Preventing Plutonomy

Adam Smith’s magnum opus of classical economics, “The Wealth of Nations,” outlines a desirable economic vision prioritizing individual liberty and self-accountability while cooperating with others to fulfill personal needs and benefit the nation. Published in 1776, Smith’s works included concepts of free-enterprise and the guiding invisible hand which gradually paved the way for the development of the economic theory of Capitalism. 

Communism, one of the 20th century’s most recognizable failed alternatives to capitalism, has been demonstrably more proficient in depriving people of life, liberty and the pursuit of happiness than the U.S. economic system. Published by the Harvard University Press in 1999, “The Black Book of Communism” found when excluding combat-related deaths, Stalin’s Soviet Union murdered over 20 million of its own citizens, though many scholars argue it was millions more. Similarly, Mao Zedong’s Great Leap Forward led to 65 million Chinese people beaten, worked or starved to death in just four short years. But communism’s more apparent failures do not excuse capitalism from risking a similar descent into authoritarian or oligarchical pitfalls. In fact, there’s a considerable amount of evidence, particularly within the last 25 years, suggesting a similar descent is well underway. 

An infamous CitiGroup brochure called the “Plutonomy Memo” was exclusively given to its high-level investors on Oct. 15, 2005, and it was not made public until a couple of years after its private debut. This brochure broke populations of major modernized countries into two distinct socioeconomic blocks, saying “In a plutonomy, there is no such animal as ‘the U.S. consumer’ or ‘the UK consumer,’ or indeed the ‘Russian consumer.’ There are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the ‘non-rich,’ the multitudinous many, but only accounting for surprisingly small bites of the national pie. … Society and governments need to be amenable to disproportionately allow/encourage the few to retain that fatter profit share.” 

Many progressives support increased government intervention, or expansion to support the proverbial little guy and lessen high levels of income inequality. After George W. Bush signed the Emergency Economic Stabilization Act in 2008, the worst effects of an approved $700 billion bailout came during Bush’s White House replacement. Former President Barack Obama’s deified presidential legacy reflects something quite contrary to Progressivism. Rather than serving as the nation’s self-proclaimed deliverer of hope and change, the record solidifies even a historically progressive president is just as likely, if not more so, to refrain from acting any differently than any other Wall Street-funded politician ever has.

Pledging to refuse accepting donations from any lobbying industry while on the campaign trail in 2007, Obama’s campaign was largely financed by elitist Wall Street donors. According to the Center for Responsive Politics, “bundlers in the finance sector accounted for about $16 million of $76.5 million brought in by top Obama fundraisers.” Raising a total of $745 million during his first campaign, more recent data from CRP indicates “769 elites are directing at least $186,500,000 for Obama’s re-election efforts—money that has gone into the coffers of his campaign as well as the Democratic National Committee.” Over $43.5 million came from the financial sector. The two-term record shows slow economic improvement following the ‘08 crash, but at the cost of caving to pressure from corporate interests, a significant expansion of government power, continuing military action in the Middle East, and not merely empowering a corrupt minority-run sub-structure of a once stable, and effective economic system, but bailing it out at the cost of the nation’s majority.

Just three days after the historic collapse of Lehman Brothers, Federal Reserve Chairman Ben Bernanke, along with Secretary Treasury Hank Paulson convened with congressional leaders on Capitol Hill. They were responding to a seemingly inevitable and rapidly approaching global catastrophe. Bernanke and Paulson explained to the elected officials that if Congress failed to authorize an immediate “$700 billion” bailout of the banks, the U.S. economy would crash in 48 hours, and the world’s economy in 72 hours. In that unconventional meeting on Sept.18, 2008, it became clear that Wall Street had crippled the U.S. economy more severely than Hitler, Mussolini, Stalin, Mao or Bin Laden ever did. 

Obama turned his back on the precedent established by Great Depression-era politicians, who for all their imperfections acted with solidarity in providing relief and financial security for future Americans. Summing up the situation beautifully at a 2010 hearing, Vice Chairman of the Independent Congressional Oversight Panel, Damon Silvers, spoke to the treasury department. According to the official transcript, he said, “We can either have a rational resolution to the foreclosure crisis, or we can preserve the capital structure of the banks. We can’t do both.” The guilty parties were bailed out and still remain unscathed by any legal consequences. Even though George W. Bush signed the Emergency Economic Stabilization Act, the following administration would set a precedent equally as problematic.

Big-tech companies like Amazon, Apple, Facebook and Alphabet Co. spend more money in lobbying expenditures than banks do in Washington D.C. This is the new Wall Street, only this should alarm people more considering these companies abide by far fewer regulations than the financial sector yet have access to much more than just financial information. Moreover, the world has never seen a single army, corporate entity or government maintain such an addictive stranglehold on the public, possess this level of far-reaching political influence and monopoly on information as this current multi-headed hydra. This is a far cry from the vision of Adam Smith, but not far enough to escape his continued relevancy and proven genius. He writes, “All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.”