The Vice-President for Governmental Affairs has just finished his report to the corporate board of directors. “Thanks, Ted,” says the Chairman. “You and your Washington staff have done a great job. Getting that little amendment inserted in the budget bill will save us at least $25 million next year. …. Questions or comments? Paul?”
Paul, the hedge fund CEO: “I’m worried about the big picture down there in Washington, Ted. It’s a mess. Deficit out of control.The anti-business attitude. Not to mention incompetence. Can’t even run a website for their own health care program. Pathetic.”
“Amen,” says Hank, who used to run a tobacco company. “What bugs me is Obama’s complaining about inequality. Just whips people up. Saw them last night on the TV news, in front of a McDonald’s somewhere, screaming for more money. Makes you sick. Want money? Get a job!”
“Actually Hank, those people already have a job,” says Cliff from Silicon Valley. “And lucky to have it. Plenty more out there ready to take their place.”
Willard, the oil and gas exec: “Now they want to raise the minimum wage—$10, $11 or more. Really stupid. It’s a job-killer. Isn’t that right Martha?”
Martha, the economics professor: “Absolutely. Simple economics: raise the price of labor the demand for it will fall. To be competitive, business has to pay people according to their productivity.”
Jim from the retail conglomerate: “Law of nature: pay for performance.”
Several furtive glances around the room.
“I mean, within reason,” Jim adds.
“I’m curious,” says Cliff to Martha. “What’s your response to people like Krugman who say that when we had high minimum wages, higher corporate taxes and stronger unions America was the most prosperous?”
“Old redistributionist thinking.” says Martha with disdain. “The New Economy depends on start-ups, not hand-outs.”
Paul, shaking his head: “These liberals don’t get it. The investors—our class of people—are the geese that lay the golden eggs. Kill us with taxes and minimum wages and these people out there are back in the Stone Age.”
Ahmed, from the Saudi trust company: “From the point of view of ‘our class of people,’ where do you think Washington is headed, Ted?”
Hank interrupting: “To Hell! Looks like Hillary in 2016 to me. Worse than Obama. The Clintons get back in and it’s the left-wing revolution for sure. Get ready to pull your money out.”
Chair: “We’re doing our best, Hank. Remember, sixty-five percent of out investment assets are overseas.” Ahmed: “Ted?” “I share your concerns, of course, “says Ted. “But, we ought to put this in a little perspective.
” Jim: “Like?”
“For starters, think back to the fall of 2008. Biggest market crash since 1929. Twelve trillion in wealth vanished and a black liberal becomes president with Democratic majorities in the House and Senate. Now that looked like the revolution was coming: bringing back Glass-Steagall, raising our taxes, and setting up single payer health insurance—certainly there would be criminal trials.
“But what happened? The Democrats gave us the cash we needed, bailed out the auto guys, and poured enough credit into the economy to stop the securities market free-fall.
‘Since then they have let us borrow the taxpayers money at almost zero interest with no strings attached. As we heard this morning, we have so much cash we’re buying back our stock—and the share price has soared. Is there anyone here whose personal wealth has not grown substantially? And, by the way, no one—at least no one important—went to jail.”
Willard: “You’re not suggesting that they should have…? Ted: “of course not. But that’s what the country thought—especially when ordinary people were losing their homes, their pensions, and their jobs. I mean, the worst thing that happened to us was Dodd-Frank.” “More goddamn government paperwork, “ says Paul. “Sure,” Ted says. “But we know it was just a slap on the wrist.” “I suppose it could have been worse….”
“Why wasn’t it?” asks Ahmed
“Because we’ve boxed in the liberals. Didn’t happen by accident, and it took a while. Way back in the 1970s, the Chamber of Commerce—with our firm’s early support I’m proud to say—launched a campaign of ideas to discredit unions, liberals and big government. We subsidized think-tanks, sponsored conservative journalists, and financed the careers of a generation of politicians who see the world like we do.
“We succeeded beyond our wildest dreams. Elected Reagan. Cut taxes. De-regulated and privatized much of the economy. We replaced defined pensions with 401(k)s and convinced millions that they’d never get their Social Security. We created the anti-tax grass-roots campaigns that evolved into the Tea Party and created the audience for Fox News. On the issues that are most important to us, we drove the liberals to the margins of the Democrat Party.” “Hmm…I don’t know about that,” says Hank.
“Think about it, “ says Ted. “The people running economic policy over the last two Democratic presidents were our people— Rubin, Summers, Greenspan, Geithner, Bill Daley, Rahm Emanuel—go down the list. This is a Wall Street crowd. Why? Because the Democrats now depend on us for the money to run their campaigns.
