Our 'Winner Take All' Economy Is Destroying Us

Published on Tuesday, January 28, 2014 by Common Dreams

Our 'Winner Take All' Economy Is Destroying Us

 

Soaring inequality in the US and why it matters

by Tim Koechlin

 

 

The United States is, by every reasonable measure, the most unequal of the world’s rich countries. And this is not new development. For more than three decades, the US has been suffering from a crisis of inequality. The Democrats have not taken this crisis seriously enough. The Republicans seem hell-bent on making it worse.




Evidence of extreme and rising economic inequality in the US is quite overwhelming. In 1979, the top 1% earned about 9% of all income; in 2013, they earned 24%. The incomes of the top 0.1% have grown even faster. More than half of all economic growth since 1976 has ended up in the pockets of the top 1%. Meanwhile, the incomes of the shrinking middle class have stagnated, and the incomes of those with a high school education or less have fallen substantially. The purchasing power of the minimum wage has fallen by about 15% since 1979. One in five kids lives in poverty.

How have we responded to all of this? By cutting taxes for the rich, busting unions and vilifying the poor! Over the past few decades, effective tax rates on US corporations and the richest 1% have fallen by about a third. Among the world’s rich countries, US tax rates on the rich are near the very bottom. Since 1970, the percentage of private sector workers in unions has fallen from 29% to 7%.

It has not always been this way. Between 1948 and 1975, the income of the median US household doubled. The incomes of the bottom 20% actually grew a little faster than the incomes of the top 20% over this period. Between 1928 and 1950, the distribution of income in the US actually became dramatically more equal.

Why should we be concerned about inequality? America is about opportunity, not guarantees -- right? Actually, no! Among the world’s rich countries, the US is tied for last in class mobility; an American’s economic success is in fact highly correlated with his/her parents’ wealth and status. Richard Wilkinson captures this sad reality perfectly: “If you want the American Dream, you’ll have to go to Denmark.”

Economic inequality inevitably means political inequality. The right-wing Koch brothers, for example, spent more than $50 million aiming to defeat Obama and the Democrats in 2012. Right-wing casino magnate Sheldon Adelson spent over $100 million. Increasingly, legislation is literally being written by corporate lobbyists. The Koch brothers are entitled to their right wing views; they should not be entitled to the kind of outsized influence that $50 million will buy.
There is also compelling evidence that inequality is socially corrosive. In their magnificent book, The Spirit Level, Richard Wilkinson and Kate Pickett show that unequal societies suffer from higher rates of violent crime, incarceration, obesity, infant mortality, mental illness and alcoholism. Inequality is also associated with lower life expectancy, lower levels of educational performance and lower levels of trust. Inequality is bad for all of us.

Those are the facts.

In this context, the Republican Party’s economic proposals are especially appalling. The Republican vision – embodied in the “Ryan Plan,” a budget proposal supported by virtually every Republican legislator -- calls for still deeper cuts in taxes for corporations and the top 1%, and further reductions in the “regulatory burden” on oil, coal and gas companies (including “frackers”) and – believe it or not -- Wall Street! And further still, Republicans advocate deep cuts in spending on education, Head Start, environmental protection, Social Security, Medicare and Medicaid. Remarkably, the Republicans have concluded – yet again! -- that the super-rich are getting too little, while children, the elderly, the middle class and the poor are getting too much!

Sound familiar? After thirty years, it should. This is trickle-down economics.* The “logic” here (and I’m being generous) is that the economy will grow if we provide a better “business climate” -- lower taxes and fewer regulations will liberate corporations to create jobs. The problem is that it doesn’t work. Three decades of lower taxes and reckless deregulation have saddled us with slow growth, soaring inequality, the financial meltdown of 2008, a devastating recession, rising tuition at our public universities, and diminishing opportunities for millions of Americans. And yet -- like a zombie that will not die – trickle-down economics is alive and well in the US, despite its long record of failure.** Ask any Republican about the economy, and he (or she) will tell you that we need more of this toxic concoction.

The US remains a very rich country. It has the capacity to do much better; it has the capacity to produce equitable, sustainable growth. A detailed discussion of how this might go is more than I can do here, but this process would surely include higher taxes on the wealthy, a more serious effort to regulate the financial sector, greater corporate accountability, and increases in public investment. It would also require a shift in priorities - a political transformation. It would require a discourse and a policy agenda that prioritizes the needs of working class and poor people: affordable education and health care, enhanced worker bargaining power, and a commitment to full employment.

