one percent America

Ferdinand Lundberg, in 1939, wrote a book about the sixty wealthiest families in America. He made the audacious claim that these families collectively owned and directed most of America’s wealth – her industrial capacity, her speculative/financial sector, her raw materials. He names the families and engages in the tedious geneological work of showing how marriage and strategic alliances maintain and expand fortunes that have their roots, many of them, in the 19^th century. He goes there from the first sentence in the book, which proclaims: “The United States is owned and dominated today by a hierarchy of its sixty richest families, buttressed by no more than ninety families of lesser wealth.” He claims that behind the de jure democratic form of government is a de facto government, “absolutist and plutocratic.”

Now, it is a difficult business, tracking family fortunes. For one thing, “family” is a misleading category. Lundberg’s prey are really more like the famous modern Russian clans, blat. Numbers of families and associates are held together in a web of mutual interests, which one can generally call after the family name of those who founded it. Thus, to use Lundberg’s first family, the Rockefellers, we can see that a Carnegie marrying a Rockefeller (a scion of one of the branches), which occurred when J. Stillman Rockefeller married Nancy C. S. Carnegie, grandniece of Andrew. Lundberg, incidentally, is a deadeye for those middle names. Where does “Stillman” come from? It comes from James Stillman, whose daughter married a Rockefeller. Stillman was the founder of National City Bank, now known as Citibank.

If Lundberg is right, then American historians have truly missed the boat. It would be like historians of 15^th century France ignoring the nobility and misunderstood the form of French government. In other words, historians have treated the United States as though it were permanently the country Tocqueville described, but it is really, since Tocqueville’s time, the country of magnates and their sons and daughters that Henry James wrote about.

Since the notion that America is an oligarchy has recently been revived – a paper with this thesis cowritten by Martin Gilens and Benjamin Page has recently been reported on in the media – and because we are all rivetted by Piketty’s thesis concerning the inequality endemic to capitalism, perhaps it is time to turn to the muckrakers who have always considered oligarchy the operational mode by which America is run.

Consider, then, a figure like Thomas W. Lamont. Lamont is in the Morgan blat. He negotiated enormous loans to keep England and France fighting in WWI; he also negotiated loans to Mussolini after the war. He was, Lundberg claims, a “mentor” to Wilson – and certainly he was one of Herbert Hoover’s unofficial advisors, famous for misjudging Black Friday in 1929. For Lundberg, Lamont is everywhere. Calvin Coolidge (who Lundberg is scornful of in a fine, Menckenish way – he adduces the series Coolidge wrote when he was vice president for a woman’s magazine, Enemies of the Republic: are the reds stalking our college Women? As a typical product of Calvin’s low wattage mind – didn’t make a major decision without calling him; Lamont is also, Lundberg claims, the “single most influential person in contemporary American journalism.” Lamont was the grey eminence behind the pronouncements of the uber-pundits of the day, like his friend, Walter Lippman. He was influential with Luce, Forbes and Sulzberger. His dinners were attended by the celebrity literati like H.G. Wells.

And yet, who among us has heard of this perfect blatman, Thomas W.Lamont? if Lundberg is even close to right, we should be viewing the twenties not only as the time of Harding, Coolidge and Hoover, but as the era of Lamont as well. He is represented by a chapter in Behind the throne, with the perhaps misleading subtitle: servants of power to imperial presidents, 1898-1968, because his loans had a major effect on Mexico’s post-revolutionary history.

In any case, if we take Lundberg’s families as clans, we have, perhaps, a clearer view of how fortunes are made and power is exercized in the United States. Lundberg quotes an interesting statistic from a  man named Robert Doane, who studied incomes for a Roosevelt era government office. According to Doane, although incomes  above $50,000 accounted for 30 percent of American savings in 1929, only 38,899 persons had such incomes, accounting for .05 of 1 percent of the American population.

The American one percenters – there is a long history there, campers.   

  

the smirk

Postcards of travel.

