Our plutocracy now lives like the British in colonial India: in the place and ruling it, but not of it.
-By Mike Lofgren
January 11, 2012- It was in 1993 during Congressional deliberation over the North American Free Trade Agreement. I was having lunch with a staffer for one of the rare Republican members of Congress who opposed the policy of so-called free trade. I distinctly remember something my colleague said: "The rich elites of this country have far more in common with their counterparts in London, Paris and Tokyo than with their own fellow American citizens."
That was just the beginning of the period when the realities of outsourced manufacturing, financialization of the economy and growing income disparity started to seep into the public consciousness, so at the time it seemed like a striking and novel statement.
At the end of the cold war, many writers predicted the decline of the traditional nation state. Some looked at the demise of the Soviet Union and foresaw the territorial state breaking up into statelets of different ethnic, religious or economic compositions. This happened in the Balkans, former Czechoslovakia and Sudan. Others, like Chuck Spinney, predicted a weakening of the state due to the rise of fourth-generation warfare and the inability of national armies to adapt to it. The quagmires of Iraq and Afghanistan lend credence to that theory. There have been hundreds of books about globalization and how it would break down borders. But I am unaware of a well-developed theory from that time about how the super-rich and the corporations they run would secede from the nation state.
I do not mean secession in terms of physical withdrawal from the territory of the state, although that happens occasionally. It means a withdrawal into enclaves, a sort of internal immigration, whereby the rich disconnect themselves from the civic life of the nation and from any concern about its well-being except as a place to extract loot. Our plutocracy now lives like the British in colonial India: in the place and ruling it, but not of it. If one can afford private security, public safety is of no concern; if one owns a Gulfstream jet, crumbling bridges cause less apprehension – and viable public transportation doesn't even show up on the radar screen. With private doctors on call, who cares about Medicare?
To some degree, the rich have always secluded themselves from the gaze of the common herd; for example, their habit for centuries has been to send their offspring to private schools. But now this habit is exacerbated by the plutocracy's palpable animosity toward public education and public educators, as Michael Bloomberg has demonstrated. To the extent public education "reform" is popular among billionaires and their tax-exempt foundations, one suspects it is as a lever to divert the more than one-half trillion dollars in federal, state and local education dollars into private hands, meaning themselves and their friends. A century ago, at least we got some attractive public libraries out of Andrew Carnegie. Noblesse oblige like Carnegie's is presently lacking among our seceding plutocracy.
In both world wars, even a Harvard man or a New York socialite might know the weight of an Army pack. Now, the military is for suckers from the laboring classes, whose subprime mortgages you just sliced into CDOs and sold to gullible investors in order to buy your second Bentley or rustle up the cash to employ Rod Stewart to perform at your birthday party. Courtesy of Matt Taibbi, we learn that the sentiment among the super-rich toward the rest of America is often one of contempt rather than noblesse; Bernard Marcus, co-founder of Home Depot, says about the views of the 99 percent: "Who gives a crap about some imbecile?"
Steven Schwarzman, the hedge fund billionaire CEO of the Blackstone Group who hired Rod Stewart for his $5 million birthday party, believes it is the rabble who are socially irresponsible. Speaking about low-income citizens who pay no income tax, he says: "You have to have skin in the game. I'm not saying how much people should do. But we should all be part of the system." But millions of Americans who do not pay federal income taxes pay federal payroll taxes. These taxes are regressive and the dirty little secret is that over the last several decades they have made up a greater and greater share of federal revenues. In 1950, payroll and other federal retirement contributions constituted 10.9 percent of all federal revenues; by 2007, the last "normal" economic year before federal revenues began falling, they made up 33.9 percent. By contrast, corporate income taxes were 26.4 percent of federal revenues in 1950; by 2007, they had fallen to 14.4 percent. Who has skin in the game now?