“Wealth Over Work”: We’re On The Way Back To “Patrimonial Capitalism”, Where Birth Matters More Than Effort And Talent
It seems safe to say that “Capital in the Twenty-First Century,” the magnum opus of the French economist Thomas Piketty, will be the most important economics book of the year — and maybe of the decade. Mr. Piketty, arguably the world’s leading expert on income and wealth inequality, does more than document the growing concentration of income in the hands of a small economic elite. He also makes a powerful case that we’re on the way back to “patrimonial capitalism,” in which the commanding heights of the economy are dominated not just by wealth, but also by inherited wealth, in which birth matters more than effort and talent.
To be sure, Mr. Piketty concedes that we aren’t there yet. So far, the rise of America’s 1 percent has mainly been driven by executive salaries and bonuses rather than income from investments, let alone inherited wealth. But six of the 10 wealthiest Americans are already heirs rather than self-made entrepreneurs, and the children of today’s economic elite start from a position of immense privilege. As Mr. Piketty notes, “the risk of a drift toward oligarchy is real and gives little reason for optimism.”
Indeed. And if you want to feel even less optimistic, consider what many U.S. politicians are up to. America’s nascent oligarchy may not yet be fully formed — but one of our two main political parties already seems committed to defending the oligarchy’s interests.
Despite the frantic efforts of some Republicans to pretend otherwise, most people realize that today’s G.O.P. favors the interests of the rich over those of ordinary families. I suspect, however, that fewer people realize the extent to which the party favors returns on wealth over wages and salaries. And the dominance of income from capital, which can be inherited, over wages — the dominance of wealth over work — is what patrimonial capitalism is all about.
To see what I’m talking about, start with actual policies and policy proposals. It’s generally understood that George W. Bush did all he could to cut taxes on the very affluent, that the middle-class cuts he included were essentially political loss leaders. It’s less well understood that the biggest breaks went not to people paid high salaries but to coupon-clippers and heirs to large estates. True, the top tax bracket on earned income fell from 39.6 to 35 percent. But the top rate on dividends fell from 39.6 percent (because they were taxed as ordinary income) to 15 percent — and the estate tax was completely eliminated.
Some of these cuts were reversed under President Obama, but the point is that the great tax-cut push of the Bush years was mainly about reducing taxes on unearned income. And when Republicans retook one house of Congress, they promptly came up with a plan — Representative Paul Ryan’s “road map” — calling for the elimination of taxes on interest, dividends, capital gains and estates. Under this plan, someone living solely off inherited wealth would have owed no federal taxes at all.
This tilt of policy toward the interests of wealth has been mirrored by a tilt in rhetoric; Republicans often seem so intent on exalting “job creators” that they forget to mention American workers. In 2012 Representative Eric Cantor, the House majority leader, famously commemorated Labor Day with a Twitter post honoring business owners. More recently, Mr. Cantor reportedly reminded colleagues at a G.O.P. retreat that most Americans work for other people, which is at least one reason attempts to make a big issue out of Mr. Obama’s supposed denigration of businesspeople fell flat. (Another reason was that Mr. Obama did no such thing.)
In fact, not only don’t most Americans own businesses, but business income, and income from capital in general, is increasingly concentrated in the hands of a few people. In 1979 the top 1 percent of households accounted for 17 percent of business income; by 2007 the same group was getting 43 percent of business income, and 75 percent of capital gains. Yet this small elite gets all of the G.O.P.’s love, and most of its policy attention.
Why is this happening? Well, bear in mind that both Koch brothers are numbered among the 10 wealthiest Americans, and so are four Walmart heirs. Great wealth buys great political influence — and not just through campaign contributions. Many conservatives live inside an intellectual bubble of think tanks and captive media that is ultimately financed by a handful of megadonors. Not surprisingly, those inside the bubble tend to assume, instinctively, that what is good for oligarchs is good for America.
As I’ve already suggested, the results can sometimes seem comical. The important point to remember, however, is that the people inside the bubble have a lot of power, which they wield on behalf of their patrons. And the drift toward oligarchy continues.
