Escalator to the Bottom

There have been numerous times throughout world history when the very wealthy cared little about the vast majority of the population who had nothing. All of those times ended badly for the aristocrats, as I recall. We’re headed that way again, and I think that’s a bad idea.

There has been no shortage of writers and speakers who have reminded us of the slow but steady losses for all Americans except the very wealthy over the past forty years or so. Each of them told us about one or more aspects of the trend that has pushed us all downward. But the Stanford Center for the Study of Poverty and Inequality’s report, “20 Facts About U.S. Inequality that Everyone Should Know” puts it all together in one place, in stark, graphic form, and tells us things that should shock everyone. Everyone should look at it and reflect. It’s much later than we thought.

Here is my commentary on some of the Stanford graphs:

Since about 1970, gross domestic product per employed worker has risen steadily, consistently, from $35,000 per year to $95,000. That’s a 270% increase in productivity. Over the same period, the median income of full time workers has actually diminished. So if the workers are not getting the benefit of their increased productivity, who is?

We all know the answer, which is found in a graph showing that, as of 2001, the top 10% income bracket had 71.5% of the wealth of the country. For the bottom 60%, 4.2%. If I figured it right, this means someone in the top 10% has more than a hundred times the wealth of a person in the bottom 60%. Others also report that the top 1% own 40% of all the wealth in the country.

The only thing that could be more graphic would be the comparison of the boss’s pay and the worker’s pay. Back in 1970, the chief took home 39 times what the average worker earned. A nice chunk, but he (always he) deserved it. By the year 2000, CEOs were getting 1039 times what the average worker earned, more than a 26-fold increase. Said another way, the boss earns in two weeks what his father earned in a year. Does anyone actually believe that these people deserve this plunder? And now it’s eleven years later. Do you suppose the gap has returned to a more reasonable level?

Mexico is a poor country. Yes, there is Carlos Slim, there are the drug lords with their millions, and there are the ruling families with old money, but when you visit, you see the evidence of extreme poverty all around. Almost a quarter of Mexico’s children live in poverty (24.8%). Thank goodness we don’t have that here in El Norte, eh? But we do. Our own level of childhood poverty is just 3% under Mexico’s, at 21.9%. We are the richest country there has ever been. How is it possible that one-fifth of our children live in poverty? Another figure: we have over eight million children who are not covered by health care insurance at all. We are failing our children, setting them up for a diminished life.

There are some 750,000 homeless people in the US. One out of five is chronically homeless. Chronic homelessness is defined as an unaccompanied disabled individual who has been homeless for over one year. These are the least fortunate among us. Poor, often mentally ill and physically ill as well, and incapable of managing their own lives. Our treatment of these least fortunate people is how our country will be judged as a just society. We are failing this test.

Rare bright spots

Fortunately, there are a few bright spots. The gender gap for pay has diminished by about 20% over three decades. But the report also shows that women’s work is largely concentrated in jobs that pay less than typical male jobs. Progress, but not good enough.

Likewise, the high school dropout rate is improving. It remains highest for Hispanics, next highest for African-Americans, but over time the dropout rate for everyone is diminishing. This is fortunate, because pay for high school graduates is 50% higher than for dropouts. College graduates earn 250% of what dropouts earn. Failing to earn a high school diploma sets one up for a lifetime of difficulty.

What all this tells us

If we are to regain something of the country promised us in our Constitution, radical changes must take place, and soon. The things we know will work are being undermined by abstract conservative Republican ideas that have produced nothing but failure in the past.

Unfortunately, the news these days is full of Republican plans to slash the budgets of just about everyone, following the faith in their failed principles, making everything worse. Except for the rich, of course.

Our federal budget problems arose because of inadequate tax revenue. This is a result of declining income and persistent high unemployment. These things are a direct result of Wall Street greed, which led to the most recent market crash. Unrestricted Wall Street greed is the direct result of the gradual decimation of regulations to control how corporations and bankers behave. There has been a relentless attack by Republican conservatives beginning with Ronald Reagan, stemming from the belief that freeing the market from restrictions of all sorts will bring wealth to us all. It doesn’t.

Now they are trying to balance the federal budget by making everybody worse off. Except the rich, of course. Forty years of steadily worsening economic conditions for everybody except the rich doesn’t seem to convince them that there is something wrong with their approach.

Conservative steam freight destroys liberal hybrid bus at crossing

The fact is, we have run smack into the difference between the conservative and liberal philosophy. The conservative philosophy boils down to doing everything for the rich, in the vain hope that some of their wealth will somehow reach the rest of us and make things all better. It’s the Laffer Curve, Supply-Side Economics, and Trickle Down, and we see the fruits of these things today.

The Laffer Curve tells us that when tax rates are too high, it creates a disincentive to pay taxes, so tax revenue falls. (Odd. I always thought paying taxes was required by law. I guess not, since GE and BoA and others don’t pay any.) We must cut taxes for the rich to increase tax revenue. And how’s that working, now that we’ve had several years of tax cuts at the top of the income scale? The only tangible result has been lower tax revenue and enormous increase in inequality. Supply-side economics claims the same, that making things favorable for the rich will increase investment. Trickle-down says that when the rich are richer, some of this wealth finds its way into the bank accounts of everyone else. It would seem that the statistics shown in the Stanford group’s graphs shoot all of these theories full of holes. By now they should all have sunk in the swamp water of our recession so we can begin talking about things that work.

The liberal philosophy says that it is the people who are the strength of the nation, the producers, the protectors of our freedom. We must do things that strengthen the common wellbeing. These must include such things as easing the burdens of those less fortunate, as well as controlling how business and commerce is done.

After vain attempts to recover from the Depression with conservative ideas during the Hoover administration, the liberal approach was tried. That, and the advent of WWII, saved the American economy, and led to the most affluent years in our history. Everyone was better off under the Democrats, even the Republicans, as Harry Truman noted.

The evidence is all around us that what conservative Republicans are trying hard to make permanent will fail. It will fail just as it failed in the Great Depression, and just as it has failed over the recent forty years. It will take a change in philosophy to reverse our fortune, not an enlargement of the failed policies of conservative Republicans.

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