Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

22 February 2010

Faux Democracy

Questioning Fundamental AssumptionsOur Ruling Class
Two Misconceptions about our Ruling Class


Faithful readers of this blog may be wondering why I’ve produced only three new posts in 2010. The reason is I’ve been reading and thinking hard. I’ve been trying to figure out why, after such a promising new beginning in November 2008, our country has gone so wrong.

We all know the symptoms. I’ll just mention one. Apart from Social Security, Medicare is the most popular social program we have. It has kept tens of millions of our elders out of poverty and saved their families from financial burden and hardship. Poll after poll shows that Americans would like some sort of “public option,” i.e., expanded Medicare, to solve our health-care crisis.

Yet after a century of trying, we don’t have it. What we have is monstrous bill that is now on life support. Even if passed, it would do as much to enrich private intermediaries as to solve the health care crisis and cut costs. Everyone knows this, which is why the bill is on life support. It’s also why the President has proposed giving the government power to roll back health-insurance premiums.

As with health-insurance, so with our other serious problems―energy obsolescence, educational decay, and infrastructural rot. (I won’t even mention climate change.) These problems have been with us for decades, and we are making scant progress in solving them. The only bright spots are some energy initiatives in the private sector (which pale in comparison with China’s) and some promising experiments in education at the state and local levels.

So what’s the cause? Why are we in national paralysis when everyone knows we’re in crisis? Why can’t we do anything?

The conventional answers don’t seem robust enough to explain our spectacular failure, as a society, to come to grips with the type of serious problems we have always overcome before. Sure, our Founders gave us a skewed Senate in which bare land counts for more than people. Sure, the filibuster rule allows a vocal and intransigent minority to put monkey wrenches in our legislative gears. Sure, our media, with some exceptions, are lazy and lack insight, and our incessant digital noise keeps most of us from any semblance of serious thought.

But our Constitution and the filibuster rules have been with us for most of our history. We have always been a politically chaotic, noisy, and unruly society. So why have we hit a wall now, and why does that wall seem more insuperable than the problems we face?

Questioning Fundamental Assumptions

In order to understand fundamental flaws, you must question fundamental assumptions. Two in particular stand out.

    Our Constitution as Scripture
The first fundamental assumption worth re-examining is our abject reverence for our Founders. We treat the Constitution they wrote like scripture. No one points out its glaring flaws, let alone questions its adequacy to our era. Evangelical Christians are more skeptical of the Bible than our leaders and most of our lawyers are of our Constitution. Even in institutions of higher learning, which ought to know better, we give it far more adulation than analysis.

Yet we know our Constitution had and has serious flaws. At the outset, it disenfranchised a majority of our population: women, African-Americans and native people couldn’t even vote. It recognized and institutionalized slavery. And today, in combination with the extra-constitutional filibuster rule, it permits about a tenth of our people to control the entire country. The small states that can control us are, by and large, the least populated, least productive, and least well educated. Maybe that’s a little too much check and not enough balance.

    The Myth of Democracy
Despite these glaring contradictions between our Constitution and our supposedly fundamental values, we have always assumed we live in a democracy. But do we? We put up with the obvious consequences of unpopular rule, including the multi-decade long failure to extend Medicare. But we rarely stop to think. If poll after poll says we want one thing, and if time after time we get another, do we the people really govern?

Thinking about these questions gets us quickly into culture. Unlike law, culture changes very slowly. We adopted the Civil War amendments (the Thirteenth through Fifteenth) in 1865. Those amendments say―in words as clear as any ever drafted by lawyers―that African Americans and native Americans, among others, are legally the same as the rest of us. After 145 years, we have elected an African-American to lead us. Yet our native Americans are still largely living apart, in reservations, mostly below the poverty line. So are many of our African-Americans, who live similarly isolated and poverty-damaged lives, in “reservations” of their own, which we call “inner cities” or (less euphemistically) “ghettoes.”

But African and native Americans are just small minorities. What about the majority of our population?

Women won the right to vote with the Nineteen Amendment in 1920, ninety years ago. Yet after nine-tenths of a century we have only two women on the Supreme Court. If population is any guide, we should have five. We have seventeen female senators out of 100; we should have 51. In the last presidential election, women were so desperate for leadership of their own that many of them backed a candidate unqualified by temperament, experience and analytical skill. Yet, in the end, women made the difference by putting Barack Obama in the White House.

These undeniable facts of life show how far culture can diverge from law, despite having centuries to adapt. Words on paper are not reality, however much we may revere them, and however much we may wish them to be true. We really ought to know that: we fought our bloodiest war ever to bring the promise of equality in our Declaration of Independence closer to reality, and we still aren’t quite there yet, 145 years after the guns fell silent at Appomattox.

Our Ruling Class

So if our our culture doesn’t necessarily reflect our law, and if our Constitution was and is fundamentally flawed, who really rules us?

An extraordinary recent TV ad provides a good clue. As I pointed out recently, most commercial advertisements sell the products or services of a single company, not ideas. But not this one. Aired during the Vancouver Olympics, it presents a single message unrelated to any specific product or service or any single company.

