The 1% is Hogging So Much of Our Income That It’s Holding the Economy Back

[Hissyspit]

http://www.juancole.com/2013/12/hogging-holding-economy.html

The 1% is Hogging so much of our Income that it’s Holding the Economy Back

(By Anthony W. Orlando)

- snip -

Or, as the late economist Michal Kalecki used to say, “The workers spend what they get and the capitalists get what they spend.” What he meant by that was that the rich can afford to save more of their income—and, indeed, we find that the One Percent continue to save 15 to 25 percent, while the saving rate of the 99 Percent has plummeted close to zero. If too much money goes to the One Percent and not enough to the 99 Percent, the economy will save more and more and spend less and less, until there isn’t enough consumer demand to justify increasing production and investment. Thus, the economy will slow down.

For awhile, the 99 Percent were able to make up for lower incomes by saving less and borrowing more, and for awhile, the economy indulged them with rising asset prices—first in the stock market, then the housing market—and falling interest rates. But this was not sustainable. Eventually, interest rates hit zero, households spent all their savings, incomes couldn’t keep up with debt payments, and asset prices stopped rising. Hence, the Great Recession.

The only real solution is to pay them higher wages.

Here’s how Hanauer frames it: “If the typical American family still got today the same share of income they earned in 1980, they would earn about 25 percent more and have an astounding $13,000 more a year. Where would the economy be if that were the case?”

When those workers earn more, they also invest in health and education, making them more productive. They’re also less likely to go out on strike, resulting in less uncertainty and more investment. Higher wages also force companies to invest more in advanced technologies that reduce costs, increasing productivity and global competitiveness.

More equal societies also don’t have to waste resources on what the economist Samuel Bowles calls “guard labor,” employing people to keep the lower classes in line. Bowles estimates that one in four Americans are working as guard labor, everything from factory supervisors to police officers.

And our government is more likely to invest in public resources that we all need to be productive—infrastructure, research and development, safety and quality standards—if all Americans feel that they’re “in it together” and not separated by class, and thus they’ll all benefit from the investments.

MORE AT LINK

Anthony W. Orlando is a Lecturer in the College of Business and Economics at California State University, Los Angeles. This op-ed is an excerpt from his new book Letter to the One Percent, published this month by Lulu Press, Inc. To learn more, visit www. LetterToTheOnePercent. com.

[Left Coast2020]

1. See tonights segment on Mellisa Harris Perry on income inequality

John Nicholes and David Kay Johnson are the guests--especially John who makes point pertaining to TPP. You'll have to sift through about 1/3 of way in online.

And may I add--in referrence to something this topic many months ago, the banks are estimated to be holding $2 trillion in assets which could go into the economy. If that happened, I'll bet ya unemployment would be at 5%...not 7%. But we all know its much higher than that.

[Pretzel_Warrior]

2. yep. all the walth in coffers of largest corporations and wealthiest families--dead weight loss

is the economic term used.

[Ichingcarpenter]

3. hogwash they say

[snot]

4. You go, Hissy!

How do the 1% expect to keep getting richer, if they keep us too poor to buy anything?

Since the 70's, excessive man-hours, plus tech advances, have created vast wealth, virtually all of which has been scraped off by the 1%. (I.e., we've been looted.)

It can't continue; and the stupid thing is, it's not even in the best interests of the 1% for it to continue.

If all the unemployed were working, and we were all making decent wages, we'd all be being productive, and we'd ALL be able to buy more stuff, and EVERYONE's standard of living could rise -- even the 1%!

We could go from a looting economy to an unlimited growth economy.

[blue14u]

8. I agree. Who is doing the math for them???

Something has to give. There is just no way to continue this
selfish greed of the 1%...

During the last election I was so sacred of what
would happen to us had Romney been elected. I still believe it would be so much worst for us had the repuks won the WH. The thing is, we are still being screwed...

WTF!!!!

[QuestForSense]

14. The thing is, the greedy are not givers.

They won't give an inch, and they don't give a damn. Even to their detriment. We've returned to the age of the robber-barons, literally. Which is why we need honest people in Washington and not their minions, who are faithful only to their corporate masters. People forget that fascism IS corporatism, and that's what we've got now. Until that changes, better get used to it.

