How many of you out there foresaw that a 700 page book on wealth inequality written by a French economist would become the runaway bestseller of 2014? Why that is about as likely as the most accomplished, non-incumbent, well funded Establishment candidate finding herself in a real dogfight with a “fringe” candidate from Vermont who refuses corporate and SuperPAC campaign contributions. Thomas Piketty, the author of Capital in the Twenty-First Century has written a piece assessing the success of the Sanders’ movement and its prospects for ending the Age of Reagan.
Piketty does see pitfalls for the Sanders’ grassroots movement. The Democratic party is unified behind the Clintons and the overwhelming majority of the corporate owned media disapproves of the Sanders’ policy prescriptions, but according to Piketty, the writing is on the wall for the end of the Reagan era.
Piketty begins with a short history of the postwar ear when the New Deal coalition reigned supreme. It was an era of fiscal progressiveness with a top marginal rate of 91% on income and a high estate tax with reduced the concentration of capital. The effects of these policies was to vastly curtail economic inequality. Paul Krugman, in his The Conscience of a Liberal, includes other factors such as high levels of unionization in creating the “Great Compression" of income. The postwar “golden era” was the exception not the rule to American history. The greatest middle class society the world had ever seen was not without its detractors. The rich struck back by organizing. Think the Powell Memo. The Vietnam war protests, the civil rights’ movement, women’s rights’, gay rights’, and other movements undermined traditional white male authority, and they mobilized to end the era of the New Deal.
Piketty writes:
All this change sparked a muscular opposition, particularly among the financial elites and the reactionary fringe of the white electorate. Humiliated in Vietnam, 1970s America was further concerned that the losers of the second world war (Germany and Japan in the lead) were catching up at top speed. The US also suffered from the oil crisis, inflation and under-indexation of tax schedules. Surfing the waves of all these frustrations, Reagan was elected in 1980 on a program aiming to restore a mythical capitalism said to have existed in the past.
The culmination of this new program was the tax reform of 1986, which ended half a century of a progressive tax system and lowered the rate applicable to the highest incomes to 28%.
Democrats never truly challenged this choice in the Clinton (1992-2000) and Obama (2008-2016) years, which stabilized the taxation rate at around 40% (two times lower than the average level for the period 1930 to 1980). This triggered an explosion of inequality coupled with incredibly high salaries for those who could get them, as well as a stagnation of revenues for most of America – all of which was accompanied by low growth (at a level still somewhat higher than Europe, mind you, as the old world was mired in other problems). (Emphasis mine.)
Piketty states that the United States is entering into another era of progressive policies, and the success of the Sanders’ movement illustrates the massive discontent with the neoliberal agenda which has produced increasing economic inequality and a precarious middle class. The whole article is worth a read. It is interesting to see the viewpoint of a foreign observer on our political culture. His viewpoint on Hillary Clinton as an “heiress of the Reagan-Clinton-Obama political regime” should give partisans a pause.
I’ll end this piece with an observation. I wish it was original, but it actually comes from a book from over twenty years ago. Stephen Skowronek, a political scientist, wrote a book entitled, The Politics Presidents Make: Leadership from John Adams to Bill Clinton. In this book, Professor Skowronek asserts that “great” Presidents destroy the previous political regime and create a new one. Thomas Jefferson destroyed the world of the Federalists. Andrew Jackson destroyed the disinterested patrician culture of the Virginia Dynasty. Abraham Lincoln destroyed the “Slave Power.” Franklin Roosevelt destroyed the symbiotic partnership between corporations and the GOP. Reagan destroyed the era of New Deal liberalism. In his revised edition, there is an interesting comparison between weak opponents of the dominant political culture. Think Andrew Johnson, Richard Nixon, and Bill Clinton. Something to ponder as you cast your votes to end the Age of Reagan.