Why America’s inequality conversation is such a farce

Tuesday, Mar 31, 2015
“It’s your own damn fault!” The upcoming campaign is supposedly going to be about inequality. Here's why it's just another plutocratic charade
Elias Isquith

As I’ve noted previously, one of the stranger recent developments in American politics has been the swift arrival of a bipartisan consensus over economic inequality. For years and years — decades, even — the left and the right have quarreled over inequality’s very existence. But now, worrying about the maldistribution of income and wealth in the U.S. is utterly mainstream. Noting the widening chasm between the 1 percent and everyone else has become so anodyne, in fact, that even would-be presidents like Hillary Clinton, Jeb Bush, Ted Cruz, Rand Paul and Marco Rubio are doing it. It’s enough to make a longtime class-warrior think she’s winning.

That would be a mistake. Because although the political value of inequality is different today than was the case before the Great Recession, it’s mainly been rhetoric — and not policy — that has changed. We may talk more than we once did about the rich are, as Fitzgerald wrote, “not like you and me.” So far, very little’s been done on the national level to explicitly confront the problem. On the contrary, the economic recovery has been so full of McJobs that there’s reason to suspect the issue may only get worse in years to come.

But if the U.S. economy is just as iniquitous as ever, and if the near-total gutting of campaign finance regulation has made the U.S. political economy almost as plutocratic as ever, then how do we explain the rise of inequality as a mainstream topic of conversation? If the 1 and .01 percent still wields such a massively disproportionate degree of influence over our culture as well as our politics, wouldn’t talk of class remain verboten? Shouldn’t the super-rich be telling voters and the public in general to pay no attention to the moneybags behind the curtain?

You might think so; but that would only be true if the wealthy’s control of American politics was more direct (and ham-handed) than it actually is. As Noam Chomsky has argued, the way the wealthy and the powerful operate in a formal democracy is significantly different from how they act in an illiberal society. The discourse has its regulators and gate-keepers, of course. But rather than outright censorship, the powers-that-be in the U.S. tend to head-off opposition by setting the parameters of the debate — and doing so in such a way as to ensure their interests are never really threatened.

Noam Scheiber’s New York Times piece on Monday shows us what that process looks like in the real world. What we see in his report is a donor class that’s acquiesced to inequality being a major 2016 issue, partially because they’ve succeeded so far in rendering any serious responses to the problem out of the question. As Scheiber notes, strong majorities of Americans — including Republicans— are in favor of the government taking action to address the crisis, with redistribution from the 1 percent to the rest being an especially popular response. Yet for all their talk of inequality and opportunity, none of the declared or soon-to-declare presidential candidates of consequence have provided even a general endorsement of such a plan.

Unsurprisingly, their hesitation is shared by one significant group — donors. Citing the invaluable work of Benjamin Page, Jason Seawright and Larry Bartels, Scheiber notes that although a majority of the wealthy Chicago-area persons these researchers interviewed professed concern over inequality, too, they were dramatically less interested in any public policy solutions. “Only 13 percent of wealthy interview subjects” want to see government work to address the problem, Scheiber writes. And only 17 percent are supportive of policies that involve raising taxes on the rich.

And it’s not just tax hikes that the wealthy are keeping off the table. While two-out-of-three Americans think the government should help citizens find a job, provided they’re willing and able, fewer than one-out-of-five of wealthy respondents agree. “Forty percent of the wealthy,” Scheiber writes, want the minimum wage to be high enough to support a family; among the general public, support for that idea nearly doubles, coming out at 78 percent. Perhaps even more telling, though, is the way the overall philosophy of the very rich permeates the public discourse at large.

For example: According to interviews with the wealthy conducted by Fiona Chin, a Northwestern graduate student whom Scheiber describes as a Page “protégé,” the 1 percent is much more likely to believe that inequality is a byproduct of virtue and hard work, rather than any flaws in the U.S.’s economic system. The wealthy, Chin says, think inequality is “a story about individual hard work, effort and character.” Sure, the rich have some built-in advantages, they say. But they’re disadvantaged too; being born with means, after all, can make you less inclined to work.

If you didn’t strike it rich in America, these 1 percenters told Chin, it’s most likely because you “didn’t take advantage of the education system.” That, of course, is a euphemistic way of saying it’s your own damn fault. And while Scheiber’s report doesn’t bring up this angle directly, it’s not hard to see how there might be a connection between the 1 percent’s focus on education and the burgeoning movement to “reform” public schooling. A grand experiment in charter schools is fine. But reducing inequality by giving money to the people who need it? Not okay.

So we may now hear Bush — or Cruz, or Rubio, or Paul — talk about “opportunity” gaps; and we may soon listen as Clinton rails against cutting hedge fund managers’ taxes. But given the constraints the 1 percent establishes upfront, you can expect that most of the ideas to come from Bush, Rubio and, eventually, Clinton will differ little from what they would’ve proposed in the years before the Great Recession. And until they stop trying to sell the same-old policies under an inequality-themed banner, the politics of the issue will not be appreciably different. We’ll merely have transitioned from denial to a charade.

The Truth about the American Economy

A Lie That Serves The Rich
Paul Craig Roberts, John Titus, and Dave Kranzler

The labor force participation rate has declined from 66.5% in 2007 prior to the last downturn to 62.7% today. This decline in the participation rate is difficult to reconcile with the alleged economic recovery that began in June 2009 and supposedly continues today. Normally a recovery from recession results in a rise in the labor force participation rate.

The Obama regime, economists, and the financial presstitutes have explained this decline in the participation rate as the result of retirements by the baby boomers, those 55 and older. In this five to six minute video, John Titus shows that in actual fact the government’s own employment data show that baby boomers have been entering the work force at record rates and are responsible for raising the labor force participation rate above where it would otherwise be.

It is not retirees who are pushing down the participation rate, but those in the 16-19 age group whose participation rate has fallen by 10.4%, those in the 22-14 age group whose participation rate has fallen by 5.4%, and those in the 24-54 age group whose participation rate is down 2.5%.

The offshoring of US manufacturing and tradable professional service jobs has resulted in an economy that can only create new jobs in lowly paid, increasingly part-time non-tradable domestic service jobs, such as waitresses, bartenders, retail clerks, and ambulatory health care workers. These are not jobs that can support an independent existence. However, these jobs can supplement retirement incomes that have been hurt by many years of the Federal Reserve’s policy of zero or negative interest rates. Those who were counting on interest earnings on their savings to supplement their retirement and Social Security incomes have reentered the labor force in order to fill the gaps in their budgets created by the Fed’s policy. Unlike the young who lack savings and retirement incomes, the baby boomers’ economic lives are not totally dependent on the lowly-paid, part-time, no-benefits domestic service jobs.

Lies are told in order to make the system look acceptable so that the status quo can be continued. Offshoring America’s jobs benefits the wealthy. The lower labor costs raise corporate profits, and shareholders’ capital gains and performance bonuses of corporate executives rise with the profits. The wealthy are benefiting from the fact that the US economy no longer can create enough livable jobs to keep up with the growth in the working age population.

The clear hard fact is that the US economy is being run for the sole benefit of a few rich people.

Back to the Dark Ages of Feudalism

The Crushing Force of Capitalism
by GILBERT MERCIER


History never repeats itself, but from time to time, consciously or not, some influential men attempt to force us into the monstrosity of their imaginary time machines to try to reverse decades, and in the case of feudalism, almost a millenium of social progress. The mid-20th century brought the years of collective psychosis of Adolf Hitler’s “thousand year Reich,” and more recently what can be viewed as the United States of America’s imperialist manifesto or so-called “Project for the New American Century”, concocted in 1997 but still in effect today under the current administration, with the self-proclaimed objective to “promote American global leadership” resolutely and by military force, if necessary.

Montesquieu and his colleagues of the mid-18th century, such as Voltaire, Diderot and Rousseau of the Age of Enlightenment, denounced feudalism as being a system exclusively dominated by aristocrats who possess all financial, political and social power. During that time, which incubated the French Revolution and built its ideological foundations, feudalism became synonymous with the French monarchy. To the Enlightenment writers, feudalism symbolized everything that was wrong with a system based on birth privilege, inequality and brutal exploitation. In August 1789, shortly after the takeover of La Bastille on July 14, one of the first action of the Assemblee Constituante was to proclaim the official abolition of the “feudal regime.”

Ironically, feudalism is making a comeback in the latest evolution and under the impulse of predatory global capitalism. After all, Karl Marx, in the mid-19th century, considered feudalism to be a precursor of capitalism. Typically a feudal system can be defined as a society with inherited social rank. In the Middle Ages, wealth came exclusively from agriculture: the aristocracy strictly assumed ownership of the land while the serfs provided the labor.

