How Did the United States Become an Oligarchy?

[Revoltingest]

"Ruling wealthy elite class...ever since"= garbage.

Even you cannot force fit Obama into that.
Or or or.

I say that it's a victim mentality to believe that an oligarchy rules us.
There are too many competing interests, & the supposed oligarchs
very often don't get their way.
We could have very different leaders than the herd in office now.
But people vote for them because they do what people want.
Don't like war? There are anti-war candidates outside the Big Two.
We voters could upend the apple cart if we really wanted.
It's happened before. It could again.

 

[Revoltingest]

The argument was about generational wealth. By include non-generational wealth is to conflate issues thus mislead people

I agree.

 

[Stevicus]

What happened to turn America in an oligarchy? Was it our high R low G economy? Was it government policies? Did the tax code play a decisive hand in the creation of our oligarchy?

Is our oligarchy becoming hereditary? What percentage of the people on the Forbes list of the 400 wealthiest Americans inherited their wealth?

Your thoughts?

I haven't read Picketty's book, although I found a review of it here: A Discussion of Thomas Piketty’s Capital in the Twenty-First Century: By How Much Is r Greater than g? - Liberty Street Economics

What is r > g?
The main argument in Capital for why wealth inequality is set to rise comes from a simple relation: r > g. This formula states that the net rate of return to capital (r) exceeds the growth rate of output (g). This is not a new concept for economists. The formula r > g is a standard property of efficient capital markets in most modern macroeconomic models. (In fact, the converse, r < g, would imply that the economy is saving too much, and that it would be possible to increase the consumption of every person at every point in time by decreasing the capital stock and raising the interest rate at least to r = g.) However, r > g may be a strong amplification mechanism for inequality within the economy. In theory, if a capital owner invested one unit of capital, got a riskless return r on it every year, and reinvested this return completely (without consuming any of the capital or giving it away to her heirs), while a worker started out with a wage equal to one unit, which she consumed entirely but which grew at g percent per year, the ratio of the capitalist’s wealth to the worker’s wage would grow at the rate r – g.

What does this story imply about r – g? Before the twentieth century, r – g was on the order of 3.5 percent to 4.5 percent, which, Piketty calculates, was enough to sustain the very high wealth concentration of the preindustrial period. During the Industrial Revolution, r – g shrank, and during the twentieth century, which was a disastrous time for capital but a good one for growth, it actually turned negative for a period of time. However, Piketty’s projections imply that the gap r – g will open up once again. With demographic growth equal to zero, g will therefore be 1.5 percent, and with r returning to its long-run value of about 4.5 percent, the gap r – g will equal about 3 percent, a bit smaller than it was at the beginning of the Industrial Revolution, but still enough to maintain much larger inequalities than we saw in the twentieth century.

As shown in the chart, R takes a sharp nosedive coinciding with the Industrial Revolution, but G starts to pick up steam.

Too Pessimistic a View of Growth?
Piketty’s crucial assumption underpinning his pessimistic view of growth is that the technological frontier naturally grows at a relatively modest 1.5 percent per year, since no developed country in the world has grown at a faster rate for a sustained period of time. But is the global technological frontier bound to grow no faster than 1.5 percent per year?

The chart below plots the logarithm of GDP per capita in the most advanced country in the world over the nineteenth and twentieth centuries. (It was Britain for the nineteenth century and the United States for the twentieth century, until the latter overtook the former as the country with the highest GDP per capita around 1900.)

I don't think that any of this is any great revelation to anyone. It seems clear that, in any society (past or present), the wealthy tend to rule and dominate the political affairs.

Centuries ago, even illiterate, unsophisticated, ignorant peasants knew the score. The real question is why anyone would be confused or shocked by it today.

Why are America's academicians and intellectuals, the "best and the brightest," only now figuring out that which illiterate peasants knew all along?

Some of it might have to do with the propaganda that many of us are raised in, about America being the "land of the free" and that we live in a democracy where the government supposedly does what the people want. We often compare ourselves to other societies where the people might have lower standards of living and/or treated much worse by their ruling class. This leads people to believe the illusions of "democracy" and "freedom" to the point where they wantonly reject any notions of an oligarchy, ruling class - or any kind of related "conspiracy theories," which are often scorned and ridiculed in popular culture.

