The Obama Watch

Hail to the Inequality President!

Elected by the poor, he's rewarded the unproductive rich, and how!

By 9.12.13

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The news is in. After five years in office, President Barack Obama has managed to create the highest level of income inequality in American history. All that effort to undermine the wealth-producing ability of the economy has not been in vain.

According to the figures published Thomas Piketty and Emmanuel Saez, the dynamic Berkeley duo that has been beating this drum for about 15 years, the top 10 percent of earners took home half the income in the United States in 2012. That’s the highest level since the government started keeping records a century ago. The top 1 percent took home one-fifth of the national income, one of the highest levels since 1913 when the federal income tax was initiated.

Says the New York Times in reporting the news:

The figures underscore that even after the recession the country remains in a new Gilded Age, with income as concentrated as it was in the years that preceded the Depression of the 1930s, if not more so. 

President Obama, harbinger of the new Gilded Age.

Now of course you have to take everything Picketty and Saez put out with a grain of salt. They’re a pair of Marxists, Saez from France, who parachuted into Berkeley in the 1990s and decided things they hadn’t seen anything this bad since the outbreak of the French Revolution. They are the originators of “the 1 percent” concept, the idea that there’s some shadowy cabal at the top of American society hoarding all the wealth.

Picketty and Saez arrive at their dire portrait by doing the following:

1) They don’t count transfer payments -- welfare, Social Security disability, food stamps, housing subsidies or anything else in their income statistics.

2) They don’t separate out Subchapter-S corporations that file as individuals in order to avoid high corporate tax rates. A lot of “the 1 percent” is banks with income of $10 million or more.

Alan Reynolds has dissected all this in countless articles, plus his excellent book, Income and Wealth.

But Picketty and Saez must be measuring something and whatever it is, it’s now reached historic proportions. So let’s give credit where credit it due. President Obama has done a better job of widening the gap between rich and poor than any President in recent memory, maybe any President in history.

Now of course, as the mainstream media is going to tell you, this is all someone else’s fault. They’ll blame George Bush or Ronald Reagan or the Republicans in Congress. The Times already gave us a head start by blaming the extension of the Bush tax cuts last January. (This came after the 2012 returns, but who cares? This is advocacy journalism.)

So as long as President Obama has succeeded in opening the widest income gap in history, let’s look at how he’s done it.

The best place to start is with what sociologists generally call the “Five Classes” in American society. They are:

  • Old wealth, the moneyed aristocracy, living off trust funds.
  • The business elite
  • The educated upper-middle class
  • The less educated working class and small entrepreneurs.
  • The poor

As often happens, people see their immediate neighbors as rivals but look for allies on the far side of the fence. Thus, the blue-collar class feels very uncomfortable living next to the poor and doesn’t much like the upper middle class. The upper middle class feels very comfortable patronizing the poor but disparages the lower middle class -- the “guns and religion” people -- and resents the richer business elite as well. The guns-and-religion people, on the other hand, tend to idealize the business elite and embrace its cause more openly than businesses dare do themselves. This is the Tea Party, which has sprung out of the real estate and insurance offices, carpenter and plumbing contractors around the nation -- all those people who “didn’t build it themselves.”

Now the business class and petit bourgeois entrepreneurs are Republicans. The blue-collar working class, what remains of it, tends to split, some loyal union members voting Democratic while others have become “Reagan Democrats.” The poor, of course, vote entirely Democratic, eager for more government benefits. This leaves one pivotal constituency -- the educated upper middle class.

Once upon a time, when these people worked mainly for businesses, they were reliable Republicans. The old suburban joke was that six months after moving out from the city, people would go down to town hall and switch their registration from Democrat to Republican. But as the educated class has become more affluent and oriented more toward government and the non-profit sector, it has become more Democratic. This puts them in opposition to both the guns-and-religion people below on the economic scale and the business elite above.

