I was having lunch with a staffer for one of the rare Republican members of Congress who opposed the policy of so-called free trade. I distinctly remember something my colleague said: "The rich elites of this country have far more in common with their counterparts in London, Paris, and Tokyo than with their own fellow American citizens."
That was just the beginning of the period when the realities of outsourced manufacturing, financialization of the economy, and growing income disparity started to seep into the public consciousness, so at the time it seemed like a striking and novel statement.
At the end of the cold war many writers predicted the decline of the traditional nation state. Some looked at the demise of the Soviet Union and foresaw the territorial state breaking up into statelets of different ethnic, religious, or economic compositions. This happened in the Balkans, former Czechoslovakia, and Sudan. Others, like Chuck Spinney, predicted a weakening of the state due to the rise of Fourth Generation Warfare, and the inability of national armies to adapt to it. The quagmires of Iraq and Afghanistan lend credence to that theory. There have been hundreds of books about globalization and how it would break down borders. But I am unaware of a well-developed theory from that time about how the super-rich and the corporations they run would secede from the nation state.
I do not mean secession in terms of physical withdrawal from the territory of the state, although that happens occasionally. It means a withdrawal into enclaves, a sort of internal immigration, whereby the rich disconnect themselves from the civic life of the nation and from any concern about its well-being except as a place to extract loot.
Our plutocracy now lives like the British in colonial India: in the place and ruling it, but not of it. If one can afford private security, public safety is of no concern; if one owns a Gulfstream jet, crumbling bridges cause less apprehension and viable public transportation doesn't even show up on the radar screen. With private doctors on call, who cares about Medicare?
The sentiment among the super-rich towards the rest of America is often one of contempt rather than noblesse; Bernard Marcus, co-founder of Home Depot, says about the views of the 99%: "Who gives a crap about some imbecile?"
Federal payroll taxes are regressive, and the dirty little secret is that over the last several decades they have made up a greater and greater share of federal revenues. In 1950, payroll and other federal retirement contributions constituted 11% of all federal revenues; by 2007, the last “normal†economic year before federal revenues began falling, they made up 34%. By contrast, corporate income taxes were 26% of federal revenues in 1950; by 2007 they had fallen to 14%. These same players are taking their compensation as capital gains instead of salary, moving form a 35% tax bracket to 15% and dodging social security and medicare taxes completely. Who has skin in the game now?
Mike Lofgren