The feudal system of the Dark Ages was the social and economic exploitation of peasants by lords. This led to an economy always marked by poverty, sometimes famine, extreme exploitation and wide gaps between rich and poor. The feudal era relation of a serf to his lord is essentially identical to the relation of a so-called WalMart associate to a heir of the Walton family. If one looks objectively at the power stratum in the US circa 2013, and the one of, let’s say, France circa 1750, it is hard to ignore the startling similarity. For example, attendance at Ivy-League schools in the US is principally an inherited privilege; the same can be said for elected positions in Congress. The concept of dynasties rules, not personal merit.

A powerful network of oligarchs worldwide seems to be pursuing the objective to set back the social clock to before the era of Enlightenment so as to return us to the Dark Ages of lords and serfs: a new era of global slavery to benefit Wall Street’s “masters of the universe.” Compared to the Middle Ages, today’s servitude is more insidious: the International Monetary Fund (IMF), World Bank, and many private banks operate like mega drug dealers. The IMF and World Bank do so with countries, while the banks do so with individuals. Once Greece, Detroit or John Doe is addicted to its fix — loans in this case — the trick is done. After a while, money must be borrowed even to service the debt.

In a recent cynical opinion piece titled “Detroit, the New Greece”, New York Times columnist and Nobel-prize winning economist Paul Krugman reasoned more like a callous Wall Street operator than someone with the self-proclaimed humanist “conscience of a liberal” by casually calling Detroit a “victim of market forces.”

“Sometimes the losers from economic change are individuals whose skills have become redundant; sometimes they are companies serving a market niche that no longer exist; and sometimes they are whole cities that lose their place in the economic ecosystem,” writes Krugman, forgetting Greece in his laundry list of “innocent victim of these mysterious “market forces.” Krugman concludes his paragraph with: “Decline happens,” as if this is a physical phenomenon, like gravity or magnetism. Like most of the leading international economists, Krugman has adamantly supported the North America Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). Detroit and Greece are not some sort of collateral damage of “market forces” in Krugman’s “decline happens” scenario. Detroit was demolished wholesale by NAFTA, and Greece was enticed to borrow money to join the EURO zone.

The IMF itself recently conceded that the policies it has implemented for Greece resulted in “notable failures.” The IMF failed to push for an immediate restructuring of Greece’s debt, but didn’t prevent money owed by the country before 2010 to private-sector creditors from being fully repaid at the onset of the fiscal crisis. Greece’s overall debt level remained the same, except it was now owned to the Euro-zone taxpayers and the IMF instead of banks and hedge funds. Both Greece and Detroit were targets of a predatory capitalism that sought to downgrade and then shut down all public sectors of an economy.

The “market forces” are not physical phenomena; they are the hyenas and vultures from Wall Street who dismantle and then feed on the carcasses of a city or country. Decline does not just happen; it is engineered by the corporate entities of global capitalism to maximize profit without regard for human costs. It is ultimately up to us, for the common good of human kind, to put wrenches into the well-oiled wheels of this global corporate machine that is breaking our backs by grinding and crushing our accomplishments of more than 250 years to return us to the servitude of feudalism.

The Great Economic Misdirection

Off With Their Heads, Redux

by ROB URIE

 

A central challenge for left critiques of capitalism as it exists today is the distance between the mythologies that craft understanding of the issues for the great majority and more probable explanations based on examination and analysis. The issues are that concentrated wealth is claims on social resources; that wealth ‘creation’ is an artifact of particular arrangement of social circumstances / relations and that wealth distribution is the social distribution of economic and political power. Concentrated wealth as it exists is hardly likely to distribute this power away from itself. And conspicuously missing is class-consciousness in any revolutionary sense amongst the poor and middle classes whose circumstances in the ‘developed’ West are in rapid decline. Taken together this is a formula for escalating consolidation of economic and political power against people who have little apparent understanding of the economic forces that are overtaking them. Were it not for the risk of growing political and economic dysfunction and its likely effects in social and environmental catastrophes— wars for resources to benefit the residual plutocracy, the inability to address global warming because doing so lowers corporate ‘profits’ and the increasing immiseration of a broadening swath of the socially dis-empowered, concern might rightly be considered effete.

For instance, a survey of public perceptions of wealth distribution undertaken by Michael Norton and Dan Ariely in 2011 found wide disparities between wealth distribution as it is perceived and as it actually is. Even that study grossly understated the concentration of income and wealth because the researchers were working with overly broad categories—quintiles, or fifths, of wealth distribution when the real concentration is at the very top. On the other side of public perceptions is the tiny group of very wealthy who see their wealth, even inherited wealth, as deserved, and who frame challenges to the idea that it is in psychological terms, as ‘envy.’ Adding to social misdirection is the mainstream economic frame that views concentrated ‘capital’ in some confused conflagration of money, quasi-money and things as the prerequisite to economic production. The predominant economic mythologies surrounding income and wealth distribution clearly work the service of the very rich.

Graph (1) above: Most people have no conception of how concentrated incomes and wealth are at the very top. When Norton and Ariely (link above) asked people what they believed this concentration to be respondents tended to underestimate concentration in the top 20%. Illustrated above is that even within the top 10% of incomes average executive compensation is so great that the average top incomes are barely visible. With the extremes illustrated in this graph as evidence, looking at the issue in quintiles, as Norton and Ariely did, obscures more than it illuminates. But this written, the authors found that even when viewed in quintiles there was broad objection to such concentrated incomes and wealth. One can only imagine responses if the issue were more precisely framed. Sources are the Federal Reserve Survey of Consumer Finances and Forbes. Units are in thousands of dollars.

Capitalist mythology has it that incomes and wealth are largely ‘earned.’ This myth unites the wages of the poor and middle classes in social understanding with those of the very wealthy in a hierarchy of justly differentiated outcomes—the incomes and wealth of hedge fund managers and corporate executives are perceived to be analogous to the paychecks received by truck drivers and service workers, only larger. In fact, through expression of social power in ‘public’ policies that decide which industries get subsidized and bailed out and through granting monopoly and cartel privileges to favored industries and industrialists, the incomes and wealth of the wealthy are not commensurate with the wages of labor in either type or scale. The contrived division of economic and political power that is a central precept of capitalist democracy serves to hide the role of concentrated wealth in crafting ‘political’ decisions that benefit the already wealthy. This is the central factor driving perceptions of political dysfunction in the West when the political system is working just as the plutocracy wishes it to work.

Graph (2) above: The growth of finance and the rise in financial asset prices has played a large role in inflating executive compensation. Captive Boards of Directors grant huge stock options to corporate executives who now earn hundreds of times more than their workers do. The mythology that the stock market reflects the ‘true’ value of companies ignores the role of the Federal government and the Federal Reserve in subsidizing corporate profits and in raising stock prices through monetary policies specifically designed to do so. Source: Forbes.

One reasonably well-known example of the public sources of corporate ‘profits’ is Wal-Mart, which is dependent upon government subsidies of both its customers and its employees. The heirs to the Wal-Mart ‘fortune’ are individually amongst the richest people in the world. Wal-Mart employees are the largest beneficiaries of Medicaid and food stamp expenditures in a number of states and the company has admitted (link above) that its sales and revenues are dependent on food stamp (SNAP– Supplemental Nutrition Assistance Program) payments to its customers. Another way of saying this is that many Wal-Mart employees couldn’t afford to work for the company if Federal and state governments weren’t subsidizing their paychecks and many of its customers couldn’t afford to shop at Wal-Mart if they didn’t receive food assistance. Left un-addressed is the use of coerced and / or sweatshop labor to manufacture the products Wal-Mart and the rest of ‘retail’ America sells. The use of overseas labor requires a subsidized global infrastructure for the transfer of resources, a standing army to assure repatriation of profits and the social means of coercing labor at ‘profitable’ wages. Historical examples of this latter tendency can be seen in U.S. military invasions throughout Central and South America and Haiti when the institution of higher minimum wages was threatened.

Graph (3) above: The pretense / premise of Western economics is that ‘we are all in this economy together.’ This was / is the improbable foundation that has kept variations on ‘trickle-down’ economics alive in economics departments across the West. Without apparent irony or much public comment is that executive compensation and the need for food assistance have risen in tandem since the 1980s. The need for food assistance is evidence of severe poverty. Not illustrated is the rapid increase in those living at half of the poverty level or less since financial asset prices and executive compensation began to ‘recover’ in 2009. Sources: U.S. Department of Agriculture and Forbes.

