Excerpt from Predicting History by Catherine Claxton Dong

(2009)  All rights reserved.

 

1. The Reagan Revolution Starts Something (1978 to mid 2010)

 

There’s still a part of me that doesn’t really understand how Reagan ever came to be president of the United States.  Maybe this book is driven by some need for me to understand — to see that the politics of the last three decades have their own coherency, even if there are parts of it that are not to my taste. 

 

It seems obvious that a world view that promotes industrial revolutions is a world view that is all about the accumulation of physical goods.  Industrial revolutions make investors rich by providing consumers products.  Everybody wins.  Materially, at least. The underlying theme that we have been living in a time when money is king — and that this is simply the result of the inevitable return of this particular season in the cycle of civilization — provides some kind of comfort.  I think.  Because if I judge what has occurred in these years simply by the standards of the rationality and ideals proposed in the 1960s and 1970s, I’m not sure I can find any rhyme and reason in what occurs in the world around me.  But if I understand this organizing principle — that whatever the government may be saying at any given time, what drives it are the preoccupations of the era in which it exists — then the politicians elected and the decisions made become surprisingly transparent. 

 

Consider how easy it is to “read” recent presidencies.

 

When Reagan was elected, one feature of his presidency stood out to such an extent that it received its own name — Reaganomics.  There was no Carternomics to precede this.  Reagan came into the White House with fresh ideas and those fresh ideas were about money.   Reaganomics advocated trickle-down economics theory.  If government gave big tax cuts to big business and wealthy individuals, the effects would “trickle down” to the consumers.  Another principal of Reaganomics was that businesses should be unhampered by government regulations.  Deregulation increased the number of business players engaging in high risk investing, including banks and pension fund managers.   Reagan was president from 1981 to 1989. 

 

The Prime Minister in England from 1979 to 1990 was Margaret Thatcher and she, too, had an economic philosophy named after her.  Thatcherism.  Its principals were very similar to Reaganomics.   Similar economic policies were ascribed to New Zealand’s finance ministers during the 1980s and 1990s, which were called Rogernomics, after the first, and Ruthanasia, after the second.

 

Let’s get back to the United States.   This preoccupation with money has continued in American politics from that time onward.  After Reagan, George H.W. Bush ran a successful campaign for president with the slogan “Read my lips: No new taxes.” Bill Clinton beat him in the next election with the mantra, “It’s the economy, stupid.”  One of Clinton’s major accomplishments in office was the passing of NAFTA, reducing tariffs between the U.S., Canada and Mexico.  The Clinton Administration negotiated approximately 300 trade agreements with other nations with the aim of lowering tariffs and increasing free trade.  Clinton’s successor, George W. Bush, went on to pass one of the largest tax cuts in history — $1.35 trillion that would not go to the government.

 

I find that I am best able to make sense of the George W. Bush administration if I regard its single priority as the enrichment of people who are already wealthy.  That if I analyze their actions in these terms alone, apparent incompetence turns to accomplishment.  The top 20% of earners received 71% of the benefit of Bush’s tax cuts.  His administration brought us to war with Iraq, to the benefit of a number of American companies, including Halliburton.  Vice President Dick Cheney served as its CEO from 1995 until 2000, and the company has come under fire for receiving no-bid contracts, using offshore tax havens, and overcharging for services in rebuilding infrastructure in Iraq.  Among the overcharges   a $27.5 million bill for cooking and heating fuel valued at only $82,100.  It has been reported that Cheney’s stock options in Halliburton rose from $241,498 in 2004 to over $8 million in 2005, an increase of more than 3,000 percent. 

 

Does connecting these dots just look like the ravings of a liberal conspiracy theorist?  Perhaps I’m too close to this particular body era, with my own set of prejudices, to see things clearly.  Yet even in his father’s administration, as with school choice — which would have handed money out to people who wanted their children to attend private schools —  it seemed to me that given any two policy choices, the Bush presidencies have invariably meant making the choice that would bring its greatest benefit to the wealthy.

 

But the U.S. is not alone in these types of economic preferences; consider Russia.   When Gorbachev became the leader of the Soviet Union in 1985, he began the transformation from communism to a capitalistic free market economy.   Economic reconstruction — perestroika — and acceleration were immediately announced.  Historians have said that glasnost, which gave people greater freedom of speech, was introduced by Gorbachev not for its own sake, but in order to gain public support for his economic policies.  Private ownership of businesses — the most radical economic reform for a Communist government — was introduced in 1988. 