Along with a grim, stubborn economic crisis, we face a national identity crisis. Do we want to recognize that our well-being is tied to that of our neighbors? Do we want to prioritize shared prosperity and economic security? Do we want a country in which every kid has a chance to reach her full potential? Or do we want a country that prioritizes the “right” of rich people to get richer?

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.

 

Tim Koechlin holds a Ph. D. in economics. He is the Director of the International Studies Program at Vassar College, where he has an appointment in International Studies and Urban Studies. Professor Koechlin has taught and written about a variety of subjects including economic, political and racial inequality; globalization; macroeconomic policy, and urban political economy.

The American Dream Can Be a Dead End, Especially If You Grow Up in the 'Wrong Place'

  Economy  

AlterNet / By Lynn Stuart Parramore

The American Dream Can Be a Dead End, Especially If You Grow Up in the 'Wrong Place'

 

 

There's one America where dreams can come true, and another where they tend to fizzle.

Photo Credit: Shutterstock.com

January 24, 2014  |  

 

 

A flurry of recent headlines proclaims that climbing the income ladder has not grown harder in America in recent decades. Referring to a study published by the National Bureau of Economic Research, many pundits have concluded that the widespread belief that a widening gap between rich and poor has made it harder to get ahead is wrong.

Not so fast. It is true that the study found that the rate of mobility has pretty much remained constant over the last couple of decades. But that doesn’t mean we don’t have a problem. If you’re born to poor parents, you still have a terrible time bettering yourself economically in America, especially if you happen to be born in the wrong place.

The researchers, an impressive group including Harvard's Raj Chetty, Nathaniel Hendren, Emmanuel Saez, Patrick Kline of UC Berkeley, and Nicholas Turner of the Treasury Department, looked at people born from the '70s to the '90s to determine how they are doing relative to their parents. Last summer, the same researchers from Harvard and Berkeley released a study on income mobility at the local level. You have to put these two studies together to get an understanding of what’s going on.

The researchers have found that it’s still harder to move from poverty to affluence in the United States than in most other wealthy countries, like Denmark. "In some sense, how could it have gotten worse?" Hendren asked the Huffington Post. "It's not like we're losing the American Dream. We never really had it."

What you really find in the research is a tale of two Americas—one where dreams can happen, one where they tend to fizzle. You have a decent shot at getting ahead if you live in certain areas of the country, but if you were born in others, you’re chances are pretty slim.

Remember George and Louise Jefferson from the popular sitcom? They wouldn't have been able to “move on up” if they were from Atlanta rather than New York. The researchers found that lower-income children living in cities in the Northeast, upper Midwest and the West Coast have much greater odds of reaching higher rungs on the economic ladder than those from cities in the Southeastern or the industrial Midwest. Geography is destiny, the research shows. Your odds of reaching the top fifth starting from bottom fifth are better than 10 percent in San Francisco, New York and Boston, but lower than 5 percent in Charlotte, Columbus and Atlanta. In Memphis, your chances are just 2.8 percent.

The key issue, the researchers say, “is not that prospects for upward mobility are declining in the U.S. as a whole but rather that some regions of the U.S. persistently offer less mobility than most other developed countries.”
Also, if there’s a big gap between rich and poor in your community, your chances of moving up the ladder are getting worse. As the researchers put it, “Because inequality has risen, the consequences of the ‘birth lottery’—the parents to whom a child is born—are larger today than in the past.”

One question we might ask is that, given the fact that more Americans are going to college, more women are working and minorities are facing less discrimination than several decades ago, why hasn’t the overall mobility gotten better?

While the research finds that people in their 20s and 30s are doing about as well as their parents, it doesn’t look at current trends that may hold you back or knock you down to a lower rung going forward. For example, if you’re a 30-year-old, your salary may be as high as your dad’s was at your age, but you’re also less likely to have a pension, and you’ll probably face higher medical costs in the future. Kids born after 1970 were lucky to have parents whose incomes were boosted by postwar prosperity, and thus reaped the benefits of this economic investment in their children. Kids may not be able to count on this going forward. These factors may suggest that a mobility plunge could be already in the making if we don’t make certain smart moves, like expanding Social Security, as Sen. Elizabeth Warren has urged.

But most of all, your luck depends on where you grow up. The research reveals five factors that influence your chances of climbing the economic ladder.

1. Less segregation: Areas that have high African-American populations face lower mobility, and whites living in predominantly African-American communities also have lower mobility. Translation: it’s the geography that matters rather than your individual race. In addition, areas where poorer people are residentially segregated from middle-income individuals also suffered decreased mobility.