As can be seen in Graph (2) above, in addition to government bailouts, subsidies and protections that boost corporate profits, a rising stock market also contributes to inflated executive compensation. Many people believe / assume that the stock market is unaffected by ‘external’ factors and therefore reflects ‘true’ market values for company stock. In fact, in recent decades the ‘monetary’ policies of the Federal Reserve have been designed to inflate the values of financial assets.  Low interest rates affect the price of the borrowing (leverage) used to buy financial assets on margin and quantitative easing (QE) is the direct purchase of financial assets by the Federal Reserve. Interest rates intentionally kept low by former Fed Chair Alan Greenspan inflated the dot-com and housing bubbles and the policies of subsequent Fed Chairs Ben Bernanke and Janet Yellen have re-inflated financial asset prices since 2009. There is nothing ‘natural’ about these sequential bubbles. Through the role that rising stock prices play in inflating executive compensation and the salaries and bonuses of bankers and hedge fund managers a tiny group of connected insiders has been made wealthy beyond the conception of most people. And the low interest rate policies of the Federal Reserve can also be seen as a subsidy of corporate profits through lowering the borrowing costs of corporations.

Graph (4) above: There are multiple ways of valuing the stock market. Most of those in use today incorporate the extreme valuations of the dot-com bubble of the 1990s and 2000s thereby making recent valuations appear more typical than they really are. When compared to long term corporate earnings (CAPE—Cyclically Adjusted Price Earnings) ‘cycles’ over one-hundred and thirty-five years of stock market history today’s valuations are very far above typical valuation levels and are currently at levels only seen a few times before in history at bubble peaks. With executive compensation coming from bubble level stock market valuations corporate executives can try to claim that they’ve ‘earned’ their compensation. But the more plausible explanation is that the Federal Reserve and a financial system run amok are far more responsible for it. Source: Robert Shiller.

Graph (5) above: Part of the explanation that the Federal Reserve gives for policies favoring the rise in financial asset prices is the ‘wealth effect,’ the tendency for people to spend more because they feel richer when stock prices rise. While some statistical analyses suggest that this may be true, who benefits from rising stock markets are the people who own stocks. As is illustrated above, the richest twenty-percent of households own almost all of the stock market. Again, as with income distribution, the true concentration of ownership of financial assets is at the very top of the top ten percent. Federal Reserve policies to raise stock prices overwhelmingly benefit already wealthy households. As Graph (3) illustrates, the contention that everyone benefits from policies to make the rich richer faces the reality that extreme poverty is rising as the rich are being made richer.

The great misdirection of Western economics in recent decades is conflation of financial wealth with economic ‘value’ creation. Apparently left unconsidered by much of the ‘income inequality’ crowd is that were financial asset prices to implode, as they did in 2001 and again in 2008, some fair proportion of the mechanism of concentrated income and wealth distribution would implode with it. This goes far in explaining the complete devotion of the political and financial establishments to resurrecting banking and finance since 2008 while ignoring the plight of the vast majority on the other side of this system. Many of the homes of the housing boom and bust are still standing but under new ownership by the financiers who took them, the role of finance in economic production exists as facilitator and not as producer. The role of facilitator could come straight from Western governments through their ability to create and distribute fiat currency ‘out of thin air.’ That this wasn’t the route taken from 2008 forward illustrates the control that the existing plutocracy has over ‘political’ policies. The real tragedy is still underway— the incapacity for social and environmental reconciliation without major social upheaval. Anyone who doubts this should spend time with the flaccid hallucinations posed as economic ‘explanation’ coming from the banker ghettoes in New York and London.

Why Society Is More Unequal Than Ever

Sunday, March 9, 2014 by The Guardian

Five years after The Spirit Level, its authors argue that research backs up their views on the iniquity of inequality

by Richard Wilkinson and Kate Pickett

 

A lot has happened in the five years since we published our book, The Spirit Level. New Labour were still perhaps too relaxed about people becoming "filthy rich". And there was an assumption that inequality mattered only if it increased poverty, and that for most people "real" poverty was a thing of the past.

But so much has changed. In the aftermath of the financial crash and the emergence of Occupy, there has been a resurgence of interest in inequality. Around 80% of Britons now think the income gap is too large, and the message has been taken up by world leaders.

According to Barack Obama, income inequality is the "defining challenge of our times", while Pope Francis states that "inequality is the roots of social ills".

The unexpected success of The Spirit Level owes more to luck than judgment. Although serious non-fiction books rarely sell well, for a week or so we even outsold Jeremy Clarkson. We now feel a bit like the dog being wagged by its tail: in the past five years, we've given over 700 seminars and conference lectures. We've talked to academics, religious groups, thinktanks of both right and left, and to international agencies such as the UN, WHO, OECD, EU and ILO.

The truth is that human beings have deep-seated psychological responses to inequality and social hierarchy. The tendency to equate outward wealth with inner worth means that inequality colours our social perceptions. It invokes feelings of superiority and inferiority, dominance and subordination – which affect the way we relate to and treat each other.

As we looked at the data, it became clear that, as well as health and violence, almost all the problems that are more common at the bottom of the social ladder are more common in more unequal societies – including mental illness, drug addiction, obesity, loss of community life, imprisonment, unequal opportunities and poorer wellbeing for children. The effects of inequality are not confined to the poor. A growing body of research shows that inequality damages the social fabric of the whole society. When he found how far up the income scale the health effects of inequality went, Harvard professor Ichiro Kawachi, one of the foremost researchers in this field, described inequality as a social pollutant. The health and social problems we looked at are between twice and 10 times as common in more unequal societies. The differences are so large because inequality affects such a large proportion of the population.

To the political defenders of inequality, the idea that too much inequality was an obstacle to a better society was a monstrous suggestion. They accused us of conjuring up the evidence with smoke and mirrors.
But since our book, research confirming both the basic pattern and the social mechanisms has mushroomed. It's not just rich countries or US states where greater equality is beneficial, it is also important in poorer countries. Even the more equal provinces of China do better than the less equal ones.

Most important has been the rapid accumulation of evidence confirming the psychosocial processes through which inequality gets under the skin. When we were writing, evidence of causality often relied on psychological experiments that showed how extraordinarily sensitive people are to being looked down on and regarded as inferior.

They demonstrated that social relationships, insecurities about social status and how others see us have powerful effects on stress, cognitive performance and the emotions. Almost absent were studies explicitly linking income inequality to these psychological states in whole societies. But new studies have now filled that gap. That inequality damages family life is shown by higher rates of child abuse, and increased status competition is likely to explain the higher rates of bullying confirmed in schools in more unequal countries.
We showed that mental illnesses are more prevalent in more unequal societies: this has now been confirmed by more specific studies of depression and schizophrenia, as well as by evidence that your income ranking is a better predictor of developing illness than your absolute income.

Strengthening community life is hampered by the difficulty of breaking the ice between people, but greater inequality amplifies the impression that some people are worth so much more than others, making us all more anxious about how we are seen and judged. Some are so overcome by lack of confidence that social contact becomes an ordeal. Others try instead to enhance self-presentation and how they appear to others. US data also show that narcissism increased in line with inequality. The economic effects of inequality have also gained more attention. Research has shown that greater inequality leads to shorter spells of economic expansion and more frequent and severe boom-and-bust cycles that make economies more vulnerable to crisis. The International Monetary Fund suggests that reducing inequality and bolstering longer-term economic growth may be "two sides of the same coin". And development experts point out how inequality compromises poverty reduction.

Lastly, inequality is being taken up as an important environmental issue; because it drives status competition, it intensifies consumerism and adds to personal debt.

In Britain, one of the few signs of real progress are the fairness commissions set up by local government in many cities to recommend ways of reducing inequalities. Partly as a result, many local authorities and companies now pay the living wage. But the coalition government has failed to reverse the continuing tendency for the richest 1% to get richer faster than the rest of society. The Equality Trust calculates that the richest 100 people in Britain now have as much wealth as the poorest 30% of households. The top-to-bottom pay ratios of around 300:1 in the FTSE 100 companies is not diminishing.

It is hard to think of a more powerful way of telling people at the bottom that they are almost worthless than to pay them one-third of one percent of what the CEO in the same company gets. Politicians must recognise that reducing inequality is about improving the psychosocial wellbeing of the whole society.

Another Huge Wealth Grab by the Rich

Monday, January 20, 2014 by Common Dreams

by Paul Buchheit

 

It was shown in a recent report that the richest Americans have made millions from their stock holdings since the recession.

