{"id":28616,"date":"2013-02-16T15:32:07","date_gmt":"2013-02-16T14:32:07","guid":{"rendered":"http:\/\/www.commondreams.org\/view\/2013\/02\/16-7"},"modified":"2013-02-16T15:32:07","modified_gmt":"2013-02-16T14:32:07","slug":"the-great-wealth-robbery-2","status":"publish","type":"post","link":"http:\/\/rinf.com\/alt-news\/breaking-news\/the-great-wealth-robbery-2\/","title":{"rendered":"The Great Wealth Robbery"},"content":{"rendered":"
\n

\"\"Two important events took place this week. One was President Obama\u2019s call for a higher minimum wage, which got a lot of attention. The other was a new report which showed just how much of our nation\u2019s wealth continues to be hijacked by the wealthiest among us.<\/p>\n

That\u00a0didn\u2019t<\/em>\u00a0get much attention.<\/p>\n

There\u2019s a Great Robbery underway, although most of its perpetrators don\u2019t see themselves as robbers. Instead they\u2019re sustained by delusions that protect them from facing the consequences of their own actions.<\/p>\n

Heads I Win \u2026<\/strong><\/p>\n

An updated report<\/a> from economist Emmanuel Saez details the loss of income suffered by 99 percent of Americans, and the parallel gains made by the wealthiest among us. Its most startling finding may be this: The top 1 percent has captured 121 percent of the increases in income since the worst of the financial crisis, while the rest of the country has continued to fall behind.<\/p>\n

If you thought the rich recovered from the crisis just fine but everybody else got the short end of the stick, relax: You\u2019re not crazy. And since the financial crisis was\u00a0caused\u00a0<\/em>by members of the 1 percent \u2014 not all of them, of course, just the ones we spent so much to rescue \u2014 it\u2019s understandable if the injustice still rankles you.<\/p>\n

You rescued them. Now they\u2019re drinking your milkshake<\/a>.<\/p>\n

Tails You Lose<\/strong><\/p>\n

But this wealth shift is not a new phenomenon. As Saez notes in his paper, \u201cAfter decades of stability \u2026 the top decile share has increased dramatically over the last twenty-five years.\u201d In fact, the top 10 percent\u2019s share of our national income is higher than it\u2019s been since 1917<\/em> – and maybe longer. (The figures don\u2019t go back any farther than that.)<\/p>\n

Although it began during the Reagan years, to a certain extent this wealth shift has been a bipartisan phenomenon. During the Clinton boom years (more of a bubble, actually; Dean Baker<\/a> has the details) the top 1 percent saw their real income grow by 98.7 percent, while the other 99 saw a smaller increase of 20.3 percent. They lost more during the recession that followed \u2014 a little over 30 percent, as opposed to 6.5 percent for everyone else \u2014 but more than made up the difference again during the Bush years.<\/p>\n

The same thing happened during the Great Recession: The top 1 percent lost more during the initial shock, but they\u2019re rapidly making up the difference now. Government policy\u2019s been designed to help them. (Meanwhile, underwater homeowners still don\u2019t have the help they need.)<\/p>\n

The disparities are even greater when you include capital gains. (Saez uses pre-tax income for his figures. Given the generous tax breaks for capital gains and the many loopholes used by the wealthy,the after-tax differences could be even greater.) There\u2019s even economic injustice at the top. Gains for the one percent have far outstripped those of the top five and top ten percent.<\/p>\n

As the old song says: Them that has, gets.<\/p>\n

If you can remember the sixties you weren\u2019t there \u2026 or can\u2019t afford<\/em> to remember<\/strong><\/p>\n

The minimum wage has been falling since 1968. As John Schmitt notes in his paper, \u201cThe Minimum Wage Is Too Damn Low<\/a>,\u201d \u201cBy all of the most commonly used benchmarks \u2014 inflation, average wages, and productivity \u2014 the minimum wage is now far below its historical level.\u201d<\/p>\n

It\u2019s currently $7.25. What would it have been if it had been tied to a commonly-used benchmark? Schmitt ran the numbers:<\/p>\n

Consumer Price Index (CPI-I):<\/em> $10.52<\/p>\n

Current CPI methodology (CPI-U-RS):<\/em> $9.22<\/p>\n

As a percentage of average production worker\u2019s earnings:<\/em> $10.01<\/p>\n

