Not in a Vacuum

With the 2014 election cycle gearing up and the 2016 election on the horizon a lot will be made of the deepening divide between the rich and the poor and the haves and the have-nots. 

 

In just the latest high profile rant from billionaire Thomas Perkins co-founder of Kleiner, Perkins, Caulfield and Byers a former venture capitalist claims that the poor are like the Nazis.  The Occupy Wall Street movement is akin to Kristallnacht the infamous assault by the Nazis on Jewish homes and businesses marking and aggressive turn in the persecution of the Jews.  Mr. Perkins’ misguided comparison blaming the poor for the plight of the rich is just the latest by the well to do complaining that they now are the persecuted class and what did they do to deserve all this bullying by those who are jealous of what they have?

 

Nothing happens in a vacuum, sir.  Although with the press always chasing the latest shiny object, one might question as to what has led us to this point so quickly?  In reality, these turns of events began gestating nearly a generation ago under President Ronald Reagan.  They largely lay dormant under the Bush 1 and then under Clinton era presidencies, who passed The North American Free Trade Act.  But the assault on the poor and middle class picked up full stream and in many ways took on a life of their own culminating in a perfect storm under the presidency of Bush 2/Cheney.  

Several factors have let to the divide between rich and poor as we sit in 2014:  Mergers, acquisitions and Wall Street and pay to play government  play an enormous role.  Deregulation of and the loosening of ownership rules for media and communications companies also fact in weakening what some used to call our fourth branch of government, the press. 

Cause:  Starting a generation ago President Ronald Reagan loosened rules governing FCC regulation on media ownership.  Provisions rules such as “equal time” and the “Fairness Doctrine” which had provided equal time for each side, right and left, to get their messages out equally were no longer enforced and deemphasised.  For those of you living in a time where you know nothing other than Fox News representing the right and MSNBC the left, understand that the major networks were required to give each side equal standing to present all sides.  if they presented one point of view, they were required to present the other.  The benefit was that people heard each argument rather than in the present day entrench themselves under the propaganda banner in which they agree.  We now have media giants like Viacom, Comcast/NBC/Universal Disney/ABC controlling content and delivery.  Effect:  Greater polarization of political ideologies.  Media companies consolidating and no longer having to compete in single markets being able to own multiple stations or newspapers in a single city effectively controlling the message.  Ratings rather than quality now the standard.

 

Cause:  We have seen tremendous merger and acquisition activity in the past 25 years.  Household name company logos such as Northwest Airlines, GTE, McDonnell Douglas and American Motors that were familiar to millions have disappeared.  Many brands that have remained such as Coors Beer and even Budweiser are now just hollow brand names part of even bigger conglomerates that produce adult beverages.  The consolidation of American business has been happening at an alarming rate over the last 25 years.  These large companies all extol the virtues of competition when they want to release themselves from government regulation, interference or taxation but when it comes time to eliminate their direct competitors they aggressively lobby our government officials cozying up to them for approval claiming that it will make their business more efficient.  Effect:  Fewer well paying jobs through consolidation combined with a growing population equal greater competition for what jobs are left.  Income stagnation.  Consolidation of power and proprietary relationships developed with government representatives in the legislative and executive branches.  

Cause:  Wall Street is the bastion of capitalism.  It is the free market at work.  Until of course it all falls in on itself.  Then we, the tax payer have to bail them out.  Why?  Because if we don’t, they take the rest of us with us.  Our stock market is fundamentally flawed because in American business today, our biggest businesses measure themselves three months at a time.  Decisions on growth, new business, hiring and firing and research and development all hinge on the previous quarter and year-end profit and loss.  Contrast this with developing countries such as China or India which takes a long term approach to business and societal success.  Result:  A disloyal workforce and even more disloyal employers willing to cast aside human resources without warning like aging, outdated equipment.  An outsourced labor force to circumvent US labor laws causes chronic historically high unemployment.  

Pay to Play Government:  A generation ago Watergate exposed corruption and lawlessness at the highest levels of government.  It was a shock to many that the President of the United States could be behind a criminal enterprise while in the White House.  Today just 40 years later we have a loosening of laws that actually allows lobbyists and interest groups to write actual legislation that OUR elected officials put their names to and have passed into law benefiting those interests.  Bills making it Ok to send jobs overseas have decimated our service and manufacturing economies systemically weakening our economy and displacing hundreds of thousand of workers.  Our lawmakers gerrymander districts whereas voters no longer pick their representatives but representatives pick their voters.  The rich and wealthy wine, dine, entertain and have access to those that are supposed to represent us yet we in our best efforts could not even dream of meeting our elected officials.  Representatives in the House and Senate have access to financial information provided by companies they are supposed to oversea allowing themselves to capitalize on their knowledge and create great wealth for themselves.  Is any of this against that law?  No.  Should it be?  Absolutely yes.  But who will represent us if our representative government is not?  Effect:  Tremendous mistrust of our government and a feeling that only the privileged few who can afford access and benefit from our government.  

You add into the mix Supreme Court rulings such as Citizens United where corporations are deemed to have the same rights as people under the Constitution.  You now have individuals and companies competing with one another over rights afforded us under the Constitution.  What happens when those interests collide?  Who prevails has yet to be determined.  However with the current conservative make up of the court court and recent rulings one can only wonder how long it will be before the pendulum swings even further to the side of big business.  Pile on the narrative that some who have unprecedented means claim that those that do not are “takers,” we are backing into the making of a class war.  What is even more unbelievable is that those that have think that they have accumulated wealth all on their own, without anyone else’s assistance. 

So the answer, Mr. Perkins is that all this has not happened in a vacuum.  When stock price is more important that long term corporate growth and societal well-being, the citizenry becomes fed up.  With unemployment high, with jobs evaporating and moving overseas the natives, for lack of a better term, are beginning to get restless.  People start to ask a fundamental question:  do the people of this country exist to prop up business and corporate interests or are these entities a byproduct of our way of life:  democracy, capitalism?  The United States is no longer a leader in education or health care or even quality of life.  Statistically the United States is not even near the best country to be able to start from nothing and get a head despite what our elected official proclaim in high profile rhetorical speeches.  Wages for the middle class have been stagnant since the 1980s while those in the 1% have gained disproportionately.   

So don’t worry about your money, your status and your way of life.  It is not in imminent danger.  You have enough of even middle class and working class people fooled.  But it won’t be long if there is not a change and you may say to yourself, “we have seen the enemy and he is us.”