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Forum Post: "Oligarchy in the U.S.A. : The wealth defence industry protects the richest of the rich." By Jeffrey A. Winters.

Posted 2 years ago on April 13, 2012, 3:55 p.m. EST by shadz66 (17842)
This content is user submitted and not an official statement

Oligarchy in the U.S.A.

The wealth defence industry protects the richest of the rich.

by Jeffrey A. Winters.

April 12, 2012 "Information Clearing House" ( http://www.informationclearinghouse.info/ ) ---


In 2005, Citigroup offered its high net-worth clients in the United States a concise statement of the threats they and their money faced.

The report told them they were the leaders of a “plutonomy,” an economy driven by the spending of its ultra-rich citizens. “At the heart of plutonomy is income inequality,” which is made possible by “capitalist-friendly governments and tax regimes.”

The danger, according to Citigroup’s analysts, is that “personal taxation rates could rise – dividends, capital gains, and inheritance taxes would hurt the plutonomy.”

But the ultra-rich already knew that. In fact, even as America’s income distribution has skewed to favor the upper classes, the very richest have successfully managed to reduce their overall tax burden. Look no further than Republican presidential contender Mitt Romney, who in 2010 paid 13.9 percent of his $21.6 million income in taxes that year, the same tax rate as an individual who earned a mere $8,500 to $34,500.

How is that possible? How can a country make so much progress toward equality on other fronts – race, gender, sexual orientation and disability – but run the opposite way in its policy on taxing the rich?

In 2004, the American Political Science Association (APSA) tried to answer that very question. The explanation they came up with viewed the problem as a classic case of democratic participation: While the poor have overwhelming numbers, the wealthy have higher rates of political participation, more advanced skills and greater access to resources and information. In short, APSA said, the wealthy use their social capital to offset their minority status at the ballot box.

But this explanation has one major flaw. Regardless of the Occupy movement’s rhetoric, most of the growth in the wealth gap has actually gone to a tiny sliver of the 1% – one-tenth of it, or even one-one-hundredth.

Even more shockingly, that 1 percent of the 1% has shifted its tax burden not to the middle class or poor, but to rich households in the 85th to 99th percentile range. In 2007, the effective income tax rate for the richest 400 Americans was below 17 percent, while the “mass affluent” 1% paid nearly 24 percent. Disparities in Social Security taxes were even greater, with the merely rich paying 12.4 percent of their income, while the super-rich paid only one-one-thousandth of a percent.

It’s one thing for the poor to lose the democratic participation game, but APSA has no explanation for why the majority of the upper class – which has no shortage of government-influencing social capital – should fall so far behind the very top earners. (Of course, relative to middle- and lower-class earners, they’ve done just fine.)

For a better explanation, we need to look more closely at the relationship between wealth and political power. I propose an updated theory of “oligarchy,” the same lens developed by Plato and Aristotle when they studied the same problem in their own times.

A quick review.

First, let’s review what we think we know about power in America.

We begin with a theory of “democratic pluralism,” which posits that democracy is basically a tug-of-war with different interest groups trying to pull government policy toward an outcome. In this framework, the rich are just one group among many competing “special interests.”

Of course, it’s hard not to notice that some groups can tug better than others. So in the 1950s, social scientists, like C. Wright Mills, author of The Power Elite, developed another theory of “elites” – those who wield more pull thanks to factors like education, social networks and ethnicity. In this view, wealth is just one of many factors that might help someone become the leader of a major business or gain a government position, thereby joining the elite.

But neither theory explains how the super-rich are turning public policy to their benefit even at the expense of the moderately rich. The mass affluent vastly outnumber the super-rich, and the super-rich aren’t necessarily better-educated, more skilled or more able to participate in politics; nor do the super-rich dominate the top posts of American government – our representatives tend to be among the slightly lower rungs of the upper class who are losing the tax battle.

