America Is Self-Destructing: Wealth, Greed, and Ideology Trump Common Cause and Social Justice

By Thomas P. Wallace

Countries that at different times in history were among the worlds greatest powers, such as Sweden, the Netherlands, France, Britain, and Germany, have gradually shifted their sights either in the wake of defeat or after protracted periods of grappling with decline, from winning the great power sweepstakes to topping the lists of nations offering the best quality of life. David Rothkopf


One critical measure of the health of a modern democracy is it ability to legitimately extract taxes from its own elites. The most dysfunctional societies in the developing world are those whose elites succeed either in legally exempting themselves from taxation or in taking advantage of lax enforcement to evade them.
Francis Fukuyama

Today, the United States has less equality of opportunity than almost any other advanced industrial country. Study after study has exposed the myth that America is a land of opportunity.
Joseph E. Stiglitz


Tea Party constitutionalism and conservative originalism more generally are less interested in the Constitutions actual words (or the real intentions of the Founders) than they are in rolling back democratic advances that have been made since 1787.
E. J. Dionne

• Language: English
• Publisher: AuthorHouse
• Release date: Jun 14, 2013
• ISBN: 9781481760850

Thomas P. Wallace

Thomas P. Wallace has served higher education for over three decades as a professor and academic administrator. His last position was President of Illinois State University.

Book preview

AuthorHouse™

1663 Liberty Drive

Bloomington, IN 47403

www.authorhouse.com

Phone: [phone]

© 2013 by Thomas P. Wallace. All rights reserved.

No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author.

Published by AuthorHouse 06/07/2013

ISBN: 978-1-4817-6087-4 (sc)

ISBN: 978-1-4817-6086-7 (hc)

ISBN: 978-1-4817-6085-0 (e)

Library of Congress Control Number: 2013910425

Any people depicted in stock imagery provided by Thinkstock are models, and such images are being used for illustrative purposes only.

Certain stock imagery © Thinkstock.

Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

Contents

Preface: Disappearance of American Exceptionalism

The Narrative: America Is Self-Destructing

•   Evolutionary Patterns of Social Orders and Human Behavior

•   Unequal, Inequitable, and Shameless Distribution of National Wealth

•   Loss of Middle Class Purchasing Power and a Stagnant Economy

•   Lessons Not Learned from History: Wise Investments of National Wealth

•   Trickle-Up or Trickle-Down Economics?

•   Dwindling Professional Ethics and Integrity

•   Missing in Action: Social Cohesion, the Work Ethic, and Altruism

•   America’s Self-Destructive Journey: One Chapter of Western Civilization

•   Truth as Defined by the Prevailing Cultural Mentality

•   Polarization of American Politics and Human Values

Chapter I. America’s Corrupt, Dysfunctional Society: Loss of Cultural Values, Ethics, and Integrity

•   America’s Post-1970s Theme: Greed Is Good

•   Shifting Cultural Values and the Pursuit of Wealth

•   Irrational Priorities and Failed Governance

•   US Health Care: Partisan Politics, Bad Economics, and Anti-Altruistic Values

•   Health Care’s Outrageous Pricing and Egregious Profits

•   Environmental Policy in an Era of Excessive Greed

•   Big Money Financing Politics: A Gift Economy of Influence

II. Political and Economic Exploitation of the Middle Class: Demeaning the Principles of Social Justice and the Public Good

•   Political Economics and Philosophy of New Republicanism: Anti-Altruism

•   Excessive Income Inequality: Statutory vs. Effective Tax Rates

•   Creative Tax Schemes and Loopholes

•   Money, Privilege, and the Power of Politics

•   Knowledge Deposed by Infotainment and Anti-Intellectualism

•   The Politics of Obstructionism

•   American Democracy on the Ropes

III. America’s Socio-Economic Stagnation: Debilitating Complexity and Misuse of National Wealth

•   Struggling with the Forces of Cultural Complexity

•   Complexity and Lack of Resources: Contributors to Economic Stagnation

•   Realities and Costs of Creeping Societal Complexity

•   The Price of Civilization and Achieving the Public Good

•   Resource Challenges and Political Liabilities

•   Great Deformations of a Crippled National Economy

•   Excessive Wealth Inequality: What is Wrong With Public Policy?

IV. Demise of the Middle Class Economy: Conflicting Economic Theories and Political Agendas

•   Middle Class Journey: Great Depression to Great Recession and Beyond

•   Decline of the Middle Class and Corporate Citizenship

•   Degradation of the US Wage, Salary, and Benefit Structure

•   Poverty in America There is hay in the barn but we’re not feeding the horses.

