Globalization, the Worker Glut, and Stagnant Wages

The impact of globalization on the distribution of income has never been more clearly demonstrated than by a couple of graphs produced by Marko Milanovic in his book Global Inequality: A New Approach for theAge of Globalization.  The first has received some notoriety as “the elephant curve.”

This chart plots the percentage gain in real income (2005 international dollars) over the period 1988 to 2008.  The horizontal axis is the percentile of the global income distribution.  One can conclude that the incomes of low to moderate income people have increased over this period by what appears to be a significant amount.  There is a dip in income growth to approximately zero at 80%, followed by a steep rise at higher income levels. Globalization has helped the low income people of the world and it has benefited the wealthy of the world.  Who are those left behind as indicated by Milanovic’s point B?

“They are almost all from the rich economies of the OECD (Organization for Economic Cooperation and Development).  If we disregard those among them who are from the relatively recent OECD members (several Eastern European countries, Chili, and Mexico), about three-quarters of the people in this group are citizens of the ‘old-rich’ countries of Western Europe, North America, Oceania….and Japan….People at point B generally belong to the lower halves of their countries’ income distributions.”

“In short: the great winners have been the Asian poor and middle classes; the great losers, the lower middle classes of the rich world.”

Milannovic’s conclusions are about what one might expect if one lives in one of the “old-rich” countries and has observed how fellow citizens have fared under globalization.  Some might even applaud these developments as a way of distributing wealth from rich countries to poor countries.  Milanovic provides another way of looking at the data that produces a critical insight.  The previous chart evaluated relative changes in income; the next converts those gains into absolute changes by providing a monetary value.

If globalization distributed income gain uniformly then every group would gain 5%.  In fact, most of the gain goes to those already wealthy: 19% to the top 1%, 44% to the top 5%, and 60% to the top 10%.  As a means of distributing income, globalization is extremely inefficient.  It seems best able to provide income to the already wealthy in both rich and poor countries.

Globalization and the addition of enormous numbers of low-wage workers to the global economy have had significant impacts on the prospects for job creation in the rich countries.  The way in which economies function has also been altered.  Traditional economic thinking would suggest that all will be solved when wages become substantially equalized across the globe.  There are numerous reasons why that will never happen, not the least of which is the pain that would be endured in the advanced economies.  So what might the rich countries do in response to this situation?

Daniel Alpert argues that we have entered a new economic era which is poorly understood. He provides an analysis of our current situation and recommendations for the future in GLUT: The U.S. Economy and the American Worker in the Age of Oversupply. 

Alpert begins by noting Ben Bernanke’s 2005 observation that there existed a “global savings glut.”  To an economist, a savings glut means that there is a lot of money possessed by corporations that is not being productively used, either as reinvestment or as redistribution via wages or dividends.

“A substantial amount of global capital was remaining unutilized or underutilized and not recycled into investment or used for consumption. By 2008, I had concluded that—if anything—Bernanke had understated the import and dimensions of his observations, and that the global economy was experiencing something that centuries of academic discourse would have thought impossible. There was, and remains, a global oversupply of labor, productive capacity, production, and capital, all (except, at times, labor) being things that were classically thought to be ever-scarce relative to the demand therefore.  Something, indeed, had happened, and it was, I concluded, substantially related to the rather sudden emergence of the post-socialist, or semi-socialist nations (China, Russia, Brazil, India and others), into full-blown economic competition with the developed nations.”

In a very short period, billions of low-wage workers were added to the available work force.  The dynamics of what followed in the rich countries are familiar.  Manufacturing was moved to places (mostly China) where this labor force could be utilized, both to sell products more cheaply in the home country, and to produce products more efficiently for the local economy.  Both contributed to the elimination of jobs and the partial replacement of higher-paying positions with lower-paying positions in the home country.  People benefited from the cheaper goods imported from the low-wage countries, but the loss in income was of greater effect.