2. Less income inequality: Areas with a smaller middle-class had lower rates of upward mobility. Interestingly, a high concentration of income in the top 1 percent was not highly correlated with mobility patterns. The researchers aren’t sure what this means, but suggest that shrinking the middle-class is a bigger impediment than increased income at the tippy top.

3. Better primary schools: Looking at such indicators as test scores and high school dropout rates, the researchers found, unsurprisingly, that you have a greater chance of climbing the economic ladder if you had access to high-quality primary schools growing up. More spending per student correlates to greater social mobility.

4. Greater social capital: High upward mobility areas tend to have strong social networks and community involvement, which can range from religious connections to more participation in local civic organizations. Clearly, voter supression is not a recipe for reaching the American Dream.

5. Greater family stability: Places where kids are being raised more often by single mothers show a lower rate of mobility— and even the children of two-parent households who live in areas where there are a lot of single mothers tend to have less mobility. This suggests that it’s not the status of the parents per se that matters, but rather the geography.

All in all, the research shows a picture that helps us understand both what we're doing right and what we're doing wrong. A country that looked more like San Francisco and less like Charlotte would offer more children the chance to grow up and realize their dreams.

Lynn Parramore is an AlterNet senior editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of "Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture." She received her Ph.d in English and cultural theory from NYU. She is the director of AlterNet's New Economic Dialogue Project. Follow her on Twitter @LynnParramore.

The Economy Is Rigged for the Wealthiest: Economic Justice is the Solution

Economic Justice is the Solution

America's Biggest Crises Are Rooted in the Fact That the Economy Is Rigged for the Wealthiest

by Kevin Zeese and Margaret Flowers / January 26th, 2014

A paradigm shift is taking place. It is coming from the awareness that all of our crises are connected to an economy rigged for the wealthiest. The symptoms of big finance capitalism create the poverty, low wages, economic insecurity and environmental destruction so a handful can profit. While these facts have been hidden by political leaders and corporate mass media, now people are seeing them and understand the task we have before us.

The Radical Dr. King

This past Monday, we celebrated Dr. Martin Luther King Jr.’s birthday. History books and the new Memorial in DC commemorate Dr. King for his 1963 “I Have a Dream” speech and his work for civil rights. Most people have been led to celebrate this limited version of Dr. King’s life. In fact, there has been an attempt to erase the last 5 years of his life, a time when he espoused a deeper political analysis, dared to question capitalism and militarism; and broke with the status quo groups.

Glen Ford of Black Agenda Report tells us that Dr. King did not “break with the legacy of grass roots organizing and direct action” as some of his Lieutenants did when they entered business and the Democratic Party. He understood that direct action “meant bringing a social institution or the society itself locally to a halt, to make the system scream, just like its victims screamed, to bring contradictions to a head, so that everyone could see what the real problem was, that is, to confront authority.”

Some reclaimed the celebration of this Dr. King. In Portland, day laborers and people without housing marched on Dr. King’s birthday to honor his radical legacy. In Washington State, peace activists honored Dr. King’s day through direct action by protesting a naval base that deploys the Trident nuclear submarine. Kellogg’s workers in Birmingham, AL remembered Dr. King and are still fighting for their rights. They’ve been locked out since October.

Dr. King would have turned 85 on January 15 if he had not been assassinated. In a wrongful death suit brought by King’s family the jury found the murder was a conspiracy involving the Memphis police as well as federal agencies. He was assassinated in part because he was a powerful leader who threatened the power structure. The Poor People’s Campaign he was organizing when he died would have brought waves of thousands of people to Washington, DC in the longest lasting occupation the city had ever seen to highlight poverty and economic injustice. Using the Stratfor system, King would have been classified as a “radical” and when marginalization doesn’t work to stop radicals, elimination is the next step.

What was radical about Dr. King is that he called for independent politics and he made the connections between racism, poverty and militarism. He was calling not just for a few concessions and improvements, but for change of the whole system. In his 1967 speech at Riverside Baptist Church, Dr. King said, “But one day, we must ask the question of whether an edifice which produces beggars must not be restructured and refurbished.” The work the social justice movement is doing today is the unfinished work of Dr. King’s last campaign.

What Is The Edifice That Creates Beggars?

This is the question that people are asking. As we wrote in “Our Tasks for 2014,” during this phase of the social movement, deep political education is essential. Activists must understand that ‘their issue’ is a symptom of a fundamental disease, a system that creates these crises. Without changing the system, the crises cannot be resolved. Through reforms, some may be reduced and perhaps delayed such as the current health care law is doing for the ongoing health care crisis. But some will continue to worsen such as climate change and the growing wealth divide.