Also, neither theory takes into account the unique power that comes with enormous wealth – the kind found in that one-tenth of the 1%. Whether or not the super-rich hold any official position in business or government, they remain powerful.

Only when we separate wealth from all other kinds of power can we begin to understand why our tax system looks the way it does – and, by extension, how the top one-tenth of 1% of the income distribution has distorted American democracy.

Enormous wealth is the heart of oligarchy.

Oligarchy, or Democracy ?

To argue that the United States is a thriving oligarchy does not imply that our democracy is a sham: There are many policies about which oligarchs have no shared interests. Their influence in these areas is either small or mutually cancelling.

Though it may strike at the heart of elitism, greater democratic participation is not an antidote to oligarchic power. It is merely a potential threat. Only when participation challenges material inequality – when extreme wealth is redistributed – do oligarchy and democracy finally clash.

The answer to the question of inequality, then, is troubling. Wars and revolutions have destroyed oligarchies by forcibly dispersing their wealth, but a democracy never has.

Democracy and the rule of law can, however, tame oligarchs.

A campaign to tame oligarchs is a struggle unlikely to fire the spirits of those outraged by the profound injustices between rich and poor. However, to those enduring the economic and political burdens of living among wild oligarchs, it is an achievement that can improve the absolute welfare of average citizens, even if the relative gap between them and oligarchs widens rather than narrows.

A graduate student in one of my seminars – resisting my terminology – once declared that the “U.S. has rich people, not oligarchs.” More than anything else, that statement claims that somehow American democracy has managed to do something no other political system in history ever has: strip the holders of extreme wealth of their inherent power resources and the political interests linked to protecting those fortunes.

Of course, this hasn’t happened.

But it is endlessly fascinating that we’re now in a moment when Americans are once again asking fundamental questions about how the oligarchic power of wealth distorts and outflanks the democratic power of participation.


fiat justitia ruat caelum ...


Jeffrey A. Winters is an associate professor of political science at Northwestern University. For a more extensive explanation of his theory of oligarchy, read Oligarchy (Cambridge University Press, 2011).

This article was first published at 'In These Times' ( http://www.inthesetimes.com/article/12698/oligarchy_in_the_u.s.a/ )

© 2012 In These Times All rights reserved.

[This important article is abridged and copied under "Fair Use" from : http://www.informationclearinghouse.info/article31064.htm - please see this or the link above for the full article]



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[-] 4 points by Shule (1539) 2 years ago

Very excellent article. Sounds like OWS movement is then somewhat mis-focused when they occupy parks, clash with the police and the "government." Although these parties may be tools or be manipulated by the ultra-rich, they are not the ultra-rich. Sounds like OWS needs to focus in on targeting the ultra-rich oligarchs themselves; like occupy their front lawns or something........

[-] 3 points by shadz66 (17842) 2 years ago

The thing to consider about the use of the word "Rich" is that in The U$A, where there are so many materialistic aspirants to "The Cult Of Wealth", a Whole Load Of People get rather upset at anything that targets or blames "The Rich" - NOT so much because they ARE "rich" but because they "Wannabe" and please cogitate over this !

That is why one is better off for reasons of truth, logic and psychology in using the "99% v The 1%" analogy. In truth and 'imho', the real opprobrium should be directed at The Parasitic 0.01% and that's why there is now an ever developing G.I.A.B.O. = "Global Insurrection Against Banker Occupation" ( http://www.youtube.com/watch?v=pGRu1uqJGkY ) !!

Resistance Is Fertile !!!

fiat justitia ...