“The suddenness and extent of the integration of over 3 billion people into a global capitalist market, that really only hitherto consisted of about 800 million in the advanced economies, produced not only the imbalances and glut conditions that have been written about extensively since the Great Recession, but have echoed in the many crises since then. We continue to experience a low interest rate and disinflationary environment and a slew of other economic phenomena that might not typically be thought of as being associated with—but are actually triggered by— the oversupply itself.”

There was an inevitable development that followed from this scenario.  By eliminating jobs and forcing wages to stagnate in the rich countries, demand for products was lowered in the rich countries.  Wages that would have been paid in the United States were now being paid in China, limiting the feedback into the domestic economy.  As Milanovic’s data shows, wages did rise in places like China and benefited its workers, but did not produce a level of income that could generate the level of demand that the same amount of money received by higher income domestic workers would have. 

“Let’s also take a moment to define global demand, because that is a subject that all too often proves confusing. The layperson might say, “Well, surely, there are many of our own poor and many more people in less developed countries who certainly desire a far higher standard of living—don’t they comprise a source of virtually unlimited demand for the products and services produced by the rest of us?” Economic demand is, however, measured in dollars and other currencies, not desire or desperation. To obtain a higher living standard, those less fortunate must obtain the money to do so, and, short of robbing banks, that happens principally via gainful employment.”

Traditionally one views an economy as functioning in what Alpert refers to as a “virtuous cycle.”  Consumption produces profit.  Profit earned from sales is reinvested in greater production capability which increases jobs and wages and leads to greater consumption and so on.  Globalization has “blocked up” this virtuous cycle.

“First, that the classically virtuous cycle (or circle) of expanded growth, spending, savings and investment has been essentially blocked up in the U.S. by the age of oversupply. Capital is being hoarded and not reinvested in additional employment-producing assets (plants, equipment, etc.) by much of the U.S. private sector, simply because there is already an excess of global capacity relative to global demand for production. Second, that this is not a short-term phenomenon. The failure of the developed economies to recover robustly ever since the Great Recession is, in this writer’s opinion, proof positive that oversupply is not something that will be absorbed by conventional business cycle dynamics. And absent the recognition of this fact in the form of targeted policy to counter its effects, the developed economies will remain in a low-growth demi-slump for a lengthy period of time.”

Alpert analyses what corporations have been doing in a period of stagnant demand.

“As a general matter, technological advances should serve to increase productivity and, therefore, economic growth, all other things being equal. But in an age of oversupply—featuring an exogenous, low-cost labor force and insufficient global demand relative to supply—all other things are anything but equal. U.S. capital spending, adjusted for inflation, has been relatively flat for the past 15 years, rising only 13% from 2000 through 2104 despite a 29% growth in real U.S. GDP. The slowdown in expansionary investment, however, is just the headline. The components of that capital spending have changed as well, with spending on information processing equipment and intellectual property products growing by 63% during that same period, while all other capital spending actually fell by 0.1%.”

Corporations have not been motivated to create new jobs.  The seemingly healthy unemployment rate has been attained not by recreating lost jobs, but by discouraging workers from bothering to continue to look for work.

“Quite a bit of the technology that is being invested in is, unfortunately, often not of the type that increases aggregate output but, rather, is employed to reduce labor costs in a slow-growth era in which profitability is more often increased through expense reduction rather than hard-to-generate top-line expansion.”

The lack of investment in the domestic economy has led to a number of unfortunate outcomes.

“We continue to experience a low interest rate and disinflationary environment and a slew of other economic phenomena that might not typically be thought of as being associated with—but are actually triggered by— the oversupply itself. These include, among other things, declining productivity and falling labor force participation; inflation in real estate and stock markets, the value of the U.S. dollar, and even stock buybacks; swollen executive compensation; and increasing income and wealth polarization since the recession, to say nothing of the global financial crisis itself.”

What is to be done about all this?  The private sector has not and cannot address it.  Alpert tells us we must increase domestic demand if we are to break out of this period of stagnation and restart that “virtuous cycle.”   The only way to increase domestic demand is for the public sector to take actions to increase the number of jobs and bring people back into the workforce.