Professor C. J. Polychroniou calls the current system “Predatory Capitalism.” We have passed the era of industrial capitalism and have entered finance capitalism based on expansion of the neoliberal economic model globally. This is fundamental to understand because it is this model that is driving all of our crises.

Neoliberal economics is not related to liberalism in ideological terms, but liberalism in terms of a freeing of the market from any regulation and a freeing up of our resources to be used by private corporations for profit. In this model, government actively serves the financial elite, as Polychroniou describes: “Policies that increase the upward flows of income and the availability of public property for private exploitation rest at the core of the global neoliberal project, where predatory capitalism reigns supreme. So does privatizing profits and socializing losses.”

It is predatory capitalism that drives the race to the bottom in worker rights and wages and that drives the dismantling of our public institutions and privatization of education, transportation, health care, the postal service, prisons and more. Predatory capitalism sells our resources to the highest bidder without regard for destruction of the planet, displacement of families or poisoning of communities.

The United States is in the Driver’s Seat

The United States, through trade policy, is a lead driver of the neoliberal march across the planet. We have written frequently about the Trans-Pacific Partnership because it will destroy sovereignty, placing governments, even down to the local level, at the service of transnational corporations. Leaked Wikileaks documents from the TPP reveal that the US is the most extreme nation advocating for corporate power and neoliberal economies.

This week, the EU announced that it will delay negotiation of a key section, the Investor State Dispute Settlement, of the Atlantic version of the TPP known as TAFTA. They are concerned that giving corporations the power to sue governments for loss of expected profits will undermine their laws to protect the health of people and the planet and are seeking greater public input. Contrast that with a case that is going forward in Mora County, NM in which Shell Oil is suing a community over its fracking ban. If Shell is able to sue a community for loss of expected profits, that community would never be able to afford that and would have to change its law; and other communities will be afraid to enact laws in the public interest or to protect the planet.

Momentum is building to stop the TPP. Organizations from across the spectrum and across the continent are working together to stop the President from being given authority to Fast Track the TPP through Congress and to unite in a day of action. Visit StopFastTrack.org to join the Ten Days of Action to Stop Fast Track which culminates in a day of protest on January 31.

Systems to Control the Masses

Predatory capitalism is directly linked to the growing national security state and militarism. As poverty and suffering increase, so does resistance by the people and those in power fear mass revolt. As corporations require access to resources around the world, the military is necessary to secure them. And it also happens that the national security and military industrial complexes profit greatly by finding new markets for their weapons and security products.
Spying on people in the US and around the world continues to become more sophisticated. The New York Times reports that the NSA can retrieve data stored in computers or USB cards using radio waves even when the computer is turned off. In Kiev this week, the government used cell phone technology to locate people and send them a text message warning them that they were considered to be part of a mass protest, which has now been deemed illegal.

The overreach of the state is starting to backfire. Recently, an independent federal review board concluded that the collection of cell phone calls by the NSA is illegal and must be stopped. Obama’s own review board called for an overhaul of the NSA, but last week the President announced only minimal reforms that protect the surveillance program. Instead of announcing real changes, he worked to reassure the public that spying is perfectly normal and acceptable. Chris Hedges interpreted his speech for us describing how faux reforms were designed to mollify Americans while “as our intelligence and law enforcement agencies, along with our courts, continue to eviscerate those rights.” And the Electronic Frontier Foundation decoded the proposed reforms, giving Obama a 3.5 out of a possible score of 12 for what is considered the bare minimum of necessary overhaul.

The expansion of the security state is a boon for the corporations that produce scanners and other technology. In order to profit and grow, they must find new markets. Perhaps this is behind the announcement that all entrances to Major League Baseball stadiums will be equipped with metal detectors in 2015. We wonder what is next.

At some point, we as the public must draw the line. Concerted action to protest this encroachment through boycotts of places that use them is one effective way to stand up for our rights.

Protesting War, Pipelines, and Wealth Inequality

This week, so-called peace talks for Syria are taking place in Switzerland. Ajamu Baraka explains the politics behind the talks. He writes that “it would be more accurate to call a ‘war conference’ rather than a ‘peace conference’ due to U.S. Secretary of State Kerry’s insistence on keeping the scope of the agenda confined to the terms of the Geneva I communique, which calls for a political transition in Syria.”

