Bottom Line

The true costs of Reagan and extreme capitalism

by Sam Smith

Progressive Review, November 2004

Next year will mark the 25th anniversary of that remarkable moment when this country began to turn its back on values that had sustained it throughout its first two centuries - values that included balancing power and wealth with concern for, cooperation with, and compassion towards others in the community we called America. In their place came a psychotic faith in the ubiquitous virtue of the market, a faith almost creationist in its absence of objective foundation, intellectually barren when not actually dishonest, and as monomaniacal as the creed of the religious fundamentalist. Every other aspect of existence - religion, family, morality, creativity, politics, community, tradition, ethnicity - was declared merely a byproduct of the marketplace.

True, America had always been a highly commercial culture. And it had gone through periods - such as that of the 19th robber barons or the 1920s - when its better nature was submerged or perverted by a corrupt culture of greed, but in these prior instances it had been generally clear who the true beneficiaries were and there had been little effort, even by these lucky few, to pretend, for example, that the luck of the Goulds, Carnegies or Rockefellers were but a tax cut away from the rest the country.

With Reagan, however, that all changed. For the first time in our history, the self-serving delusions of the privileged few became the standard for the whole nation, propagated in politics, on campuses and in the media. Even liberals would begin to adopt the language of extreme capitalism. Few asked for the evidence to support its thesis or examine critically its deceptive logic.

To give some sense of the cultural eruption that had occurred, consider some remarks from the 1960s. The first were delivered in 1964 by Lyndon Johnson:

"The Great Society rests on abundance and liberty for all. It demands an end to poverty and racial injustice, to which we are totally committed in our time. But that is just the beginning. The Great Society is a place where every child can find knowledge to enrich his mind and to enlarge his talents. It is a place where leisure is a welcome chance to build and reflect, not a feared cause of boredom and restlessness. It is a place where the city of man serves not only the needs of the body and the demands of commerce but the desire for beauty and the hunger for community.

"It is a place where man can renew contact with nature. It is a place which honors creation for its own sake and for what it adds to the understanding of the race. It is a place where men are more concerned with the quality of their goals than the quantity of their goods.

"But most of all, the Great Society is not a safe harbor, a resting place, a final objective, a finished work. It is a challenge constantly renewed, beckoning us toward a destiny where the meaning of our lives matches the marvelous products of our labor."

That same year, Ronald Reagan had this to say: "We were told four years ago that 17 million people went to bed hungry every night. Well, that was probably true. They were all on a diet." And two years later: "Unemployment insurance is a pre-paid vacation for freeloaders."

Reagan was still just a brash voice for the wealthy, the greedy, and the lucky, a Bill O'Reilly with charm. But by the time he ran for president, the crudity and the covert cruelty had been transformed into a faith, a philosophy, and a political platform, in part due to a small group of rightwing economists and other academics, but mostly thanks to the new prime minister of England, Margaret Thatcher. As Newt Gingrich noted, "Margaret Thatcher was the forerunner who made Reagan possible. The 1979 campaign was the direct model from which we took much of the 1980 Republican campaign."

Time Magazine would later exude, "By the mid-1980s, privatization was a new term in world government, and by the end of the decade more than 50 countries, on almost every continent, had set in motion privatization programs, floating loss-making public companies on the stock markets and in most cases transforming them into successful private-enterprise firms. Even left-oriented countries, which scorned the notion of privatization, began to reduce their public sector on the sly. Governments sent administrative and legal teams to Britain to study how it was done."

To be sure, Reagan and Thatcher can not be blamed for everything that followed. For example, both Clinton and Blair were more effective in destroying their own party's traditions of social democracy than Reagan had been. As Gingrich remarked, "in a lot of ways Tony Blair is Margaret Thatcher's adopted son." Still it was Thatcher and Reagan that got things rolling. Every president and prime minister, regardless of party, who followed took their country further to the right

What Reagan was up to was easily apparent to the modestly observant. In 1985 Haynes Johnson noted in the Washington Post:

"His appeal has been to private instead of public interests, the self instead of selfless interests. Absent is any call for public service, for common effort, for shared sacrifice, for actions that extend beyond the gratification of the individual, for a wise perspective on the experience of the past and a clear definition of the unmet challenges of the future. The result of this sort of thinking leads to greater celebration of selfishness. It means a greater green light for a new wave of greed so evident in these mid-1980's."

