Greedonomics

by Robert Scheer

Let me tell you how screwed we are. Better yet, let me once again quote my favorite economist, the late Beatle John Lennon. I’ve frequently cited the words he sang in “Working Class Hero” because they make the most salient point concerning our devastated economy: “A working class hero is something to be/Keep you doped with religion and sex and TV/And you think you’re so clever and classless and free/But you’re still fucking peasants as far as I can see.”

He’s singing about you white guys, the peasants who voted for the Republicans in such sufficient numbers that they kept control of the House of Representatives, preventing the Democrats from legislating any but the slight- est increase in a taxation system designed to make the rich richer. The most that President Obama could get passed, even after winning a second term, was an insignificant tax increase on the superrich families earning more than $450,000 a year. That and a lousy 5% increase on the capital-gains profits from gambits that allowed GOP candidate Mitt Romney to pay 14% on his many millions in income while lesser souls were paying upwards of 35% on their hard-earned labor in the real world.

The richest of the rich, like the Koch brothers, bought your vote with hysterical appeals to your most primitive and therefore distorted instinct of self-preservation based on a false notion of one’s own class position. Most white guys who vote Republican are big losers in today’s economy, but they still think of themselves as middle-class winners. They make up a majority of those with underwater mortgages and foreclosed homes, and they are denied once widely available decent-paying jobs with medical coverage. But they still believe that when Uncle Sam invades some country with oil, they will benefit. They won’t.

Want proof? Just Google the “Equity Strategy” reports that Citigroup sent to its richest clients before the great recession hit. Dated October 16, 2005, the first report heralded the new day of the “Plutonomy” that in the United States has replaced the traditional capitalist-based democracy. The USA, the United Kingdom and Canada are now clearly defined as a new form of capitalist political rule—by the rich and for the rich. As the Citigroup report proudly claimed, “the world is dividing into two blocs—the plutonomies, where economic growth is powered by and largely consumed by the wealthy few, and the rest.”

The report went on to state: “What are the common drivers of Plutonomy? Disruptive technology-driven productivity gains, creative financial innovation, capitalist-friendly cooperative governments….”

That was written two years before the crash of 2007 ushered in the great recession that wiped out much of the wealth of the middle class. Citigroup was a big player in the financial scams that led to the housing bubble triggering the economic crisis that still haunts us. The Citigroup reports predicted for their most privileged clients exactly what was in store: “We project that the plutonomies…will likely see even more income inequality, disproportionately feeding off a further rise in the profit share in their economies….”

They nailed it. In a March 5, 2006, report titled “Revisiting Plutonomy: The Rich Getting Richer,” Citigroup pronounced: “We think the rich are likely to get even wealthier in the coming years. … Asset booms, a rising profit share and favorable treatment by market-friendly governments have allowed the rich to prosper and become a greater share of the economy in the plutonomy countries.”

Then the crash hit, enabled by the radical deregulation of Wall Street by the market-friendly U.S. government. While the average homeowner was smashed, that same U.S. government bailed out Citigroup, which packaged its toxic mortgage-based securities. The result has been an increase in the wealth of the superrich at the expense of just about everyone else.

In 2011 the net worth of the Forbes 400 increased by $200 billion and now totals over $1.5 trillion. The wealth of the richest 1% of Americans is now equal to the total wealth accumulated over a lifetime by the bottom 90%. It is time to deep-six the word democracy and acknowledge that a plutonomy is what we have become.