“The underutilization of labor, the lack of growth, the continued falling share of labor as a percent of GDP—all of these issues and more—are the result not of depressed wages or insufficient job formation counts; they are the result of an insufficient amount of work relative to the body of labor willing to work. Increase the demand for labor, and all other issues—wage levels, price reflation, productivity and the reswitching dilemma, capital spending, and even zero interest rates—take care of themselves … it really is that simple.”

“….I am proposing that the U.S. government use its credit (either directly or through a newly constituted infrastructure bank) to borrow the excess capital necessary to make such investment from the overstuffed pool of excess capital sloshing around the globe and available to the U.S. at interest rates that make borrowing and investing it wisely an economic imperative, if not actually a moral one.”

“….a five-year $1.2 trillion public investment program in transportation, energy, communications, and water infrastructure would create an additional 5.5 million jobs or more in each year of the program—directly, through the projects themselves, and indirectly, through the multiplier effect on other sectors of the economy. With the American Society of Civil Engineers telling us that our present infrastructure backlog is nearly $2.5 trillion, projects will not be hard to find. And neither will labor. Adding 5.5 million workers (assuming all were new/returning entrants to the labor force) would barely restore the labor force participation rate back to the levels of 2010, still well below levels prior to the recession.”

The global capitalist order seems to have maneuvered itself into a dead end from which it cannot escape.  Alpert makes an excellent argument that it is time for the public sector to come to the rescue—once again.

Justice for the Poor and Unfortunate, but Only If Corporate Crime is First Rendered Unenforceable

A large number of wealthy corporate leaders have been willing to expend their fortunes trying to eliminate the government and the social contract under which they have acquired their wealth.  This somewhat counterintuitive trend is explained at length in Jane Mayer’s book Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right. 

It is remarkable how many corporate leaders who have been charged or threatened with legal actions because of crimes they have committed are now ardent small-government, anti-regulatory enthusiasts.  Apparently being fabulously wealthy is insufficient; one must also be free from the inconveniences of the rules and regulations that society has decided it needs.  The Koch brothers and their Koch Industries conglomerate provide the best example of people who have sinned mightily and are willing to spend a lot of time, money, and effort to ensure they can continue to sin mightily.  Surprisingly, the mechanism for providing themselves with this freedom is support for criminal justice reform.

The system of criminal justice in the United States is certainly in need of reform.  As crime rates have fallen dramatically over the past few decades, financial and political incentives have created an efficient mechanism for sweeping people up off the streets, convicting them of trivial crimes, such as drug possession, and incarcerating them for long periods.  This development has been accompanied by an almost complete lack of convictions for those who commit crimes of corporate malfeasance.  The absurdity of this system has become apparent at all levels of government as costs have become prohibitive.  Bipartisan attempts to address excessive rates of incarceration have arisen even in dysfunctional Washington.  Outrageously, such attempts have come to naught because some Republican politicians are insisting that their corporate overlords are in even further need of protection from criminal prosecution.

Mayer provides an update on some relevant Koch brothers’ activities in an article for The New Yorker: New Koch.  The Kochs’ interest in criminal justice arose from a criminal case brought against one of their facilities in 2000.

“In that case, a whistle-blower who worked for a Koch refinery in Corpus Christi, Texas, told authorities that the company had covered up the fact that it was “hemorrhaging” benzene, a known carcinogen. The Justice Department mounted what David Uhlmann, who then oversaw the department’s environmental-crimes section, has called “one of the most significant cases ever brought under the Clean Air Act.” In a settlement, the original ninety-seven charges were dropped, including criminal charges against four company employees, but Koch Industries pleaded guilty to one count of concealing information from the government about its discharge of benzene. The company agreed to pay a ten-million-dollar fine, and to pay ten million more to improve the environment in Corpus Christi.”

What most would consider a slap on the hand for an insidious crime, was instead viewed by the Kochs as a dangerous overreach of government power.  The Kochs’ interest in criminal justice is aimed at ensuring that they, and others like them, will never again have to worry about prosecution for crimes.

