“No sensible democracy would opt for an economic system in which the financial wealth of the top 1 percent of households exceeds the combined wealth of the bottom 95 percent.”
That is the commonsense observation with which Jeff Gates begins his provocative new book, Democracy at Risk: Rescuing Main Street from Wall Street. (Perseus Publishing, Cambridge, MA.)
Noting that the nation’s 400 richest families increased their wealth on average by $940 million each from 1997 to 1999 — an increase of $1.28 million every day — Gates then asks the provocative question: “Who voted for that?” He asks, “How many wage earners in a true democracy would endorse a system in which 1998 wages are 7 percent lower than in 1973 — when Richard Nixon was in the White House.”
These questions are rhetorical, but they are provocative because they highlight a critical insight: how wealth is distributed is a function of conscious policy choices. The business pages and financial magazines are flush with accounts of this or that entrepreneur or innovator, but as important and desirable as entrepreneurialism may be, major shifts in how wealth is allocated are due in large part not to the workings of the free market, but to the political market in Washington, D.C.
Tax policy over the last 20 years has shifted the tax burden off the shoulders of the wealthy and large corporations, and increasingly on to the middle class, spurring the massive wealth concentration of the last two decades.
Federal Corporate welfare policies shift more than two hundred billion dollars annually from American taxpayers to Big Business.
Moreover, depreciation rules and other tax policies encourage rapid depletion of natural resources, with the costs of cleanup and environmental degradation foisted on to the public. National and international accounting rules ignore the real costs of ecological destruction, facilitating more intense pollution and resource extraction.
Once you accept Gates’ point that society’s rules significantly influence how and where wealth is generated, and how it is distributed, the next step is to ask the question now off the political radar screen: What measures can be taken to deconcentrate economic power?
Gates offers a range of intriguing proposals, among them:
+ Create a legal requirement for pension fund managers to invest not only with the purpose of achieving competitive returns, but also to enhance broad-based ownership of major assets. Why should pension funds invest to turn Sam Walton’s family into multi-billionaires, he asks, rather than using their investment leverage to demand that Wal-Mart stock be broadly shared among workers and others?
+ Encourage customer-owned utilities, with customer service payments buying not only electric, water or other utility services, but also a progressively larger share of equity in the utility.
+ Use the power of government purchasing to reward companies that are broadly held — and, it should be added, meet other public interest standards.
+ Create a commission, made up largely of the super-rich, to propose ways to more evenly distribute the nation’s wealth.
To encourage the public to think boldly and creatively about wealth questions, Gates recalls Huey Long’s “Share Our Wealth” program. Long wanted to impose a “capital levy” on family fortunes in excess of $5 million ($62 million in 1999 dollars). The “surplus wealth” would be turned over to a corporation that would issue stock to the American people according to a Congressionally devised plan. The relevance of this plan today? “Though the times are very different,” Gates writes, “Huey remains correct on his key point: Ways must be found to Share Our Wealth.”
We live now in an era in which massive disparities of wealth subordinate democracy to plutocracy. To break the grip of today’s oligarchs and shift to policies to encourage broad-based prosperity will require a status quo-shaking political movement on both a national and international scale. There are many signs that such a movement is now nascent — the student campaigns against sweatshops, the protests in Seattle and Washington against corporate globalization and in many local innovations to disperse ownership and establish local control over local wealth.
As Jeff Gates has written — we know that capitalism routinely expands without expanding the ranks of those called capitalists.
What remains is for a growing political momentum to generate more innovative thinking, local experimentation and a maturing public movement that demands a renewed commitment to wider ownership of capital resources and a subordination of manic mercantilism to democratic values.