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"The Rich Don't Always Win" - But They Usually Do

Thursday, 25 April 2013 09:27 By Salvatore Babones, Truthout | Op-Ed

Combat the epidemic of misinformation that plagues the corporate media! Click here to make a tax-deductible donation to Truthout and keep independent journalism strong.

Businessman grunge(Photo: Victor1558; Edited: JR / TOnce upon a time there was a land of milk and honey called the United States of America. America was a great country, but it faced a powerful enemy, the evil Soviet Union. In 1959, there was a trade exhibition of American products in Moscow, the capital of that evil empire. The vice president of America, one Richard Milhous Nixon, attended the exhibition on America's behalf.

A 29-year-old future journalist named William Safire was there at the exhibition representing the American building industry. Doing his job very well, he steered Nixon and his Soviet nemesis, Nikita Khrushchev, toward a walk-through display of the typical American home.

As they toured the model American home, Nixon and Khrushchev debated the relative merits of the American and Soviet systems. The debate came to a climax in the kitchen, and so it went down in history as the "kitchen debate."

Khrushchev argued that the Soviet Union had surpassed America in rockets and high technology. Nixon responded by showing Khrushchev around the model American kitchen with its modern 1950s appliances. Nixon told Khrushchev how any ordinary American, a military veteran or a steelworker earning $3 an hour (worth $24 today), could afford a brand-new home with modern appliances. And he was right.

In The Rich Don't Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970 journalist and policy analyst Sam Pizzigati tells the story of how that American workers' paradise came to be. (Seven Stories Press, 2012)

It's not a pretty story. It took violent strikes, street fights, two depressions, two world wars and the twin threats of fascism and communism to push America's ruling class to the conclusion that There Is No Alternative to a policy of ensuring livelihood with dignity for all.

By 1950, the victory of the people over plutocracy was assured. By 1970, female, black, Latino and native Americans were beginning to share in that victory. By 1980, it was all over.

The vision of an America united behind civilized, egalitarian, progressive values lasted just three decades. But what a vision it was.

Pizzigati's book is a must-read for the contemporary progressive. I read its 370 pages in just two long sittings and would have read it in one if I hadn't had to sleep. Pizzigati's focus on the nitty gritty history of the battles and debates that led to the creation of mid-century America is surprisingly gripping - and full of surprises.

Do you think southern conservatives have always been anti-worker? Think again. Alabama Senator Hugo Black championed a 30-hour work week. He proposed work-sharing to fight the Great Depression, a policy successfully implemented in Germany to counter the 2008 global downturn.

Do you think LaGuardia is nothing more than a crowded airport? Think again. New York Congressman, and later mayor, Fiorello LaGuardia was a Republican crusader for higher taxes on the wealthy - most of whom, in his day, lived right in his own city of New York.

Do you think Franklin Roosevelt raised taxes in the 1930s to make the rich pay for his New Deal policies? Think again. The symbolic 1932 jump in the top tax rate from 25 percent to 63 percent came under Republican Herbert Hoover, before Roosevelt was even elected. Not that it was Hoover's idea: The momentum for this "soak the rich" policy came from House Republicans.

Pizzigati tells the story of how Roosevelt became a full convert to policies of progressive taxation and workers' rights only under pressure from Louisiana phenomenon Huey Long. Roosevelt's "second hundred days" at the beginning of his second term offered up the Social Security Act, the Public Works Administration and the National Labor Relations Act.

But Roosevelt's real conversion came during World War II, and it came because he needed money to pursue the war. When you need seriously large amounts of money, you can only get them from the rich. Roosevelt became first frustrated, and then angry, with rich Republicans who were intent on blocking his efforts to finance the war through taxation.

The president came out swinging in 1942 with a proposal to impose an after-tax income cap of $25,000 per year (equivalent to about $350,000 today). He settled for an 88 percent tax on incomes over $200,000 (just under $3 million today). Even income over $60,000 (just under $1 million today) was taxed at 75 percent.

If Pizzigati's microscope shows us anything, however, it is that real progress is rare and difficult. It takes means, motive and opportunity. To hear Pizzigati tell it, the means are provided by aggressive social movements, the motives are provided by political exigencies and the opportunities are provided by world wars.

Pizzigati charts two episodes of real progress toward a more equal America: the first prompted by World War I and the second prompted by World War II. Both wars called for huge government revenues that could only be met by taxing the rich. Both wars also called for cooperative labor relations and direct government management of the economy.

