George Packer’s excellent essay in Foreign Affairs, The Broken Contract, offers his take on the causes of American decline. He argues that the precipitating factors began in 1978, a year of high inflation, high gas prices, public dissatisfaction with government over Vietnam and Watergate, and rampant unemployment.
Despite these problems, national institutions quietly coexisted as “custodians” of the national interest. The New Deal passed and offered Americans welcomed social protections. Injustice remained, to be sure, but there was a thriving middle class where the average CEO made only 40 times that of his lowest paid employees.
But the economic turmoil brought on by “stagflation” led those fearful of capitalism’s solvency to launch think tanks and lobbying groups in its defense. Efforts to liberalize elections by distributing primary election power from party bosses to the populace were perverted by special interests with money to spend, ads to run, and politicians to buy.
Power begat money begat power. The average CEO now made 400 times his lowest paid employee. Organized money began a decades long transfer of wealth to the those at the top of the society.
Packer concludes his article in triumphant fashion, with a brilliant assessment of American inequality which I share now:
Inequality creates a lopsided economy, which leaves the rich with so much money that they can binge on speculation, and leaves the middle class without enough money to buy the things they think they deserve, which leads them to borrow and go into debt. These were among the long-term causes of the financial crisis and the Great Recession. Inequality hardens society into a class system, imprisoning people in the circumstances of their birth–a rebuke to the very idea of the American dream. Inequality divides us from one another in schools, in neighborhoods, at work, on airplanes, in hospitals, in what we eat, in the condition of our bodies, in what we think, in our children’s futures, in how we die. Inequality makes it harder to imagine the lives of others–which is one reason why the fate of over 14 million more or less permanently unemployed Americans leaves so little impression in the country’s political and media capitals. Inequality corrodes trust among fellow citizens, making it seem as if the game is rigged. Inequality provokes a generalized anger that finds targets where it can–immigrants, foreign countries, American elites, government in all forms–and it rewards demagogues while discrediting reformers. Inequality saps the will to conceive of ambitious solutions to large collective problems, because those problems no longer seem very collective. Inequality undermines democracy.