And if it had been tied to productivity gains the minimum wage would be $21.72 today. But that cream was skimmed off at the top.<\/p>\n

Magical Thinking<\/strong><\/p>\n

There\u2019s a myth in this country that enormous wealth doesn\u2019t come from anywhere or anyone, that it\u2019s self-creating and self-sustaining, thriving on pure oxygen like an epiphyte or a garden fairy. In reality, highly concentrated wealth is caused by actions \u2014 human actions with human consequences.<\/p>\n

Saez: \u201cA number of factors may help explain this increase in inequality, not only underlying technological changes but also the retreat of institutions developed during the New Deal and World War II \u2014 such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits, and changing social norms regarding pay inequality.\u201d<\/p>\n

Wealth inequity is created whenever an employer lowers his employees\u2019 wages, replaces a full-time worker with several part-timers, busts a union, cuts corners on workplace safety, or pays a lobbyist to change the rules.<\/p>\n

It\u2019s created whenever a job is shipped overseas, and when investments are shifted from job-producing industries to the non-productive financial sector. It\u2019s\u00a0created when GE outsources its manufacturing operation and gets into the banking (read, \u201cgambling with taxpayers\u2019 money\u201d) business. Or when AIG stops insuring risk and starts betting on it.<\/p>\n

And the process isn\u2019t slowing down. In fact, it seems to be accelerating.<\/p>\n

As Saez says, \u201cWe need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional and tax reforms should be developed to counter it.\u201d<\/p>\n

Up<\/strong><\/p>\n

President Obama\u2019s proposal is modest, and there\u2019s no reason not to enact it immediately. For those who believe that businesses \u201ccan\u2019t afford\u201d to pay higher wages, some key facts:<\/p>\n

Most low-wage workers work for large corporations, not Mom-and-Pop businesses.<\/span><\/p>\n

A\u00a0Data Brief<\/a>\u00a0from the National Employment Law Project finds that 66 percent of low-wage employees work for companies with more than 100 employees. A handful of very large corporations collectively employ nearly 8 million low-wage employees.<\/p>\n

There\u2019s no evidence minimum wage increases mean fewer jobs.<\/span><\/p>\n

Opponents say a higher minimum wage means fewer jobs. But the official U.S. unemployment rate in 1968, when the real minimum wage was highest, was 3.6 percent. Today it\u2019s 7.8 percent \u2014 and the unofficial numbers are even worse.\u00a0At the state level, \u00a0the\u00a0Fiscal Policy Institute<\/a>\u00a0recently concluded that \u201cstates with minimum wages above the federal level have had faster small business and retail job growth.\u201d<\/p>\n

Ninety-two percent of the 50 largest low\u00e2\u20ac\u0090wage employers in the country were profitable last year.<\/span><\/p>\n

As the NELP notes, big corporations more than recovered from the recession: 75 percent are collecting more revenue, 63 percent are earning higher profits, and 73 percent have higher cash holdings than they did before the crisis.<\/p>\n

Bringing It All Back Home<\/strong><\/p>\n

The real \u201cjob creators\u201d aren\u2019t the ultra-wealthy. If they could create jobs with all their added wealth, they would have done it already. The real job creators are working people with jobs.<\/em><\/p>\n

They don\u2019t invest their money in hedge funds or stash it in offshore accounts. They\u00a0spend<\/em>\u00a0it: on food, transportation, their kids\u2019 education, maybe a night at the movies \u2026 And then other people get jobs making those things possible.<\/p>\n

We have a working model to follow: The USA in the 35 years after World War II. As Paul Krugman says, \u201cTo the extent that people say the economics is confusing or uncertain, that\u2019s overwhelmingly because people want it to be.\u201d We know how to do this.<\/p>\n

Raising the minimum wage is a start. A\u00a0maximum\u00a0<\/em>wage would help, too, by reducing CEOs\u2019 incentives to emphasize quarterly gains over long-term growth and leaving more to be shared with employees.<\/p>\n