So, when people have been conditioned to believe that "the system works" and that we have a representative government "of the people, by the people, and for the people," then people seem like they're shocked or disillusioned when they find that the more "normal" methods of governance are still mostly in place.

When I say "normal," I'm referring to the general way most human societies have operated, usually under an authoritarian hierarchy where only a few rule over the many. That's how it's been for most countries throughout most of history, but we Americans have somehow been led to believe that we're some great exception. When they hear suggestions that we're not exceptional, it sets off alarm bells in the brain - "How can we not be exceptional?"

 

[Audie]

I say that it's a victim mentality to believe that an oligarchy rules us.
There are too many competing interests, & the supposed oligarchs
very often don't get their way.
We could have very different leaders than the herd in office now.
But people vote for them because they do what people want.
Don't like war? There are anti-war candidates outside the Big Two.
We voters could upend the apple cart if we really wanted.
It's happened before. It could again.

It's "Drifting too far from the shore"
(I think there is a song about that)
when a person resorts to plain falsehoods
to fluff up their case.

It is verv unsophisticsted to think
others wont notice, that it is somehow
in their self interest.

 

[Phaedrus]

Your thoughts?

It all boils down to greed and power, a dangerous combination, breeding corruption. If one is to believe in the concept of evil, surely, corrupt monetary influence is the epitome.

 

[Audie]

I haven't read Picketty's book, although I found a review of it here: A Discussion of Thomas Piketty’s Capital in the Twenty-First Century: By How Much Is r Greater than g? - Liberty Street Economics

As shown in the chart, R takes a sharp nosedive coinciding with the Industrial Revolution, but G starts to pick up steam.

I don't think that any of this is any great revelation to anyone. It seems clear that, in any society (past or present), the wealthy tend to rule and dominate the political affairs.

Centuries ago, even illiterate, unsophisticated, ignorant peasants knew the score. The real question is why anyone would be confused or shocked by it today.

Why are America's academicians and intellectuals, the "best and the brightest," only now figuring out that which illiterate peasants knew all along?

Some of it might have to do with the propaganda that many of us are raised in, about America being the "land of the free" and that we live in a democracy where the government supposedly does what the people want. We often compare ourselves to other societies where the people might have lower standards of living and/or treated much worse by their ruling class. This leads people to believe the illusions of "democracy" and "freedom" to the point where they wantonly reject any notions of an oligarchy, ruling class - or any kind of related "conspiracy theories," which are often scorned and ridiculed in popular culture.

So, when people have been conditioned to believe that "the system works" and that we have a representative government "of the people, by the people, and for the people," then people seem like they're shocked or disillusioned when they find that the more "normal" methods of governance are still mostly in place.

When I say "normal," I'm referring to the general way most human societies have operated, usually under an authoritarian hierarchy where only a few rule over the many. That's how it's been for most countries throughout most of history, but we Americans have somehow been led to believe that we're some great exception. When they hear suggestions that we're not exceptional, it sets off alarm bells in the brain - "How can we not be exceptional?"

I dunno, the "howcome them fancy professors and intellectuals
aint as smart as peasants" bit is not very convincing.

But for something grounded in numbers and the present,
how do you see the effect of low interest rates on the growing
wealth inequality gap in the USA?

 

[MikeDwight]

We have been moving away from the Gentry since our founding. It seems like the "Richie Rich" series or the movie "Being There" are themes that aren't coming back. We're celebrating the sudden-wealth tech giants, neatly placed to be role models. Nations decide on the wealth on the guys up there Easy, they're not Trillionaires after all. THey spend their lives defending having money is the common theme, who wants that? I hate Krugman, pretend intellectualism.

There are Capitalist countries totally devastated in war where you should assume no generational wealth like Korea or inheritance, how about that? Otherwise this pretends the "inheritee" didn't shape the lifestyle of the "inheritor" around it.

