Vance Packard and the Ultra Rich

Presently I'm reading Vance Packard's The Status Seekers, which published in 1959 as a follow-up to his 1957 book The Hidden Persuaders. Status Seekers is out of print and I gather it had less impact than Persuaders(which was reissued recently), or at least is not remembered as having had as much impact. There's no question Seekers is dated in some respects, such as his numerous references to the prices of things circa 1959, and to a "diploma elite" who were seemingly guaranteed better outcomes in their lives by virtue of having attended college.

If anything, its datedness is instructive as to how much the underpinnings of the US economy and the zeitgeist are so different today. At any rate, datedness in some trivial particulars doesn't disqualify a text as therefore having little or no value. It's a little like objecting to a film from years ago because you don't like the hairstyle of the protagonist.

This is from Chapter 2, "An Upsetting Era:"

This brings us to the second big economic change affecting class: the graduated federal income tax. Some have described it as the great leveler. The federal-government income taxes began rising in the thirties to fight the Depression, and soared even more steeply in the forties to finance World War II. They still remain near wartime levels. As a result, it has become virtually impossible for a man to become a multi-millionaire by salary alone. He needs to have capital gains, only one quarter of which he loses in taxes, or to be an oilman and get a "depreciation allowance." Still, in 1958, I was able to find, without too much difficulty, several dozen Americans who have established fortunes of at least $10,000,000 in the twenty years since income taxes have become so high.[4]

Despite the laments about high taxes, the number of American families with a net worth of a half-million dollars has doubled since 1945. Most of the very rich manage, one way or another, to hold onto the bulk of their new incomes each year. Meanwhile, corporate lawyers have applied their ingenuity to find non-taxable benefits for key executives. These range from deferred payments in the form of high incomes for declining years and free medical checkups at mountain spas, to hidden hunting lodges, corporate yachts, payment of country-club dues (according to the survey, three quarters of all companies sampled did this), and lush expense accounts. One sales manager declined a $10,000 raise and took instead a $10,000 expense account which, it was specified, he didn't have to account for.

(Packard's footnote refers to "How to Make a Fortune-- New Style" from Ladies' Home Journal, January 1959. No author is cited. He also cites a lot of academic sociologists throughout the book, so he wasn't just citing popular articles, although the citations are a bit sparse for my taste.)

In the 1989 interview above with Harold Channer, Packard talks about Ultra-Rich: How Much is Too Much? which had just been published a couple of months earlier, and which turned out to be his last book. In Ultra Rich he suggests an absolute limit of 25 million dollars on inheritable fortunes, which he argues would motivate the wealthy to be more mindful of creating civic legacies and take an interest in making plans to disperse their fortunes down to that limit before they died.

For my part I think an absolute limit like that is unrealistic and promotes corruption, much as Prohibition promoted an underground alcohol economy in the 1920s. I think Huey Long also argued for an absolute limit on wealth back in the 1930s.

But I appreciate Packard's intent as well as his noting that Reagan's tax policies were promoting inequality, which, if memory serves, not so many people fretted about in 1989. To put it in perspective, remember that Bush Senior had been inaugurated president that January, the same month that Ultra-Rich was published. My impression at the time was that many people regarded the Reagan era as being an aberration, and felt we were likely to go back to the New Deal Lite policies of Nixon, Ford and Carter, especially after George Bush Sr. had memorably described Reagan's ideas as "voodoo economics" in 1980. And of course most of us didn't know to call him Senior then.

Smoke gets in your eyes

Ezra Klein: "2011 is not 1995"(via BDR)

...you would’ve never known it from President Obama’s encomium to the agreement. Obama bragged about “making the largest annual spending cut in our history.” Harry Reid joined him, repeatedly calling the cuts “historic.” It fell to Boehner to give a clipped, businesslike statement on the deal. If you were just tuning in, you might’ve thought Boehner had been arguing for moderation, while both Obama and Reid sought to cut deeper. You would never have known that Democrats had spent months resisting these “historic” cuts, warning that they’d cost jobs and slow the recovery.

Boehner, of course, could afford to speak plainly. He’d not just won the negotiation but had proven himself in his first major test as speaker of the House. He managed to get more from the Democrats than anyone had expected, sell his members on voting for a deal that wasn’t what many of them wanted and avert a shutdown. There is good reason to think that Boehner will be a much more formidable opponent for Obama than Gingrich was for Clinton.

Of course I don't know Ezra Klein, but by most accounts he is a bright, highly educated overachiever, so I assume he knows better, or at least should know better. He gives Obama and Reid credit they don't deserve, suggesting they fought the good fight against those horrible Republicans, and are bravely putting on a good face in defeat. To believe this you have to believe that Obama and Reid are not in fact in on the effort to strip mine the New Deal and Great Society programs. Reid and Obama could have, for example, insisted on a vote on ending the GWB era tax cuts in the summer of 2010, when the dems still had a majority, playing election funding hardball with the so-called Blue Dogs in the House and Senate(most of whom lost re-election anyway). They didn't do this because they didn't want to.

But what about a filibuster? Bills have passed the Senate for many decades without 60 votes. They could have forced a GOP fillibuster, rather than reactively running away from even the possibility of one because they didn't have 60 votes locked up, breaking the phony-baloney gang of 14 agreement. Again, they didn't force the issue because they didn't want to.

Going back to 1990s income tax rates would have rendered the 38 or 39 or whatever billion in cuts unnecessary. (Whether they even were necessary in the short term is also debatable, but to keep the present discussion simple assume they were.)

