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Sunday, July 19, 2020

Our new oligarchy in action

I have mentioned before in this space that my most ambitious book, Politics and War (1990), looked at four periods of general war in Europe (1559-1659, 1661-1713, 1789-1815, and 1914-45) to shed light on the development of European politics.  In the first period, monarchs tried vainly to subdue an all-powerful European aristocracy that often made alliances across frontiers against the monarchs.  In the second, Louis XIV manged to tame his own aristocracy, and used his foreign policy to build up his fellow monarchs as well.  In the third, new monarchs, led by Napoleon, used the ideas of equality before the law and career open to talent to make state more powerful than ever.  In the era of the two world wars, European states tried to create huge empires all over the world, and to make themselves ethnically homogeneous--and expanded the scale of conflict to the point that they could not compete with two non-European powers, the US and the USSR.  History has written a new chapter in the thirty years since 1990.   The era of the strong national state seems to be over, and a new international oligarchy is taking charge.

How all this is working in the United States emerged this month from two New York Times articles--the kind of articles that appear much less frequently than they used to, but which show that even in the midst of our obsession with identity, traditional journalism still lives.  Both articles carry the bylines of Michael LaForgia and Kenneth Vogel, and one also includes Hailey Fuchs. The first, on July 6, focused on a particular lobbyist, Michael Urban, who happens to be a West Point classmate of the Secretaries of State and Defense, Mike Pompeo and Mark Esper.  and he had become friendly with President Trump by the time of the 2016 campaign, in which he served.  Urban has been a registered lobbyist since 2002, but he has nearly tripled his revenues--to $25 million in 40 months--since President Trump took office.  He intervened most dramatically to get Pompeo to reverse a Congressional ban on arms sales to Saudi Arabia--imposed after the murder of Jamal Kashoggi--on behalf of his client Raytheon, which then proceeded with huge new sales.  The article identifies seven other lobbyists whose business has exploded under Trump, including two, Brian Ballard and Jeff Miller, who had never lobbied at the federal level before.  The same group of lobbyists has raised $8 million for Trump's re-election campaign since last year.  The article doesn't explain how each of these men got close to Trump, but it explains that they stepped into a vacuum after a failed developer and reality TV star parlayed his national image into the Republican nomination, in defiance of the Republican establishment.  The King in our system remains the American people, who elect a new one every four or eight years, and Trump in 2016 emerged, by the narrowest of margins, as the King's new favorite, outflanking the Bush and Clinton families that had dominated their respective aristocracies for decades.   Anyone who could get close to the new favorite could benefit handsomely, and they have done so.

The second article, on July 13, tells a slightly different story.  Michael B. Williams was before Trump's election the general counsel of the American Suppressor Association, the trade group of firms that make silencers for guns.  While moviegoers associate silencers with hit men, they are also used by the military, since they make it harder for enemy targets to tell where gunfire is coming from.  For this reason, the federal government as for many years banned their sale abroad, where they could fall into the hands of enemies of the United States and help to kill American troops.  Apparently seeing an opportunity, Williams in 2016--when he was 30--joined the Trump campaign, and then managed to join the Office of Management and Budget under former Tea Party Congressman Mick Mulvaney.  In 2019 Mulvaney became White House Chief of Staff--a position which he held for only a year--and Williams became a "counselor and deputy assistant to the president."  He continued daily contacts with his brother Knox Williams, the director of the American Suppressor Association, and he had now passed the two-year period in which government officials are prohibited from working on issues of interest to their former employers. This month, the State Department lifted the ban.  Since Mulvaney's departure from the White House, Williams has gone to work at the Department of Housing and Urban development.  Many expect him eventually to return to a lucrative position in the firearms industry.

Now stories like these have been part of Washington lore for many decades now, but at least until the 1980s, lobbyists pushing for policy changes that would help their clients had to contend with other priorities.  The vastly expanded federal government that Franklin Roosevelt put in place was trying to meet the needs of the American people and defend freedom abroad.  The Trump Administration does not care about either one of those objectives.  It represents a hostile takeover of our civic institutions, which Trump and his allies are milking for their own private purposes to the maximum extent possible. With Trump threatened with defeat, this process is likely to accelerate in the next six months.  Congressional Republicans, with rare exceptions, are now deeply implicated in it as well.