•(k) Retirement Plans: This Monster Is Out of Control

•   Failed Public Education

•   Federal Taxes Too High? But, Relative to What?

•   The Pathway to Self-Destruction

V. Equitably Sharing Productivity within a Capitalist Democracy: Fundamental to Common Cause, Social Justice, and Economic Growth

•   Fluctuations of Cultural Values and Income Inequality

•   America’s Two Gilded Ages and The Global Economy

•   The Fallacy of Self-Correcting Free Markets

•   Individualism: Rights and Freedoms vs. Responsibilities to Social Justice

•   Inequality and Social Cohesion, Trust, and Status

VI. Narcissistic Individualism and Darwinian Economics: The Role of Social Capital and Human Behavior

•   Uncoupling and Disengaging from Community Involvement

•   Declining Religious, Social, and Professional Involvement

•   Mysterious Social Disengagement: Pursuit of the Good Life

•   Human Nature, Values, and Behavior: Variables of Social Change

•   Values and Morality Affecting Economic Behavior

•   Individual Motivations, Aspirations, and Responsibilities

•   Darwinian Economics

•   The Influence of Spiritual Expectations on Economic Advancement

VII. Post-1980s New Republicanism: The Culture of the Old South Collides with the Rights and Freedom Revolution

•   The South’s Great White Switch: Culture Solidarity and Civil Rights

•   Post-1950s Reorientation of Southern Politics

•   Foundations of New Post-1980s Republicanism

•   Newt Gingrich: Architect and Catalyst for a New Republican Culture

•   Shifting Voter Values and Priorities

•   The Political Partisan Divide

•   Summary of Major Pew National Findings: Partisan Polarization

•   New Republicanism and America’s Human Rights Revolution

•   The Rights Revolution Wins Big in 2012 Elections

VIII. Big Money’s Grand Scheme and the Great Recession: Seizing Economic and Political Power (1970s-present)

•   Origins and Mechanisms of Big Money’s Grand Scheme

•   Consolidation and Solidarity via the Influence of Wealth

•   Washington’s Post-1970s Political Culture

•   Dismissing the Bretton-Woods Agreement and Glass-Steagall Legislation

•   Post-Glass-Steagall Legislation Era (2000-2008)

•   Goldman Sachs and the Big Short

•   The Role of Credit Rating Agencies

•   Aftermath of the Great Recession

IX. Keynesian Economics to the Rescue… Again! From Roosevelt to Obama

•   Rebounding from the Great Depression

•   Post-1970s Abandonment of Keynesian Economics

•   The Return to Keynesian Economics: The Bush-Obama Era

•   Bush and Obama Address the Nation’s Financial and Economic Crisis

X. Shifting Philosophical Currents of Thought: Self-Interest Defines Truth and Knowledge

•   The Politics of Global Warming

•   Shifting Human Values: Fabricating Truth and Altering Political Culture

•   Formulation of Political Thought, Judgment, and Choice

•   Identifying Variables of Truth: Relationships to Cultural Dynamics

•   Defining Truth and Wisdom as Influenced by Adopted Values

•   Western Civilization’s Six Philosophical Currents of Thought

•   Cultural Roots of American Society’s Philosophical Basis of Truth

XI. Comprehending America’s Cultural Dysfunction: The Science of Complex Systems and Chaos Theory

•   The Nature and Complexity of Societal Functional Systems

•   The Elements and Science of Complex Systems

•   The Origin and Mismanagement of Human Complex Systems

•   The Great Recession: Mild Randomness of Economics Becomes Chaos

Notes

Athens, Sixth Century BC

At the base of this democracy and this culture lies the production and distribution of wealth. Everywhere this is the foundation . . . . Supporting all society is the peasant, the poorest and most necessary of men. But [man] observes that the goddess of liberty is no friend to the goddess of equality, and that under the free laws of Athens the strong grow stronger, the rich richer, while the poor remain poor. Individualism stimulates the able, and degrades the simple; it creates wealth magnificently, and concentrates it dangerously. In Athens, as in other states, cleverness gets all that it can, and mediocrity gets the rest. The landowner profits from the rising value of his land; the merchant does his best, despite a hundred laws, to secure corners and monopolies; the speculator reaps, through the high rate of interest on loans, the lion share of the proceeds of industry and trade. Demagogues arise who point out to the poor the inequality of human possessions, and conceal from them the inequality of human ability; the poor man, face to face with wealth, becomes conscious of his poverty, broods over his unrewarded merits, and dreams of perfect states. Bitterer than the war of Greece with Persia, or of Athens with Sparta, is, in all the Greek states, the war of class with class . . . . The essential cause of the Roman conquest of Greece was the disintegration of Greek civilization from within. No great nation is ever conquered until it has destroyed itself.