 

[joe1776]

I'd call the USA, a "plutocracy," government by the wealthy. And as Purex pointed out earlier, it's been that way since the founding. Money can manipulate elections, the tax code, the law, the media and the votes on government policy.

The names of the wealthy manipulators change. There is turnover. But their essential nature: highly arrogant and infected with greed, remains constant.

 

[BSM1]

Maybe we should blow up a battleship this October....

 

[Audie]

I do not live in the USA (nor am I making any pronouncements, whether from on high or otherwise).
If this is accepted by everyone, why does the USA also regard itself as a beacon of democracy? Or has it stopped doing that?

Can you provide a link to something that will bring me up to speed?

The USA, not being a individual, regardeth not.
Some individuals in the US think one way, some another.

In the event it does not hurt to keep in mind that the
American revolution was wonderfully inspirational,
and the constitution would do as a model for
everyone.

Human failure to be virtuous is a separate matter.

 

[Stevicus]

I say that it's a victim mentality to believe that an oligarchy rules us.
There are too many competing interests, & the supposed oligarchs
very often don't get their way.
We could have very different leaders than the herd in office now.
But people vote for them because they do what people want.
Don't like war? There are anti-war candidates outside the Big Two.
We voters could upend the apple cart if we really wanted.
It's happened before. It could again.

Actually, this could have happened in any society, no matter if it was a democracy or not. If the people of Germany didn't like Hitler, all they had to do was riot and start a revolution. If the entire population was mobilized, they could have gotten rid of him overnight.

It's the same for any other dictatorial regime. People can fight back and overthrow. It's happened before. It could again.

However, such things are relatively rare throughout history, largely because people tend to believe that the system works. There are those who are inclined to zealously defend that system and attack any position which might undermine faith in that system.

Some might argue that the system itself might be the problem. Sure, we have a democracy, but we've also seen what happens to those who are perceived as "mavericks" who might buck up against the system. They could end up dead, such as what happened to JFK and RFK. Or they could be mercilessly attacked by media, which are presumably controlled by political machines.

On the other hand, I've heard some apologists acknowledge the flaws in our system, yet still advocate and believe that working within the system is best - so at least some good things might still be done. They say that this is about the best we can hope for. I've even heard a few people around here say that they can't think of any system better than the one we have here in America.

 

[Revoltingest]

Actually, this could have happened in any society, no matter if it was a democracy or not. If the people of Germany didn't like Hitler, all they had to do was riot and start a revolution.

Of course, there's a world of difference between voting (takes mere
minutes with no risk of physical danger) & rising up against a violent
dictator who executed millions for the crime of just being who they are.
So I say the 2 scenarios are less than comparable.

However, such things are relatively rare throughout history, largely because people tend to believe that the system works. There are those who are inclined to zealously defend that system and attack any position which might undermine faith in that system.

If we compare the current status quo with the 1890s,
we can see that the oligarchs (ie, the wealthy) have
taken a beating in their ability to act unconstrained.
Voters did that.

Some might argue that the system itself might be the problem. Sure, we have a democracy, but we've also seen what happens to those who are perceived as "mavericks" who might buck up against the system. They could end up dead, such as what happened to JFK and RFK. Or they could be mercilessly attacked by media, which are presumably controlled by political machines.

We voters choose our news & entertainment sources in the media.
When they cater to our desires, or we ensconce ourselves in echo
chambers, we cannot blame the oligarchy for that.

On the other hand, I've heard some apologists acknowledge the flaws in our system, yet still advocate and believe that working within the system is best - so at least some good things might still be done. They say that this is about the best we can hope for. I've even heard a few people around here say that they can't think of any system better than the one we have here in America.

If someone carps that we're powerless to fight the oligarchy,
& then votes for the same old same old...there's a possible
inconsistency in that to consider.

 

[Sunstone]

I don't think that any of this is any great revelation to anyone.

Well, I would at least agree with you that it should not come as any great revelation to any reasonably well-informed person that America is an oligarchy, but how many reasonably well-informed Americans are there these days? Serious question.

It seems clear that, in any society (past or present), the wealthy tend to rule and dominate the political affairs.

Centuries ago, even illiterate, unsophisticated, ignorant peasants knew the score. The real question is why anyone would be confused or shocked by it today.