[ladjf]

22. Unfortunately, as they acquire more wealth, their greed tends to increase exponentially.nt

[JHB]

29. Speaking of Romney, remember the 47% video

Now, ignore Rmoney, and just think of his audience.

Did any of them (and I'm sure they all think of themselves as "savvy investors&quot question any of Romney's claims and assumptions?

When he spoke about the factory in China, and said he was told the fences were to keep people out, did any of them ask "And you just believed what the salesman told you?"

Did any of them take issue with he characterization of the 47% who (after all legal deductions and credits) have no federal income tax liability as "wanting the government to take care of them"?

[tclambert]

13. After the first $100 million or so, the money itself doesn't matter, it's your status in "the game."

Just like some people get hooked on online MMPRPGs, some get hooked on the Wealth Game. Making more dollars may seem like winning, but our biggest playesr now look at it another way. They want a bigger piece of the pie (ideally, the whole pie for just one person). That definition of winning doesn't require making the pie any bigger, just taking more pie from everyone else. In fact, one obvious game-playing strategy involves limiting or decreasing the wealth of the other players. And here's a trick for doing that: allow the other players to easily borrow lots of money (from you) to temporarily feel like they still have some wealth. Eventually, the debt will crush them, they will realize that they now have NEGATIVE wealth, and that you "own" the debt.

[sendero]

19. They don't care about US markets any more..

... they is plenty to be made in China and India etc. Why do you think they are so keen on all of these "free trade" agreements?

[Sirveri]

40. An unlimited growth economy would destroy the biosphere.

We can not consume 7 times the amount of resources that the earth is capable of producing and expect that to last forever. There is a solution, but I don't see the social organisational development needed to make such a solution occur.

[2naSalit]

42. Bingo!! nt

[leeroysphitz]

5. And the great owners...

And the great owners, who must lose their land in an upheaval, the great owners with access to history, with eyes to read history and to know the great fact: when property accumulates in too few hands it is taken away. And that companion fact: when a majority of the people are hungry and cold they will take by force what they need. - John Steinbeck, The Grapes of Wrath, Ch. 19

[Spitfire of ATJ]

6. It's holding OUR economy back. The 1% has demonstrated that they don't CARE about that....

BTW: Money at zero percent is what one would expect of third world currency. It's like we're saying it's worthless.

Greenspan did that to get investors to dump Treasury Notes and move their money into the private sector,...where it could be ripped off.

[dchill]

7. Let's not forget...

the TRILLIONS held offshore, out of circulation and untaxed.

[jtuck004]

9. It's not going to change until we quit enabling them. n/t

[tclambert]

10. If the typical family had $13,000 more a year, where would the economy be?

Economists might start using a "p" word we haven't heard much in the last few decades--Prosperity. (You younger readers, under 40, might not have heard of this word. But I swear I didn't make it up.) Economists actually used to debate over how to exactly define prosperity. Does it require growth? Should you include non-economic factors like health and happiness in the definition? But they would all agree we haven't seen anything close to it in a long, long time.

Another archaic term economists of yore used to talk about is a "rising standard of living." It seemed pretty popular in the 1960s, but has mostly fallen out of use today.

[MrScorpio]

11. I've been saying this for years...

Let the dollar circulate!

[nikto]

12. The top 1%...

Probably assume they will just move on to sell to foreign markets once the US economy has been
as fully plundered and drained, as they can accomplish.

[TheKentuckian]

35. There is also a tremendous amount of money to be made without producing any actual value.

Some "markets" are greater in value than the entire global economy. Plenty to be made just betting on the action.

[cantbeserious]

15. The Oligarchs, Corporations And Banks Own And Control The Politicians That Own And Control Us

eom

[Laelth]

16. k&r for the truth. n/t

-Laelth

[Notafraidtoo]

17. Imagine

You are 45-60 years old and you never spent much time with your family because you thought love was amassing wealth they can inherit, they don't know you and you don't know them but you feel as though you are doing the right thing by your family hording as much as possible.