It is doubtful that real solutions to address the crises in Syria will come from the talks. Relief from the extreme violence and displacement are not part of the conversation. This is all about regime change and as expected, the propaganda is rolling out. Human Rights Watch released a report this week on Syria that lacks all credibility, as described by Dan Murphy of the Christian Science Monitor.

To raise the urgent need for peace and support for the 3 million Syrian refugees, CODEPINK and allies brought a delegation of women to Switzerland. They are demanding an immediate ceasefire and that women be included in the talks. They demonstrated outside of the talks on Wednesday.

Also this week, tar sands bitumen started flowing in the Southern leg of the Keystone XL pipeline. There has been strong opposition to the tar sands and pipeline for years now. It brought together a broad coalition which has used the courts, blockades and protests to try to stop this project, which James Hansen calls ‘Game Over’ for the planet, from proceeding. There was an urgent action at the White House and a protest at a TD Bank, a major financier, in Maine to express solidarity with communities like Manchester, TX that are being poisoned by oil processing and others protested megaloads traveling through Montana to the Alberta tar sands. A new study was released that also showed increased cancer rates in a community downstream from the tar sands.

And the World Economic Forum is taking place this week at a Swiss resort in Davos. One of the main topics is wealth inequality. Bill Gates, who is attending, doesn’t think wealth inequality is a problem as long as poverty is decreasing, but the majority of Americans , and we suspect the world population, disagree. Oxfam reports that 85 of the richest people have the same wealth as 3.5 billion of the poorest people. And there is no confidence that real solutions to reduce wealth inequality will come out of the meeting of the wealthy at Davos.

Organizers from around the world are calling for a Commission for Truth and Justice in Switzerland. Sign the petition here. They write, “This is not asking for charity, we are demanding justice and to create the conditions that ensure equal opportunities for all.” Charity is not the solution, though it is likely the only solution that the wealthy can come up with.

Solidarity not Charity

Charity undermines the peoples’ rights to self-determination and allows the status quo to continue. Polychroniou makes the point that “philanthropy serv[es] as a means to disguise the exploitation of the poor and deny the structural problems of the capitalist system.” Further, charity is arbitrary and anti-democratic. Those with the wealth decide who receives and can use their wealth to divide communities against each other and further disempower them.

The people of the world are rejecting this ‘plantation politics’ and are uniting instead. We see this in all of the circles in which we exist. This past weekend in Chicago, activists from across the country and from different areas of advocacy met to organize “Earth Day to May Day – Ten Days to Change Course” actions as part of a Global Climate Convergence. In addition to connecting our struggles and showing that the system is the problem, one of the goals is to reclaim the meaning of these holidays.

This convergence is also in line with the tasks of this moment in history. In joining our efforts and maintaining a position of what is necessary, not what we are told is on the table, we shift the realm of the possible. And as we shift the cultural acceptance of what is possible, those who have operated within the current system will shift as well and more will join the new effort. Why? Because those who stand for justice in all of its forms represent what the majority of people already want.

A task of the day is solidarity. And the new economy that is emerging to replace predatory capitalism is a solidarity economy, which we call economic democracy. In a democratized economy, people have more input into decisions about the economy and more benefit from it as well. This is an economic model that will solve the crises of our era and prevent them from returning.

The new economy is taking shape on a number of different levels from communities that are putting democratic economic institutions in place to students who are recreating their economic curriculum to economists who are working together to define the new economy more concretely.

Completing the Campaign for Economic Justice

The centerpiece of so many of the issues that confront us stem from an economy that works for only the wealthiest. The poverty of tens of millions, the low-pay of hundreds of millions, and economic insecurity of virtually all but the wealthiest, as well as the destruction of the environment all stem from this rigged economy of predatory capitalism.

While Occupy made “We are the 99%” famous, this wealth divide is not new. In fact, in a 1956 sermon, Dr. King said:

The misuse of Capitalism can also lead to tragic exploitation. This has so often happened in your nation. They tell me that one tenth of one percent of the population controls more than forty percent of the wealth. Oh America, how often have you taken necessities from the masses to give luxuries to the classes. If you are to be a truly Christian nation you must solve this problem.

Now, the task falls to all of us, we must educate and mobilize people to create a broad national consensus that recognizes the unacceptable injustice of the rigged economy and the need to transform to economic democracy that brings economic fairness and leads to a government that functions with the participation of the people and is not dominated by the ‘rule of money’. The transformation is before us, it is our task to achieve it.

