Dashing Toward Oligarchy, Government Is Now a Protection Racket For the 1%

Search form

Dashing Toward Oligarchy, Government Is Now a Protection Racket For the 1%

Dashing Toward Oligarchy, Government Is Now a Protection Racket For the 1%
Thu, 4/24/2014 - by Bill Moyers
This article originally appeared on BillMoyers.com

A new report shows that top C.E.O.'s were paid 331 times more than the average U.S. worker in 2013. At the same time, the poorest fifth of Americans paid an average tax rate of 11 percent while the richest one percent contributed half that rate at state and local levels.

Government Is Now a Protection Racket for the 1%

The evidence of income inequality just keeps mounting. According to “Working for the Few”, a recent briefing paper from Oxfam, “In the U.S., the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.”

Our now infamous one percent own more than 35 percent of the nation’s wealth. Meanwhile, the bottom 40 percent of the country is in debt. Just this past April 15 — Tax Day — the AFL-CIO reported that last year the chief executive officers of 350 top American corporations were paid 331 times more money than the average U.S. worker. Those executives made an average of $11.7 million dollars compared to the average worker who earned $35,239 dollars.

As that analysis circulated on Tax Day, the economic analyst Robert Reich reminded us that in addition to getting the largest percent of total national income in nearly a century, many in the one percent are paying a lower federal tax rate than a lot of people in the middle class. You may remember that an obliging Congress, of both parties, allows high rollers of finance the privilege of “carried interest,” a tax rate below that of their secretaries and clerks.

And at state and local levels, while the poorest fifth of Americans pay an average tax rate of over 11 percent, the richest one percent of the country pay — are you ready for this? — half that rate.

Now, neither Nature nor Nature’s God drew up our tax codes; that’s the work of legislators — politicians — and it’s one way they have, as Chief Justice John Roberts might put it, of expressing gratitude to their donors: “Oh, Mr. Adelson, we so appreciate your generosity that we cut your estate taxes so you can give $8 billion as a tax-free payment to your heirs, even though down the road the public will have to put up $2.8 billion to compensate for the loss in tax revenue.”

All of which makes truly repugnant the argument, heard so often from courtiers of the rich, that inequality doesn’t matter. Of course it matters. Inequality is what has turned Washington into a protection racket for the one percent. It buys all those goodies from government: Tax breaks. Tax havens (which allow corporations and the rich to park their money in a no-tax zone). Loopholes. Favors like carried interest. And so on.

As Paul Krugman writes in his New York Review of Books essay on Thomas Piketty’s Capital in the Twenty-First Century, “We now know both that the United States has a much more unequal distribution of income than other advanced countries and that much of this difference in outcomes can be attributed directly to government action.”

Recently, researchers at Connecticut’s Trinity College plowed through the data and concluded that the US Senate is responsive to the policy preferences of the rich, ignoring the poor. And now there’s that big study coming out in the fall from scholars at Princeton and Northwestern universities, based on data collected between 1981 and 2002.

Their conclusion: “America’s claims to being a democratic society are seriously threatened… The preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.” Instead, policy tends “to tilt towards the wishes of corporations and business and professional associations.”

Last month, Matea Gold of The Washington Post reported on a pair of political science graduate students who released a study confirming that money does equal access in Washington. Joshua Kalla and David Broockman drafted two form letters asking 191 members of Congress for a meeting to discuss a certain piece of legislation. One email said “active political donors” would be present; the second email said only that a group of “local constituents” would be at the meeting.

One guess as to which emails got the most response. Yes, more than five times as many legislators or their chiefs of staff offered to set up meetings with active donors than with local constituents. Why is it not corruption when the selling of access to our public officials upends the very core of representative government? When money talks and you have none, how can you believe in democracy?

Sad, that it’s come to this. The drift toward oligarchy that Thomas Piketty describes in his formidable new book on capital has become a mad dash. It will overrun us, unless we stop it.

Originally published by Bill Moyers

Article Tabs

With stores near military bases across the country, the retailer USA Discounters offers easy credit to service members. But when those loans go bad, the company uses the local courts near its Virginia headquarters to file suits by the thousands.

Despite the 828-page Dodd-Frank Act, the derivatives pyramid has continued to explode to a value now estimated to be as high as $2 quadrillion.

HSBC, Deutsche Bank and the Bank of Nova Scotia have been accused of attempting to rig the daily global price of silver in the latest price fixing scandal to rock the banking industry.

The British Medical Association joins a growing movement of institutions – including dozens of universities, foundations and even the World Council of Churches – dumping oil, coal and gas holdings.

A community without dollars is not a community without wealth.T his basic insight lies at the heart of the community resilience movement.

This summer, the CIA's private Amazon Web Services cloud—shielded from the public behind a wall of national security—becomes operational.

Posted 5 days 5 hours ago

The Premier of the Province, Kathleen Wynn, is being given another chance to respond to growing calls from the Indigenous community to protect their Territorial Rights.

Posted 6 days 4 hours ago

Extensive research and reports commissioned by the fracking industry are treated as seminal, informative works within the U.K. government – but to date, no one outside industry vouches for its safety.

Posted 5 days 5 hours ago

It seems the people of the world are factually correct when they label the United States the greatest threat to peace in the world.

Posted 6 days 4 hours ago

From the Trans-Pacific Partnership to the Transatlantic Trade and Investment Partnership to the Trade In Services Agreement, massive trade deals are being advanced in coordination with a militarized police state.

Posted 3 days 8 hours ago

The Post is supposed to expose CIA secrets. But Amazon – owned by Jeff Bezos, who is also the new owner of the Post – is under contract to keep them due to its new $600 million “cloud” computing deal with the CIA.

The University of Pittsburgh Medical Center is a “$10 billion integrated global health enterprise” with 20 hospitals and 400 clinics in western Pennsylvania. But its status as a “nonprofit charity” makes it tax-exempt, and Pittsburgh is trying to change that.

The Help vs. The Wherewithal

The dream of living as the rich live can blind the dreamer to economic realities.

Since January, Fannie Mae has spent nearly $50,000 of what is essentially public money to keep one home empty.

Getting to a zero percent tax rate despite turning a profit requires creative accounting — and corporate tax codes allow companies to avoid tax liability even in years when they turn a profit. 57 companies listed on the S&P 500 index last year paid zilch.

Sign Up