“In 2004, the company gave the National Association of Criminal Defense Lawyers money to help it start a new initiative that would focus on ways to strengthen white-collar-criminal defense. The initiative featured numerous joint projects with the conservative Heritage Foundation, which also was determined to combat “over-criminalization.” The anti-government tenor of the effort meshed perfectly with the Kochs’ outlook.”

Advisors to the Kochs knew they would never attain their goals if they acted blatantly in their own self interest.  Consequently, they generated a strategy that would ultimately allow their representatives to participate directly in criminal-reform efforts.  This included support for programs that served the minority groups most affected by mass incarceration.

“Norman Reimer, of the National Association of Criminal Defense Lawyers, insists that the Kochs’ long-standing support for criminal-justice reform ‘is deeply principled and not window dressing…. Reimer acknowledges that until recently the company had funded mainly programs involving white-collar crime. Reimer told me that for years he had been asking Koch Industries to donate funds to support indigent defense, but it didn’t do so until 2014. At that point, Reimer says, the company provided a ‘significant six-figure’ grant to train and support public defenders. That grant, while much needed, was less than a tenth of what Koch Industries spent on its corporate-image ads that year.”

A few tiny investments provided the Kochs and their allies with a glimmer of respectability, and allowed them access to legislators working on policy changes.  Rena Steinzor records what transpired in an article for The American Prospect: Dangerous Bedfellows: The Stalemate on Criminal Justice Reform (for some reason, it is not available online).

“In February 2015, a startling collection of strange political bedfellows assembled to promote mass-incarceration reform at all levels of government.”

“Fiscal and libertarian conservatives (Koch industries, FreedomWorks, and Right on Crime) joined the group to emphasize the urgency of cutting prison spending, which is about $80 billion annually and unsustainable for many states, as well as the importance of freeing nonviolent offenders from government control.”

“The coalition began with the low-hanging fruit: reforms designed to eliminate mandatory minimums for nonviolent drug offenders and to give judges more discretion in sentencing other defendants.”

Progress was made and there was bipartisan support for passing a bill out of the Senate Judiciary Committee.  It was at that point that the Kochs revealed their game plan.

“But then, after months of closed-door negotiations to craft an acceptable compromise and on the eve of a Senate judiciary committee vote, what [Senator] Whitehouse describes as a ‘Trojan horse’ rumbled noisily on to the stage in the form of demands by Republican Senator Orrin Hatch that the bipartisan group add provisions to weaken white-collar criminal enforcement.  This hidden agenda was the central goal of the business conservatives, led by Charles and David Koch.  The senators refused the provisions and the committee passed the legislation without the amendment.”

The sinister logic of the Kochs held relief for mostly members of the black and Latino minorities hostage to the demands of an extremely small number of wealthy white people—who were not likely to ever be convicted of anything anyways.  When the Hatch amendment was proposed to the House Judiciary Committee, where the republican majority is greater, they were willing to consider them, and ultimately agreed to incorporate those provisions in the House version of the bill.  The Obama administration is in favor of the Senate version, and the Department of Justice is “fiercely opposed” to the Hatch provisions.  It is not clear what, if anything will come of this reform effort.

Mayer provides an assessment of what the Kochs have been after.

“According to critics, the new measures would unreasonably raise the standard required for the government to hold corporate executives criminally liable for wrongdoing; the government would have to prove that the executives hadn’t just committed a crime but knowingly done so, even in instances of dire consequence to the public, such as lethal pollution and unsafe food or drugs.”

“Uhlmann, the former Justice Department official, warned, ‘For thirty years, Congress has insisted that companies know their legal obligations, and that they fail to do so at their own peril. This legislation would erode the venerable principle that ignorance of the law is no defense.’ He went on, ‘While we need to reduce the Draconian sentences imposed on nonviolent drug offenders, the Kochs are using criminal-justice reform as a Trojan horse for their efforts to weaken environmental, health, and safety regulations’.”

In effect, what the Kochs want is for prosecutors to have to prove that individuals not only had committed a crime but also had criminal intent.  Intent is essentially impossible to prove unless the offender is dumb enough to have written a notarized confession.

