The Golden Age of Tycoons


John F. Kennedy essentially bought his way into politics. His father, the wealthy Joseph Kennedy, picked out a nice congressional seat in Massachusetts and basically paid the occupant of the position to step down and run instead for the Boston mayoralty. JFK’s father then tried to pay off the Democratic frontrunner to drop out of the race, and when that didn’t work, persuaded William Randolph Hearst not to run any of the candidate’s ads or pictures in Hearst-owned newspapers. Joe Kennedy even paid a janitor named Joseph Russo to run in the race in order to dilute support for another leading candidate named Joseph Russo. Recognizing the importance of PR, the Kennedy family contributed $600,000 – an enormous sum in 1946 – for a children’s hospital in the district where JFK was running for office.

It would be reassuring if this interpenetration of wealth and politics were simply part of the old style of American politics where deals were brokered in Tammany Hall back rooms and dead men voted in Chicago. But money is still king in U.S. politics. In the 2010 elections, the most expensive in history, winning a congressional seat cost about $1.4 million, and each Senate seat set the winners back by $9.8 million. In 2008, Barack Obama broke fundraising records in his presidential bid when he took in $750 million, and he’s on track to break the record again in 2012.

Sometimes candidates rely on their rich fathers. But if not born to wealth, they quickly mature into 1 percenters. Nearly half of the members of Congress are millionaires. While the median net worth of all Americans dropped by 8 percentfrom 2004 to 2010, the net worth of our elected representatives climbed over the same period by 15 percent. It’s still the best Congress that money can buy, and it’s only going to get worse, thanks to the Supreme Court and its 5-4 Citizens United decision. The wealthy can now spend unlimited amounts of money to influence the 2012 elections.

Money has full-spectrum dominance of U.S. politics, from the “street money” that party machines hand out at the community level for get-out-the-vote campaigns to the immense contributions from a financial sector that has already chosen Mitt Romney as the Republican candidate. Then there’s the perfectly legal “revolving door” by which retiring politicians leverage their invaluable political connections to amass great wealth in the private sector. The stock reason for retirement – “I want to spend more time with my family” – should really be “I want to spend more time with my financial advisor.”

We don’t call any of this corruption. We reserve that term for dolts like former Illinois governor Rod Blagojevich, who recently received a 16-year sentence for trying to sell a Senate seat, or former Prince George’s County executive Jack Johnson, who is getting a seven-year sentence for taking as much as $1 million in bribes. These abuses are the exception, rather than the rule, or so we would prefer to believe. But that’s only because we write the rules to permit the rich to run our democracy.

Corruption, after all, is what happens in other countries, particularly those that rank below the United States (at number 24) in Transparency International’s 2011 Corruption Index. One of those countries is Russia, which registers at a dismal 143rd place in the index, tied with Nigeria.

Russians recently went to the polls to elect a new parliament (Duma). United Russia, the party of Prime Minister Vladimir Putin and President Dmitry Medvedev, saw a major slip in support in the December 3 elections, though it will still remain the largest parliamentary faction. Even this poor showing, Russian observers allege, was inflated by fraud.

“The Russian election-observer Golos identified 5,300 allegations of electoral violations,” writes Foreign Policy In Focus (FPIF) contributor Dimitar Indzhov in Russians United against United Russia. “International observers also judged the elections fraudulent. Concerned citizens took 18 videos of people stuffing ballot boxes with votes for United Russia and uploaded them onto YouTube. These are pretty stark images of unfairness. But Russian people have put up with United Russia for some time, despite its autocratic tendencies.”

This time, however, Russians did not simply grumble into their vodka. They poured into the streets on December 10 and then again on December 24, despite freezing temperatures in Moscow.

The explicit protest has been around voting irregularities. But the complaints run deep and implicate the role that money plays in Russian politics. After all, United Russia is in bed with the most profitable and powerful industries in Russia – oil, gas, timber. “Under President Vladimir Putin’s watch, the Russian state has turned into something like Russia Inc., with top Kremlin staffers and senior ministers sitting on the boards of various state-owned corporations and taking an active interest in their progress and profits,” Dmitri Trenin wrote several years ago inWashington Quarterly.

The most obvious example is Gazprom, the largest Russian company and the largest extractor of natural gas in the world. It is a state within a state, administering a series of towns along its pipeline from Siberia westward. It runs a TV station, maintains 26 cultural centers, and promotes its operations with this catchy music video (with the chorus “Let’s drink to you, let’s drink to us, let’s drink to all the Russian gas”). Dmitry Medvedev served as the head of the board of directors at Gazprom when he was first vice prime minister, relinquishing the job only when he became president. The company has received the lowest rating from Transparency International.

Russia’s heavy reliance on energy exports and the widening gap between its rich and poor demonstrate that, thanks to Gazprom, the country is suffering from the “resource curse.” Instead of using the revenues from its natural gas exports to diversify its economy and raise the living standards of all, the Russian leadership has merely consolidated its power and its support among the wealthy. Corruption has settled upon the land like a toxic cloud. Russia has become Nigeria with nukes.

“At its core,” writes David Remnick in The New Yorker, “Putin’s Russia is not a democracy, sovereign or otherwise. Rather, power for power’s sake and the accumulation of vast wealth in the hands of various ‘clans’ and friends of the Kremlin are at the center of things. Very few owners of the mansions outside Moscow were able to buy those properties, and hold onto them, without close connections, and complete fealty, to the regime.”

The collapse of the Soviet Union produced a Gilded Age of tycoons and their political supporters. Such a Gilded Age might have given way, through the influence of Russian trust-busters and civil society watchdogs, to a political economy that was corrupt in the more conventional U.S. sense of everyday influence peddling. But when Putin took over in 2000, he further consolidated state power and punished any dissenting tycoons. U.S. corruption is legitimated by the market; Russian corruption is legitimated by the state.

The backlash happening today in Moscow is a combination of the tea party movement and Occupy Wall Street. Anarchists stand side-by-side with great-power nationalists; libertarians and old-style communists protest in rough unison. There is tremendous resentment toward the small group of people – politicians and tycoons – that has profited from both privatization and nationalization. What will emerge from this confrontation between Putin and the people is hard to forecast. But it will certainly be nationalist in orientation, for that seems to be the strongest unifying force in Russia today. In a recent poll, 59 percent of Russians approved of the ominous slogan “Russia for Russians.” As Alexei Navalny, the most prominent blogger-critic of Putin, explains of this sentiment,  “We have a huge number of migrants whose behavior and cultural code is way out of joint with the cultural codes of those living here, the Russians.”

Millions of people have thronged the streets of cities all over the world this last year to protest the influence of money on power – the corruption in Mubarak’s Egypt and Ben Ali’s Tunisia, the malign effects of Wall Street and other financial institutions, the power elite in Russia. It is truly galling when the wealthy and powerful steal elections, whether JFK in 1946 or Vladimir Putin in 2011. Democracy must not be yet another method by which the rich stay rich. In the United States as in Russia, democracy must serve the people, particularly those not already helped by the market or the state.

John Feffer is the co-director of Foreign Policy in Focus at the Institute for Policy Studies, writes its regular World Beat column, and will be publishing a book on Islamophobia with City Lights Press in 2012.


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