—Will Durant, The Life of Greece

Preface

Disappearance of American Exceptionalism

The United States reached a pinnacle of exceptionalism during the period from World War II through the mid-1970s. America came to the aid of the free world and, after the war, led a restructuring of economic and financial institutions and revitalization of the world economy. America exhibited exceptionally broad-based industrial and human capabilities during the war and high moral values and wise economic policies afterward; in turn, the postwar global economy was exceptionally profitable for the United States.

Additionally, historic economic gains of the period from post-WWII through the 1970s brought unprecedented economic prosperity to the United States, which was equitably shared among all income segments and significantly improved the average well-being of the population. Unfortunately, this era of preeminent global exceptionalism has been gradually squandered since the 1970s, as wealth, greed, and ideology have gradually suffocated attempts to promote human rights, social justice, and the common good. The robber barons re-emerged, and America underwent a transition to a second Gilded Age, which brought forth the Great Recession, a rerun of the Great Depression.

Clearly, American capitalism remains exceptional by virtue of its spirit of innovation, entrepreneurship, global economic achievements, and creation of abundant wealth. However, its current international ranking among the twenty richest nations of the world in providing for the broad-based well-being for its citizens is dismal, discouraging, and immoral. Political and corporate leaders continually preach about America’s exceptionalism, but apparently their criteria, as members of the Big Money class and as political power brokers, differ substantially from those of the poor and middle class. As the potential for America’s greatness continues to wither, its performance since the 1980s, as experienced by average citizens, does not measure up to greatness, much less exceptionalism.

Consider, from a middle class prospective, current international data from the Organization for Economic Cooperation and Development (OECD), which rank US obesity, life expectancy, infant deaths, teenage births, homicides, imprisonments, and general health and social problems as the lowest among the twenty richest nations. Other rankings were second lowest for child well-being and illegal drug use and fourth worst for math and literacy of fifteen-year-olds.¹

In addition to having the highest income inequality, according to the OECD, America’s financially related rankings, based on a nation’s percentage of gross domestic product (GDP), include the largest budget debt and lowest gross public spending, taxes paid, and foreign aid. Meanwhile, corporate tax revenues as a percentage of GDP have steadily declined from just less than 6 percent in the early 1950s to about 1 percent in 2009. The nation’s current net taxes paid, as a percentage of GDP, is less than the post-WWII average.² Thus, by an internationally adopted standard, the current net American tax burden is a light load for both individuals and corporations.

But how, during the 1950s and 1960s, was the United States so successful in creating and equitably sharing great prosperity with those citizens who created it, only to see this progressive era fade into the Great Recession? Well, fifty years ago, the United States and European nations collected about the same percentage of total taxes as a percentage of GDP: about 30 percent. However, since 1965, this percentage has remained constant in the United States (that is, no increase in the percentage of GDP devoted to taxes), while European nations increased their percentage from 1965 to 2009, on the average, by 10 percent.³ Consequently, compared to the United States, at least nineteen of the world’s most developed nations have a greater degree of income equality, assume a higher tax responsibility, and consistently attain higher levels of well-being for a variety of problems across their total populations.

But what American politician could survive an election process preaching a message of severe income inequality? No one could, despite the fact that this fundamental problem with the US economy has denied the middle class a fair share of the nation’s historic prosperity, thus lowering the nation’s collective purchasing power to the extent of creating a recessionary economy. What corporate executive could survive telling stockholders they should receive a lower return on their investments so as to increase middle class wages, which have been stagnant for three decades? Furthermore, what political party could survive with a message that, according to accepted international standards, Americans should be paying higher taxes to finance world-class public education, health care, and public and social services?

