I've been making the case that our inequality problems are political and not purely economic. If we had a system of owner operators then they'd be self governing, but our system is built on banks that rule the money supply, and businesses with partial or complete monopolies over resources or branded products. This system is designed to siphon money off to those who govern wealth, which becomes synonymous with those who own capital.
Paul Krugman weighs into the inequality debate. with his latest editorial in the New York Times:
"A few days ago, The Times published a report on a society that is being undermined by extreme inequality. This society claims to reward the best and brightest regardless of family background. In practice, however, the children of the wealthy benefit from opportunities and connections unavailable to children of the middle and working classes. And it was clear from the article that the gap between the society’s meritocratic ideology and its increasingly oligarchic reality is having a deeply demoralizing effect." ["http://www.nytimes.com/2013/09/13/opinion/krugman-rich-mans-recovery.html?_r=0"]
And of course these gaps reflect political power as well a economic power -- and are destructive!
The report illustrated in a nutshell why extreme inequality is destructive, why claims ring hollow that inequality of outcomes doesn’t matter as long as there is equality of opportunity. If the rich are so much richer than the rest that they live in a different social and material universe, that fact in itself makes nonsense of any notion of equal opportunity.
But of course the "equality of opportunity" is false advertising too. Later in the article he notes:
The data in question have been compiled for the past decade by the economists Thomas Piketty and Emmanuel Saez, who use I.R.S. numbers to estimate the concentration of income in America’s upper strata. According to their estimates, top income shares took a hit during the Great Recession, as things like capital gains and Wall Street bonuses temporarily dried up. But the rich have come roaring back, to such an extent that 95 percent of the gains from economic recovery since 2009 have gone to the famous 1 percent. In fact, more than 60 percent of the gains went to the top 0.1 percent, people with annual incomes of more than $1.9 million.
And this follows on a report that showed that the improvement in GDP over the last 30 years has pretty much all gone to the same people.
Basically, while the great majority of Americans are still living in a depressed economy, the rich have recovered just about all their losses and are powering ahead.
So we have a depression for most people but opportunity for the wealthy.
"An aside: These numbers should (but probably won’t) finally kill claims that rising inequality is all about the highly educated doing better than those with less training. Only a small fraction of college graduates make it into the charmed circle of the 1 percent. Meanwhile, many, even most, highly educated young people are having a very rough time. They have their degrees, often acquired at the cost of heavy debts, but many remain unemployed or underemployed, while many more find that they are employed in jobs that make no use of their expensive educations. The college graduate serving lattes at Starbucks is a cliché, but he reflects a very real situation."
I certainly found that to be the case. One of the smartest men I've known struggled while getting two college degrees and struggled in blue collar work until he finally landed the kind of work equal to his education and became a curator of a small museum.
What’s driving these huge income gains at the top? There’s intense debate on that point, with some economists still claiming that incredibly high incomes reflect comparably incredible contributions to the economy. I guess I’d note that a large proportion of those superhigh incomes come from the financial industry, which is, as you may remember, the industry that taxpayers had to bail out after its looming collapse threatened to take down the whole economy.
Krugman doesn't attack this but my Mathematically Perfected Money friends and folks talking about how capital goods are displacing workers (automation) have an explanation. If a person can only sell his labor at less than it is worth and must borrow to survive then all he can expect to net is a net transfer of his labor earnings to his employers and eventual replacement with automation that also belongs to those same masters. Capitalism is entering an automated stage where it no longer needs us. We are becoming 'superfluous'.
In any case, however, whatever is causing the growing concentration of income at the top, the effect of that concentration is to undermine all the values that define America. Year by year, we’re diverging from our ideals. Inherited privilege is crowding out equality of opportunity; the power of money is crowding out effective democracy.
Money can buy offices, and if not it can buy the officers.
So what can be done? For the moment, the kind of transformation that took place under the New Deal — a transformation that created a middle-class society, not just through government programs, but by greatly increasing workers’ bargaining power — seems politically out of reach. But that doesn’t mean we should give up on smaller steps, initiatives that do at least a bit to level the playing field.
What we are needing is not just income redistribution but a redistribution of common properties that have been usurped. The days when the super rich own oil deposits, own the assets that process the oil, and then make money from the refined product, need to end. The oil in the ground belongs to the commons and the companies need to pay for the privilege of taking out of the ground and compensate those harmed by the removal. Same with Coal and other minerals. We need to put the profits from oil in a National Sovereign fund not the pockets of fat cats.