So where do they look for allies? Well, don’t forget about that one small sliver at the top -- old wealth. This narrow class of people has bequeathed one great gift upon American politics -- environmentalism. Environmentalism is the philosophy of an aristocracy. It says, “We’ve already got enough, we don’t need any more wealth, we don’t need industrial progress, let’s just sit back, enjoy nature and be happy with what we have.” Environmentalists worry about the “population bomb,” which roughly means “too many poor people.” They don’t want power plants, factories, fracking, Walmart, or anything that smacks of commercialization or industrialization. They just want to leave everything as it is, enjoy what we’ve got, and maybe even move a little bit backward on the technological scale. As Thorstein Veblen wrote more than a century ago:

The institution of a leisure class… makes for the perpetuation of the existing maladjustment of institutions and even favors a reversion to somewhat more archaic scheme of life.

Windmills, anyone?

So what’s happened is this. As the upper middle class has become ever more affluent and separated from the industrial economy, they have looked over the neighboring business elite and found an even more compatible ally -- old wealth. They are now feeling comfortable enough with the information economy and the expansion of government so that they can abjure all this dirty, polluting business of the industrial economy and join those who say, “We’ve already got enough.”

Moreover, aristocrats always have an enormous social appeal. They have money and class and seem to live effortlessly. This can be seen embodied in the profile of one highly prominent individual, Robert F. Kennedy, Jr., hero of the planet, uber-environmentalist, and subject of adoring press coverage everywhere. Robert F. Kennedy, Jr. lives in the Hudson Highlands, has six children, and preaches that everyone else should limit their families and curb their consumption. In recounting the environmental opposition to an early power-plant proposal in the Highlands, the Storm King Mountain controversy of the 1960s, wrote in his book The Riverkeepers:

The [environmental] committee quickly found support among the well-heeled residents of the Hudson Highlands. Many of its founding members were the children and grandchildren of the Osborns, Stillmans, and Harrimans, the robber barons who had laid out great estates amid the Highlands' spectacular scenery and whose descendants had fought fiercely since the turn of the century to preserve the views for themselves and the public.

You can now add the name “Kennedy” to the list.

As Veblen wrote in The Theory of the Leisure Class, one of the great puzzles about industrial society is that those who have benefited most from it are often its greatest opponents. Veblen called this phenomenon “industrial exemption” and explained it as follows: Once people reach the top, they are no longer concerned with accumulating more wealth but turn their attention toward halting further progress so that others will not follow them up the ladder.

Thus, Robert F. Kennedy, Jr. opposes burning coal, natural gas fracking, oil pipelines, nuclear power, vaccination of children, and just about anything else you can imagine. He does invest in solar plants in the desert -- as long as it’s not his desert. When someone proposed putting windmills on Long Island Sound and near his home in Hyannis Port, however, he opposed that as well. There was one marvelous moment during his recent debate with Robert Stone, the director of the pro-nuclear documentary, Pandora’s Promise. Kennedy was ranting on about how Stone was in the pay of the nuclear industry and its “profits” when New York Times environmental writer Andrew Revkin, who was moderating, asked Kennedy about his solar investments. “Don’t you have a financial interest there as well?” he said.

You could see the wheels turning in Kennedy’s head. “Don’t you know how I am?” he wanted to say. “I’m a Kennedy! We Kennedys don’t invest for money. We already have money. We only invest only for the good of humanity.”

So where does this leave President Obama? Well, he’s been through American colleges and absorbed environmentalism from the air he breathed. His entire agenda is aimed at putting this upper-middle-class aristocratic vision into effect. He has blocked the Keystone Pipeline, shuttered coal plants, blocked western mining, and slowed the development of oil and gas on federal lands everywhere. He hasn’t managed to stop fracking but his EPA would do it in a minute if they could figure out how to gain jurisdiction. His appointees to the Nuclear Regulatory Commission have closed down Yucca Mountain and stonewalled further nuclear development, even though it would be the best way of reducing carbon emissions. (See Obama’s recent visit to Sweden.) In place of all this, he is squandering money on bizarre solar projects that will cover ten square miles of desert with highly polished, dust-prone mirrors in order to produce the same amount of electricity you could get from one medium-sized natural gas or coal plant -- when the sun shines.

The great irony is that while Obama was basically elected by the poor (African Americans voted for him by 95 percent), his entire agenda has been geared toward the implementing the preferences of the upper middle class and their new-found friends, the “old rich.” The result has been industrial torpor, economic stagnation, and an ever-widening gap between rich and poor.

So let’s have a round of congratulations for President Barack Obama, the champion of American inequality!

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About the Author
William Tucker is news editor for RealClearEnergy.org.