A Tale of Two Americas

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  How much is a life worth? How much would it cost you to run over someone with a car and leave them for dead?

 It’s not a question you will ever have to answer, unless you are very wealthy.

 Martin Joel Erzinger, who manages more than $1 billion in assets for Morgan Stanley in Denver, is being accused only of a misdemeanor for allegedly driving his Mercedes into a cyclist and then fleeing the scene, Colorado’s Vail Daily reports. The victim, Dr. Steven Milo, whom Erzinger allegedly hit in July, suffered spinal cord injuries, bleeding from his brain and, according to his lawyer Harold Haddon, “lifetime pain.”

  But District Attorney Mark Hurlbert says it wouldn’t be wise to prosecute Erzinger — doing so might hurt his source of income.

 Lord knows we don’t want to endanger the critical job of managing wealth for the uber-wealthy.

  Erzinger ran over a man and left him for dead alongside the highway. His punishment will be a fine, not the criminal felony charges that someone from the working class would automatically receive.

 Erzinger has bought his way out of a felony charge, over the strenuous objections of his victim; it’s very unlikely that online petitions will do any good at this point. Just another thing to add to the list of things that money can buy, I suppose.

 This is what happens when you run over a respected surgeon. What if the victim was only a construction worker, or worse yet, a homeless man? What price would you put on the life of a lower-class citizen?

 While I was reading this article I couldn’t help but think about the scene from The Tale of Two Cities by Dickens.

 Monsieur the Marquis ran his eyes over them all, as if they had been mere rats come out of their holes.

He took out his purse.

“It is extraordinary to me,” said he, “that you people cannot take care of yourselves and your children. One or the other of you is for ever in the way. How do I know what injury you have done my horses. See! Give him that.”

He threw out a gold coin for the valet to pick up, and all the heads craned forward that all the eyes might look down at it as it fell.

 Erzinger eventually stopped at a parking lot and called Mercedes auto assistance (instead of 911) to have his car towed. Monsieur the Marquis could have told him that running over peasants can damage your horses.

The triumph of neofeudalism

“When plunder becomes a way of life for a group of men, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.”

– Frederic Bastiat, 1850

 It is rare, but becoming more common, that concept of class and wealth inequality is mentioned. It is hard not to notice that the rich are getting richer, while the rest of us are getting poorer.

 It’s extremely important that this concept of class is discussed and the degree of wealth inequality is measured, but it shouldn’t stop there.

 In a feudal society, the local lord owned everything. The serf only owned his belly. The separation of the wealthy from from everyone else was a self-reinforcing system that fed itself back into the political system and the nation’s laws.

 Under feudal law, the local lord and noble had complete judicial power that only the king could overrule. Sentences, for crimes such as running over a peasant, were usually in the form of a payment of fines.

 The fact that our legal system is beginning to resemble a feudal legal system is not a healthy sign for our democracy.

 This is the Death Spiral of Democracy. The way to increase the concentration of wealth is to partner with the State so the Central State functionaries and agencies funnel ever-larger shares of the national income to your cartel or quasi-monopoly while the State suppresses or marginalizes potential competitors.

  The more wealth you concentrate, then the more political power you can purchase.

 Most of the time rewards are subtle. For example, the vast majority of tax subsidies are designed to benefit the top 5%. The billion dollar incomes of private-equity partners are taxed at a 15% rate, far less than the incomes of working class Americans.

  Is it any wonder why extending unemployment benefits is a huge scandal, but quantitative easing by the Federal Reserve isn’t? Unemployment benefits cost tens of billions of dollars and go to the working poor. Quantitative easing costs trillions of dollars and are designed to prop up the asset prices of the wealthy.

 Did you ever wonder how it came to be that our news media has become totally dominated by wealthy corporate interests? Did you ever wonder why our political bodies have become willing captives of wealthy interests? Albert Einstein explained how this would happen over 60 year ago.

 Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of the smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.

  Americans have long tolerated high wealth inequality, and low tax rates for the uber-rich, because of the assumption that “everyone has a shot”. That we have a “meritocracy” and that you rise and fall based on hard work and ability, not like those socialists on Europe.

 A 2006 study found that “Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark. Among high-income countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States.” These were long-term trends present before the recent recession.

Income distribution in the United States is more unequal than in Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Argentina, and Ecuador. Income inequality is declining in Latin America, while increasing in the United States. The United States ranked 22nd on the list of corrupt countries, a historic low. Economically speaking, America has traveled far down the road to banana republic status.

The meritocracy myth of America is the carrot on a stick, dangled just out of reach of the donkey pulling the cart.

A nation of two sets of laws

 Over the past few years we’ve seen the thieves on Wall Street bring down the entire world economic system through massive, and on-going fraud. Instead of prosecuting the thieves, the government bailed them out with taxpayer money.

  In fact, the only high profile person to go to jail was Bernie Madoff. His mistake was that instead of stealing from the working class, like the rest of Wall Street, he stole from the wealthy. If he had been satisfied with just pilfering 401k’s and pension funds he would be out on the street today.

 In the spring of 2005, Citigroup published a document titled “Revisiting Plutonomy: The Rich Getting Richer.”

 “…the top 10%, particularly the top 1% of the United States – the plutonomists in our parlance – have benefitted disproportionately from the recent productivity surged in the US… [and] from globalization and the productivity boom, at the relative expense of labor.”

  “… [and they] are likely to get even wealthier in the coming years. Because the dynamics of plutonomy are still intact.”

Someone mentions a modest hike in the tax rates on the rich and it is denounced as “socialism” and “class war”. Yet behind closed doors they acknowledge that we have a plutocracy.

  There is a class war going on, and the working class is losing. Can it get worse? Of course it can. The blueprint was written in the feudal system and exists today in any banana republic. Already we’ve seen the return of debtor prisons.

 Vast wealth concentration and inequality did not just happen. It didn’t have anything to do with Adam Smith’s invisible hand. It has happened because of carefully considered policy decisions that were purchased by a ruling elite.

 Those policy decisions can always be reversed, but the people of this country must demand it first. The first step is to acknowledge that he playing field is not equal and the meritocracy is a dead idea.