Tuesday, January 28, 2014

Obama is more right than he knows, Not only is inequality the defining issue of our time From a constitutional perspective, it is the defining issue of all time

Tonight  is President Obama’s fifth State of the Union Address.  For a speech that has yet to be given people sure seem to have a lot to say about it. Some, like Politico are looking forward to it, hoping the president will optimistically lay out a series ofproposals similar, or indeed identical, to those he proposed in his previous 2011 speech where he pushed for the American Jobs Act. The AJA went down in flames amid the budget battles that year but Progressives hope that Obama will threaten Congress with unilateral executive action.  To the WSJ such threats will constitute a further capture of power by the executive at the expense of the legislative branch and to the detriment of Constitutional government generally. Peggy Noonan thinks that the voters have been let down by Obama so often that they’ll mostly sleep through the speech regardless. Wonkette points out that the left sleeps through pretty much everything Peggy Noonan writes.

One thing pretty much everyone agrees on is that the President will continue to focus on income inequality and economic mobility. The president himself declared that income inequality was “the defining problem of our time.” Naturally Paul Krugman instantly lauded the speech. But the praise and enthusiasm seemed to stop there. Ezra Klein, ordinarily a strident Obama cheerleader writes in his erstwhile publication “Wonkblog” that inequality doesn’t have much of an effecton growth or demand and Amitai Etzioni, who famously coined the term “McJob” writes in the Atlantic that inequality is a loser politically for the president because the Democratic Party is split over how to address it and it would be better to stay united as a party and let the GOP split itself. It is interesting to me that, Krugman aside, the main criticism of the left is that the politics aren’t great and the policies aren’t likely to work. A very rare concession on the part of Progressives about the limits of government.

On the Right people have criticized the president from the usual angles: the issue isn’t inequality but the overall standard of living which is much higher now than atany time in the past, or that the chief issue is growth and mobility in income rather than it’s distribution. Others, such as Samuel Brittan has written in the FT that since there is little the policies politicians propose to address inequality usually make it worse mean that he word itself should be banished from the discourse. And of course there are also the crackpots like Tom Perkins who worry that the implied, and sometimes overt, demonization of the 1% threatens to lead to another Kristallnacht.

On this issue I am going to have to do something I don’t usually do and that is agree with Barack Obama, and to some extent Paul Krugman. I do not agree with them in it’s causes or in the policies that will reverse it. My differences with them remain there. Where I agree with them is that it is an extremely important issue in it’s own right. That it cannot be mitigated by overall well being, in economic mobility, or that overall economic growth can offset it’s pernicious effects. In fact, I would take it a step further than the president. Inequality isn’t merely the defining issue of our time, it is, in some ways, the defining issue of all time.

Inequality has been a major problem for every form of political organization pretty much since the writing of history began. In Thucydides “The Peloponnesian War,” the first chapter is about how the Greek world divided itself into mutually hostile alliances led by Athens and Sparta. Athens established an Empire largely of unstable democracies that were militarily dependent on it and paid taxes to support their defense. The Spartan policy on the other hand “was not to exact tribute from her allies, but merely to secure their subservience to her interests by establishing oligarchies among them” that is to say, the Spartans allied themselves with the 1% in each state which sought the protection of the Spartan Army from the 99%.  

Guess how the war between Athens and Sparta actually got started: in the Greek colony of Epidamnus (modern day Durres Albania,) a conflict between the 1% and the 99% spurred an “Occupy Epidamnus” movement that succeeded in exiling of the 1% from the city. The 1% sought the aid of Corcyra, the mother country, to demand their return to power and the return of their possessions.  The 99% sought the aid of Corinth in maintaining it’s “expropriation of the expropriators.” Then, in a cascade of triggered alliances, Corcyra sought the aid of Athens and Corinth the aid of Sparta and the war between the great powers was on.

Throughout the war each side sought to exploit conflicts between the haves and have nots in its opponents. The most evocative descriptions of violence in the entire book are those of the atrocities of the Corcyran Civil War between the Oligarchs and the Democrats. Athens herself was the subject of an oligarchic coup near the end of the war called “The Rule of the 400” which in turn provoked a naval mutiny and a popular counter-revolution. At the end of the war the Spartans imposed an oligarchy of “The Thirty Tyrants” on Athens though this itself was short lived. While Socrates did not directly support the Rule of the Thirty he had been a harsh critic of the excesses of Athenian Democracy and, as you can read in Plato’s Republic he has quite a lot of nice things to say about the Spartan oligarchy. When the resurgent Democrats took power in Athens, they tried and convicted him on trumped up charges and ultimately executed him. So while the folks at Salon may think Bill O’Reilly would consider him a pinhead, Socrates was actually executed by the Progressives of his era.

