{"id":109554,"date":"2014-03-17T17:44:06","date_gmt":"2014-03-17T17:44:06","guid":{"rendered":"http:\/\/rinf.com\/alt-news\/?p=109554"},"modified":"2014-03-17T17:44:06","modified_gmt":"2014-03-17T17:44:06","slug":"income-inequality-going-get-catastrophically-worse","status":"publish","type":"post","link":"http:\/\/rinf.com\/alt-news\/breaking-news\/income-inequality-going-get-catastrophically-worse\/","title":{"rendered":"Why Income Inequality Is Going to Get Catastrophically Worse"},"content":{"rendered":"

Nomi Prins\u00a0<\/strong>
\nRINF Alternative News<\/a><\/strong><\/p>\n

Inequality is endemic to the core structure of an America that operates more as a plutocracy than a democracy.<\/h3>\n

There\u2019s been a lot of discussion about the historically high levels of income and wealth inequality lately \u2013 mostly from people on the shorter end of that stick \u2013 with good reason: There\u2019s no end in sight.<\/p>\n

In his new book, \u201cCapital in the Twenty-First Century,\u201d economist Thomas Piketty argues that worsening inequality is inevitable in a mature capitalist system, based on his analysis of 200 years of data. But inequality isn\u2019t just an evolving condition like a crippling allergy that comes and goes, or just grows, enumerated by horrifying statistics. Nor is it just the result of a capitalist-utopian idea of free markets in which everyone gets a fair shot armed with equal information (which simply don\u2019t exist in the real world, where markets are routinely gamed by the biggest players). Inequality is endemic to the core structure of an America that operates more as a plutocracy than a democracy. It is an inherent result of the consolidation of a substantial amount of both financial power and political influence in the hands of a few families.<\/p>\n

In my upcoming\u00a0book<\/a>, \u201cAll the Presidents\u2019 Bankers,\u201d I trace the lineage of the banking and political families and their associates who have had the most combined influence on American policy. Inequality of income or wealth is a byproduct of the predisposition and genealogy of this coterie of America\u2019s power elite. True, being born into wealth means having a greater chance of accumulating more of it \u2013 but take it a step further. Expanding on the adage of \u201cit takes money to make money,\u201d we get a much better idea of why inequality is so rampant: Because aside from income and wealth issues, it takes power to keep power.<\/p>\n

By nature of the construct and self-reinforcing behavior of a small circle of American families and their enterprises \u2013 particularly over the past century since financial capitalism replaced productive capitalism as the means to expand power, wealth and influence \u2013 a comparative handful of families and their connections run Wall Street and Washington collectively. They run America as two sides of one political-financial coin, not as divided factions but as co-influencers of policy through public and private office.<\/p>\n

There have been times during the past century when the specific individuals commanding this joint effort paid credence to the public interest, or were imbued with more humility. During those times, levels of inequality happened to decrease. At other times, the power elite solely promoted private gain, as from WWI through the crash of 1929, and since the 1970s, particularly since the 2008 crisis. At those times, inequality happened to grow. This is not to imply that the moods of the elite were the sole arbiters of the direction of inequality, but that whatever the direction of these levels, general economic health is more dependent on the actions of this long-term, tightknit and concentrated few than on the ideal of a democracy. In this environment of such power inequality, economic inequality is unavoidable \u2013 and unsolvable.<\/p>\n

Today, the focus of this power structure is so skewed that any notion of \u201cpublic good\u201d is mere campaign fodder for presidents or presidential hopefuls, and nonexistent for the banking elite. That\u2019s why inequality for the rest of the population has leapt back up to 1928 levels and will continue to rise from there. That\u2019s why Jeb Bush or Hillary Clinton or both may run for president, while JPMorgan Chase, J.P. Morgan\u2019s legacy, remains the most powerful bank in the world, as it was designed to be more than a century ago.<\/p>\n

In the Economic Policy Institute\u2019s February 2014\u00a0report<\/a>\u00a0\u201cThe Increasingly Unequal States of America,\u201d authors Estelle Sommeiller and Mark Price chronicle income inequality on a state-by-state basis from 1917 to 2011. Starting in 1979 until 2011, as the average income of the bottom 99 percent of U.S. taxpayers rose by 18.9 percent, the average income of the top 1 percent rose by 10 times more, or 200.5 percent. Conversely, between 1928 and 1979, the share of income held by the top 1 percent fell in every state but one.<\/p>\n

More recently, their results show that between 2009 and 2011, not only did income inequality grow in all 50 states, but all income growth went to the top 1 percent in 26 states. New York and Connecticut led the pack in terms of income inequality by virtue of their disproportionate share of financial industry millionaires and billionaires, whose fortunes were in turn bolstered by federal and Fed policies that championed the banks that had first access to cheap money and a place to dump their toxic assets. In these states, the average income gap in 2011 had the top 1 percent making 40 times more than the bottom 99 percent. (The gap in California was 26.8 times, confirming that on average Wall Street money trumps tech and entertainment money. The smallest average gap was in Hawaii at 12.1 times.)<\/p>\n

Not only are current income inequality levels near the 1928 peak, but the systemic risk posed by this inequality is worse now. There is no counterbalance to the banking elite who possess no imbedded public spirit underlying their political influence and command more instruments of leverage capital than ever before. There\u2019s no strong labor force, no large swaths of the population demanding reform by any means necessary, no revolution. Instead, we have an overhang of debt, stagnant wages and inferior jobs, all exacerbating income inequality.<\/p>\n

Risk inequality means that those who have less to begin with have more to lose in adverse circumstances, whereas those with more have less to lose. This extra inequality dynamic is as dangerous to individuals as it is to the greater economy. It is particularly damaging in the wake of the epic Wall Street bailouts and ongoing zero-interest rate monetary policy and quantitative easing of the Federal Reserve policy, which helps the same banks whose family legacies worked with the Washington leaders who were their friends to create the Fed to back their bets and preserve their wealth a century ago.<\/p>\n

Inequality has been given nothing but pithy lip service by the political-financial elite, elected or selected, or those aspiring to more of it. Last fall, Hillary Clinton was paid $400,000 to tell two Goldman Sachs gatherings that the financial crisis was a shared responsibility, implying that Wall Street had been unfairly demonized in its wake.<\/p>\n

The Economic Policy Institute report authors conclude, \u201cIn the next decade, something must give. Either Americans must accept that the American dream of widespread mobility is dead or new policies must emerge that will restore broadly shared prosperity.\u201d But the cards have already been dealt \u2013 and the verdict is in. Not only will the American dream remain dead, but also income and wealth and risk inequality will escalate by virtue of the government-supported consolidation of banking family and firm power.<\/p>\n

\n
\n

Nomi Prins is a journalist and senior fellow at\u00a0Demos<\/a>. She is the author, most recently, of “It Takes a Pillage” and “Black Tuesday.”<\/em><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Nomi Prins\u00a0 RINF Alternative News Inequality is endemic to the core structure of an America that operates more as a plutocracy than a democracy. There\u2019s been a lot of discussion about the historically high levels of income and wealth inequality lately \u2013 mostly from people on the shorter end of that stick \u2013 with good […]<\/p>\n","protected":false},"author":1,"featured_media":109555,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[487],"tags":[],"class_list":{"0":"post-109554","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-breaking-news"},"_links":{"self":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/109554","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=109554"}],"version-history":[{"count":0,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/109554\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media\/109555"}],"wp:attachment":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=109554"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=109554"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=109554"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}