 It's getting worse. The facts are summarized here, and presented in greater detail at Us Against Greed.

1. Just 13 Americans Made More from Their Investments in 2013 than the Entire SNAP Budget

Some wealthy Americans like to refer to themselves as "makers," and food stamp recipients as "takers," even though most of the latter are children, the elderly, or low-wage workers. Many of the top 13 on the Forbes list did not make anything of significance in 2013. Yet by being heavily invested in the stock market they were able to take $80 billion among them, more than a year of food stamps for almost 50 million people.

2. The Richest 400 Took $300 Billion in 2013, Approximately the ENTIRE Safety Net
The total budget for SNAP, WIC (Women, Infants, children), Child Nutrition, Earned Income Tax Credit, Supplemental Security Income, Temporary Assistance for Needy Families, and Housing is less than the $300 billion 'earned' by the Forbes 400.

3. The Richest 12,000 Families are Estimated to have Each Made $40 Million in the Past Year
The stock market grew by $4.7 trillion in 2013. The richest 1% owns about 38% of all stocks, or about $1.8 trillion of the 2013 gain.

At the lofty levels of the unimaginably rich, the takings of the .1% (120,000 households), and even moreso of the .01% (12,000 households), become progressively greater and greater for the very richest households (unlike their taxes). According to wealth data compiled by Kopczuk and Saez, each member of the elite .01% group owns about 40 times the wealth of an average member of the richest one percent. Assuming that this ratio holds for accumulated 2013 wealth, each of the 12,000 super-rich American families made about $40 million in just one year. This is not an unreasonable conclusion, in light of the average gain of $750 million for each member of the Forbes 400.

4. The Richest 400 Individuals Own More Than Three-Fifths of America
The richest 400 now own over $2 trillion among them, or about 2.8% of the country's wealth of $72 trillion. This is more than the holdings of three-fifths of America, or 72 million families.

Conclusion: The System Is Broken
The overall calculations reveal that, to the best approximation:

--The richest 400 individuals made an average of $750,000,000 each in 2013.
--The .01% (12,000 families) made about $40,000,000 each.
--The .1% (120,000 families) made about $3,600,000 each.
--The rest of the 1% (1,068,000 families) made over $830,000 each.
--The 2-5% (4,800,000 households) made about $300,000 each.
--The 6-10% (6,000,000 households) made about $95,000 each.
--The 11-20% (12,000,000 households) made about $39,000 each.
--The 21-40% (24,000,000 households) made about $13,000 each.
--The 41-60% (24,000,000 households) made about $4,000 each.
--The 61-80% (24,000,000 households) made about $333 each.
--The bottom 20% (24,000,000 households) made nothing.

Capitalism is supposed to provide everyone the opportunity to benefit from our country's productivity. But it hasn't worked that way for the past 35 years. Today only the people who already have money can increase their wealth. Congress doesn't seem to recognize, or doesn't care, that the system is horribly distorted in favor of a small group of people who need to do very little to take most of the wealth.

Recognizing the Class War

FinCap Wins Anyway
by JAMES ROTHENBERG


Stories don’t have to be true. They just have to hold our interest. The American story has held our interest for a long time, and it’s even partially true. The early settlers found it tough going, but that was in comparison to an English way of life. They found plenty of people here who were born here. Well, not quite people. Savages. The distinction accounts for all subsequent actions of the one toward the other.

The founders drew up a beautiful set of laws, but that was also to keep in place property arrangements commensurate with position. Liberty was deemed to be the province of all, with the country run by the people who own it.

The westward push was adventurous and heroic, but it also pushed southward some weaker, brown skinned people. The yellow skinned built the railroads and the black skinned built the economy, but the landowners built the legal structure. In this “nation of laws”, nothing has the lasting strength of the legal structure.

There’s a lot of wonderful things about America, the many freedoms, the informality, the modernity, and the special way we associate (sometimes) with the underdog. And it’s not a society where a peddler or clerk can’t chat up a bank president. But the story of America as a classless society is only partially true.

Missing are rigid, caste-like separations. Lines are more subtle and smeared out by a lifetime of ingesting bureaucratic illusion, played out like national theme music, and a relatively good living standard. And even where we openly speak of the “great middle class” it contains a touch of lording it over third world and autocratic countries that have a great “poor class”.

Over the ages class distinctions have been put in place by easily recognized fiat. In America they are infused by corporate law. You can’t step into an airport without hearing over and over again, “Federal law prohibits…dadadadadadadada” , but federal law does not prohibit corporate law, and it is this that helps create the orbital compulsion whereby the lightweights cannot escape from the pull of the heavyweight. Put in relativistic language (for accuracy and with the gain of an apt psychological overtone) the lightweights simply follow the easiest path in distorted space.

Differences in Americans’ status along class lines are internalized, and therefore partially discounted, but there are indications people are beginning to keep closer score, as evidenced by the Occupy movement. Its second stage engines haven’t fired yet. More is going to be needed because a vital Left presence is the only bulwark against nascent fascism, very hospitable to capitalism. It certainly isn’t going to come from our two monopoly political parties. The class disparity between rich and poor is manifest in the way government policy is slanted.

For instance:

Before becoming president, Barack Obama had a lot to say in favor of single-payer healthcare, actually a very bad name. It’s confusing to people and possibly purposely so. How many people actually care about how many entities pay for their healthcare so long as it is paid for by someone other than them? The better name is national healthcare, the model already existing in Medicare.

Perhaps because the very idea of socialism has been crapped on for so long in this country, even proponents of single-payer choose their words carefully, avoiding terms like “socialized” and “nationalized”. That’s why we hear the euphemism, “universal healthcare”.

State propagandists coined the expression “godless communism”, as if this was a property of communism. If it is, the implication is that we have a system of “godly capitalism”. Gets pretty silly. Except that all our state managers take a virtual oath to that god.

Obama actually had a very good chance to move to national healthcare. He had described, and passionately, our present health system as being in a state of “crisis”, not only for its being behind the rest of the developed countries that have nationalized but for being a drag financially, physically, and mentally upon already burdened working people who either didn’t have insurance or couldn’t afford what they did have.

The record shows that when he had the chance to make a change he dealt in the insurance companies, the HMO’s, the drug companies – make that the entire health profit industry – but zero advocates for national healthcare.

Once in the White House, Obama continued his strong support of TARP, bailing big banks out of crisis. What distinguished this crisis from the healthcare crisis was the class of people waiting to be rescued. The rich and powerful are not used to waiting and in a week’s time Wall Street and its enablers in Washington got their dream fix, essentially a massive socialization of trillions of dollars in guarantees to finance capital. One crisis adverted, at least temporarily, the other morphed into the tepid Affordable Care Act, written with the pen and ink of the healthcare industry.

Another example of the ongoing class war is the jobs situation and how it is being dealt with. There are not enough good paying jobs for the people who need them, largely because the people who don’t need them have pinched the availability of good paying jobs in the interest of maximizing shareholder profits. That’s through plant closings, downsizing, outsourcing, offshoring, union busting, and taking wage advantage of a surplus worker pool.

It’s bad for the country when there are too few good paying jobs. At the extremes it leads to disillusionment, anxiety, depression, despair, and social unrest. It’s bad for government coffers also because of decreased payroll taxes. And when it comes to a certain point it is detrimental even to finance capital that expects and relies on working class consumption. No money, no spend.

Domestic needs are taking a back seat to our imperialism, a psychopathic use of American power bent on world domination. If you can beat them, why join them? All this national treasure, manpower, and brainpower could be directed toward repair and replacement of our 20th century infrastructure. A modern layer of this infrastructure is high speed internet. Access to fast broadband connections are the new necessity for the 21st century and many countries are putting the U.S. to shame in this department, the NSA notwithstanding.

What happens if we put these two desirable things together? 1) Putting people to work 2) Rebuilding infrastructure. What comes to mind and what came to mind at the beginning of the Obama presidency is a public works program on a grand scale, the template of which was created in 1933 as part of the New Deal. Whatever consideration Obama gave to the much talked about idea it is certainly not part of the present deal.

But it’s not too late. It may even be a better time because efforts to boost the economy with easy money have proven inadequate. Federal Reserve bond buying and low interest rate policy have done wonders for Wall Street and corporate profit and loss statements but, again, that’s just the impatient rich and powerful. The jobs aren’t coming back even with real negative interest rates.

Obama and his advisors are aware of predictions of economic stagnation into the foreseeable future, but they are also aware of the nervousness of finance capital whenever a socialist idea is advanced. Maybe it’s time for the president to convince them that it’s in everyone’s interest. More realistically considering Obama’s penchant for pleasing the owners, maybe it’s time for finance capital to convince the president that the government is the employer of last resort. FinCap wins anyway.

