05 November 2010

"Wage repression" and "plutocracy" explained by Bill Moyers

In polite circles, among our political and financial classes, this is known as “the free market at work.” No, it’s “wage repression,” and it’s been happening in our country since around 1980. I must invoke some statistics here, knowing that statistics can glaze the eyes; but if indeed it’s the mark of a truly educated person to be deeply moved by statistics, as I once read, surely this truly educated audience will be moved by the recent analysis of tax data by the economists Thomas Piketty and Emmanuel Saez. They found that from 1950 through 1980, the share of all income in America going to everyone but the rich increased from 64 percent to 65 percent. Because the nation’s economy was growing handsomely, the average income for 9 out of l0 Americans was growing, too – from $17,719 to $30,941. That’s a 75 percent increase in income in constant 2008 dollars.

But then it stopped. Since 1980 the economy has also continued to grow handsomely, but only a fraction at the top have benefitted. The line flattens for the bottom 90% of Americans. Average income went from that $30,941 in 1980 to $31,244 in 2008. Think about that: the average income of Americans increased just $303 dollars in 28 years.

That’s wage repression.
There are a number of other excellent observations at the source, which is the text of a speech Moyers gave at B.U. last month.  Some additional excerpts:
That’s how financial capitalism works today: Conserving cash rather than bolstering hiring and production; investing in their own shares to prop up their share prices and make their stock more attractive to Wall Street. To hell with everyone else...

Late in August I clipped another story from the Wall Street Journal. Above an op-ed piece by Robert Frank the headline asked: “Do the Rich Need the Rest of America?”... the article went on to describe how the super-rich earn their fortunes with overseas labor, selling to overseas consumers and managing financial transactions that have little to do with the rest of America, “while relying entirely or almost entirely on immigrant servants at one of several homes around the country.”...

So the answer to the question: “Do the Rich Need the Rest of America?” is as stark as it is ominous: Many don’t. As they form their own financial culture increasingly separated from the fate of everyone else, it is “hardly surprising,” Frank and Lind concluded, “ that so many of them should be so hostile to paying taxes to support the infrastructure and the social programs that help the majority of the American people.”...

Now, most people know what plutocracy is: the rule of the rich, political power controlled by the wealthy. Plutocracy is not an American word and wasn’t meant to become an American phenomenon – some of our founders deplored what they called “the veneration of wealth.” But plutocracy is here, and a pumped up Citigroup even boasted of coining a variation on the word— “plutonomy”, which describes an economic system where the privileged few make sure the rich get richer and that government helps them do it...

I’ll repeat that: “The dynamics of plutonomy are still intact.” That was the case before the Great Collapse of 2008, and it’s the case today, two years after the catastrophe. But the plutonomists are doing just fine. Even better in some cases, thanks to our bailout of the big banks...

Socrates said to understand a thing, you must first name it. The name for what’s happening to our political system is corruption – a deep, systemic corruption. I urge you to seek out the recent edition of Harper’s Magazine. The former editor Roger D. Hodge brilliantly dissects how democracy has gone on sale in America. Ideally, he writes, our ballots purport to be expressions of political will, which we hope and pray will be translated into legislative and executive action by our pretended representatives. But voting is the beginning of civil virtue, not its end, and the focus of real power is elsewhere. Voters still “matter” of course, but only as raw material to be shaped by the actual form of political influence – money...

The Gilded Age returned with a vengeance in our time. It slipped in quietly at first, back in the early 1980s, when Ronald Reagan began a “massive decades-long transfer of national wealth to the rich.” As Roger Hodge makes clear, under Bill Clinton the transfer was even more dramatic, as the top 10 percent captured an ever-growing share of national income. The trend continued under George W. Bush – those huge tax cuts for the rich, remember, which are now about to be extended because both parties have been bought off by the wealthy – and by 2007 the wealthiest 10% of Americans were taking in 50% of the national income. Today, a fraction of people at the top today earn more than the bottom 120 million Americans.

You will hear it said, “Come on, this is the way the world works.” No, it’s the way the world is made to work. This vast inequality is not the result of Adam Smith’s invisible hand; it did not just happen; it was no accident. As Hodge drives home, it is the result of a long series of policy decisions “about industry and trade, taxation and military spending, by flesh-and-blood humans sitting in concrete-and-steel buildings.” And those policy decisions were paid for by the less than one percent who participate in our capitalist democracy political contributions. Over the past 30 years, with the complicity of Republicans and Democrats alike, the plutocrats, or plutonomists (choose your own poison) have used their vastly increased wealth to assure that government does their bidding...

