How the 0.1% rule

Submitted by martin on 23 November, 2017 - 9:54 Author: Martin Thomas
plutocracy

"How does a political party dedicated to the material interests of the top 0.1 per cent of the income distribution win and hold power in a universal suffrage democracy?", asks columnist Martin Wolf in the Financial Times (21 November 2017).

It is indeed the question of questions about the politics and economics of today's social system. Wolf is a former right-wing Labourite who recounts that in the early 1970s he shifted "from social democracy to classical liberalism. I remain such a liberal today".

He interprets the question as one only about the Republican administration in the US today. He is prompted to ask it by the Republicans' current tax Bill. "In the House [of Representatives] version, about 45 per cent of the tax reductions in 2027 would go to households with incomes above $500,000 (fewer than 1 per cent of filers) and 38 per cent to households with incomes over $1m (about 0.3 per cent of filers)".

With that the Republicans plan to "slash spending on nearly all of the non-defence discretionary spending of the federal government, plus its spending on health and social security...

"This is a determined effort to shift resources from the bottom, middle and even upper middle of the US income distribution towards the very top, combined with big increases in economic insecurity for the great majority".

The Republicans are not unique. They do it in a particularly gross way, but they share the general direction with pretty much every administration of every major country since the early 1980s at least.

The Blair government in Britain did bring in the minimum wage and increase NHS and education spending; the Workers' Party regime in Brazil did run the Bolsa Familial welfare program and bring many workers from the "informal" into the "formal" economy where they would have some legal rights; but even such measures have been side-sweeteners within an overall priority of boosting profits and the revenues of the wealthy.

Wolf identifies the answer to the puzzle as "pluto-populism". That has three planks.

"The first... is to find intellectuals who argue that everybody will benefit from policies ostensibly benefiting so few".

Among intellectuals enjoying high profiles, who are almost always well-off, it is surely easier to accept arguments which say that policies benefiting you and your friends, and the businesses which may give you grants for research or give visibility to your work, will also somehow, in the long run, be best for the more-remote-from-you mass of people out there. Even more so for politicians to think that the desired policies of the lobbyists which surround them, and the bosses who may give then high-paid jobs after their time in politics, also serve the common good.

The arguments convince some of the worse-off, too. Capitalism appears to be the only show in town. To get jobs and better wages out of capitalists, you first have to make sure they're making good profits.

Moreover, the bosses are the bosses, aren't they? They know how to run the system. In the USA, Trump seems to have got many votes from worse-off people because of, not despite, the fact that he is a billionaire.

A second plank, says Wolf, is "to give wealth the overriding role in politics it holds today [and] to suppress the votes of people likely to vote against plutocratic interests, or even disenfranchise them". That is especially true in the USA. But it is true in Britain, too. The Tory party always has an advantage in funding, the Labour right has billionaire funding for its internal campaigns, and Labour is always under pressure to woo rich donors. Young and transient people, especially those dodging debt-collectors, have less access to the vote than well-off and settled people.

"The third approach is to foment cultural and ethnic splits", to create scapegoats, to channel the anger and frustration of the worse-off against migrants, or the "liberal elite", or sometimes just big-city dwellers.

The top 0.1 per cent are very remote to almost everybody. Quite a few of the worse-off can be persuaded or half-persuaded that billionaires got to be billionaires by exceptional energy and skill, and no doubt a bit of luck, in negotiating the sort of channels for advancement that those worse-off people can see as accessible to themselves: starting a small business, winning promotion at work, etc.

They can be persuaded that policies that would cramp the billionaires would also harm their own chances of advance through individual effort, and divert resources to the feckless and idle.

A new "cultural split" exploited by the right has been between older people in smaller towns, often lacking the formal educational credentials so over-valued in today's capitalism, and younger educationally-credentialed people in big cities. In the USA, in France, in Britain, Trump, Le Pen, and Brexit draw support disproportionately from those older small-town people.

As recently as 1991, in Britain, the proportion of over-65s was about the same in small towns as in big cities. By 2011, there were 36 over-65s for every 100 people of working age in Britain’s villages, double the figure of 19 in large cities.

University graduates gravitate to big cities. In 2014-5, 45% of university students had lived in smaller towns, rather than cities, before university, but only 20% of students were in non-cities.

Some students return to non-cities after graduation, but most stay in cities. London alone has almost a quarter of all new graduates working in it six months after graduation.

Those graduates are not necessarily at all in luxurious jobs, but to uncredentialled older people in small towns they may seem to monopolise public discourse and form the alien "liberal elite" that Trump and other US right-wingers rail against.

It has the appearance of "naturalness" that parties serving the rich can command the votes of the majority of the worse-off. In fact the result depends on an intricate and constantly-revised system of political devices.

The way to break through that system is simple to state, though effortful to implement. Nurture working-class unity and solidarity, through political education and through unifying struggles. Uphold democratic rights. Foster working-class self-assertion, combat deference.

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