An Orgy of Thieves

The American Criminal Elite
by JEFFREY ST. CLAIR and ALEXANDER COCKBURN


All through the 1980s and 1990s, professorial mountebanks like James Q. Wilson and Charles Murray grew plump from best sellers about the criminal, probably innate, propensities of the “underclass,” about the pathology of poverty, the teen predators, the collapse of morals, the irresponsibility of teen moms.

There was indeed a vast criminal class coming to full vicious potential in the 1990s: a group utterly vacant of the most elementary instincts of social propriety, devoid of moral fiber, selfish to an almost unfathomable degree. The class comes in the form of our corporate elite.

Given a green light in the late 1970s by the deregulatory binge urged by corporate-funded think tanks and launched legislatively by Jimmy Carter and Ted Kennedy, by the 1990s, America’s corporate leadership had evolved a simple strategy for criminal self-enrichment.

First, lie about your performance, in a manner calculated to deceive investors. This was engineered by the production of a “pro forma” balance sheet freighted with accounting chicanery of every stripe and hue, willingly supplied by Arthur Andersen and others. Losses were labeled “capital expenditures”; losing assets were “sold” to co-conspirators in the large banks for the relevant accounting period.

Later, using Generally Accepted Accounting Principles, slightly more realistic balance sheets would be presented to the SEC and the IRS.

Flaunting the “pro forma” numbers, corporations would issue more stock, borrow more money from some co-conspiratorial bank, buy back the stock for the chief executives, who would further inflate its value by dint of bogus accountancy, sell the stock to the chumps and bail out with their millions before the roof fell in, leaving pension funds like CalPERS holding the bag. The fortunes amassed by George W. Bush and Dick Cheney are vivid illustrations of the technique.

The scale of looting? Prodigious. This orgy of thievery, without parallel in the history of capitalism, was condoned and abetted year after year by the archbishop of the economy, Alan Greenspan, a man with a finely honed sense of distinction between the scale of reproof merited by the very rich and those less powerful. When Ron Carey led the Teamsters to victory way back in 1997, Greenspan rushed to denounce the “inflationary” potential of modestly improved wage packets. Even though declared innocent by a jury of his peers, Carey was forbidden ever to run in a union election again. And so it goes now with the drumbeats about raising the minimum wage.

Where were the sermons from Greenspan or his successor Ben Bernanke about the inflationary potential of stock-option fortunes lofted on the hot air of crooked accountancy and kindred conspiracies?

Let someone die in a gang-banger crossfire in South Central, and William Bennett will rush to indict an entire generation, an entire race. Where are the sermons from Bennett, Murray and the Sunday Show moralists about the CEOs scuttling off with their swag, leaving their employees to founder amid wrecked pensions and destroyed prospects? A street kid in Oakland is in the computer by the time he’s 10. No “criminal propensity” profiles for grads of the Wharton or Harvard business schools.

You have to go back to Marx and Balzac to get a truly vivid sense of the rich as a criminal elites. But these giants did bequeath a tradition of joyful dissection of the morals and ethics of the rich, carried on by Veblen, John Moody, C. Wright Mills, William Domhoff, and others. But by the mid-1960s, disruptive political science was not a paying proposition if you were aiming for tenure. A student studying Mills would be working nights at the soda fountain while the kid flourishing Robert Dahl and writing rubbish about pluralism would get a grad fellowship.

Back in the 1950s, people were reading stuff about the moral vacuum in affluent suburbia by writers like Vance Packard and David Riesman. Presumably, inner loneliness soon became inner joy. There was nothing wrong about putting one’s boot on a colleague’s neck and cashing in. Where are the books now about these proving grounds for the great corporate criminal cohort of the 2000s, who came of age in the Reagan years?

In fact, it’s nearly impossible to locate books that examine the class of corporate executives through the lens of cool, scientific contempt. Much of the current writing on CEO culture is published in magazines like Fortune, Businessweek or Forbes. And though there are a few authors — like Robert Monks (Power and Accountability) — who focus their attention on executive culture, nowhere will you find empirical studies on the sociobiological roots of the criminal tendencies of the executive class.

Why? The rich bought out the opposition. Back in the mists of antiquity, you had communists and socialists and populists who’d read Marx, and who had a pretty fair notion of what the rich were up to. Even Democrats had a grasp of the true situation. Then came the witchhunts and the buyouts, hand in hand. Result, a Goldman Sachs trader could come to maturity without ever once hearing an admonitory word about it being wrong to lie, cheat and steal, sell out your co-workers, defraud your customers.

The finest schools in America educated a criminal elite that stole the store in less than a decade. Was it all the fault of Ayn Rand, of the Chicago School, of Hollywood, of God’s demise?

Does Democracy Still Work in America?

Manufactured Poverty: a reality but not a necessity

An Elegant Feast - JULY 21, 2013 

The history of poverty in the United States is depressing. So we repress it. Instead our history books talk about industrial revolutions, wars, economic prosperity, global trade, and so on. The consequences that such events have on the poor and oppressed are either whitewashed or legitimized. Our history books serve as an example of a larger ideological mission to naturalize poverty and to give us reasons to ignore it. In other words, there has been a direct and systematic attempt to make poverty appear to be innate, unchanging, irreversible, and everlasting. If people can be convinced to accept poverty, then the incentive to alleviate it is removed.

Even well meaning progressives will, unsuspectingly, get caught up in a regressive language. They will say, “Poverty is complex.” But the perception of poverty’s complexity has been conditioned in us in order to overwhelm our motivation. What if we accepted the uncontroversial fact that a small fraction of US military spending could feed, house, and educate everyone on the planet, 10 times over. If we wanted to eliminate poverty in the United States, it could be done within a week.

What is our impediment? There is a concerted effort, by those with economic and political power, to manufacture and to maintain poverty. Currently, an effort is underway to eliminate the minimum wage. On the surface, advocates will unabashedly argue that the goal is to create the cheapest possible labor force. But it should be lost on no one that the ability to push the working class into economic desperation is, in itself, a political end. People who are merely trying to survive do not have the time, the energy, or the resources for political advocacy. Economic exploitation always accompanies marginalization.

The desire to eliminate the minimum wage is only the most recent and flagrant part of an organized effort to barricade the halls of wealth and power. The series of so-called free trade agreements in the 1990s consistently lowered human rights standards abroad while, simultaneously, forcing US workers to compete with third world labor. The intent is clear: to drive down real wages and to decrease the quality of life of the working class. The tax cuts of Bush the Second’s presidency redistributed wealth from the bottom to the top in an explicit effort to further consolidate economic and political power. These efforts coincided with a national push for ‘right to work laws’ (or really, right to work for nothing laws) so that workers were politically disenfranchised while also being economically exploited. No politician worthy of the name would be foolish enough to discuss these practices in public, but the strategy is unmistakable. There is a political motivation to fossilize poverty.

Unfortunately, the Obama years have made the problem worse. The bailouts of the banks assured the financial sector that they will always be protected. In order to guarantee poverty, the powerful maintain this simple equation: privatize profits, socialize losses. After the downturn of 2008, everyone has become poorer except the people who caused the crash. To call this an accident ignores the facts and ignores the history. Still, there are people, many people, who genuinely want to combat poverty. But this needs to be done with eyes wide open. To face poverty is not to fight laziness or circumstance or ability; these are mirages. To combat poverty is to take the fight directly against those who have consciously made poverty one of the most shameful institutions of the United States.

The Double Bed of Business and Government

Interpenetration in the Obama Administration
by NORMAN POLLACK


Oh Mary Jo, we eagerly awaited your cleaning up of the stench, crud, dreck of SEC—all, and obviously, in vain, as your appointment to head the Commission once more reveals the Obama Administration’s mighty efforts on behalf of the American Business System, especially its most problematic, exploitative, illegal features, i.e., those which create the greatest unearned profits for the perpetrators of economic skullduggery and sleight-of-hand, now, as the latest attraction, derivatives trading. Obama has found his soul mate in regulation in Mary Jo White, just as in paramilitary operations in John O. Brennan. Government, at its finest hour of political treachery in serving the American people.

