America the Plutarchy? Say What?


What in the heck is a “plutarchy”? Well, it certainly is not an America where Pluto is the president. It is a composite word from the word “plutocracy” which means “rule by the wealthy” and oligarchy, which is “rule by a few” or “rule by a small group.” No, I’m not making this up, it is a real word which has been used by economists and other academic types to describe the system under which we exist today. What happened to “democracy” you ask? Perhaps one should pose that question to the Plutarchy. Who is/are the plutarchy? As explained below, the plutarchy are the 20 or so families that own the majority of America’s wealth and their corporate surrogates.

Lately, there has been an “Occupy” movement going on in the United States in which the protestors have styled themselves as the 99 percent who are protesting against the richest 1 percent who make their money though Financial Institutions, including the highly visible mega-banks. What the 99 percent fail to realize is that they are missing 9 percent of the target. The 1 percent had a major part in the ruination of our economy, the loss of our jobs, the loss of our houses, the loss of our life savings and the loss of our retirement. Where did it all go? Ask the 9 percent who serve the 1 percent. Therein lies the majority of blame for the robbing of the middle class and the further impoverishment of the “working class." Therein lie the people who used the 1-percenter’s money to not only make more money for the 1 percent, but to make big bucks for themselves in the process.

The top 1 percent of our population owns 43 percent of the “net worth” of America. Also the upper half of this 1 percent own far more than the lower half of the 1 percent. In fact just .1 percent (point-one percent or 1/1000th) of the American population controls the majority of 43 percent of America’s net worth. This comprises about 20 American Families who “own” about half of America’s net worth. These families are identifiable, of course the Arkansas Waltons of Wal-Mart are in that 1/1000th are somewhere near the top, if not at the top. And, you know some of the other names, like Buffet, Gates and Koch. The “point-one percenters” are the “ultrarich” and the rest of the 1 percent are the “uber-rich."

But, the point of this column is not about the top 1 percent Let’s take a look at the next 4 percent who own or control another 30 percent of our national wealth. They together with the 1 percent control 73 percent (nearly three quarters) of our national wealth. The next 5 percent control 11 percent of America’s net worth. (This 9 percent are known as the super-rich) This 9 percent (super-rich) plus the 1 percent (ultrarich and uber-rich) comprise only 10 percent of America’s population but own nearly 85 percent of the wealth in America. They own 90 percent of the privately owned stock, bonds, securities, commercial and residential real estate. Their name may not be on your deed, but they own the mega-corporations and mega-banks that own the “debt instruments” which represent the lien or mortgage on the real estate for our homes and our businesses,

However, there is another 10 percent (merely rich) who are the “money makers” for the highest 10 percent. These are the professionals, such as money managers, brokerage houses, banking executives, corporate executives, and a few lawyers who work for the “owners” and their corporations. These people invented the false value in the “bundling of debt instruments” which were assigned somewhat arbitrary worth based on the demand they created for even more debt instruments to bundle. It was these bundles of mortgages and other debt instruments that were sold to the mega-corporations owned by the top 1 percent and 9 percent. They called for more of these “bundles” or “packages”, which in turn created a demand for more of what went into the bundles; mortgages. This stimulated the money managers, investment bankers and brokers to create more debt instruments by encouraging looser/liberal lending and borrowing standards and, more importantly, to encourage lending on the “equity” that homeowners and commercial real estate owners had built up. This included small business owners and local owners of franchises who either bought or leased commercial space.

The banking industry went crazy giving out loans to homeowners based on a false increase in “appraisal value” that was not based on the actual value but more on the demand for the debt instruments (mortgages) which went into the bundles. The more of these mortgages that the money lenders wrote, the more fees there were for the brokers, the lender employees that wrote the loans, the secondary mortgage buyers who bought the loans and sold them to other investment banking sources who sold them in “bundles” to the investment funds and corporations owned by the 10 percent. And then you had the corporations, like AIG, who wrote insurance policies for the 10 percent which essentially guaranteed against losses in case the debt instruments in the bundles lost value. Then a combination of economic factors came together in a “perfect storm” which created higher fuel costs, higher food costs, higher credit card interest due to missed payments, higher payday loan interests due to missed or late payment, repossession of autos for late or missed payments, higher building material costs, higher delivery costs and the upward adjustment of interest payments in adjustable-rate mortgages (ARM). Consumers, including homebuyers and small business owners prioritized payments, opting to pay for true necessities instead of on their loans. Mortgages became low priority, especially when adjusted to higher interest rates because of late payments. Business loans were neglected in favor of keeping the business going. Auto loans came next, student loans came next, and so on. Soon, home and auto repossessions and business failures went through the roof. Paying loans became the lowest priority. The chain reaction went up the pyramid driving down the value of houses and the value of the “robbed” equity that was represented in the debt instruments which drove down the price of the bundles which caused the top 10% to invoke the insurance they had purchased to protect themselves from just such a melt-down. Remember the AIG meltdown and bailout. You and I paid for that and our children’s children will continue to pay for it as well as the other bailouts of the Financial Industry. The very idustry that created the crisis. But remember the Financial Industry was “stimulated” by the “demand” from the top 10 percent.

The net result of all this was even further loss of the “value” of the scraps the remaining 90 percent of us scrap over. The “middle class” in America disappeared overnight. They are now part of the “working class.” Perhaps upper income working class, but never the less. Some hung on to mortgages that were now “underwater” meaning the loans they owed amounted to way more than the house was now worth. They sacrificed other consumer spending to stay up with their mortgage, especially spending previously directed to small businesses, thus driving small businesses into either defaulting on commercial loans or being unable to pay their lease of commercial properties. This in turn caused the commercial space owners to default on their loans, which added another nail in the coffin.