You do that by making workers work harder for less, cutting corners in your product so it cost less to make, avoiding paying taxes basically stealing the future of the company ( and the nation for that matter) you manage, own or invest in so you can amass as much as you can before you retire and die.

The super wealthy even buy elections to make this happen because they see it as a quick returning investment just like everything else, its not a conspiracy its just people stealing the future of everyone else to give to their family's because they never understood what it was like to love or be apart of a family so for them love=money sick i know. Sure some see it as a game and you can add that to the equation but in the end they think they are doing the right thing, that's why unless we force them it wont change, we will be left with a hollow husk of a economy and a nation.

[Festivito]

18. And their austerity solution lets them hog even more. eom.

[rock]

20. The Rich are Worthless

You may quote me.

[ananda]

21. It appears to be the Scarcity Principle at work.

There's a huge fear operating under all that greed and sociopathy.

[L0oniX]

23. CEO's work for stock holders ...not employees.

[PassingFair]

25. Eventually even the stock holders get left holding the bag.

The CEO's are working for the hedge funds who buy up the DEBT
they create with their bloated salaries and useless layers of management.

[KittyWampus]

24. Thank You for posting this. Good read.

[Coyotl]

26. I've been repeating this mantra since Reagan. It is called capital hoarding.

But, a real problem is capital leaving the US economy to pay for their consumptive habits.

[VanillaRhapsody]

27. The problem is people think rich people spend...but they don't they save

which takes money out of circulation in the economy.

What really drives an economy is a well paid Middle Class...who DO spend money...thus circulating from merchant to merchant who in turn create jobs to compensate the increased business

Thus it is a strong Middle Class that are the job creators...not the rich at all!

[Coyotl]

30. The wealthy also spend on the wrong things

They hoard capital AND resources, building castles with enough material to house ten or more families for example.

[VanillaRhapsody]

32. They buy land at pennies on the dollar...they hoard that too...

I had a friend...now deceased...who made his fortune in the eighties when in his words "there was blood in the streets" and he bought alot of it up.

[Coyotl]

33. The price of land in some popular hunting areas is now beyond the reach of farmers

because there are so many rich Republicans spending their Bush tax cuts on private hunting land.

[Uncle Joe]

28. Kicked and recommended.

Thanks for the thread, Hissyspit.

[Tuesday Afternoon]

31. du rec

[ErikJ]

34. Hence the need for Fed's QE's-to compensate for the $ lost to the hoarders nt

[WillyT]

36. HUGE K & R !!! - Thank You !!!

[Initech]

37. George Carlin was right - it's a big club and we're not in it.

[SoLeftIAmRight]

38. Have you ever played monopoly?

In the end it is fun for only one person.

[JEB]

39. Greedy pig Walton family has as much wealth at the bottom 40% of USA.

We need to levy stiff taxes on high incomes which would be an incentive to put that money to work rather than just hoarding and piling up the interest and dividends.

[reformist2]

41. "The only real solution is to pay them higher wages."

This needs to be the core of the new new deal - along with it, price controls on things like rent and health care that aren't really "free markets" and where price gouging is rampant.

[2naSalit]

43. It appears that

hoarding all the money was the plan in the first place. Anything else is just jerking the yoyo string for fun.

[AdHocSolver]

44. All of you describe pieces of the economic puzzle, but you fail to see the big picture.

The underlying assumption is that the 1 percent just don't understand what they are doing to the economy.

If the 1 percent would only understand that they are hurting the middle class and that this will negatively affect them in the long run, then they would stop hoarding assets, stop outsourcing jobs, raise the minimum wage, pay their fair share of taxes and invest in infrastructure and education. This is wishful thinking, and if left to the "good will" of the 1 percent, it will never happen.

The preponderance of evidence indicates that the 1 percent know exactly what they are doing, and they are working diligently to bring about the worst case scenario for the middle class.

Why? Because a large, well-educated, and politically active middle class is necessary to a democracy, and the surest way to bring about a dictatorship is to destroy the middle class.

The war on the middle class is not about increasing wealth, it is all about establishing absolute power.