That same year, I wrote:

"I'm worried. I don't think even the president's critics are taking the Reagan phenomenon seriously enough. This is not just another bad president we're facing, but an administration that is attempting a massive revolution in economics, social and moral values, foreign policy, class and racial relationships, and civil liberties. . .

"We laugh at its error, hyper-simplicity and naiveté, but as Goebbels pointed out in 1926: 'There is no need for propaganda to be rich in intellectual content.'

"I do not propose that Reagan and his aides are fascists, but I do suggest that they could well - because of their ignorance, selfishness and egotism - be leading us into a proto-fascist period in which America would accept accelerated depreciation of its democratic values based on the faulty premises so effectively sold by the Reagan crowd.

"Stand back a minute and look around you. We face a massive deficit and what does our president want to do to correct it? Increase still further military spending even at the cost of destroying programs that have been an integral part of American life for decades. Forget about the issue of priorities and think what this says about who holds power in this country. When people starve to feed the military machine, democracy is in deep trouble. In truth, the Reagan administration is an attempt to turn the military-industrial combination from a complex to a full autocracy.

"Part of the problem stems from the cultural background of the Reagan elite; they are used to being bosses, they now have the key to executive washroom of the world, America, and damned if anyone else is going to get in. This executive suite mentality helps perhaps to explain why the Reagan people are so abysmal at the ordinary politics of compromise and negotiation. They're best at telling people what to do, only now instead of it being a branch manager it's a senator, an interest group or another once sovereign nation. Listen to them talking about why they won't help this or that segment of the population; their rhetoric is that of a CEO announcing the closing of a plant to improve the profitability of the company. . .

"We must cast this struggle in its true nature: the protection of traditionally honored American values, rights and goals against the would-be usurpation of a small, wealthy, power-hungry elite that is increasingly turning this into a government for the few and against the people. The Reagan administration's big lies must be called what they are. The hypocrisy and the Orwellian perversion of language must be hit at every turn. Americans must be reminded that after the blacks suffer, the poor suffer, the farmers suffer, they are next. They must learn that the smile on the face of their president is that of the Cheshire cat. And that they are being politically robbed of their heritage, their rights and their money.

This was the real Reagan, one that barely surfaced in his lifetime and had largely disappeared by the time of his absurd death fest, in no small part thanks to a media that quickly adopted the icon's language, clichés and premises. Reagan transformed American politics into show business and the media was glad to join the cast. The fatuous banalities passing for sound philosophy or ex cathedra statements pretending to be arguments passed deep into the mind of America. Reagan had taught us that truth and reality were no longer important.

One indicator of the power of this lesson came in a 1996 Nexis search of news media by Norm Solomon. He found that:

- "Free enterprise" had been used in 3,489 stories, "free market" in 9,345, and "property rights" in 6,802.

- "Labor rights," however, showed up in only 440 stories; "economic justice" in 592; and "economic democracy" in only 38.

- "Welfare reform" was mentioned in 22,013 stories but "corporate welfare" in only 2,351 and "corporate welfare reform" only 17 times.

Reagan was still calling the shots nearly a decade after leaving office.

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So where has all this left us? To paraphrase Ronald Reagan, are you better off than you were 25 years ago?

The media doesn't even ask this question, but if it did here are just a few of things it would discover, much of it easily retrievable from its own clip files:

- "The traditional pension, an employee benefit that was widely available until the early 1980's has been vanishing from the American workplace ever since. More than two-thirds of older households - those headed by people 47 to 64 - had someone earning a pension in 1983. By 2001, fewer than half did" - New York Times

- In the 1980s about two-thirds of corporations included health care benefits with their pensions. Today only about a third do.

- In April 2004, the nation's trade gap hit a record $48 billion, precisely the sort of thing extreme capitalism, free trade, and globalization was supposed to prevent.

- The top one percent's share of household wealth had dropped from 1929 to 1981 from 44% to 27%. By 1998 it was back up to 39%.

