Thoughts on the Concentration of Wealth

In the first hundred years of the first millennium A.D., Plutarch said, “An imbalance between rich and poor is the oldest and most fatal ailment of all republics.”

In the late1800s, political economist Henry George said, “What has destroyed every previous civilization has been the tendency to the unequal distribution of wealth and power.”

In the last century, Justice Louis Brandeis said, “We can have democracy in this country or we can have great concentrated wealth in the hands of a few, but we cannot have both.”

In 2005, journalist Walter Cronkite said, “The ruling class is the rich…And those people are so able to manipulate our democracy that they really control the democracy.”

More recently, journalist Lou Dobbs was quoted as saying, “It is the members of this business elite…that pose the greatest danger to our American way of life. They are the ones who bought and paid for members of both political parties.”

Throughout humanity’s centuries these men and many hundreds like them have sounded the same alarm, whether delivered in philosophical or inflammatory rhetoric: danger lurks!

This danger has been with us since the development of hierarchy. To Find The Way Of Love describes hierarchy as civilization’s disease, and love—expressed as freedom and equality in personal relationships is its cure. It also describes the genesis and development of both self-interest and altruism.

As far as we know, in the hunter-gatherer societies of earliest man, self-interest and the common good were one. That, however, changed with the advent of agriculture and the production of surplus. Surplus was vulnerable to hoarding, which led to hierarchical control, and that hierarchy has existed ever since. Civilization is indeed ailing.

Slavery, feudalism, and the “divine right of kings” were all examples of hierarchy at its worst, with self-interest as their matter-of-fact ethos. Those who slaved for the enrichment of others were nameless and faceless. The human machine that built pyramids, fought wars, and worked the land without rights served the economic interests of the few.

The men and women throughout our history who have sounded the alarm about the dangers resulting from the concentration of wealth, knew what evils lurked in humanity’s past.

The concentration of wealth is synonymous with a widening gap between the haves and have-nots. This is a global problem with many small steps, ultimately leading to large consequences. Here, we will focus on a few selected steps taken during the last 40 years in the United States.

The present concentration of wealth in the U.S. began in the 1960s, when the Nixon administration supported the formation of conglomerates such as the Ling Tempco Vought Corporation. Precursors of today’s hedge funds, conglomerates produced huge profits for their organizers without demonstrably contributing additional value to the national economy. This was the beginning of wealth consolidation through mergers and acquisitions with no value added.

The process accelerated in the 1980s during the Reagan administration, when the percentage of wealth owned by the top 5% of the U.S. population increased substantially. President Reagan also increased the power of the wealthy elite when he fashioned a bailout plan for the Continental of Illinois Bank by introducing the concept of “too big to fail,” the financial community interpreted this as a government guarantee against failure.

This was followed in 1982 by the deregulation, overseen by Vice President Bush, of the savings and loan industry. That deregulation has been described as “the largest theft in the history of the world and US taxpayers are those who were robbed” – of more than 1.4 trillion dollars – and they are still paying.

Then in 1999, President Clinton signed into law, the repeal of the Glass-Steagall Act. This allowed banks to engage in investment activities, which were previously prohibited. The initial bill was introduced by Senator Phil Gramm (R-Texas) and Representative Jim Leach (R-Iowa). Although that bill passed along party lines (Senate 54-44) and  House 362-57), the final bill passed in the Senate 90-8 and the House 362-57, and President Clinton signed it into law.

Between 1999 and 2008, there was wild speculation on the part of U.S. banks in investment activity which led to the worldwide financial crisis that began in 2008. The role that the repeal of  Glass-Steagall played in the ensuing financial crisis has been debated. However, in Europe, there has been an increasing call for new legislation based on the original Glass-Steagall Act. And none of these crises would have occurred had it not been for the enormous concentration of wealth, which seeks transactions that produce profit with no value added.

So now we are back to Plutarch and all the others who have sounded the alarm,  and back to the words that became a prediction throughout the ages: “An imbalance between rich and poor is the oldest and most fatal ailment of all republics.”

Oliver & Barbara

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