Plutocracy to Plutonomy: From Bad to Worse!

Yes, It Does Get Worse!  As if a plutocracy supported by a government that is controlled by a political duopoly isn't bad, enough, the story gets even worse. Now we have to deal with a couple of other dirty words -- plutonomy and plutonomics..

How Plutocracy Works.. Our plutocracy is based upon the rich (the wealthiest 5%) and the super rich (the wealthiest 1%) in our country who finance the political duopoly that comprises our government. This government then passes legislation that is favorable to the wealthy. The wealthy then contribute more to the politicians, and the cycle repeats. It's an insidiously symbiotic relationship that benefits nobody but the super wealthy and the politicians, some of whom are members of this financial elite themselves. And this is all done at the expense of the remaining 95% of the population. Obviously, this is not exactly a textbook case of democracy in action. Rather, it is a textbook example of how democracy can be bought and has been lost in this country. All we have now is a plutocracy cloaked in a facade of democracy.

Plutonomy Rears Its Ugly Head.  The word plutonomy is a contraction of the Greek word plutus (meaning wealth) and the suffix -onomy (meaning management). It is in effect the management of wealth. However, in actuality, it can be somewhat more than that. The web site Investopedia defines plutonomy as "Economic growth that is powered by the wealthiest upper class of society." .

Plutonomy vs. Plutocracy. To make a distinction, plutocracy pertains to the extremely wealth as a major controlling interest in government. Plutonomy pertains to the extremely wealthy as a major controlling interest in our economy. The two are different, even though they may be inextricably intertwined in this country. The end result is essentially the same: a country in which 95% of its non-rich people are subservient to the richest 5% and who involuntarily contribute to that minority’s increased wealth and further control.

Plutonomics. You may also encounter the word plutonomics. In his book, "Plutonomics:A Unified Theory of Wealth," S. E. Harrison's book defines plutonomics as:

"The science or study of wealth, wealth measurement, and wealth management."  [It can be thought of as a methodology for accumulating massive wealth, retaining it, and making it grow -- even at the expense of an overwhelmingly huge majority.]

Great!  Not only do we have a tremendous imbalance in the distribution of wealth in this country, but now we even have a methodology for making the imbalance worse.

Bill Moyers on Plutonomy.  (May 1, 2010). "Plutocracy is not an American word but it's become an American phenomenon. Back in the fall of 2005, the Wall Street giant Citigroup even coined a variation on it, plutonomy, an economic system where the privileged few make sure the rich get richer with government on their side."  [Emphasis added.]

The Citicorp Reports. In 2005 and 2006, Citigroup issued two major reports catering to and for the exclusive use of its richest clients. These were supposed to be confidential reports for the eyes of their wealthy elite. However, someone leaked these reports, and when they hit the public, they caused quite a stir for some -- and a stink for others.. As a result, one of the world's largest financial conglomerates was unmasked for espousing the concept of plutonomy and selling it to their richest investors..Here are some of the comments extracted from these documents that give the reader a flavor as to what Citigroup was pitching 

"Our thesis is that the rich are the dominant drivers of demand in many economies around the world (the US, UK, Canada and Australia). These economies have seen the rich take an increasing share of income and wealth over the last 20 years, to the extent that the rich now dominate income, wealth and spending in these countries. Asset booms, a rising profit share and favorable treatment by market-friendly governments have allowed the rich to prosper and become a greater share of the economy in the plutonomy countries." [Emphasis added.]

“The world is dividing into two blocs - the plutonomy and the rest. The U.S., UK, and Canada are the key Plutonomies - economies powered by the wealthy.”

“There are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the “non-rich”, the multitudinous many, but only accounting for surprisingly small bites of the national pie.” [Emphasis added.]

'

“At the heart of plutonomy, is income inequality. Societies that are willing to tolerate/endorse income inequality, are willing to tolerate/endorse plutonomy."  [Are we willing to tolerate the tremendous income inequality we have in this country?]

"Perhaps one reason that societies allow plutonomy, is because enough of the electorate believe they have a chance of becoming a Pluto-participant. Why kill it off, if you can join it? In a sense this is the embodiment of the “American dream”. But if voters feel they cannot participate, they are more likely to divide up the wealth pie, rather than aspire to being truly rich."  [A very good reason for all of us to vote.]

"We project that the plutonomies (the U.S., UK, and Canada) will likely see even more income inequality, disproportionately feeding off a further rise in the profit share in their economies, capitalist-friendly governments, more technology-driven productivity, and globalization."  [Emphasis added.]

"Society and governments need to be amenable to disproportionately allow/encourage the few to retain that fatter profit share. The Managerial Aristocracy, like in the Gilded Age, the Roaring Twenties, and the thriving nineties, needs to commandeer a vast chunk of that rising profit share, either through capital income, or simply paying itself a lot."  [Emphasis added.  Especially take note of the term "Managerial Aristocracy.]

"The wave of globalization that the world is currently surfing, is clearly to the benefit of global capitalists, as we have highlighted. But it is also to the disadvantage of developed market labor, especially at the lower end of the food-chain."  [What an insult to be referred to as the lower end of the food-chain.]

