In this issue:
We feature some new data about grotesque wealth inequality, a dive into the Pandora Papers, and important writing that explores the relationship of the 1% to right-wing authoritarianism. Much of this is sobering, but we explore how divisions within the ruling class might be leveraged to advance progressive economic agendas and preserve democracy.
Immigration Matters news: Jacob Hamburger interviewed Deepak and Ruth Milkman on the Tocqueville 21 Podcast episode “Immigration and the Crisis of Democracy,” which explores how immigration policy should change to reflect the realities of twenty-first-century politics, economics, and ecology. We also talk about how the fight for a more inclusive United States intersects with the fight to preserve democracy from its enemies in a post-January 6th world. Deepak also did an interview with Arizona NPR station KJZZ about some of the toplines in the book.
There will be an in-person launch of the paperback edition of Immigration Matters on October 19th in New York City at McNally Jackson at their Seaport location (NEW location, bigger venue). You can R.S.V.P. here – space is limited, so sign up!
A note from Harry: Taking advantage of the fact that Deepak is out of town and I’m putting the finishing touches on this issue of the Platypus, I’m excited to share the news that Deepak, who is too humble to announce this, is being honored with the “Freedom from Want” Award by the Roosevelt Institute. The other awardees are Pulitzer-winning journalist Nikole Hannah-Jones, U.S. Senator Raphael Warnock, and four of the heroic immigrant workers who won the historic Excluded Workers Fund in New York State: Maria Isabel Sierra, Sonia Pérez, Sixta Leon Barrita, and Rubiela Correa. The Freedom Medal will be given posthumously to famed civil rights activist Fred Korematsu and accepted by his daughter Dr. Karen Korematsu. There will be three events, each at 7 p.m. ET on three consecutive Wednesdays, October 13, 20, and 27. The event on the 20th will feature the four leaders who won the Excluded Workers Fund as well as an interview of Deepak by Cristina Jiménez of United We Dream. I hope you’ll join and support The Roosevelt Institute, which is playing such a key role in changing the economic debate in our country. Here’s a link for more information, and here’s a link to register for the events for free.
What is the Ruling Class Thinking?
One of the most absurd critiques of Biden’s Build Back Better legislation is that proposed tax increases on the rich and corporations are too extreme or even that they would be “vengeful,” as Joe Manchin put it. In fact, what President Biden has proposed would for the most part take us back to where we were before Trump’s tax cut bonanza for the rich. A more accurate critique would be that Biden’s plan doesn’t go far enough and wouldn’t do much to tackle the escalating concentration of wealth in America. Forbes magazine reports that the richest 400 Americans added $4.5 trillion (a 44% increase) to their wealth last year during a pandemic that shuttered much of the economy. That’s more than the entire $3.5 trillion total price tag over 10 years of the bill that Manchin and Sinema object to. Read that sentence again. We’re all a little numb, but that is a staggering set of facts.
And many of the rich aren’t even paying the taxes they owe. If you haven’t tuned into the Pandora Papers, you should. As the Washington Post put it,
The Pandora Papers is an investigation based on more than 11.9 million documents revealing the flows of money, property and other assets concealed in the offshore financial system. The Washington Post and other news organizations exposed the involvement of political leaders, examined the growth of the industry within the United States and demonstrated how secrecy shields assets from governments, creditors and those abused or exploited by the wealthy and powerful. The trove of confidential information, the largest of its kind, was obtained by the International Consortium of Investigative Journalists, which organized the investigation. . . .
Over the last decade, economists have focused attention on measuring the vastness of the wealth hidden away in offshore accounts and companies. Because of the huge amounts of money that don’t show up in official country statistics, they note, measurements of global inequality may have been understated.
Estimates vary widely about how much money is out there, but loosely speaking, it’s a lot: from $1 trillion to more than $25 trillion. The most common type of estimate is based on national economic figures on investment, and such estimates generally come in the range of $5 trillion to $8 trillion.
Roughly, that corresponds to about 10 percent of global gross domestic product.
Exactly who owns that wealth is more difficult to know. One of the best-known estimates comes from a 2019 study that found that the wealthiest 0.01 percent of households owned 50 percent of financial assets held in foreign jurisdictions.
