Bad News (a Long Read)

Looking out the window in a pleasant neighborhood, you don’t see the problems. But they’re very real.

This is the headline of an article in Time written by a businessman and a former labor leader: “The Top 1% of Americans Have Taken 50 Trillion Dollars from the Bottom 90%”:

Like many of the virus’s hardest hit victims, the United States went into the COVID-19 pandemic wracked by preexisting conditions. A fraying public health infrastructure, inadequate medical supplies, an employer-based health insurance system perversely unsuited to the moment—these and other afflictions are surely contributing to the death toll. But in addressing the causes and consequences of this pandemic—and its cruelly uneven impact—the elephant in the room is extreme income inequality.

How big is this elephant? A staggering $50 trillion. That is how much the upward redistribution of income has cost American workers over the past several decades.

This is not some back-of-the-napkin approximation. According to a groundbreaking new working paper by Carter C. Price and Kathryn Edwards of the RAND Corporation, had the more equitable income distributions of the three decades following World War II (1945 through 1974) merely held steady, the aggregate annual income of Americans earning below the 90th percentile would have been $2.5 trillion higher in the year 2018 alone. That is an amount equal to nearly 12 percent of [Gross Domestic Product] —enough to more than double median income—enough to pay every single working American in the bottom [90%] an additional $1,144 a month. Every month. Every single year.

Price and Edwards calculate that the cumulative tab for our four-decade-long experiment in radical inequality had grown to over $47 trillion from 1975 through 2018. At a recent pace of about $2.5 trillion a year, that number we estimate crossed the $50 trillion mark by early 2020. That’s $50 trillion that would have gone into the paychecks of working Americans had inequality held constant—$50 trillion that would have built a far larger and more prosperous economy—$50 trillion that would have enabled the vast majority of Americans to enter this pandemic far more healthy, resilient, and financially secure. . .

At every income level up to the 90th percentile, wage earners are now being paid a fraction of what they would have had inequality held constant. . . .On average, extreme inequality is costing the median income full-time worker about $42,000 a year. Adjusted for inflation using the [Consumer Price Index], the numbers are even worse: half of all full-time workers (those at or below the median income of $50,000 a year) now earn less than half what they would have [if] incomes . . . continued to keep pace with economic growth. And that’s per worker, not per household.

The next article I read was written for the Times Literary Supplement by a Columbia University researcher. “The Rich and the Rest” is a review of three books. The first book describes how corporate America and the rich have waged a successful war on science for the past seventy years:

A succession of administrations have frayed the social safety net and dismantled regulatory controls. Corporate money has bought unprecedented influence in electoral campaigns and reaped unprecedented political power in return. In The Triumph of Doubt: Dark Money and the Science of Deception, the epidemiologist David Michaels details many of the victories these corporate interests have won. Michaels, the former head of the Occupational Safety and Health Administration under the Barack Obama administration, spent years weighing the survival of workers and citizens against the short-term profits of corporations. In his book, he documents not only a shocking disregard for human welfare on the part of big business, but also a co-ordinated effort to compromise the culture of knowledge itself.

Michaels painstakingly explains the way medical researchers have documented the dangers of certain consumer products and industrial processes, beginning with smoking. . . . One early study “found that heavy smokers were fifty times as likely as non-smokers to contract lung cancer”. This was terrible news for the tobacco industry, which had burgeoned with the wartime practice (in both world wars) of issuing cigarettes to soldiers as standard rations. And so the industry responded by commissioning a public relations expert to set up a “research committee” to contest the findings. Unfortunately, the findings were solid, so the mission became the manufacture of doubt. Did tobacco use cause lung cancer? The evidence suggested that it did. Was tobacco the only cause of lung cancer? Of course not. So carcinogens like asbestos and radon became excuses for quashing public health measures concerning tobacco. Over time, an army of publicists, lawyers and corrupt scientists was assembled to prolong the public agony in the interest of squeezing every last nickel from the trade.

. . . Chapter by chapter, case by case, Michaels marches through the many ways corporate greed has co-opted science, law and government, in each case following the model set by Big Tobacco. . . .

Michaels’s book follows in the distinguished footsteps of the historians of science Naomi Oreskes and Erik M. Conway, whose Merchants of Doubt (2010) described how Big Tobacco’s proxies segued into climate change denial. Once again, even when the science was near unanimous, the purveyors of fossil fuels and industrial contaminants saturated the public sphere with specious arguments and outright falsehoods. In recent years oil companies have busily diversified and invested in alternative energy, but they have simultaneously waged war against environmental regulations to maximize every bit of profit from the existing industry before they abandon it, regardless of the human cost.

The second book tells the story of the fabulously wealthy Koch family. It was Fred Koch, a chemical engineer, who saw a great opportunity during the Texas oil boom in the early 20th century:

Fred cleverly predicted that subsidiary industries such as refineries and pipelines would pave the way to great fortunes. He was more concerned with profits than with politics – he built refineries for both Stalin and Hitler – and, while a highly successful businessman, he remained a fairly ordinary oil magnate: it took his sons to transform the company into a political and economic powerhouse. As Christopher Leonard writes in Kochland: The Secret History of Koch Industries and Corporate Power in America, Charles Koch, who was made company president in 1966, despised New Deal America.

His response was to create “a political influence network that is arguably the most powerful and far-reaching operation ever run out of an American CEO’s office … Charles Koch’s political vision represents one extreme pole in the ongoing debate about the role of government in markets; a view that government should essentially protect private property and do little else”. . . .