Obviously, the answer to each question is none. Such propositions are counter to the prevailing theme that greed is good for America and to the reality that truth is what a culture wishes it to be as opposed to what it actually is. Such is the myth of trickle-down economics of the post-1980s, associated with the misconception that a free market economy promotes the general interest of the people. In 1864, Charles Dickens warned in Hard Times, I am sure you know that the whole social system is a question of self interest. What you must always appeal to is a person’s self interest.⁴ In The End of Laissez-Faire (1926), John Maynard Keynes also disagreed with those who saw free markets as inherently providing just resolution among competitive forces:

By the working of natural laws individuals pursuing their own interests with enlightenment in conditions of freedom always tend to promote the general interests… . It is not true that individuals possess a prescriptive natural liberty in their economic activities. There is no compact conferring perpetual rights on those who Have on those who Acquire. The world is not so governed from above that private and social interest always coincide. It is not so managed here below that in practice they coincide. It is not a correct deduction from the Principles of Economics that enlightened self interest always operates in the public interest. Nor is it true that self interest generally is enlightened; more often individuals acting separately to promote their own ends are too ignorant or too weak to attain even these. Experience does not show that individuals, when they make up a social unit, are always less clear sighted than when they act separately.⁵

The intent of this volume is to draw attention to and examine major elements of America’s escalating self-destructive journey of the past half-century, which have imposed historic, debilitating socio-economic consequences on all but the extremely rich. The nation’s past internationally recognized and deserved image of having achieved a high degree of exceptionalism has become substantially diluted. The dominant cultural driving forces of this socio-cultural transition have been an infectious, greedy materialism created by historic post-World War II global prosperity and a political right-wing response to the post-1960s progressive civil and human rights revolution. As a consequence, interrelated and interdependent social, economic, and political forces have attacked, manipulated, and demeaned fundamental democratic principles. The ideological justification offered represents a self-serving and self-righteous brand of narcissistic individualism, a false and perverted sense of compact conforming perpetual rights… that individuals possess a prescriptive ‘natural liberty’ in their economic activities.

Restoring American exceptionalism begins with renewing the altruistic values of a societal-oriented individualism, re-establishing higher individual and professional ethics, and a recommitment to the principles of Athenian social justice and the public and common good. After all, these are the cultural characteristics that originally created US exceptionalism.

The Narrative: America Is Self-Destructing

A society does not ever die from natural causes, but always does from suicide or murder—and nearly always from the former.¹

Arnold J. Toynbee

Since the time of ancient Greece, each of the world’s most successful civilizations has ultimately reached a plateau of economic prosperity and cultural advancement, acquiring a seemingly limiting degree of maturation, a prolonged and unresolvable economic stagnation, a declining middle class, and ineffective governance. Such cultural stagnation and degradation are representative of Toynbee’s breakdown stage of cultural development and a precursor to the deterioration stage. Over the last half century, America has gradually accumulated a profile of cultural characteristics representative of the self-destructive pathway followed by past great civilizations and is approaching its limiting degree of maturation and the zenith of its global prominence.

America’s self-destruction is a consequence of abused historic prosperity; excessively self-oriented, self-indulgent individualism; and failed human values and behavior, which have gradually demeaned and diminished the ideals of Athenian democracy and the ethic of principle, thereby stifling the attainment of social justice and the maintenance of the common good.

In its quest for unremitting socio-economic prosperity and preeminent global influence, America has acquired a level of complexity, disorder, and dysfunction that appears to exceed humankind’s capabilities to tame and manage. American society’s degradation has been extensive, severe, and mostly ignored; it is also expanding at an exponential rate. The nation’s unethical business, political, and financial systems; corporate domination of politics; ineffective government; record individual and public debt; rampant incivility; and record inequity of wealth distribution represent extreme systemic moral shortcomings and a failure of fundamental societal institutions.

Corresponding flawed behavioral traits reflect severely defective human attitudes, values, ethics, and priorities, which, for mature societies, have historically led to major self-inflicted, culturally degrading consequences. Current American symptoms include the rationale for conducting decades of elective foreign wars; the ethology of the Wall Street financial collapse; the nation’s inability to unify after the Great Recession in a spirit of common cause; continuing barriers to racial, ethnic, and gender inclusiveness; and the lack of response to the decades-long erosion of the nation’s infrastructure, sliding quality of public education, and lowered professional ethics and standards of conduct.

Such a striking, repetitive historical profile has motivated sociologists and historians over the ages to seek explanations for what is often described as societal self-destruction. Accordingly, in the second decade of the twenty-first century, scholars are questioning the continued supremacy of Western civilization. In 2011, Niall Ferguson suggested, We are living through the end of 500 years of Western ascendancy.²

The financial crisis that began in the summer of 2007 should therefore be understood as an accelerator of an already well-established trend of relative Western decline.³

Arguably, the most shameless and revealing defective cultural characteristic of America’s soul is manifest by the national ongoing debate as to whether the approximately forty to fifty million citizens who are without health insurance should be guaranteed health benefits. The resulting physical pain, emotional stress, social anguish, and lost socio-economic opportunities that have been inflicted upon so many Americans by the most prosperous nation in the world is the personification of a selfish, materialistic society that has lost its bearings, a breakdown of public morality.

