Number 190 January 31, 2003

This Week:

Quote of the Week
Anti-War Resources of the Week
Wealth and Power
The Demagogue Dynamic: Easy as 1-2-3
George W. Bush’s Economic Stimulus Plan


There is so much to say about the attack on Iraq that it is difficult to refrain these days from becoming a single-issue newsletter. However, I think it’s important to remember, in the midst of the war fever, that it’s all connected, and that there is a “big plan” to consolidate wealth and power. The attack on Iraq is part of it, and the attack on the Popular Government here at home is another part of it. There is an incredible amount of positive organizing against the war going on (as evidenced by, among other things, the increasing attacks on that effort in the media.) This week’s Anti-War Resource of the Week highlights some good news that you can work on in your own community.

The more general good news about the elite power grab now underway is that it seems to be so extreme that it may be opening up the minds of some normally-complacent people to the idea that they might have to “get political” in order to preserve or strengthen the freedoms and rights that we all value. As Joni Mitchell sang so many years ago, “Don’t it always seem to go that you don’t know what you got ‘til it’s gone?”

I’m outta room. Gotta go. Until next week,


"Quote" of the Week:

This week’s “Quote” is from the Star Tribune (Newspaper of the Twin Cities!) of January 29th, in an article reporting on a series of hearings by the House Health and Human Services Finance Committee on “doing more with less.” These hearings were intended to get from the public their “ideas for saving money.” Health and Human Services is the part of state government that primarily serves the needs of poor and sick Minnesotans. Elizabeth Kuoppala, policy advocate for the Minnesota Coalition for the Homeless, called the process a “sham.” Here’s what she said about the “do more with less” hearings:

“It's based on the myth that government can do more with less. And they won't let people testify who believe that a tax increase should be part of the equation. That rules a lot of us out.”

Anti-War Resource of the Week

A LITTLE ENCOURAGEMENT: 57 cities in the United States of America have now passed resolutions against a war on Iraq. While some say that this sort of resolution is no business of city government, I consider it a perfectly appropriate way for citizens to express their views in a formal and democratic way.

A group of progressive organizations calling itself the Cities For Peace Campaign is helping to push this effort forward. Read about it—including the inspiring list of cities, universities, and labor groups who have gone on record against the war!—on the CFP website at

My own city council member has introduced a resolution in Minneapolis, and explains the reasoning pretty well in some comments found on page B2 of the January 30th Star Tribune (Newspaper of the Twin Cities!) Find that story at


Wealth and Power

Wealthy and powerful people would normally support policies that increase both their wealth and their power. However, if forced to choose, the intelligent elite will give up some wealth if that’s necessary in order to retain power. Why? Because every elite knows that, if you have power, you can always get wealth. But if you don’t have power, then your wealth could be taken from you. That’s why true majority rule in an unequal society is always a threat to those at the top.

Consider that history is filled with the stories of corporations offering pay increases and improved working conditions to their workers if only they will agree not to form a union. This is because the bosses know that a union gives workers power, and it’s worth giving up a little money (or a lot!) to prevent a change in the power advantage that owners have over unorganized workers.

Perhaps an even better illustration is the elite hatred of taxation. The legitimacy of taxation arises from the idea that the majority has the right to decide that we all should contribute some of “our” wealth towards the common good. Such evidence of the rights of people taking priority over the “rights” of wealth is considered by the Individualist and Competitive to be nothing but “robbery,” or “confiscation” of “their” property.


The Demagogue Dynamic: Easy as 1-2-3

Demagogue (n): a person who tries to stir up the people by appeals to emotion, prejudice, etc. in order to become a leader and achieve selfish ends.

Last week I talked about the Two Types of Government. One—the one that serves the majority of people in the country—I called the Popular Government. The other—the one that serves the wealthy and powerful—I called the Business Government. I suggested that people who say they are “anti-government” are often not opposed to government as a whole, but only to the part or parts of government that don’t serve their interests. Confusion on this point plays a big role in bringing demagogues to power, including the current resident of the White House, and here’s how.

Due to the power of the business class, the Popular Government is far less important and helpful than it could be. Less helpful, in fact, than it is in many other countries with far less wealth than we have here, as you can see if you compare systems of Social Security, health care, criminal justice, welfare, and so forth. This has two troubling effects. First, the weakness and inadequacy of such important programs as Social Security and (what is left of) welfare make them hard to defend for some people. After all, who wants to defend programs that aren’t working so great?

Secondly, popular discontent with the inadequacy of public programs—especially when they are underfunded and understaffed—is constantly being manipulated by the business classes to create “support” for getting rid of them entirely. Knowing that people under stress gravitate to strong leaders with simple solutions, demagogues utilize a simple 3-step strategy: 1. Accurately “read” popular discontent; 2. “Explain” what the problem is, and 3. Sell the voters on a false “solution.”

Consider the attack on Social Security:

1. Opponents of the program “read” people’s legitimate complaints that their Social Security benefits are not sufficient to allow them to retire in dignity;
2. Opponents “explain” that this is because the system is old, out-of-date, there’s no money, it’s in crisis, etc.
3. The saleable solution: “Save” Social Security by privatizing it.

