“We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
U.S. SUPREME COURT JUSTICE (1856-1941)
This is from last week, but we didn’t have a chance to get to it.
The chief executives of America’s top 350 companies earned 312 times more than their workers on average last year, according to a new report published Thursday by the Economic Policy Institute.
The rise came after the bosses of America’s largest companies got an average pay rise of 17.6% in 2017, taking home an average of $18.9m in compensation while their employees’ wages stalled, rising just 0.3% over the year.
The pay gap has risen dramatically, with some fluctuations, since the 1990s. In 1965 the ratio of CEO to worker pay was 20 to one; that figure had risen to 58 to one by in 1989 and peaked in 2000 when CEOs earned 344 times the wage of their average worker.
It’s hard to look at these numbers and not see a country in rotting decline. No one thinks everything was rosy in 1965; in many, many ways, things are so much better now. But when unions were strong, and corporations felt at least somewhat beholden to their communities, if just because they were bound by regulations and self-interest, there was a much broader sense of fairness.
That this fairness was driven by self-interest doesn’t make it less fair. Workers fought hard to push back against the bloody excesses of the gilded age, fought hard and in many cases literally died so that they could have a seat at the table. They threatened to shut down productivity and it worked, because bosses knew that if there were no workers, there was no money to be made (and not incidentally, it meant that the title of “boss” would disappear).
Partly created by the effort of those workers was the idea that the economy prospered when everyone had a chance to take part in it. That seems like a really simple idea, and indeed even a fascist like Ford recognized that things were better off if his workers could afford a Ford. That’s not to say he was benevolent or progressive or indeed even particularly good to his workers. He just knew that a certain sense of fairness kept the economy rolling and prevented revolution.
That’s really important context, I think. It’s axiomatic (and happily correct) among people who actually know things to say that the New Deal, far from being socialist, saved capitalism from itself. When revolution as sweeping the world and American workers were more and more organized, capitalism needed to be tamed lest it swallow itself whole. And for nearly 40 years, America had one of the largest economic booms in recorded history.
There are a lot of reasons for that decline, but there is no doubt that in the 80s inequality started to grow. An assault on worker’s rights was once again joined, as the greed and excess of that rotten decade became good politics. The boss class, long shackled, was unleashed, and the constellation of worker-hating think tanks and pundits and policy-makers were finally allowed to be free.
While this assault came from the right, it is dishonest to pretend that it wasn’t essentially bipartisan. Democrats fled from unions, afraid of scandals and lured by big Wall Street money (because of course there were never any scandlas or corruption on Wall Street, much less in capitalism as a whole). And, maybe not coincidentally, the Soviet Union fell.
This is a half-baked theory, but I can’t help but wonder if not having any Communist opposition made the wealthy class forget that revolution was always possible. If the fear of communism temepered the excess of capitalism, did its removal from the world scene eliminate that fear?
I don’t have an answer to that. But I do know this is unsustainable. It seems grim now, for sure. Unions are being destroyed, and if Trump is able to install another Heritage-bred Supreme Court justice, to go along with his more under-the-radar remaking of the judiciary, it could be a long midnight for labor in America. That decline has been aided by more relative material comfort than in the last gilded age, as true deadly labor has for the most part been outsourced to the third world.
But it can’t last. The Trump election was a weird and race-aided expression of that populist anger, and the rise of socialism as a reaction on the left is also a reaction to this rigged game. We’ve seen now for decades what it means when the rich have all the power. We’ve seen how so many of them are warped by wealth, made mean and stupid and cruel, turned petty and weak. We’ve seen how they bend the laws to aid only themselves.
People can see that. The Atlas shrugging excuses can only work for so long. As the EPI put it in their report:
CEOs are getting more because of their power to set pay, not because they are more productive or have special talents or more education. If CEOs earned less or were taxed more, there would be no adverse impact on output or employment.
That isn’t to say the dam is about to burst. Despite Trump’s campaign bluster, the right works tirelessly to be the footstools of the ultra-wealthy and to aid them in helping get even richer at the expense of workers, the environment, and democracy. Democrats are getting better, but are still instinctively timid at best and complicit at worst.
But that’s changing. The Democrats are moving to the left and are not being hurt in the polls, despite a legion of sneering brats crowing about Venezuela on the Fox Screeching Hour. That, to me, is a chance for capitalism to save itself from itself. America is not a country ripe for revolution, and in reality never truly has been. We have always respected wealth too much to say bad things about it.
But we also aren’t immune from history. The pressures of poverty contrasted with gilded excess and the reality of working harder just to make someone else richer at your expense will catch up. The grinding misery most of the country feels and the inability to get truly ahead unless you are at the head of the table is a recipe for, if not revolution, a reckoning of sorts. I don’t know how that will play out, but I do now that this system can’t last for too much longer. Either unchecked capitalism will win, or democracy will. Hopefully democracy does. The miserable threats of the former could enter us into a period of low-level violence and official repression.
The outline for that is already there and is getting filled in. The question is how we’ll react.
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