The plutocrats who soaked up all the money now say the deficits require putting Social Security and other public services on the chopping block. You might think that Mr. Bush today would regret having invaded Iraq on false pretences at a cost of more than a trillion dollars and counting, but no, just last week he said that his biggest regret was his failure to privatize Social Security. With over l00 Republicans of the House having signed a pledge to do just that when the new Congress convenes, Mr. Bush’s vision may yet be realized...

Here we are now, on the verge of the biggest commercial transaction in the history of American elections. Once again the plutocracy is buying off the system. Nearly $4 billion is being spent on the congressional races that will be decided next week, including multi millions coming from independent tax-exempt organizations that can collect unlimited amounts without revealing the sources...

Rove, other conservative groups and the Chamber of Commerce have in fact created a “shadow party” determined to be the real power in Washington just like Rome’s Opus Dei in Dan Brown’s “The DaVinci Code.” In this shadow party the plutocrats reign. We have reached what the new chairman of Common Cause and former Labor Secretary Robert Reich calls “the perfect storm that threatens American democracy: an unprecedented concentration of income and wealth at the top; a record amount of secret money, flooding our democracy; and a public becoming increasingly angry and cynical about a government that’s raising its taxes, reducing its services, and unable to get it back to work. We’re losing our democracy to a different system. It’s called plutocracy.”...

Come now and let’s visit Washington’s red light district, headquarters of the U.S. Chamber of Commerce, the front group for the plutocracy’s prostitution of politics. The Chamber boasts it represents more than three million businesses and approximately 300,000 members. But in reality it has almost nothing to do with the shops and stores along your local streets. The Chamber’s branding, as the economics journalist Zach Carter recently wrote, “allows them to disguise their political agenda as a coalition of local businesses while it does dirty work for corporate titans.”...

Why isn’t government working for them? Because it’s been bought off. It’s as simple as that. And until we get clean money we’re not going to get clean elections, and until we get clean elections, you can kiss goodbye government of, by, and for the people. Welcome to the plutocracy.
I've excerpted quite a bit, but it's only a small portion of the essay, which is extensive and pulls no punches.  I greatly admire Bill Moyers for his knowledge and insight, and for his willingness to speak truth to power.  See my posts here and here.  But most importantly, read the original source link.


  1. Thank you for posting Moyers' speech. Americans are in some kind of coma these days. Kinda like a food coma as we like to call how we feel after eating too much. I think we're in a political coma induced by the millions of dollars in misinformation flooding our airwaves. Americans either don't care or they're being willfully ignorant of what's happening.

    Keep up the good work TYWKIWDBI.


  2. I really, really want to like your blog, but when you get political I want to wretch. Please stop.

    It is true that "When buying and selling are controlled by legislation, the first things to be bought and sold are legislators - PJ O'Rourke". This is also known as capture theory; please look it up.

    As the Utopian statists in the two dominant political parties will continue to pass regulation, and the businesses effected most will make damned sure the the laws are steered in their favor. This is not free market capitalism; this is merchantilism, later known as fascism.

    Wage repression is classic Marxist class warfare theory wrapped in modern jargon. Class warfare is a boogie man summoned up to buy the votes of the poor with fear, and the funds of the rich with guilt.

    Mises, Hazlitt, Hayek, and Rothbard have all clearly refuted the mechanics of class warfare, and amply demonstrated that rises in wages are directly proportional to increases in real productivity. Wages increase the fastest where technology is the greatest, unless the market is distorted by government action.

    In the case of the US post 2008, of course the most productive segment of the population is sitting on their capital; there was a severe economic downturn, and most of the developed world is over leveraged and deeply in debt. Perhaps as important though is the fact that the free market in the US has been under a continuous assault for two years; cap and trade, Obamacare, and financial reform have left business owners and corporations in a holding pattern.

    You simply cannot budget for the future if you don't know how big a bite will be taken out of your profits by the ever expanding parasitic class. Anyone who owns a business (unless they are so starry eyed in love with the legislative philosophy of the last two years) should be holding on to venture capital because the full economic impact of the massive legislative endeavors of the last two years is not yet known.

    Uncertainty, not class struggle, or corporate blue meanies, is the reason that the wealthy are holding on to venture capital. They are also deleveraging. The Fed is also floundering about with inflationary economic policy that is creating uncertainty, with no other plan than to hold interest rates at 0%.

    Bill Moyer is an ideologue with a solid grounding in Marxist class theory, but he apparently knows nothing of Austrian economics.