I’m in a hotel in Bayside San Diego. The Midway looms out the window to the left, massive, and kept in great shape, externally, so that tourists get a chance to see what those old floating fortresses from the big one were all about. Earlier, I’d taken Adam down to see it and was surprised and overjoyed to see some instances of true Republican Party art – an art that evokes warm patriotic feelings through the kind of unabashed kitsch which is so vulnerable to mockery that it doesn’t deserve even to be mocked. One was an enormous painted statue that took the famous iconic moment of the sailor kissing a woman in Times Square on V-E day – when Americans were under the delusion that they were celebrating the end of the war in Europe – and monumentalized it,  the woman bent in the man’s arms, dressed in a short white skirt and with white stockings, the sailor in blue, his sailor hat on his curly head, his mouth about the size of my arm from the hand to the elbow on her mouth, ditto the size and with thicker lips, for the delectation of tourists. Myself, I didn’t have a camera, or I would surely have asked someone to photograph me under this monstrosity. Why not? Sometimes, the plunge into the moronic inferno is a tonic to the soul. The other is the Bob Hope Memorial, where a statue of the comic stands in front of an appreciative and ethnically diverse group of Gis, posed in attitudes of rapture and applause. Because overdetermination is the heart and soul of kitsch, there is a soundtrack of Hope’s routines perpetually running in the background…

To give you an idea, then, of the place. This is where we are.  I’m in the hotel seven stories up, and I’m in the hall with Adam, who is fascinated with the view outside the big window. Up the hall comes your standard issue, clean limbed American whitetype, circa thirty years old: he has a friendly face, and he says, pointing at Adam, wants to be spiderman, right? Nice guy, so I reply, I think that or a politician – he likes to get above the people and give speeches. This brought about the unexpected reply that this man was in politics, but thought this “cycle” would be his last. I’m going into private equity, the man says. I mumble something. They are scumbags, but they are honest scumbags, he says. Then, pointing at Adam, he says, Never see his social security.

I reply, getting to my feet, that on the contrary, he’s french, and he certainly will. The guy begins to back to the elevator, which has arrived. You know, I say, Adam his mother and me spent five days at the hospital before he was born and it costs less than a thousand dollars. The man is now in the elevator, and he smirks. Paid for by the taxpayers, he says. Before I could reply, the smirk vanished.

In that instance, I had several arguments and responses I would like to have launched. Most pertinently, that those taxpayers had all been born, and thus were beneficiaries themselves of the French system. Or that doing single entry accounting is not a good way of getting into private equity – you have to count not only what you pay for but what you receive.

However, what struck me was that just by making arguments, I lost. The man had the victor’s smirk. It is even a cognitive smirk – a smirk that your thought, going around a corner, runs smack into and is smothered forever. At one time, the left had that smirk in the twentieth century. But for a long time now, it has been the exclusive possession of a certain rightwing type – the kind of upper twenty percent looking guy who repeats cliches (such as that about the honest scumbag) shamelessly, more as a way of showing an insignia, of asserting a place in the lockerroom, than of actually meaning anything.

That smirk is, of course, on the neck of the vast majority of Americans, but it is respected, revered and imitated by those it trounces on because, well, it is the smirk of victory. Why put yourself on the losing side? Especially when, because it is the losing side, you know that the losers, if they have a chance and actually gained power, will only fuck things up.

San diego, man.

a little dream of nixon

We are traveling in the Boulder Denver area this weekend. Denver has wonderful houses and a lotta rain, and I got sick yesterday. I took some pills, we put Adam to bed, then I lay down to sleep and had this dream.
I was at a comic book festival. I was with three people. The only one in focus was a tall, geeky looking guy – who I began to see was Stephen Merchant, Ricky Gervais’s partner on the Extras. He gave me a computer to write things on, but whatever I wrote appeared on the screen as something different, in Greek or Cyrilac script. I got mad and, like Adam, threw the computer down. Later Stephen told me this was a test, and then he revealed that I was being inducted into the CIA. He introduced me to the man with him – Richard Nixon. Nixon was much shorter than I expected. He had a sour look on his face. He was wearing a sweater that I somehow recognized. It was cream colored with brown braiding, very thick, with a sort of ruff, or turtleneck. It was, in short, the kind of sweater one bought in the seventies. 
I was given a dossier and told my job. I was very happy, because I was sure that the pay was good, and the work sounded easy. It had to do with codes and comic books. But at this point I must have begun waking up, because I began to worry about Nixon. I had shaken his hand! I had called him Mr. Nixon! Wasn’t I opposed to Nixon? At this point I did wake up.
I conclude from this dream that my subconscious has become reactionary, which is potentially embarrassing. On the other hand, it did dress Nixon in the most ridiculous costume and made him short. So the subconscious of my subconscious must know what’s what.

