The menace of economic and political dynastization is that it flies under the radar of the Americans who grew up believing that the democratic values of World War II and Franklin D. Roosevelt, carried by another leadership generation into the 1960s, would last forever. Instead, the 1980s and '90s ambulanced many of those values to an ideological emergency ward. But much of the liberal and progressive community--caught up in older micro-issues--has found the changing über-philosophy difficult to grasp.
A similar thing happened in the mid-to-late-nineteenth century, when aging Jeffersonians and Jacksonians remained lulled by the egalitarian implant of those earlier days, as well as by the post-1783 elimination of the British system of entail and primogeniture, which kept estates intact at death. Finally, in the 1880s, it became clear that the advent of large corporations, enjoying a long legal existence and constitutional rights equivalent to persons, had provided the framework for the rise of a new aristocracy. Hundred-year-old reforms and shibboleths had become irrelevant.
By this point, the average American had stopped believing the old Fourth of July speeches about how the forefathers had anticipated every danger. From Maine to California, citizens saw railroads taking control of state politics. Muckraking journalists began to employ a new descriptive term: plutocracy. As the trusts and monopolies flourished while America's largest fortunes grew tenfold and twentyfold between 1861 and 1901 thanks to stock values, it became clear that some critical safeguards were missing. Luckily, the need to bridle railroads, trusts and monopolies, and to tax the incomes and inheritances of the rich, voiced with increasing clarity by Theodore Roosevelt, Woodrow Wilson and the Progressives, brought significant results by 1914. FDR added further reforms during the New Deal years.
As of 2002, alas, old New Deal memories and 60 cents will get you a candy bar. The transformation of the US economy and its supporting politics since the 1960s has been staggering; and especially so since the 1980s, with the growth of financialization, wealth concentration, economic elitism and dynastization. Millionaires' income tax rates dropped so fast in the 1980s, for example, while those of people in the middle rose with FICA increases, that in 1985 the two almost met.
Back in 1937, an economics writer named Ferdinand Lundberg wrote about how "America's Sixty Families" (and another hundred lesser clans) owned a huge chunk of US business through their corporate stock holdings. Six decades later, the current "overclass" probably begins with the largely overlapping quarter-million "deca-millionaires" ($10 million and up) and the quarter-million Americans with incomes in excess of $1 million a year. But for sticklers, the 2000 equivalent of the rich families of 1937 could be the roughly 5,000 clans having assets of $100 million or more.
Today, following the havoc of the biggest two-year major market debacle since 1929, many of the Internet fortunes are gone, while the established rich are very much with us and, by and large, sleeker than ever. This was also true in 1937, parenthetically, when researcher Lundberg's discourse paid hardly any attention to the nouveau-riche aviation, radio, motion picture and electric gadget fortunes of the Roaring Twenties. Most had shriveled or vanished between 1929 and 1932. The old money was back on top.
So it is again, although a third of the tech billionaires of 1999 have kept billionaire status, a much better ratio than in 1929-32. Nevertheless, what is striking in the current lists is the entrenchment of established families through the good offices of the Dow Jones and the S&P 500. The top 1 percent of Americans own about 40 percent of the individually owned exchange-traded stock in the United States, and own an even higher ratio of other financial and corporate instruments.
The median US family, depending on the calculus, has only $6,000 or $9,000 of stock, a benefit overshadowed during the 1990s because its debt level rose by a good deal more. The financialization of America since the 1980s--by which I mean the shift of onetime savings deposits into mutual funds, the focus on financial instruments, the giantization of the financial industry and the galloping preoccupation of corporate CEOs with stock options instead of production lines--has been a major force for economic polarization. This is because of its disproportionate favoritism to the top income and wealth brackets. The never-ending stream of 1980s and '90s bailouts of banks, S&Ls, hedge funds, foreign currencies and (arguably) stock markets by the Federal Reserve has been another prop.
The upper-tier hogging of the economic benefits of the 1990s can be approached from a number of directions, but hardly anyone controverts that the top 1 percent made out like bandits. The New York Times, for example, reported that 90 percent of the income gain going to the top fifth of Americans went to the top 1 percent, who are only a twentieth of that top fifth. Some scholars bluntly contend that attention should focus on the top one-tenth of 1 percent, because these are the raw capitalists and money-handlers, not the high-salaried doctors, lawyers and Cadillac dealers.