As it happens, in both World War I and World War II America was led by left-leaning Democratic presidents, Woodrow Wilson and Franklin Roosevelt. While these two leaders may not have been radical progressives, neither was beholden to bankers or big business. Both felt strongly that the rich should help pay the costs of the nation's wars.

And both happened to fight wars at times when America's labor movement was expanding, not shrinking. Though the labor movement may not have been strong enough to impose progressive policies on its own, the labor movement was able to exert pressure. By the time of George Bush's wars of the 2000s, such pressure was nonexistent.

Particularly interesting are Pizzigati's in-depth discussions of the conservative counter-movements that immediately followed both world wars. Both were based on hyped-up "red scares" during which the rich claimed that the continuation of wartime progressive policies would lead to revolution, anarchy and communism.

The reactionary red scare after World War I was completely successful in reversing the progressive program. Unions were busted, taxes were cut, profits boomed and the stock market collapsed - in that order. The result was the Great Depression.

The reactionary red scare after World War II was less effective. Pro-business politicians pushed through the strongly anti-union Taft–Hartley Act in 1947 (over President Truman's veto), but failed to bring down high wartime tax rates. The result was a quarter century of extraordinary economic growth.

It is fairly obvious from Pizzigati's micro-history that presidential leadership made all the difference between these two outcomes. After World War II, we had Harry Truman and Dwight Eisenhower. After World War I, we had Warren Harding and Calvin Coolidge.

Pizzigati edits the web site and newsletter Too Much, which exposes the contemporary excesses of America's ridiculously rich. In a sense, The Rich Don't Always Win fills in the backstory of how the rich came once again to have too much. Although Pizzigati's story peters out in the 1970s, it's clear that we've been here before.

Too many progressive editorials end with melancholy reflections on how bad things have become. Pizzigati prefers to end with the positive reflection that "the rich don't always win." One might just as fairly point out that progressives only won once, in the aftermath of a world war, with a succession of three staunchly independent leaders in the White House.

My heart is with the progressives, but my money (if I had any) would be on the rich.

Copyright, Truthout. May not be reprinted without permission.

Salvatore Babones

Salvatore Babones (@sbabones) is an associate fellow at the Institute for Policy Studies (IPS) in Washington, DC. His latest book is Sixteen for '16: A Progressive Agenda for a Better America, available now from Policy Press.


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"The Rich Don't Always Win" - But They Usually Do

Thursday, 25 April 2013 09:27 By Salvatore Babones, Truthout | Op-Ed

Combat the epidemic of misinformation that plagues the corporate media! Click here to make a tax-deductible donation to Truthout and keep independent journalism strong.

Businessman grunge(Photo: Victor1558; Edited: JR / TOnce upon a time there was a land of milk and honey called the United States of America. America was a great country, but it faced a powerful enemy, the evil Soviet Union. In 1959, there was a trade exhibition of American products in Moscow, the capital of that evil empire. The vice president of America, one Richard Milhous Nixon, attended the exhibition on America's behalf.

A 29-year-old future journalist named William Safire was there at the exhibition representing the American building industry. Doing his job very well, he steered Nixon and his Soviet nemesis, Nikita Khrushchev, toward a walk-through display of the typical American home.

As they toured the model American home, Nixon and Khrushchev debated the relative merits of the American and Soviet systems. The debate came to a climax in the kitchen, and so it went down in history as the "kitchen debate."

Khrushchev argued that the Soviet Union had surpassed America in rockets and high technology. Nixon responded by showing Khrushchev around the model American kitchen with its modern 1950s appliances. Nixon told Khrushchev how any ordinary American, a military veteran or a steelworker earning $3 an hour (worth $24 today), could afford a brand-new home with modern appliances. And he was right.

In The Rich Don't Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970 journalist and policy analyst Sam Pizzigati tells the story of how that American workers' paradise came to be. (Seven Stories Press, 2012)

It's not a pretty story. It took violent strikes, street fights, two depressions, two world wars and the twin threats of fascism and communism to push America's ruling class to the conclusion that There Is No Alternative to a policy of ensuring livelihood with dignity for all.

By 1950, the victory of the people over plutocracy was assured. By 1970, female, black, Latino and native Americans were beginning to share in that victory. By 1980, it was all over.

The vision of an America united behind civilized, egalitarian, progressive values lasted just three decades. But what a vision it was.

Pizzigati's book is a must-read for the contemporary progressive. I read its 370 pages in just two long sittings and would have read it in one if I hadn't had to sleep. Pizzigati's focus on the nitty gritty history of the battles and debates that led to the creation of mid-century America is surprisingly gripping - and full of surprises.

