The End of the Reagan Era
Above Photo: From Piketty.blog.lemonde.fr
Note: We saw the shift in public opinion as we were planning the Occupation of Freedom Plaza in Washington, DC in 2011. We looked at where the public stood on issues and where the government was going — two different directions despite super majorities wanting a more progressive approach. See We Stand With the Majority published in August 2011. The seven point plan we discussed is essentially the Sanders platform, plus we had a section on ending wars and militarism. In the article below economist Thomas Picketty sees the Sanders campaign as a symbol of the end of Reaganism whether or not Sanders wins. I suspect this is possible as public opinion has continued to build in our directions since 2011 but we will only make this transformation if the movement keeps pushing no matter how the election turns out. Our job in this post-occupy phase of the movement is to build national consensus. This does not happen quickly and we are not there yet, but we are moving in the right direction.
How should we interpret the incredible success of the ‘socialist’ Bernie Sanders in the American Primaries? The Vermont senator now has the lead over Hillary Clinton amongst the Democrat supporters under 50 years and only the senior citizens’ vote has enabled Hillary to maintain her advantage. Faced with the Clinton electoral machine and the conservatism of the major media, Bernie will perhaps not win the primary. But it has been demonstrated that another Sanders, possibly younger and less white, could one day soon win the American presidential elections and change the face of the country. In many respects, we are witnessing the end of the politico-ideological cycle opened by the victory of Ronald Reagan at the November 1980 elections.
Let’s glance back for an instant. From the 1930s to the 1970s, the United States pursued an ambitious policy of reduction in social inequalities. Partly to avoid any resemblance with Old Europe, seen then as extremely unequal and contrary to the American democratic spirit, in the inter-war years the country invented a highly progressive income and estate tax and set up levels of fiscal progressiveness never used on our side of the Atlantic. Between 1930 and 1980, for half a century, the rate of taxation applicable to the highest American incomes (over one million dollars a year) was on average 82%, with peaks at 91% from the 1940s to the 1960s, from Roosevelt to Kennedy, and it was still 70% when Reagan was elected in 1980. This policy in no way affected the strong growth of the post-war American economy, doubtless because there is not much point in paying super-managers 10 million dollars when one million will do.
The estate tax, which was just as progressive, with rates in the range of 70-80% applicable to the biggest fortunes for decades (whereas this rate has rarely risen above 30-40% in Germany or in France), considerably reduced the concentration of American capital, without the wars and the destructions which did the job in Europe.
In the 1930s, the United States also implemented a federal minimum wage, well before the European countries and at a level (expressed in 2016 dollars) which was above 10 dollars per hour at the end of the 1960s, by far the highest at the time. All this took place with practically no unemployment because the level of productivity and the educational system could allow it. This was also the period when the United States finally put an end to the legal racial discrimination still operational in the South, which was far from democratic, and launched new social policies.
But all this aroused strong resistance, in particular amongst the financial elites and in the reactionary fringes of the white electorate. Humiliated in Vietnam, the America of the 1970s was further concerned by the fact that those who had been defeated in the war (with Germany and Japan in the lead) were catching up at top speed. America was also suffering from the oil crisis, inflation and the under-indexation of the tax schedules. Reagan surfed on all these frustrations and was elected in 1980 on a programme designed to reinstate a mythical capitalism said to have existed in the past.
The culmination was the 1986 fiscal reform which ended half a century of steady fiscal progressivity and lowered the rates applicable to the highest incomes to 28%. This choice was never genuinely challenged by the Democrats of the Clinton years (1992-2000) and the Obama era (2008-2016) who were to stabilise the rate at around 40% (roughly half the average level for the period 1930-1980), the key element being an explosion of inequalities and huge salaries, in a context of weak economic growth (but slightly higher than in Europe, bogged down by other problems) and stagnation of the incomes of the majority.
Reagan also decided to freeze the level of the federal minimum wage which, as from the 1980s, has been slowly but surely eroded by inflation (little more than 7 dollars per hour in 2016, as compared with almost 11 dollars in 1969). There again, this new politico-ideological regime has shown little sign of attenuation by the Democratic alternation of Clinton and Obama.
Today, Sanders’ success demonstrates that a substantial proportion of America is tired of the rise in inequality and these pseudo-alternatives and intends to return to a progressive agenda and the American tradition of egalitarianism. Hillary, who fought on the left of Obama in 2008, particularly on the issue of health insurance, today appears as the keeper of the status quo, the heir to the Reagan-Clinton-Obama political regime.
Audience members listen as Democratic presidential candidate, Sen. Bernie Sanders, I-Vt. speaks during a campaign stop at Daniel Webster Community College, Monday, Feb. 8, 2016, in Nashua, N.H. (AP Photo/John Minchillo)
Bernie clearly proposes to reinstate fiscal progressivity and a high minimum wage (15 dollars per hour). He also adds universal health care and free higher education in a country where inequality in access to education has reached incredible heights and has thus revealed the wide gulf between the reality and the winners of the system with their somewhat enervating speeches advocating a meritocratic approach.
At the same time, the Republican Party is sinking into a discourse which is hyper-nationalist, anti-immigrant and anti-Islam (a religion that is almost non-existent in the United States), and also into an endless glorification of rich whites. The judges appointed under Reagan and Bush have lifted all legal restrictions over the influence of private money in political life, which considerably complicates the task of candidates like Sanders. But new forms of political mobilisation and participatory financing can win the day and steer America into a new political cycle. We are very far from the doom and gloom of the prophecies predicting the end of history.
Translation of an op-ed published in Le Monde, February 14-15, 2016