Who Rigged It, How We Fix It
By Robert B. Reich
BREAK ’EM UP
Recovering Our Freedom From Big Ag, Big Tech, and Big Money
By Zephyr Teachout
One of the mysteries in politics for decades now has been why white working-class Americans began to vote Republican in large numbers in the 1960s and 1970s. After all, it was Democrats who supported labor unions, higher minimum wages, expanded unemployment insurance, Medicare and generous Social Security, helping to lift workers into the middle class.
Of course, an alternative economic view, led by economists like Milton Friedman, was that this turn toward the Republican Party was rational and served workers’ interests. He emphasized free markets, entrepreneurialism and the maximization of profit. These, Friedman argued, would raise wages for many and even most Americans.
But wages did not rise. And yet many in the working class kept voting Republican, still seemingly angered by Lyndon Johnson’s Great Society, which was dedicated to helping the poor and assuring equal rights for people of color. In the 1980s, under Ronald Reagan, income inequality began to rise sharply; wages for typical Americans stagnated and poverty and homelessness increased. Capital investment remained relatively weak despite deep tax cuts (as it does today under Donald Trump). At the same time, antitrust regulation was severely wounded, and giant corporations began to monopolize industry after industry.
In 2004, Thomas Frank’s book “What’s the Matter With Kansas?” tried to explain why a once Democratic state had turned resolutely Republican. His eloquent review of the rhetoric of the age was instructive.
But the presidential election of 2016 sent the sharpest message yet. Working-class voters in Michigan, Pennsylvania and Wisconsin opted for Trump, and apparently against their economic interests. Trump had succeeded in appealing to their anger and the Democrats were caught flat-footed.
Two new books, “The System,” by the former labor secretary Robert B. Reich, and “Break ’Em Up,” by the lawyer and activist Zephyr Teachout, a onetime candidate for New York State attorney general, are among the latest examples of an evolving set of explanations that try to make sense of the 2016 results.
A powerful money-fueled oligarchy has emerged in America that is an enemy of democracy, Reich writes. The self-interested power of the nation’s wealthy often goes unnoticed by voters, and is partly misdirected by right-wing rhetoric about issues like immigration. But it leads to lower wages, less product choice and abusive labor practices. Trump has harnessed the frustration of the working class, Reich says, but he was a “smokescreen” for the oligarchy. Reich has an almost unmatched ability to make insightful observations about the nation’s inequities, and in “The System,” he observes that the question is no longer Democrat versus Republican or left versus right, but “democracy versus oligarchy.”
To Teachout, what’s behind our rigged system is the close cousin of oligarchy: corporate monopoly. Teachout lists her culprits, among them familiar names: Amazon, Google, Facebook, Monsanto, AT&T, Verizon, Walmart, Pfizer, Comcast, Apple and CVS. These companies “represent a new political phenomenon,” she says, “a 21st-century form of centralized, authoritarian government.”
Two dramatic related facts underscore the claims of both Reich and Teachout. The much discussed rise of wealth among the top 0.1 percent, which now has 20 percent of the nation’s wealth compared with only 10 percent 40 years ago, has been brought to light in recent years by the innovative economists Thomas Piketty and Emmanuel Saez. The flip side is that wages for the large majority of American workers have stagnated more or less over this same period.
According to Reich, the “anti-establishment fury” that is the result of such inequity supersedes racial prejudice as the cause of Trump’s success. In 2001, more than three out of four workers were satisfied that they could get ahead by working hard. In 2014, only slightly more than one out of two thought so. Voters wanted badly to blame it all on the swamp Trump promised to clean up.
For Reich, the big oligarchical companies have the lobbying and campaign-financing muscle to mold the rules in their own favor. They can win enormous tax cuts, suppress financial and environmental regulations, acquire new patents and subsidies, fight for free trade — it is a long list. For years, they successfully battled against higher minimum wages and labor laws that restricted their union-busting efforts.
Teachout, a dogged scholar, lays out a comprehensive list of damage done to American consumers by monopolized industries like Big Pharma, fossil fuels, Silicon Valley, health insurance, banking and communications giants from Verizon to Facebook and Google. She provides example after example of how these companies limit consumer choice and suppress regulation. Google and Facebook may make access to some news easier, but they also undermine the profitability of the print news organizations, putting many of them out of business. Big Pharma is protected from competition by questionable patents and by ever lighter regulations. The nation’s private health care system, dominated by a relative handful of insurance companies, keeps costs much higher in the United States than in the rest of the rich world. For Teachout, the solution follows as night follows day. Break up the big companies and reintroduce competition. (Surprisingly, this is straightforward mainstream economic theory.)
But both Reich and especially Teachout should temper their anticorporate zeal, at least to a degree. Big companies have often done good while also doing bad. In the 1800s, the A.&P. grocery chain provided a wide range of products, though it put countless mom and pop stores out of business. Ford built a cheap functional car in the 1920s, and Apple an affordable personal computer in recent years. Some balance is required.
Still, they are mostly right. Here is Teachout’s general recommendation: “Instead of protesting Pfizer on Tuesday for hiking drug prices, Comcast on Wednesday for suppressing union voices and Amazon on Thursday for getting billions in subsidies, we should unite behind a coherent agenda, demanding that antitrust authorities break up Pfizer and Comcast, Amazon and Facebook, Monsanto and Tyson.”
Both authors say that Ronald Reagan led the way to the swift undoing of traditional antitrust regulation in the 1980s. But Reich is almost as harsh on the Clinton and Obama administrations. Even when the Democrats controlled both houses of Congress, he writes, they allowed antitrust enforcement to “ossify,” let companies hammer away at trade unions and went easy on Wall Street. They were also soft on the issue of campaign contributions, failing to advocate for public financing of elections.
Why? Reich argues that the Democrats chose to turn their backs on the working class and pursue suburban swing voters. He knows, he tells us. He was there. And he reports that the Democrats “drank from the same campaign funding trough as the Republicans — big corporations, Wall Street and the very wealthy.”
Reich makes an example of Jamie Dimon, the chairman of JPMorgan Chase. For Reich, he is representative of the C.E.O. class that talks about corporate social responsibility but rarely practices it. A lifetime Democrat, Dimon was a major supporter of the Trump tax cut and does not support an increase in the minimum wage.
Teachout by and large shares Reich’s anger and may even exceed it. Yet both find reasons for optimism in new laws and grass-roots movements. America achieved marriage equality for gays and lesbians, elected a Black man president and made the Affordable Care Act law. Reich insists democracy will ultimately prevail over oligarchy. And Teachout sees America embarking on a new antimonopoly moment.
These are valuable books, and the anger they will generate may prove politically energizing. But Reich’s claim that democracy will somehow prevail underestimates the dangers we face. As for Teachout, more competition may help alleviate some problems, but it is in fact an idealized version of free market thinking.
Meanwhile, the current president is moving in exactly the opposite direction. He is promising cuts in social policies that may well increase middle-income and working-class frustration. He wants to rewrite the official definition of poverty to claim that there are fewer poor. He undermines the rule of law on a regular basis. The Supreme Court has been stacked with extreme conservatives. Voter suppression is common.
Is it any wonder that many fear democracy in America may not prevail?
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