“The evidence shows that the very wealthy have the means and sophisticated legal help to hide money,” said Annette Alstadsaeter, a professor at the Centre for Tax Research at the Norwegian University of Life Sciences, and one of the authors of the study. . .
Only a handful of U.S. billionaires show up in the records obtained by the ICIJ. Absent from the Pandora Papers are some of the nation’s wealthiest — Tesla founder Elon Musk; billionaire investor Warren Buffett; and Amazon founder Jeff Bezos, who owns The Washington Post.
In part, this may be because U.S. residents generally do not use the financial services providers whose records were obtained. In part, experts said, it is because U.S. billionaires pay so little in taxes relative to their incomes that hiding money offshore is mostly unnecessary.
Yep, our tax rates are so low that the American super-rich can’t be bothered to hide their money offshore.
One of the great puzzles of the recent era has been the relationship of plutocrats to Trumpism and right-wing authoritarianism. Are they ardent supporters, passive bystanders, enablers, or something else?
Doug Henwood has a superb piece in Jacobin, “Take Me to Your Leader: The Rot of the American Ruling Class,” arguing that the capitalist class contains different fractions with divergent interests and politics. He contends that the political hard right today is powered not by the titans of the largest investment banks or public corporations; they won the big battles they most care about long ago and are passively reaping huge rewards, content to make money hand over fist. Instead, the right in recent decades has been powered and funded by regional, second-tier, and privately held corporations. Think of the loony My Pillow CEO, Mike Lindell, as the archetype.
But a new class fraction did find expression in, or at least had affinities with, the Trump administration. As I argued above, the business coalition that came together in the 1970s to lobby for deregulation and tax cuts largely dissolved as a united force when it got what it wanted. Rather than a broad agenda, the business lobby narrowed to focus on sectoral and individual corporate interests. The Chamber of Commerce, though purporting to speak for business in general, came to rent itself out to specific clients, often unsavory ones. Big capital is socially liberal — or it pretends to be. It has no interest in the Christian right’s moral agenda, nor is it nativist. Almost every Wall Street and Fortune 500 company has a diversity department, handling everything from anti-racist training sessions to the corporate float for the annual LGBT pride parade. Their worldview is little different from Hillary Clinton’s — but they’re not passionately engaged in politics. They write checks, but profits are high, and the tax rate they paid on those profits over the last few years was the lowest it’s been since the early 1930s.
They’re layabouts compared to the class fraction I’m describing, a gang made up of the owners of private companies as opposed to public ones, disproportionately in dirty industries. The financier wing comes largely out of “alternative investments,” hedge funds and private equity, not big Wall Street banks or Silicon Valley VC firms. Most alternative investment operations are run as partnerships with a small staff, often under the direction of a single figure. Collectively, they look like freebooters more than corporate personalities, and asset-strippers more than builders, be it natural assets in the case of the carbon moguls or corporate assets in the case of the PE titans. Trump himself ran a real estate firm with a small staff and no outside shareholders. Like a private equity guy, Trump loaded up his casinos with debt and pocketed much of the proceeds.
The prominence of private ownership is striking, and it’s politically reactionary. Lately, institutional investors have been lobbying for some action on climate — not profit-threatening action, of course, but something. Central bankers are starting to make similar noises; they’re increasingly worried that a financial system reliant on carbon assets (which could easily collapse in value when they’re recognized for the climate-killers they are) might run into serious trouble. Since they have no outside shareholders, the Kochs and Hamms of the world are spared having to listen to this chatter.
Henwood surveys the wreckage and argues,
One doesn’t want to idealize the ruling classes of the past. For all of history, their wealth and status have depended on exploiting those below them — and they’ve never shied away from extreme measures if they feel that those things are threatened. But the present configuration of the American ruling class is having a hard time performing the tasks it’s supposed to in order to keep the capitalist machine running. It’s not investing, and it’s allowing the basic institutions of society — notably the state but also instruments of cultural reproduction like universities — to decay.
Capitalists have long been driven by shortsightedness and greed. But it feels like we’ve entered what Christian Parenti calls the necrotic phase of American capitalism.
