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Dawn of the Age of Oligarchy: the Alliance between Government and the 1%

Kevin Lamarque/Reuters

Kevin Lamarque/Reuters

Thanks to their cozy relationship with the Obama administration, a new class of super-wealthy oligarchs keeps getting more powerful while the country’s middle class shrinks.

For The Daily BeastJoel Kotkin writes: When our current President was elected, many progressives saw the dawning of a new epoch, a more egalitarian and more just Age of Obama. Instead we have witnessed the emergence of the Age of Oligarchy. The outlines of this new epoch are clear in numerous ways. There is the diminished role for small business, greater concentration of financial assets, and a troubling decline in home ownership
Barack_Obama_and_Dmitry_Medvedev_in_Kremlin-1

[Also see A Glimpse into the Political Future – city-journal.org]
On a cultural level, there is a general malaise about the prospect for upward mobility for future generations.Not everyone is suffering in this new age. For the entitled few, these have been the best of times. With ever more concentration of key industries, ever greater advantage of capital over labor, and soaring real estate values in swanky places such as Manhattan or San Francisco which , as one journalists put it, constitute “vast gated communities where the one percent reproduces itself.” The top hundred firms on the Fortune 500 list has revenues, in adjusted dollars, eight times those during the supposed big-business heyday of the 1960s.
This shift towards oligarchy well precedes President Obama’s tenure. It was born from a confluence of forces: globalization, the financialization of the economy, and the shift towards digital technology. Obama is not entirely to blame, it is more than a bit ironic that these measurements have worsened under an Administration that has proclaimed income inequality abhorrent.
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[Check out Joel Kotkin‘s book The New Class Conflict at Amazon.com]

Despite this administration’s occasional rhetorical flourishes against oligarchy, we have seen a rapid concentration of wealth and depressed conditions for the middle class under Obama. The stimulus, with its emphasis on public sector jobs, did little for Main Street. And under the banner of environmentalism, green cronyism has helped fatten the bank accounts of investment bankers and tech moguls at great public expense.

Wall Street grandees, many of whom should have spent the past years studying the inside of jail cells for their misbehavior, are only bothered by how to spend their ill-gotten earnings, and how not to pay taxes on it. The Obama Administration in concert with the Congress , have consented to allow  the oligarchy to continue paying capital gains taxes well below the income tax rate paid by poor schmuck professionals, small business owners and high-skilled technical types.

In this, both political parties are to blame. Republican fealty to the interests of the investor class has been long-standing. But Obama and the Democrats are also increasingly backed in their “progressive” causes by the very people — Wall Street traders, venture capitalists and tech executives — who benefit most from the federal bailouts, cheap money, low interest rates, and low capital gains tax rates.

Large financial institutions also have benefited greatly from regulations that guaranteed their survival while allowing for increased concentration of financial assets. Indeed in the first five years of the Obama Administration the share of financial assets held by the top six “too big to fail” banks soared 37%, and now account for two-thirds of all bank assets.

“Quantitative easing,” the government’s purchase of financial assets from commercial banks, essentially constituted a “too big to fail” windfall to the largest Wall Street firms, notes one former high-level official. By 2011, pay for executives at the largest banking firms hit new records, just three years after the financial “wizards” left the world economy on the brink of economic catastrophe. Meanwhile, as “too big to fail” banks received huge bailouts, the ranks of community banks continues dropping to the lowest number since the 1930s, hurting, in particular, small businesspeople that depend on loans from these institutions…(read more)

The Daily Beast

Joel Kotkin is the Roger Hobbs fellow in urban futures at Chapman University, His next book, The New Class Confict from Telos Publishing, will be available in September 2014.

 

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2 Comments on “Dawn of the Age of Oligarchy: the Alliance between Government and the 1%”


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