Thursday, March 31, 2011

The Gap

Image courtesy of Super Yachts, Lustre Ltd.

25% of home-owners are "under water."
As has been noted with a certain sense of alarm by those among us who believe that a rising economic tide should "lift all boats" rather than just luxury yachts, the income gap between the middle class and even "upper-" and "upper-upper-" middle class as well as lower income folks,  and the economic elite has become much greater over the last 30 years.    

Between 1980 and 2005, more than 80% of the increase in total incomes went to the top 1%.  

Eighty per-cent of the growth in incomes went to one per-cent - a fact that is in my view stunning and at least part of the reason we're in such precarious economic straits.  When wealth doesn't "trickle down," everything from our tax policies to our political discourse gets skewed by the resulting imbalance of economic power and the country suffers.  (Authentic conservatives, incidentally, should take note of this and be as alarmed as liberals or "progressives", because radical increases in economic inequality totally undermine the social cohesion, stable communities and family life, and moderation in our political system that traditionally draws folks to the  "conservative" promise - as distinct from the radicalism of free-market ideologues and right-wing extremists or self-serving agendas of the economic elite that "normal" conservatives often find themselves in bed with.)

Well, we wake up today to find that the news on economic inequality is even worse than those radically-rising income gap figures have been telling us.  Today's NYTs explains that, while the shift hasn't been as extreme over the decades as in income distribution, the base-line for wealth distribution for the "bottom" 80% of Americans is remarkably low and declining, while the top 1% are doing even better than they have been with income distribution. Here's the chart, from the New York Times'  "Economix" - (note the steady decline for the 80% "bottom"):

Sources: Sylvia A. Allegretto, Economic Policy Institute; Edward Wolff, unpublished 2010 analysis of the U.S. Federal Reserve Board, Survey of Consumer Finances and Federal Reserve Flow of Funds, prepared for the Economic Policy Institute. 

And here's the chart for income, where you can see the radical decline among every group, including those close to the top, except for that 1% upper-upper economic elite, who have been running a game on the rest of us :
What to do about this sorry state of affairs, as the country still reels from a blow dealt by the Bankster's  "Get Rich Quick!" schemes that almost brought the global economy down - hadn't taxpayers been there to prop up the top?   The "real economy" -  people who work, who provide services and make things - aren't just getting far less than the economic aristocracy. This is essentially the same elite that - almost literally - holds a gun to the heads of the rest of us in their control of the country's financial system on which every productive activity depends for credit and relatively stable markets - and even that extremely important sense of "confidence" that the center of our economic system won't simply disappear into a "black hole" as it almost did in 2008.

For starters, Representative Jan Schakowsky of Illinois, a member of the Simpson-Bowles Deficit Commission who offered her own counter-proposal to the chairs that could bring down deficits over time using principles of fairness rather than stuff like raising the retirement age, has a tax proposal that doesn't just eliminate the Bush tax cuts but increases taxes incrementally on the various ultra-rich elites - even within that top 1%, i.e. billionaires pay a higher rate than millionaires (because we need to be as fair to millionaires with "progressivity" as we are to any other taxpayer - right?)  You can check out her proposal - which is co-sponsored by Senator Sanders of Vermont - HERE

It's past time to begin to use tax fairness to temper this radical inequality in wealth and incomes, as we also find funds for important challenges such as infrastructure improvements and tackle bringing the country's fiscal mess back into balance.  Running huge deficits, even in relatively good times, that are financed by tax breaks for the ultra-rich - which has been the GOP prescription since Reagan - doesn't make any sense.  The government needs to be able to step in aggressively with needed spending during downturns and periods of extended unemployment, without deficit hysterics used as a wedge to block effective policy - such as we are currently seeing.  Tax fairness - based on increasing progressivity - is just common sense.  Let's hear more voices in DC like Representative Schakowsky and Senator Sanders!

1 comment:

  1. Actually, running deficits during good economic times is nearly criminal; that's when you save up money to take you through the bad times. I'm in Canada, and we've handled the meltdown well, and it's for two reasons: One, we never let our banks run amok, and two, we ran surpluses during the nineties boom, allowing us the flexibility to respond well to the meltdown. Thank you Paul Martin!

    I'd like to add that there hasn't been a fiscally responsible conservative government in the west for at least thirty years, with the possible exception of Margaret Thatcher. The idea that the right wing "owns" fiscal probity is a Very Big Lie.