Strangers in Their Own Land: Anger and Mourning on the American Right

By Polly Cleveland

When I was a teenage bookworm, and later a student at Harvard and Berkeley, I looked down on what my dad called “The Great Unwashed”. By this unfortunate Victorian term, he meant the ignorant, the prejudiced, the parochial and especially the hyper-patriotic politicians who made his life difficult as a Foreign Service officer. So it would still be easy for me today to look down on members of the American right, especially the Tea Party supporters of Donald Trump.

Arlie Hochschild, a retired sociology professor at U.C. Berkeley, has spent five years interviewing and becoming friends with Tea Party supporters in Louisiana. As she puts it, she has been trying to climb over the “empathy wall,” to “turn off the alarm bells”, in order to understand how her friends view the world. Her new book, Strangers in Their Own Land, should be essential reading for Democratic politicians from Hillary on down, as well as for elite snobs like me. She has also written a revealing article for the September issue of Mother Jones.

Hochschild addresses what she calls the Great Paradox: why would the residents of “cancer alley” one of the most polluted places in the United States—nonetheless oppose environmental regulations? Her friends are well aware of the pollution and many have suffered personally in health and destruction of their beloved neighborhoods. Yet other concerns seem to take priority. First, there’s a loathing of government, federal government especially. Government takes their taxes and does nothing for them. The government of Louisiana is captive to the oil companies. Since the oil companies at least provide good (though few) jobs, they blame government instead. Another concern is honor and respect. All their lives, Hochschild’s friends have worked hard, gone to church, and helped their neighbors. They deeply resent the coastal elites who say they “cling to guns or religion”, or call them rednecks, racists, bigots, sexists, xenophobes and now “deplorables.”

Hochschild describes what she finds to be the “deep story” of the right:

You are patiently standing in the middle of a long line stretching toward the horizon, where the American Dream awaits. But as you wait, you see people cutting in line ahead of you. Many of these line-cutters are black—beneficiaries of affirmative action or welfare. Some are career-driven women pushing into jobs they never had before. Then you see immigrants, Mexicans, Somalis, the Syrian refugees yet to come. As you wait in this unmoving line, you’re being asked to feel sorry for them all. You have a good heart. But who is deciding who you should feel compassion for? Then you see President Barack Hussein Obama waving the line-cutters forward. He’s on their side. In fact, isn’t he a line-cutter too? How did this fatherless black guy pay for Harvard? As you wait your turn, Obama is using the money in your pocket to help the line-cutters. He and his liberal backers have removed the shame from taking. The government has become an instrument for redistributing your money to the undeserving. It’s not your government anymore; it’s theirs.

What makes this deep story ring true? Hochschild asks. Her friends are older, white middle class—more than half of Tea Party supporters earn at least $50,000. But their position is precarious. All around them they see people falling into poverty, despair, and worst of all, dependence on government handouts. So while the liberal media sneers, Fox News, Rush Limbaugh, and now Donald Trump hear and validate the deep story. That’s why a woman friend of Hochschild’s can say of Trump, “He’s a jerk, but I like some of what he says.”

At a recent book-signing in New York, Hochschild told us she invites Hillary to come meet her friends in Louisiana. When we learn to listen, even if we don’t agree, we will find areas in common. Notably, her friends support reducing pollution and getting money out of politics.

Taking a broader perspective, I can’t help noticing how the deep story of waiting in line resembles the zero-sum mentality of very unequal, low-mobility societies. The British Equality Trust has developed an index relating inequality to social and health problems. Louisiana, Mississippi and Alabama are way up there on the scale of both. The emphasis on honor and respect also fits the pattern. If there’s little mobility, one’s position in the hierarchy becomes very important. Think of gang-infested poor neighborhoods, where one can get killed for “disrespecting,” or where a kid who does well in school is teased and harassed. Think also of India, where the caste system remains intractable in many regions, and Pakistan where it’s acceptable to kill a daughter who destroys the family honor by marrying without permission.

My brother is a Republican, though not a Tea Partier. He can deluge me with facts supporting his positions. It’s excruciatingly difficult to “turn off the alarm bells” and listen for feelings and points of agreement. Arlie Hochschild has motivated me to try harder. She reminds all of us that, regardless of disagreements, we still owe Tea Party supporters our full respect, readiness to listen, and willingness to work together where we can.

