Does "power always follow property"? John Adams believed it did, calling it an "infallible maxim in politics."
In this era of Super PACs, it's hard to believe that any Americans are in denial about the huge political influence exercised by the wealthiest among us, or fail to recognize that extreme wealth leads to massive inequality in political influence. On most issues, billionaires have some diversity of opinion, so their donations sometimes work at cross purposes. On one issue, however, there is virtual unanimity among the extremely wealthy, namely the necessity to defend their vast wealth against redistribution and taxation.
John Winters has developed a convincing theory of oligarchy based on its long existence predating written history, and how its forms have varied through the ages. He identifies the paramount goal of the oligarch, which is to "secure, maintain, and retain his extreme wealth and power against all manner of threats." He explains why "those with the most ability to pay are also the ones most empowered to avoid doing so, and why ordinary democratic participation is an ineffective antidote."
Material power resources "are both the single most unequally distributed power resource in American society and the one most resiliently resistant to dispersion and equalization." Power does come from other sources than vast wealth, but that power tends to be more temporary and conditional, depending, for example, upon holding a particular office. Dennis Hastert used to be one of the most powerful people in America. Today the former Speaker is a lobbyist. Hastert's son won't inherit the power his father used to have.
The power of the oligarchs, by contrast, does not depend upon holding an office, on being the best and the brightest, or on working the hardest. The six heirs of Sam Walton own as much wealth as 100 million Americans.
There is more detail in this book about the ancient Greek and Roman oligarchies than the general reader will want. Ditto for the in-depth description of the "sultanistic" oligarchy of Suharto in Indonesia. More interesting to this American reader is the description of how oligarchy works smoothly to achieve its goals in modern democracy. "It is clear," writes Winters, "that oligarchy coexists remarkably easily with democracy," and that no democracy has ever ended oligarchy.
Evidence that oligarchy thrives in the contemporary USA is found in discussions about the long-term viability of Social Security. The competing solutions offered reveal a clash between the interests of oligarchs and everyone one. One proposal is to repeal the cap and subject all income to the Social Security tax, which would raise $90 billion a year. The other proposal is to raise the retirement age and to reduce the COLA for everyone. Given that Obama indicated support for shrinking the COLA, the latter policy probably has a better chance of being enacted than the former.
Another telling issue is the estate tax, which applies only to estates above $5 million. Oligarchs have long fought to reduce or eliminate the estate tax, which the think tanks they fund have dubbed the "death tax." In the first decade of this century, they got the estate tax gradually phased out until it disappeared entirely in 2010. When the phase-out ended in 2011, the tax was revived - over GOP opposition -- though at a lower rate and higher exemption than had previously existed.
The reader will encounter various interesting historical tidbits such as the following:
* Appalachian feuds in America primarily involved oligarchs feuding about wealth, not drunk and ignorant hillbillies as legend would have it. Though poorer members of the communities were hirelings in such conflict, the key players were typically prominent and affluent. In the famous Hatfield vs McCoy feud, for instance, Hatfield has been described as a "mountain feudal lord," while McCoy led one of the most prosperous families in the region.
* Historically democratic procedures evolve and widen "in lockstep with the creation of daunting protections for oligarchic property against the potential threats from poor majorities. No protections, no democracy...Failed protections, failed democracy."
* The Sixteenth Amendment adopted in 1913 authorizing the federal income tax "was one of the most extraordinary and direct challenges to oligarchs in US history," since it started as a tax solely on the income of the ultra-rich.
* Within a few years, however, due to diligent lobbying by income defense industry, tax rates were cut sharply during the 1920s and progressivity was ended between the ultra-rich and the merely affluent. While capital gains were initially taxed at the same rate as other income, by 1922 the top rate on cap gains was dropped to 12.5% while the top income rate was 58%; it was reduced to 25% by 1925.
* Americans with the top 400 incomes consistently pay federal taxes at lower effective rates than those below them among the top one percent of incomes. In other words, among the most affluent one percent of Americans, the income tax is regressive, with a lower effective rate as one moves up the oligarchic scale.
* The US tax system as a whole is "essentially flat, rather than progressive," because progressive nominal income tax rates are offset by regressive payroll and consumption taxes.
* The Social Security tax is "the most regressive tax in the U.S." thanks to the cap on income subject to the tax. As a result, the bottom 90 percent pay at the top tax rate, since all of their income is subject to the tax, while those above the cap pay a lower rate of their total income, with the wealthiest paying just a tiny fraction of one percent of income.
* The IRS quickly learned that it was easier to extract resources from many people with modest incomes than from a few with massive incomes and formidable defensive capability. It's far more costly to prosecute those who can readily defend themselves and whose attorneys can make plausible legal arguments about complicated areas of the law.
Oligarchic theory provides a fascinating way to understand history and democracy. It will be particularly enlightening for those who disagree with John Adams'"infallible maxim in politics." ###
ISBN-13: 978-0521182980
ISBN-10: 0521182980
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This is indeed an excellent ouvrage to understand the logic of power in various ...
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