 

Boris Yeltzen in the 1990s introduced “shock therapy,” privatizing the economy by selling off government assets at extremely low prices to the highest corporate Russian bidders.   The Yukos Oil Company was privatized in 1993 for $110 million — in 2004 it was valued at $30 billion. By the mid-1990s, a new class had emerged in Russia, made up of entrepreneurs, former high officials in the government, and criminal bosses, all of whom had found ways to secure enormous amounts of money.  These people came to control financial, industrial, energy and telecommunications empires within Russia, and became known as oligarchs. 

 

When people talk about oligarchy in Russia, they’re not, of course, talking about Russia suddenly taking the vote away from anyone who doesn’t have an income of at least a million dollars.  But there can still be a condition very similar to oligarchy while living within an (apparent) democracy.   Governments can continue to operate by the same rules as they do in other eras, but because of the change in world view, work toward very different goals with the changing of an era.  In this case, the goal of making the rich richer.   Raising a small group of people to wealth and power.  The goals of oligarchy are met without the form.

 

Rule of the few.  That’s what an oligarchy is, after all.  Now think about the 1960s and all of the other mind eras that we’ve talked about.  All of the protests against hierarchy, against special privileges for an upper class, against rule by “The Man” — there was nothing oligarchical about those times at all.  They were the times when the masses ruled — or at least attempted to rule.  When power was in the hands of diverse grassroots movements. 

 

And then it all changes.  We get someone like Ronald Reagan.  We yearn for someone like Ronald Reagan.  Someone who will make changes that help an oligarchy emerge, as the rich pay fewer taxes and deregulation makes becoming rich that much easier.  Russia simply took it to an even greater extreme.  Consider  recent statistics in the United States.  In 1978, CEOs made about 35 times the pay of the average worker in their company.  In 2001, 23 years later, CEOs made over 500 times the average worker’s pay.  The tax rate in 1981 in the highest bracket was 70% for people earning more than $215,400.  By 2004, those earning more than $319,100  were being asked to pay only 34%. Who does all of this benefit the most?  A small, wealthy upper class.  And it is that class that has dominated government. 

 

And then there’s Europe.

 

Radical changes in European politics have occurred in the last few decades and it has all been based on a decision to change economic policy.  The European Union has brought about something in Europe that many thought could not be achieved.  Twenty-five member states have joined together in a single market, with twelve of those states embracing a single currency, managed by a single European Central Bank.   The Union specifies open borders that allow the free movement of capital, people, goods and services.  Countries with histories of distrust toward each other, of diverse cultures and languages, have come together in the peaceful pursuit of....money. 

 

Europeans have also been busy building up their oligarchies.  Several million Britons are thought to have offshore bank accounts, few of whom pay any taxes on that income.  It’s estimated that there are now $11.5 trillion in offshore assets held by wealthy people worldwide. Italy and Japan have lowered capital gains taxes and France, Germany and Russia have lowered taxes on dividends.  Eight eastern European countries have adopted flat-rate taxes that benefit the rich.  Slovakia, for instance, formerly had a tax rate that ranged from 10 to 38%.  Now the rate is 19% for everyone.  Those with little money, as a result, have seen their rates jump from 10 to 19%, while those with a lot of money have seen their rates fall from 38 to 19%. 

 

It’s all about making the rich richer.

 

So we see how the change in world view is reflected in the government.  Economic concerns become front and center and the “concerns” of the economy are to make sure that people with money are able to make more of it.  A rich oligarchy tends to see their needs met.

 

But that doesn’t really get down to the nitty gritty of an industrial revolution, does it? So far we’ve just talked about the ways 20th century governments have eased the way to making money, but we haven’t yet gotten to the core principles of making the money.  It’s no good to have your tax burden decreased if you haven’t got any money to be taxed in the first place.  How do people in these times make money?  What is different about the way people in these times make money, that yields monumental changes like industrial revolutions?

 

Was there something different about making money after the 1980s that hadn’t been true of the decades before?

 

Yes.

 

It was called venture capital.

 

When it began in the 1980s, it was used primarily as startup money for many of the original hi-tech companies.  Companies that wouldn’t have been able to get the money needed through conventional bank loans.  Wealthy investors got together and sank large amounts of money into these companies, in the hopes of getting spectacular returns down the road.  High risk leading to high reward. 

 

Venture capital didn’t actually begin with this body era.  The father of venture capital, Professor Georges Doriot, formed the first company in 1946.  His idea?  To find investors who weren’t interested in making money but in financing noble ideas.

 

Very mind era.

