The Rich Should Embrace Bernie: America’s Plutocrats Have Much to Gain from Sanders’ Platform
Since the Great Recession began almost a decade ago, the growing divide between the richest Americans and everyone else has become increasingly apparent in the United States and around the world. After nearly four decades of neoliberal economic policies—e.g., deregulation, sweeping tax cuts for the wealthy, privatization, free trade deals, etc.—wealth and income inequality have skyrocketed from record lows in the 1970s to historic levels today.
And while inequality has become a much more discussed topic in 2016 than just ten years ago, most Americans still don’t know how unequal America truly is. Indeed, according to various studies conducted over the past several years, the majority of people think America is much more equal than it actually is, and most consider their low estimate to be too unequal.
As Nicholas Fitz reports in Scientific American on a 2011 report that surveyed more than 5,000 people:
“The average American believes that the richest fifth own 59 percent of the wealth and that the bottom 40 percent own 9 percent. The reality is strikingly different. The top 20 percent of U.S. households own more than 84 percent of the wealth, and the bottom 40 percent combine for a paltry 0.3 percent. The Walton family, for example, has more wealth than 42 percent of American families combined.”
The ideal distribution of wealth, according to the respondents, would be for the top fifth (20 percent) to own 32 percent (in fact, the top one percent owns more than 35 percent of all private wealth) and the bottom two-fifths (40 percent) to own 25 percent. Still unequal, but not the obscene levels currently found in the United States.
According to another 2014 survey conducted by the Association for Psychological Science, the median American estimate for CEO-to-worker pay ratio in America is 30-to-1, and the ideal is 7-to-1. In reality, the CEO-to-worker pay ratio in America is about 354-to-1.
This massive divergence between what people think about inequality and what the actual reality is evokes a 2014 quote from comedian Chris Rock: “If poor people knew how rich rich people are, there would be riots in the streets.”
Fortunately for America’s plutocrats, this is not the case. Not only are most people ignorant of how unequal America has become, but a large part of the population expect to become wealthy one day and greatly overestimate economic mobility.
A 2015 study done by Perspectives on Psychological Science, which surveyed over 3,000 people, found that people overestimate upward mobility while underestimating downward mobility. “Participants in the survey overshot the likelihood of rising from the poorest quintile to one of the three top quintiles by nearly 15 percentage points,” wrote one of the researchers, Shai Davidaiin, in a New York Times article. Even more telling is the fact that “poorer individuals believe there is more mobility than richer individuals.”
This mindset is largely a result of American culture and the enduring mythology of the American dream, which suggests that everyone and anyone can climb from rags to riches if they simply have the will to do so (implying that those who remain poor or in the working class for their entire lives have only themselves to blame). Of course, throughout America’s long history there have been periods when this was more accurate than other periods, but even during so-called golden ages (most notably the Post-war era) it has been greatly exaggerated. For every self-made millionaire, there have always been thousands of wage-earners struggling to get by, and for every Jay Gatsby there have been myriad Donald Trumps (although, it should be noted that Donald only started out with a “small one-million dollar loan” from his father).
As several researchers on the subject, Michael Kraus, Shai Davidal, and A. David Nussbaum, write in the aforementioned Times article: “Studies suggest that belief in the American dream is woefully misguided when compared with objective reality. Addressing the rising economic gap between rich and poor in society, it seems, will require us to contend not only with economic and political issues, but also with biases of our psychology.”
Beyond self-delusion, Americans tend to face an endless barrage of distractions in their lives, which makes political and economic consciousness close to impossible for many. First of all, Americans work longer hours than just about any of their counterparts in other major economies—and this doesn’t include raising a family and running a household—which leaves very little leisure time, and in effect makes staying well-informed a major challenge for the citizenry. Moreover, the inadequate free time that most Americans do have is usually spent seeking out diversions and superficial pleasures to escape from the dullness of reality. The latest Apple product, the latest binge-worthy TV-show, the latest smartphone app, the latest pair of overpriced basketball sneakers, the latest video game, and so on. Marx may very well have deemed modern forms of entertainment, whether professional sports or reality-TV, to be the “opiate of the masses.”
And people wonder how America has become a de facto plutocracy.
As Montesquieu once said, “The tyranny of a prince in an oligarchy is not so dangerous to the public welfare as the apathy of a citizen in a democracy.” Of course, the question is: how long will the population remain docile, and how bad do things have to get before people start to revolt? The Bernie Sanders presidential campaign has done an important service in publicizing the reality of inequality in modern America, and the anti-establishment ethos of 2016 may very well lead to a larger and more far-reaching popular movement after the election. But as long as the majority remains distracted, ill-informed, and apathetic, the plutocrats have the upper hand.
When it comes to the plutocrats, who presumably want to preserve the system that has been so advantageous to them over the years, the most prudent thing for them to do might be to embrace the kind of Social democratic reforms that Sanders has advocated over the past year. As renowned economist Joseph Stiglitz writes in his 2012 essay, “The 1 Percent’s Problem”:
“There are good reasons why plutocrats should care about inequality anyway—even if they’re thinking only about themselves. The rich do not exist in a vacuum. They need a functioning society around them to sustain their position. Widely unequal societies do not function efficiently and their economies are neither stable nor sustainable. The evidence from history and from around the modern world is unequivocal: there comes a point when inequality spirals into economic dysfunction for the whole society, and when it does, even the rich pay a steep price.”
It is often forgotten that the New Deal reforms of the 1930s were largely a result of America’s elite (at least some members of America’s elite) hoping to stave-off more radical political movements (e.g. socialism, communism, anarchism, and even fascism). To prevent the working class from embracing radical movements that threatened the entire capitalist system, the establishment made the system more inclusive and favorable to the workers. This reformist philosophy has been disregarded over the past several decades, and we are now living in a society of haves and have-nots because of this deviation.
As an authoritarian demagogue continues to climb in the polls here in America and fascist political groups continue to threaten parliaments across Europe (largely because of the draconian austerity policies that the neoliberal technocrats in Brussels and bankers in Germany have forced on populations), it might be time for the world’s plutocrats to rethink their strategy, and perhaps take the advice of Franklin Roosevelt (from a letter he wrote before being elected president):
“There is no question in my mind that it is time for the country to become fairly radical for at least one generation. History shows that where this occurs occasionally, nations are saved from revolutions.”