By: Paul Krugman, Op-Ed Columnist, The New York Times, March 24, 2014
“No Separating The Son From The Father”: What Rand Paul Can Learn From George W. Bush’s Daddy Issues
Sen. Rand Paul (R-Ky.) recently told my Daily Caller colleague Alex Pappas that he has “pretty much quit answering” questions about his controversial father, former Texas Rep. Ron Paul.
Referencing George W. Bush’s campaign for president in 2000, Paul continued: “Did he get tons of questions about his dad? … I don’t know that he did, to tell you the truth.”
This is a silly semantic game for Paul to play. Whether or not George W. Bush was directly asked a lot of questions about George H.W. Bush in the run-up to the 2000 race is almost irrelevant. Because it is something close to an irrefutable fact that the elder Bush has loomed large over W.’s career and life for decades. In the minds of millions of Americans, there was no separating the son from the father — much in the same way there is no separating Hillary from Bill, or Jeb from a pair of Georges.
A simple search of the news archives is telling. As far back as 1978, when George W. Bush lost a bid for Congress, Bush declared: “We don’t need dad in this race.” When his opponent attacked him over his family connections and pedigree, Bush responded: “Would you like me to run as Sam Smith? The problem is I can’t abandon my background. I’m not trying to hide behind any facade.”
George H.W. Bush was a congressman, director of the CIA, vice president, and president. It is a legacy no son could escape — particularly a son who entered his father’s profession.
Ron Paul does not have nearly the record that the first President Bush did. But he is still a leading political figure in his own right. Perhaps the country’s most famous libertarian, the maverick congressman from Texas has an extremely passionate following, and became a nationally known figure thanks to several failed presidential bids. Rand Paul is kidding himself if he thinks he won’t have to deal with his dad’s legacy.
If after four years in the political limelight, Rand is already tired of answering questions about his dad, well, he’s got a long haul ahead of him. The “fortunate son” charge first lodged against Bush in 1978 was leveled more than two decades later, during the 2000 GOP primary. “If [John] McCain’s book is titled Faith of My Fathers,” quipped Margaret Carlson, “Bush’s should be called Friends of My Father.”
Of course, George W. Bush also faced the challenge of subtly distancing himself from his father’s “read my lips” flip-flopping image, without throwing the old man under the bus. Today, it’s easy to see 41 as a wise old statesman, but in 1999 and 2000, skeptical conservatives still didn’t trust the Bush clan.
The good news for the younger Bush was that after eight years of President Bill Clinton, Republicans were desperate for a winner (and the perception of being a winner can cover a multitude of perceived sins).
And for us mainstream conservatives, word had gotten out that Dubya was more conservative than his father — that he was “one of us.” He came of age studying Lee Atwater’s campaign style and Ronald Reagan’s political philosophy, we were told. The son was not like the father, the whispers went, answering questions we all had, even if they weren’t asked of the candidate himself.
Good luck finding any contemporaneous documentation to back this up, mind you. You’ll just have to take my word for it. We conservatives were somewhat quiet about it. But a 2003 Bill Keller article retroactively confirms this messaging: “That Bush is Reaganesque is a conceit that some conservatives have wishfully, tentatively embraced since he emerged as a candidate, and one that Bush himself has encouraged,” Keller noted. “The party faithful have been pining for a new Reagan since Reagan, and for Bush the analogy has the added virtue of providing an alternative political lineage; he’s not Daddy’s Boy, he’s Reagan Jr.” (Emphasis added)
For all the talk about Poppy and Dubya — and I’m sure they have a strong bond — the backers of George W. Bush had to burn a lot of calories distancing the son from his old man. And this lasted well into his presidency. “When Bob Woodward asked President Bush if he had consulted with his father about the decision to go to war in Iraq,” Bob Herbert recalled in 2005, “the president famously replied, ‘There is a higher father that I appeal to.'”
Similarly, Rand cannot escape his father, just as Jeb and George W. couldn’t, and just as Hillary Clinton cannot escape her husband. “Hillary Clinton spent eight years in the Senate and four at the State Department,” says Dave Weigel, “but has to answer for her husband’s actions in the mid-1990s. Paul, with three years behind him in the Senate, says he does not have to answer for what his father does right now.”
I’m not sure it’s fair to judge anyone based on the sins of their father, the successes of their father, or whom they’re married to. But these comparisons and questions are inescapable, and have always been so. Rand Paul cannot appeal to historical precedence to evade comparisons to his dad. Because fair or not, voters still want to know how far the apple falls from the tree — and they always have.