I appreciate your points, Stevicus, and I'm grateful to you for a serious and thoughtful post.

A couple points that might be worth mentioning here. First, the US has flirted on and off with oligarchy since at least the Gilded Age. In a sense, what we have today is nothing new. However, it seems there is now some evidence that our current oligarchy is turning hereditary at precisely the time when it is achieving unprecedented concentrations of wealth and power even for an oligarchy. Of course, we don't know for sure it is turning hereditary, but who on earth would be surprised if it were? Has that not been a theme in history since the days of Sumer 5,500 years ago?

Second, the tendency of republics that have great disparities of wealth between rich and poor to evolve into oligarchies was noted at least a couple thousand years ago by Plutarch -- so this is something that has been more or less understood for thousands of years. What might not be as fully appreciated is that oligarchies tend to evolve into rule by strongman -- quite often in the form of a tyranny. A modern case in point is the evolution of the post-communist Russian oligarchy into tyranny under Putin.

By the way, the fact that oligarchies tend to evolve into rule by strongman seems to have something to do with the nature of competition. Which means you often enough see something similar in operation outside of politics.

Last point -- it is important in this context to clearly distinguish between plutocracy and oligarchy.

 

[Stevicus]

I dunno, the "howcome them fancy professors and intellectuals
aint as smart as peasants" bit is not very convincing.

Isn't it? The idea that the strong dominate the weak and that the rich rule over the poor is not exactly new.

But for something grounded in numbers and the present,
how do you see the effect of low interest rates on the growing
wealth inequality gap in the USA?

I'm not sure. It seems it has the effect of increasing the amount of overall debt and reducing savings. I think some members of the Fed wanted to increase interest rates, but Trump balked against that idea. I haven't checked recently as to where that issue stands right now.

I'm not so much concerned about the wealth inequality gap within the USA itself, not at present. The greater concern might be the wealth inequality gap on a global scale.

 

[MikeDwight]

Sometimes, wherever the wealth is, needs to be accounted for and implemented , wherever us as a society decide to put it all, and that's in fact called accounting. I have a degree in it. crAAAaazy

 

[joe1776]

...Last point -- it is important in this context to clearly distinguish between plutocracy and oligarchy.

I view the USA as a plutocracy because wealth is not an essential of oligarchies as I understand the word. And wealth is absolutely essential for manipulating the American republic.

Would you please make the distinction as you see it?

 

[Stevicus]

Of course, there's a world of difference between voting (takes mere
minutes with no risk of physical danger) & rising up against a violent
dictator who executed millions for the crime of just being who they are.
So I say the 2 scenarios are less than comparable.

Yes, although the common thread here is that both require an effort of the will which many people are simply unwilling to make.

Lots of people vote. Admittedly, the turnout can often be disappointing. But why do they vote as they do?

If we compare the current status quo with the 1890s,
we can see that the oligarchs (ie, the wealthy) have
taken a beating in their ability to act unconstrained.
Voters did that.

Yes, although it was more than just that. A lot of other things were going on, such as the labor movement. Progressives like Teddy Roosevelt changed a lot of things - although he also made a lot of enemies. When he ran under the Bull Moose ticket in 1912, an attempt was made on his life.

The Great Depression undoubtedly had an effect on people's outlook and voting choices as well. That appears to be the main impetus in bringing FDR to the forefront and 20 years of Democratic rule in Washington.

But the Roosevelts were also wealthy, along with many of their supporters - so they were part of the oligarchy, too.

If the people choose one faction of oligarchs against another, that doesn't necessarily defeat the oligarchy itself. Such power struggles can and do happen, as they have throughout history.

We voters choose our news & entertainment sources in the media.
When they cater to our desires, or we ensconce ourselves in echo
chambers, we cannot blame the oligarchy for that.

Well, yes, I guess you have a point here. Some people are hard to figure out.

If someone carps that we're powerless to fight the oligarchy,
& then votes for the same old same old...there's a possible
inconsistency in that to consider.

I don't know if the same people doing that. Those who say that we're powerless to fight the oligarchy would more likely be disinclined to vote at all.