We also need a national strategy for regaining the more reasonable distribution of income this country had in the 1950s. We need to ensure that the door of opportunity, which is closing every day for millions of young people, is opened again. And we need to ask the wealthiest to really pay their fair share \u2014 at something closer to the top tax rates of the 1950\u2019s or 1960\u2019s. (Elvis Presley\u2019s manager \u201cColonel\u201d Tom Parker once said \u201cI consider it my patriotic duty to keep Elvis in the ninety percent tax bracket.\u201d)<\/p>\n

Most of all, we need to educate those around us so they understand what\u2019s happening. That includes the well-intentioned well-to-do, who might do more to end the problem if they knew it existed. \u00a0After all, you can\u2019t stop a robbery until you know it\u2019s happening.<\/p>\n

\u00a9 2013 Campaign for America’s Future<\/p>\n

\n
\"Richard<\/a><\/div>\n
\n

Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant, and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance, and information technology. Richard has consulting experience in the US and over 20 countries.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

\n

\"\"Two important events took place this week. One was President Obama’s call for a higher minimum wage, which got a lot of attention. The other was a new report which showed just how much of our nation’s wealth continues to be hijacked by the wealthiest among us.<\/p>\n

That didn’t<\/em> get much attention.<\/p>\n

There’s a Great Robbery underway, although most of its perpetrators don’t see themselves as robbers. Instead they’re sustained by delusions that protect them from facing the consequences of their own actions.<\/p>\n

Heads I Win …<\/strong><\/p>\n

An updated report<\/a> from economist Emmanuel Saez details the loss of income suffered by 99 percent of Americans, and the parallel gains made by the wealthiest among us. Its most startling finding may be this: The top 1 percent has captured 121 percent of the increases in income since the worst of the financial crisis, while the rest of the country has continued to fall behind.<\/p>\n

If you thought the rich recovered from the crisis just fine but everybody else got the short end of the stick, relax: You’re not crazy. And since the financial crisis was caused <\/em>by members of the 1 percent – not all of them, of course, just the ones we spent so much to rescue – it’s understandable if the injustice still rankles you.<\/p>\n

You rescued them. Now they’re drinking your milkshake<\/a>.<\/p>\n

Tails You Lose<\/strong><\/p>\n

But this wealth shift is not a new phenomenon. As Saez notes in his paper, “After decades of stability … the top decile share has increased dramatically over the last twenty-five years.” In fact, the top 10 percent’s share of our national income is higher than it’s been since 1917<\/em> – and maybe longer. (The figures don’t go back any farther than that.)<\/p>\n

Although it began during the Reagan years, to a certain extent this wealth shift has been a bipartisan phenomenon. During the Clinton boom years (more of a bubble, actually; Dean Baker<\/a> has the details) the top 1 percent saw their real income grow by 98.7 percent, while the other 99 saw a smaller increase of 20.3 percent. They lost more during the recession that followed – a little over 30 percent, as opposed to 6.5 percent for everyone else – but more than made up the difference again during the Bush years.<\/p>\n

The same thing happened during the Great Recession: The top 1 percent lost more during the initial shock, but they’re rapidly making up the difference now. Government policy’s been designed to help them. (Meanwhile, underwater homeowners still don’t have the help they need.)<\/p>\n

The disparities are even greater when you include capital gains. (Saez uses pre-tax income for his figures. Given the generous tax breaks for capital gains and the many loopholes used by the wealthy,the after-tax differences could be even greater.) There’s even economic injustice at the top. Gains for the one percent have far outstripped those of the top five and top ten percent.<\/p>\n

As the old song says: Them that has, gets.<\/p>\n

If you can remember the sixties you weren’t there … or can’t afford<\/em> to remember<\/strong><\/p>\n

The minimum wage has been falling since 1968. As John Schmitt notes in his paper, “The Minimum Wage Is Too Damn Low<\/a>,” “By all of the most commonly used benchmarks – inflation, average wages, and productivity – the minimum wage is now far below its historical level.”<\/p>\n

It’s currently $7.25. What would it have been if it had been tied to a commonly-used benchmark? Schmitt ran the numbers:<\/p>\n

Consumer Price Index (CPI-I):<\/em> $10.52<\/p>\n

Current CPI methodology (CPI-U-RS):<\/em> $9.22<\/p>\n

As a percentage of average production worker’s earnings:<\/em> $10.01<\/p>\n

And if it had been tied to productivity gains the minimum wage would be $21.72 today. But that cream was skimmed off at the top.<\/p>\n