Let’s get serious. The United States throughout its historical development has interiorized the structure and values of capitalism, a puristic capitalist-institutional formation, still more greatly accelerated since the aftermath of World War II, to a far more intensified expression than any advanced industrial nation, thereby making America and capitalism itself synonomous, identical, indistinguishable one from the other—a synchronism of the two transcending party, and with thorough bipartisan support, creating clear boundaries to social change and political protest. Obama is merely the latest spear carrier in a continuous line—with few notable exceptions in the nation’s past—of presidents ministering to the needs of dominant groups and attempting, sometimes unsuccessfully (witness the latest financial crisis and its still unfolding consequences), to satisfy the imperative needs of the economic system. Rather than seek, even within capitalism, the moderation of its war-prone, imperialist, underconsumptionist tendencies and societal class differentials, thereby adding some degree of justice and melioration to its execution and operations, America, now particularly under Obama, is going for broke to liberate its oppressive, even nightmarish, inner reason and potential, in which militarism, deregulation, and an economic freefall for working people become increasingly evident.

In this light, Mary Jo White at SEC, rather than a disappointment (for those who still hold out hope of Obama’s essential honesty as dedicated to social welfare and structural democracy), is par for the course, one that started off with the appointments of Geithner, Summers, and Robert Rubin’s policies, ideas, and confederates under Clinton, the placation of and support for Big Pharma and health insurers under Obamacare, the more pointed assistance to the defense, nuclear, and oil industries, and the heartfelt embrace of Wall Street, and continues in a sophisticated corporatism—the real definition of liberalism—far more dangerous for its realization of a social order founded on monopolism and wealth concentration than is the unsystematic business favoritism and chisling mindset, the penny ante mode of capitalist development, which fails to marshall the full resources of the State, of the Republicans.

Obama has a step up on his predecessors—for reasons still difficult to determine, given that his personal acumen and brightness have been grossly exaggerated. Perhaps he simply has allowed the gathering historical forces inhering in the US’s global posture, in which America can no longer dictate the course of world events, to coalesce in his administration: an aggressive defensiveness against the very democratization his candidacy supposedly represented. Capitalism serves as the battering ram for the restoration of American world power. Its helpmate, more than previously, is naked force displayed as the doctrine of permanent war, the military juggernaut adjusted to the specific theaters of concern from naval power in the Pacific to drones for targeted killing, intervention, CIA activities of regime change, the JSOC paramilitary operations, springing up throughout the globe.

Interpenetration, the integrative, instead of merely parallel, structures, values, relations of mutual dependence and inspiration, of business and government, has in America since the time of Theodore Roosevelt (Gabriel Kolko’s Triumph of Conservatism, after more than a half-century, still has not been assimilated into the collective realization that REFORM is largely big-business inspired, to achieve the consolidation of wealth and, relatedly, the security of capitalism at home and in the world, free from radical challenges, and even that of lesser-capitalist competitors), provided the foundations designed to ensure that capitalism in America, because inseparable from the State, could rely on government for its stabilization and global expansion. Now, under Obama, there is no longer any question (one muted or nonapplicable for long stretches of the past, frequently embodied in the strategy of the Open Door) that a mainspring of capitalism is the reliance on the military, for purposes of counterrevolution abroad, economic stimulation at home, and in both arenas, a system of power fusing national and international purpose to create Fortress Capitalism as an eternal source of wealth and leadership.

Welcome Mary Jo; do your mischief with respect to derivatives, themselves already mischievous enough, knowing that you will sleep soundly in the knowledge that, if your Boss can sleep soundly after personally selecting targets for assassination, you too deserve restful slumber for participating in the wreckage of an economy whose victims are all but assassinated in their despair, loss of employment, and for some, foraging in the ash cans as in days of yore—under your counterpart servants of wealth.

Here follows my New York Times Comment (May 6) on its editorial disappointment on Ms. White’s record as the newly-installed head of the SEC. My fond wish is that Times disappointment will turn into forthright and fundamental criticism of the whole shebang (but I’m not holding my breath):

The Times’ analysis of SEC partiality to banks and their role in the dervatives trade is wise, sound, and timely, but lacking fuller context: Obama’s wider posture of deregulation, exemplified by the appointment of White but actually running through the regulatory apparatus. SEC, FDA, EPA, in areas crucial to the welfare of the American public, we are being left to hang out to dry. The issue of derivatives cannot be treated in isolation: In all respects, internal corporate-banking hegemony defines the American scene, suitably disguised in liberal rhetoric.

When will the con game stop? Probably not for a long time, as both major parties contribute to the widening of economic and class differentials, accompanied by the weakening of the social safety net. Symbolically, derivatives signify the splitting apart of America–not the 1% vs. the 99%, too simplistic by far, but a structural cleavage sufficiently acute to result in underconsumption, unemployment, and the need to rectify domestic hardship through greater militarism, both as distraction and as the source of further enrichment for America’s wealthy.

Yes, we are witnessing the financialization of the US economy, introducing basic distortions across the board, from loss of manufactures to further financial crises. As a nation, we seem not to learn, possibly even incapable of learning. But I’m glad The Times in this editorial helps to open the can of worms.

Shrinking Expectations in the New / Old America

The Great Restructuring
by DAVID ROSEN


A series of recent reports from the Bureau of Labor Statistics (BLS), the Pew Foundation and Urban Institute detail how more and more Americans are adjusting to the new old America.

The BLS report for March 2013 was pretty bleak. Nearly 12 million (11.7 million) Americans were unemployed, roughly the same as in February. It distinguishes between a “broader” measure (at 13.8%) and a “standard” measure (at 7.6%) of unemployment. The unemployment rates were as follows: for blacks, 13.3 percent; Hispanics, 9.2 percent; whites, 6.7 percent; and Asians, 5.0 percent; and for adult women, 7.0 percent;adult men, 6.9 percent; and teenagers, 24.2 percent.

More telling, it reported that the number of people classified as “long-term unemployed” (i.e., jobless for over 27 weeks) is 4.6 million, thus accounting for approximately 4 out of 10 ten unemployed persons. Adding to this, it noted that 7.6 million people are underemployed. These are people taking part-time positions because they can’t get full-time work.

Adding these three categories, 23.9 working-age Americans are less-than-full employed. The BLS estimates the total U.S. workforce of those 16-years and older at 154 million. These people illustrate how the Great Recession is becoming a way-of-life.

Much of the media discussion about the BLS findings focused on whether the current “economic revival” has stalled or reversed. Stepping back from the immediacy of the findings suggests a more pessimistic caution, one that suggests that the U.S. may well be witness an historic restructuring.

A recent report from Pew Research, A Rise in Wealth for the Wealthy; Declines for the Lower 93%: An Uneven Recovery, 2009-2011, begins to place the BLS data in a larger context. Its findings are pretty damning with regard to current “revival”: “During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%.” Pew’s findings are based on recently released Census Bureau data.

Pew goes further and details the financial consequences of restructuring of “wealth distribution”: “the mean wealth of the 8 million households in the more affluent group rose to an estimated $3,173,895 from an estimated $2,476,244, while the mean wealth of the 111 million households in the less affluent group fell to an estimated $133,817 from an estimated $139,896.”

Making matters structurally worse, the wealth-gap divide is only getting greater. Pew reports: “the 8 million households in the U.S. with a net worth above $836,033 saw their aggregate wealth rise by an estimated $5.6 trillion, while the 111 million households with a net worth at or below that level saw their aggregate wealth decline by an estimated $0.6 trillion.” (Household wealth is calculated by adding up personal assets like a home, car, real property, a 401(k), stocks and other financial holdings and subtracting all debts, including mortgage, car loan, credit card debt and student loans.)

The Urban Institute’s study, Less Than Equal: Racial Disparities in Wealth Accumulation, adds further resonance to the Pew findings. It warns, “in 2010, whites on average had two times the income of blacks and Hispanics, but six times the wealth.” It found, “wealth disparities have worsened over the past 30 years.” “High-wealth families (the top 20 percent by net worth) saw their average wealth increase by nearly 120 percent between 1983 and 2010, while middle-wealth families saw their average wealth go up by only 13 percent. The lowest-wealth families— those in the bottom 20 percent—saw their average wealth fall well below zero, meaning their average debts exceed their assets.”

In no uncertain terms, the Urban Institute’s argues, “there is extraordinary wealth inequality between the races. In 2010, whites on average had six times the wealth of blacks and Hispanics. So for every $6.00 whites had in wealth, blacks and Hispanics had $1.00 (or average wealth of $632,000 versus $103,000).” Making matters worse, it point out “the racial wealth gap grows sharply with age.” The older a person, the poorer s/he will likely be, especially a person of color.

And the big losers in the Great Recession? “Between 2007 and 2010, Hispanic families saw their wealth cut by over 40 percent, and black families saw their wealth fall by 31 percent,” it reflects. “By comparison, the wealth of white families fell by 11 percent.”

