Life in the Rear-view Mirror

Goodbye Democracy, Hello Plutocracy

A plutocracy is nothing more than rule by the rich. Wealthy families have always held a lot of sway with government, but never, in recent times, to the extent we are witnessing now. The change from a functioning democracy to a plutocracy seems to have crept up on us slowly and stealthily. The first indication of change was the assassination of John Kennedy, a populist president with liberal, or socialistic ideas that didn’t sit very well with the defenders of capitalism, or to put it more correctly, the defenders of privilege. If there was any doubt then, there should not have been any left when Robert Kennedy was assassinated a few years later, on the campaign trail, because he clung to the same ideals as his brother.

Capitalism created enormous wealth, which became concentrated in the hands of the few – the captains of industry – and they gradually took firm control of the levers of political power, just as President Eisenhower had feared, and cautioned against. Since then, Presidents could govern the country as long as they remembered who was in command. However, not many people saw the murder of the Kennedy brothers as the beginning of the end of democracy. Now it’s abundantly clear to most, but back then it wasn’t.

The consequences of this political shift are many. The first is that the rich got richer and the poor got poorer. Moreover, the corruption that it caused in political institutions has had a demoralizing effect, on society as a whole, and on the young in particular. Many bright young people have given up on the political process and have become disenfranchised. In the U.S. only about half of eligible voters turn out to vote during presidential elections, and only about one third for mid-term elections. They have also given up on the American dream!

With global youth unemployment so high, more than 25%, and in some countries even close to 60%, our new political order has created what has been called the lost generation – an entire cohort of young people who have stopped believing in their governments, society, and themselves. The future of any country depends on the economic contribution of the young to sustain those unable to work. They are wasting their best productive years living with their parents and giving up any hope of future work. They will be ill prepared for the shock that the ruling classes have in store for them.

A quick look at the European situation reveals some interesting results. In Germany, youth unemployment is below 10%. In Italy, Greece, and Spain it is in the range of 40-60%, and in France, Sweden, and the U.K., it is in the 20-30% range. Germany, with its strong work ethic and pro-labour policies has the best unemployment rates in Europe. Italy, on the other hand, led until recently by a corrupt media mogul, has the worst youth unemployment numbers in Europe, after Greece and Spain. In the U.S., where the national unemployment rate has recently been hovering near 7%, that for unemployed youth is close to 20%. These young people will face another shock when they reach retirement age – no pensions.

Politicians are already making it quite clear that the social safety net that Americans have in place today will not survive. The reason is that the ruling class will not allow tax rates to be increased, particularly for the rich – those who can most afford to pay. The only one to speak out on the need to raise taxes on the rich was billionaire Warren Buffet: one of the very few with a social conscience. He decried the fact that his secretary pays proportionately more taxes than he because the rich have many tax loopholes that don’t exist for the working class. Soon after his public statement, other billionaires denounced his action and defended their privileges publicly.

As long as the ruling class is permitted to buy their politicians outright, tax reform in the U.S. will not happen. Therefore, it’s almost a foregone conclusion that the so-called entitlements for working Americans will slowly diminish, until they achieve parity with working Mexicans, to the south. Canada is not much better off. Both Americans and Canadians will be looking to very interesting times over the next few decades, especially the middle class.

A few years ago I attended a lecture by the outspoken Noam Chomsky, MIT professor emeritus and one of my favourite authors because he is not afraid of telling it like it is. In effect, he told us that what’s been happening in American politics and government is exactly what the wealthy families had decided in the 1970s. He mentioned the name of the accord, but I can’t remember it, and it's not the kind of thing that will pop up in an Internet search. The captains of industry had banded together to reverse the nation’s liberal policies. First on their list was the power of the unions, and they dealt with that very swiftly. Today’s unions are a mere shadow of their former selves.

Second was the transfer of wealth from the public to the private sector. Privatization accomplished that objective also in quick order. Government assets in financial institutions, electrical utilities, railways, and other industrial concerns, which were built up during the war years and those immediately after, were privatized – sold to the private sector for a song. For the first time in the last one hundred years, governments have net negative assets – everything of value has been siphoned out by the wealthy.

Third was deregulation. It started with the financial sector and spread to everything else. Unfortunately, deregulation brought us the near meltdown of the global financial system, in which trillions of dollars were transferred from government coffers into the hands of the wealthy, in what has been the biggest swindle in history. The big banks paid out humongous bonuses to the people who brought them to the brink of disaster. It was a well-orchestrated financial opera. The rich knew that the government would bail them out if they got in trouble with their speculative practices that brought them outsized profits and bonuses. How did they know that? They control the government!

Fourth was globalization, which Chomsky said was a new form of imperialism, which utilizes strategies of foreign economic conquest, backed up by violence when necessary. This brings to mind the incident in Africa a year ago when police, who were on the payroll of the mining company, gunned down striking miners, who were risking their health and their lives for subsistence wages. That’s the end point of laissez faire capitalism! Globalization, he said, was pure strategy for the enrichment of the super rich.

According to him, Barak Obama was not the solution to what ails America and its allies. The solution lies in the hope of popular movements striving to create integration and international cooperation. But this has no chance of succeeding because the powers that be have already pushed government to reduce individual freedoms and civil liberties, in the guise of fighting international terrorism. That is, in the future, any individual or group working peacefully to help create a better world can be arrested under suspicion of terrorism and held indefinitely without a fair trail.

Welcome to rule by oligarchy!

If you still have any lingering doubts, read Thomas Piketty’s book, Capital in the Twenty-First Century, published in 2013. He studied income and wealth distribution in France, Britain and the U.S. since the eighteenth century, and his conclusion leaves absolutely no doubt as to where we are headed. And, if you are concerned about his credentials, he is professor at the École des Hautes Ėtudes en Sciences Sociales, and professor at the Paris School of Economics.