Robert Reich’s recent post about the pernicious effect of the concentration of wealth on the economic health of America.
Political science professor David Michael Green: “Our Long National Nightmare Isn’t Over, It’s Just Beginning”
Tag Robert Reich
Aux Armes, Citroyens!
In honor of Bastille Day, it’s worth taking a moment to consider the situation in which we find ourselves in this country today.
Speaking at the protests of the G20 summit in Toronto, Canadian activist Maude Barlow reminded the gathered crowd that the three richest men in the world have more money than the 48 poorest COUNTRIES in the world. Just let that sink into your brain for a second. Overall, the richest 2% of the world’s population controls over half of the wealth, and the bottom 50% control less than 1% of the wealth.
Sucks to be them, right? Well, you’re most likely one of them, too. If you’ve got some time, this rant by Hofstra University political science professor David Michael Green brings home the reality of how the redistribution of wealth away from the middle class is on the brink of turning this country into another Argentina or Brazil, where a tiny percentage of elites control the wealth and the vast majority of people live in the worst slums imaginable. If you can’t be bothered to read the whole thing (and it is quite a stemwinder), at least read this paragraph:
The product of these efforts has been precisely what one would expect. Corporations and economic elites have grown fantastically more wealthy than they already were thirty years ago. Their tax liabilities are now negligible and sometimes less than zero. Massive national debt, the product in part of those tax gifts to the rich, plus huge bills for interest on that debt (this alone is one of the largest items in the federal budget each year), is now owned by the mass public, who got nickels and dimes worth of tax cuts, in exchange for which they will now have to literally work years of their lives to pay down the taxes the rich escaped. Working people across the country get less and pay more for everything today. College is becoming increasingly out of the financial reach of average Americans. The minimum wage, which actually often isn’t the minimum, is far from a sustainable salary for one person, let alone a family. As of 2004, the richest one percent of Americans possessed sixty percent of all wealth in the country, while the bottom forty percent accounted for a whopping two-tenths of a percent. Between 1979 and 2004, after-tax income for the top one percent of Americans rose by 176 percent, while for those in the bottom 20 percent that figure rose only six percent. And those figures are for six years ago, during what by current standards was flush times for working people. Now jobs are disappearing, with the inevitable effect of driving wages down further, not to mention all the obvious effects on prosperity, security, health, mental health and sheer longevity.
Here’s a graph to help you visualize that:
Writing in The Nation, Harvard economist and former Labor Secretary Robert Reich says that this widening gap is at the very heart of the Great Recession, just as it was in 1929. In 1928, the richest 1% of Americans received 23.8% of income earned in the U.S., and in 2007 that figure was 23.5%, aided by tax cuts and shifting tax burdens that consistently favored the rich while gutting the middle-class. Again, Reich’s article isn’t a quick read, so here’s a good pullquote:
If nothing more is done, America’s three-decade-long lurch toward widening inequality is an open invitation to a future demagogue who misconnects the dots, blaming immigrants, the poor, government, foreign nations, “socialists” or “intellectual elites” for the growing frustrations of the middle class. The major fault line in American politics will no longer be between Democrats and Republicans, liberals and conservatives. It will be between the “establishment” and an increasingly mad-as-hell populace determined to “take back America” from them. When they understand where this is heading, powerful interests that have so far resisted reform may come to see that the alternative is far worse.
Need some quant porn to flesh it out? Look at this post at Calculated Risk that compares the current unemployment situation to previous economic downturns. The graph below is too small to read here, so be sure to look at the original, but I think even at the reduced size you get the point:
Boston College law professor Ray D. Madoff (apparently no relation) calls the end of the estate tax and the continuation of other elite-friendly tax laws nothing less than the enabling conditions to create an American aristocracy, even as some super-rich individuals like Warren Buffet and Bill Gates themselves have called for their class to give away their fortunes to the betterment of society.
While Reich is quick (and correct) to point out that the Democrats are just as equally to blame for the situation as the Republicans, it never ceases to amaze me that the current crop of Republicans has stopped even pretending that they have any other agenda, and that President Obama and the Democratic leadership in Congress will compliantly go right along with it, without so much as a peep from anyone other than “Give ‘Em Hell” Bernie Sanders (the only ACTUAL socialist in Washington, I hasten to add).
