Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
Economy
In reply to the discussion: STOCK MARKET WATCH -- Monday, 22 April 2013 -- Earth Day [View all]Demeter
(85,373 posts)5. The Great Wealth Robbery By Richard Eskow
Two important events took place this week. One was President Obamas call for a higher minimum wage, which got a lot of attention. The other was a new report which showed just how much of our nations wealth continues to be hijacked by the wealthiest among us.
That didnt get much attention.
Theres a Great Robbery underway, although most of its perpetrators dont see themselves as robbers. Instead theyre sustained by delusions that protect them from facing the consequences of their own actions.
Heads I Win
An updated report from economist Emmanuel Saez details the loss of income suffered by 99 percent of Americans, and the parallel gains made by the wealthiest among us. Its most startling finding may be this: The top 1 percent has captured 121 percent of the increases in income since the worst of the financial crisis, while the rest of the country has continued to fall behind.
If you thought the rich recovered from the crisis just fine but everybody else got the short end of the stick, relax: Youre not crazy. And since the financial crisis was caused by members of the 1 percent not all of them, of course, just the ones we spent so much to rescue its understandable if the injustice still rankles you.
You rescued them. Now theyre drinking your milkshake.
Tails You Lose
But this wealth shift is not a new phenomenon. As Saez notes in his paper, After decades of stability the top decile share has increased dramatically over the last twenty-five years. In fact, the top 10 percents share of our national income is higher than its been since 1917 - and maybe longer. (The figures dont go back any farther than that.)
Although it began during the Reagan years, to a certain extent this wealth shift has been a bipartisan phenomenon. During the Clinton boom years (more of a bubble, actually; Dean Baker has the details) the top 1 percent saw their real income grow by 98.7 percent, while the other 99 saw a smaller increase of 20.3 percent. They lost more during the recession that followed a little over 30 percent, as opposed to 6.5 percent for everyone else but more than made up the difference again during the Bush years.
The same thing happened during the Great Recession: The top 1 percent lost more during the initial shock, but theyre rapidly making up the difference now. Government policys been designed to help them. (Meanwhile, underwater homeowners still dont have the help they need.)
The disparities are even greater when you include capital gains. (Saez uses pre-tax income for his figures. Given the generous tax breaks for capital gains and the many loopholes used by the wealthy,the after-tax differences could be even greater.) Theres even economic injustice at the top. Gains for the one percent have far outstripped those of the top five and top ten percent.
As the old song says: Them that has, gets.
If you can remember the sixties you werent there or cant afford to remember
The minimum wage has been falling since 1968. As John Schmitt notes in his paper, The Minimum Wage Is Too Damn Low, By all of the most commonly used benchmarks inflation, average wages, and productivity the minimum wage is now far below its historical level.
Its currently $7.25. What would it have been if it had been tied to a commonly-used benchmark? Schmitt ran the numbers:
Consumer Price Index (CPI-I): $10.52
Current CPI methodology (CPI-U-RS): $9.22
As a percentage of average production workers earnings: $10.01
And if it had been tied to productivity gains the minimum wage would be $21.72 today. But that cream was skimmed off at the top.
Magical Thinking
Theres a myth in this country that enormous wealth doesnt come from anywhere or anyone, that its self-creating and self-sustaining, thriving on pure oxygen like an epiphyte or a garden fairy. In reality, highly concentrated wealth is caused by actions human actions with human consequences.
Saez: A number of factors may help explain this increase in inequality, not only underlying technological changes but also the retreat of institutions developed during the New Deal and World War II such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits, and changing social norms regarding pay inequality.
Wealth inequity is created whenever an employer lowers his employees wages, replaces a full-time worker with several part-timers, busts a union, cuts corners on workplace safety, or pays a lobbyist to change the rules.
Its created whenever a job is shipped overseas, and when investments are shifted from job-producing industries to the non-productive financial sector. Its created when GE outsources its manufacturing operation and gets into the banking (read, gambling with taxpayers money) business. Or when AIG stops insuring risk and starts betting on it.
And the process isnt slowing down. In fact, it seems to be accelerating.
As Saez says, We need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional and tax reforms should be developed to counter it.
Up
President Obamas proposal is modest, and theres no reason not to enact it immediately. For those who believe that businesses cant afford to pay higher wages, some key facts:
Most low-wage workers work for large corporations, not Mom-and-Pop businesses.
A Data Brief from the National Employment Law Project finds that 66 percent of low-wage employees work for companies with more than 100 employees. A handful of very large corporations collectively employ nearly 8 million low-wage employees.
Theres no evidence minimum wage increases mean fewer jobs.
Opponents say a higher minimum wage means fewer jobs. But the official U.S. unemployment rate in 1968, when the real minimum wage was highest, was 3.6 percent. Today its 7.8 percent and the unofficial numbers are even worse. At the state level, the Fiscal Policy Institute recently concluded that states with minimum wages above the federal level have had faster small business and retail job growth.
Ninety-two percent of the 50 largest low‐wage employers in the country were profitable last year.
As the NELP notes, big corporations more than recovered from the recession: 75 percent are collecting more revenue, 63 percent are earning higher profits, and 73 percent have higher cash holdings than they did before the crisis.
Bringing It All Back Home
The real job creators arent the ultra-wealthy. If they could create jobs with all their added wealth, they would have done it already. The real job creators are working people with jobs.
They dont invest their money in hedge funds or stash it in offshore accounts. They spend it: on food, transportation, their kids education, maybe a night at the movies And then other people get jobs making those things possible.
We have a working model to follow: The USA in the 35 years after World War II. As Paul Krugman says, To the extent that people say the economics is confusing or uncertain, thats overwhelmingly because people want it to be. We know how to do this.
Raising the minimum wage is a start. A maximum wage would help, too, by reducing CEOs incentives to emphasize quarterly gains over long-term growth and leaving more to be shared with employees.
We also need a national strategy for regaining the more reasonable distribution of income this country had in the 1950s. We need to ensure that the door of opportunity, which is closing every day for millions of young people, is opened again. And we need to ask the wealthiest to really pay their fair share at something closer to the top tax rates of the 1950s or 1960s. (Elvis Presleys manager Colonel Tom Parker once said I consider it my patriotic duty to keep Elvis in the ninety percent tax bracket.)
Most of all, we need to educate those around us so they understand whats happening. That includes the well-intentioned well-to-do, who might do more to end the problem if they knew it existed. After all, you cant stop a robbery until you know its happening.
This article was originally posted at Campaign for America's Future
http://blog.ourfuture.org/20130214/the-great-wealth-robbery
Edit history
Please sign in to view edit histories.
34 replies
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
RecommendedHighlight replies with 5 or more recommendations
Another Giveaway to the Banksters: Obama, Housing and the Next Big Heist By Mike Whitney
Demeter
Apr 2013
#4
From the "We don't care if we're ass backwards wrong! We're standing by it" Department.
Fuddnik
Apr 2013
#7
GOOD NEWS ANTIDOTES: Worker-Owned Cooperatives: Direct Democracy in Action By David Morgan
Demeter
Apr 2013
#9
Remaking the Federal Reserve, Building Public Banks and Opting Out of Wall Street
Demeter
Apr 2013
#11
Create Finance System That Serves Public, Part I: Shrink, Regulate Banks, and Enforce Law
Demeter
Apr 2013
#14
Well, the stupid "drug testing for welfare" meme is flying over the social networking sites... AGAIN
Hugin
Apr 2013
#16
The youngers cannot play that game no $$$, no future, a lot of us oldsters won't..
kickysnana
Apr 2013
#26