[Charles] turned the full beam of his method to politics in 2008, when the Obama administration and the Democratic Congress began to draft policies to respond to the climate crisis, endangering fossil fuel profits.

Koch and his associates have created a political assembly line to fund, organize and publicize an opposition. His donors’ gatherings . . . have collected millions of dollars, which have then funded organizations such as the American Legislative Exchange Council (ALEC), which in turn have leveraged influence-peddling among state legislators, and funded faux “grassroots” (or “astroturf”) organizations, such as Americans for Prosperity. These have orchestrated demonstrations and door-to-door canvassing during elections. Koch-funded groups have subverted language with Orwellian flair: Americans for Prosperity promotes regressive tax policies and wage suppression; the Heartland Institute promotes the despoliation of the American landscape by sowing doubt about climate and environmental hazards.

The review’s third book deals with America’s “compound epidemic of addiction, alcoholism and suicide”, an epidemic that obviously predated Covid-19:

The Princeton economists Anne Case and Angus Deaton survey this tragic landscape in Deaths of Despair and the Future of Capitalism. Case and Deaton call this situation the dark side of meritocracy, in which “the less educated are devalued and disrespected”. In this view, the collapse of social constructs, including marriage, institutional religion and trade unions, leaves people unmoored and their interests undefended. And while the elites of the past often regarded noblesse oblige and charity as the obligations of privilege and faith, modern American meritocracy, rooted in the founding religion of Calvinism, suggests that the happy “elect” are deserving of their good fortune, and that the “losers” are simply reaping what they sow. To help them is throwing good money after bad. Better to spend it on a sports arena.

The upshot is dire. The US has the highest infant mortality rate and the lowest life expectancy among industrialized nations – a situation that the Covid-19 crisis has cast into sharp relief. The US accounts for 4 per cent of the world’s population but more than 25 per cent of global deaths from the pandemic. . . .

Nowhere are the flaws of unfettered capitalism better illustrated than in the opioid crisis (here as in Michaels’s book). It is a tragically familiar tale: a powerful pharmaceutical company creates a new market for addictive painkillers by encouraging and incentivizing doctors to record pain levels as the fifth vital sign (after temperature, pulse, respiration and blood pressure). Once this subjective symptom is recorded, the drug can be prescribed, having been falsely advertised as unlikely to lead to addiction. Billions of dollars in profit are then realized, at a dire cost: to this day millions remain addicted; more than 67,000 Americans died from overdoses in 2018 alone. In this cycle of immiseration, a dysfunctional society breeds pain, then creates a revenue stream from a treatment that infinitely compounds it.

Yet millions of voters, in particular struggling White men with high school educations, support the Republican Party, the party of big business. They have their reasons, despite the fact — revealed by the study described in that Time article — that “by far the single largest driver of rising inequality these past forty years has been the dramatic rise in inequality  between white men”. Again from the Time article:

The $50 trillion transfer of wealth the RAND report documents has occurred entirely within the American economy, not between it and its trading partners. . . . [This] upward redistribution of income, wealth, and power wasn’t inevitable; it was a choice—a direct result of the trickle-down policies we chose to implement since 1975.

We chose to cut taxes on billionaires and to deregulate the financial industry. We chose to allow CEOs to manipulate share prices through stock buybacks, and to lavishly reward themselves with the proceeds. We chose to permit giant corporations, through mergers and acquisitions, to accumulate the vast monopoly power necessary to dictate both prices charged and wages paid. We chose to erode the minimum wage and the overtime threshold and the bargaining power of labor. For four decades, we chose to elect political leaders who put the material interests of the rich and powerful above those of the American people.

I’ll conclude this avalanche of dysfunction with a passage from a densely-written classic, Politics and Markets, by Charles Lindblom (I’m going to finish it this time). It was published, coincidentally or not, in 1976:

One obstruction to polyarchy [rule by the many] is the privileged position of businessmen [by which Lindblom means their tremendous control over the functioning of a nation’s economy]. It is a rival . . . to the polyarchal control of government [since government must induce businessmen to keep the economy going]. Another obstruction is the disproportionate influence of businessmen in interest-group, party and electoral politics. It permits businessmen to win . . . disproportionately in their many polyarchal struggles. . . But now suppose that the business influence strikes even deeper in a particular way. Consider the possibility that businessmen achieve an indoctrination of citizens so that citizens’ volitions serve not their own interests but the interests of businessmen. The privileged position of business comes to be widely accepted. In electoral politics, no great struggle need be fought [202] . . . 

. . . Despite universal suffrage, income distribution in the polyarchies [like the US and UK] has not changed greatly. . . In few of the polyarchies is there serious discussion, even among the politically active, of major alterations of the distribution of wealth and income. And citizens are extraordinarily ignorant on the issue. . . [208].

Two recent studies of British working-class attitudes and opinions agree in finding both a narrow range of opinion and widespread deference of working class to upper class — this in a society many of whose nineteenth-century leaders feared that universal suffrage would bring about demands for a more equal sharing of income and wealth, so obviously advantageous did they see such policies for the mass of voters. It is one of the world’s most extraordinary social phenomena that masses of voters vote very much like their elites. They demand very little for themselves [208-209].

Lindblom was calling attention to economic inequality before America became vastly more unequal. Now the public is more aware of inequality, but that’s because inequality is so much worse. Nevertheless, “masses of voters [continue to] vote very much like their elites”. What would the professor make of our situation in the year 2020? (I bet he’d recommend voting.)