News Release

New Book Chronicles “Oligarchy”


Author of the new book Oligarchy, Winters said today: “By choosing Wall Street as the origin of their action, and by focusing on the gap separating the 1% from 99%, the Occupy movement has hit upon the chronic problem of oligarchy and democracy in America. The power of concentrated wealth has overwhelmed and effectively disenfranchised the majority of American citizens. One person/one vote will be meaningless in U.S. politics unless the distorting power of wealth is addressed. Failing to do so could result in a deep crisis of legitimacy in American democracy.”

Winters is professor of political economy at Northwestern University and just wrote the piece “Oligarchy and Democracy” in the new issue of the American Interest, which states: “Measured by income, oligarchs at the very top of American society have an MPI [Material Power Index] just over 10,000, which happens to approximate the MPI of Roman senators relative to their society of slaves and farmers. …

“Over the course of the 20th century, two wrenching things happened within American democracy and oligarchy that together constitute the Great American Inversion. First, early in the century, steep new income taxes were imposed exclusively on the rich. By the end of the century, these same tax burdens had been shifted from the richest Americans to the various strata below them.

“Second and related, there was a sharp reversal of economic momentum for average Americans and the rich. The average income of working-class Americans around 1920 doubled in real terms by 1955 and tripled by 1970. A growing American middle class was taking an ever-larger share of an expanding economic pie. Although the chasm separating the rich from the rest remained huge, ordinary citizens were closing the gap at a remarkable pace. But then this process stopped. In the four decades since 1970, there has been almost no improvement on average for the lower 90 percent of American households. Although the U.S. economy continued to grow, income stopped growing for average citizens. Adjusted for inflation, average household incomes in 2010 were almost exactly what they had been forty years earlier. They peaked and stopped in 1970 at ‘triple 1920.’ Growth America became stagnation America. …

“The Sixteenth Amendment was passed in 1913, after which a Federal income tax was again imposed exclusively on the top 1 percent of earners. Oligarchs immediately began to explore new modes of income defense. … Despite the daunting complexities of taxing wider swaths of the population (and the risks of doing so at election time), the government capitulated to the wealthy few. Beginning with deep tax cuts on oligarchs enacted in 1921, 1924 and 1926, the single most progressive economic policy ever enacted in U.S. history — an income tax exclusively on the rich — was slowly inverted into a mass tax that burdens oligarchs at the same effective rate as their office staff and landscapers.”