Conclusion. "Our overall conclusion is that a backlash against plutonomy is probable at some point. However, that point is not now. So long as economies continue to grow, and enough of the electorates feel that they are benefiting and getting rich in absolute terms, even if they are less well off in relative terms, there is little threat to Plutonomy in the U.S., UK, etc."

Where Things Now Stand. The economic elite now control our government,our economy, and our pocketbooks. And they have brainwashed a great percentage of our population into believing that we still live in a democratic society with free enterprise and an open market.

In reality, a minuscule minority is controlling a humongous majority from the top down. We are no longer participants in the system, controlling our own futures. Rather, we are slaves to the system and controlled by our masters, doing the bidding of the “Managerial Aristocracy” -- in the workplace, in our homes, and even at the ballot box...

In medieval times, the population was divided into nobility and commoners. Our founding fathers wanted something better for the people of this country. However, we have undone much the good they accomplished, all to our own detriment. We are once again a country of nobility and commoners, lords and subjects, aristocrats and peasants. Is that what our founding fathers wanted for us? And is that what we want for ourselves and those who follow us?

Coming Up:

	Campaign Funding's Impact On Democracy
	Money Talks, And Politicians Listen!
	U.S. Congress: Bought And Paid For
	Lobbying And Its Impact On Democracy

Duopoly and Wealth: The Ties that Bind

Our Plutocratic Duopoly. As previously stated, our country is governed by a political duopoly (the Republicans and the Democrats), who freeze out any viable attempts at representation by any other party. This duopoly is in turn controlled by the plutocrats (the wealthy). What has happened over the years is that our so-called representatives have been increasingly generous to the wealthy, and the wealthy have responded in kind with generous financial support. As a result, the politicians have doled out more favors for the rich, and the rich continue to reciprocate in kind.

Democracy On the Auction Block.  Almost a nine years ago, this problem was recognized and brought to the attention of the American people by Senator Paul Wellstone.  Here is what he had to say on the Phil Donahue Show! in December of 1992:

"We've got government to the highest bidder. We've got auction block democracy. It's not true that each voter counts for one and only one; that's the way it's supposed to be in a democracy. Money determines who gets to run for office, how people run for office, it determines what people do while in office and the fact of the matter is the vast majority of people are cut out of the loop."

The Rich Get Richer … And the poor get poorer.  While the wages of the working class have stagnated or even dropped over the years, the incomes of the plutocrats have increased in drastic proportions.  According to one source (How Rich Are The Rich?), a gigantic proportion of our country's economic growth over the past 30 years has gone directly into the pockets of the top one-hundredth of one percent of the population, who now have an average annual income of $27 million per household. Meanwhile, the average annual income for the bottom 90% is only $31,244.  Yet Congress goes along with huge tax breaks for the rich.

Our Congressional Elite. To make matters even worse, some of the Congressional members who act on legislation favoring the wealthy are wealthy themselves. According to an article published by the Center for Responsive Politics titled “Congressional Members' Personal Wealth Expands Despite Sour National Economy,” almost half of our federal legislators are millionaires themselves.  Roll Call's "Guide to Congress" lists the 50 Richest Members of Congress. You can be sure that most of those who are not yet millionaires certainly will be after they leave office and move into lucrative corporate, consulting, or lobbying positions.

Taxing the Wealthy.  Here is a recap of the highest income tax brackets in effect from 1936 to the present. (source:http://ntu.org/tax-basics/history-of-federal-individual-1.html)

• From 1936-1963 (24 years), the rate ranged from 81% to 94%.  
• From 1950-1963 (14 years), the rate ranged from 91% to 92%.  
• From 1964-1981 (8 years), the rate ranged from 69.125% to 77%..  
• From 1982-1986 (5 years), the rate was reduced to from 69.125% to 50%.  
• From 1987-1992 (6 years), the rate fluctuated between 28% and 38.5%.
• From 1993-2000 (8 years), the rate stabilized at 39.6%.  
• In 2001, the rate was reduced from 39.6% to 39.1%.
• In 2002, the rate was reduced from 39.1% to 38.6%.
• In 2003, the rate was reduced from 38.6% to 35%, where it still stands in 2011.

A Boon for the Wealthy. For 45 years, the highest income tax rate for the ultra-wealthy was at 70% or higher, and our country prospered. Since then, the maximum tax rate has been cut in half and look where we stand today. While these tax cuts have generated untold riches for the wealthy, the rest of the country has suffered from huge unemployment rates, loss of home values, loss of job benefits, loss of retirement funds, a substandard educational system, a crumbling national infrastructure, threats of cuts in Social Security, Medicare, and Medicaid,, and an ever-increasing national debt,

It Started with Carter. And it's not just the conservatives who are to blame. Both parties are tainted with this mutual gift exchange between the two major political parties and the elites. It all pretty much started under Jimmy Carter. In 1978, his Democratic Congress passed a bill to cut the top rate of the capital gains tax from 48% to 28% (where it remains today). and Carter signed it into law.  What a windfall for the wealthy!