how goethe became a loser, too

"Eckermann – the best prose work of our literature, the highest point reached by the German humanities” – Nietzsche

Eckermann’s Conversations with Goethe in the Last Years of his Life was an instant nineteenth century classic, mined for quotes not only in Germany, but in England and America. Margaret Fuller, with Emerson’s encouragement, published an English translation, and Emerson incorporated a number of Goethe’s remarks in the book into his essays.

Strangely, I have the impression that, at least in the Anglosphere, it is now rarely read. Boswell’s Life of Johnson is still read, but for us, Boswell is even more in focus than he was in the 18^th century, since we have his papers and letters. In the Life of Johnson, Boswell seems plausible – he teases Johnson, he opposes him, he loves him, but he is very separate from him. Eckermann is a more… ectoplasmic creature. He seems to have been entirely absorbed by his sage. In Avita Ronell’s essay about Eckermann, she makes him out to be another mad German romantic – and indeed, he seems to have spent the last years of his life in a room filled with songbirds, taking dictation from Goethe’s spirit – as the physical husk of the man had died years before. Goethe was very conscious of what Eckermann was doing – as indeed, he had to be, since in the end, Goethe drew up a contract with Eckermann, making him the editor of his collected works. Unlike Boswell, Eckermann was not independently wealthy – which has also made him a more painful subject to remember. The Conversations start with Eckermann’s autobiographical sketches, giving us an impression of him as a sort of sport, an unusual bolt from a peasant marriage. Indeed, the lack of sophistication of the family gives Eckermann a sort of joke to introduce himself with: one day when he was around 12, he discovered he had a talent for drawing. Ther drawings he made eventually came to the attention of the only wealthy man in his small town, who invited the boy to see him and told him that he was willing to finance his training as a painter. His parents were not overjoyed by this news. To them, a painter slapped paint on the façade of a house, like the large houses they were erecting in Hamburg. It was a nasty and dangerous job, and they councilled against it, so Eckermann refused.

Such low hijincks to put beside one of the peaks of European literature! Yet Goethe was not averse to low hijincks himself. Olympian he may have been, but he married an unlettered factory girl, Christiane Vulpius. Eckermann was not unlettered, but he was not credentialled – he was basically self-taught, although he did finally go to art school. He always remained, however, the peasant who had struggled against the enormous inertia of a society that literally didn’t recognize the artist, and he was forever poor.  

Now here’s the reason I bring this up. I consider myself a loser and have a second sense for the tribe of losers in literature. The last shall be first – such is the secret credo and barren hope of this crowd. Mostly, no. The first are first and trample on our faces over and over again. But the losers remember Melville, Pessoa, Kafka – they are pillars of the losers faith, that there is a view of modernity, a terrible view, in which one sees the reverse of things – and that is as close as we can come to the truth.

The uncanny thing about Goethe is that he is not only an Olympian, but – among the multitudes he contains – he is also a loser. Or he understands the loser’s vision on some deep level. That seems rather unfair. This is the guy who was unkind to Lenz in his madness and tried to bar the door to Kleist. This is Mr. Cold Marble. And yet at the end of his life, he is a loser – at least by proxy – through Eckermann. 

Tool news: NYT sponsors an op ed by Yulia Tymoshenko.

Best article about contemporary Ukraine I've read. It makes a mockery of the coverage in the Western press, which is not only propaganda, but ignorant propaganda - the propagandists really have no idea what is going on. 

assassinating the forbes 400 myth, larry summers edition

Everybody is under suspicion
But you don't wanna hear about that...

It is to two economists with the American EnterpriseInstitute, Steven Kaplan and Joshua Rauh, that we owe the meme that the Forbes 400 represents the fruits of social mobility, the rewards of an essentially meritocratic society..

Kaplan and Rauh have divided the individual who find places in the Forbes 400 from 1982 to 2012 into three categories: that that come from wealthy families, those that come from upper middle class families, and those that come from working or middle class families. The claim to discern a distinct change from 1982 to 2012 – the number of individuals coming from wealthy families declines, while those from upper class families increases. Thus, there is churn at the top, due to the meritocratic structure of American capitalism.

