I've written several op eds and letters to our local paper trying to sway people who I believe might be sitting on the fence politically. I live in Idaho which is very conservative. I try to walk a line that doesn't turn them off to my progressive message but use examples that show how unfair and just bat shit crazy our current political and economic system are and how they got that way. The first diary and op ed that was specifically aimed at this goal I wrote about a year ago. I hope to write a series that will help to counteract some of the right wing echo chamber that has been so prevalent in the U.S. media. There may be some opportunities since Republicans have screwed-up so badly in so many different ways.
Thanks to Orinoco for the illustrations and collaboration.
There's a lot of smoke and mirror play going on today. Just like a magician pulling a rabbit from a seemingly empty hat, the success of the trick depends on the audience looking where directed and not at what is really going on. Wealthy people have the power and money to direct attention away from themselves. When Americans get angry and complain about the slow economy and the lack of jobs, the rich and their minions point to lazy, irresponsible moochers getting government benefits and label them as the problem. Makers versus takers is the new sleight of hand. While everyone argues about how they're being ripped off by shiftless no-goods, the rich just keep on doing what they have been for over thirty years, getting richer. Just like in the Wizard of Oz to see the truth you have to look behind the curtain. Like in many confusing issues, follow the money.
The latest study on income distribution states that 93% of new revenue generated by the economy from 2009 to 2010 went to the top 1%. That left 7% for the remaining 99% of the population.
Wonder where that raise is that you've been waiting for so long? It is not in the pockets of the poor and unemployed. It's in the bank accounts of the of the top 1%. The rich have seen an income growth of 275% over the last 30 years while middle income earners saw a 40% rise and the lowest fifth had an 18% increase over the same time. Seems like a rising tide lifts some boats much faster than others in our economic system.
You don't have to be an economist to know that the economy does best when money circulates. Where is the wealth of the country and why isn't it circulating? Most of the money is held by those who spend the least.The richest 1% own 42% of all the wealth in the country while the bottom 60% have 2.3%. It is the greatest economic disparity since the Gilded Age right before the depression. Poor people spend all their money just surviving. Middle class people spend a much higher percentage of their income on food , clothing, and shelter than the rich. If you want to get the economy moving then get money to the people who will spend it. But, right on cue, those defenders of the rich will shout, "That's redistribution of the wealth!" And that is more misdirection, the wealth has already been redistributed and the wealthy got it:
From 1947 through around 1975, productivity and wages rose at about the same rate. Increased productivity meant higher profits from which labor got a fair share. Unions were instrumental in getting higher wages, not only for union members, but for all American workers. Well paid workers created a solid, strong middle class. A single income from a good job could feed, clothe, and educate an entire family. After the mid-seventies, productivity continued to rise but wages became stagnant. Two income families became necessary to try and stay even. Where did the profit from increased productivity go? See the above income rise for the top 1%. Union membership peaked in 1979 at 21 million and has declined to about 14 million members now. Unions are still a force in the U.S. but have been under attack for years and are not nearly as powerful as they used to be. With less representation for workers, businesses have been able to redirect more profits to owners and share-holders and pay less to workers.
Favorable tax laws have also helped funnel more revenue to the rich. The top tax rate during the Eisenhower administration was over 90% and has dropped to 35% today. By using an even lower capital gains tax rate of 15% and other tax advantages and loopholes, the ultra-rich pay a much lower rate than 35%. As was seen during the presidential campaign, Governor Romney's tax returns showed he had an income of $22 million dollars in 2010 and he paid less than 14% in taxes on it. This is standard for the very rich who know how to play the system. Corporate CEOs and hedge-fund managers have been able to get most of their income classified at the capital gains rate with the help of friendly legislators. Tax deductions to corporations that move American companies offshore to other countries have contributed to the profits of the rich. Continuing subsidies to corporations making record profits are another windfall. The list goes on.
Corporate Chief Executive Officers (CEOs) have made out like bandits over the past 30 years. Friendly boards of directors began to award CEOs gigantic compensation packages during this period. In the sixties, CEOs earned about 40 times the pay of an average worker. Today many CEOs earn 380 times more than the average worker. The average CEO pay has increased over 725% from 1978 to 2011. During the same time workers have seen an increase of 5.7%. The stock market has done well also as shown by the S&P 500 which increased 349% in the same period. Unfortunately, not many working people had money to invest in the market. In fact today they often have to borrow just to get by. It just goes to show that no matter how big the economic pie grows the 99% will get a very thin slice and have to fight over that. The system is rigged and not for workers or the average citizen.