- "The Congressional Budget Office says the income gap in the United States is now the widest in 75 years. While the richest one percent of the U.S. population saw its financial wealth grow 109 percent from 1983 to 2001, the bottom two-fifths watched as its wealth fell 46 percent" - CBS

- "[Edward N. Wolff, an economist at New York University] found that the average net worth of an older household grew 44 percent, adjusted for inflation, from 1983 to 2001, to $673,000. But much of that growth was in the accounts of the richest households, which pushed the averages up. When Mr. Wolff looked at the net worth of the median older household - the one at the midpoint of the economic ladder, a better indicator of what is typical - the picture changed. That figure declined by 2.2 percent, or $4,000, during the period, to $199,900.
For a generation to emerge from two bullish decades with less wealth than its parents had 'is remarkable,' Mr. Wolff said. Based on economic growth and market returns over those 18 years, he said, their wealth "should be up around 30 or 40 percent." - New York Times

- Meanwhile, for households of all ages, between 1983 and 1998 the average household net worth of the poorest 40% in the U.S. declined 76%.

- "The biggest indicator of a healthy society - average life expectancy - dropped. People in the U.S. now don't live even as long as people in Costa Rica. Meanwhile the U.S. infant mortality rate has risen, so much so Cuba has a better success rate of bringing healthy children into the world." - CBS

- In 1983, 50 corporations controlled most of the news media in America. By 2002, six corporations did.

- Between 1981 and 1997, children 3-12 spent 25% less time playing, an hour less a week eating meals, one-half hour less a week sitting and talking with someone at home.

- The number of Americans without health insurance climbed 33 percent during the 1990's, according to the U.S. Census Bureau.

- Farmers in 1999 were getting 36% less for their products in real dollars than in 1984.

- In 1980 there were less than 500,000 people in prison in the U.S. By 2000 there were two million. In 1980, 8% of the prisoners were there for drug offenses; by 1998, 28% were.

- Ninety percent of young white male workers are now doing worse than they would have 20 years ago. Adjusted for inflation, the income of a recent male high school graduate declined 28% between 1973 and 1997.

- Wages for the bottom 10% of all wage earners fell by 9.3% between 1979 and 1999

- Median student-loan debt, 1977: $2,000. 1997: $15,000

- Ratio of executive pay to that of a factory worker in 1980: 42 to 1. Ratio of executive pay to that of a factory worker in 1998: 419 to 1. Annual pay of a factory worker if it had kept pace with executive salaries: $110,000

- In 1977, the disclosed wealth of the top ten senators was $133 million. In 2001 it was $1.83 billion.

- In 1982, U.S. foreign debt was less than 5% of GDP; by 2002 it was almost 25%

- Between 1973 and 2001, the incomes of the poorest 20% went up 14%, that of the 20% in the middle went up 19%, but the richest 5% went up 87%.

- The real value of the minimum wage peaked in 1969 at over $7 an hour. Its real value is now at $5 an hour.

- Eighty-six percent of stock market gains between 1989 and 1997 flowed to the top ten percent of households while 42 percent went to the most well-to-do one percent.

- In 1998 the top-earning one percent had as much income as the 100 million Americans with the lowest earnings.

- Two-thirds of American households headed by a person between the ages of 47 and 64 in 1998 had the same pension wealth or less in real dollars than they did in 1983. Almost 20% of all near-retiree households could expect to retire in poverty.

- 1973 to 1995 was the only time in American history that real earnings declined.

- By the turn of the century poor black families were working 190 hours more a year - and poor white families 22 hours more -- than in 1979 for roughly the same pay.

- The two richest men in America -- Bill Gates and Warren Buffet -- own more assets than the bottom 45% of the country.

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Economic deterioration is not the only damage done by a quarter century of extreme capitalism. Money, after all, is just another form of power, the type you can carry around in your pocket. Once you accept the idea that power in one form is its own justification, there is nothing to stop the principle from extending to every aspect of life. The elements of extreme capitalism - including winner take all, damn the damage, zero tolerance for those who can't make you richer, contempt for activities without monetary profit, disrespect for the less fortunate - spread like a virus to our communities, our schools, our police departments, and our foreign policy.