Mayer even quotes Steinzor.

“Rena Steinzor, a law professor at the University of Maryland, who argued for tougher treatment of corporate crime in her 2014 book, “Why Not Jail?,” agrees with Uhlmann. ‘The Koch brothers are playing a long game that has as its ultimate goal reducing the federal government to a size so small it is difficult for us to comprehend,’ she warns. ‘It would literally be confined to currency, roads, and foreign affairs. Public-health protections would be gone’.”

Mayer also quotes Jeffrey Winters, a political-science professor at Northwestern University on why we should be concerned about the ability of the wealthy to control our legislators.

“Winters notes that ‘one of the greatest challenges in history has been to create legal governing institutions that are stronger than the strongest people in society. Oligarchs have long deployed their wealth and power to free themselves of constraints that others in society face’.”

It is not clear who presently has more power—society or the wealthy Koch brothers.

The Koch Brothers and the Weaponization of Philanthropy

There have always been wealthy people who have tried to use their money to impose their will upon the nation.  That is the point made by Isaac William Martin in his book Rich People’s Movements: Grassroots Campaigns to Untax the One Percent.  Martin suggests that the wealthy have a primal fear of democracy.  Since they are wildly outnumbered, the non-wealthy could move against them and confiscate their wealth if they chose to.  The passage of the sixteenth amendment allowing the federal government to levy an income tax came to be viewed as a “revolutionary” development, and the imposition of a progressive income tax was certainly considered a form of confiscation.

The development of the Tea party Movement and the political and social activism of the wealthy Koch brothers and their allies are often viewed as recent developments.  Martin warns us that we are mistaken.  What we are seeing is merely another chapter, albeit a more threatening chapter, of activism by the wealthy attempting to redefine our social contract as a means of protecting their accumulation of wealth.  To make that point, he informs us of an earlier movement that had utilized the label “T Party.”

“In September 4, 1962, hundreds of conservative activists crowded into the Wilshire Ebell Theater in Los Angeles for a protest meeting that they called the California T Party.  These protestors were unusually well-heeled and unusually radical.  They were there to support a constitutional amendment that would outlaw all federal taxation of income and inherited wealth, and would further require the federal government to sell off virtually all of its assets in order to pay for a massive, one-time transfer of wealth to the richest Americans.”

“There were two more California T Parties that week, followed by a national gathering in Chicago two weeks later, at which activists from around the country met, sang protest songs, and attended workshops on grass roots organizing for income tax repeal.”

The radical wealthy at that time were taking their guidance on how to create a movement from the Civil Rights Movement.  It would be the era of the Koch brothers before a more successful strategy would emerge.  Jane Mayer provides the up-to-date details in her book Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right.

Charles and David Koch inherited both wealth and radical philosophies from their father, who was one of the founding members of the John Birch Society.  Mayer tells us that they were not much concerned about the Communist plots so important to the other Birchers.  They were more interested in social and economic philosophies. 

They managed to arrive at a view of government as having only the function of protecting personal property and personal rights.

“As far back as 1976, Charles Koch, who was trained as an engineer, began planning a movement that would sweep the country.  As a former member of the John Birch Society, he had a radical goal.  In 1978, he declared ‘Our movement must destroy the prevalent statist paradigm’.”

The Koch brothers were exceptionally wealthy, and that produced influence among the fraternity of the extraordinarily wealthy.

“Charles and David Koch automatically had extraordinary influence.  But for many years, they had magnified their reach by joining forces with a small and intensely ideological group of like minded political allies, many of whose personal fortunes were also unfathomably large.  This faction hoped to use their wealth to advance a strain of conservative libertarian politics that was so far out on the political fringe as recently as 1980, when David Koch ran for vice president of the United States on the libertarian Party ticket, it received only 1 percent of the American vote.   At the time, the conservative icon William F. Buckley Jr. dismissed their views as ‘Anarcho-Totalitarianism’.”

And what was in the platform on which David Koch ran?