* * *

The Great Recession of 2008-2010 fulfilled its historic mission. It legitimized the restructuring of social and economic relations, sanctioning the unquestioned rule of the corporate plutocrats. In response, a sense of doom seeps through America not unlike that spreading through much of Europe.

The 2008 and 2012 elections of a corporatist moderate enshrined the tyranny of global financial capital and the militarist policies of a failing imperialist power. Pres. Obama’s elections formally ended the American Century.

Over the last quarter-century, the U.S. has been witness to the systematic destruction of the grand liberal moment. This was the half-century or so known as “the American Century,” from the New Deal thru the Great Society that shaped the U.S. during much of the mid-20th century. Ironically, both saw domestic “progress” intimately linked to foreign military engagement.

This period shared a kind of quasi-utopian fervor not unlike that found during the Revolution and the Civil War eras. For all their respective shortcomings, these were historical moments defined by a moral sensibility that defined the country as seeking to be a more egalitarian, more inclusive nation. As Lincoln would have said, these moments demonstrated America’s better angles. One can’t say that of Obama’s America.

Since Pres. Nixon, and with the collusion of both Republican and Democratic presidents, the utopian pendulum has steadily moved to the right, giving way to the increased tyranny of those with privilege. Pres. Obama is putting the final nails in the coffin of the vision of an egalitarian America. He is returning the nation to the worst impulses that characterized the Gilded Age, the last grand era of corporatist tyranny. On one side is the gluttony and elitism regally displayed by the well-to-do and, on the other side, a deepening hopelessness among a growing number of Americans.

As the BLS, Pew and Urban Institute reports remind us, a growing proportion of the new underclass lives a furtive existence. They can be broadly dubbed the lost souls of America, those who have essentially given up on the American dream. Many are among the new dispossessed if not homeless and have essential lost all hope. What keeps them going is one of the unasked questions of today. Among them is the growing army of vets, throw-a-ways of the military-industrial complex.

But these lost souls of America also include a growing segment of the U.S. population. A recent Associated Press-GfK poll found, for the third year in a row, only 1 in 4 Americans now expects his/her financial situation to improve over the next year.

The deeper, darker questions that these and similar reports fail to raise is: (i) what will it take to turn personal despair into political rage? and (ii) can Americans reclaim the once-inspired utopian legacy of its past for a better 21st century?

From Bad Jobs to Good Jobs

Sunday, 05 May 2013| By Colin Gordon, Dissent

What happened to the good jobs? This is the question posed by fast-food workers who walked out in New York and Chicago in recent weeks. It is the question posed by activists in those corners of the economy—including restaurants and domestic work and guest work—where the light of state and federal labor standards barely penetrates. And it is the question posed (albeit from a different set of expectations) by recent college graduates for whom low wages and dim prospects are the dreary norm.

There is no shortage of suspects for this sorry state of affairs. The stark decline of organized labor, now reaching less than 7 percent of private-sector workers, has dramatically undermined the bargaining power and real wages of workers. The erosion of the minimum wage, with meager increases overmatched by inflationary losses, has left the labor market without a stable floor. And an increasingly expansive financial sector has displaced real wages and salaries with speculative rent-seeking.

New work by John Schmitt and Janelle Jones at the Center for Economic and Policy Research recasts this question, posing it not as a causal riddle but as a political challenge: what would it take to get good jobs back?

Schmitt and Jones start with a basic distinction between good jobs (those that pay $19 an hour or better and offer both job-based health coverage and some retirement coverage) and bad jobs (those that meet none of these criteria). Each of these categories accounts for about a quarter of the workforce (the rest fall somewhere in between), with the share of good jobs slipping since 1979 and the share of bad jobs creeping up. The goal, by simulating the impact of different policy interventions, is to increase the share of good jobs and to eliminate—as much as possible—the bad jobs entirely.

Some policies—however salutary—would have little impact on this “good job-bad job” distribution. Raising the minimum wage, for example, would boost the earnings of 30 million workers, but it would do so by transforming bad jobs into not-quite-so-bad jobs. A worker earning $10 an hour without benefits, after all, is still pretty far removed from a good job.

The graphic below summarizes the findings of Schmitt and Jones, for men and women, for five policy changes. Gender pay equity, not surprisingly, would yield some small gains for women—a slightly higher percentage of good jobs, and slightly lower percentage of bad jobs. A 25 percent increase in college attainment yields only a modest improvement, a finding consistent with other research suggesting that wages are falling despite increasing educational attainment and not because there is some “skills” mismatch between available workers and available jobs.

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There is a stronger payoff for collective bargaining, which Schmitt and Jones simulate with an increase in union density sufficient to capture the same number workers as the increase in college attainment (in the first scenario, 8.7 percent of the workforce are given college diplomas; in the second, 8.7 percent of the workforce are given union cards). This yields not only a union wage premium but higher rates of job-based health and pension coverage. But the payoff is not as big as one might expect, probably because labor’s ability to deliver such benefits to its members has fallen as its share of the workforce has gone down. Simply bumping up the union density rate, in other words, is not the same thing as reclaiming the labor movement of past generations. The strongest payoff comes with socializing and universalizing health and retirement coverage. Adopting either would erase the bad jobs entirely. Adopting both would push the share of good jobs to nearly half (50 percent for men, 39 percent for women). This resonates with our understanding of the perverse logic of job-based social policy—which tends to widen inequalities (good jobs, after all, are the ones with good benefits) rather than close them. It resonates with our understanding of the broader benefits of universal social policy—which wipes away not only the waste and stigma associated with risk-rating and means-testing, but the crushing insecurity of going uncovered or uninsured. And it resonates with our political and economic realities, in which incremental progress on social policy (maybe just in the states) seems more likely than a surge in labor organization and more resourceful than deep personal investments in education.

Average Income For The Bottom 90 Percent Of Americans Grew Just $59 In 40 Years

By Travis Waldron | ThinkProgress

The top 10 percent of Americans have experienced rapid income growth over the last 40 years, but the bottom 90 percent haven’t been so lucky. In fact, average income rose just $59 from 1966 to 2011 for the bottom 90 percent once those incomes were adjusted for inflation.

That’s according to a new study of tax data from David Cay Johnston, who won a Pulitzer Prize for his writing about tax policy. While the bottom 90 percent’s incomes rose just $59, the top 10 percent fared much better, he found:

In 2011 the average AGI of the vast majority fell to $30,437 per taxpayer, its lowest level since 1966 when measured in 2011 dollars. The vast majority averaged a mere $59 more in 2011 than in 1966. For the top 10 percent, by the same measures, average income rose by $116,071 to $254,864, an increase of 84 percent over 1966.

The difference in those gains has reduced the share of income the bottom 90 percent holds as well. That segment held two-thirds of all household income in 1966 but just 51.8 percent in 2011, Cay Johnston found. Other studies have had similar results. One study found that pay for chief executives increased 127 times faster than worker pay over the last 30 years, and official data has shown worker wages stagnating since the 1970s. That has led to a sharp increase in American income inequality, which now rivals rates from countries like the Ivory Coast and Pakistan.

The biggest driver in that disparity, Cay Johnston wrote, was not that the rich were working harder, “but the shift of income from labor to capital and changes in federal income, gift, and estate tax rules.” Indeed, the estate tax has been eased over recent decades and federal income taxes have become more favorable to the wealthy thanks to breaks for investment income. A recent study, in fact, found that the capital gains tax cut, which benefits the wealthy but does virtually nothing for everyone else, was “by far” the biggest driver in the growth of American income inequality. (HT: Huffington Post)

Divided We Fall: a Tale of Two Economic Realities

The American Economy Continues to Slide, But There’s Plenty of Optimism at the Top
by JASON HIRTHLER


“Teach these boys and girls nothing but Facts. Facts alone are wanted in life.” These lines from schoolmaster Thomas Gradgrind open Charles Dickens’ Hard Times, which satirized the quantitative ethics of 19th century utilitarians. The simple premise of utilitarianism pioneered by Jeremy Bentham was that an action or policy should be judged by a single criterion: whether or not it contributed to the greatest happiness of the greatest number. It can feel, living in the early 21st century, that our leaders are operating on a principle of anti-utility, seeking the greatest happiness of the numerical few. The Washington establishment would dispute the truth of this claim, but then, as three examples will suggest, elites answer to a separate reality. To paraphrase Scott Fitzgerald, let me tell you about the very rich. Their facts are different from yours and mine.