Kevin Zeese, JD and Margaret Flowers, MD co-host Clearing the FOG on We Act Radio 1480 AM Washington, DC, co-direct Its Our Economy and are organizers of the Occupation of Washington, DC. Read other articles by Kevin Zeese and Margaret Flowers.

This article was posted on Sunday, January 26th, 2014 at 10:08am and is filed under Activism, Anti-war, Assassinations, Capitalism, Classism, Corporate Globalization, Economy/Economics, Espionage/"Intelligence", Fracking, Military/Militarism, Neoliberalism, NSA, Oil, Gas, Coal, Pipelines, Poverty, Privacy, Refugees, Solidarity, Statism, Syria, TPP.

The obscene lifestyles of the new global super-rich

SALON

Friday, Jan 24, 2014 10:45 AM EST

The obscene lifestyles of the new global super-rich

 

Private jets and lavish penthouses are just the tip of the iceberg

 
Lynn Stuart Parramore, Alternet

Topics: AlterNet, Wealth, Income inequality, Gilded Age, News, Politics News

 

 

 

This article originally appeared on AlterNet. 

 

 

A new crop of global super-rich is pouring into the United States, changing the economic landscape from Manhattan to Los Angeles. They’re driving up the price of real estate, pushing out the middle class and going on buying binges that would make Gilded Age robber barons blush.

First they want the hotel room — perhaps the storied, $15,000-a-night penthouse at the Fairmont San Francisco, where guests receive honey made by the Fairmont’s own honeybees. JFK was rumored to tryst there with Marilyn Monroe. Next they want the shopping spree, snapping up million-dollar diamond Chanel watches and $1,000-per-ounce perfume. Then they want to buy a home in their favorite playground —maybe a $90 million pad at Manhattan’s behemoth One57, where they can pay negligible taxes yet enjoy the full menu of New York City services.

For the new ultrawealthy, ordinary toys will not do. Once upon a time, owning a super-charged sports car was a symbol of wealth to a certain breed of balding Floridian. But today’s young global gazillionaires require something with a little more flash, like a gold-plated Lamborghini, which costs $7.5 million and even has its own Twitter feed. Brett David, the CEO of Lamborghini Miami, has been selling top-dollar cars for a long time. But even he is shocked at the number of items he’s selling to overseas buyers, from Argentines and Venezuelans to a new crop of Russian and Chinese shoppers.

To help us understand this new breed of 1 percenter, CNBC helpfully launched a brand new series on Jan 22 “ Secret Lives of the Super Rich.” Starting off with a sycophantic chant of “money, money, power, power” over cheesy opening credits, the show is a full hour of nonstop douchiness (two episodes aired Wednesday back-to-back), featuring eager commentary from CNBC’s “wealth editor” Robert Frank (yes, such a job title exists).

For most Americans, half of whom live at or near the poverty line, this is something like a safari through a foreign country that strangely exists in your own backyard. You’ll probably never attend the Breeder’s Cup, the “richest two days in sports,” but you can gawk at the adventures of Justin Zayat, a 21-year-old NYU student and son of racing tycoon Ahmed Zayat who manages million-dollar horses from his college dorm room. You may never own a home with a poolhouse bigger than a McMansion, but you can follow a pair of Russian oligarchs, Irina and Joseph, as they tour a $15 million Gatsby-era estate on Long Island where they can, among other things, ascend a spiral staircase looking up the butt of a three-story stuffed giraffe. Home collectors, we are told, are the new art collectors.

Among the nuggets of wisdom I gleaned sitting through this journey to the land of Richistan was that rich people really, really like taxidermy. Let’s think about this for a moment. Does being surrounded by the corpses of majestic animals give the tycoon a buffer against the existential fear of death? Most of us poor souls walk around just trying to survive, but perhaps the super-rich, who have all their basic needs met and then some, end up with an amplified anxiety about death that fills in the psychological real estate usually devoted to wondering how to pay for your kids’ college. Hence they load up their apartments with stuffed alligators.

The global elites seem to spend a great deal of time wondering how to survive an apocalypse — you might call them Billionaire Doomsday Preppers. They want high-security buildings where their identities are protected, complete with panic rooms and stockpiles of food and water in case of emergency. In case there’s a Third World meltdown, they want a First World stronghold. If death comes, at least they have maid service.

Attending to the psychological quirks of the rich and powerful who don’t want to accept death has a venerable tradition that goes back to the pharaohs, who liked to hit the afterlife in a solid gold mask with an army of embalmed servants. More recently, the field of cryongenics has arisen to stoke dreams of immortality among the wealthy (whole body freezing is the most expensive, but at a discount they can just freeze your head).

