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Adam Smith’s “Invisible Hand” Picking Our Pockets

Now that Newt Gingrich has torn the mask off the ugly face of  predatory corporate capitalism, it’s clear why defenders of the status  quo such as AEI President Arthur C. Brooks were so eager to frame the  debate after the Wall Street collapse in 2008 as an existential clash  between “entrepreneurship” and “European-style statism” in which freedom  itself was endangered by “expanding bureaucracies, a managed economy  and large-scale income redistribution.”

Trickle-down, supply-side capitalism sold itself for decades to a  gullible public as the comforting belief that a rising tide raises all  boats. There was no need for class warfare, the rich assured us, since  giving them more money meant more jobs for us. That was the  implicit bargain when America agreed to cut the taxes of the rich in  half.

Yet, the most important economic story of the last 30 years has  been the growing income gap brought on by the radical transformation of  the American economy from one that makes things to one that packages  debt – and does so by enhancing the purchasing power of the masses at  the expense of the predictable wage growth that supplies the foundation  of a stable and broadly-based middle class society.

Denied the utilitarian argument that trickle-down capitalism  works best for everyone, defenders of laissez faire have more recently  turned to metaphysics and morality in order to build their firewall  against what they can all see coming: a Second New Deal.

This helps explain the peculiar, desperate and almost frenzied  explanations we’re hearing from plutocrats like Mitt Romney, who is  being forced (thanks to Occupy Wall Street and now Newt Gingrich) to  explain to us in greater detail just how he came by all those millions.

Romney’s reliance on the fall-back reactionary politics of “envy”  and “class warfare” shows it’s a story he’s not keen on telling.

As Charles Blow wrote in the New York Times,  Romney “lambasted” his Republican opponents Newt Gingrich and now Rick  Perry for poking about into what Romney did as head of the private  equity firm Bain Capital.  Obviously targeted for a friendly  Republican audience rather than a more skeptical general election one, Romney’s  only comeback seemed to be a tactical one — that attacks against him  and his performance as a latter-day Robber Baron were playing right into  the hands of President Obama, who Romney charges with dividing America through the “bitter politics of envy.”

On NBC’s Today show Romney went further and said the entire  debate about income inequality was out of bounds, even telling host Matt  Lauer that questions about whether those palatial fortunes of the rich  were fairly won should be entertained — if they are entertained at all  — only “in quiet rooms” where opposition to out-sized fortunes  could either be safely reasoned with or bought off.

Listen carefully because Romney’s is the authentic voice of the New American Aristocracy.

And that’s the problem, says Blow. With all due respect to  Romney’s “quiet rooms,” says Blow, Americans have been quiet for far too long  about a reward system that unfairly favors the  few.

Notes Blow, a report released last week by the Pew Research  Center found that about two-thirds of Americans perceive a “strong  conflict” between rich and poor. That is up 19 percentage points from  2009. Another report cited by Blow showed that the United States ranks  near the bottom among Western countries in the social mobility it  provides its citizens.

“This has nothing to do with envy and everything to do with fairness,” says Blow.

Indeed, as all those Tea Party Republicans who’ve been brushing up on their early American history can no doubt tell us, it’s precisely  the power of concentrated capital to re-create a British aristocracy  wearing colonial blue that was at the heart of the bitter rivalries and antagonisms that separated Federalists from  Anti-federalists, Hamiltonians from Jeffersonnians.

More recently, conservative apologists for Big Monied interests were quick to label Elizabeth Warren as a leftist radical who  hates all that is decent and holy about American rugged “individualism,”  while harboring the typical Harvard elitist’s contempt for the simple  desire of average Americans to get ahead. Yet, even conservatives had to  concede that when Warren spoke about the American Social Compact she  was articulating the commonplace truth that “nobody in this country got  rich on his own.  Nobody.”