[-] 2 points by Shule (1539) 2 years ago

Yes thanks, point well taken. I may add its in actuality more convoluted than just the parasitic .01% and the wannabes. I feel much of .01% victimization is directed at the 1%, and the rest of us are just getting the fall out, and then there is this business of the utilization of the poor by the .01% (as in how do folks who have really bad credit get loans for example) so in a sordid kind of way these irresponsible poor folk are making out. And then there are some in the .01% who are socially responsible and would look after the rest of us in a good way. For us commoners, the issue might not be so much about how to get rid of the .01% (that might really be too hard), but rather choosing which of the .01% we'd like to have ordain over us??? Right now its very clear some real sicko psycho bastards are running affairs in America. I like to refer to them as the Evil Oligarchy. How can some of those .01% folks who are not so evil help? My original point I was trying to make was that OWS and the rest of the insurrection really needs to target in, and somehow put a hurting on, on the parasitic .01%, i.e. the evil oligarchy. Otherwise they're just be laughing.

[-] 2 points by shadz66 (17842) 2 years ago

Bro' : We need Democracy NOT demoCRAZY deMOCKERYcy !!! It is as simple or as "convoluted" as that !! Thus, for a tiny look at what we are all up against :

veritas vos liberabit ...

[-] 1 points by Shule (1539) 2 years ago

ok, I'm all for it....

[-] 1 points by Renneye (3160) 1 year ago

Couldn't have said it better myself !! Exactly !! Get the ones at the very tip top, or they'll do this to us again and again. They need to see their names on signs, on tv !

[-] 3 points by beautifulworld (20444) 2 years ago

Seems to me that it is the American capitalist economic system that allows, and even cheers and worships, the kind of wealth building we see among the top .01% that in turn creates the oligarchy.

[-] 3 points by shadz66 (17842) 2 years ago

I agree with that assessment and the situation is further compounded by an utter failure of Western Representative Democracy which has mutated in The U$A in particular, into a Wholly Corporate Owned demoCRAZY deMOCKERYcy, further evidence of which I post below :

Which is why THE 99% STRUGGLE has to come to fore, heartening evidence of which is :

per aspera ad astra ...

[-] 3 points by beautifulworld (20444) 2 years ago

Yes, and it begs the question of which comes first. Is it the capitalist wealth that first controls the democratic system? Or is it the democratic system that fails, thereby allowing the capitalists to garner these oligarchic powers?

And, yes! Occupy Wall Street! Nice to see occupiers on the sidewalks of Wall Street itself. We'll have to see how long that lasts before Machiavelli (Bloomberg) gets involved.

[-] 3 points by shadz66 (17842) 2 years ago

Yes, The 'DemoCRAZY / CRAPitalist' chicken and egg conundrum is a fair quandary to be in, which is why I dig folk like Cindy Sheehan ( http://en.wikipedia.org/wiki/Cindy_Sheehan ) - who is up for taking on "The Empire" at every turn. See :

facta non verba ...

[-] 3 points by beautifulworld (20444) 2 years ago

Her approach is interesting. I think this chicken & egg thing is part of the reason why OWS refuses to become political and has hesitated to make demands.

[-] 3 points by shadz66 (17842) 2 years ago

I thoroughly agree with OWS's stance as 'The Information Function' is in the long run far more important in order to effect true and lasting change. However, I personally see OWS as extremely "political" !!!

There is no real 'politics' (imho) in The Faux Binary Construct of 'Demoblican & Republocrat' as both are wholly owned and paid for by the self same bunch of wankers (pls xcuse my lang) !!

I mean just HowTF on This Good Earth and 'beautifulworld' does a Billionaire Peacock get swathes of Blue Collar Americans to vote for him if not by Pure Propaganda ?!

Here's some evidence of that which makes my blood boil :

veritas vos liberabit ...

[-] 3 points by beautifulworld (20444) 2 years ago

I agree with you about OWS being "political" in the truest sense of the word and not re: political parties.

And, thanks for the article.

[-] 1 points by shadz66 (17842) 2 years ago

You are most welcome & here's the theme tune to a famous US TV series which you and others may know but here is an acoustic rendition where you will see the initial truth of the reason why it came to be written and I append it as an allegory and analogy of 'Truth Beneath Appearances' - if that doesn't sound too 'high falutin' : http://www.youtube.com/watch?v=MYSJVBO8ARA !!!

omnia causa fiunt ...

