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CONNECTIONS: Is America becoming an oligarchy?

Today, 1 percent controls 90 percent of the wealth. Will there be an unstoppable shift away from democracy?

About Connections: Love it or hate it, history is a map. Those who hate history think it irrelevant; many who love history think it escapism. In truth, history is the clearest road map to how we got here: America in the 21st century.

In the 1950s, approximately 50 percent of the population was in the middle class. In addition, the economy grew 8.7 percent. It was part of an expansion that lasted until 1975. In the 1970s, 71 percent of the population was in the middle class.

Since the 1970s there has been a slow slide downhill. Economic growth slowed. The United Nations annual report (2018) estimated the chance for upward mobility in the USA the lowest among industrialized nations. Today, according to the Pew Research Center, just 49 percent of the population is in the middle class while 70 percent believe they are. Growth has dipped to 3 percent and it is projected downward (2.3 percent) for 2019.

What is the interplay between a country’s economy and its form of government? Is it directly related or more subtle? Does one create the other or is it more nuanced? Simply put: Can you have equal distribution of power without equal distribution of wealth? Will the redistribution of wealth into a few hands always result in rule by a few? Is one an absolute predictor of the other? If not, what are the other factors? If so, what does the decrease in the middle class and the slowing growth over the last half-century mean; does it mean a transition to another form of government?

For Adam Smith and John M. Keynes, the government’s control over, or interference with, the economy was of primary concern; however, for some economists, the concern is reversed. “The economic system determines the laws, the type of government, and the role of society in day to day life.”

Who is right? There are forms of government that appear to be reflections of the economy—for example, an oligarchy. If there is an unequal distribution of wealth into a few hands, will those few hands inevitably hold the reins of power? If so, does that mean a democracy requires an equal distribution of wealth to sustain an equal distribution of power?

There are those who firmly believe that to survive and thrive, a democracy requires a strong middle class. Included among them is former Secretary of State Madeline Albright. For them, John Madison was the bulwark of our democracy. What happens without him? Is there an underlying economy that fosters autocracy? Albright thinks so.

In April 2019, at the House Financial Services Committee hearing, freshman Rep. Katie Porter, D-Calif., asked JP Morgan Chase CEO Jamie Dimon—a man who earns $31,000,000 annually—how an employee of his—a woman who earns $35,000 annually—was supposed to live.

Rep. Katie Porter, D-Calif., questions JP Morgan Chase CEO Jamie Dimon. Image courtesy Daily Kos

Dimon said he didn’t know. Apparently, no one does. The problem Porter was making manifest was that, for too many Americans, incomes do not cover costs. Too many Americans are working poor.

In America today, there is extreme income inequality. Jamie Dimon earns $30,965,000 more per year than his entry-level employee. That is indisputable income inequality. Does that explain a political tilt to the right, white supremacy, or anti-immigration? Does it explain the general dissatisfaction with our government, and a drift toward oligarchy or even autocracy?

If the economy tilts severely enough, is there an inevitable effect on our form of government? What happened the last time we had such severe income inequality?

The Gilded Age was 52 years of American history from the close to the Civil War to our entrance into World War I. It was a time when vast new wealth was disproportionately distributed into a few hands. The source of the “new wealth” was a shift from an agrarian to a manufacturing economy. So what happened to our government?

The language of a representative democracy remained in place. What changed was the actual power structure. Power shifted from the agrarian South to the industrial North, from states’ rights to the centralized federal government, and to the monied class.

Concomitantly, immigration increased, and the middle class expanded. For that expanding class, mass transportation, central banking and Henry Ford were easing the way. Finally, there was Teddy Roosevelt. He believed the stranglehold a very few had on the economy must be challenged or those few would exert a crushing grip on levers of power. The Trust Buster was born, and the monopoly was threatened.

Did the super-rich of the Gilded Age change the laws, the form of government and the societal norms? To a large extent, yes. However, leaders like Teddy Roosevelt and Franklin Delano Roosevelt, who instituted the social safety net to bolster and support the middle class, slowed the move toward oligarchy. The super-rich called FDR “a traitor to his class.”

Today, 1 percent controls 90 percent of the wealth. Will there be an unstoppable shift away from democracy? Money talks, but does it dictate, or merely effect to some extent, the laws and the form of government? What countervailing factors are present today?

First, the population is much higher today than it was in the Gilded Age. The increased population puts an additional strain on the government and its ability to produce and dispense sufficient goods and services. The leaders seem to have different goals and values. Regardless of your party affiliation, regardless of theirs, both Roosevelts, Teddy (R)  and FDR (D) worked for the middle class — not the richest among us. At the end of the Gilded Age, there was a world war that produced a common enemy and glossed over any internal splits.

The story Americans told each other in the Gilded Age—social Darwinism—explained and justified the income disparity.  If a culture has one story it tells that a majority accepts, the power of that story cannot be overestimated. That story shapes and directs the people. When the war came, the story of one America fighting together against a common enemy unified and motivated. Today we cannot agree on much—not even the story of us.

Middle class grew then and is shrinking now. Albright asked “who guards our liberty?” and answered “all of us.”

If the fastest growth and the strongest middle class in U.S. history are behind us; if an America in which a single wage earner could support a family is behind us; if Americans who trusted the government and demanded it work as hard and honestly as he or she did are in the past; what is before us?