped out in the next financial crisis) you’ll “make it”.

Then you’ll have the same problems that the SuperRich do. So better to vote against national healthcare and schools and fair credit laws and higher taxes and all the things that the non-rich rely on daily to get by.

Besides, if you vote FOR those things, the Gays will get them too! You don’t want that to happen do you ?

Faith Van Horne April 1, 2011 at 6:15 pm

What I can’t quite work out is why there isn’t more outrage over this.
Conversations with some of my family members have answered this. In a debate on health care with my uncle, he stated that, without exception, people who don’t have health care are too lazy to go out and work to afford it, and so don’t deserve it. He believes that any easing of the burden on the lowest earners in our economy is an active attack against the people who make the most money and therefore work the hardest and provide jobs to all the leeches below them. And he’s not alone. A fair portion of my family watches Fox News and agrees with him.
The craziest part is, I grew up receiving free lunches, Medicare, welfare and food stamps because my mother was poor. My uncle helped us a lot growing up, and understood my mom’s situation. We got out of it, thank god, but he understands that my mom wasn’t lazy; we needed that help. The cognitive dissonance stuns me.

BlueNight April 1, 2011 at 10:21 pm

With due respect to your invaluable writing skill (I’m a fan of Implied Spaces), I don’t think you’re seeing the big picture with income inequality.

Standards of living and means of production are the real territory of the class war. Income inequality is merely an emergent property.

The means of production are available for purchase in every hardware store and elsewhere. Anyone can buy into a 401k or other investment vehicle, to turn their depreciating currency into capital that generates currency. Anyone can start a business with a loan, a franchise license, some training, and a few employees. The very computer on which you wrote this blog can be used to generate income in thousands of different ways.

If you want to talk about standards of living in America, compared to developing countries, be my guest. Oh, how much toilet paper do you have in your house right now? How many people around the world have never even heard of toilet paper?

If you’re talking about the super-rich, just consider that there will ALWAYS be the super-rich, unless they can be individually tracked down and slaughtered by jealous thieves. Instead, set up a program where wage-earners can buy into businesses and capital, and reap a share of the profits. (Oh wait, that’s called stocks and bonds.)

Or let the masses do what you do for a living: create and exploit intellectual properties…

Dave Bishop April 2, 2011 at 8:45 am

Yes, Faith ‘poor bashing’ appears to be a very potent weapon in the class war. I noticed way back in 1979 that although Margaret Thatcher preached a right wing ideological message which was pro ‘free enterprise’ and anti union the real reason why she was so fervently supported in the UK was because she appeared to threaten to punish the poor for their poverty.

When I talk to people of a right wing persuasion or people who declare that they are ‘apolitical’ or ‘undecided’ I realise that their political views can be boiled down to a single statement i.e. : “People of a lower status than me are getting more than I believe they’re entitled to.” They then tend to support any politician who promises to punish the poor for their fecklessness.

The right wing media in the UK run endless stories about ‘benefits cheats’ and ‘idle scroungers’ and these messages are avidly consumed by large sections of the British public . It doesn’t help, of course, that Britain is still a very class-ridden society.

wjw April 4, 2011 at 5:32 am

BlueNight, I’ve been putting money into various investment vehicles for decades now, and I’ve made a modest little nest egg that might just get me through old age without my having to spend my nights sleeping on a steam grate, assuming of course that I could actually find a steam grate to sleep on here in rural New Mexico. And that I never, ever, ever get sick.

Your statement that there will always be the super-rich is the most depressing thing I’ve heard all week. We’ve only had people that rich for the last twenty or thirty years— the plutocrats of the past never had anything like the money these people regularly pay themselves.

(And by the way, 6 of the top 10 inherited their money, and are either named Walton or Koch. I bet if I inherited the country’s largest oil distribution company I could do really well for myself. As the saying goes, if you want to make $100 million, better start with $10 million.)

As for folks buying stocks and bonds to get a share of the wealth, for every manager who pays himself $350 million each year, that’s $350 million that doesn’t go out in dividends to shareholders, and that isn’t invested in new technology, new physical plants, or other improvements to keep their companies profitable. Money that doesn’t go out in salaries to their employees so that their employees can buy homes and consumer goods to keep the economy churning.

And of course there IS a time-honored method for making sure that the hyper-rich don’t gathered too much wealth and power. It’s called taxation. I’d suggest taxing any income over, say, $50 million at 90%. Any of the super-rich that object to this plan can explain to Congress why their lifestyle requires more than $50 million/year.