“We always contributed to friendly Democrats, of course. But in the old days our money was balanced out by the unions. Today, union membership is down to eleven percent of workers—the lowest level since 1916. As their membership dropped, their influence on the Democrats faded. For 20 years unions have been asking Democrats for legislation to make it easier for them to organize. Clinton stiffed them. Obama stiffed them.
“In effect, we narrowed the definition of liberalism to social issues—discrimination, abortion, same-sex marriage. Sure, we get some annoying law suits over this stuff, but its no real threat to our profits.”
Martha: “But labor’s decline was surely a result of larger economic trends—globalization, de-regulation, privatization.”
Ted: “Right. But these were not really inevitable forces of nature. They were products of policy. And who did we get to pass the trade legislation—NAFTA, the World Trade Organization, the China trade deal—that allowed our companies to off-shore production? Clinton. Who forced through de-regulation of transportation, utilities and finance? Carter and Clinton. Who championed privatization of government services and education? Clinton and Obama.
“Republicans politicians have always been in our pocket. Now we have most of the Democrats.” Paul: “Wait a minute: what about Obamacare?”
Ted: “Makes my point, Paul. Again, think back a few years. The country was mad as hell at our health insurance and pharmaceutical companies. Movies and TV sitcoms showed insurers cancelling policies of cancer patients, telling doctors what treatments they could and could not prescribe. There were media exposés of price gouging by drug companies and documentaries showing people without insurance dying in overcrowded emergency rooms.
“In the anti-business climate that followed the crash, Obama could have hammered us with a single payer proposal—extend Medicare to everyone. Simple, easy to understand, and popular. But we scared him off. So he took the proposal from the Heritage Foundation—our think tank—which forces people to buy private insurance and has no real controls over what the companies can charge. It also made the program so complicated that a screw-up was likely.
“I was in on those original meetings—Heritage’s purpose was to make sure single-payer would never happen. And it won’t, at least in our lifetimes. Gallup told us in 2006, that 69 percent of people thought that the government should guarantee access to health care. Today that number is 42 percent.
Jim: “Are you saying that it doesn’t make a difference whether the government is run by Democrats or Republicans?”
“Not no difference Jim. But for us, not a huge one. Sure, Democrats still moan about the plight of what they call the “99 percent.” But we’ve got them so paralyzed with fear of being labeled “big government tax-and-spenders” that they can’t deliver much to their own constituencies.
“They’re almost totally on the defensive—saving social security, food stamps, collective bargaining. Two of Obama’s three priorities for the rest of his term—new trade agreements and liberalized immigration are ours as well. As for the third—raising the minimum wage—I wouldn’t say this in public, but we know that the companies we invest in can afford it.
“After the Supreme Court’s Citizen United decision the Democrats depend even more on our money. Why aren’t the liberals out there launching a serious campaign to undo that decision with a constitutional amendment? We’ve destroyed their confidence, that’s why. Liberals still bark, but they don’t bite.
“So don’t worry about Hillary, Hank. No leftwing revolution from her. If she’s elected, she’ll draw the people running Treasury and the key agencies from the same talent pool that Bill and Obama drew from—our friends.
“Matter of fact, the most radical movement in American politics is not coming from the left; Occupy Wall Street was a bust. It’s coming from the right—the Tea Party.
“But they seem out of control,” says Akio from the Japanese banking group. “What will happen to the value of our Treasury bonds if they force a default?”
“They are a little loony,” admits Ted. “But if they threaten our interests, we—even the Koch brothers—will cut off their money. Meanwhile, they play the role of useful idiots—they scare the hell out of the Democrats.
“So, Willard’s right, we’re in a class war. Thing is: we’re winning.” Ahmed: “But, this growing inequality—can it be sustained? At some point, will not your middle class revolt?”
Ted: “You’d think. But it’s been five years of hard times for at least 80 percent of Americans. No reason to think it can’t go on for another five—or ten, or more.
“Of course, it’s possible that at some point in the future the built-up pain out there might … maybe…burst.” Ahmed: “After us, the deluge?”
Chair: “After us? Don’t worry, Ahmed. Looks like we’ll be in charge of this country for a long time. And on that happy note, I’ll entertain a motion to adjourn for lunch.”
Jeff Faux is a distinguished fellow at the Economic Policy Institute, which he founded. His latest book, The Servant Economy (Wiley), was published in June 2012.