America is a Class War

Have you noticed? It's been going on for a while.

Photo by Kayle Kaupanger on Unsplash

On August 23rd, 1971, about two months before he was nominated to serve as an Associate Justice on the US Supreme Court, Lewis Powell, Jr. wrote a memo to his friend Eugene B. Sydnor, Jr. at the U.S. Chamber of Commerce. The memo was titled “Attack on American Free Enterprise System” and served as the blueprint for business and conservative forces to “fight back” against the liberal society that started with FDR’s New Deal and culminated in the Great Society reforms of President Lyndon B. Johnson in the 1960s.

Powell wrote that the purpose of the memo was to “identify the problem and suggest possible avenues of action for further consideration.”

The problem as Powell saw it, was that business in the United States was on the back foot and that liberal forces were ascendant in culture, thought, regulation and business in America and needed to be reversed.

Here is a bit of Powell memo to give you a flavor of the tone:

Sources of the Attack

The sources are varied and diffused. They include, not unexpectedly, the Communists, New Leftists and other revolutionaries who would destroy the entire system, both political and economic. These extremists of the left are far more numerous, better financed, and increasingly are more welcomed and encouraged by other elements of society, than ever before in our history. But they remain a small minority, and are not yet the principal cause for concern.

The most disquieting voices joining the chorus of criticism come from perfectly respectable elements of society: from the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians. In most of these groups the movement against the system is participated in only by minorities. Yet, these often are the most articulate, the most vocal, the most prolific in their writing and speaking.

That may sound a bit hyperbolic and frantic today but consider that this memo was written over 50 years ago at a time when liberal politics was at its apex in America and business and the Republican party were in a bit of the wilderness.

You could say it was the exact opposite of what we see today with the Republican Party ascendant and in control of all branches of US government and the Democratic Party flailing.

Please read the Powell memo for yourself. It is worth your time. When you read it you can see that a lot of the seeds for corporate dominance, conservative media, conservative think tanks, and the culture wars we have seen in the past decades are all there. Powell wasn’t the only one thinking these things or writing about them. But he did a good job of synthesizing the problem from a conservative perspective and set out a play book for how to turn things around.

And here we are today.

The Powell memo was the template for the last 50 years of wealth redistribution in the United States. Look at this chart below. It took about 10 years, but starting with the Reagan administration, average income for the 1% rose exponentially, those for everyone else lagged far behind. Contrast the last 40 years with the 30 years before that (1950 - 1980) where growth was largely shared equally.

We now live in a world where corporations are ascendant. America is not a government of the people, by the people, for the people, as President Lincoln emphasized in his Gettysburg Address. The United States is a government of the 1%, by the 1% and for the 1%, as Powell argued for in that memo just over 5 decades ago.

Since corporations are legally people you can simply say the US government is “of the corporate people, by the corporate people, and for the corporate people,” but that doesn’t roll off the tongue quite as well.

Over that time, tax rates on the wealthy and corporations were slashed multiple times, starving some of the programs of the New Deal and the Great Society of their effectiveness. In 1971, when The Powell Memo was written, the top corporate tax bracket was 48%. By 1980, that was down to 46%. Today it is 21%, and many corporations pay no to little taxes through completely legal loopholes and tax avoidance schemes. This isn’t just the case in the US. Tax avoidance is great for creating shareholder value, so corporates have pursued it doggedly around the world. In 1980, corporate tax rates around the world averaged 40.11 percent, and 46.52 percent when weighted by GDP. Since then, countries have recognized the impact that high corporate tax rates have on business investment decisions; in 2022, the average is now 23.37 percent, and 25.43 when weighted by GDP, for 180 separate tax jurisdictions. Personal tax rates in the US were 70% at the highest level in 1971, while the highest rate today is 37%. It is interesting to look at the corporate tax rates in the US over time. In the robber baron era of the early 1900s, corporate tax rates were incredibly low. In 1910, the top corporate tax rate was 1%. That rose to 12% by 1918. The rate was 24% in 1940, and then rose to 40% two years later as the US entered World War II and stayed high to pay for the war and programs like the GI bill that helped build the middle class. Corporate tax rates started falling after the Powell memo.

If you don’t believe there is a class war going on in the United States, explain this:

The minimum wage in America currently sits at $7.25 an hour. It was last raised in July of 2009. That is over15 years ago. Since that time, the cost of living has increased by 20%. During that period, the top corporate tax rate has fallen from 35% to 21%.

Over the past 50 years, conservatives in the United States succeeded in their messaging to American’s that “government was the enemy” and scaled back regulation and social programs over time. In 2010 the U.S. Supreme Court case known as Citizens United v. FEC, struck down as unconstitutional a federal law prohibiting corporations and unions from making expenditures in connection with federal elections. That opened the floodgates to spending on politics by largely hidden interests. This equating money with speech, gave billionaires and corporations a disproportionate influence on speech.

What we need.

Where we are now in America didn’t happen overnight, and it wasn’t an accident. There was a plan, and people on the one side of the political spectrum executed that plan. If there is a coherent plan to change to the American economy to one that puts people over profit, and looks to address climate change and ecological overshoot, I haven’t seen it. If I missed it, please share it with me.

It will then take a large part of the population (it doesn’t have to be a political party) all pulling in one direction to make things happen. Then expect about 10 years to begin to see the fruits of your labor. That’s how these things work.

Sorry if that’s too late to save ourselves, but we weren't’ as serious about getting things done for the past 50 years - and here we are as a result.

America is a long con, a protection racket, and a class war, and most of us haven’t caught on.

The Powell memo was the first shot fired in a class war that has raged mostly unnoticed by Americans for the past 50+ years. It has gone unnoticed largely because for most of that time, America was prosperous. Although the top 1% were getting most of the gains in wealth on average, people were better off.

Your average person born in the years following the Powell memo was still better off than their parents and enjoyed a relatively prosperous life. We all learned that GDP growth was the way to measure success. Growth was how we defeated the Soviet Union, our houses got bigger, our cars got bigger, our waistlines got bigger, all signs of a prosperous economy.

But that has change. For the first time in American history, the current youngest generation - millennials - will be worse off economically than their parents. Add in the environmental degradation they face, and they, and the generations that come after them are likely to take a closer look at the long con, the protection racket and the class war.

But that may have to wait. Republicans have all the power now in Washington and that likely means more tax cuts for corporations and no minimum wage hike. Trump’s 2017 tax cuts are set to expire soon. Studys show that those tax cuts made inequality in America worse.

If anyone has been working on a memo to address the class war, please share it with us. I’ve been working on one, but it is about 100 blogs long. I need an editor.