Nevertheless, the starkly elitist and anti-government writings of  Ayn Rand are enjoying an Indian Summer among America’s plutocracy  largely due to the flattering portrait Rand paints of them as society’s  only “productive class” and upon whom the rest of us parasites must  feed. These are the members of America’s superclass, says Rand, who have  it within their power to bring civilization itself to a halt should  they decide to “Go Galt” – go on strike – in order to resist the taxes  imposed on them to support the lassitude of the greater idle masses.

Warren articulates an alternative view in which the resources of  these wealthy job creators are nothing but worthless paper in the  absence of the critical collective investments society makes in the  human and economic infrastructure necessary to build the kind of economy  where all that paper can be profitably put to use.

You can see now why Warrren’s alternative narrative about the  value of investments in roads, research and schools made by a government  Rand’s superclass is so intent on dismantling would be seen as  destabilizing to the self-serving mythology plutocrats have constructed  for themselves that unregulated private capital is solely responsible  for wealth creation and the jobs that go with it. And this is why  conservatives were so determined that Elizabeth Warren and her  subversive ideas be knocked down, and now — and even by social conservatives who believe birth control is immoral and should be illegal who nevertheless lined up to attack Warren on her imagined assaults on “individualism” and “personal autonomy.”

Recently, I wrote about the arbitrage Republicans have used to  great effect in recent decades to profit from the gap that exists  between the way the public thinks about how the economy works and how it  really does. The public thinks the same old rules still apply about  people being rewarded for the risks they take and the contributions they  make within a competitive “free market,” where taxing away the fruits  of those labors in order to give rewards to others less prudent or  hard-working is thought to be both unfair and unjust.

That in a nutshell is the basic concept called The American Work Ethic to which most American voters subscribe.

But there is a huge gap between the facts and fictions of our  economic existence that Blow helps to illuminate when he writes about an  older Contract with America that the wealthy in this country have now  broken.

The old “social symbiosis,” says Blow, was one where Americans  working together “create a society in which smart, hard-working people  can be safe and prosper, and the rich in turn reinvest a fair share of  that prosperity back into society for posterity.”

It’s an arrangement in which everyone benefits, says Blow. “But  somewhere along the way this got lost. Greed got good. The rich wanted  all of the societal benefits and none of the societal responsibilities.  They got addicted to seeing profits go up and taxes go down, by any  means necessary, no matter the damage to the individual or the  collective. Those Maseratis weren’t going to pay for themselves. And the  resulting income inequality helped to stall economic mobility.”

The values of “freedom,” “individualism,” “entrepreneurship” –  and the corresponding attacks against “envy” and “class warfare” – which  the Republican Party and its wealthy benefactors are feverishly putting  forward to protect their privileges and vested interests, are  predicated on public belief in what Blow calls the “idea of equal opportunity” that is  central to this country’s “optimistic ethos.”

But income inequality and “corporate greed,” he says, “are making  a lie of that most basic American truism. The rich and their  handmaidens on the political right have consolidated America’s wealth on  the ever-narrowing peak of a steep hill and greased the slope. And they  want to cast everyone at the bottom as lazy or jealous, without  acknowledging the accident of birth and collusion of policies that  helped grant them their perch.”

A Republican Party whose agenda is now so wholly At One with  America’s One Percent thinks nothing of passing laws to dismantle unions  in order to prevent average workers from gaining economic leverage by  means of pooling the one resource they possess – their labor. Yet, at  the same time, Republicans define as “persons” those legally  incorporated enterprises that are nothing more than creatures of the  state and of those laws which allow the wealthy to pool that resource  which they have in such abundance – their capital.

And once this basic inequity receives the attention it deserves,  that low roar you hear gaining volume in the distance will be the sound  of Americans waking up to fact that for far too long the plutocrats in  this country have been using Adam Smith’s famous “Invisible Hand” to  pick their pockets.

By: Ted Frier, Open Salon, January 15, 2012

January 16, 2012 Posted by raemd95 | Class Warfare, Economy | Economic inequality, Income Gap, Middle Class, Mitt Romney, Newt Gingrich, Politics, Republicans, Teaparty | Leave a comment