Sandy Brian Hager

What Happened to the Bondholding Class? Public Debt, Power and the Top One Per Cent

In 1887 Henry Carter Adams produced a study demonstrating that the ownership of government bonds was heavily concentrated in the hands of a ‘bondholding class’ that lent to and, in Adamss view, controlled the government like dominant shareholders control a corporation. The interests of this bondholding class clashed with the interests of the masses, whose burdensome taxes financed the interest payments on government bonds. Since the late nineteenth century there has been plenty of debate about the ownership of the public debt. But the empirical evidence offered to support the various arguments has been scant. As a result, political economists have few answers to questions first raised by Adams over century ago: how has the pattern of public debt ownership changed? Can we still speak of a powerful ‘bondholding class’? Does public debt redistribute income from taxpayers to public creditors? This article develops a new framework to address these questions. Anchored within a ‘capital as power’ approach, the research indicates a staggering pattern of concentration in the ownership of US public debt in the hands of the top one per cent of US households over the past three decades. Accordingly, the bondholding class is still alive and well in contemporary US capitalism.

Investment Bank Power and Neoliberal Regulation: From the Volcker Shock to the Volcker Rule

In 1941, Paul Sweezy (1910–2004), a founding member of the ‘monopoly capital’ school of Marxism, published an article on the power of US investment banks in light of the 1929 stock market crash and ensuing depression. His assessment of their relative position and future prospects within the corporate hierarchy was bleak. Although the major investment banks had survived the turbulent 1930s, Sweezy argued that they failed to reassert the dominance they secured during the initial transition from competitive to monopoly capitalism around the turn of the twentieth century (see Veblen 1923). Firms that once embraced the guidance of investment bankers had matured into giants capable of expanding their operations through internal financing. As a result, most of the securities market activity that took place involved routine refunding operations that required little investment bank expertise, while those few securities that were newly issued were privately placed with increasingly powerful institutional investors.

Public Debt, Inequality, and Power The Making of a Modern Debt State

Who are the dominant owners of US public debt? Is it widely held, or concentrated in the hands of a few? Does ownership of public debt give these bondholders power over our government? What do we make of the fact that foreign-owned debt has ballooned to nearly 50 percent today? Until now, we have not had any satisfactory answers to these questions. Public Debt, Inequality, and Power is the first comprehensive historical analysis of public debt ownership in the United States. It reveals that ownership of federal bonds has been increasingly concentrated in the hands of the 1 percent over the past three decades. Based on extensive and original research, Public Debt, Inequality, and Power will shock and enlighten. “These days, the topic of America’s debt stirs heated political debate. But one of the most important facts in this discussion has hitherto been obscured: who actually owns that debt inside America? Hager has done some fascinating and pathbreakingresearch to answer that question and concluded that the ownership pattern is surprisingly concentrated—and unequal—and that this may have implications for how the entire debt debate develops in the coming years. This is an illuminating work that deserves wide attention.” GILLIAN TETT, Financial Times “The relationship between the ownership structure of government debt and economic inequality—between public finance and the class structure of modern capitalism—is one of several central concerns of political economy that has been almost completely neglected in recent decades. Sandy Brian Hager’s book returns to the subject with theoretical and empirical bravado.” WOLFGANG STREECK, Director Emeritus, Max Planck Institute for the Study of Societies “Money is power, and US Treasury debt is the world’s single largest financial instrument. Hager’s insightful book fills an enormous hole in our knowledge of who owns this debt and how the power flowing from that increasingly concentrated ownership affects US and global politics.” HERMAN M. SCHWARTZ, author of Subprime Nation: American Power, Global Capital, and the Housing Bubble SANDY BRIAN HAGER is Postdoctoral Fellow at the Weatherhead Center for International Affairs at Harvard University. He has published in various journals, including New Political Economy and Socio-Economic Review.

‘New Europeans’ for the ‘New European Economy”: Citizenship and the Lisbon Agenda

This chapter analyses the European Union’s Lisbon Agenda and its relation to changing conceptions of citizenship in general, and social citizenship in particular. The guiding assumption made here is that citizenship, conceived in simple terms as the concept defining the rights and responsibilities of civil society to the state and vice versa, is not static but instead bound up with and dialectically related to broader struggles over socio-economic restructuring (see also Purcell, 2002). Although these processes have certain transformative effects on the rights and responsibilities of citizenship, at the same time rights and responsibilities entrenched in prior social struggles can have an impact on, and even limit the degree of such change. If, as Chantal Mouffe (1992: 225) suggests, ‘the way we define citizenship is intimately linked to the kind of society and political community we want’, and if in turn, as Bryan Turner (1993: 12) submits, ‘whatever forces push modernization forward also develop and expand citizenship’, then an examination of citizenship should us provide with a clearer indication of the underlying ‘social purpose’ of these processes.

A global bond: Explaining the safe-haven status of US Treasury securities

This article offers new theoretical and empirical insights to explain the resilience of US Treasury securities as the world’s premier safe or “risk-free” asset. The standard explanation of resilience emphasizes the relative safety of US Treasuries due to a shortage of safe assets in the global political economy. The analysis here goes beyond the standard explanation to highlight the importance of domestic politics in reinforcing the safe status of US Treasury securities. In particular, the research shows how a formidable “bond” of interests unites domestic and foreign owners of the public debt and works to sustain US power in global finance. Foreigners, who now own roughly half of the US public debt, have something to gain from their domestic counterparts. The top 1% of US households, which dominate domestic ownership of US Treasuries, has considerable political clout, thus alleviating foreign concerns about the creditworthiness of the US federal government. Domestic owners, in turn, benefit from the seemingly insatiable foreign appetite for US Treasury securities. In supplying the US federal government and US households with cheap credit, foreign investors in US Treasuries help to deflect challenges to the top 1% within the wealth and income hierarchy.