In the modern world of American politics, special-interest money is displacing voters. Wealth is highly concentrated in a few hands, with corporations wielding enormous power. More and more families patch together two or more paychecks to meet the widening income, healthcare, and pension gaps that are threatening the middle class…
After a disastrous defeat in Vietnam and the adoption of Reaganomics, the American Empire embarked upon becoming La República Bananera del Norte. On a small scale, the two vanguard nations, Guatemala and Honduras, gave the world the three defining characteristics of a Banana Republic.
I. Class Structure: a tiny elite, a small middle class, and a large underclass. In the Guatemalan banana republic, ninety percent of the country’s farms yielded below subsistence for the campesinos, while the oligarchs owned two percent of the farms with sixty-five percent of the arable land.
In La República Bananera del Norte, wealth is also highly concentrated in a few hands. In 2007, the top one percent of households (the oligarchs) owned thirty-five percent of all privately held wealth, and the next nineteen percent (the managerial, professional, and small business stratum) had fifty percent; thus, just twenty percent of the people owned an amazing eighty-five percent of everything, leaving only fifteen percent of the crumbs for the bottom eighty percent. The bottom forty percent of the population holds a mere .3 percent of the wealth in La República Bananera del Norte.
From 1983 to 2004, forty-two percent of the new financial wealth created went to the top one percent, ninety-four percent went to the top twenty percent, and a mere six percent of all the new financial wealth generated in La República Bananera del Norte during the 1980s, the 1990s, and the early 2000s went to the bottom eighty percent. The top 0.1 percent—one out of every thousand households—received over twenty percent of all after-tax income gains between 1979 and 2005, compared with 13.5 percent enjoyed by the bottom sixty percent of households. If the total income growth of those years were a pie, the slice enjoyed by the roughly 300,000 people in the top .1 percent would be half again as large as the slice enjoyed by the roughly 180 million in the bottom sixty percent.
The ratio of CEO pay to worker pay rose from 20:1 in 1965 to 271:1 in 2017.[*] Over the past forty years, with increasing globalization, factory workers, as well as many middle managers, experienced a shift from a high-wage to a low-wage economy.
More and more families patch together two or more paychecks to meet the widening income, healthcare, and pension gaps that are threatening the middle class. In the wake of the 2008 economic collapse, high unemployment, the scarcity of high-paying jobs, and skyrocketing foreclosures led many Americans to believe that much of the middle class is sinking into the underclass.
II. Rule by a corrupt oligarchy. The collusion between the United Fruit Company and the Guatemalan political rulers, often a military junta, kept money flowing north and the distribution of land and natural wealth unequal.
In La República Bananera del Norte, the oligarchy enriches itself by exploiting the rest of society. Here is one way it works. According to Edgar S. Woolard, Jr., a retired CEO of DuPont, the compensation of a CEO is made to appear fair and objective. A CEO hires outside consultants, so-called experts on compensation. They suggest a compensation package that includes salary, stock options, a retirement plan, and other benefits that will please the CEO. The consultants know that the CEO has a determining voice if they will ever be hired again. The board of directors goes along with the scam because three or four CEOs from other corporations sit on the board. The scam moves from corporation to corporation: That is how the ratio of CEO pay to worker pay rose from 20:1 in 1965 to 271:1 in 2017.
In La República Bananera del Norte, a CEO often sacrifices the good of the corporation to his or her own private good. James M. Kilts, chief executive, chairman, and president of Gillette from 2001 to 2005, defended the acquisition of Gillette by Proctor & Gamble for $57 billion. He brushed aside the criticism that the acquisition would be costly to shareholders and employees but a windfall for executives. Mr. Kilts was to receive a rumored $185 million. The two investment banks that judged the deal fair to executives, shareholders, and employees would receive fees only if the acquisition went through, which it did.
Another way the oligarchy exploits the rest of society is through owning US senators and representatives. In 2009, 13,664 registered lobbyists were headquartered in Washington, D.C., which amounted to twenty-six lobbyists for every congressperson. The American people elected 535 congressional representatives to promote their welfare, while corporations, labor unions, and advocacy groups hired 13,664 lobbyists to advance aims often contrary to the common good. Special-interest groups, through lobbyists, spent $3.49 billion to influence legislation in the House of Representatives and the Senate. Top honors went to the US Chamber of Commerce, spending $144 million. This is not surprising. The business community is divided into “industries,” each with narrowly-defined interests and with substantial money to promote those interests.
The power wielded by corporations in American politics is a puzzle only if one believes that American democracy operates according to Lincoln’s vision, “government of the people, by the people, for the people.” Indeed, in the modern world of politics, special-interest money is displacing voters. Money reaped through serving special-interest groups is converted into votes through what former Congressman Tony Coelho calls “political technology”—polling, television advertising, and computer-driven mail.
And this political technology is expensive. During the 2009-2010 election cycle, Senate Majority Leader Harry Reid spent $22,635,642 to get re-elected, and future Speaker of the House John Boehner spent $7,451,751. The day after being elected, Senator Reid and Congressman Boehner must begin raising money for the next election. Senator Reid must raise $3,775,000 each year while he is in office, and Congressman Boehner $3,725,000, that is about $10,275 every day, including weekends and holidays.
Most members of Congress cannot raise those sums of money in their local districts through twenty or fifty dollar contributions from constituents. They must go to moneyed interests wherever they are. To keep needed campaign funds flowing, senators and congressmen pass spending programs, subsidies, tax breaks, and economic regulations that serve special-interest groups at the expense of the nation as a whole.
Special-interest politics produces incoherent national policies that cause a ballooning national debt and an overall economic decline. Congressman Boehner handed out checks from the tobacco industry on the floor of the House to fellow Congressmen in 1995 when they were considering a bill to end a tobacco subsidy, and we rubes, we believers in one man, one vote, had our tax money transferred to the tobacco industry.
Pushing self-interest to its logical conclusion, the primary allegiance of many senators and representatives is to themselves, not to their constituents back home or even to political ideology.
III. The policies of the oligarchy lead to the financial bankruptcy of the State. Honduras’ $4 billion dollar foreign debt excluded capital investment, thereby contributing to its economic stagnation and reinforcing its Banana Republic status.
The current debt (2017) of La República Bananera del Norte is $19.3 trillion, or $61,365 person. The Federal Budget deficit for the fiscal year 2017 was $666 billion, that is $2,050 for every man, woman, and child. Alright, you campesinos fork up the cash to keep the oligarchs in power!
Bienvenido a La República Bananera del Norte.
Editor’s Note: Mr. Stanciu wrote the original version of this essay in 2011. It is published here for the first time. “The only changes in the original essay,” Mr. Stanciu notes, “are several numerical updates that are even more depressing than the original.”
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[*] Lawrence Mishel and Jessica Schieder, “CEO pay remains high relative to the pay of typical workers and high-wage earners,” (July 20, 2017).