Continued with Reagan. Not to be outdone, Ronald Reagan, in a can-you-top-this gesture, signed his Economic Recovery and Tax Act into law, which unleashed a bunch of extra benefits for the wealthy, including tax cuts for corporations and reductions in both capital gains and estate taxes -- something to warm the heart of every plutocrat in the country.  And campaign contributions continued to pour into campaign coffers.

And Culminated with Bush. In the year 2000, George W. Bush finally made it public when he stated to a room full of wealthy donors, "Some people call you the elites. I call you my base."  And the wealthiest of the elites were probably his home base.  They rewarded Bush and he went on to pay them back with his big tax cuts that drastically favored the rich over the middle and lower classes.   Bush maintained that his 2001 tax cuts would benefit all Americans, but that proved not to be. A source quoted in Mother Jones claims that 51% of the tax cut benefits went to the top 1% of the population.   (see:How the Oligarchs Took America).

The Rising Tide. Politicians who pass bills giving financial advantages and incentives to the rich like to cite the oft-use catchphrase, "A rising tide floats all boats."  There may seem to be an element of truth in there somewhere, but not everybody in this economy is wealthy enough to own a boat (proverbial or otherwise).  So, unfortunately, all it does for many people is to just flood their back yards with increasing financial problems.

The Ties that Bind. It is increasingly obvious that both parties are in bed with big money interests, and that they are willing to cater to them in order to garner their favor and financial support. And it isn't just a one-night stand. They are joined at the hip. These are indeed the ties that bind our government to wealthy special interests, instead of to the people. These are the ties that have destroyed our democracy.

Coming Up. 

	Political Duopoly: Working Partner of the Plutocracy
	Plutocracy to Plutonomy: From Bad to Worse!
	Campaign Funding's Impact On Democracy
	Money Talks, And Politicians Listen!

Democratic Republic or Plutocracy?

Is Democracy Dead?  Many people say that we are no longer a democracy or even a democratic republic.  They say instead that our democracy has been taken over by a plutocracy.  Just what is a plutocracy?  It has nothing to do with a planet or a Disney character, but it has everything to do with your freedom and welfare, and how you are represented by our government.  So, let's take a look as several definitions and discuss that matter.

Definitions of Plutocracy.  Before proceeding further, it might be well to establish a few more definitions – in this case, for the word “plutocracy.” Here are a few definitions and their sources. (emphasis added)     

• Plutocracy is rule by the wealthy, or power provided by wealth. The word plutocracy is derived from the Ancient Greek root ploutos, meaning wealth and kratos, meaning to rule or to govern.
  (source: http://en.wikipedia.org/wiki/Plutocracy)
  
  
• Plutocracy: 1. government by the wealthy; 2. a controlling class of the wealthy.
  (source: http://www.merriam-webster.com/dictionary/plutocracy)
  
  
• Plutocracy: 1. government by the wealthy. 2. A wealthy class that controls a government.
  (source: http://www.thefreedictionary.com/plutocrat)
  
  
• Plutocracy: 1. the rule or power of wealth or of the wealthy. 2. a government or state in which the wealthy class rules. 3. a class or group ruling, or exercising power or influence, by virtue of its wealth.
  (source: http://dictionary.reference.com/browse/plutocracy)
      
• Plutocracy:    government by the wealthy.
  (source: http://oxforddictionaries.com/definition/plutocracy)
  

A More Descriptive Definition.  I apologize for showing so many almost identical definitions here. However, I wanted to make the point that there is no disagreement or variation in the definition of this term. The following definition is the one I like best, though, because it is the one that amplifies more fully than the other definitions just how this power is manifest:

“The term "plutocracy" is formally defined as government by the wealthy, and is also sometimes used to refer to a wealthy class that controls a government, often from behind the scenes. More generally, a plutocracy is any form of government in which the wealthy exercise the preponderance of political power, whether directly or indirectly.”
(source: http://www.progressiveliving.org/plutocracy_defined.htm

Bill Moyers Weighs In.  Having read (or at least skimmed) some of those definitions above, can there any question as to whether the United States is a plutocracy or a democracy?  If you still have any doubt, here is an additional quote from :Steven T. Jones in the May 6, 2010 issue of the San Francisco Bay Guardian:
    

“The great public-interest journalist Bill Moyers, 75, ended his long-running Journal program on Friday with a warning: Plutocracy and democracy don’t mix. And these days, it appears that the former has all but destroyed the latter, turning American democracy into a cruel and deceptive farce.”   

(source:http://www.sfbg.com/politics/2010/05/06/moyers-plutocracy-and-democracy-cant-co-exist)

“People live with the illusion that we have a democratic system, but it’s only the outward form of one. In reality we live in a plutocracy, a government of the rich.” - Allan Radel

Coming Next.

Major Threats to Our Democratic System

The Great Economic Divide

How the Pursuit of Profits Kills Innovation and the Economy