When did all this happen? 2500 years ago. So as you can see, income inequality has been a major factor in Western history for as long as Westerners have been recording and trying to understand our history. The story of the Peloponnesian War shows how bitter and destructive inequality can be but the moral of the tale it tells says more about the potential for factional strife over wealth to weaken a state vis a vis it’s external opponents. Classical history has far more to say on the subject however. Probably the greatest drama of the classical world was the struggle for reform within and the ultimate collapse of the Roman Republic.

The political history of Rome from the fall of Tarquin the Proud in 509BC until the passage of the Lex Hortensia in 284BC was a tale of a class struggle between the wealthy “Patricians” and the commoners or “Plebs.” The Plebian class, made up of tradesmen and small farmers, like the sailors in the Athenian Navy had a lot of political power because they formed the backbone of the Roman Army and, surrounded as it was by strong and hostile neighbors this conferred quite a lot of power indeed. Unlike the 99% in Epidamus however, when the Plebs were unhappy with the Patricians they would exile themselves or “secede” from the city. Sometimes they would do so at a moment of national emergency and force the hands of the Patricians. As a result, over the two hundred or so years from the overthrow of monarchy to the passage Hortensian Law the Plebs won successive concessions from the Patricians. The representatives of the Plebs, the Tribunes and the Censors, became very powerful offices within the Roman government and with the passage of the Hortensian Law, the Plebian Assembly was put on an equal legal footing with the Senate and, effectively became the highest legislative body in Rome.

From a legal perspective the Hortensian Law would seem to represent the final triumph of the commoners against the aristocrats but changes in the Roman economy soon put inequality into overdrive. Twenty years after the passage of the law Rome and Carthage began an eighty year struggle for control of the Western Mediterranean which saw the destruction of Carthage and the triumph of Rome. As a result of these and other victories over the Greeks, the Gauls and others had the effect of bringing absolutely stupendous wealth to Rome and they brought with them massive changes in the economic and social organization of Rome. The smallholders who made up the backbone of the Army spent many years campaigning and were forced to sell their farms to large landowners. Roman governors of conquered provinces were generally permitted to personally loot them resulting in the creation of absolutely incredible fortunes which were then brought back to Rome. The simultaneous demobilization of the Army and the large increase in the number of slaves taken as war booty crushed the wages for the returning veterans and reduced many of the citizen solders to poverty.

As a result, over time the population of Rome became very unequal, divided between a class of truly extreme wealth and a class of people who were extremely poor.  Since the Hortensian Law however, the poor held real political power but virtually no economic power and so the rich went about buying their votes. The phrase “bread and circuses” refers to the sustenance and entertainment that were financed out of the personal fortunes of politicians seeking to curry favor with the masses who held the keys to elections.  It was common for political figures to run up huge debts in order to secure election to powerful positions and then use those positions to generate enough wealth for themselves to repay their debts. Corruption spread throughout the government and society.

Then as now, the political class within Rome saw this inequality for the political danger it was. The political history of Rome for the hundred years after the fall of Carthage is the struggle for the political class to alternately address or exploit the problems for the Republican form of government that the incredible inequality created. The most noted reformers were a pair of brothers, Tiberius and Gaius Gracchus, who my high school Latin teacher Sister Helen Warren, a very liberal Vatican II era nun, often compared with the Kennedy brothers.

The Gracchi attempted to work within the Roman constitutional system at a series of reforms aimed at limiting the wealth of the Senatorial Class by limiting the amount of land they could own and establishing courts for the prosecution of particularly venal government officials. They tried to make land that the state had conquered in Italy available to the poor so they could qualify for the military. They sought to grant land to the landless in colonies established in lands the Romans had conquered abroad. The Senatorial class, naturally, resisted these reforms and while they were able to use legal means to dilute some of the laws they were not able to stop them so they resorted to extra constitutional means and, in yet another parallel with the Kennedy Brothers, they were both murdered. 

With the murder of the Gracchi Brothers Rome moved beyond the “Plebian/Patrician” era to the “Populares/Optimes” era where more than birth or status the primary difference between the parties was explicitly wealth. This also began an era when "reforms" were frequently sought outside the constitutional framework. The next champion of the "Populares" was Marius who, in the course of a national emergency, removed the property requirement for entrance into the Roman army. What was seen at the time as a highly egalitarian reform had the effect of militarizing the poor. Armies increasingly were loyal to their wealthy commanders who could promise them loot and land, and bread and circuses rather than the Republic itself. This began the era of coups and counter coups. The forces of the Republic fought back against this, most famously with the foiling of the Catalinarian Conspiracy by Cicero but the Republican forces were fighting a losing battle. After being dealt a mortal blow when Julius Caesar, at the head of his army, was made dictator for life it was killed entirely when his nephew Octavian preserved the form of the Republic but assumed all its powers in his own hands.

So, as you can see, the issues surrounding income inequality have a very very long history. But is this all a bunch of nonsense that can be written off as easily as Tom Perkins’ false analogy? I don’t think so. You know who else didn’t think so? The framers of the Constitution.

