Gross Inequality Part 2: Have Banana Republic Inequality? Expect Banana Republic Politics.

Stephen Rockwell • 23 September 2018
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Before "Banana Republic" was the overpriced brand from the Gap, it was a term referring to countries that experienced great economic inequality and generally unstable politics.  

Such instability was often blamed on the inherent flaws of the country itself as opposed to the outside forces that undermined democracy for economic self-interest.  In fact, American fruit corporations played a dominant role in the politics of smaller Latin American countries.  The corporations owned much of the fertile land and exerted control over the country through the support of a few corrupt elite and the disruption of labor organizing. 

These elite found themselves in positions of wealth at the cost of the impoverishment of their fellow citizens. Populist and labor uprisings against such gross inequality of wealth and power threatened this establishment order.  In countries like Honduras and Guatemala, popular elected governments that attempted to build fairer systems were deposed with the help of these corporations.  Often military governments were installed that would maintain and benefit from the inequality.  

In the late 19th and early 20th century, this same American corporate power played a dominant role in American politics, until the labor movement and the Progressive Movement fought back against the extremes of unbridled and unregulated capitalism and the inequality it creates.  The post WWII consensus grew out of this progressivism and New Deal politics that honored the role of labor and put tax policies in place that would ensure that a rising tide lifted all ships.

However, the greedy elites fought back starting with Nixon's southern strategy and Reagan's Democrats.  Republicans used veiled racism to garner the support of white working class Americans, even as the economic policies pursued by Republicans did little to help and more often did serious destruction to the economics that support white working class livelihoods.  

As a result, inequality skyrocketed over the last 40 years.  Yet, the wealthy almost inexplicably want more. To what end could such stark inequality lead? The Trump era demonstrates that these wealthy elites will tolerate an incredible amount of indecency, and more overt forms racism and xenophobia to ensure that their ends are met.

Example A: What is the one significantly policy accomplishment of the Trump Era?  A tax cut in which 83% of the benefits went to the very top few percent.  

These tax cuts are the set up for the final step for Republican establishment:  As we run trillion dollar deficits in good economic times, it is clear the the GOP was really full of it about their concern about deficits.  We knew this of course because it was Ronald Reagan that first started punching gaping holes in the federal budget for tax cuts for rich people and increases in military spending.

The next step in this process is a complete gutting of the social safety net, a dream of Speak Paul Ryan.  The midterm elections and the election of 2020 will help determine if this dream becomes a reality for Republicans.

We are close to Banana Republic status

The economy is completely out of any type of reasonable balance as we covered in our our list post on the topic.  Such inequality and such corruption from economic elites means we will start seeing banana republic politics.  Right wing, militaristic leaders arise to do the bidding of the elites.  They often use racism, homophobia, or some other type of oppression to divert the attention of followers away from their own economic situation and towards feeling better because they are not a member of an oppressed class.  Trump is a master of these politics and is much more overt in his attacks, but all Republican Presidents since Nixon have done so, even if perhaps in a more veiled manner.  

The countervailing political force to such inequality and political corruptions becomes socialism. Socialist revolution in the Latin America is a major part of the political discourse with its most successful establishment in Cuba.  In the US, the Progressive movement and later New Deal economics adopted a number of socialist positions and arguably saved American capitalism by rounding off many of the rough edges and worst abuses while taming elite greed through high taxes. 

Today, it has been shocking and frankly underreported to see the growth of a legitimate socialist/democratic socialist movement in the two years since Trump was elected.  After an election where no other Presidential candidate has ever gotten so close to the White House as a democratic socialist as Bernie Sanders, Democratic Socialists of America (DSA) has grown in leaps and bounds surpassing 50k members nationwide.  This is part of the reason that Sanders is a front runner yet again for 2020.  Furthermore, we have seen democratic socialists organize and push against establishment, often corporatist Democrats, most notably Alexandria Ocasio-Cortez's defeat of number 4 house Dem Joe Crowley.  

In a world where the economic system continues to fail so many and give so many benefits to so few, we can expect these countervailing forces at opposite ends of the political spectrum to continue to pick up stream. 

If Democrats are smart (a stretch, I know), they won't attempt to suppress these impulses, but rather re-adopt New Deal economics that can provide a large enough tent for working people of all stripes and an ideological spectrum that ranges from progressivism to socialism. 

Universal health care, debt free college, smarter infrastructure, and real climate action are all uniting issues. If there are Democrats still not on board with any of these, they should understand how radically the ground is shifting.  They will likely need to step aside given the political currents of our time.  

This is the second in a series on Economic Inequality. Click here for the The first installment, Gross Inequality Spurring a True Left and a Racist Right.