Meanwhile, the New Yorker has an excellent profile of Secretary of the Treasury Steven Mnuchin, by  Sheelah Kolhatkar.  Mnuching's career, it turns out, has been intimately connected to the turmoil in the US economy in the last twenty years or so.  His father Robert, from the Silent generation, worked for many years at Goldman Sachs, and pioneered some new, innovative and very successful trading strategies there before retiring in 1990  Steven went to Yale, like his father, became the publisher (according to the New Yorker) of the Yale Daily News, and graduated in 1985, just as things were really opening up on Wall Street.  He immediately joined Goldman Sachs, where his father had worked as well, and became heavily involved in another new innovation, mortgage-backed securities.  He left Goldman in 2002 and joined up with a college roommate in ESL Investments, which specialized in buying debt-ridden companies, reorganizing them, and often, liquidating them.  They handled the merger between K-Mart and Sears, which promptly put K-Mart out of business, and has not allowed Sears to survive either.  Sears Creditors have now sued ESL for stripping the company of its assets. He was working with another investment firm when the financial crisis hit in 2008. Although Mnuchin had no banking experience, he joined a consortium of other heavy hitters to purchase a failed bank, IndyMac, that had originated thousands of hyper-risky mortgages and had to close its doors.  The F.D.I.C. gave them extraordinarily favorable terms, the new group, renamed, OneWest, turned billions of dollars in profits on the deal as the F.D.I.C. covered a billion of the previous losses.  OneWest also foreclosed on 36,000 homes.  I remember a brilliant article by Theodore Draper in the late 1970s pointing out that politicians and bureaucrats who had supported the Vietnam War never seemed to have paid any price for doing so, while those who had opposed it never earned any reward.  In the same way, many of those who wrecked the economy in the 2000s seem to have emerged stronger than ever and still hold our economic future in their hands.

Joe Biden, if he is elected, will restore a civil tone in the White House and try to take some steps on behalf of the American people. I do not know however if he will be able to reverse the trend towards aristocratic power.  He is the Democratic nominee today because Barack Obama chose him as Vice President in 2008 and thus gave him unmatched name recognition and access to the aristocrats who make the biggest donations to the Democratic Party.  His selection as Vice President will benefit in 2024 from the same kinds of connections, whoever she may be.  It has taken decades for us to sink to where we are, and it may well take more decades seriously to reverse the trend.   


Bozon said...

An interesting post as always.

Being elected and being a noble used to be connected, long ago, especially within the old Catholic hierarchy of Europe, and The Holy Roman emperor was elected, although always also a noble.

So, there is some precedent for elections and the aristocracy, nobility, or crown, or emperor, to be elected. But not the other way around, ever.

Maybe Napoleon, a usurper, is a counterexample.

Hitler fits badly with the concept of being either a noble or an emperor, rather than the highest demagogue, the bourgeoise father, of the German state.

In the US, there has been no king, emperor, aristocracy, or nobility, on principle, elected or not.

What you may mean, I think, are either demagogue politicians, or oligarchic backers of demagogues, like Bloomberg, who may also themselves run for office.

Oligarchy means rule of the few, not necessarily aristocrats at all.

If a Spartacus took over here, it would be rule of Spartacus, a very few, but it would not be an aristocracy, a nobility, an emperor, or have a king, or parliament.

Chapman's comment re George III in your The 1619 Project post is useful to review here. He was certainly neither an oligarch nor a tyrant, but that did not prevent the colonists from so painting him.

All the best

Jude Hammerle said...

Dear Dr. Kaiser,

I think LBJ certainly paid a price for his support of the Vietnam War.

But to address your greater point...

Deregulation of an industry--at least in principle--is a free market expression. A taxpayer Bailout--at least in principle--is an expression of big government. Big government and free market expressions are opposites by definition, so deregulation and bailouts are opposites.

Simple logical rules follow from these definitions. If an industry is too big to fail, for instance, it must be regulated. An industry pressing for deregulation must forego in advance the prospect for a bailout. An industry that receives a bailout must agree to terms amounting to "community service." I could go on.

There will come a day when the majority no longer allows itself to be divided into social, political and cultural factions and instead unites to assert its economic interests above all others. Its first step will be to institute a set of simple, logical rules like those above. And that will be a bad day for oligarchs.

All the best,
Jude Hammerle

Bruce Wilder said...

The spectacle of the Bush Alumni Association joining the Obama Alumni Association in support of the geriatric leadership of Biden and a return to the "civil tone" of "normal" politics where everyone in power or in positions of media prominence is wrong about every thing, every policy all the time and never pays a political price is more than I can stomach.

You, more than most, recognize that the fixed pattern of American anacyclosis should have resulted in a major political re-alignment and financial reforms in roughly the 2004-10 period. And, the U.S. did have wave elections bringing in new partisan majorities and a younger generation as the previously incumbent Party humiliated itself and then . . . nothing. And, we are left now with singularly geriatric "leadership" from Trump to Biden, McConnell to Pelosi, Fauci to whomever, and collapse as the state cannot manage to test-and-trace or quarantine or mask production and distribution in response to an epidemic.

It is becoming hard to believe we will even get to an election made pointless by the nomination of Biden, too old and too corrupt and too authoritarian to reform or reconstruct. The economy is collapsing structurally as small businesses are forced to liquidate and billionaires grow richer still and violence is a rising tide if not a tsunami in the making. History unfolding indeed.

Energyflow said...

finance and military strip the carcass of middleclass/democracy clean. This phenomenon is non-partisan. Once in power corruption is the rule. The right had hoped wealth would hinder this in Trump freeing him to be 'his own man' and speak his own mind as opposed to Obama and others who need book deals to pay his retirement, lifestyle. Biden is arguably literally corrupt(ukraine) and clinton( uranium one). A monarchy would eliminate this problem. I propose Jeffrey the first, Bezos namely. Remember Croesus of the Triumvirate? In the current situation it seems talented military leaders will take over once the general madness has gone too far. Infighting over 'feelings' is just too childish. We are down to banana republic levels.