PANDERING TO PLUTOCRATS and Catering to Kleptocrats

People of privilege will always risk their complete destruction rather than surrender any material part of their advantage…. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right. The sensitivity of the poor to injustice is a trivial thing compared with that of the rich. ____ John Kenneth Galbraith

Corruption is a cancer: a cancer that eats away at a citizen’s faith in democracy, diminishes the instinct for innovation and creativity and already-tight national budgets, crowding out important investments. It wastes the talent of entire generations ____Joe Biden

Fascism is the marriage of corporation and state ____ Benito Mussolini

Recent revelations regarding Trump’s amazingly novel tax arrangements are a stark testimonial to the way our political economy panders to plutocrats as well as caters to kleptocrats. A few years back, Chrytia Freeland, now Deputy Prime Minister of Canada, wrote a book entitled, Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else. Standout points include: 1) the gap between rich and poor is becoming completely insurmountable, 2) the new multi-billionaires (several if not mostly Americans) feel no allegiance to any particular nation, and 3) they believe that they alone created their astronomical levels of wealth. When I first read it, I thought she occasionally demonstrated too much admiration for these masterbaters of universe. One particular individual she singles out for praise is Reid Hoffman, now chairman of Linkedin and partner in Greystone (a shadow banking firm). A decidedly less favorable portrait of Hoffman is provided in Columbia Professor, Nicholas Lemann’s recent his book, Transaction Man: The Rise of the Deal and the Decline of the American Dream. Irrespective of whether one recognizes all the Ponzi schemes inherent in the Silicon Valley business model, one could hardly call these unicorn riders “self-made” anything. Hoffman was born with a venture capital spoon in his mouth and was well-connected to the original “PayPal Mafia”. More importantly perhaps, the entire Internet was built by the US taxpayers.

The United States has always been more or less a plutocracy (ruled by and for the rich), and in recent years it is more a kleptocracy (ruled by crooks), only slightly more subtle than a 3rd World banana republic. In the past, however, open frontier provided by the genocide of indigenous populations, and brief periods when progressive and labor movements prevailed over powerful opposition, helped to fuel a mythology of the American Dream (every person a potential prince). These were contingent upon being male and white, of course. It is noteworthy that the US is a republic (representational system), not really a democracy. Democracy (rule by the citizens) was historically regarded as “mob rule”, and even the ancient Athens limited participation to the landed elite (with woman and slaves as non-citizens). The US did not allow for the popular election of Senators till the passage of the 17th Amendment in the 20th Century. At best we are today an oligarchy with fading democratic aspirations. It is crucial, therefore, to explain how pluto and kleptocrats have built high walls out of myths and mysticism to conceal how much they have heavily rigged the system in their own favor. These myths include various versions of Horatio Alger (rags to riches fairy tales) to convince us that their inordinate wealth was “self-made”, and their political power is mere conspiracy theory. Moreover, they have spread their corruption far and wide so as to assemble armies of sycophants, politicians, and errant enablers. Primary among these roadies and toadies are the small cult (neoliberals) who captured the economics profession and made a science out of predation. However, I have delt with this particular plague in detail in other missives, for now suffice it to say that neoliberal economics is now deeply embedded in US institutions from government & courts to banking & corporate governance. In this piece I would like to focus on their philosophical fellow travelers among the neofeudal, neoreactionary, and neofascist movements. It is these growing anti-democratic ideologies and their wealthy patrons that, while often hidden, pose a potent threat to our way of life, such as it is.

A brief history of elite justification

Elaborate justifications for elite power and privilege go back to antiquity. Prowess in combat and conquest were indicative for most of human history, yet many a monarchical dynasty also claimed direct decent from deity, and thereby “divine right to rule”. As late as 1700s, Louis XIV was referred to as the “Sun God”, and hereditary rulers (albeit mostly ceremonial) still exist today. Serfdom (non-persons as property of the landed gentry) actually continued in European pockets until the beginning of the 19th century, and indentured servitude much later. The US was the last major nation to abolish slavery in 1865, and universal civil-rights are still contested to this day. Our founding fathers, at least, abolished “titles of nobility” in custom, yet contrary to popular believe, it was never ratified in law. Plus, we still have our dynastic ruling families, and our own Robber Barons (named after German Raubrittes who extracted tolls for passage past their fortified river castles). MIT Professor, Thomas Piketty in his tome Capital in the 21st Century, details how inherited wealth and political power is dramatically rising once again. So, all we need do to acquire galactic levels of privilege (e.g. piles of get out of jail free cards) is to get a billionaire to adopt us.