[-] 1 points by beautifulworld (20444) 2 years ago

I've never seen the Sopranos, but thanks for the song. What things appear to be on the surface is not always so, and resistance, if too late, can turn rather ugly.

[-] 2 points by shadz66 (17842) 2 years ago

Perhaps so ... but better late than never and .. Resistance Is Fertile - et fiat pax .

[-] 2 points by beautifulworld (20444) 2 years ago

True that.

[-] 2 points by shadz66 (17842) 2 years ago

There is of course a sad but still humorous irony in your never having seen "The Sopranos" - a fictional 'gangsta drama' and the deadly reality of The U$A being run like a racket in the evil grip of Gangster Capitalists and The Criminal Bankster Syndicate !!!

Anyway, here's the very first version of the theme tune in its original seedy glory and as you may have heard it (but perhaps only on adverts - in your case, lol) as sung by this bunch of UK Anarchists : http://www.youtube.com/watch?v=6Y4u52__vUY !!

radix omnium malorum est cupiditas !

[-] 2 points by DKAtoday (33128) from Coon Rapids, MN 2 years ago

BW - hey hi!!!!!!!! You are having another good day in the face of unremitting evil supporters. Love your spirit.

[-] 1 points by beautifulworld (20444) 2 years ago

Hi DKAtoday. Thanks. It's all worth it.

[-] 1 points by DKAtoday (33128) from Coon Rapids, MN 2 years ago

Don't I know it!!!!!!!!!!!!!!!!!

Wish we had more eternally strong like you.

We are making progress and I love it, I take heart in the continued attacks of the depraved as it confirms that we are not wasting time.

[-] 1 points by beautifulworld (20444) 2 years ago

That is true. Good way to look at it.

[-] 3 points by DKAtoday (33128) from Coon Rapids, MN 2 years ago

You provide a good example in maintaining a positive attitude. It is contagious.

[-] 1 points by gnomunny (5691) from St Louis, MO 2 years ago

Damn, shadz, I was getting ready to start a new thread on that Kaplan story but you beat me to the punch (shakes fist in air . . . again). Actually I started posting it almost two hours ago but had to wait two hours after my F.U.G.E. post as per the rules. Stupid rules.

[-] 2 points by shadz66 (17842) 2 years ago

Please consider posting it 'gno(sis)' because it'll get a better readership IF posted, as not everyone (moi aussi!) can click on every link. Also, if you think about it, the rules make sense as otherwise any old Timmy/Tina-Troll could set up a 'bot' to flood the forum with BS. pax.

[-] 2 points by gnomunny (5691) from St Louis, MO 2 years ago

Good point. I will.

[-] -1 points by monetarist (40) 2 years ago

Oh you realized this now? And according to you wealth creation should be shunned?

[-] 4 points by beautifulworld (20444) 2 years ago

Actually, no, I don't think you need to shun wealth creation as long as everyone has enough. But when wealth creation is allowed to the extent it has been for the top .01%, and when they are allowed to control our government, and when 50% of Americans earn a paltry income of less than $26,000 per year, then no, it's not okay with me and maybe at that level it should be shunned.

[-] -1 points by monetarist (40) 2 years ago

I too believe that everyone should have enough but I do not think it should be achieved by limiting other's wealth. May be what is needed is a massive program to upgrade the skills of this and future generations.

[-] 3 points by beautifulworld (20444) 2 years ago

I don't agree that people are to blame for their low pay because of their low skill level. Corporations offer up low paying jobs and people fill them because that is all that is available.

[-] -1 points by monetarist (40) 2 years ago

Corporations also offer high paying jobs provided you are qualified. I don't make minimum wage and I bet neither do you. If you dont have a undergrad degree (or a degree in some useless discipline from a unknown college) well paying jobs will be hard to get.

[-] 1 points by beautifulworld (20444) 2 years ago

Right, but you can't just train people and hope the jobs appear. That's my point.