That way we can get our schools, infrastructure, pensions, and health care, not to mention pay for our overseas military adventures.

My great fear is that if we dare to tax the hyper-rich, they’ll just take their money offshore and leave the U.S. economy gutted. But even if that happens, I think we’ll be better off without them.

wjw April 4, 2011 at 5:36 am

Oh, I should mention— just by way of illustrating how these people think, and how little what we think matters— Transocean Ltd., which owned the Deepwater Horizon rig that blew up, killed 11 people, and created the worst oil spill in history, has just declared its 2010 “the best year in safety performance in our company’s history,” and awarded big bonuses and salary increases to its top execs.

Lance Larka April 4, 2011 at 11:58 pm

“Oh, maybe in a few areas of the economy. Luxury jets. Manhattan penthouses. Yachts. But if we’re waiting for the rich to actually do something useful and productive with their money, it seems we’re going to wait a long time.”

No, even here the people actually doing the work get a pittance compared to the owners/managers/investors etc.

DensityDuck April 5, 2011 at 6:33 am

It’s always hilarious when a middle-aged white American male complains about how someone has it too good.

“Your statement that there will always be the super-rich is the most depressing thing I’ve heard all week. We’ve only had people that rich for the last twenty or thirty years— the plutocrats of the past never had anything like the money these people regularly pay themselves. ”

Ah-heh. The plutocrats of *those* plutocrats’ past never had anything like the money that *those* plutocrats paid themselves. And so on back into the hallowed depths of history.

Like the man said, there’s *always* going to be rich bastards. The question is, what do the *rest* of us do?

And, to top it off…

“…there IS a time-honored method for making sure that the hyper-rich don’t gathered (sic) too much wealth and power. It’s called taxation.”

This is the part where Walter looks up the statistics for taxes paid by each income bracket, compares the figures for the US to those for other countries, and never talks about this subject again.

wjw April 6, 2011 at 4:43 am

Oh, I’m happy to talk about that subject till the cows come home.

At present the top U.S. bracket is higher than that of many developed countries— BUT our tax laws have a lot more loopholes that savvy people can find; AND our tax on capital gains, which is where the hyper-rich get much of their income, is less than half that of the top rate. That’s why the income of the rich doubled after 2001, when the capital gains tax was reduced.

Also, countries outside the U.S. develop a lot of addition income by imposing a VAT, which— like sales taxes everywhere— mainly impacts low-income citizens.

As for the tax rates, the developed world has been in a race to the bottom over the last couple decades, and as a result many of these countries are finding themselves extremely short on revenue, and are now cutting back on the social programs that made them such pleasant places to live.

Returning to the subject of democracy, I really don’t think we want to be one of those countries where the tycoons are in charge. We really don’t want to be Russia, or Croatia circa 1991, or any of those places.

And while I may be a middle-aged white guy complaining that other people have too much, at least I’ve reversed the stereotype— usually we complain about the poor getting too much help from the suffering taxpayer.

DensityDuck April 6, 2011 at 6:23 am

I’m not talking about the tax brackets; I’m talking about the money. The actual amount of taxes being paid.

Here’s a useful link: (calm your trigger-word response, please.)

Note how the richest decile, in America, pays 45% of the tax burden on 33.5% of the income. That’s a ration of 1.35, which is higher than anyone else on the chart.

If you want to talk about how the rich bastards ought to pay their fair share, then it’s useful to know what their share is right now. Maybe we think they should pay more, or less, but the idea that they’re getting away without paying anything is simply not true.

wjw April 7, 2011 at 11:23 pm

DD, that’s an excellent source. But it’s not exactly news that, if you’re going to tax someone, you have to go to where the money is. You can’t tax the poor because they have no money; you can tax the middle only so much before they slide into being poor; but the rich can afford to pay a greater share.

The article also doesn’t mention that a lot of developed countries have a highly regressive VAT that provides a good deal of income for the state. For instance Poland, where the rich pay less on a greater share of the country’s income, has a 23% sales tax that mainly impacts the poor and middle classes. For the average poor person, who has to spend nearly every penny on basic necessities like food and shelter, that’s nearly a quarter of a poor man’s income gone BEFORE you even get to an income tax.

Stats on VATs here:

wjw April 8, 2011 at 9:35 pm

Hey, glorious news! The head of JP Morgan just increased his compensation by 1500 percent!

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