Carole Owens: What will Jay USA do?
LEE — In April 2019, at a House Financial Services Committee hearing, freshman Representative Katie Porter (D- Ia.) posed a question to JP Morgan Chase CEO Jamie Dimon. A JP Morgan Chase employee grossing $35,000 annually nets $2,425 monthly. Monthly expenses are: rent $1,600, utilities $100, car gas and expenses $400, low-cost food budget $400, cell phone $40, and child care $450.
"She is short $565 a month," Porter told Dimon. Porter's question? "What would you suggest she do?"
Dimon dodged the question, "I don't know that all your numbers are accurate."
Assume they are.
Dimon, a man earning a reputed $30,965,000 annually, $2.5 million monthly, was stymied, "I don't know. I would have to think about it."
Porter selected a starting salary at JP Morgan Chase. That is less than I posited for the annual income of Jay USA in an earlier column in this series but the problem is the same. Incomes do not cover costs for too many Americans. Too many Americans are working poor.
What is the interplay between a country's economy and its form of government? Is it directly related or more subtle? Does one create the other or is it more nuanced? Simply put: can you have equal distribution of power without equal distribution of wealth? Will the redistribution of wealth into a few hands always result in rule by a few? Is one an absolute predictor of the other? If not, what are the other factors? If so, what does the transition from John Madison to Jay USA, the flattening of the middle class, over the last half-century mean; does it mean a transition to another form of government?
For Adam Smith and John M. Keynes, the government's control over, or interference with, the economy was of primary concern; however, for some economists, the concern is reversed. "The economic system determines the laws, the type of government, and the role of society in day to day life."
Who is right? There are forms of government that appear to be reflections of the economy, for example, an oligarchy. If there is an unequal distribution of wealth into a few hands; will those few hands inevitably hold the reins of power? If so, does that mean a democracy requires an equal distribution of wealth to sustain an equal distribution of power?
There are those who firmly believe to survive and thrive, a democracy requires a strong middle class. Included among them is former secretary of state Madeline Albright. For them, John Madison was the bulwark of our democracy. What happens without him? Is there an underlying economy that fosters autocracy? Albright thinks so.
In America today, there is extreme income inequality. Jamie Diamond earns $30,965,000 more per year than his entry level employee. That is indisputable income inequality. Does that explain a political tilt to the right, white supremacy, or anti-immigration? Does it explain the general dissatisfaction with our government, and a drift toward oligarchy or even autocracy?
If the economy tilts severely enough, is there an inevitable effect on our form of government? What happened the last time we had such severe income inequality?
The Gilded Age was 52 years of American history from the close to the Civil War to our entrance into WWI. It was a time when vast new wealth was disproportionately distributed into a few hands. The source of the "new wealth" was a shift from an agrarian to a manufacturing economy. So what happened to our government?
The language of a representative democracy remained in place. What changed was the actual power structure. Power shifted from the agrarian South to the industrial North, from states' rights to the centralized federal government, and to the monied class.
The story Americans told each other in the Gilded Age — Social Darwinism — explained and justified the income disparity. If a culture has one story it tells, that a majority accepts, the power of that story cannot be overestimated. That story shapes and directs the people. What happened next?
Concomitantly immigration increased, and the middle class expanded. For that expanding class, mass transportation, central banking, and Henry Ford were easing the way. Finally, there was Teddy Roosevelt. He believed the strangle hold a very few had on the economy must be challenged or those few would exert a crushing grip on levers of power. The Trust Buster was born, and the monopoly was threatened.
Did the super-rich of the Gilded Age change the laws, the form of government, and the societal norms? To a large extent, yes. However, leaders like Teddy Roosevelt and Franklin Delano Roosevelt, who instituted the social safety net to bolster and support the middle class, slowed the move toward oligarchy. The super-rich called FDR, "a traitor to his class."
Today, 1 percent controls 90 percent of the wealth. Will there be an unstoppable shift away from democracy? Money talks, but does it dictate, or merely effect to some extent, the laws and the form of government? What countervailing factors are present today?
Albright asked, who guards our liberty, and answered, all of us. John Madison trusted the government and demanded it work as hard and honestly as he did. What does Jay USA demand and what is he willing to do? Is that what will dictate our tomorrow?
A Berkshire writer and historian, Carole Owens is a regular Eagle contributor. This is the third and last past of a series on the economy.
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