It is unfortunate that whenever someone mentions Karl Marx, eyes glaze over and instant rejection ensues.
But Marx was extremely insightful and warned us of impending trouble. In 1848 he told us that, over time, a vastly disproportionate share of wealth would be amassed by the most powerful and most capable in society, the oligarchs, and that would allow them to exploit the rest of the people.
In the 1920s, largely because of the lack of government regulations, the United States found itself in precisely the situation that Marx described. The oligarchs had become super--rich and the majority of Americans were dirt poor. While the super-rich were building castles for themselves, millions of ordinary people were standing in bread lines. And in desperation, millions were turning to Communism as an answer.
If it hadn't been for WWII, we might be a Communist nation today.
That movie ended in about 1950 because a variety of government regulations were created to prevent such a tragic situation from ever happening again. Over time, new banking regulations would prevent undue speculation, Social Security was strengthened, aid for dependent children would help the poorest and laws were passed to protect workers and children from victimization. Estate taxes insured that dynasties did not accumulate more and more wealth and power at the expense of the rest of society.
Since 1950, the oligarchs were not asleep. They realized that the same government that had helped create a vibrant middle class could help them regain their enormous wealth of the past. They realized that legislators could be purchased like red meat in the grocery and in return for donations, legislators would allow the oligarchs to write the laws and tax code — and they did like kids in a sandbox.
Almost every single loophole imaginable to advantage the super-rich has been enacted. While most workers pay about 18 percent in income tax and another 6 percent for Social Security, the super-rich who depend largely on dividends and capital gains can pay only 15 percent. Oligarchs who own three mansions a yacht and a jet receive tax deductions on those properties whereas poor renters are left in the dust.
Financial deregulation, which was supposed to lower banking costs, allowed the debauchery on Wall Street to begin. Bankers created billions in profits by bilking naive potential homeowners into purchasing loans that would soon ratchet up to unpayable levels. And when the piper came for his due, the oligarchs hired the former CEO of Goldman Sachs to fix Wall Street. Although he was given a congressional mandate to use billions in taxpayer money to prop up bad loans, he instead shoveled money to the Wall Street bankers who virtually threw open the vault at Ft. Knox and yelled "Come on down. The price is right."
Goldman Sachs was on the edge of bankruptcy, yet it paid 28,500 employees an average bonus of $700,000 using bailout money. Morgan Stanley, another bank in need of resuscitation, paid its 40,000 employees an average bonus of $343,000.
This was at a time when 6.5 million Americans had lost their jobs. Horrors, that bad movie is being rerun, and it is not over yet.
Look at the current scheming of the oligarchs. They want to cut social programs that benefit the poor while shielding themselves from any sacrifice at all. How can they cut Pell grants and simultaneously give billionaire Bill Gates a tax cut? The oligarchs even refuse to tax people making more than $1 million at a 30 percent rate. To them, welfare for corporations is saintly while welfare for the poor is abominable.
They refuse to eliminate the loophole that provides $16 billion per year in special oil and gas tax deductions to an industry that is profiting wildly today while they complain bitterly about welfare slackers when the entire Aid to Families with Dependent Children costs about $25 billion per year.
Perhaps the biggest blow to democracy may be the Supreme Court's Citizens United decision allowing oligarchs to strengthen their stranglehold by buying as many legislators as they can afford. And now they are planning to "simplify" your tax code. Ouch! Is Occupy Wall Street the first chink in oligarchs' armor?
Karl, where are you when we need you now?