June 18, 2013
America is the richest country on Earth. We have the most
millionaires, the most billionaires and our wealthiest citizens have
garnered more of the planet's riches than any other group in the world.
We even have hedge fund managers who make in one hour as much as the
average family makes in 21 years!
This opulence is
supposed to trickle down to the rest of us, improving the lives of
everyday Americans. At least that's what free-market cheerleaders
repeatedly promise us.
Unfortunately, it's a lie, one of the biggest ever perpetrated on the American people.
middle class is falling further and further behind in comparison to the
rest of the world. We keep hearing that America is number one. Well,
when it comes to middle-class wealth, we're number 27.
most telling comparative measurement is median wealth (per adult). It
describes the amount of wealth accumulated by the person precisely in
the middle of the wealth distribution—50 percent of the adult population
has more wealth, while 50 percent has less. You can't get more middle
Wealth is measured by the total sum of all
our assets (homes, bank accounts, stocks, bonds etc.) minus our
liabilities (outstanding loans and other debts). It the best indicator
we have for individual and family prosperity. While the never-ending
accumulation of wealth may be wrecking the planet, wealth also provides
basic security, especially in a country like ours with such skimpy
social programs. Wealth allows us to survive periods of economic
turmoil. Wealth allows our children to go to college without incurring
crippling debts, or to get help for the down payment on their first
homes. As Billie Holiday sings, "God bless the child that's got his
Well, it's a sad song. As the chart below shows,
there are 26 other countries with a median wealth higher than ours (and
the relative reduction of U.S. median wealth has done nothing to make
our economy more sustainable).
Here's a starter list:
Our minimum wage is pathetic, especially in comparison to other developed nations
(We're # 13.) Nobody can live decently on $7.25 an hour. Our
poverty-level minimum wage puts downward pressure on the wages of all
working people. And while we secure important victories for a few unpaid
sick days, most other developed nations provide a month of guaranteed
paid vacations as well as many paid sick days.
hard to improve your station in life if you're in prison, often due to
drug-related charges that don't even exist in other developed nations.
In fact, we have the largest prison population in the entire world, and
we have the highest percentage of minorities imprisoned. “In major
cities across the country, 80% of young African Americans now have
criminal records” (from Michelle Alexander's 2010 book, The New Jim Crow: Mass Incarceration in the Age of Colorblindness).
tax structures favor the rich and their corporations that no longer pay
their fair share. They move money to foreign tax havens, they create
and use tax loopholes, and they fight to make sure the source of most of
their wealth—capital gains—is taxed at low rates. Meanwhile the rest of
us are pressed to make up the difference or suffer deteriorating public
Is there one cause of the middle-class collapse that rises above all others?
Yes. The International Labor organization produced a remarkable study (Global Wage Report 2012-13)
that sorts out the causes of why wages have remained stagnant while
elite incomes have soared. The report compares key causal explanations
like declining bargaining power of unions, porous social safety nets,
globalization, new technologies and financialization.
Guess which one had the biggest impact on the growing split between the 1 percent and the 99 percent?
means the increasing role of financial motives, financial markets,
financial actors and financial institutions in the operation of the
domestic and international economies."
This includes such trends as:
The corporate change during the 1980s to make shareholder value the ultimate goal.
The deregulation of Wall Street that allowed for the creation of a vast array of new financial instruments for gambling.
Allowing private equity firm to buy companies, load them up with debt, extract enormous returns, and then kiss them goodbye.
The growth of hedge funds that suck productive wealth out of the economy.
myriad of barely regulated world financial markets that finance the
globalization of production, combined with so-called "free trade"
The increased share of all corporate profits that go to the financial sector.
The ever increasing size of too-big-to-fail banks.
The fact that many of our best students rush to Wall Street instead of careers in science, medicine or education.
short, financialization is when making money from money becomes more
important that providing real goods and services. Here's a chart that
says it all. Once we unleashed Wall Street, their salaries shot up,
while everyone else's stood still.
Do we still know how to fight!
carefully researched ILO study provides further proof that Occupy Wall
Street was right on the money. OWS succeeded (temporarily), in large
part, because it tapped into the deep reservoir of anger toward Wall
Street felt by people all over the world. We all know the financiers are
Then why didn't OWS turn into a sustained, mass movement to take on Wall Street?
reason it didn't grow was that the rest of us stood back in deference
to the original protestors instead of making the movement our own. As a
result, we didn't build a larger movement with the structures needed to
take on our financial oligarchs. And until we figure out how to do just
that, our nation's wealth will continue to be siphoned away.
hope, I believe, lies in the young people who are engaged each day in
fighting for the basic human rights for all manner of working
people—temp workers, immigrants, unionized, non-union, gays, lesbians,
transgender—as well as those who are fighting to save the planet from
environmental destruction. It's all connected.
point these deeply committed activists also will understand that
financialization both here and abroad stands in the way of justice and
puts our planet at risk. When they see the beast clearly, I am confident
they will figure out how to slay it.
The sooner, the better.
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