History often has a hidden beginning. Since the 1970s, people who are already well off have enjoyed a rising percentage of income and wealth. Meanwhile, ordinary Americans face declining social mobility, a shrinking middle class, widening income inequality and crumbling infrastructure. There is plenty to be mad about and plenty of blame to go around.
The economic struggles of the American working class since the late 1970s were not just the result of globalization and technology changes. A long series of public policy changes favored the wealthy. Some argue these changes were the result of sophisticated efforts by the corporate and financial sectors to change government policy, from tax laws to deregulation, to favor the wealthy.
In August 1971, less than two months before he was nominated to serve as an associate justice of the Supreme Court, Lewis F. Powell Jr. sent a confidential memorandum to his neighbor and friend Eugene B. Sydnor Jr., chair of the Education Committee of the U.S. Chamber of Commerce. Powell was a leading Virginia corporate lawyer, a former president of the American Bar Association and served on 11 corporate boards.
The 34-page memo was titled “Attack on American Free Enterprise System.” It presented a bold strategy for how business should counter the “broad attack” from “disquieting voices.” The memo, also known as the Powell manifesto, did not become available to the public until after he was confirmed.
He began the memo this way: “No thoughtful person can question that the American economic system is under broad attack.” He went on to write that the assault was coming from “perfectly respectable elements of society: the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians.” American business believed it was facing a hostile political environment during the late 1960s and that it was under attack with the growth of government authority under the Great Society and an increase in regulations ranging from the environment to occupational safety to consumer protection.
The memo outlined a bold strategy and blueprint for corporations to take a much more aggressive and direct role in politics. Powell was following the Milton Friedman argument that it was time for big business to focus on the bottom line; it was time to fight for capitalism. Powell proposed waging the war on four fronts: academia, the media, the legal system, and politics.
The memo influenced, for example, the creation of new think tanks such as the Heritage Foundation, the Manhattan Institute, and other powerful organizations. As Jane Mayer wrote, the Powell Memo “electrified the Right, prompting a new breed of wealthy ultraconservatives to weaponize their philanthropic giving in order to fight a multifront war of influence over American political thought.”
The venerable National Association of Manufacturers moved its offices from New York City to Washington. Its CEO noted: “The relationship of business with business is no longer so important as the interrelationship of business with government.” The number of corporations with public offices in Washington grew from 100 in 1968 to over 500 in 1978. In 1971, only 175 firms had registered lobbyists in Washington; by 1982, nearly 2,500 did.
When it comes to lobbying, money is the weapon of choice. It looms over the political landscape like the Matterhorn. The number of corporate political action committees (PACs) increased from under 300 in 1971 to over 1,400 by the middle of 1980. The money they spread around gave lobbyists the clout they needed. The growth of super PACs and lobbyists ensured that any piece of relevant regulation would be watered down, first in Congress and then during implementation.
The Powell memo galvanized Corporate America and enlarged the influence of big business over the political landscape. It encouraged business to play a more active role in American politics. Corporate America and the 1 percenters got the memo.