Lets go into the ways Kaplan and Rauh are full of hooey.

A.     Granting, for the moment, that the categorization, although a bit fuzzy, does actually represent three different kinds of individuals, we have to trust Kaplan and Rauh on their judgments as to which class individuals fall. They don’t include the list of all individuals on the list – in Peter Bernstein’s book about the list, All the Money in the World, there were 1302 people on the list from 1982 to 2006, which makes it likely that there might have been fifty to one hundred more in the six years after 2006 – but instead give us representative names – which is how we know that they included Bill Gates in the upper middle class group, because his father was a well known lawyer. This tells us a lot about the laziness and bias of the authors. Even a cursory glance at the numerous profiles of Bill Gates over the years would tell you that he was endowed with a million dollar trust fund by his maternal grandfather, who owned a Seattle bank. A million dollars back in the sixties was a figure to reckon with. If one can’t trust the authors about Gates, one of the five names they mention, how are we to trust them about the rest?

B.     Of course, family money is a tricky subject. Carl Icahn definitely came from a middle class family. On the other hand, when Icahn was 32 and wanted to buy a seat on the NYSE, it was certainly convenient that he had an uncle, Elliot Schnall, who was a Palm Beach millionaire and who could loan him the money without questions.

C.     But even granting that there are meritocrats in the purest sense on the 400, like Jeff Bezos, does this prove Kaplan and Rauh’s point? By no means. Because we want to know that wealth is churning in response to meritocratic pressure from below. One of the symptoms of a vigorous churn would be the fact that few 400 figures remain on the list for long. If they do, we have evidence of wealth stratifying in a hierarchical way – wealth is just going to wealth. Go back to Jeff Bezos. He has been on the list since 1999 – giving him a stretch of 15 years. This is not unusual – as is obvious from Bernstein’s appendix in 2006. This fact should lead us to a deeper contextualization about the 400. As almost all economic histories show, between 1932 and 1979, America experienced a great leveling. It wasn’t that the wealthy went away; however, the labor and white collar wage class enjoyed incredible gains in income and opportunity. When you look at the 1982 list, you are looking at dynasts who made it through the leveling period plus that subgroup that benefited ‘meritocratically’ from oil, building, manufacturing, and real estate. In the years since, the list reflects the baby boomer years – year in which, among other things, higher education was relatively cheap and available for the ambitious. We have now reached the period when that group is going into its sixties, and the wealth is definitely settling into place. Along with the perrenial dynasts, there are the long timers  – people who have been on the list 15 years or more – who need to be broken out.

D.     As well, it is unclear from Kaplan and Rauh’s charts if they double count these perennials. If Bezos is counted, each time, as coming from the wage class in their compilation – rather than once, when he entered the list – they are making an elementary error. I suspect they make it. I suspect they know that they are making it. I suspect that they are working for the American Enterprise institute.

E.      However, the larger criticism concerning how well the 400 represents dynastic wealth. In fact, the very framework seems to occlude it. In 1987, CBS news reported that, curiously, there was not a Dupont on the list, even though the Dupont family was worth an estimated 10 billion dollars. CBS resolved this anomoly by pointing out that if each of the 1500 Dupont relatives got a share of that money it would come to 5 million apiece. However, this is a deeply misleading. The Dupont fortune operates as a unified entity through family trusts. As an entity, it is as unified as the ‘Gates’ entity. In a list of individuals going from 1982, sheer mortality and reproduction would naturally diminish the part of the inheritors, but this would not really give us an idea of how much money is under dynastic control. In 1937, a journalist named Lundberg published a book about America’s wealthy dynasties, and the names in it seem foreign to us, who are used to reading about tech barons and hedgefunders. But those families rarely lose their money. The Pitcairns, for instance, who started PPG, have a private family investment fund in which all the family participates. Individually, they would not be on the list, but as an entity, it is a good bet they would be. The same is true for the Weyhaeusers. There are many many families like this.

Forbes recognizes this in other lists – for instance, they simply amalgamate all the Walton wealth into Walton Family on their world billionaires list. But they are very inconsistent about it in the 400 lists. Sometimes children and spouses appear separately, sometimes they don’t.

