"The market is the best mechanism ever invented for efficiently allocating resources to maximize production . . . I also think there is a connection between the freedom of the marketplace and freedom more generally." -President Barack Obama
We live in an era where income inequality is its greatest since shortly before the Great Depression. The income gap between the rich and poor is the largest it has been in nearly a century. Between 1993 and 2012, the income of the top 1 percent grew by over 86 percent; for the rest of us: 6.6 percent. (The top 1 percent, by the way, is comprised of those families who make more than $394,000 per year). But if you live in the truly rarefied world of the top .001, the goalpost starts at $11 million dollars per year, and the average yearly income is $31 million. Since the official end of the Great Recession in 2009, largely caused by the top 1 percent and their reckless actions, the top 1 percent have seen their incomes grow by 31.4 percent; the rest of us, 0.4 percent.
Political scientists have definitively shown that politicians are responsive to the policy preferences of the affluent -- by which I mean the top 90 percent ($135,000 yearly income) and the policy preferences of the vast majority of Americans opinions simply do not matter. The American Dream -- intergenerational income mobility -- appears to be on life-support. Since 1980, the proportion of campaign contributions by the top 0.01 percent has become increasingly significant. For example, in 1980, the biggest contributor was Texan Cecil Haden at $1.72 million (in 2012 dollars) versus the Nevada casino owners the Adelsons who donated over $100 million dollars in 2012.
This has not been a recent phenomenon, but something that began with, generally speaking, the Reagan era. But even with the advent of the relatively elevated fortunes of the Democratic party, there has been no sign of campaign reform.
As exemplified by the above President Obama quote -- who, is accused by conservatives of being a socialist! -- the Democratic party has come to fully accept free market capitalism along with deregulation to almost the same extent as the GOP. This is a marked change from what it meant to be the party of the left in this country for over 100 years. A short history -- we'll look at the longer view later -- is this. Labor unions used to be the backbone of the Democratic party. However, in a surprise loss during Carter's presidency on a labor bill in the late 1970s, the writing was on the wall and Democrats knew it. Labor's political punch was weak. So a former U.S. Congressman from California, Tony Coelho, hit on an idea: let's start courting big business money. This was right around the time the DLC (Democratic Leadership Council), known for its coziness with corporate money, was born.
Then President Clinton was elected. Clinton signed NAFTA (North American Free Trade Agreement), defying labor. Clinton signed welfare reform and signed a bill allowing capital punishment to again be a penalty for federal crimes. For all the venom thrown his way, Clinton close to big business. It's been well-documented that his economic advisers -- Robert Rubin, Larry Summers, et al -- were sympathetic to Wall Street. In fact, it was Clinton who repealed the Glass-Steagall Act, an FDR era regulation that separated commercial banking from the investment banking side:
"Today, Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century," then-Treasury Secretary Lawrence H. Summers said at the time. "This historic legislation will better enable American companies to compete in the new economy."
Obama's economic team of course included Larry Summers. This goes hand-in-hand with the Democrats increasing reliance on campaign donations from the top 0.01 percent. And we know wealthy donors, while having little tolerance for redistributionist policies, are more pro-business than pro-market (think about the difference for a second).
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SHOW ME HOW
Obamacare -- the individual mandate -- was the brain product of the conservative think-tank the Heritage Foundation (so it's exceedingly inane for anyone to call it socialist medicine). There have been zero, zip, none federal prosecutions of any heads of the big banks that caused the Great Recession. To give just one example of the revolving door, Obama's budget director, Peter Orszag, left the White House to join Citigroup one of the prime movers behind the "Great Recession."
What about social issues? To be sure, voting Democratic makes a difference on these fronts, but most of society's changes have come about without the help of anyone. For example, the cultural conservatives who are still foaming at the mouth about gay marriage are in a losing battle, on the wrong side of history much like racial conservatives who fought against the end of Jim Crow. The battle has been effectively won. Outside of Texas/Oklahoma/Virginia/Florida, the death penalty is a relative rarity. Abortion may be the one debate conservatives are slowly gaining ground, but numerous recently-passed state laws effectively outlawing abortion are being challenged in federal court and observers believe there may simply not be enough votes on the Supreme Court to undo a woman's right to an abortion.
Being a Democrat just really does not matter that much anymore.
But don't be glum. In Part Two, I will explore what Peter Beinart has called the New New Left. There is hope yet.