[-] 1 points by monetarist (40) 2 years ago

Actually you can and may countries have done so successfully, India (IT and BPO) and China (manufacturing) are prime examples.

[-] 1 points by beautifulworld (20444) 2 years ago

I think that what comes first is that the jobs are available, there is a demand for that labor, and people train to meet that need.

[-] 2 points by Renneye (3160) 1 year ago

great thread !!

[-] 2 points by Renneye (3160) 1 year ago

"Oligarchy In The USA"!!! What a great thread to bring to the forefront! Perrrrrfect timing!! Love the stats in that link! Thanks Shadz! ^.~

Expose the Oligarchy!!!

[-] 2 points by shadz66 (17842) 1 year ago

Yep, we try to keep 'exposing the oligarchs' by "dawns early light" or even at dusk !!! Any time is a good time for revealing The Psychopathy of Our Overlords !! They can't stand The Light !

Hope you & yours are well.

fiat lux ...

[-] 2 points by GypsyKing (9727) 2 years ago

Thanks for the great post, as usual!

[-] 2 points by GirlFriday (21783) 2 years ago

Good post!

[-] 2 points by epa1nter (4650) from Rutherford, NJ 2 years ago

NIce post. Thanks.

[-] 1 points by Misaki (893) 1 year ago

but APSA has no explanation for why the majority of the upper class – which has no shortage of government-influencing social capital – should fall so far behind the very top earners.

Capital gains. That was easy.

[-] 1 points by brightonsage (4494) 2 years ago

So, Obama declined to require those with government contracts to not discriminate against LGBT. employees by executive order. Maybe the ex generals running these companies are bigots? These companies are major contributors to whom? Usually the GOP. This going to change that?

I would like few quid for my pro quo?

[-] 1 points by XenuLives (1645) from Charlotte, NC 2 years ago

I want to see that Citibank statement (memo?) It sounds pretty damning if its true.

[-] 2 points by shadz66 (17842) 2 years ago

There has been a concerted campaign waged by expensive lawyers to attempt to have the following information erased from US web-sites and t'inter-web in general, but of course that takes some doing !!!

I came at it via a Canadian Web-site, so here it is in printable pdf. form for you and others. You will need to have Adobe Acrobat on your computer - a good programme to have and which will be available free :

fiat lux ...

[-] 2 points by gnomunny (5691) from St Louis, MO 2 years ago

Excellent. I did a cursory search on the web a few minutes ago (not too deep, mind you) and couldn't find anything. Shadz comes through again. If I ever make it over that way (gotta check out those "country houses." Those that remain, that is) we must tip a pint or two.

[-] 1 points by shadz66 (17842) 2 years ago

Sounds most convivial 'gno(sis)' :-) tho' I can introduce you to the mysterious delights of warm British beers, with regard to the "country houses" ... well I can drop you off at the gates and pick you up later, as they aren't my 'cup o' tea' really - "SQUAT The Lot !!", I say.

verum ex absurdo ...

[-] 1 points by gnomunny (5691) from St Louis, MO 2 years ago

Yeah, I understand you guys have had a bit of a rocky relationship with your "big houses," especially after the war. We did, too. I understand the mindset, but it makes me sad to see historic places meet the wrecking ball. For me, it's the art and the architecture, my friend. The irreplaceable craftsmanship. The history. Burghley House has a Rubens hanging on the wall of the "old kitchen." A fucking Rubens! In the kitchen! That kind of thing amazes me. One could have all the money in the cosmos but never have the opportunity to have Verrio or Laguerre paint their ceiling.

But then, if we get to drinkin', well, I may have to wait for the next trip. ;-)

[-] 1 points by XenuLives (1645) from Charlotte, NC 2 years ago

Oh wow... Thanks for sharing that!

I can't believe that hasn't been publicized more. That's incredible that a bank would say the things that I saw while skimming through the document.

[-] 1 points by shadz66 (17842) 2 years ago

You are welcome 'XeLi', spread the word bro'. pax ...