Maybe the new bumper crop of billionaires signals the need for a whole new industry: terror management consulting for the 1 percent. The expert could provide a full menu of death-denying services, from customized trips to Brazilian jungles where ayahuasca shamans can help them conquer their fear of dying to a full roster of apocalypse simulations conducted in the privacy of their own home.

If none of that works, at least the super-rich can look forward to a million-dollar funeral, such as the one a Chinese businessman just put on for his mom, complete with a 600-musician marching band and gold-plated cannons firing out the final salute. You can’t take it with you, but you can die trying.

WashingtonsBlog

The Stunning Truth About Inequality In America

Posted on September 26, 2013 by WashingtonsBlog

Cheat Sheet on Inequality

Talk about inequality has been in the news recently, but you won’t believe what’s really happening in America today:

• Inequality in America today is twice as bad as in ancient Rome, worse than it was in Tsarist Russia, Gilded Age America, modern Egypt, Tunisia or Yemen, many banana republics in Latin America, and worse than experienced by slaves in 1774 colonial America

• It’s the highest level of inequality ever recorded in the U.S.

• It’s worse in America than in any other developed nation

• Staggering inequality in America has become permanent

• There are 2 economies: one for the rich, and the other for everyone else

• The economy has only recovered for the 1% … the rest of the country is more or less stuck in a depression

• The super-rich are raking in more than ever

• On the other end, more and more people are sliding into poverty

• 1 out of every 5 households in the United States is on food stamps

• The middle class has more or less been destroyed

• A who’s who of prominent economists and investors say that inequality causes crashes and hurts the economy

• Extreme inequality helped cause the Great Depression, the current financial crisis … and the fall of the Roman Empire

• Inequality isn’t happening for mysterious or uncontrollable reasons. Bad government policy is responsible for runaway inequality

• Bush was horrible, but income inequality has increased even more under Obama than under Bush

• Americans consistently underestimate the amount of inequality in our country.  They will be shocked – and may be furious – when they learn the truth

• It’s a myth that conservatives accept runaway inequality.  Conservatives are as concerned as liberals regarding the stunning collapse of upward mobility

The Inequality Problem is the Wrong Frame

The New York Times

The Opinion Pages|Op-Ed Columnist

The Inequality Problem

JAN. 16, 2014

Suddenly the whole world is talking about income inequality. But, as this debate goes on, it is beginning to look as though the thing is being misconceived. The income inequality debate is confusing matters more than clarifying them, and it is leading us off in unhelpful directions. 

In the first place, to frame the issue as income inequality is to lump together different issues that are not especially related. What we call “inequality” is caused by two different constellations of problems. 

At the top end, there is the growing wealth of the top 5 percent of workers. This is linked to things like perverse compensation schemes on Wall Street, assortative mating (highly educated people are more likely to marry each other and pass down their advantages to their children) and the superstar effect (in an Internet economy, a few superstars in each industry can reap global gains while the average performers cannot).

At the bottom end, there is a growing class of people stuck on the margins, generation after generation. This is caused by high dropout rates, the disappearance of low-skill jobs, breakdown in family structures and so on.

If you have a primitive zero-sum mentality then you assume growing affluence for the rich must somehow be causing the immobility of the poor, but, in reality, the two sets of problems are different, and it does no good to lump them together and call them “inequality.”

Second, it leads to ineffective policy responses. If you think the problem is “income inequality,” then the natural response is to increase incomes at the bottom, by raising the minimum wage. 

But raising the minimum wage may not be an effective way to help those least well-off. Joseph J. Sabia of San Diego State University and Richard V. Burkhauser of Cornell looked at the effects of increases in the minimum wage between 2003 and 2007. Consistent with some other studies, they find no evidence that such raises had any effect on the poverty rates.

That’s because raises in the minimum wage are not targeted at the right people. Only 11 percent of the workers affected by such an increase come from poor households. Nearly two-thirds of such workers are the second or third earners living in households at twice the poverty line or above. 

The primary problem for the poor is not that they are getting paid too little for the hours they work. It is that they are not working full time or at all. Raising the minimum wage is popular politics; it is not effective policy.

Third, the income inequality frame contributes to our tendency to simplify complex cultural, social, behavioral and economic problems into strictly economic problems.

There is a very strong correlation between single motherhood and low social mobility. There is a very strong correlation between high school dropout rates and low mobility. There is a strong correlation between the fraying of social fabric and low economic mobility. There is a strong correlation between de-industrialization and low social mobility. It is also true that many men, especially young men, are engaging in behaviors that damage their long-term earning prospects; much more than comparable women. 