Read, Explain, Sell; it’s as easy as 1, 2 3. Before Social Security, it was welfare. Next it’s the income tax. Speaking of taxes, what’s up with George W.’s “economic stimulus” plan, the most well-known part of which is a major tax cut? Read on...


George W. Bush’s Economic Stimulus Plan

If you happened to notice that the very title of this article is a piece of propaganda promoted by the Individual and Competitive (IC, a.k.a. “conservative”) elements in our society, then good for you. But did you notice that the standard response of the liberal opposition fails to address the real issue at stake? If not, this piece is for you.

Lots of people have been talking about, analyzing, and criticizing the economic plan put out by the “President” on January 7th. Surely you’ve heard about it. It’s the one where Bush proposes a $674 billion, 10-year economic package. To their credit, the corporate press has done a pretty good job of pointing out, as the New York Times (“All The News That’s Fit To Print”) put it, that the “Plan Gives Most Benefits to Wealthy and Families.”

As the headline implies, virtually all of the public debate on what the “President” calls an “economic stimulus” plan has been focused on the tax cut aspects of what he has proposed—how fair the cuts are, who they benefit, and so forth. Lots of self-described liberal critics refuse to characterize it as an “economic stimulus” plan at all, calling it instead a “tax cut” plan and pointing out that the cuts go almost entirely to the rich. They are outraged by the unfairness of it. Good for them.

Self-described “conservatives,” for the most part, defend the plan, pointing out that rich people pay most of the taxes, so it’s only fair that they should get most of the cuts. Anyhow, they say, it’s not a “tax plan;” it’s an “economic stimulus” plan, because those wealthy folks will take the money that would have gone to taxes and instead invest it in job-producing businesses. They don’t really believe that, as University of Michigan tax economist Joel E. Slemrod, who supports dividend tax cuts, made clear early this month, saying: “For political reasons, [Bush and Co.] think calling it stimulus is going to resonate better than fundamental tax reform.”

Missing the Point

The Bush plan to cut taxes on stock dividends may or may not stimulate anything, but one thing it will do is reduce the revenue taken in by the government, and not just on the federal level.

The dividend tax cut is going to put enormous pressure on city and state budgets, for two reasons. First of all, states tie their dividend taxes to the federal law, so the states will stop taxing dividends if the federal government does. Secondly, if dividends are not taxed, then investors will have even less reason to invest in municipal bonds—bonds that states and cities use to fund projects like schools, highways and public housing—since they’ll be worth less than before relative to stock dividends. This will likely force states and cities to raise the interest rates on their bonds to make them more competitive with corporate stocks. This, in turn, will cost the states billions and billions of dollars, far more than the new state aid proposed by Mr. Bush. “Clearly, this was not the intended effect of the plan,” says Bill Pound, executive director of the National Conference of State Legislatures. Oh, but it was, Mr. Pound, indeed it was.

Lower Taxes, Good. Weaker Government, Better

What Mr. Pound doesn’t seem to realize is that the primary concern of the IC crowd is the removal of any impediments to the exercise of their power. Having their taxes cut is secondary (in line with the wealth/power equation outlined elsewhere in this issue of the Notes). Since the only institution powerful enough to place any meaningful limits on corporate power in recent years is the government—federal and state—then it follows that the agenda of the corporate leadership in this country is to reduce the power of any and all governments by “starving” them of the funds needed to do, well, anything. Not just in this country, either; the U.S. withholding of our U.N. dues over the past decade was motivated by the same agenda.

The fact that this is at the center of the IC agenda is no secret. They aggressively support “limited government” and oppose “big government,” as I pointed out last week, in “The Core of the IC Agenda.” The grab for power is always cloaked in the language of preserving “freedom” and “sovereignty,” and that’s accurate. They want to preserve their freedom to use their wealth and power however they like, the public—and the world—be damned.

When virtually all of us are talking about who gets the tax cuts, we are helping to disguise the real agenda, which is who does not get the revenue. In addition to removing impediments to their power, putting the government on a “tax diet” further weakens the Popular Government, making people even more disenchanted with its ineffectiveness and ever more cynical. The weaker a public institution is, the less people care when it is weakened even further.

Elites win twice when this dynamic is established. First of all, the government is weak and they are more powerful. The second reason is that it jump-starts the 1-2-3 “Demagogue Dynamic” that can be used to institutionalize that power, as I explain elsewhere in this issue. So, not only are we losing this round, but the next round is being set up with the cards stacked (to mix a metaphor).

The “President” refers to his plan as an “economic stimulus” plan. Critics claim to be in opposition when they refer to it as a “tax cut” plan. To observe this dynamic is to witness a truly remarkable propaganda coup. We’re all arguing about whether this is a dog or a cat, when it’s a different animal entirely. It’s not a tax cut plan, and it’s not an economic stimulus plan. It’s a plan to delegitimize any and all public spending for the public good. As such, it’s an attack on not only the weak and unresponsive government we have, but on the strong and democratic Popular Government we could have. And, unless we learn to see this propaganda and act fearlessly to counter it, it looks like it might just work.