Even if they lost a vote on the tax cuts in summer 2010, it would have given the democrats a rhetorical club against the GOP in the then-upcoming elections, refuting the Tea Partiers claim that they were serious about reducing the deficit. It may have even helped in the midterms, at least in some districts that democrats lost.

And as far as Boehner being a 'much more formidable opponent for Obama than Gingrich was for Clinton'', you have to assume that the degree of difference between BHO and Boehner today is comparable to that between Gingrich and Bill Clinton in '95, and that BHO is not a corporate stooge, etc.

(Actually, even Bill Clinton has shifted corporate right closer to the GOP than he was, at least operationally, in 1995. I note Clinton's endorsement of Joe Lieberman versus Ned Lamont in 2006 as exhibit A, and Clinton's own rejection, in December 2010, of going back to the Clinton era tax cuts as exhibit B. Of course 1995 was so many six figure speeches ago, and one imagines that Bill's Rolodex of well-connected friends is so much fatter.)

Klein continues:

So why were Reid and Obama so eager to celebrate Boehner’s compromise with his conservative members? The Democrats believe it’s good to look like a winner, even if you’ve lost. But they’re sacrificing more than they let on. By celebrating spending cuts, they’ve opened the door to further austerity measures at a moment when the recovery remains fragile. Claiming political victory now opens the door to further policy defeats later.

Or, claiming political victory now confuses stupid people and sends the proper signal of deference to the owners. I guess that's crasser, and may even use words that are frowned upon in the Washington Post style manual. But he's undoubtedly right about opening the door to further austerity measures and 'further policy defeats'. You have to give him that.


Among the best blog posts from this past week:

Two from Ian Welsh, "In Light of the Budget Deal: Obama’s Personality"
and "When Medicare is destroyed is only a matter of when"


and two from Jack Crow, "Clumsy Theater"
and "Pay no attention to the man behind the..."

The Wilderness

update below.

In “Can’t argue with that” Jonathan Schwarz quotes Chris Hedges, thus:

The lunatic fringe of the Republican Party, which looks set to make sweeping gains in the midterm elections, is the direct result of a collapse of liberalism. It is the product of bankrupt liberal institutions, including the press, the church, universities, labor unions, the arts and the Democratic Party. The legitimate rage being expressed by disenfranchised workers toward the college-educated liberal elite, who abetted or did nothing to halt the corporate assault on the poor and the working class of the last 30 years, is not misplaced. The liberal class is guilty. The liberal class, which continues to speak in the prim and obsolete language of policies and issues, refused to act. It failed to defend traditional liberal values during the long night of corporate assault in exchange for its position of privilege and comfort in the corporate state. The virulent right-wing backlash we now experience is an expression of the liberal class’ flagrant betrayal of the citizenry.

I wrote in the comments:

Although I think Chris Hedges is generally on the right side, his habit of making sweeping pronouncements at the expense of discussing "prim and proper" policy specifics has always rankled me.
[...]
I'd have more sympathy with his thesis if he was willing to more specifically criticize Obama and distinguish between the democratic party leadership and the concept of liberalism. My guess is that Hedges would respond that a critique of Obama and the dem leadership is implicit in his comments, but it isn't, and Hedges' conflation lets obedient dem voters off the hook for their sheepish loyalty to the party.

Mike Meyer used to write in ATR comments about the need for a viable 3rd party. Well the creation of a viable 3rd party will never happen if its regarded as something that needs to be put off, perpetually, until one more election in which you back the dems. It's like that one more cigarette before you quit. There is nothing that Obama would willingly do with 230 or 240 house members sworn in on 1/2011 that he wouldn't be able to do with just 210 or 205, because he is a phony-baloney democrat and merely a bag man for the finance industry.

Their decision, for example, to avoid voting on repealing tax cuts just means they're hoping to be "forced" to save the rich man's tax cuts next year, like a drunk who threatens the other guy while he's being held back by his more sober friends.

...

I reworded the comment above slightly, see below.* Of course I should have added that most democrats that are higher up the dem food chain are phony-baloney democrats now.

Hedges’s main point, that the tea partiers exist because supposedly liberal constituencies have sold out liberalism is at least partly correct. I think it’s more accurate to say that the democrats have been selling out the New Deal as a rear guard action to hold on to power without having to do the presumably riskier task of directly confronting Reaganism. (Ian Welsh suggests this process is nearly complete, and it’s difficult to argue with his darker assessment.)

Hedges also seems to accept the GOP rhetorical trap of falling for the distinction between the working class and "snooty liberal elites" when in fact most tea partiers are middle class types who have health insurance and jobs or pensions and are afraid that they'll have to pay for subsidizing the growing ranks of poor people, all the while that they stupidly hector for tax cuts and against deficit spending. What’s particularly maddening about the ascent of Obama is the crisis of the fall of 2008 was the best opportunity for an ideological counter-strike against Reaganism that our society has had in 15 or 20 years, and instead we got a phony health care reform that is set up from the start to be gutted later except for it’s most noxious aspect, the individual mandates that will force people to go to the private sector and will eventually destroy medicare as well. At least we have our distractions.

(In fact the tea partiers are quite correct to object to the individual mandates; it may even be their only salient aspect. Just as, ironically, it will most likely be the one plank of Obama-ism they will never be able to dislodge.)

Chris Hedges, Truthout, “The World Liberal Opportunists Made”

Ian Welsh,"How the next 4 years will play out"


*update: originally I quote Hedges briefly, thus:

"The real enemy of the liberal class has never been Glenn Beck, but Noam Chomsky."

Later in the essay he criticizes liberals for shutting out and marginalizing Chomsky. OK, which is it?

Ian in the comments as well as a commenter at ATR have convinced me this is not correct.-JV