For all these reasons, Kaplan and Rauh’s 400 proof is a farce. A farce that, I should say, is easily seen through. One doesn’t have to go through some complicated mathematical proof, one simply has to apply elementary social science reasoning. It is the kind of thing that is dogfood for the dogs, rightwing columnists who can wave the paper about and claim to have refuted the socialists and Stalinists once and for all. Only mooks would fall for it.

This is, of course, why it gets an honored place in LarrySummers’ review of Thomas Piketty’s Capital.  Summers, Obama’s favorite economist, the man who design the Clinton era deregulatory architecture – or should I say, instead,  wrecked regulation of the financial markets and helped midwife the depression?  - inserts the following paragraph in gesturing towards other evidence that American wealth is not becoming so unequal:

“A brief look at the Forbes 400 list also provides only limited support for Piketty’s ideas that fortunes are patiently accumulated through reinvestment. When Forbes compared its list of the wealthiest Americans in 1982 and 2012, it found that less than one tenth of the 1982 list was still on the list in 2012, despite the fact that a significant majority of members of the 1982 list would have qualified for the 2012 list if they had accumulated wealth at a real rate of even 4 percent a year. They did not, given pressures to spend, donate, or misinvest their wealth. In a similar vein, the data also indicate, contra Piketty, that the share of the Forbes 400 who inherited their wealth is in sharp decline.”

A brief look here can be defined as the look one gives the index card on which one has copied some “happy facts” to share with the assembled plutocrats at one of Summers $50,000  talks. It is the index card that has the orange sauce from the duck on the corner.

I am not shocked that Summers would publish something this stupid. It is not that Summers is a stupid man – he is, mainly, an “insider” – someone who knows how to “play” in DC, as he famously told Elisabeth Warren.  In the economics profession, Summers is widely regarded as a genius. This says less about the elevation of his intellect than the shallowness of his field – a molehill is an Everest to a herd of aphids.

Like the overwhelming majority of economists, Summers isn’t very good in thinking in broad terms, or understanding the economy and what it is for. He is perpetually like a man standing with his nose three inches from a pointillist painting – he can see all the dots in detail, but he can’t see or imagine the picture. This is fortunate for him – economics is the handmaiden of the plutocrats, and those who step back and begin to see the picture are soon quietly sidelined. 

the democracy team: how to understand American foreign policy

Philosophers have long argued about what democracy really means. Western politicos don’t have that problem – democracy is a team name, like the Rangers. Nobody expects the Rangers to be rangers, and nobody expects the “democratic forces” supported by the krewe of Clinton, Bush, Obama, Blair, Hollande etc. – whatever figurehead is in power - to be democratic. Blair, in one of the comic highpoints of his miserable reign, toured the Gulf states and touted the democratic alliance (of Saudi Arabia, Bahrain, and Mubarrak’s Egypt) against the enemies of democracy, i.e. Iran. Of course, Iran has at least the trappings of a democracy, much like the U.S. and the U.K., while Saudi Arabia is perhaps the most totalitarian country in the world, and showed what it thought of civil protest by invading Bahrain when the Arab Spring threatened the ruling prince. Not that I am defending a country that routinely condones torture and has the highest prison population in the world – but I would still call the U.S. a quasi-democracy. For instance, elections are held in the U.S. so that people have a chance to make their opinions known and have them betrayed by whoever they elected. And Americans are damn proud of this, and call it operation enduring freedom. Or is that when we invade a country illegally?

I get mixed up.

I’ve been thinking about the democratic team with regards to the astonishing smoke and mirrors show being put on about the Ukraine. The NYT has been outstanding in this respect – liberals like to criticize Fox news, but the NYT reporting on Ukraine makes Fox News look like the successor to Edward Morrow and Walter Cronkite. I thought the nadir had been reached in the article that praised the pro-government paramilitaries in Odessa for their good work in squelching the “pro-Russian” side. This, from a newspaper that is, normally, anti-neo Nazi. However, one must remember that the paramilitaries are on the democratic team and it all works out beautifully. Today, the NYT editorialdissed the referendums in Donetsk with language that was almost pure bungalowBill. Here’s how they started

“If there were questions about the legitimacy of the separatist referendums in eastern Ukraine, the farcical names of the entities on which people were asked to vote — the self-declared People’s Republics of Donetsk or Luhansk — surely answered them. “

‘Surely’ – in the club where the editorialists chuckle about things like those funny Chinese and Negro names – most amusing.  It is a kinda nostalgic, retro opening to a salvo full of the cliches one expects from … well, the NYT.  The funnily named little countries are surely parallel to that standard of the white mostly elite clubs, the funny names Negros give their children. Always a hoot in the cigar room.  But in spite of having lived through the Iraq invasion and knowing how the establishment works, it still made me curiously angry.