While we have always had our Brahmins, our caste system has been less formally enforced, unless you are on the rock bottom with the Untouchables. Furthermore, as bloodlines ran thin and religious claims became increasingly ridiculous, other notions such as the Protestant Ethic, gospel of prosperity, and eventually the American Dream (entrepreneurial risk version), stepped up to reify the maldistribution of wealth and power. This is where neoliberal economics came in so handy. Supernatural justifications were simply replaced with the ersatz natural elements of a self-proclaimed science. Inordinate power and privilege were simply ignored or explained away, and thus irrelevant to the study of the economics. Moreover, early (or Classical) elite studies tended to reinforce the inevitability, as well as the suitability, of caste and class. Interestingly enough several of its major figures (e.g. Mosca, Michels, & Pareto) were linked to the rise of Italian Fascism. Following the discrediting of the consequences of their work via WWII, modern elite studies (e.g. C. Wright Mills, G. William Domhoff, Thomas R. Dye, & Thomas Ferguson) are much more empirical and far less laudatory. They tend, however, to view the same data through their own disciplinary lenses. Sociologists often find a solitary power elite, while political scientists often find combative or pluralistic elites, and economists don’t find a bloody thing. Irrespective of which perspective one prefers, the significant policy role, if not complete dominance, of a relatively small number of power-brokers is pretty irrefutable. As much as these forces are contradictory to cherished notions of democracy, most scholars, including many economists, acquiesce to these Machiavellian machinations. Worse yet, some even seek to rejuvenate ancient exaltations of the right to rule. Particularly problematic is the resurrection of more virulent and reactionary appeals to theocracy, monarchy, and ethnocracy. These various rancid and warmed-over anti-democratic and anti-enlightenment tracks are especially popular among the new minted moguls and their minions among the mammoth info-tech monopolies. From the “Moldbuggery” of Curtis Yarvin and the “Dark Enlightenment” of Nick Land, to the medieval and “alt-right” ambitions of Steve Bannon and the anarcho-capitalism of Peter Thiel, we are witnessing the rekindling of a grand neofeudal apologia. So, wake-up serfs.

Turning a blind eye to corruption

For those of you who think ideas can’t hurt you, and all this neo-feudalism and neofascist is relatively harmless, I would merely direct you to how much our economy has been fundamentally altered by a political philosophy that panders to pluto/kleptocrats. In Fordham Professor, Zephyr Teachout’s Corruption in America: From Benjamin Franklin’s Snuff Box to Citizens United, she documents how corrupt business and government practices, heretofore far beyond the pale, are now standard operating procedures. Even when big banks and businesses are caught up in out and out fraud, the fines are exceedingly low, and only low-level flunkies ever go jail, if at all. Most firms merely factor in fraud settlements as a natural cost of doing business, and often use them tax write-offs. Teachout tells us that for nearly all of our history, lobbying with and insider trading by government officials were outlawed, but now we have legalized bribery. Furthermore, anti-trust (called by the more positive term “competition policy” in the rest of world) was once strictly enforced. Now it is a joke, not to mention the bundle of administrative and court decisions that systematically undermined worker rights. She also provides a detailed analysis of recent changes in campaign finance laws, and suggests that Citizens United should join the Dred Scott Case and Bush v. Gore as the once of worse supreme court decisions of all time. One dollar one vote is clearly anti-democratic. Moreover, in the current era where corporations have all the rights (but few of the responsibilities) of persons, corruption reigns. We not only have the best government money can buy; it is dirt cheap. A few 1000s invested in a few key legislators, one can purchase 100s of millions in regulatory relief as well as government contracts. As Sarah Chayes, Senior Associate at the Carnegie Endowment for Peace, points out in her latest book On Corruption in America, we are now worse than many war-torn parts of the world. Our corruption, moreover, is clouding the prospects of the entire planet.

The anti-New Deal coup d’ etat

So how did the US become a paradise for predators? Well essentially it always has been such, yet for a brief period following the Great Depression and the WWII it did achieve a relatively inclusive economy. FDR, given his patrician up-bringing, was labeled “an enemy to his class” when he sought to control the corporate and banking trusts, and support worker’s rights, etc. There was even a plan to overthrown him (the “Business Plot of 1933”). FDR’s legacy was never the socialist system that fear-mongering plutocrats had claimed it would be. Following the war, however, corporate elites organized for a more clandestine and protracted project to roll back New Deal reforms and to forge a new oligarchic system. Many of the same individuals who so lavishly funded the capture of mainstream economics (via institutes, think tanks, and entire faculties) also launched far-right political movements. Two recent blockbusting books: Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (by Distinguished New Yorker, investigative journalist, Jane Mayer) and Democracy in Chains: The Radical Right’s Stealth Plan for America (by Duke Professor, Nancy MacLean) document these processes. What is so insidious about this strategy is that seeks conceal their autocratic aims behind the rhetoric of libertarianism and the “minimalist state”. It would be more accurate to call these so-called “neoliberal” economists, neofeudal. They also strive to cloak their ideology with the mantel of science. In 1969 they began awarding their own fake Nobel Prizes (actually the Riksbank prize) at the same time as the real scientific and peace awards.