James Galbraith Tells Us What Everyone Needs to Know About Inequality

By Polly Cleveland

Inequality has surged in the U.S. over the last forty years; many observers now blame the deregulation and tax cuts for the rich starting with the presidency of Ronald Reagan in 1980. In his new short book, Inequality: What Everyone Needs to Know, James Galbraith explains how this happened through the change in U.S industrial structure:

“In the early postwar period, the dominant American industrial corporation–such as General Motors, General Electric, American Telephone & Telegraph, International Business Machines–was an integrated behemoth that contained within itself not only production, but every phase of basic research, product design, and marketing that was relevant to its mission. Therefore incomes were distributed within the corporation by administrative decisions, governed by the bureaucratic imperatives and prerogatives of those in charge, and strongly responsive to the incentives of a highly progressive income tax structure. Top scientists and engineers, as well as top executives, were paid salaries, and salaries were regulated by the corporation. Tax structures also gave strong incentives for the corporation to retain profits, rather than pay them out as dividends, and to reinvest the proceeds–whether in factories or in the palatial towers that grew up in Manhattan, San Francisco, and Chicago in those years.

All of this changed with the tax “reform” movements of the 1970s and 1980s, which pushed for lower top marginal tax rates, fewer special exemptions from the tax, and for a “shareholder-value” model of corporate compensation. And a special feature of this change was that it created strong incentives to restructure the corporation itself.

“In particular, as the digital revolution came into view, the top technologists in the big corporations realized that they would be far better off if they set off on their own, incorporated themselves as independent technology firms, and then sold their output back to the companies for which they had formerly worked in salaried jobs.…

The effect of this structural transformation on the distribution of household incomes in the United States, as recorded in the tax records, is astonishing. For there were created, mainly in the 1990s, a handful of citadels of stratospheric incomes, previously unknown in the country and concentrated in the tiny handful of locations. One of these was Manhattan, the home of Wall Street and the source of finance. A second was Silicon Valley, a cluster of counties in Northern California. And the third was Seattle, Washington, and its near suburbs.”

Galbraith is describing the same phenomenon that Barry Lynn documented at length in his chilling 2010 exposé: Cornered: The New Monopoly Capitalism and the Economics of Destruction. That is, the transformation from vertically integrated firms to horizontally-integrated monopolistic trading companies, buying inputs from all over the world, squeezing both their suppliers and their customers. But Galbraith adds a new insight: not only did the postwar high-tax regime induce corporations to keep executive pay in check, it also induced them to retain profits and reinvest them in the corporation. With the 1980’s “greed is good” transformation, rates of reinvestment slowed as executives started taking more for themselves—surely helping slow the overall rate of growth.

Wait a moment! High taxes on income and profit produced more investment and growth? That’s the exact opposite of today’s Republican, and often Democratic, mantra that high taxes kill investment and growth. But the postwar taxes that tamed the corporate behemoths were in fact high marginal rates, top rates in a steeply progressive system. These were the very taxes imposed at the beginning of World War II to prevent war profiteering. These were taxes designed to capture the “unearned income” or “economic rent” of powerful corporations and wealthy individuals. It was perfectly logical for such corporations and individuals to “avoid” such taxes by investing money they would otherwise lose.

If high marginal income and profit taxes are so beneficial, is there any prospect—given the political will— of returning to such tax levels? Unfortunately, now that so many multinational corporations and wealthy individuals are registered or domiciled in tax haven countries, any simple effort to impose truly high marginal rates on profits or income will simply lead to more creative evasions, corruption (see Panama), and tax wars.

But, assuming the political will, are there other approaches? Galbraith proposes:

A much older and yet, to this day, still more promising alternative to taxing financial wealth is to tax land value, including the value of mineral and energy resources in the ground. The economic concept behind this idea is that of Ricardian rent–the argument that rents (which are inherently unproductive) flow to the owners of the fixed and non-reproducible asset, namely land. By taxing land and minerals, one reaches the least defensible forms of accumulated wealth, while at the same time doing the least to distort market decisions as between capital investment and hiring of labor. And there is another advantage: unlike financial wealth, land stays put. It exists in fixed jurisdictions with registered ownership; all the taxing authorities need to do is to send an appraiser, and then a bill. Local property taxes already work this way; however, in the United States landowner opposition to land taxes has been fierce, and many states are barred by their constitutions from levying property tax on a statewide basis. In California, notoriously, even local property taxes were capped in the late 1970s by a ballot measure strongly supported by wealthy landholding interests.

Land taxation has been for a century the program of the followers of the 19th century American economist Henry George, whose influence was vast around the world a century ago. One of his followers was the Chinese revolutionary Sun Yat-Sen, founder of the Republic of China in 1911. And Maoist China, by conducting an early war against landlords, ended up having the world economy most like the Georgist program in the modern age. But instead of taxing land value, the Chinese state actually owns it, and collects the land rent for itself. By doing this, Chinese municipalities and provinces have enjoyed ample revenue from which to make capital improvements, which is why Chinese cities have been able to grow like weeds in the reform era…

To this I would add that land taxes weren’t new in China: they financed Chinese empires as early as 2000 BC. Stiff land taxes of four shillings to the pound of assessed value financed the transformation of British finance in 1688; Adam Smith deemed them “the most equitable of all taxes.” Taxes on high profits and incomes and on land values all capture unearned income, or rents, forcing taxpayers to invest productively to pay the tax.