Take, for example, the proposal by Bill de Blasio, who finished in first place in Tuesday’s Democratic primary and is the probable next mayor of New York, to provide universal prekindergarten education, paid for with a small tax surcharge on those with incomes over $500,000. The usual suspects are, of course, screaming and talking about their hurt feelings; they’ve been doing a lot of that these past few years, even while making out like bandits. But surely this is exactly the sort of thing we should be doing: Taxing the ever-richer rich, at least a bit, to expand opportunity for the children of the less fortunate.
All that is nice, but pinning hopes on education only addresses the openings where education is a premium entry card. But it won't end favoritism, nepotism, or the simple advantages of connections and access do to education and class. We need to enable blue collar people to have a stake in this country and people to own their tools and have a share in business capital.
Some pundits are already suggesting that Mr. de Blasio’s unexpected rise is the leading edge of a new economic populism that will shake up our whole political system. That seems premature, but I hope they’re right. For extreme inequality is still on the rise — and it’s poisoning our society.
Either it will be populism or it will be unrest. Either we'll have a system that is fair to everyone or it will degenerate into some Terminator/Robocop/Caprica future. It's not a new issue. Ellen Brown in the group "Global Research" (which I may or may not agree with otherwise) notes;
"The Federal Reserve Act was passed in 1913 in response to a wave of bank crises, which had hit on average every six years over a period of 80 years. The resulting economic depressions triggered a populist movement for monetary reform in the 1890s."
Ellen Brown then notes: "Mary Ellen Lease, an early populist leader, said in a fiery speech that could have been written today:"
"Wall Street owns the country. It is no longer a government of the people, by the people, and for the people, but a government of Wall Street, by Wall Street, and for Wall Street. The great common people of this country are slaves, and monopoly is the master. . . . Money rules . . . .Our laws are the output of a system which clothes rascals in robes and honesty in rags. The parties lie to us and the political speakers mislead us. . . ."
Krugman is pointing to a problem he is probably too afraid to take on too directly for fear of retaliation. But the solution is simple:
"We want money, land and transportation. We want the abolition of the National Banks, and we want the power to make loans direct from the government. We want the foreclosure system wiped out."
A "well regulated capitalism can only provide that if there is judicial, legislative and executive direction in the direction of actual justice and equity. But Ellen notes that the Federal Reserve Act was a bait and switch. Instead of holding the giant monopolies and banks accountable it ratified their governance of banking.
"That was what they wanted, but the Federal Reserve Act that they got was not what the populists had fought for, or what their leader William Jennings Bryan thought he was approving when he voted for it in 1913."
And Ellen then notes: "In the stirring speech that won him the Democratic presidential nomination in 1896, Bryan insisted":
"[We] believe that the right to coin money and issue money is a function of government. . . . Those who are opposed to this proposition tell us that the issue of paper money is a function of the bank and that the government ought to go out of the banking business. I stand with Jefferson . . . and tell them, as he did, that the issue of money is a function of the government and that the banks should go out of the governing business."
And you hear the same arguments echoed down to the same time, with, as Ellen notes, he answers "with this famous outcry against the restrictive gold standard":"
You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.
Nothing has changed except the orders of magnitude of the wealth, and the internationalization of the issue. The privateering of banks in using paper money, and even more perniciously electronic money, to make loans and acquire people's homes, work, tools, and labor at a pittance is a tool with a power greater than a pirate ship's broadside.
Merely getting rid of the reserve won't fix this. But turning the Fed into the agency it should be and sovereign money issued by purchasing assets rather than loaning money would help. http://www.globalresearch.ca/one-hundred-years-is-enough-time-to-make-the-federal-reserve-a-public-utility/5362475
Further Reading:
- http://www.wealthandwant.com/HG/what_the_railroad_will_bring_us.html
- http://www.foreconomicjustice.org/11444/jerry-peloquin-disappearing-jobs-and-the-ownership-solution
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http://www.nytimes.com/2013/09/10/education/harvard-business-students-see-class-as-divisive-an-issue-as-gender.html
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"http://www.nytimes.com/2013/09/13/opinion/krugman-rich-mans-recovery.html?_r=0"
- "http://www.globalresearch.ca/one-hundred-years-is-enough-time-to-make-the-federal-reserve-a-public-utility/5362475"
- http://perfecteconomy.com/