In the same decade that these ill-founded economic theories were moving from universities and think tanks to the halls of power with Margaret Thatcher and Ronald Reagan, plans were progressing for the more significant (perhaps) capture of the court system, as well as the corporate boardrooms. In the summer of 1971, Attorney Lewis Powell, member of 11 corporate boards, secretly conveyed his infamous “Powell Manifesto” the Chamber of Commerce. He set forth an agenda for removing remaining elements of the New Deal, and securing further levers of power. It was basically a “corporate bill of rights.” He was rewarded with a seat on the US Supreme Court by Richard Nixon.

The courts, with their faux political neutrality and their lifetime appointments are the least democratic element in our government. Nonetheless, this underbelly of the plutocracy is often overlooked. But not by the forces of feudalism. Elites have poured billions into buying the courts. Beginning with funding law and economic programs and organizations such as the Federalist Society (the birthplace of baby Borks) and huge lobbying efforts for the likes Brett Kavanaugh, they have been unrelenting in perverting the law to their own ends. Moreover, they have often hidden their corporatist agenda amid the culture wars. Take the case of the newest neofeudal justice, Amy Coney Barrett, she was not chosen for her anti-abortion bona fides, but her potential for protecting the plutocratic prerogatives. This is not to suggest that overturning Roe v. Wade will not be devasting for the downtrodden of America, it will. It is merely to point out how skillful elites are at gaining religious support for such their various un-Christian activities. What is so curious is that there are so few born-agains on the bench. In the process of building their bogus theocratic state, they convinced the various protestants (including evangelicals) that their once hated Catholics are their brothers/sisters in Christ. But I digress. The real puzzle of the neofeudal movement is how they are managed to get most of the serfs (working class) on their side. It is not by way of Medieval vassalage (mutual obligation), noblese oblige is long gone. It is pure subterfuge.

Full frontal fascism is waiting in the wings

Populist demagoguery has taken on a whole new and exceedingly more dangerous disposition in recent years. Initially the masses were bamboozled by forces on right (term after term) running against the bureaucratic apparatus that they themselves had disabled. Government was always broken and only they can fix it. Moreover, Rutgers Professor, Naomi Klein, in her book The Shock Doctrine, details how neoclassical economists and global financial interests have designed a US economy that merely lurches from one disaster to the next, as they mop up on arbitrage opportunities and tax supported bailouts. It is interesting to see how Corvid 19 Pandemic is being used for cover-up how the de-regulated financial system was nearly on the verge of another meltdown, not to mention to provision of direct aid to firms that well on to way to zombie status long before the onset of the virus.

Orchestrated emergencies (from oil shocks to prolonged wars of choice) have always been in the neofeudal tool kit. Austerity (except for skyrocketing defense budgets) amid huge tax cuts for the rich became the cure-all (much like blood-letting in pre-modern medicine). Then there was the notorious “Southern Strategy” of exploiting deep seated racial animus. Jim Crow was rebranded into “law and order” politics. Now we have the fabricated patriotism, xenophobia, and scapegoating as well as vilification of the press, straight from the pages of the totalitarian playbook (ala. Hannah Arendt). Plus, and we have a large number of old school as well as spruce-up white supremacists and radical militia groups being included in conservative constituencies. It is comically tragic how these street level fanatics have been so easily and totally taken-in by the very elite forces that had so brutally displaced them from productive roles in society. It is frightening to imagine what might happen if these wannabe freedom fighters find out who they are really working for. Meanwhile, the traditional ally of elites, the police, are caught in the middle. Either way, the subliminal run-of-the-mill fascism of the ruling class is actually on the verge becoming far less subdued. And, like the industrialists of Nazi Germany, they hubristically believe they can somehow contain the madness. They seem to believe that the evil genie of fear and hate can somehow be put back in the bottle, and that civil-disorder can be temporarily utilized to get us to embrace their new terms of indenture. Dostoevsky’s Grand Inquisitor may indeed be right that “man is tormented by no greater anxiety than to find someone quickly to whom he can hand over that great gift of freedom with which he was born”. Once there is blood in the streets, however, all bets are off, and it is never quite clear what group of fanatics and their sponsors will ultimately come out on top. There are dangers on the far left as well as the far right, albeit mostly on the right, at present.

When Ben Franklin emerged from the Constitutional Convention and was asked what form had prevailed, he said “a republic, if you can keep it”. For most of our history, increased participation became integral to that mission, and it actually expanded to the point that we came to regard ourselves as a democracy. When Alexis de Tocqueville wrote about Democracy in America, following his visit in the 1830s, he praised us for our communal spirit. I wonder what he would think today about those who maintain their right to endanger the public health. He would certainly be dismayed to find us on the brink of another civil war, especially over such trivial issues. The “divide and conquer” strategies ginned-up by the ruling class in order to divert us from their mismanagement have peaked, and it is time for us to join together discover representatives that actually represent us. Our envious French visitor once said, “grant me thirty years of equal division of inheritances and a free press, and I will provide you with a republic”. We need to do a lot better job of keeping ours.



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Greg Daneke

Greg Daneke

Gregory A. Daneke, Professor Emeritus, School of Business, Arizona State. Other teaching posts: Michigan & Stanford. Gov. service: GAO, DOE, and White House.