Angry enough that I decided to look back at how the talking heads were talking about Russia in the nineties.  In 1993,  Yeltsin’s situation with the parliament was almost  a mirror image of what was happening in Kiev in January of this year. Again, a president seemed to oppose the unanimous opinion of the legislature. In the case of  Yakunovych, the discontent stemmed from his refusal to sign the association agreeement with the EU. In Yeltsin’s case, it occurred because of discontent with Yeltsin’s “shock therapy.” Constitutionally, Yeltsin’s decree power ran out in December 1992. In April, a referendum was scheduled to sort out the deadlock between the executive and the legislature . As Martin Malia tells the story in his article, Soft Coup, for the New Republic (April 19,1993) (all from the standpoint that Yeltsin is the “democracy team), Yeltsin came to believe he would either lose the referendum in April or that the anti-privatization parts of the referendum would go against him. Now, as we all know, the democracy team cannot tolerate democracy if democracy is going to screw up the “liberalization” of the economy. As Malia points out, the opposition actually wanted something like worker’s collectives to take over the major industries. Such poppycock! And then the referendum coming up which might give the wrong, anti-democratic answer to the question, do you want oligarchs to take over your industry and plummet your economic status for the next fifteen years. .So in March Yeltsin sounded out foreign countries, i.e. the US, to see what they would think if he just unconsstitutionally swept aside the power of the legislature and ruled by decree. Amazingly, they were “understanding”. So Yeltsin pretty much did that, and proposed his own referendum.

A recent National Interest story has a capsule version of what happened next. 

“While Yeltsin won majorities expressing confidence in his leadership, supporting reform, and calling for new parliamentary elections, opposition to reform remained high—45% voted against it in the referendum. No less important, a majority favored early presidential elections, meaning that Russia’s voters wanted not only a new parliament, but a chance at a new president and a clean political slate to move beyond the confrontation between Yeltsin and conservative legislators.

Russia’s president was not interested in the latter message, however, and pressed ahead in his conflict with the Supreme Soviet and government by diktat—with the full support of the Clinton administration. (And despite private advice from Richard Nixon, who encouraged Yeltsin to seek a compromise with the parliament in March 1993, only to be told by the Russian leader that U.S. officials were counseling the exact opposite.) When Yeltsin eventually dissolved the parliament in frustration in September, President Bill Clinton stated explicitly that “President Yeltsin has made his choice, and I support him fully.” Ambassador-at-Large for the former Soviet Union Strobe Talbott referred to Yeltsin’s dissolution of parliament as a “noisy squabble.” With this support, Yeltsin sent in the tanks two weeks later, on October 4, and swept the Supreme Soviet into the dustbin of history. It was surely noisy, but rather more than a squabble.”

I rather like the farcical intrusion of Richard Nixon into this story – a man from the past who actually advised, oh, democracy democracy instead of team democracy. Poor Nixon, made obsolete by the zeitgeist that had shifted far to the right of him, with Clinton and the neo-liberals in the lead!

The moral of the Yeltsin story is that the curious reporting about Ukraine – for instance, a New Yorker reporter named Jon Lee Anderson writing that the Maidan protestors swept away a “tyrant” – is not curious once you dispense with the idea of democracy as a process and understand it as a team label. Of course, the democracy team does have to do one thing: it has to privatize. It has to respect “private property” – for instance, the assets of multinational corporations. Otherwise it isn’t the democracy team anymore, but tyranny. And it is in this neat machine that the people of East Ukraine are supposed to be milled to death. For who could support the non-democracy team (the one that holds elections) except devilish souls like Putin, who are not at all democracy team like Boris Yeltsin was.