Low income is the outcome of these interrelated problems, but it is not the problem. To say it is the problem is to confuse cause and effect. To say it is the problem is to give yourself a pass from exploring the complex and morally fraught social and cultural roots of the problem. It is to give yourself permission to ignore the parts that are uncomfortable to talk about but that are really the inescapable core of the thing. 

Fourth, the income inequality frame needlessly polarizes the debate. There is a growing consensus that government should be doing more to help increase social mobility for the less affluent. Even conservative Republicans are signing on to this. The income inequality language introduces a class conflict element to this discussion.

Democrats often see low wages as both a human capital problem and a problem caused by unequal economic power. Republicans are more likely to see them just as a human capital problem. If we’re going to pass bipartisan legislation, we’re going to have to start with the human capital piece, where there is some agreement, not the class conflict piece, where there is none. 

Some on the left have always tried to introduce a more class-conscious style of politics. These efforts never pan out. America has always done better, liberals have always done better, when we are all focused on opportunity and mobility, not inequality, on individual and family aspiration, not class-consciousness.

If we’re going to mobilize a policy revolution, we should focus on the real concrete issues: bad schools, no jobs for young men, broken families, neighborhoods without mediating institutions. We should not be focusing on a secondary issue and a statistical byproduct. 

A version of this op-ed appears in print on January 17, 2014, on page A25 of the New York edition with the headline: The Inequality Problem.

Why There Is No Outcry

OpEdNews Op Eds 1/25/2014 at 18:03:11

 

Why There I€™s No Outcry

By Robert Reich (about the author)     Permalink  

Source: Robert Reich Blog

Change is Coming
(image by Before It's News)

People ask me all the time why we don't have a revolution in America, or at least a major wave of reform similar to that of the Progressive Era or the New Deal or the Great Society.

Middle incomes are sinking, the ranks of the poor are swelling, almost all the economic gains are going to the top, and big money is corrupting our democracy. So why isn't there more of a ruckus?

The answer is complex, but three reasons stand out.

First, the working class is paralyzed with fear it will lose the jobs and wages it already has.

In earlier decades, the working class fomented reform. The labor movement led the charge for a minimum wage, 40-hour workweek, unemployment insurance, and Social Security.

No longer. Working people don't dare. The share of working-age Americans holding jobs is now lower than at any time in the last three decades and 76 percent of them are living paycheck to paycheck.

No one has any job security. The last thing they want to do is make a fuss and risk losing the little they have.

Besides, their major means of organizing themselves -- labor unions -- have been decimated. Four decades ago more than a third of private-sector workers were unionized. Now, fewer than 7 percent belong to a union.

Second, students don't dare rock the boat.

In prior decades students were a major force for social change. They played an active role in the Civil Rights movement, the Free Speech movement, and against the Vietnam War.

But today's students don't want to make a ruckus. They're laden with debt. Since 1999, student debt has increased more than 500 percent, yet the average starting salary for graduates has dropped 10 percent, adjusted for inflation. Student debts can't be cancelled in bankruptcy. A default brings penalties and ruins a credit rating.

To make matters worse, the job market for new graduates remains lousy. Which is why record numbers are still living at home.

Reformers and revolutionaries don't look forward to living with mom and dad or worrying about credit ratings and job recommendations.

Third and finally, the American public has become so cynical about government that many no longer think reform is possible.

When asked if they believe government will do the right thing most of the time, fewer than 20 percent of Americans agree. Fifty years ago, when that question was first asked on standard surveys, more than 75 percent agreed.

It's hard to get people worked up to change society or even to change a few laws when they don't believe government can possibly work.

You'd have to believe in a giant conspiracy to think this was all the doing of the forces in America most resistant to positive social change.

It's possible, of course, that they intentionally cut jobs and wages so much to cow average workers, bury students under so much debt they'd never take to the streets, and make most Americans so cynical about government they wouldn't even try to for change.

But it's more likely they merely allowed all this to unfold, like a giant wet blanket over the outrage and indignation most Americans feel but don't express.

Change is coming anyway. We cannot abide an ever-greater share of the nation's income and wealth going to the top while median household incomes continue too drop, one out of five of our children living in dire poverty, and big money taking over our democracy.

At some point, working people, students, and the broad public will have had enough. They will reclaim our economy and our democracy. This has been the central lesson of American history.

Reform is less risky than revolution, but the longer we wait the more likely it will be the latter.



http://robertreich.org/

Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.