Our oil and gas industry, it says, provides over nine million jobs. The implication is clear. The Great Recession cost us eight million jobs. The oil and gas industry boasts that it alone accounts for more than that. Damage or cut that industry, it implies, and the results will be catastrophic. So if you want work, follow us. We rule. The ad is “signed” by the American Petroleum Institute.

If you asked for a textbook demonstration of who rules us and how, you could not get a more direct answer. Corporations rule―not all of them, just the big ones that control our industrial, commercial, transportation and telecommunication infrastructure.

How do they rule? The helpful ad itself tells us. They rule by providing jobs. If you work for a living, your daily bread depends on them.

Having lost their jobs with little hope of getting them back, millions of Americans now feel this truth acutely. Even if you don’t work for one of the ruling corporations, you depend on the cars, trucks, airplanes, fuel, computers, radios, televisions, telephone lines, cell phones, medical products, wonder drugs, and hospitals (among other things) that they produce or control.

That’s the real reason for our auto bailout. It’s not that GM and Chrysler were crucial parts of our culture or technological infrastructure. But millions of workers and sympathetic political leaders (including the President) did not want to lose all those jobs. And the ruling class did not want such an important part of our industrial base to come from Germany, Japan and South Korea. National boundaries and nationalism still factor into the ruling class’ thinking, although their significance is rapidly waning in our globalized economy.

But jobs are not the only way the ruling class rules. It also rules directly by buying politicians and indirectly through propaganda.

Our flawed Constitution makes it so much easier to buy our “leaders.” Small minds from small states come cheaper because their populations are smaller and less attentive, and because there are fewer and smaller local interests to compete in bidding for politicians’ votes.

When you have only to buy people who represent about one-tenth of our population and GDP, you get a bargain. So filibusters have been on fire sales for about a decade. Besides, people in the twenty-one tiniest states that can rule by filibuster generally are less productive and therefore harder up economically. Offer them jobs, and they’ll follow you anywhere.

Neither offering jobs nor buying elected officials exhausts the ruling class’ means of governance. When all else fails, it has the most powerful and effective propaganda machine in human history. Without working up a sweat, it can make close to one-third of our people blame Barack Obama for decades-old problems, as well as a deficit created by the last administration and the Great Recession. Without taking ownership of outright lies, it can exploit beliefs that the President is not a U.S. citizen, that he is a Muslim, and that his goal is to redistribute the wealth of this nation to the poor and minorities exclusively, and, by so doing, destroy our vibrant public sector. The effectiveness of this propaganda machine, which I have noted earlier, would make Hitler and Stalin blush, not with shame but with envy.

Our propagandists (whose profession has adopted the modern euphemisms “public relations” and “communications”) have become so successful and so arrogant that they no longer even try to conceal their aims and methods. The American Petroleum Institute ad is a case in point. It is about as subtle as the Stalinist and Maoist propaganda of an earlier and more innocent age.

Another case in point is the now-discontinued series of Intel ads, on which I have already commented. Their message, stated indirectly, was simple: “We (the executives at Intel) are smarter than you. We make the brains of your computers, which you can use but cannot ever hope to understand, let alone design and build. You depend on those brains for your work, your communication, and now even your social life. So don’t bug us and don’t question us. If we elbow aside a smaller rival like AMD, we’re doing it for your own good. We know better.”

If you can find a better example of Big Brother in twenty-first-century America, please let me know. The only surprise is that Big Brother lives in the private sector, not in dreaded government. Our long-dead Founders, who tied our government in knots so it could never threaten us, would be surprised at this huge threat from the private sector, which they utterly failed to predict. So would George Orwell.

The irony is how the ruling class has used our own fundamental values, ju-jutsu style, to undermine popular rule. Periodically, the Supreme Court has become an important instrument of its control. The greatest triumph came during the Gilded Age, when the Court decreed that corporations are “persons” able to claim rights under the Civil War Amendments. Everyone knew, of course, that the nation had fought its bloodiest war and adopted those amendments to give people―specifically African and native Americans (but not yet women!)―the human rights of citizens. But the Court decreed that corporations, which are abstract creations existing only on paper, have the very same constitutional rights, which state laws cannot take away. So much for states’ rights to regulate corporations!

As a product of our second Gilded Age, our current Supreme Court just decided Citizens United. From the notion that corporations—which exist only on paper—have human rights, the Court “derived” its corollary: that corporations can spend as freely as they like to influence voters. That decision gives a large part of our ruling class (the rich and powerful people who control and manage corporations) new and enormous resources for propaganda.

You can bet that no assembly-line worker or middle manager is going to decide how that money is spent. Shareholders ultimately might, but it will take decades of lawsuits before their “rights” in that regard are settled. In the meantime, any group of like-minded members of the ruling class who sit on the board of an ExxonMobil or an Intel can use the enormous wealth acquired from buyers of their products to tell those buyers how to vote. And (unless the Court’s membership changes) it’s just a matter of time before the principle of Citizens United undermines all limits on corporate benevolence, allowing the profits you make possible when you buy your daily necessities to be funneled directly into campaign contributions.