In 2012, a Harvard University report demonstrated that extending the Medicaid program in three states for low-income adults not normally eligible for Medicaid, but who would be included under a provision of the Affordable Care Act, scheduled to be implemented in 2014, would result in a 6.1 percent decline in the death rate. This corresponds to 2,840 fewer deaths per year for every 500,000 persons included in the program.⁴

However, Republicans uniformly vow to repeal or cripple implementation of the act as being unaffordable and an unwise, improper government takeover of health care, despite the evidence and common sense that universal health care would prolong the lives of many citizens—and ignoring the fact that the nation occupies the lowest life expectancy ranking among the twenty richest nations. All nineteen of those other nations provide their citizens with universal health care.⁵

Unfortunately, the lack of empathy for those unable to afford and secure adequate healthcare is consistent with the same indifference of the general public, corporations, and political leaders toward the forty-four million Americans, or 14 percent, who live in poverty. This nation is badly served by such a warped, self-oriented mentality, a gross lack of empathy that has infected American society. More broadly, the nation’s precipitous decline among the world’s most prosperous nations during the last three decades to low international rankings of health, education, and public support for improving the living standards of average people should provide a striking wakeup call for American society.

If Toynbee viewed twenty-first-century America’s time of troubles, he (along with other early nineteenth century contributors to the literature of civilization studies) could justifiably comment that he got it right (see his quote at the beginning of this chapter). Additionally, he points out that each civilization enjoys its era of socio-economic prosperity and assumes that good fortune will continue unabated forever, but ultimately it succumbs to the mirage of immortality.⁶

Human history has not seen a civilization that has avoided the pathway of cultural breakdown, degradation, and collapse. Samuel Huntington notes, History ends at least once and occasionally more often in the history of every civilization.⁷ There is a misconception that most civilizations collapse as a result of being overrun by invading barbarians. However, the usual agents of debilitating cultural degradation are misguided and self-serving values, objectives, priorities, and behavior; wasteful and excessive consumption of personal wealth; and the unprincipled stewardship of national wealth, energy, and human resources.

A. L. Kroeber notes, Cultures inherently tend to progress… . Fluctuations of cultural vigor are normal… . The reason for the fluctuation is that… with successful development they accordingly become exhausted and that there must be a breakdown or abandonment and reformulation of patterns before the culture can go on to new high achievement. That there is some tendency for the several patterns of one culture to form, to culminate, and to dissolve or atrophy simultaneously, is, I think, obvious. ⁸ He notes that the real question is why particular cultures die.

Pitirim Sorokin, pondering the history of Greco-Roman Western civilizations, rhetorically frames the question as, Where shall we look for the roots of change of socio-cultural phenomena?⁹ He responds that the system bears in itself the seeds of its change and is driven by virtue of its own forces and properties.¹⁰

These early authors of twentieth-century civilization studies, having independently completed exhaustive, well-respected scholarly works, conclude that cultures, over time, essentially destroy themselves. Appropriately, Will Durant observes, the fall of Rome, like her rise, had not one cause but many, and was not an event but a process spread over 300 years.¹¹

Evolutionary Patterns of Social Orders and Human Behavior

During the course of human history, social orders have exhibited common evolutionary patterns of cultural maturation, which inherently increase social, political, and economic complexity and dysfunction. Additionally, societal advancement innately creates a shifting cultural mentality, progressing from prevailing altruistic values of civility and spirituality and the ethic of principle toward greater individual sensate values of self-interest, materialism, and ruthlessness and the ethic of happiness. This transition represents shifting cultural priorities from employing an intense mental discipline and physical labor required to create economic growth and prosperity to a higher priority of maximizing personal enjoyment, leisure time, and happiness. As a result, community oriented priorities, social cohesion, and mutual cooperation and respect are gradually diminished over generations, while self-oriented ambitions, rationalizations, and outcomes become an acceptable norm. Durant describes the culture transition:

As civilization develops, customs, institutions, laws, and morals more and more restrict the operations of natural impulses, action gives way to thought, achievement to imagination, directness to subtlety, expression to concealment, cruelty to sympathy, belief to doubt; the unity of character common to animal and primitive men passes away; behavior becomes fragmentary and hesitant, conscious and calculating; the willingness to fight subsides into a disposition to infinite argument.¹²