Another place a lot of money from the American economy disappears to is by offshoring. Both capital and companies can be offshored, meaning transferred to another country. Both usually hurt the country they leave. Two years ago, Sensata Technologies bought a car sensor manufacturing company that employed 170 workers in Freeport, Ill. Sensata then informed the employees that all jobs and equipment would be transferred to China by the end of 2012. Current employees would train their Chinese counterparts. China had built Sensata a factory and Chinese labor costs would be a pittance compared to wages paid in the U.S. The end result is that Sensata, whose controlling interest is owned by Bain Capital, will make a fortune that will end up in the pockets of the 1% while 170 previously productive, tax paying workers will likely have to join the ranks of the maligned 47% through no fault of their own. This can be seen as corporate strip-mining. A company's assets are stripped from it and shipped overseas and all that is left here is a big hole in the lives of the workers and their community. It may be legal but it is not moral.
Another asset that can be shipped or kept overseas is money. A study commissioned by the The Justice Network in the U.K. finds that 21 trillion dollars, maybe as much as 31 trillion, has been shifted from scores of countries around the world to tax protected destinations like Switzerland and the Cayman Islands where it sits in bank accounts avoiding taxes that should have been paid to the countries due them. That is a lot of money being kept out of the economy as the world endures a serious recession. As austerity is deemed necessary for the majority of people, the attitude of the economic elite is clear. They decide to safeguard their gains achieved through a rigged economic system from even the paltry taxation their income is subject to. Let the commoners give up their luxuries of food and shelter but don't ask the rich to contribute.
The 1% like to push the idea there are those who are "creators" or those who create jobs and without whom there would be no jobs. Everyone should be grateful for them for they are the reason we have civilization. Besides being laughably arrogant, it is an untrue assumption that employers or CEOs are the only necessary element for a market economy. A business is composed of management and labor. Both are necessary for production. Let's look at John Schnatter, CEO of Pappa Johns Pizza. He recently complained that compliance with Obamacare would increase the cost of a pizza by fourteen cents. Another study says the cost would be more like a nickel. Schnatter said one remedy could be to cut hours for employees so that fewer would qualify for coverage. Schnatter's personal wealth is estimated in the hundreds of millions and the assumption is that most of it came from his position at Pappa Johns. How many pizzas could Schnatter make on his own? Could he have made such a fortune on his own? No, the pizza his employees made and delivered were the biggest contributing factor. Yes, employees come and go but the position they fill still needs a person. So he would begrudge the nickel a pizza it would cost to cover his low wage or minimum wage employees the luxury of not having to worry about whether they get sick or not. Capitalism as it is practiced is often pretty ugly and driven by greed. It doesn't have to be. Costco pays its employees a good wage with benefits and outperforms Sams Club in revenue collected per square foot of retail floor space. The worst thing said about Costco is that it could be more generous to stock holders and Wall Street. More negativity along this line, please.
The above are examples which illustrate just some of the ways used by the rich to get ahead financially and stay there. They have not earned the enormous profits accumulated over the past few decades. No more than the dealer of a three card Monte game wins by giving players an even chance. A player might be allowed to win sometimes but that is because the dealer knows it will draw in more marks. The dealer has to convince players that if they really pay attention and are quick enough they will win. But, in reality, the dealer controls the cards and the outcome. The rich use phrases like individual responsibility, free market, makers versus takers to divert attention from the real action. Just so, the dealer's patter occupies the players while he slips the winning card up his sleeve and replaces it with a loser.
The idea that a free market economy is self-regulating and will always perform in a way that will have the best outcome for the common good is addressed by a famous economist after the mortgage bubble burst. Alan Greenspan, former chairman of the Federal Reserve and longtime proponent of a deregulated market, testified before congress about the financial collapse in 2008: "I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms." Ideals are only as good as the people who practice them. People often fall short and it is best to not to trust them too much. Just ask the Catholic Church.
If you have ever had to be on unemployment, get foodstamps, or be on welfare you would laugh at those who suggest you would rather live on these than have a job that pays enough to support themselves. Most available jobs are minimum wage and many employers are careful to schedule hours so that workers are part-time instead of full-time to avoid paying benefits. Today Walmart workers qualify for government benefits of $2.66 billion, or about $420,000 per store. Many Walmart workers don't make enough money in wages to survive, so must seek additional aid from the government. Then they are shamed for getting foodstamps, Medicaid, or other assistance. Walmart had a gross profit of $114.2 billion in 2011. Walmart uses government aid programs to get the taxpayer to make up the difference between the low worker wages it pays and a living wage. Either you believe that over the last thirty years American workers have become lazy and shiftless or that the rich have learned to game the system so successfully that little wealth is left over for everyone else. Look at the figures above again before you answer. This country has tried the "trickle-down" theory for decades. It doesn't work. The only reason we have kept this failed, unequal system for so long is that enough of us have been distracted by sleight of hand tricks to pull back the curtain and see who is really hurting the economy.