OK

This is only a Preview!

You must Publish this diary to make this visible to the public,
or click 'Edit Diary' to make further changes first.

Posting a Diary Entry

Daily Kos welcomes blog articles from readers, known as diaries. The Intro section to a diary should be about three paragraphs long, and is required. The body section is optional, as is the poll, which can have 1 to 15 choices. Descriptive tags are also required to help others find your diary by subject; please don't use "cute" tags.

When you're ready, scroll down below the tags and click Save & Preview. You can edit your diary after it's published by clicking Edit Diary. Polls cannot be edited once they are published.

If this is your first time creating a Diary since the Ajax upgrade, before you enter any text below, please press Ctrl-F5 and then hold down the Shift Key and press your browser's Reload button to refresh its cache with the new script files.

ATTENTION: READ THE RULES.

  1. One diary daily maximum.
  2. Substantive diaries only. If you don't have at least three solid, original paragraphs, you should probably post a comment in an Open Thread.
  3. No repetitive diaries. Take a moment to ensure your topic hasn't been blogged (you can search for Stories and Diaries that already cover this topic), though fresh original analysis is always welcome.
  4. Use the "Body" textbox if your diary entry is longer than three paragraphs.
  5. Any images in your posts must be hosted by an approved image hosting service (one of: imageshack.us, photobucket.com, flickr.com, smugmug.com, allyoucanupload.com, picturetrail.com, mac.com, webshots.com, editgrid.com).
  6. Copying and pasting entire copyrighted works is prohibited. If you do quote something, keep it brief, always provide a link to the original source, and use the <blockquote> tags to clearly identify the quoted material. Violating this rule is grounds for immediate banning.
  7. Be civil. Do not "call out" other users by name in diary titles. Do not use profanity in diary titles. Don't write diaries whose main purpose is to deliberately inflame.
For the complete list of DailyKos diary guidelines, please click here.

Please begin with an informative title:

The Income Gap Widens

If wages had tracked with growth (GDP) over the past 60 years, you would be making about 160% what you make now. Do the experiment: multiply your current salary or hourly wage by 1.6 and tell me what you get. $35,000 a year? You should actually be making $56,000 now. You make $60,000? Well, you’d be making $96,000 now. $10 an hour? How’s $16 sound instead? What would you do with the extra money?

What am I talking about? I’m talking about the fact that in 1952 the gross domestic product was just over $2 trillion in inflation adjusted dollars. At the end of 2012, the GDP had grown to $13.6 trillion. Measured per capita (dividing by the population of each year) it was $14,000 in 1952 and is $43,270 today. In other words, the US generates wealth to the tune of $43,270 per year for each man woman and child in America. Last year, we generated three times as much wealth per person as compared to 1952.

The average worker's hourly compensation in 1952 was $10.59 (adjusted for inflation). Based on this, you can calculate a ratio of average hourly compensation to per capita GDP. In 1958 that was 0.089% and it has been falling ever since. Now it stands at 0.054% (average wage now is $23.53/hour). The difference between these two figures is what gets you to the “1.6 times” figure I mentioned at the start. That's what we all should be making if the ratio of wages to GDP were the same as it was in 1958. But things didn't happen that way. So much for the rising tide lifting all boats, or wealth trickling down...or some other such nonsense.

Intro

You must enter an Intro for your Diary Entry between 300 and 1150 characters long (that's approximately 50-175 words without any html or formatting markup).

The country is getting richer, but that wealth is not tracking with people’s wages. The point of departure of this essay is the contention that a healthy economy is one in which wages do track with per capita GDP—within a reasonable boundary. To say otherwise is to believe that exploitation of the workforce is a good thing, as long as it makes the rich richer. There are many objective measures that prove otherwise.

If you were making 1.6 times what you make today, the rich would be no worse off. We would still have the disparity of income that we had in 1958. There would still be obscenely rich people in the world, but what would change is that we would not have the extreme poverty and lack of infrastructural investment that we see today. And you'd feel an added sense of security and freedom with that added 60% to your paycheck every two weeks.

Now do a second calculation. Take your new salary (the one that is 1.6 times your current one) and subtract what you make now. This difference—the money you are not making but that you should be making—is being stolen from you each year by the 0.5% highest earning Americans.

That is why you keep hearing story after story about the record income disparity, which hasn't been this great since before the Great Depression. It was the income tax changes, social safety nets, and other economic policies that were enacted to avoid another Great Depression that led to that health ratio of average hourly compensation to per capita GDP that we had in 1958. Since then we have dismantled the framework of the New Deal and witnessed the gap steadily increase.

If your household earns more than $600,000 every year, then you can count yourself among the top half of a percent. If your family earns less than that, then you continue to be systematically stolen from by way of miserable US economic policy that has been written and enacted by the wealthy elite.

The additional 60% income that you should be receiving represents a subsidy that you pay to corporations every year. This is not the invisible hand of a free market. This is a rigged system that is unjust and anti-capitalist. It is one in which the middle class is losing and there is little connection between hard work and economic upward mobility. It is not the decisions being made by the CEOs and investment bankers that is increasing our GDP. It is the sweat of those whose wages have been almost completely stagnant for the past ten years. It's a bad deal.

The way to turn this around is through a more progressive tax structure that can broaden our social services, and through regulations that hold Wall Street accountable. It was carefully crafted economic policies that brought us to this point and it is carefully crafted policies that will get us back to where we should be. The question is, "who is crafting them?"

President Obama had a chance to make a difference, but we must now recognize that he was not up to the challenge. We must look forward to the next leaders who will have a stronger momentum building behind them and we must continue to peacefully protest.

Sources: Measuring Worth, The Congressional Budget Office, EXCEL FILE.

- The Greatest Economy

Extended (Optional)

Originally posted to intrados on Tue Sep 17, 2013 at 04:30 AM PDT.

Also republished by In Support of Labor and Unions, TrueMarket, Income Inequality Kos, and Community Spotlight.

EMAIL TO A FRIEND X
Your Email has been sent.