    Anyhow I'll shut up now. Please just stick with historical tidbits. Or art, or tech. Anything but politics.

  3. Anonymous,

    In this case, the word retch does not require a 'w'. What you actually said was, "when you get political I want to do a bad deed." Please look it up. Smartiepants.

  4. Too bad you might have to lose readers because they can't stand reading views that are opposed to their own. Maybe he/she should spend more time writing their own blog than criticizing others and then they could find the perfect blog for him or her.

    Moyers makes many good points.

  5. Oh noes! A typo! well, that negates my entire philosophy. Good thing the typo police were here to save the populace from my evil misspelling menace! Yay!

    Argue points or refute premises; don't snipe.

  6. Mises, Hazlitt, Hayek, and Rothbard

    A rogues gallery of jackasses if there ever was one. Free market fanatics are just as bad as communists: Always blaming the utter failure of your policies on "the conditions not being right".

    Moyers is correct, and neoliberals can't stand to see that, thus the comical, teenage basement, jibber jabber about Austrian economics, complete with the cliched mentioning of unfunny P.J. O'Rouke.

    You'd be better off listening to an insane street preacher than discredited neoliberal fanatics.

    They're ideas are why this country has steadily been declining.

  7. Steve you've attacked me but not the argument. That which is stated without reason can be dismissed without reason.

  8. To Anonymous:

    "buy?...the funds of the rich with guilt." The Wall St. execs that took multi-million $ bonuses while driving their companies and investors into bankruptcy know no guilt.

    "under a continuous assault for two years." Yeah, everything was just coming up roses until they got that black man in office huh?

    I think your point of view is made manifestly clear when you refer to the bottom 90% of the US population as "the ever expanding parasitic class."

    "Uncertainty...is the reason that the wealthy are holding on to venture capital." When has capitalism ever been based on certainty?

  9. Anonymous - and, I'm sorry, I mixed you up with the other Anonymous that ripped you for not being able to handle other points of view, it's confusing when people haven't got a name to stand behind...

    Your points all appear to take it for granted that what is happening in politics today is some form of normality. That way well be the case. But only because normal has been distorted through many decades of abuse - did you read, at all, the article referenced?

    "Capture Theory - please look it up." I did. The second sentence, not even paragraph, beyond a brief description of what it is, described it as a failure of government, producing negative externalities.

    Capitalism, apart from free market idealism, appears to be the idea that one should externalise all costs as far as one can. Surely you can see the flaws in this. No resource is infinite.

    I'm glad you enjoy the rest of the posts on TYWKIWDBI. As do we all. It is surprising, therefore, that you have the mental capacity to take all that in, yet not be able to see the consequences of the theories you expound in your post. Your language choices I will leave, for now.

  10. I worry when people relate a certain failure of capitalism in practice to the utter rejection of capitalist theory as a whole. As if ignore all the demonstrated benefits in favour of the costs - without even trying to fix the source of the costs.

    A couple of thoughts (bit of a long post I think):

    1) There will always be rent-seeking corporations and individuals - you think we live in a world where we give away our time, effort and money for free? The great insight of free market theory (when applied correctly!) is that you don't need to worry about rent-seekers because consumers will punish them with their wallet.

    This whole 'plutocracy' issue is only a problem because of legislators that are influenced by these rent-seekers - and voters who go blissfully along with it.

    2) To Steve: "Free market fanatics are just as bad as communists: Always blaming the utter failure of your policies on "the conditions not being right"."

    Seriously? We dont build out decisions in the world on principles and conditions?

    3) Ayoshe: You should have a read of Julian Simon's 'The Ultimate Resource' (or at least go to the wikipedia page for a summary). He challenged the notion that we are running out of natural resources. Importantly, what Simon demonstrated is that scarcity is relative to the price we pay for resources. As it becomes more expensive, then we look for alternatives and better ways of doing things. He demonstrated, empirically, that throughout human history we have found new resources, substitute resources, better ways of using the resources we have.

    How many times in history have we heard that food is running out, oil and coal reserves are reaching their peak, and that we are all going to starve? I guarantee you that what we say today was said 100 years ago.

    The great achievement of capitalism is the harnessing of human ingenuity to prolong our resources almost indefinitely.

  11. I don't want to see like I'm brushing off the insights Moyer provides - but I worry that many people confuse these systemic problems with capitalism itself.

    Its Crony Capitalism, and its broken. And I agree with Anonymous (or one of the Anonymouses hehe) - its bordering on Mercantilism.