All this is a modern, more subtle variant of the company store. Everything you buy for your daily existence generates corporate profits, over which you have no control. The owners and officers of the corporation can then use those profits to propagandize you to do what they want. If you think this is the way to make democracy flourish, think again. Caesar with his bread and circuses was a piker in comparison.

As far as I can tell from my hit meter, most readers of this blog are college students. For many of them, it may come as a shock to learn that we live in a faux democracy. But we do. From our founding as a nation, we have always had a ruling class, and it has always governed behind the scenes. Over the years it has become bigger and more diverse in gender, ethnicity and views, but it is still there, and still very much in control. Neither the abolition of slavery, property requirements for voting, and the poll tax nor women’s suffrage changed that. Maybe having a ruling class is an inevitable part of the human condition. Much of our current paralysis derives from its increasing diversity and dissension within it.

These facts of life are too depressing―and to important―to discuss or absorb in a single essay. So I’m going to explore them in a series of essays, outlining the history of our ruling class, how it operates today, and the consequence of how it operates. In a final essay, I will explore the chance and risk of real change through the only possible means: changing the minds and the members of the ruling class. I hope I can come up with some means besides gradual infiltration by better minds―a process which, although now ongoing, might take decades.

Two Misconceptions about our Ruling Class

But before ending this essay, I’d like to debunk two common misconceptions about the ruling class in America. It is not monolithic, and it is not a conspiracy. It is open in the same way (perhaps more so) as the leadership structures in Vladimir Putin’s Russia and so-called “Communist” China are open.

If you have great talent, political and diplomatic skill, and if you don’t rock the boat too much, you can find a place on board. Bill Gates, after all, is part of the ruling class although the company that put him there (Microsoft) did not exist forty years ago. Other people are part of it because their families or the corporations they run or control have been part of it for generations.

The fluidity and openness of our ruling class are something on which much more need be said. A large part of our success as a nation stems from these characteristics, as applied to newcomers as diverse as Andrew Carnegie, Bill Gates and Barack Obama. But a large part of our current dilemma is the waning of openness and, with it, our flexibility as a nation.

As for conspiracy theories, forget about them. You don’t need to meet in secret and conspire when you rule. The ruling class and its impact on America are obvious. They are as clear as the fact that Wall Street nearly destroyed the global economy (not to mention our own) yet so far has managed to fend off not only any meaningful regulation of its future conduct, but also any attempt to limit its obscene bonuses. No one in the ruling class need hide, and few do today. Lloyd Blankfein has become a sort of dark celebrity.

Besides, conspiracy is old hat. Our ruling class today is the broadest and most diverse in the world, indeed in human history. It is no longer defined by family (the Rockefellers, Astors, etc.), location (Northeast), ethnicity (WASP), or social-club membership (Masons or Elks). All those stories about secrets clubs and handshakes are red herrings.

Here a concept from economics and antitrust may be helpful. Section 1 of our Sherman Act prohibits conspiracies in restraint of trade. For example, suppose a bunch of private contractors gets together in a smoke-filled room and decides who will bid what on a public project, or who will “win” the bid. That’s a criminal conspiracy and a civil offense.

But suppose instead each contractor, separately and independently, calculates how much the project will cost, decides that 10% is a reasonable profit, and ends up bidding precisely the same price, without ever conferring or even communicating with any other contractor. The economic result is the same as a conspiracy―identical bids―but the mechanism is different. Economists and antitrust lawyers call this mechanism “conscious parallelism.” It is perfectly legal and occurs all the time. (Just ask yourself, for example, why rival airlines often offer identical air fares between the same pairs of cities, sometimes down to the penny. If they agreed on the rates, that would be a crime, but they don’t have to agree. They just have to calculate the same costs or decide independently to match each other’s fares, so none loses market share.)

Members of our ruling class operate in this way, with conscious parallelism, not conspiracy. They don’t need to conspire because they all think alike. They all have land, wealth and investments to protect. They all want to keep workers’ salaries and benefits (including health care) as cheap as possible so they have more profit for themselves. They all want low taxes, so they can keep as much of the money they make as possible, sometimes to re-invest in their businesses, sometimes (as on Wall Street) to make themselves rich. They want as little regulation as possible so they can operate without restraint and make their own mistakes. They want free trade so they can build their empires and lower the cost of capital and labor by transferring operations abroad. (Do you recognize the theme of a particular political party here?)

Of course they disagree at times. That disagreement and its consequences will occupy much of a future essay. But at the same time as our ruling class has become more diverse, older parts of it are becoming more entrenched. Oil, gas, and coal are all nineteenth-century industries. Many of their leaders are trying hard to stop the birth of wind and solar power and the rebirth of nuclear energy. Many are consummate deniers of climate science, about which they know literally nothing, except that it might provoke social responses that could threaten their entrenched business models. For them, that’s enough to mount determined opposition, including propaganda.

So the “creative destruction” for which our nation has been famous is slowing down as various vested interests, well represented in our ruling class, object to being destroyed. In the final analysis, maybe that’s why all human societies eventually decay: like older individuals, they get hardening of the arteries. But that, too, is a subject for another essay.


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