Here is only a partial list of the other pain that resulted:

- Anti-trust laws, once considered the great mediator of commercial excess, have been steadily eroded.

- Organized labor has become a mere shadow of its former self; the rights of workers are damaged in ways that would have caused national turmoil had they been attempted when America was still a social democracy.

- Between 1980 and 2000, the U.S. per capita spending on schools increased 32%. The per capita spending on prisons grew 189%

- California built 21 prisons between 1980 and 1998; it built just one college.

- From the inauguration of a full-scale war on drugs in 1985 to 1998, the number of deaths per 100,000 for drug-induced causes almost doubled. In other words, having a drug war proved twice as deadly as not having one.

- Employers have become notoriously less loyal to their workers forcing an increasing number to become economic nomads. This not only creates burdens for the individual but disrupts the stability of communities.

- Despite the endless talk of free markets, those doing the talking have jammed Washington with thousands of additional lobbyists whose job it is to make damn sure that such free markets don't exist.

- As media has become increasingly monopolized, the cultural choices of Americans have become more limited as have the possibilities for artists who might supply those choices. It is not an accident that America has produced so little significant art, music, or theater since 1980; extreme capitalism has no interest in it.

- There has been a massive shift towards the language of capitalism in all aspects of our conversation and speech, making our words more clichéd, less meaningful, less enjoyable, and less human. To an extraordinary degree we now speak to each as salesmen rather than as fellow citizens. This makes for a pretty seedy culture, full of insincerity and deceit while short on cooperation, individual creativity and shared goals.

- The age of Social Security coverage is rising as the public is being taught not to expect that either Social Security or Medicare will continue to serve as they do at present.

- There has been a dramatic increase in homelessness.

- Efforts to control individual rebellions against the banal and life-draining culture of extreme capitalism have produced increasingly authoritarian, militaristic and punitive tactics such as the war on drugs, zero tolerance, and the conversion of public schools into quasi-detention centers. We drug our students for daring to be restless, the very students who, in another time, would have become the creators, the thinkers and the wise that a society so badly needs.

- Advertising has invaded every aspect of our life making existence increasingly one long commercial.

- Our environment has steadily and dangerously deteriorated, but extreme capitalism has taught us not to care and so we approach crises like an oil shortage critically unprepared.

- Medicine has been converted from a public service to a corporate exploitive enterprise.

- The number of laws in our society has exploded, bearing little relationship to population growth, cultural complexity or any other rational factor. The number of lawyers have grown with it; in Washington there are nearly seven times as many attorneys as three decades ago. It now takes longer, requires more paper, and stirs up more intimations of liability to do almost anything worthwhile than it once did. While our rhetoric overflows with phrases like "entrepreneurship" and "risk-taking," the average enterprise of any magnitude is actually characterized by cringing caution with carefully constructed emergency exits leading from every corner of chance.

- Our public school system has steadily declined, all the more so as corporate and bureaucratic principles are laid on top of on the very non-corporate business of teaching.

- We increasingly use corporatized prisons without adequate public supervision and prison slave labor to serve corporate interests.

- Our voting turnout has declined.

- Corruption, both corporate and political, has increased to the point that it is no longer deviation but an assumed part of our culture. We all live in a Mafia neighborhood now.

- Employing the techniques and goals of corporate monopolization to our foreign policy we have become more hated and fearful than at any time in our history. We have reacted with a spiral of panicked and brutal responses that have simply made things we worse.

- We have lost interest in our Constitution and democratic ideals and have made our government serve first and mainly the interests of our largest corporations. There is a technical name for this: it is called corporatism or fascism.

None of this has made us happier, wealthier, healthier, safer or better custodians of this land to pass on our children. We lack glory, gladness, grace and decency, having traded them in for tricks, treachery and greed.

This is the bottom line of extreme capitalism. but placated by Prozac, persuaded by prevarication and pacified by prohibition, we ignore our drift towards the mean and the brutish and continue to accept the lie that we are the better for it.

[Some of the stats come from an article written by Sam Smith for Tompaine.com]

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