Indeed, in The Federalist Papers, the arguments the framers made for the ratification of the Constitution they explicitly identify it as by far the most powerful motivator of the kind of factionalism that poses a threat to the Constitutional order:

“So strong is this propensity of mankind to fall into mutual animosities, that where no substantial occasion presents itself, the most frivolous and fanciful distinctions have been sufficient to kindle their unfriendly passions and excite their most violent conflicts. But the most common and durable source of factions has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society.”

The Constitution itself, with its principle of majority rule, is unequal to the task of solving this problem.

“No man is allowed to be a judge in his own cause, because his interest would certainly bias his judgment, and, not improbably, corrupt his integrity. With equal, nay with greater reason, a body of men are unfit to be both judges and parties at the same time; yet what are many of the most important acts of legislation, but so many judicial determinations, not indeed concerning the rights of single persons, but concerning the rights of large bodies of citizens? And what are the different classes of legislators but advocates and parties to the causes which they determine? Is a law proposed concerning private debts? It is a question to which the creditors are parties on one side and the debtors on the other. Justice ought to hold the balance between them. Yet the parties are, and must be, themselves the judges; and the most numerous party, or, in other words, the most powerful faction must be expected to prevail.”

In particular they are concerned about taxation:

The apportionment of taxes on the various descriptions of property is an act which seems to require the most exact impartiality; yet there is, perhaps, no legislative act in which greater opportunity and temptation are given to a predominant party to trample on the rules of justice. Every shilling with which they overburden the inferior number, is a shilling saved to their own pockets."

The Founders give up as hopeless the idea of removing the causes of factions, in this case inequality, and instead hope to contain them. How do they propose to do this?

Either the existence of the same passion or interest in a majority at the same time must be prevented, or the majority, having such coexistent passion or interest, must be rendered, by their number and local situation, unable to concert and carry into effect schemes of oppression.”

But they openly acknowledge that this is extremely difficult and in a veiled reference to ancient Greece and Rome they send us a warning:

“If the impulse and the opportunity be suffered to coincide, we well know that neither moral nor religious motives can be relied on as an adequate control… Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths.”

One need not look to Athens or Rome, or event to the Founders to see evidence of the problems facing us. The Occupy Wall Street movement, as ineffectual as it has been is a harbinger. It is the descent into factional expropriation that Mitt Romey warned of in his remarks about the 47%. The Patient Protection and Affordable Care Act is financed with a tax on capital gains, interest and dividends something which explicitly targets owners of property and equity, a minority. It pays subsidies to everyone with incomes up to 400% of the poverty line, a group that comprises 60% of the population, an electoral majority. This is not an accident. It may be just, but it is what worried the founders.

Is Barak Obama a reformer like the Gracchi, seeking to address the underlying causes of inequality? Or is he an opportunist, seeking to use the facts of inequality to enhance the power of his own party at the expense of the opposition. A case could be made for either side, but about one thing you can be certain. He is absolutely correct when he calls inequality the defining issue of our time, indeed, if you love constitutional government, it is the defining issue of all time.

I’m going to pay attention to the speech.


rob said...

Inequality has been around ever since the state at least, and probably since the division of labor, and, as an imbalance, is arguably always a potential source of instability, those who de-emphasize it do so because it does not decisively cause the fall of empires, although it can as in the case of the French Revolution. But it didn't cause the Peloponesian War -- it merely played into it. Thucydides himself, as I recall the book, is plain about this: Athenian expansion threatened Sparta. And there are as many explanations for the decline and fall of Rome as there are subfields of the social sciences and then some. Give Alaric credit: only the Western Empire "fell." Did The Eastern Empire last another millennium because there was little inequality? If so, then inequality is not so pervasive in history. If there was extreme inequality, which is likely, then inequality alone doesn't bring empires down. Milanovic has a fascinating article in which he gives the Byzantine Empire at AD 1000 a Gini coefficient insignificantly lower than the Western Empire's under Augustus but greater than ours and Russia's, though less than Brazil's.

Kenneth Monahan said...

Thanks for your comment Rob. The point I am making in the Thucydides section is that inequality has been a source of political instability, and in some regards, fatally so, since the dawn of history itself. I don't mean to say that it caused the Peloponnesian War any more than I would say Bosnian nationalism caused the First World War. What I am saying is that inequality, like ethnic nationalism is an extremely difficult problem that can exacerbate or catalyze other problems.

The point I am making with the analogy to the Roman Republic is that representative government in particular, as noted by the American Founders, is particularly threatened by income inequality. The Roman Empire was not undermined by it, the Roman Republic was destroyed by it. Your point about Byzantium is valid but it is important to point out that it was NEVER representative.

Yes, states can do quite well when there is large inequality, particularly authoritarian Empires, but we in the American Republic at the dawn of the 21st Century I think would prefer to keep our good thing going.

And thanks for the Milanovic suggestion.