Tuesday, February 02, 2010

Class Warfare... in Context

When you hear somebody like Senator John Thune whinge about "class warfare", you shouldn't assume that he's an overblown idiot. I mean, that may be the case, but you shouldn't doubt that his concerns are real.
“I think they think if they can create enough animosity toward Wall Street and corporate America, they get into this traditional sort of Democrat rhetoric and tap into the populist anger out there,” Sen. John Thune, South Dakota Republican, told The Daily Caller. “For Democrats to be successful they’ve got to create a sense of class warfare and an us versus them mindset.”
Let's turn to the banking industry itself to remind ourselves of the present class structure, and why Republicans (and no small number of Democrats) fear "class warfare". Writing of the "plutonomy thesis" that acknowledges the disproportionate concentration of wealth among a tiny portion of the population (the top 1% of households receiving 20% of overall U.S. income and possessing 33% of the nation's wealth, representing 40% of financial net worth - more than the bottom 95% of households combined), a Citigroup report concludes
Our whole plutonomy thesis is based on the idea that the rich will keep getting richer. This thesis is not without its risks. For example, a policy error leading to asset deflation, would likely damage plutonomy. Furthermore, the rising wealth gap between the rich and poor will probably at some point lead to a political backlash. Whilst the rich are getting a greater share of the wealth, and the poor a lesser share, political enfrachisement remains as was -- one person, one vote (in the plutonomies). At some point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich. This could be felt through higher taxation on the rich (or indirectly though higher corporate taxes/regulation) or through trying to protect indigenous (home-grow)] laborers, in a push-back on globalization -- either anti-mmigration, or protectionism. We don’t see this happening yet, though there are signs of rising political tensions. However we are keeping a close eye on developments.
To somebody like Thune, it's not "class warfare" for the wealth gap to continue to grow in favor of the rich - and for the political system to be constructed to favor that outcome. It's only class warfare if the rich are asked to help support the nation that... enriched them in the first place. A true horror.

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