By: Matt K. Lewis, The Week, March 24, 2014
“Three Questions For Ukraine Hawks”: There Are Real And Specific Questions We’d Better Ask Ourselves Before We Jump In
Watch an hour of cable—and I’m talking MSNBC; forget Fox—and you might well come away from the hyper-ventilations thinking that we will or should go to war over Vladimir Putin’s takeover of Crimea. Listen: Nobody’s going to war over Crimea. This isn’t 1853. Yes, it matters to us how Crimea may once again become a part of Russia, and we don’t like it a bit, but let’s face it, it doesn’t really matter to us in cold, hard, realpolitik terms, whether Crimea is a part of Russia. It’s used as a naval base, and Russia’s had that all along.
Now Ukraine, that’s different. Or so everyone on TV says. But when everyone starts saying something, I start doubting. After all, a decade ago, nearly “everyone”—every “grown up,” that is, every person who took a “properly expansive” view of American security in the post 9/11 age—said we needed to topple a dictator who had nothing to do with 9/11. So: Is Ukraine different? We may decide that yes, it is, but there are some real and specific questions we’d better ask ourselves before we just automatically make that declaration.
One way we decide these things is by looking at the historical record, and the historical record practically screams no, Ukraine is not different, is not a vital American or Western interest. Soviet Russia annexed Ukraine in 1922, after a war that had commenced in 1917, when the Bolsheviks took Moscow. The borders of Ukraine changed many times over the years. Even its capital was moved from Kharkiv in the east to Kiev in the west. At the end of World War II, the USSR expanded Ukraine again, as Stalin unilaterally redrew the Curzon Line to take in Eastern Galicia and Lvov, Poland, which became and still is Lviv, Ukraine.
There were further alterations after the war. In 1954, as we all now know, Crimea became part of Ukraine (staying within the USSR). If the Western countries objected to any of these moves, they objected lightly and only formally. Roosevelt and Churchill pestered Stalin about the Lvov/Lviv situation at Yalta, but Uncle Joe wasn’t having it, and they left it alone.
So historically, Ukraine hasn’t been something the West regarded as worth fussing over very much. In more recent years, after the USSR’s collapse, Russia asserted that Ukraine and, for that matter, all 14 former satellite SSR’s were within the Russian sphere of influence. They even coined a term for it: the “near abroad.” Not all Americans have accepted the idea that the near abroad falls strictly within the Russian sphere of influence, by any means. When John McCain and Joe Biden and others thunder about bringing Georgia into NATO, they’re rejecting the idea explicitly. But like it or not, three presidents have basically accepted the idea—none more so than George W. Bush, who confronted Putin about his 2008 Georgia incursion (both happened to be in Beijing for the Olympics) and whose administration took a few steps but who never imposed sanctions, as Barack Obama has now. Bush’s green light to Putin shone far brighter than Obama’s has.
Of course, history changes. The fact that we never cared about Ukraine before doesn’t by definition mean that we shouldn’t care about it today. First, there is the matter of the 1994 Budapest Memorandum, in which the United States, Britain and Russia guaranteed Ukraine’s existing borders in exchange for it giving up its nukes. The Obama administration declared Russia in violation of that concord on March 1. More broadly, Putin is a despicable tyrant who wants glory for Mother Russia. If “glory” means swallowing back up those 14 former SSRs, then he does have to be countered. The Obama administration and the European Union should certainly impose tougher sanctions, and in the American case, on more than seven people. Maybe NATO troops should train Ukrainians, too—maybe not on Ukrainian soil, but somewhere in Europe. There are other similar steps that can be taken short of sending in a slew of “advisors” (special ops people) and military materiel just yet, like helping Ukraine get this new National Guard up and running.
But let’s just think hard about this. There’s nothing easier for pundits or commentators on cable to stomp the table about how Putin is playing us and running rings around Obama and he’s a madman who must be stopped. Our former ambassador to Moscow, Michael McFaul, said yesterday after Putin’s duma speech that the post-Cold War era was over. McFaul has been a reliable guide through these rapids, but that’s nonsense. We aren’t in a new Cold War. Spend five minutes ruminating on what happened during the Cold War and what sparked it, and you should be able to clear your head of such combustible notions. We’re a long way from that yet.