Inherently, societal development continuously creates higher levels of organizational and functional intricacies and associated human stress and perplexity, which gradually shape a greater nonfunctional, incomprehensible social order for an increasingly larger segment of the population. Carroll Quigley describes this cultural sequence as reaching a crisis of organization and function… its vigor and morale have weakened… it becomes stabilized and eventually stagnant.¹³

This escalation of the progressive rudiments of societal maturation, reaching a crisis of organization and function, include the proliferation of increasingly expensive and highly convoluted processes, bureaucracies, policies, laws, regulations, and codes as well as modes of transportation and communication. Theoretically, the intention of such societal advancement is to continuously provide more effective, efficient, productive, and equitable outcomes that will improve the human experience for all members of society. However, the history of civilizations has demonstrated that ultimately socio-economic advancement concentrates economic rewards and political influence on a small minority. In a repeat of the nation’s Great Depression experience, America’s most wealth individuals and corporations have successfully manipulated, and now dominate, the nation’s highly nontransparent and complex economic, financial, and political systems to best serve their interests. In the process, professional ethics have become severely tarnished and state and federal government systems have been corrupted and manipulated as human nature has once again succumbed to Big Money.

Mark Twain noted, It is not worthwhile to try to keep history from repeating itself, for man’s character will always make the preventing of the repetitions impossible.¹⁴ Accordingly, America has suffered through two recessionary cycles as a result of shortcomings of man’s character and the allure of wealth and power, as history continues to repeat itself.

How did American society get to this disgraceful, chaotic state, repeating this well-worn pathway of shameful behavior that other failing societies have traveled that corresponds to Toynbee’s time of troubles and his sequence of cultural breakdown, stagnation, and degradation?

The major components leading to America’s Great Recession first emerged during the late 1970s and 1980s, proliferated, matured, coalesced, and ultimately contributed to a significant post-1980s socio-cultural transition, a reversal of the pendulum and momentum of America’s post-WWII progressive era. The centerpiece of this ongoing socio-cultural transition is a broad set of mutually reinforcing, self-serving conservative ideological forces, which encompass white supremacy; extreme corporate and individual self-interest and greed; arbitrary constrains of human rights; a lack of compassion for the well-being of the less fortunate; and a reckless strategy of non-compromising, winner-take-all politics.

Major contributing social, economic, and political elements of this post-1980 conservative movement, which are still unfolding, include, first, the South’s backlash to the 1960s civil rights legislation and the continuing expansion of the nation’s broader rights and freedoms provided the nucleus, the catalyst, and electoral momentum for a political conservative crusade.

Second, as a result of civil rights legislation, the national Republican party, having experienced little success in House and Senate elections since 1932, discovered, during the 1970s, a new vehicle of opportunity in the rapid and overwhelming Great White Switch of southern Democrats to the Republican party. Ironically, the new post-1980s Republicanism was molded based on the culture of the Old South and the 1950s southern Democratic party membership.

Third, by 1980, in the midst of economic prosperity and increasingly aggressive federal government regulation of business, the emergence of the national conservative movement of new Republicanism presented corporations and wealthy individuals with an opportunity to enhance their political influence and add to their corporate profitability. Utilizing their wealth and organizational skills, the objective was established to bring together a strong, broad-based voter coalition of newly minted southern Republicans; northern conservatives of all political persuasions; small businesses; and major corporations to embrace a broad agenda of common conservative interests. These included lower corporate and personal taxes; less government regulation of banking, business, and the environment; and conservative social and religious issues, particularly those of the Deep South and evangelicals, all representing at least one major objective of the self-oriented financial, spiritual, philosophical, and moral agenda.

Fourth, by the 1990s, Big Money had succeeded in purchasing the minds of politicians and in funding, reorienting, and strengthening the personnel, agendas, vitality, and organization of many of the nation’s nonprofit business organizations, such as the US Chamber of Commerce, and establishing an army of lobbyists to carry the corporate mission. Additionally, corporate wealth’s creation and control of partisan think tanks and media outlets and the proliferation of modern communication technologies has contributed to a broad distribution of political propaganda and disinformation. Also, judicial decisions have continued to allow the legal flow of enormous quantities of anonymous money into the election process, even within the judicial branch.

