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.
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