Do you think southern conservatives have always been anti-worker? Think again. Alabama Senator Hugo Black championed a 30-hour work week. He proposed work-sharing to fight the Great Depression, a policy successfully implemented in Germany to counter the 2008 global downturn.

Do you think LaGuardia is nothing more than a crowded airport? Think again. New York Congressman, and later mayor, Fiorello LaGuardia was a Republican crusader for higher taxes on the wealthy - most of whom, in his day, lived right in his own city of New York.

Do you think Franklin Roosevelt raised taxes in the 1930s to make the rich pay for his New Deal policies? Think again. The symbolic 1932 jump in the top tax rate from 25 percent to 63 percent came under Republican Herbert Hoover, before Roosevelt was even elected. Not that it was Hoover's idea: The momentum for this "soak the rich" policy came from House Republicans.

Pizzigati tells the story of how Roosevelt became a full convert to policies of progressive taxation and workers' rights only under pressure from Louisiana phenomenon Huey Long. Roosevelt's "second hundred days" at the beginning of his second term offered up the Social Security Act, the Public Works Administration and the National Labor Relations Act.

But Roosevelt's real conversion came during World War II, and it came because he needed money to pursue the war. When you need seriously large amounts of money, you can only get them from the rich. Roosevelt became first frustrated, and then angry, with rich Republicans who were intent on blocking his efforts to finance the war through taxation.

The president came out swinging in 1942 with a proposal to impose an after-tax income cap of $25,000 per year (equivalent to about $350,000 today). He settled for an 88 percent tax on incomes over $200,000 (just under $3 million today). Even income over $60,000 (just under $1 million today) was taxed at 75 percent.

If Pizzigati's microscope shows us anything, however, it is that real progress is rare and difficult. It takes means, motive and opportunity. To hear Pizzigati tell it, the means are provided by aggressive social movements, the motives are provided by political exigencies and the opportunities are provided by world wars.

Pizzigati charts two episodes of real progress toward a more equal America: the first prompted by World War I and the second prompted by World War II. Both wars called for huge government revenues that could only be met by taxing the rich. Both wars also called for cooperative labor relations and direct government management of the economy.

As it happens, in both World War I and World War II America was led by left-leaning Democratic presidents, Woodrow Wilson and Franklin Roosevelt. While these two leaders may not have been radical progressives, neither was beholden to bankers or big business. Both felt strongly that the rich should help pay the costs of the nation's wars.

And both happened to fight wars at times when America's labor movement was expanding, not shrinking. Though the labor movement may not have been strong enough to impose progressive policies on its own, the labor movement was able to exert pressure. By the time of George Bush's wars of the 2000s, such pressure was nonexistent.

Particularly interesting are Pizzigati's in-depth discussions of the conservative counter-movements that immediately followed both world wars. Both were based on hyped-up "red scares" during which the rich claimed that the continuation of wartime progressive policies would lead to revolution, anarchy and communism.

The reactionary red scare after World War I was completely successful in reversing the progressive program. Unions were busted, taxes were cut, profits boomed and the stock market collapsed - in that order. The result was the Great Depression.

The reactionary red scare after World War II was less effective. Pro-business politicians pushed through the strongly anti-union Taft–Hartley Act in 1947 (over President Truman's veto), but failed to bring down high wartime tax rates. The result was a quarter century of extraordinary economic growth.

It is fairly obvious from Pizzigati's micro-history that presidential leadership made all the difference between these two outcomes. After World War II, we had Harry Truman and Dwight Eisenhower. After World War I, we had Warren Harding and Calvin Coolidge.

Pizzigati edits the web site and newsletter Too Much, which exposes the contemporary excesses of America's ridiculously rich. In a sense, The Rich Don't Always Win fills in the backstory of how the rich came once again to have too much. Although Pizzigati's story peters out in the 1970s, it's clear that we've been here before.

Too many progressive editorials end with melancholy reflections on how bad things have become. Pizzigati prefers to end with the positive reflection that "the rich don't always win." One might just as fairly point out that progressives only won once, in the aftermath of a world war, with a succession of three staunchly independent leaders in the White House.

My heart is with the progressives, but my money (if I had any) would be on the rich.

Copyright, Truthout. May not be reprinted without permission.

Salvatore Babones

Salvatore Babones (@sbabones) is an associate fellow at the Institute for Policy Studies (IPS) in Washington, DC. His latest book is Sixteen for '16: A Progressive Agenda for a Better America, available now from Policy Press.


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