Fifth, corporate-political alliances, possessing unlimited corporate and private money, have successfully created and orchestrated a broad scope of business-friendly legislation through the governance systems of Washington and state houses. The effects have crippled the economy, paralyzed governance, achieved record public indebtedness, and created abundant lower and middle class suffering at a level not encountered since the Great Depression. Joseph Stiglitz identifies the objective of the money people:

For those with money, spending it to shape the political process is not a matter of civic virtue; it is an investment, from which they demand (and get) a return. It is only natural that they end up shaping the political process in their interests.¹⁵

By the 1990s, Big Money, utilizing a sophisticated makeover of the former 1950s southern Democratic party, was successfully marketing a broader national conservative agenda with a Republican party label. By the 1990s, this had provided the necessary electoral successes to reach the primary objectives of controlling the course of American politics and recording historic profits for both corporations and the top few percent of the nation’s wealthiest individuals. Effective corporate lobbying and political donations have shaped legislation that legalized and shielded financial abuses from regulators, credit rating systems, and the public and have played a major role in the current global financial and economic crises. The resulting home mortgage market collapse, ill-advised tax policies, and loss of retirement and pension funds have been direct consequences of the same mechanism of corporate-political collusion. An unholy corporate-political alliance has affected the markets, making them discriminatory and neither efficient nor effective (but extremely profitable for the nation’s wealthiest corporations and citizens).

Beginning in the 1980s, the political influence of the business sector has been very successful in minimizing, eliminating, and preventing government regulation of the financial industry. Specifically, this effort has provided the legal strategies, money, and tactical assistance to grease the pathways and remove legal obstacles for the financial industry to manipulate the nation’s financial markets and create an inequity in wealth of historic proportions, one detrimental to the middle class economy. Likewise, in the aftermath of the more recent Wall Street collapse, proposed legislation deemed necessary to establish and maintain the necessary regulation of the investment industry so as to avoid another such scenario has been met with massive, coordinated political and corporate resistance. Furthermore, the inability or unwillingness of those responsible for securities credit ratings and regulatory functions has not become more efficient or effective.

Stiglitz adds, The power of markets is enormous, but they have no inherent moral character.¹⁶

Something has happened to our sense of values, when the end of making more money justifies the means, which in the US sub-prime crisis meant exploiting the poorest and least-educated among us. Much of what has gone on can only be described by the words moral deprivation. Something wrong happened to the moral compass of so many of the people working in the financial sector and elsewhere. When the norms of a society change in a way that so many have lost their moral compass, it says something significant about the society.¹⁷

Unequal, Inequitable, and Shameless Distribution of

National Wealth

The resulting inequitable distribution of national wealth over the last three decades, which allocated relatively meager annual wage increases to a great majority of Americans, has gradually gutted middle-class purchasing power and stalled the national economy. Since the 1970s, the corporate influence on Washington politics has gradually and systemically produced lower tax rates on income, inheritance, corporate profits, and capital gains, which unnecessarily benefited extremely wealthy Americans. Ultimately, politics not economics has produced excessive income inequality by virtue of tax policy orchestrated by the wealthy, which has been the major contributor to the economic stagnation leading to both the Great Depression and the Great Recession.

Accordingly, Big Money has been successful in capturing historic levels of corporate profits, individual income gains, and accumulated wealth, while middle class income has stagnated. Meanwhile, the nation has incurred a record national debt, in large measure from inadequate tax revenues as measured by the percentage of gross domestic product (GDP), an internationally accepted standard for measuring created national wealth.

Over the past fifty years, total federal tax revenues as a function of national wealth have remained relatively constant, within 15 to 20 percent of the nation’s GDP. However, corporate tax revenues as a percentage of GDP have steadily declined, from just less than 6 percent in the early 1950s to about 1 percent in 2009.¹⁸ By 2009, due to the 2001 Bush tax cuts, the nation’s tax revenues had declined to the lowest level as a share of the economy since the 1940s. But government expenditures relative to GDP have steadily increased, from about 15 percent in 1947 to 20 percent in 2007, jumping to 25 percent in 2009.¹⁸

Apple, one of America’s most profitable corporations, provides an illustration of creative corporate tax avoidance. In 2011, Apple paid cash taxes of $3.3 billion worldwide on reported profits of $34.2 billion, a tax rate of only 9.8 percent.¹⁹

To contrast the fortunes of the middle-class, consider that during the 1960s, the lower 90 percent of households accounted for more than half of America’s income gains, whereas the era of great prosperity from 2002 to 2007 brought more than half of income gains to the wealthiest 1 percent. In 2011, this 1 percent of the population possessed greater net worth than the lowest 90 percent,²⁰ and six times the financial wealth of 80 percent of Americans.