“It called for the repeal of all campaign-finance laws and the abolition of the Federal Election Commission (FEC).  It also favored the abolition of all government health-care programs, including Medicaid and Medicare.  It attacked Social Security as ‘virtually bankrupt’ and called for its abolition, too.  The Libertarians also opposed all income and corporate taxes, including capital gains taxes, and called for an end to the prosecution of tax evaders.  Their platform called for the abolition too of the Securities and Exchange Commission, the Environmental Protection Agency, the FBI, and the CIA, among other government agencies.  It demanded the abolition of ‘any laws’ impeding employment—by which it meant minimum wage and child labor laws.  And it targeted public schools for abolition too, along with what it termed ‘compulsory’ education of children.”

There is no evidence that the Koch brothers’ goals have changed, but Mayer provides plenty of evidence that they learned a better way to get what they wanted without having to participate directly in political battles.

The Kochs and others would be greatly influenced by a memo distributed by Lewis Powell, soon to be nominated to the Supreme Court by Richard Nixon.  Powell argued that businesses were under assault and needed to fight back.  What was unique about his proposal was that businesses could not win any battle with society unless they first gained control of the terms of the dispute.

“What distinguished his jeremiad from many other conservative screeds was his argument that the greatest threat was posed not by a few ‘extremists of the left,’ but rather by ‘perfectly respectable elements of society.’  The real enemies, he suggested, were ‘the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences,’ and ‘politicians’.”

“Powell called on corporate America to fight back.  He urged America’s capitalists to wage ‘guerilla warfare’ against those seeking to ‘insidiously’ undermine them.  Conservatives must capture public opinion, he argued, by exerting influence over the institutions that shape it, which he identified as academia, the media, the churches, and the courts.  He argued that conservatives should control the political debate at its source by demanding ‘balance’ in textbooks, television shows, and news coverage.  Donors, he argued, should demand a say in university hiring and curriculum and ‘press vigorously in all political arenas.’  The key to victory, he predicted, was ‘careful long-range planning and implementation,’ backed by a ‘scale of financing available only through joint effort’.”

The mechanism for waging this ‘guerilla warfare’ would be the private foundation—supposedly devoted to charity and other ‘public goods.’

“By 1930, there were approximately two hundred private foundations….By 1950, the number had grown to two thousand, and by 1985 there were thirty thousand.  In 2013, there were over a hundred thousand private foundations in the United States with assets of over $800 billion.  These particularly American organizations, run with little transparency or accountability to either voters or consumers yet publicly subsidized by tax breaks, have grown into 800-billion-pound Goliaths in the public policy realm.”

“Private foundations have very few legal restrictions.  They are required to donate at least 5 percent of their assets every year to public charities—referred to as ‘nonprofit’ organizations.”

It was this designation of “nonprofit organizations” as the legal equivalent to charitable organizations that would allow what Mayer refers to as the “weaponization of philanthropy.” When Congress created this interpretation of nonprofits as “social welfare” entities early in the twentieth century it was not expected that the wealthy would use them as a means of propagating personal political agendas while hiding the source of funds.

“….to qualify as tax exempt, such groups had to certify that they would be ‘operated exclusively for the promotion of social welfare.’  The IRS later loosened the guidelines, though, allowing them to engage marginally in politics, so long as it wasn’t their ‘primary’ purpose.  Lawyers soon stretched the loophole to absurd lengths.  They argued, for instance, that if a group spent 49 percent of its funds on politics, it complied with the law because it still wasn’t ‘primarily’ engaged in politics.  They also argued that one such group could claim no political spending if it gave to another such group, even if the latter spent the funds on politics.  Experts likened the setup to Russian nesting dolls.  For example, at the end of 2010, the Center to Protect Patient Rights reported on its tax return that it spent no money on politics.  Yet it granted $103 million to other conservative groups, most of which were actively engaged in the midterm elections.”

Mayer explains how the wealthy used their money to fund campaigns against public policy notions of which they disapproved.  Consider the findings of a study of the funding behind the campaign against actions to counter global warming.

