How Conservatism and Plutocrats Shaped The Economy and Stole The American Dream

How Conservatism and Plutocrats Shaped The Economy and Stole The American Dream

Who Stole the American Dream? (Random House, 2012), by Hedrick Smith, is essential reading for anyone who want to understand America today, or why average Americans are struggling to stay afloat. Smith reveals how pivotal laws and policies were altered while the public wasn’t looking, how Congress often ignores public opinion, why moderate politicians got shoved to the sidelines and how Wall Street often wins politically by hiring over 1,400 former government officials as lobbyists. The following excerpt comes from the prologue, “The Challenge From Within.”

History often has hidden beginnings. There is no blinding flash of light in the sky to mark a turning point, no distinctive mushroom cloud signifying an atomic explosion that will forever alter human destiny. Often a watershed is crossed in some gradual and obscure way so that most people do not realize that an unseen shift has moved them into a new era, reshaping their lives, the lives of their generation, and the lives of their children, too. Only decades later do historians, like detectives, sift through the confusing strands of the past and discover a hitherto unknown pregnant beginning.

One such hidden beginning, with powerful impact on our lives today, occurred in 1971 with “the Powell Memorandum.” The memo, first unearthed by others many years ago, was written by Lewis Powell, then one of America’s most respected and influential corporate attorneys, two months before he was named to the Supreme Court. But it remains a discovery for many people today to learn that the Powell memo sparked a business and corporate rebellion that would forever change the landscape of power in Washington and would influence our policies and economy even now.

The Powell memo was a business manifesto, a call to arms to Corporate America, and it triggered a powerful response. The seismic shift of power that it set in motion marked a fault line in our history. Political revolt had been brewing on the right since the presidential candidacy in 1964 of Senator Barry Goldwater, the anti-union, free market conservative from Arizona, but it was the Powell memo that lit the spark of change. It ignited a long period of sweeping transformations both in Washington’s policies and in the mind-set and practices of American business leaders—transformations that reversed the politics and policies of the postwar era and the “virtuous circle” philosophy that had created the broad prosperity of America’s middle class.

The newly awakened power of business helped propel America into a New Economy and a New Power Game in politics, which largely determine how we live today. Both were strongly tilted in favor of the business, financial, and corporate elites. Trillions were added to the wealth of America’s super-rich at the expense of the middle class, and the country was left with an unhealthy concentration of political and economic power.

This book will take you inside that decades-long story of change and show how we have unwittingly dismantled the political and economic infrastructures that underpinned the great era of middle-class prosperity in the 1950s, ’60s, and ’70s.
The Economic Divide - The 1 Percent and the 99 Percent

Today, the gravest challenge and the most corrosive fault line in our society is the gross inequality of income and wealth in America. Not only political liberals but conservative thinkers as well emphasize the danger to American democracy of this great divide. “America is coming apart at the seams—not seams of race or ethnicity, but of class,” writes conservative sociologist Charles Murray of the American Enterprise Institute. Murray voices alarm at what he describes as “the formation of classes that are different in kind and in their degree of separation from anything that the nation has ever known. . . . The divergence into these separate classes, if it continues, will end what has made America America.”

Since the era of middle-class prosperity from the mid-1940s to the mid-1970s, the past three decades have produced the third wave of great private wealth in American history, a new Gilded Age comparable to the era of the robber barons in the 1890s, which led to the financial Panic of 1893 and the trust-busting presidency of Theodore Roosevelt; and to the era of great fortunes in the Roaring Twenties, which ended in the stock market crash of 1929 and the Great Depression.

In our New Economy, America’s super-rich have accumulated trillions in new wealth, far beyond anything in other nations, while the American middle class has stagnated. What separates the Two Americas is far more than a wealth gap. It is a wealth chasm—“mind-boggling” in its magnitude, says Princeton economist Alan Krueger. Wealth has flowed so massively to the top that during the nation’s growth spurt from 2002 to 2007, America’s super-rich, the top 1 percent (3 million people), reaped two-thirds of the nation’s entire economic gains. The other 99 percent were left with only one-third of the gains to divide among 310 million people. In 2010, the first full year of the economic recovery, the top 1 percent captured 93 percent of the nation’s gains.

Americans, more than people in other countries, accept some inequality as part of our way of life, as inevitable and even desirable—a reward for talent and hard work, an incentive to produce and excel. But wealth begets wealth, especially when reinforced through the influence of money in politics. Then the hyperconcentration of wealth aggravates the political cleavages in our society.

The danger is that if the extremes become too great, the wealth dichotomy tears the social fabric of the country, undermines our ideal of equal opportunity, and puts the whole economy at risk—and more than the economy, our nation itself. A solid majority of Americans say openly that we have reached that point—that our economy is unfairly tilted in favor of the wealthy, that government should take action to make the economy fairer, and that they’re frustrated that Congress continually blocks such action.

What’s more, contrary to political arguments put forward for not taxing the rich, an economy of large personal fortunes does not deliver the best economic performance for the country. In fact, concentrated wealth works against economic growth. Several recent studies have shown that America’s wealth gap is a drag on today’s economy.

This basic truth is why conservatives - Fox News, The Wall Street Journal, Glenn Beck, the Koch brothers, Pete Petersen and every other conservative crank spends their wheels so often, so loudly and with such hatred. They have to keep the illusion going that they are the free market capitalists and those who oppose them are anti-Christ Marxists. The radical Right and their corporate collectivism is the real threat to capitalism and freedom, not normal moderate Americans.