One of the main themes in past American crises was the balance between capital and labor.
- Jefferson’s ideal of the "yeoman farmer" included opposition to central banking.
- Jacksonian Democracy was all about opposition to the Bank of the United States.
- The Civil War’s economic arguments were a conflict between the slave labor-based South and the increasingly capital-based North.
- The crisis of the 1890s featured a revolt by farmers and urban workers against Trusts and Gilded Age capitalists. Republican give on these issues kept them in power. (To the right, the chief giver.)
- The New Deal saw the capitalist system under extreme threat, with FDR representing "progressive" government on behalf of southern and western populism, against the New York financial interests.
The crisis of the 1960s had little to do with money, which may be one reason why analysts today don’t see the conflict between labor and capital, or issues of financial equity, as having any resonance. There is nothing in any analyst’s lifetime to remind them of it.
Yet that is what we have. The heart of political differences today lies in support for the interests of labor on the Democratic side and support for the interests of capital on the Republican side. The genius of the Nixon Thesis was to use issues of war and social policy to get millions habituated into voting against their own economic interest.
The result, in our time, has been the utter triumph of New York capitalism. As The Skilled Investor notes in a two-part series, financial services firms now amount to 20% of the value of the S&P 500, twice that of the energy sector and 50% more than technology. The reason, according to the author, was the rise of fee-for-service banking.
- Each time you move you lose 15% of your home equity in commissions and other expenses.
- The replacement of paper money with plastic money means you pay to use the money you have, each time you use it.
- Financial companies have used their position inside every stock and bond trade to manipulate the market and make hedge fund managers into billionaires.
The way with which money is manipulated in this decade, with no real
oversight, and no serious criminal penalties, dwarfs anything seen in
the 1890s or the 1920s. And the people behind this enormous transfer of
wealth have powered the Republican Party to political dominance for a
generation. The economic sectors favoring Democrats, by contrast —
trial lawyers, entertainment, etc. — are tiny by comparison.
This concentration of wealth and power among the ultra-rich is not
an issue right now, because the economy as a whole seems to be doing
OK. Or at least financiers convince us this is so. The fact is that
every single financial news outlet — not just the Wall Street Journal
but Forbes, Fortune, CNBC, Investor’s Business Daily, and nearly every
newsletter — enforces a rigid political code of happy talk and
knee-jerk support for right-wing policies. The only thing remarkable
about Rupert Murdoch is how he has managed to infect this attitude of
outright lying and manipulation on the rest of the mass media. His
triumph in winning Dow Jones is, by comparison, small beer, a sort of
homecoming.
I suspect this is why the media gives John Edwards a much harder
time than any other Democratic candidate. It’s totally in the tank for
Wall Street. So they have called him a hypocrite for being wealthy yet
caring about the poor. They have called him The Breck Girl because his
looks have lasted (he looked geeky in the 1970s). And the $400 haircut
is his political epitaph.
Note that they have never addressed his issues. This is how they roll. This is how they win.
So the right thinks.
By contrast, Hillary Clinton actually supports most of the Wall
Street agenda (even bragging of taking lobbyist money at YearlyKos) and
Barack Obama seems to stand for nothing — he’s as empty as the O in
his name, and to Wall Street equally corruptible.
I am increasingly seeing jokes about how "the war in Iraq is a mess
but the war on the middle class is an unqualified success." The way the
right has managed to steer middle-class anger into the safe, racist,
nativist hands of Lou Dobbs has been wondrous to behold.
If power can be gently transferred to Hillary Clinton, the Right
now thinks, the economy might collapse on her watch and absolute power
might be returned in short order, since her past as part of the Clinton
AntiThesis will prevent her from going to war against the Right in
order to restore the economic balance.
But if you’ve got a few extra bucks, toss them to Edwards. He can
use them. And he’s the only one out there who’s really talking the talk
of economic populism. It’s a force that can use some fire underneath
it.
Once the bottom falls out of this economy, populism may be the only
hope capitalism has. Because if the vast American middle class is
impoverished, the pitchforks won’t come out for Washington alone.
History says they’ll be after New York just as hard.