I’d like to hear everyone tossing around those kind of rhetorical lightning bolts answer, in a calm voice, three questions: One, why should Ukraine, which never before was a realpolitik first-order concern of the United States, be one now? Two, what exact sacrifices are we willing to make to preserve Ukraine’s territorial integrity? And three, what broader risks might those acceptable sacrifices entail, and are they worth it?
There might be very good answers to all three questions. But our political culture has a very bad habit of not wanting to discuss them much. That’s a habit we need to change.
By: Michael Tomasky, The Daily Beast, March 19, 2014
“Unregenerated Paulism Strikes Again!”: What Changed In The Last Six Years For “Paul The Younger”?
Last week MoJo’s David Corn drew attention to the rather large flip-flop being executed by the junior senator from Kentucky with respect to America’s relationship with Russia:
Earlier this week, Sen. Rand Paul (R-Ky.) slammed President Barack Obama for not doing enough in response to Russian President Vladimir Putin’s incursion into Crimea….
Paul went on to outline a number of steps he would take, were he president, including imposing economic sanctions and visa bans (which Obama has already implemented), kicking Russia out of the G-8, and building the Keystone XL pipeline. (He did not explain how helping a Canadian firm export tar sands oil would intimidate Putin.) He added, “I would reinstitute the missile-defense shields President Obama abandoned in 2009 in Poland and the Czech Republic.” He griped, “The real problem is that Russia’s President is not currently fearful or threatened in any way by America’s President, despite his country’s blatant aggression.”
This was, Corn noted, a million miles away from Rand Paul’s reaction to Russian aggression towards Georgia.
[W]hen Russia sent troops into Georgia (on George W. Bush’s watch), Paul didn’t want to provoke Russia by placing missiles in Poland. Yet today, when Russia moves into Ukraine (on Obama’s watch), he’s all for dispatching missiles to Poland to send a message to Putin. Does Paul care more about Crimea than Georgia? Or does he care more about keeping a foot on the GOP’s anti-Obama bandwagon? Paul’s office did not respond to a request for comment.
It appears that Paul, an isolationist who doesn’t want to be isolated within the GOP, spotted the opportunity to develop some Obama-bashing hawk cred as the presidential campaign nears. “I stand with the people of Ukraine,” Paul declares now, though that was not what he said about Georgians. What’s changed in the past six years: geopolitics or Paul’s own political calculations?
Paul the Younger can safely survive exposure of his flip-flop by David Corn. But it’s a little more difficult for him to ignore Paul the Elder, who sees no need to change his own take on U.S. foreign policy, as indicated by his pungent op-ed at USAT today:
Residents of Crimea voted over the weekend on whether they would remain an autonomous region of Ukraine or join the Russian Federation. In so doing, they joined a number of countries and regions — including recently Scotland, Catalonia and Venice — that are seeking to secede from what they view as unresponsive or oppressive governments.
These latter three are proceeding without much notice, while the overwhelming Crimea vote to secede from Ukraine has incensed U.S. and European Union officials, and has led NATO closer to conflict with Russia than since the height of the Cold War.
What’s the big deal? Opponents of the Crimea vote like to point to the illegality of the referendum. But self-determination is a centerpiece of international law. Article I of the United Nations Charter points out clearly that the purpose of the U.N. is to “develop friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples.”
Why does the U.S. care which flag will be hoisted on a small piece of land thousands of miles away?
Critics point to the Russian “occupation” of Crimea as evidence that no fair vote could have taken place. Where were these people when an election held in an Iraq occupied by U.S. troops was called a “triumph of democracy”?
Perhaps the U.S. officials who supported the unconstitutional overthrow of Ukraine’s government should refocus their energies on learning our own Constitution, which does not allow the U.S. government to overthrow governments overseas or send a billion dollars to bail out Ukraine and its international creditors.