    Keep up the posting Minnesotastan - political, economic, historical. We should all be debating this stuff as much as the rest of it.

  12. Wall St. execs did indeed take multi-million $ bonuses while driving their companies and investors into bankruptcy. The free market mechanism that prevents this behavior is the corporate raider, but they have been driven to near extinction by legislators. Corporate raiders specifically target companies that are under-performing and undervalued, while their CEOs rake in money. The raider buys up stock, ousts the bad leadership, and gets the company performing again. Liberals(the same people that decry CEO salaries) hate corporate raiders too. Watch the movie Wall Street for the liberal view of corporate raiders.

    Capitalism, as far as I can tell, is a term coined by Marx to describe the tyranny of those with venture capital over those without. Free marketeers should never have let the debate be framed in the terms of Socialism vs Capitalism, because Capitalism is a straw man. Crony capitalism (mechantilism, rascism, etc) is not a free market.

    That said, the purpose of a free market is not to "externalise all costs" it is to allow free exchange. Period. The decision of what has value, and what that value is, lies entirely with the buyer and seller, without coercion. Period.

    Each party expects to gain something that they value more than the item that they are giving up, and if either party feels that they are not gaining, the exchange does not take place. No third party interference, no coercion.

    That is the defining aspect of a free market. Nothing to to with shucking costs off onto another party.

  13. er...that should say Fascism, not Racism. Stupid auto correct got me.

  14. "...what Simon demonstrated is that scarcity is relative to the price we pay for resources. As it becomes more expensive, then we look for alternatives and better ways of doing things. He demonstrated, empirically, that throughout human history we have found new resources, substitute resources, better ways of using the resources we have."

    If our population were static,I'd have more faith in this idea. You can only stretch resources so far before they break. We found a better way to fish -- now we're running short. So we turn to something else. Will the fishing industry recover before we've exhausted the replacement? Who knows? But if we keep adding people, it's going to be harder and harder to feed and clothe them and it's the ones with the fewest resources who will suffer the most and the soonest.

    "How many times in history have we heard that food is running out, oil and coal reserves are reaching their peak, and that we are all going to starve? I guarantee you that what we say today was said 100 years ago."

    I just wonder if we'll be saying this in another hundred years.

    "The great achievement of capitalism is the harnessing of human ingenuity to prolong our resources almost indefinitely."

    Again, it's that 'almost' that's most worrying.

  15. I really want to agree with much of what Moyers is saying, however, while looking up a source for his quote ...

    As one of the plutocrats crowed: “We are rich. We own America. We got it, God knows how, but we intend to keep it.”

    ... I found that he was misquoting Frederick Townsend Martin's The passing of the idle rich (Martin was an activist for the rights of the poor and his exposition of "how the rich think" represents a straw man if there ever were one).

    That Moyers chose to misrepresent a similarly-minded activist's writing as representative of the views of the era is very disappointing.

  16. An interesting observation, Z.

    You aroused my curiosity, so I just briefly searched the keywords, and it appears that Moyers wasn't the only one to misconstrue the words. Here's a comment from a column by Russell Baker back in 2008:

    "...Frederick Townsend Martin, who wrote as a contented specimen of “the idle rich,” ascribed their success to single-minded devotion to greed: “It matters not one iota what political party is in power or what President holds the reins of office,” he wrote.

    We are not politicians or public thinkers; we are the rich; we own America..."

    Baker claims that Martin was a "contented specimen of the idle rich."

    This now raises the question as to whether Moyers' citation of Martin is appropriate or not. I don't think he was "misquoted" as such - the words appear to be correctly cited - its more a question of whether Moyers' is misattributing the motives and attitude of Martin.

    Perhaps Martin meant what he said, but claiming that he was "crowing" about it is the wrong term to use. Perhaps he was guilty about it - but he still meant that it was true.

  17. addendum - link for the Russell Baker comment:


  18. I love your blog, politics are interesting, and anyone who complains about it can stop trying to ruin it for the rest of us who like reading about it, please.

  19. I get a kick out of people who tell you what or what not to post on your personal blog. "Waaah! The free exchange of ideas on your personal website is interfering with my personal enjoyment of the free entertainment! I have to scroll an extra four inches down to avoid this quasi-political post! I my have to boycott your advertisers!"

    Meanwhile, the comments here are just as interesting as the post itself.

  20. Why is it in a free market economy they can close factories that cannot compete and go bankrupt.
    But when certain financial institutions [not all] are technicaly bankrupt. the Tax payer bails them out?


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