Henwood’s portrait of the 1% in America is a devastating indictment that suggests that our ruling class bears substantial responsibility for the crisis of democracy we face. Both fractions are culpable — the one that enthusiastically embraces Trumpism and the one that passively enables it.
Henwood’s argument compliments others we’ve highlighted in The Platypus. In Down to Earth: Politics in the New Climatic Regime, Bruno Latour makes a similar case in a distinctively French way, contending that much of the world’s elite has essentially seceded from the rest of humanity, no longer believing in any kind of shared project and preparing to decamp for other futures we are not invited to — Mars in the case of Branson, Bezos, and Musk; transhumanism and the search for immortality in the case of Silicon Valley moguls. Henwood’s broad perspective also dovetails with Evan Osnos’s ethnographic reporting in the New Yorker about the Trumpist collaborationism of the ultra-rich in Greenwich, Connecticut, and the unhinged escapism of plutocratic survivalists, who have jointly bought a missile silo and built a high-end bunker to retreat to in the End Times.
If there’s a bright spot in all this, it may be that Henwood’s analysis of the rot suggests that one path to defeating authoritarianism is to raise the cost of doing business under such conditions for that portion of the corporate class that has mostly watched comfortably from the sidelines. It’s notable, as Molly Ball reported back in February, that many powerful corporate forces acted to thwart Trump’s coup. They were spurred mostly by fears of civil disorder and, to some degree, an understanding that Trump’s efforts to portray mail-in ballots as fraudulent was part of a duplicitous strategy to claim he’d won on election night and present any “blue shift” as evidence that Democrats were stealing the election. These concerns led the U.S. Chamber of Commerce, the Business Roundtable, “as well as associations of manufacturers, wholesalers and retailers,” to issue a statement before the November election, “calling for patience and confidence as votes were counted.” The Chamber went one step further, joining forces with the AFL-CIO, the National Association of Evangelicals, and the National African American Clergy Network to issue a joint statement on Election Day that read,
. . . it is imperative that election officials be given the space and time to count every vote in accordance with applicable laws. We call on the media, the candidates and the American people to exercise patience with the process and trust in our system, even if it requires more time than usual. It is important to remember that challenges are a normal part of every election. We are confident our country and its institutions can rise to this historic moment.
Although we may not always agree on desired outcomes up and down the ballot, we are united in our call for the American democratic process to proceed without violence, intimidation or any other tactic that makes us weaker as a nation. A free and fair election is one in which everyone eligible to cast a ballot can, all ballots are counted consistent with the law and the American people, through their votes, determine the outcome.”
After the election, as Trump’s coup plotting swung into high gear, many corporations kept up the pressure. In the wake of January 6th insurrection, as Judd Legum reported,
about 170 companies announced they were suspending donations from their corporate PACs to the 147 Republicans who voted to overturn the election results or to all members of Congress.
Although several corporations backslid on their pledges — emboldened by the Chamber’s diminished ardor to withhold funding for all 147 members — when the Federal Elections Commission released its first-quarter report in April, it was clear, as Legum writes,
There was a financial cost for many of the Republicans who chose to validate Trump's lies about election fraud by voting to overturn the election results. Total corporate PAC donations to that group were down 80%, from $6.7 million to $1.3 million, compared to the first quarter of the 2020 cycle, according to an analysis by the Wall Street Journal.
Objectors that appear frequently in the media, like Senator Josh Hawley (R-MO) and Congresswoman Marjorie Taylor Greene (R-GA), were able to more than offset the PAC donations with small donations from the GOP base. But most Republican members of Congress were not able to replace the PAC cash. Two-thirds of the Republican objectors that had comparable data from the last cycle had "overall fundraising declines.
Further, as Samir Sonti, argues in a forthcoming piece (pre-order here), because a significant portion of the wealth of the 1% derives from investments that depend on the easy money policy of the Federal Reserve, there’s some possibility that a robust economic program won’t be immediately cut off by moves to increase interest rates.
Defeating authoritarianism will depend first and foremost on the creation and mobilization of a broad united front of social forces for multi-racial democracy. But exploiting the divergent interests among the 1% that Henwood points to may prove tactically crucial.