 

The explosion in venture capital came later.  It began to pick up speed in the 1970s, with venture capital dollars reaching $1 billion by 1979, $2 billion the next year, and more than $6 billion in the mid 1980s.  From 1972 to 1992, 962 firms were brought to the public market by venture capitalists.  Firms like Apple, Compaq, Federal Express, Microsoft, Staples and Starbucks.

 

Europeans were a little slower off the mark.  In 1991, Israel had about $50 million in venture capital funds, but in recent years they have consistently topped the $1 billion mark.   Swedish venture capital firms went from about 25 funds in the beginning of the 1990s to more than 140 by 2002.  In just five years, European investment in venture capital rose 1000%.

 

And even these firms took on an oligarchical structure.  What is diverse and small, is replaced by what is wealthy and large — and oligarchical.

           

Remember how, with the Reformation, we saw the mind era pattern of revolution extend outside of the political realm, to the religious realm?  A single individual was controlling the religious lives of all the people, and the people in such times were no longer willing to accept this.  We like to compartmentalize our lives into areas like political, economic, religious, and social, but when a world view takes hold of our imagination, its passions are not limited to just one arena.  They encompass all areas of our lives.  Just as happened when Protestantism fought for independence from Catholicism.

 

Body eras, on the other hand....

 

Consider the mega churches that have developed in recent years.  These can’t be operating in a vacuum.  Surely they replace a profusion of smaller churches, often independently run by a much larger group of pastors.  Even more obvious are the oligarchies that begin forming in the economic sphere.  It is in times like these that the mom-and-pop corner businesses go under, as they are bought up by the national chains.  Where once there were many heads of businesses, each separately in charge of the products they sold, in charge of their own advertising, their own employment practices — a profusion of business rulers — this all changes, until a much smaller number of mega-business rulers are the result. 

 

In the 1970s there were 40 major railroads in the United States.  Now there are only four.  The mass media in the 1970s was composed of about 50 companies and now there are only nine.  The top 5 supermarket chains have doubled their control of the market and 80% of passenger air travel is now controlled by the four largest alliances of airline carriers.  The top ten banks went from controlling 1/5th of our money to 1/3rd. 

 

I could go into the details of the mergers, the hostile takeovers, the non-hostile takeovers, the buy-ins — all of the ways in which this occurred around the world, and most especially in the United States.  But, once again, I don’t need to do that, do I?  Because you already know.  These are the times we’ve been living in.  When a very few companies have swallowed up the smaller ones and gained immense money and power. 

 

These time periods promote rule by the few.  By the rich — the very rich — few.  At least, if the 20th century body era is anything to go by.

 

But let’s get back to how I started this section.  With a stomach punch in 1980 as Ronald Reagan won the presidency.   As a frustrated observer when one president after another won election to office by appealing to people’s greed — no new taxes — instead of their sense of justice.  As even a Democratic president — Bill Clinton — cashed in all of his political chips in order to bring about free trade agreements like NAFTA, instead of attending to my concerns, as I complained to my academic friends via email on my brand new computer. 

 

Hmmmn.

 

The present period in history — beginning in the 1980s — has been given a number of titles — the Third Industrial Revolution, the Information Age, and the Knowledge Economy, among them.  All of these draw on changes in the way we live that come from the new gadgets that have been introduced in the last 30-odd years.  An age that began with the new Sony Walkmans, which in time became Ipods.  With Pong which in time became games like The Sims and Grand Theft Auto.  With electronic typewriters that morphed into computers and the relegation of libraries to just another contributor to the internet.  We’ve also seen digital cameras, flat screen televisions, home faxes, and particularly mobile phones have a huge impact on our lives.  We’ve seen the prices of these products steeply drop since their introduction even as their quality has increased enormously.  But we all know the wonders of this age, surely?  This is where the trickle-down economy really takes place.  When the new goods, through the efforts of a huge influx of producers, become cheap enough to make and transport that they “trickle down” from elite luxury goods to middle class necessities. 

 

And really, that’s the legacy of these times.  Even if you question whether a Reagan or a Bush may have gone too far, or applied the goals of the era in short-sighted ways, we will see over the course of this chapter that governments have had an important part to play in making investment happen, and that their (inevitable) eagerness to advance the era’s needs does have a trickle-down effect  just one that doesn’t involve the trickle-down of hard cash.  Because all of this production brings new opportunities in consumption.  Reaganomics is part of why I can be sitting here today, typing these words I’ve researched on the internet into my personal computer.  It’s how this book could be written.

 

Let’s see if the 19th century time period that I’ve designated a body era offers the same kind of evidence of a world view devoted to materialism.

 

http://www.PredictingHistory.com

 

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