As Mitt Romney closes in on the Republican presidential candidacy, the major parties are preparing their narrative for the elections. Romney has been identified as a rogue job-destroying vulture capitalist, rhetorically contrasted with good, job-creating, capitalism, while for his part he describes his critics as motivated by jealousy of success.
Talking Points Memo commented: “If a speech Thursday morning by one of his top economists is any indication, President Barack Obama is going all in with the 2012 re-election message of stemming the rise in income inequality and reforming a system that’s increasingly perceived to be rigged in favor of the rich. White House Council of Economic Advisers Chairman Alan Krueger rattled off a flurry of statistics illustrating the rise of inequality and its connection to the shrinking middle class. He blamed it on economic policies tilted to favor top earners — including income tax reforms (presumably during the Bush era) and the ‘drastic cut in the estate tax’.”
The belated concern for the middle class, echoing the message of the Occupy movement, stands in contrast to the actions of Obama’s administration, which has done nothing to stop illegal bank evictions or curb corporate power. Although it sounds good in speeches, implementing a change in tax policy which would cut into the accumulation of wealth and power at the top would mean overturning corporate control of the political process which has been consolidated over at least the last 30 years.
Because of the power accumulated by the super-rich, they have developed a political ideology that justifies social inequality as god-given or natural, and use their strength to resist taxation. Economist Joseph Stiglitz describes a rational solution to the crisis of inequality and why it is unlikely to be implemented: “More progressive taxation, in effect redistributing income from the top to the middle and bottom, would simultaneously reduce inequality and increase employment by boosting total demand. Higher taxes at the top could generate revenues to finance needed public investment, and to provide some social protection for those at the bottom, including the unemployed. Even without widening the fiscal deficit, such ‘balanced budget’ increases in taxes and spending would lower unemployment and increase output. The worry, however, is that politics and ideology on both sides of the Atlantic, but especially in the US, will not allow any of this to occur.”
Mitt Romney displayed this unapologetic tax-cutting ideology of the plutocrat on the Today Show. Host Matt Lauer asked Romney if he believed that questioning the practices of Wall Street or social inequality was more about ‘fairness’ or about ‘envy.’ “Romney insisted that it was solely an ‘envy-oriented’ attack on ‘millionaires and billionaires and executives and Wall Street’.” He went on to say: “When you have a president encouraging the idea of dividing America based on the 99 percent versus one percent — and those people who have been most successful will be in the one percent — you have opened up a whole new wave of approach in this country which is entirely inconsistent with the concept of one nation under God.”
So, in Romney’s theology, we are one nation in which the rich are successful because they have been divinely blessed. Their success came about purely from their own effort and everyone else had no part in it. The reality is very different. In 1999 Bain Capital realized a profit of $85 million on an investment of $18 million in an Indiana company called Steel Dynamics. It’s one of the companies Romney is claiming is a job-creating success. However, as the LA Times points out, “the state and county pledged $37 million in subsidies and grants for the $385-million plant project. The county also levied a new income tax to finance infrastructure improvements to benefit the steel mill over the heated objections of some county residents.”
E.J. Dionne comments: “Capitalists of Romney’s sort never want to acknowledge how much their ability to make money depends on what government does. How does it structure the laws related to property, taxation and debt? What rules does it write on how companies can be acquired and how power within firms is apportioned among shareholders, employees, managers and other stakeholders? These are not natural laws. They are the work of politicians and the lobbyists who influence them.”
Obama and Krueger are reproducing a myth that capitalism is somehow inherently equalizing, that it embodies the opportunity for social advancement for all, while conveniently avoiding discussing the results of deregulation and the bank bailouts. But while capital has an imperative to increase itself, it has no imperative to create jobs unless it can produce ever-increasing profit. The way capitalism has to work today is to extract value from the rest of society, increase exploitation of its workforce, and accumulate compounded wealth in the hands of a few highly-paid executives and plutocratic shareholders.
The fact is that industrial capital has become increasingly financialized since the 1970s, when corporations experiencing declining profits from manufacturing offset this trend by exporting capital to low-wage countries and financializing debt. When he worked with Bain Capital Romney was seizing the opportunity presented by manufacturers in difficulties who could be made to create profits for Bain by loading them up with debt and reorganizing them.
In the 1950’s-70s manufacturing generated the profits it needed to invest in new technology. It’s the changes in capitalism since the 1970s that have created the situation today where the 99 percent face pauperization. The myth of a job and living-standard improving capitalism is based on the idealized Mad Men memory of the “golden age” of the U.S. economy.
Philip Pilkington writes in Naked Capitalism: “… nonfinancial companies have been able to maintain their profitability through their financial arms despite the real economy of production, distribution and consumption stagnating. … With their profitability squeezed, businesses are likely to turn on their workers and attempt to cut their wages and living standards. At this point we could well see a true depression taking shape in which businesses cut workers and wages to increase profitability, all the while profitability continues to fall as the unemployed and underpaid buy less and less stuff.”
Occupy Wall Street has begun the process of imagining an alternative to our corrupted political and financial system. In New York, Occupy members and local activists in East New York have entered the second month of their occupation of vacant homes. Alfredo Carrasquillo is the father of two whose family is living in an occupied home. He told the Real News Network: “I felt it was my duty and obligation to stand up as a young man of color from these communities … to show that there’s nothing ashamed with admitting that the system is wrong and is not allowing you to progress and be productive and own your own property and become a productive citizen in society.”
The home occupiers’ loss of shame and fear in face of economic hardship is significant. It indicates the breakdown of the social stigmas holding back the poor from resisting bank authority. According to the Real News presenter, “A recent study by the Center for Responsible Lending examining home loans received between 2004 and 2008 found one in four borrowers in low-income areas have been foreclosed on or risk foreclosure. More than 3.5 million people could still lose their homes to foreclosure, on top of the 2.7 million who already have. To reverse this trend, activists, including the group Take Back the Land, are vowing to expand eviction defenses and occupations across the country. Similar actions are underway in Atlanta, Chicago, and Seattle.”
The tension between the struggles of the 99 percent and the rhetoric of the politicians will come to dominate the 2012 election campaigns. The Occupy movement will have an important role in challenging the corruption of the process and asserting the source of sovereignty in the American people.