Suffice it to say that “What’s the big deal?” is not a terribly popular position to take in contemporary Republican politics towards the infamous “weakness” of Barack Obama towards the rapacious Russian Empire. I suppose it’s possible Rand Paul is going to triangulate on his old man as a definitive illustration of his acceptability to the conventional conservative movement and its militaristic tendencies. Otherwise, there may be some tense moments at the next Paul family dinner.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, March 18, 2014
“Flashback, 2008”: When A Russian Invasion Made Fox News Shrug
Fox News commentators have been rushing in to blame President Obama for the Russian military’s excursion into Ukraine. It’s because of Obama’s “weakness” that Vladamir Putin has seized the military initiative, announced Sarah Palin.
The crisis proves Obama’s guilty of misunderstanding the Russians and not being “interested in American national security affairs,” according to John Bolton. Former Secretary of Defense Donald Rumsfeld told Fox viewers Obama “left a vacuum that Putin is filling,” and Steve Doocy complained the president hasn’t done “much” to solve the situation.
Also, Obama needs to get a “backbone” and he’s “lost moral authority.” All this while Fox has marveled over Putin’s prowess as a true “leader,” and swooned his supposed physical superiority over Obama.
Please note that in August 2008, during President Bush’s final months in office, a strikingly similar scenario played out when Russian forces invaded the former Soviet state of Georgia. At the time, the Bush White House sounded an awful lot like today’s Obama White House. From Bush spokeswoman Dana Perino, now a Fox host:
“The United States supports Georgia’s territorial integrity. We call for an immediate ceasefire. We urge all parties Georgians, south Ossetians, Russians to deescalate the tensions and to avoid conflict. We are working on mediation efforts and to secure a ceasefire, and we are urging the parties to restart their dialogue.”
Yet unlike today, the Putin-led excursion in 2008 completely failed to spark the panicked rhetoric that’s become Fox News’ trademark since Russian troops crossed over into Ukraine last week. Notably absent from the 2008 Georgia coverage was relentless finger pointing and blaming the White House for the extreme actions of a foreign leader thousands of miles away. There was also none of the Putin cheerleading that we hear on Fox News today.
In fact, some of the Fox commentators currently stoking the flames of “crisis” were rather non-judgmental when Russian tanks moved into Georgia. “I don’t think the Russians are reckless,” Charles Krauthammer announced on August 8, 2008, as Russian fleets advanced into the Black Sea and Russian jets launched raids targeting government buildings in Georgia. “What they are doing here is reasserting control of this province. And when it’s done, which will probably happen in a couple days, the firing will crease.”
Three days later, Krauthammer insisted there was nothing for the United States to do as the crisis escalated: “Well, obviously it’s beyond our control. The Russians are advancing. There is nothing that will stop them. We are not going to go to war over Georgia.” Krauthammer’s Fox colleague Jeff Birnbaum, agreed: “Because Georgia is not part of NATO, there’s really no danger the United States or Europe will get involved in what is really a civil war almost between–within this small part of Georgia.”
Fox News’ message to America then? Just relax. There’s nothing the U.S. can do about Russia invading its sovereign neighbor and it will all be over soon.
Bill O’Reilly agreed with the laissez-faire analysis. “Even if President Bush wanted to help Georgia we simply don’t have the ground forces to do it,” said O’Reilly on August 11.
“And confronting the Russians in the air would lead to major hostilities that the USA cannot afford right now.”
Even Fox’s usually bellicose, right-wing think tank commentators demurred. “There’s no easy answer; there’s only tough choices,” said the Heritage Foundation’s Peter Brookes on August 12, 2008. “Russia is a tough nut to crack.”
Indeed.
Recall that early in his presidency Bush famously announced he had peered into Putin’s soul and spotted goodness in the Russian leader. The Georgia invasion belayed Bush’s gut instincts, but few Fox commentators mocked the president for his misreading of Putin. (Nor was there discussion that Bush’s failed war with Iraq had created an opportunity for Russia’s military expansion.)
“I don’t think that Putin spit in the eye of the president,” insisted Karl Rove in 2008. And John Bolton, who this week accused Obama of not “paying attention” to Ukraine? Back in 2008, he gave Bush a pass when Russian troops poured into Georgia. “I think a lot of people missed it, not just the administration.” Bolton said on Fox.
Whereas the current Ukraine conflict is all about Obama on Fox News (i.e. Putin: leader; Obama: weak), Bush was portrayed as a minor figure when Russia waged war in Georgia six years ago.
By: Eric Boehlert, Media Matters For America, March 4, 2014
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