It is more than painfully clear that there is little that can be done within the existing political structure to reverse the situation, and that the only agent of change will be class warfare on the size and scope of the three major proletarian revolutions. The real remaining question is how much worse will things have to get for the middle-class populations of the U.S. and Europe — will nothing happen until every major city resembles Mumbai or Rio de Janeiro? I think the answer lies in how quickly things transpire; if things level off for a decade or two, the complacent population of America and Europe are not likely to rise up, even as our way of life is inexorably assaulted. A few sharper shocks, and maybe we’ll get some sense kicked into us.
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Linkapalooza – Doom And Gloom
First, the entertainment portion of our program:
It is a damn good thing that the Bush Administration chose to announce their agreement to pay the $700 billion ransom demand made by Wall Street over the weekend. If this had happened during the work-week, the pressure on Congress to Just.Do.Something. would have been overwhelming, especially after Ben Bernanke used the “nuclear option” on Congress to tell them just how serious this problem is. And, given that Nancy Pelosi and Harry Reid bend over for Geroge Bush more than a Greenwich Village tranny during Fleet Week, they would have gone along in a snap. But the weekend gave every pundit known to humanity a chance to take a deep breath, sort out the details, and come to the conclusion that the bailout plan, as proposed, is FUCKING WACK.
If the Bush bailout plan were put into place without modification, you might as well cancel the November election, because Hank Paulson would be the de facto Ruler Of The Free World. With a blank check, zero accountability, and virtually unlimited authority to do whatever he wants to the American economy, and thus by extension the entire world, he might as well declare himself King Henry the First and be done with it. It was apparently not enough to hand over a trillion dollars to Halliburton, not to mention $9 billion (UPDATED: make that $23 billion) IN CASH to the gang posing as the Iraqi government, but with less than six months remaining in their administration, they needed to make sure that Paulson’s buddies on Wall Street got their welfare checks AND the option to buy up all the failing banks in America at a deep discount.
You know it’s a bad idea when even such Republican lickspittles as William Kristol go on record in the New York Times as calling it a duck. I have been collecting links all morning to the various and sundry politicians, pundits and other bloviating gasbags and here’s the lineup I have so far of people who have said the bailout is a Bad Thing:
- Paul Krugman called it “Cash For Trash”
- Robert Reich says no blank check without some conditions, and even has a suggestion for a totally different sort of plan
- Vermont Senator Bernie Sanders offers a proposal that warms the cockles of my sclerotic pinko heart: Make the rich pay for the bailout, bring back strict regulation to the financial sector, and stand ready to roll out a Second New Deal to rebuild American infrastructure and put millions to work. (In a perfect world, I would be voting for a Kucinich/Sanders ticket come November…)
- Speakng of Kucinich, he has picked up on Krugman’s “Cash For Trash” line, and says he will introduce a counter-proposal to distribute the remaining good assets of the failed banks to each and every American citizen to the tune of the $2,300.00-per-person figure that has been bandied about as the per-capita cost of the bailout.
- Meanwhile, Kucinich’s chief economic adviser from his primary campaign, University of Missouri Professor Michael Hudson, spoke about the crisis in this interview last week (pre-bailout announcement) with DemocracyNow.org (video here if you’re interested). He doesn’t even think the AIG bailout is a good idea…and he’s right.
- This post at DailyKos has a quick roundup of punditry, including Krugman. Even the Wall Street Journal isn’t too keen on the plan
- Politico.com’s round-up adds University of Chicago School of Business Professor Luigi Zingales (who wrote the 2003 book “Saving Capitalism From The Capitalists”), Mitt Romney’s financial adviser Harvard Economics Professor Greg Mankiw, Time Magazine’s Justin Fox, annd Conde Nast Portfolio writer Felix Salmon.
Meanwhile, the Financial Times is one of the few places where you’ll read anything good about the plan, and even their recommendation is lackluster, and some of their columnists are even less certain about it all. Then there’s this moron writing in Time, who seems to think it’s 2002 all over again by declaring us the “United States of France” for even SUGGESTING a bailout plan.
Then there are the side effects to consider:
Jason Rosenbaum at The Seminal, is quick to point out that while Hank Paulson is shoveling out the contents of the U.S. Treasury to his former co-workers at Goldman Sachs, John McCain STILL thinks it’s a good idea to deregulate the health insurance industry the same way he voted for deregulating the investment banks over the last 25 years. And let’s not forget that McCain LOVES the idea of creating private retirement accounts instead of funding Social Security, so that we can hand over our hard-earned money more efficiently to Wall Street.