So why is all this of interest to Indian Country? Well, on the whole the reservations came out pretty good because of the historic reluctance of lenders to write mortgages and even auto loans to reservation residents. However, the payday lenders moved in and began to strip the wealth from reservation residents when other lending sources cut off the small amount of lending they were doing on the reservation. Almost no commercial loans to speak of were financed on reservations unless backed by the tribe’s or tribal casino operations, some of which had gone on an expansion frenzy during this same time period. The gaming revenues took a hit but, on the whole, the Indian-casino industry survived. By the way, 80 percent of the Indian Casino revenue is controlled by just 10% of the tribes (Roughly 50 tribes). These figures mirror the figures we see on a national basis. Ironically, the real damage that occurred in Indian Country was in the defaults that occurred relative to either bank loans or the issuance of Tribal Debt Instruments (Bonds) for some of this top 10 percent when they went on their expansion spree. But, defaults also occurred in the Indian-casino Industry in rural areas where the feasibility of loans was based on demographics of income and “discretionary” use of non-obligated cash within surrounding populations, some up to a 150 mile radius. These loans were borderline when they were written and almost immediately went into default at the onset of the recession which had been caused by the money lenders who had stripped the wealth, net worth and disposable income from the very casino patrons upon whom the casinos relied.

The Indian-casino industry has experienced an up-tick recently, but one has to wonder-how real and long-lasting it will be. Because of the mortgage defaults we are fast becoming a nation of renters and, as renters, we may have a little more “disposable” income with which to entertain ourselves. However the “renters” still want to own a home (the American Dream) at some point, and may qualify for a loan to do so five to 10 years down the road. The Home Mortgage Industry still has not bottomed out. Some real estate industry sources are trumpeting the bottoming out of the crash because of small increases in sales. Some of this may be due to bank owned properties put on the market for prices that reflect either what the banks want to recover or for prices that will make “speculators” a return on the amount they gave to the banks for their foreclosed properties. The “renters” may have a little more disposable income now, but probably won’t if they decide to buy again or buy for the first time. Thus, I suggest caution to the Indian-casino industry. Sometimes bigger is not better. I hope we learned that lesson from recent events.

Maybe my layman’s explanation of the state of America’s economy and the ripple effect it has had, and will continue to have, on the Indian Casino Industry is a bit simplistic and there are a myriad of other factors that come into play. The point is, don’t count on a recovery until America has truly recovered. It has not. It probably won’t as long as 85 percent of America’s net worth is owned by just a few. Historically, when this scenario occurs, the wealthy owners will protect their money and we are already seeing that come to pass. Class warfare did not start yesterday, it started when this continent was colonized. Societal strata was determined from the git-go by whether you were an “owner” or a “renter” or “worker”. It was also determined by whether you were a “professional” who served the “owners." Professional includes the lawyers, judges, senators and congressman and the managers of the “owners’” wealth. Wealth controlled the making of laws, the interpretation of laws and the administration of laws. This has not changed, its just that the numbers are bigger. The wealth of the wealthiest depends on those who serve them and those who work for wages that sustain the small businesses that sustain the corporate interest who either own them (franchises) or own the debt upon which small businesses are built. It is nothing less than ironic that we in America idolize the very rich and we have bought the myth that if we work hard enough we can be very rich too. That myth needs to be re-examined. It is the workers who create wealth for the wealthy while keeping just a small portion for ourselves. However, the wealthiest 10 percent (with the help of the 10 percent represented by the professionals) just reached in and robbed so many of us from what chance we might have of ever moving beyond being a wage earner, even us who are supposed to be the middle class. We may never become owners as the value was robbed out of what little we owned. The result is we are still “sharecroppers” or “renters.” The bulk of what we earn goes to the wealthy while we get just enough to sustain us to the next crop.

I fear for the “democracy” that we are all taught is worth fighting for when the inequities of our economic conditions are so large and irresolvable. Even the ultrarich and uber-rich know that the inequities are dangerous. Witness Warren Buffet imploring the Congress to “tax me more”. The redistribution of wealth in a democracy has to be based on a tax that confiscates more of your wealth as you become wealthier. Our present tax system does not accomplish that goal at the upper end. Our present tax system confiscates more, as a percentage of wealth or earnings, from the wage earners, small businesses and salaried workers, not the merely-rich, super-rich, uber-rich and ultrarich. The system is in turn enforced by the senators, congressmen, judges and political appointees who are “sponsored” by the wealthy. It may be just in our human nature that the “have mores” control the “get mores” by helping them maintain their status at the expense of the “have nots." When the “have mores” feel threatened they rally the “get mores” who rally the “have nots” to preserve “our American way of life” and even inspire us to war on those who would be a threat to their wealth. Is this a cynical view of American humanity? I don’t think so. It’s just the way it is and has been. Even in Indian Country.

Money rules this country, including Indian Country. If you don’t believe me just make an assessment of who has the most influence on Indian Policy and who is making “Indian Law” either though the Courts, the Administrative Process and in the Congress and Legislatures. I can guarantee you that it is the top 20 percent of the tribes that control 80 percent of Indian-gaming revenue. In a way, it is good to have a class of Indians who can influence the making of the rules and the interpretation of them. We never had that kind of influence before. However, can Indian Country set an example and function as a “Democracy” in which all Indian tribes and Native groups have influence? Or, is Indian Country drifting into a plutocracy or a plutarchy that protects and increases the wealth of the wealthy while the rest of Indian Country fights over the scraps? You decide.

Harold Monteau is a Chippewa Cree Attorney and Indian Economic Development Consultant residing in Albuquerque, New Mexico and was Chairman of the National Indian Gaming Commission in the Clinton Administration. He can be reached at