On Labor Day weekend, eight weeks before one of the most consequential elections in American history, it’s useful to consider the inequalities of income and wealth that fueled Donald Trump’s victory four years ago – and which are now wider than ever.
No other developed nation has nearly the inequities found in the US, even though all have been exposed to the same forces of globalization and technological change. Jeff Bezos’s net worth recently reached $200bn and Elon Musk’s $100bn, even as 30 million Americans reported their households didn’t have enough food. America’s richest 1% now own half the value of the US stock market, and the richest 10% own 92%.
American capitalism is off the rails.
The main reason is that large corporations, Wall Street banks and a relative handful of exceedingly rich individuals have gained enough political power to game the system.
Chief executives have done everything possible to prevent the wages of most workers rising in tandem with productivity gains, so most gains go instead into the pockets of top executives and major investors. They’ve outsourced abroad, installed labor-replacing technologies and switched to part-time and contract work.
They’ve busted unions, whose membership shrank from 35% of the private-sector workforce 40 years ago to 6.4% today.
They’ve pushed government to slash their own taxes, unravel safety nets for the poor and middle class and reduce investment in education and infrastructure. They’ve eliminated a raft of labor protections. They’ve defanged antitrust enforcement, allowing their monopolies free rein. The free market has been taken over by crony capitalism, corporate bailouts and corporate welfare.
This massive power shift laid the groundwork for Trump. In 1964, almost two-thirds of Americans believed government was run for the benefit of all the people. By 2013 almost 80% believed government was run by a few big interests. The erosion in public trust was particularly steep in the wake of the Wall Street bailout and Great Recession. In 2006, 59% of Americans thought government corruption was widespread. By 2013, 79% did.
At the start of the century, a Gallup poll found that 77% of Americans were satisfied with opportunities to get ahead by working hard, and only 22% dissatisfied. By 2014, only 54% were satisfied and 45% dissatisfied. According to the Pew Research Center, the percentage of Americans who believe most people who want to get ahead can do so through hard work dropped by 13 points between 2000 and 2015.
Much of the political establishment wants to attribute Trump’s rise solely to racism. Racism did play a part, to be sure, but racism’s sordid history in American politics long predates Trump.
What has given Trump’s racism – as well as his hateful xenophobia, misogyny and jingoism – particular virulence has been his capacity to channel the intensifying anger of the white working class. It is hardly the first time a demagogue has used scapegoats to deflect public attention from the real causes of its distress.
Trump speaks the language of authoritarian populism but acts in the interests of America’s emerging oligarchy. His deal with the moneyed interests was simple: he’d stoke divisiveness so Americans wouldn’t see how the oligarchy has taken over the reins, twisted government to its benefit and siphoned off the economic rewards.
He’d make Americans so angry at each other that they wouldn’t pay attention to CEOs getting exorbitant pay while slicing the pay of average workers, wouldn’t notice the giant tax cut that went to big corporations and the wealthy, and wouldn’t be outraged by a boardroom culture that tolerates financial conflicts of interest, insider trading and the outright bribery of public officials through unlimited campaign donations.
This way, the moneyed interests could rig the system while the president complained that the system was rigged by a “deep state”.
Notwithstanding all this, Trump trails Joe Biden in the polls. Trump’s inexcusable failure to contain the coronavirus is having a larger impact on swing voters than the divisiveness he foments. Death has a way of concentrating the mind.
But if Biden is elected, he would be well advised to remember the forces Trump exploited to gain power, and to begin the task of remedying them. The solution is not found in mere redistribution of income. It is found redistributing power. Income isn’t a zero-sum game in which some people’s gains require other people’s losses, but power indubitably is. Some have it only to the extent others don’t.
If wealth continues to concentrate at the top, no one will be able to contain the corrupting influence of big money on the American system and the anger it unleashes. As Justice Louis D Brandeis once said: “We can have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can’t have both.”