The C-Suite and Main Street

Earlier this month, March job figures coughed up a slim volume of 85,000 new jobs, and the unemployment rate ticked down to 7.6 percent from 7.7 percent in February. As happens every month in this comical pantomime, the facts are shotgunned into the public consciousness by venerable propagandists like The New York Times and Washington Post, and the semi-articulate cable networks. The State Department then steps forward to impart a few rosy sentiments, although providing the necessary cautionary language lest our optimism overwhelm us.

The positivity of the official interpretation of the jobs report was belied by the 663,000 more citizen-consumers who slipped behind the black curtain of idle despair (47 percent of them women), not even bothering to seek work. According to Mike Gimbel, an analyst for socialist weekly Workers World, adding the decrease in the active labor force to the number of workers with insufficient part-time work, the unemployment rates skyrockets north of 20 percent. Nearly 90 million American adults are now out of the labor market, a new threshold of despair. (That’s nine times the number of unemployed at the height of the Great Depression, when there were only 123 million people in the country.) The jobs report complemented the specter of the sequester or a grand bargain still swirling overhead, promising to slice four trillion dollars from the economy over the next decade.

Yet a recent Financial Times survey of 400 global senior executives reports new optimism among business leaders, who project economic and industry improvements in the next six months. This peculiar optimism of corporate leadership, even amid the collapsing scenery of American society, is revealing on two levels. First, it evinces the degree to which Fortune 500s have uncoupled themselves from the American consumer market. The United States may be sliding toward Third World conditions, but expanding segments of Brazil and China are racing toward First World abundance. These markets, not ours, have laid claim to the attentions of corporate profiteers. What does it matter to the multinational if median income in the U.S. has climbed a mere $59 since 1966, when Brazil’s per capita income has nearly doubled since 1999? One salient example: Nearly seventy percent of Coca-Cola’s revenue comes from outside the U.S. In the first quarter of 2013, its international sales volume grew three times as fast as its American volume. Over the next five years, Coke plans to spend $30 billion on international expansion in China, India, Russian, and the Middle East. So long as one continent is in the ascendant, the fall of another is of little interest.

Second, the survey elicits the degree to which Wall Street financial markets have untethered themselves from Main Street industry. Industrial manufacturing has been in heavy decline as a percentage of American GDP, from a peak of 34 percent in the fifties to about 11 percent now. Perhaps as corollary, the GDP share held by the financial sector is on a steady uptick, now over eight percent and rising, while the total turnover of financial markets is many times our GDP. Derivatives, exempted from tepid Dodd Frank controls, are being purchased in bulk every month by the Fed, which is also holding interest rates at zero, ensuring banks can borrow for nothing, swivel on a dime and fleece credit card desperados at 18% a month. Why should corporate leaders care that it is slowly gaining a huge reserve army of American labor, to use Karl Marx’s term, which it can one day play off against some arriviste working class in a BRIC country?

Madison Ave and the 90 Million

Much like the heady delirium in the boardroom, these shadow facts too infrequently penetrate the optimistic consciousness of our vast marketing industry. As oil pipelines hemorrhage and radioactive waters sieve into the soil, we are admonished by a new nationally broadcast ad for the Acura RXL: “You wake up in your luxury bed and slide out of your luxury sheets. You get into your luxury shower and dry off with your luxury towel. You put on your luxury suit and your luxury watch. You grab your luxury coffee from your luxury coffee maker, and add some luxury sugar. You step out of your luxury house and step into your luxury car…which makes everything else seem ordinary.” Another class of commercials trots out sonorous-voiced actors like Tommy Lee Jones to lean on farm fences and talk about retirement planning, while Matt Damon’s soothing voice reminds how “common sense” is all we need to build a halcyon tomorrow. It always seems a healthy number of the wide-grinned retirees portrayed zooming down the California coast are minorities, often the African-Americans who lost half their wealth during the housing collapse.

What must the mass unemployed think as the television drones forth with this condescending drivel? The Boston Globe reports on a study by the Urban Institute that claims Generation X and Y—the two generations following the Boomers—have saved less than their parents did in their early adulthood: “Stagnant wages, diminishing job opportunities, and lost home values are behind the issue and have kept young Americans from saving even as the economy doubled from the early 1980s, the study found.”

The drear state of the economy is compound by what the young do to counteract it—take out loans. The Globe story notes, ‘’‘People in my generation are of the opinion that it’s OK to take out tens of thousands of dollars in student loans,’’ said Young, who graduated in May 2012. ‘‘That puts them in debt right away.’’’ The article concludes that, with no savings, Gen X and Y will rely more on the social safety net, the very programs millionaires Barack Obama and John Boehner are so anxious to cut. But millionaires can afford to be utopian, hence the blandishments about the road to a stronger America.

If the actor in the Acura commercial were a genuine luxury guy living a genuine luxury life, and his address were placed on a title screen at the end of the ad, I suspect a large mob drawn from the 90 million unemployed would soon descend on his luxury house. As Obama rather imperiously told a frightened assembly of derivatives kingpins during the collapse, “I’m the only thing standing between you and the pitchforks.” Of course, the commercial is just another tawdry piece of condescension foisted on the masses from Madison Avenue, but it artlessly demonstrates the second disconnect in our storyline—between the media and the masses. The Acura RXL lists at $48,450. Average per capita debt is $47,500.

The White House and the Poor House

It was Freud who said that if you wanted to know human nature, simply reverse its clearest moral injunctions. If we are forbidden to steal, it is because we are thieves. If adultery is verboten, it is because we are covetous. By that measure, perhaps we can discern the aims of Washington by reversing the desires of the American public. (Much like we can find countries that receive the most American aid by seeking out the nations with the most egregious human rights abuses.)

Testing Freud’s formula bears some interesting results. According to relentlessly consistent polling numbers, we oppose cuts to social spending such as education and Social Security and favor national health insurance provided by the government. Yet the policies we receive from either wing of the Business Party are healthcare reform that will leave millions still uninsured (but usefully fined), higher defense spending, lower education spending, and aggressive interventions across the planet. Far less than half of Americans want to prioritize immigration and gun control, but these topics dominate media coverage. We want jobs and a strong economy before a level deficit. Yet we get an austerity package designed to slow the economy and job growth. Even though our paychecks have flatlined for forty years, and our schools are growing poorer and our prescriptions dearer. Even though sixty percent of the jobs created by the stimulus were part time, and the piddling median wage in 2011 was $26,965.

At a macro level, the Freudian formula works the same. The Journal of the Academy of Arts & Sciences recently reported on the disparity between public opinion and policy. In polling, large majorities have favored federal policies to cut greenhouse emissions, even supporting tax breaks for corporations that reduce emissions—a stance that reflects global consensus on the reality of climate change and the need to do something about it. In fact, 118 countries have set national targets for renewable energy (RET). As the formula predicts, the U.S. has no national renewable energy target, placing it on the regressive right of the global political spectrum.

While nearly two thirds of Americans favorable developing renewables over oil, gas, and coal, we churn ahead with oil, gas, and coal exploration and encourage states to draft their own environmental targets. Extraction is keeping the federal government too busy to deal with such peripheral concerns. Substitute your own favorite federal failing and watch the formula work for you. Rather than prosperity, austerity. Rather than due process, solitary confinement. Instead of higher wages for Main Street, higher earnings for Wall Street. In lieu of jobs, offshoring. Instead of substance, rhetoric.

Here lies our third disconnect, between government and the people. Like the Wall Street and Madison Avenue realities, individuals in the highest echelons of federal power are wildly prosperous, moving seamlessly between the precincts of the state and the serene towers of global enterprise. They are showered with the patronage of both while employed by either, such that the distinctions between the two become opaque and nominal. The goals are common—dominion. The profits are shared—the costs socialized. And the media continually rehabilitates the profile of power like the Soviets rehabbed victims of the gulag—ex post facto. The facts of life for the obscenely rich are not like the facts for the majority. They are doing fabulously. Witness the outpouring of mawkishness in the wake of Margaret Thatcher’s death. In her first decade in power, she cut taxes on the wealthy by half while the income of the poor plummeted by forty percent. Who penned those lavish encomiums to sit atop Thatcher’s grave? Who but the survivors?

Interesting that the quote from Fitzgerald, about the rich being different from the rest of us, was from a set of short stories called All the Sad Young Men, largely about the rich and the shimmering anomie of the world they inhabited. Yet if the surveys, media, and policies on offer are any indication, all the sad young men have shed their survivor’s guilt and moved on. Life is a fairy tale waiting to be bought. Darker realities, like the distant wail of an ambulance, hardly register anymore.