At least Barack Obama isn’t ready to hand over all the money so easily, but he isn’t exactly stepping up to the plate yet either. The Boston Herald reports that he spent some time this weekend meeting with Warren Buffet, Larry Sanders, Paul Volcker and a bunch of other Serious People to get a better handle on the situation and maybe come up with something. But, seriously, Barry, you need to pull something out of your ass that isn’t just some rhetorical flourish on top of a wishy-washy do-nothing plan like the rest of your platform. Somebody tell me again why you think he’s better than McCain, because I still just don’t feel the love for him that you do. Running on “I’m not John McCain” isn’t much of a change, you know.
Much has been made of this e-mail from an unnamed Democratic congressman who isn’t too happy with the events of the last few days. He’s ready to vote for anything that “…would serve no useful purpose except to insult the industry, like requiring the CEOs, CFOs and the chair of the board of any entity that sells mortgage related securities to the Treasury Department to certify that they have completed an approved course in credit counseling… That would just be petty and childish, and completely in character for me. I’m open to other ideas, and I am looking for volunteers who want to hold the sons of bitches so I can beat the crap out of them. I think he’s on the right track myself, but over at MetaFilter the user named “Pastabagel” has a very salient reminder about spreading the blame for all this around. While I feel the Congress-critter’s pain, Pastabagel has a very valid point: we gave the Democrats back the majority to take care of this bullshit and they have let us down immensely. Republicans and Democrats alike need to be thoroughly beaten with sharp and pointy objects for their complicity in this clusterfuck.
And the general public? Well, we’ve been enjoying our bread and circuses, of course. The Pew Research Center’s weekly analysis of news content says that in the week of September 8-14, which is the week before the market tanked and people started to get nervous, 42% of all news coverage was devoted to some aspect of Sarah Palin, with nearly 25% of that coverage being about the “lipstick on a pig” comment, while the crumbling economy got 4% of the newsmedia’s attention. Forty-two fucking percent of their seemingly limitless time thrown away on some white-trash “hockey mom” who can “see Russia from her house”, while the millionaires line up for their bags of money taken directly from our pockets. We, the people of this country, also deserve a full measure of blame for this. And we’re going to get it. Soon.
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BOHICA
Wall Street’s having another iffy-but-not-disastrous day — the Asian markets were all up, but the Europeans didn’t do well and that, in turn, has pushed the Dow down again. As I have followed the news and/or various websites where the situation is being discussed, I swear I have heard every possible prognostication from “no big deal” to “there’ll be blood in the streets”, so it’s very hard for someone like myself, with no genuine appreciation for the stock market or its relationship to the economy as a whole, to know who or what to believe. The only thing that just about everybody seems agreed upon is that we’re headed into a recession (or even a depression), if we aren’t already in one.
This American Prospect article from last week (pre-Gray Tuesday) is on the gloomier end of things. Harold Meyerson, the author (and the editor of TAP), expects that nothing short of a set of programs in scope and significance as the New Deal will be needed to reform the American economy, which (he says) has been undermined by the get-rich-quick schemes of unscrupulous businesses and the de-regulationist policies of the last 30 years. Obviously, he thinks the Democratic candidates for President have better solutions in mind than the Republican ones, but I personally think it’s wishful thinking to think whoever gets elected this year will bring much to the table.
Writing over at Slate, Daniel Gross says that the recession has a silver lining in the form of forcing American corporations to learn how to compete globally. His position is based on the assumption that the economy in the rest of the world is not as frighteningly dependent on the American consumer as it once was, and that the relatively strong position of the economies of countries in Asia, along with relatively neutral economies in the G7 will prevent the damage from going too deeply abroad. If the recession turns out to be short and shallow, it could benefit the American economy in the long run to correct the fundamentals from the bubble effects and put us in a good starting point for the next expansion.
Former Labor Secretary Robert Reich writes in Salon today that we are basically fucked. Bush’s plan to give everybody $800 isn’t going to do squat, housing prices haven’t begun to see the bottom of the barrel yet, the candidates are useless, and the only thing that will save us is a Cloverfield-sized monster bail-out from the foreign investors who we’re already into for far too much money.
Maybe panic-buying carrots isn’t such a wild idea. At least you can eat them when the money’s all gone.