I don't say that we're powerless to fight the oligarchy, but voting can only do so much. It might help to some degree, but the fact remains, too much political and economic power in this country still rests in the unelected.

Maybe a restructuring of the system might help. I've often thought they could run the Federal government like many state governments are run. At the state level, we can vote for propositions and make changes to state laws. We vote for others in the executive branch besides the governor. In Arizona, we vote for our state attorney general, state treasurer, secretary of state, and even state mine inspector. Other states have lieutenant governors who are elected separately from the governor. At the local level, we can elect our county sheriff.

So, why can't we do that for the Federal government? The President and Vice-President can be separate elective offices, and all the Cabinet posts can also be elected separately. Some other positions can also be elected, such as FBI Director, along with directors of the CIA, NSA, CBP, DEA, LSD, and all the rest of them in that poisoned bowl of alphabet soup we call a "government."

Same for the Board of Governors of the Federal Reserve Board. They should be elected as well. And of course, the Joint Chiefs of Staff. That way, we could say that it really is the voters' fault when we go to war. But right now, the voters have no say in choosing them, and they don't really know what they're doing in terms of war policies.

 

[Shadow Wolf]

Jeff Bezos created his wealth. Gates created his wealth.

I wouldn't say they came from nothing, especially Gates.

 

[Revoltingest]

Yes, although the common thread here is that both require an effort of the will which many people are simply unwilling to make.

Lots of people vote. Admittedly, the turnout can often be disappointing. But why do they vote as they do?



Yes, although it was more than just that. A lot of other things were going on, such as the labor movement. Progressives like Teddy Roosevelt changed a lot of things - although he also made a lot of enemies. When he ran under the Bull Moose ticket in 1912, an attempt was made on his life.

The Great Depression undoubtedly had an effect on people's outlook and voting choices as well. That appears to be the main impetus in bringing FDR to the forefront and 20 years of Democratic rule in Washington.

But the Roosevelts were also wealthy, along with many of their supporters - so they were part of the oligarchy, too.

If the people choose one faction of oligarchs against another, that doesn't necessarily defeat the oligarchy itself. Such power struggles can and do happen, as they have throughout history.



Well, yes, I guess you have a point here. Some people are hard to figure out.



I don't know if the same people doing that. Those who say that we're powerless to fight the oligarchy would more likely be disinclined to vote at all.

I don't say that we're powerless to fight the oligarchy, but voting can only do so much. It might help to some degree, but the fact remains, too much political and economic power in this country still rests in the unelected.

Maybe a restructuring of the system might help. I've often thought they could run the Federal government like many state governments are run. At the state level, we can vote for propositions and make changes to state laws. We vote for others in the executive branch besides the governor. In Arizona, we vote for our state attorney general, state treasurer, secretary of state, and even state mine inspector. Other states have lieutenant governors who are elected separately from the governor. At the local level, we can elect our county sheriff.

So, why can't we do that for the Federal government? The President and Vice-President can be separate elective offices, and all the Cabinet posts can also be elected separately. Some other positions can also be elected, such as FBI Director, along with directors of the CIA, NSA, CBP, DEA, LSD, and all the rest of them in that poisoned bowl of alphabet soup we call a "government."

Same for the Board of Governors of the Federal Reserve Board. They should be elected as well. And of course, the Joint Chiefs of Staff. That way, we could say that it really is the voters' fault when we go to war. But right now, the voters have no say in choosing them, and they don't really know what they're doing in terms of war policies.

We should note that the underlings of elected leaders largely
do as the latter order. So voting is important.

Unhappiness results when one expects that government will
reflect one's vote. Seldom does that happen, because there
are other voters, & they have different values / goals / opinions.

 

[leov]

What happened to turn America in an oligarchy? Was it our high R low G economy? Was it government policies? Did the tax code play a decisive hand in the creation of our oligarchy?

Is our oligarchy becoming hereditary? What percentage of the people on the Forbes list of the 400 wealthiest Americans inherited their wealth?

Your thoughts?





Background information, if you need it....

Oligarchy? It always was , came from the Old World, from Rome and before.