“Robert Brulle, a Drexel University professor of sociology and environmental science, discovered that between 2003 and 2010 over half a billion dollars was spent on what he described as a massive ‘campaign to manipulate and mislead the public about the threat posed by climate change.’  The study examined the tax records of more than a hundred nonprofit organizations engaged in challenging the prevailing science on global warming.  What it found was, in essence, a corporate lobbying campaign disguised as a tax-exempt philanthropic endeavor.  Some 140 conservative foundations funded the campaign, Brulle found.  During the seven-year period he studied, these foundations distributed $558 million in the form of 5,299 grants to ninety-one different nonprofit organizations.  The money went to think tanks, advocacy groups, trade associations, other foundations, and academic and legal programs.  Cumulatively, this private network waged a permanent campaign to undermine Americans’ faith in climate science and to defeat any effort to regulate carbon emissions.”

Not surprisingly the Kochs and Koch Industries were big players in this effort, along with many others whose wealth depended on fossil fuels.  The fact that over half a billion dollars was spent on combating proposed legislation in this one area may seem like a lot of money.  Mayer tracks the Koch brothers’ wealth over time: $28 billion in 2009, $62 billion in 2012, and up to $83.2 billion in 2015.  They have done rather well under a president who they viewed as an enemy of business.  A half billion dollars is really just “loose change” for these guys.  And they aren’t the only ones who could spend stupendous amounts of money if they wished.

The Kochs have been holding “summits” since 2003 in which like-minded people were invited to discuss issues and strategies.  These summits really took off with the election of Obama in 2009, when a number of people who grew wealthier under George W. Bush realized that the new president might ruin the good thing they had going.  Something had to be done to undermine the Obama administration

“By 2009, the Kochs had indeed succeeded in expanding their political conference from a wonky free-market swap fest to the point where it was beginning to attract an impressive array of influential figures.  Wealthy businessmen thronged to rub shoulders with famous and powerful speakers, like the Supreme Court justices Antonin Scalia and Clarence Thomas.  Congressmen, senators, governors, and media celebrities came too.”

The Kochs viewed attendees at these summits as donors who would pledge money to fund projects.  As these gatherings grew in popularity, so did the amounts pledged as contributions to the joint effort.  These were intended to be secret meetings with no record of what transpired and no attendance lists made public, but Mayer was able to gather some information that had leaked out.

“No fewer than eighteen billionaires would be among the ‘doers’ joining the Kochs’ clandestine opposition movement during the first term of Obama’s presidency.  Ignoring the mere millionaires in attendance, many of whose fortunes were estimated to be worth hundreds of millions of dollars, the combined fortunes of the eighteen known billionaire participants alone as of 2015 topped $214 billion.”

Dare we refer to this network of the wealthy as a cabal?  The Kochs and their “friends” have advertized a budget of $889 million for the 2016 election cycle.  Who knows how much money will actually be spent—and for what purpose?

Consider that it takes tens of millions to elect a senator, millions to elect congresspersons, state legislators, and  judges, and perhaps thousands to elect school board members.  There is plenty of money available to take over the nation.  If a legislator cannot be bought with campaign funds and other goodies, he or she can be threatened with campaign funding for a primary opponent.  If he or she still doesn’t behave they can simply be replaced by someone who will.  The Kochs and their accomplices essentially own the Republican Party.  There is no limit to the damage of which they are capable.

Recall that incredible platform on which David Koch ran for vice president in 1980.  Is it still so incredible?  Taxes have not been eliminated, but funding for the IRS is being ratcheted down which makes it easier for the wealthy to avoid taxes.  Public education has not been abolished, but note the number of billionaires who are championing “nonprofit” private charter schools as an alternative.  Public higher education is being starved of funds, making it easier for the Kochs and others to dangle needed money in front of universities in order to establish teachers and curricula that adhere to their philosophies.  Koch Industries is most famous for the pollution it generates.  The Environmental Protection Agency is under continual assault.  Concerns about debt are overplayed in order to continually limit the ability of the government to govern.

The bottom line is that people and policies that once were considered insane are now dominant in one of our political parties.

Be afraid!  Be very afraid!