Magical Thinking<\/strong><\/p>\n

There’s a myth in this country that enormous wealth doesn’t come from anywhere or anyone, that it’s self-creating and self-sustaining, thriving on pure oxygen like an epiphyte or a garden fairy. In reality, highly concentrated wealth is caused by actions – human actions with human consequences.<\/p>\n

Saez: “A number of factors may help explain this increase in inequality, not only underlying technological changes but also the retreat of institutions developed during the New Deal and World War II – such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits, and changing social norms regarding pay inequality.”<\/p>\n

Wealth inequity is created whenever an employer lowers his employees’ wages, replaces a full-time worker with several part-timers, busts a union, cuts corners on workplace safety, or pays a lobbyist to change the rules.<\/p>\n

It’s created whenever a job is shipped overseas, and when investments are shifted from job-producing industries to the non-productive financial sector. It’s created when GE outsources its manufacturing operation and gets into the banking (read, “gambling with taxpayers’ money”) business. Or when AIG stops insuring risk and starts betting on it.<\/p>\n

And the process isn’t slowing down. In fact, it seems to be accelerating.<\/p>\n

As Saez says, “We need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional and tax reforms should be developed to counter it.”<\/p>\n

Up<\/strong><\/p>\n

President Obama’s proposal is modest, and there’s no reason not to enact it immediately. For those who believe that businesses “can’t afford” to pay higher wages, some key facts:<\/p>\n

Most low-wage workers work for large corporations, not Mom-and-Pop businesses.<\/span><\/p>\n

A Data Brief<\/a> from the National Employment Law Project finds that 66 percent of low-wage employees work for companies with more than 100 employees. A handful of very large corporations collectively employ nearly 8 million low-wage employees.<\/p>\n

There’s no evidence minimum wage increases mean fewer jobs.<\/span><\/p>\n

Opponents say a higher minimum wage means fewer jobs. But the official U.S. unemployment rate in 1968, when the real minimum wage was highest, was 3.6 percent. Today it’s 7.8 percent – and the unofficial numbers are even worse. At the state level,  the Fiscal Policy Institute<\/a> recently concluded that “states with minimum wages above the federal level have had faster small business and retail job growth.”<\/p>\n

Ninety-two percent of the 50 largest low‐wage employers in the country were profitable last year.<\/span><\/p>\n

As the NELP notes, big corporations more than recovered from the recession: 75 percent are collecting more revenue, 63 percent are earning higher profits, and 73 percent have higher cash holdings than they did before the crisis.<\/p>\n

Bringing It All Back Home<\/strong><\/p>\n

The real “job creators” aren’t the ultra-wealthy. If they could create jobs with all their added wealth, they would have done it already. The real job creators are working people with jobs.<\/em><\/p>\n

They don’t invest their money in hedge funds or stash it in offshore accounts. They spend<\/em> it: on food, transportation, their kids’ education, maybe a night at the movies … And then other people get jobs making those things possible.<\/p>\n

We have a working model to follow: The USA in the 35 years after World War II. As Paul Krugman says, “To the extent that people say the economics is confusing or uncertain, that’s overwhelmingly because people want it to be.” We know how to do this.<\/p>\n

Raising the minimum wage is a start. A maximum <\/em>wage would help, too, by reducing CEOs’ incentives to emphasize quarterly gains over long-term growth and leaving more to be shared with employees.<\/p>\n

We also need a national strategy for regaining the more reasonable distribution of income this country had in the 1950s. We need to ensure that the door of opportunity, which is closing every day for millions of young people, is opened again. And we need to ask the wealthiest to really pay their fair share – at something closer to the top tax rates of the 1950’s or 1960’s. (Elvis Presley’s manager “Colonel” Tom Parker once said “I consider it my patriotic duty to keep Elvis in the ninety percent tax bracket.”)<\/p>\n

Most of all, we need to educate those around us so they understand what’s happening. That includes the well-intentioned well-to-do, who might do more to end the problem if they knew it existed.  After all, you can’t stop a robbery until you know it’s happening.<\/p>\n

© 2013 Campaign for America’s Future<\/p>\n

\n
\"Richard<\/a><\/div>\n
\n

Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant, and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance, and information technology. Richard has consulting experience in the US and over 20 countries.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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