In 1955, the 400 wealthiest taxpayers had an average income of $13.3 million, in 2008 dollars, and were taxed, on the average, at a rate of 51.2 percent. In 2008, this group had an average income of $270.5 million and was taxed at an average rate of only 18 percent,²¹ whereas by 2011, they possessed greater wealth than the bottom 150 million citizens and were taxed at an average 17 percent.²²

Two conclusions: First, the nation’s budget deficits have been the result of steadily increasing federal spending as corporate tax revenues, as a percentage of their profits, have steadily declined. Second, this history demonstrates that the concept of trickle-down economics has been an economic failure for all but the super-rich.

Thirty years ago, when Forbes magazine published its first list of the top 400 wealthiest Americans, $75 million was sufficient to get on the list, whereas in 2011, the figure was $1.1 billion. The cumulative net worth of the 400 people on the 2011 list increased by $200 billion, compared to a 4 percent decline in the median household income in 2011.²³ Financiers have adopted a winning strategy of maximizing their income into the capital gains category in order to benefit from the 15 percent tax rate. This is particularly beneficial for those who have inherited their wealth, which is estimated to be 40 percent of those on the Forbes list. In 2011, the 400 accounted for 16 percent of all capital gains.²³

To illustrate the new normal for the top annual compensation award, consider that in 2006, the top twenty-five hedge fund managers earned an average $600 million, with the top being $1.7 billion. As a result of a tax loophole, these earners were taxed at the capital gains rate of 15 percent rather than the normal or statutory 33 percent rate for their income level.

Loss of Middle Class Purchasing Power and a

Stagnant Economy

Not surprisingly, the lower socio-economic segment of American society, having undergone three decades of stagnant income gains and net wealth, while assuming increasing debt, have substantially reduced their consumption of goods and services. The decline in purchasing power for over half of the population due to declining real wages has resulted in reduction of industrial production levels and general business activity. As demand declines, so does production.

Businesses are unwilling to invest capital to expand production, offer new goods and services, and undertake new construction, as long as potential consumers do not possess the necessary financial means to spend. Hence, an anemic economic growth rate continues to reduce money circulating throughout the economy, thereby contributing to a progression of recessionary conditions.

Importantly, a nation’s reliance on consumer spending by the wealthiest segment of Americans, who overwhelmingly benefited from three decades of economy gains, is not a feasible solution for a stagnant economy. Their level of consumer spending alone would be insufficient to create a growing and stable economy. To illustrate, in the fall of 2011, according to Moody’s Analytics, Americans with the highest 5 percent of income accounted for only 37 percent of all consumer purchases.²⁴ Hence, the combination of declining business revenues, worker income, and consumer consumption only prolongs or deepens a recessionary economy.

In any event, economic renewal requires mutually supporting, broad-based economic activity capable of balancing goods and services production, consumer spending, and financial investment. Lacking such economic stability, those individuals and corporations able to hold their wealth waiting for investment opportunities will do so, while those less fortunate will go into debt or suffer crippling losses of assets. Accordingly, as of 2012, American corporations are estimated to have between $1 and $2 trillion in investment capital waiting for consumers to start spending, representing the dilemma of the proverbial chicken and egg.

The most conspicuous example of America’s current flawed values, ethics, and priorities is the criteria upon which the nation’s economic prosperity is evaluated by economists, judged by the public, and disseminated to the public. A review of news media coverage would reveal utmost public admiration for such financial successes as corporations with billion-dollar profits, golden parachutes of hundreds of millions of dollars for fired CEOs, yearly billion-dollar hedge fund earners, and multimillion-dollar compensation packages for professional athletes and college football and basketball coaches. Generally, these highly envied segments of society represent those with the greatest talent for creating revenues for the primary purpose of generating maximum profits for individual investors and institutions. In stark contrast, those public entities and employees that bear the responsibility to educate children and to provide essential social services for the poor, hungry, homeless, handicapped, and ill have been assigned the lowest salary and budget priorities, reflective of low political clout and public support.

In contrast to American society’s preoccupation with maximizing the financial success of individuals and corporations at the expense of the lower and middle classes, Japanese and Scandinavian societies place high national priorities on more societal-oriented goals of national success. Among the twenty richest nations, Japan and three Scandinavian countries have the smallest income inequality among its citizens and also rank among the six countries having the lowest level of health and social problems. Their primary national goal and economic objectives are founded on altruistic values, compassion for all citizens, promoting the common good, and achieving a fair and just society (i.e., the most important ideals of a democracy).

In contrast, in 2010, of these twenty wealthiest nations, America had the highest budget deficit, lowest tax revenues, and lowest public spending on health and social problems, relative to the percentage of its GDP, and had the lowest