CEO Pay Soars, Workers Toil in Capitalism’s New Gilded Age

by Jon Queally, Common Dreams, April 16, 2014

Ratio of CEO-to-worker pay is ‘unconscionable,’ says AFl-CIO as prominent economist argues this level of inequality proves current capitalist system ‘cannot work’

Here’s the first number to know: 331.

That, according to a new report, is the number of times more the average CEO in the United States made in 2013 compared to the average worker.

Here’s the second number: 774.

That’s the number of times more those same CEOs—some of the wealthiest individuals on the planet—made compared to the nation’s minimum wage workers.

“I have proved that under the present circumstances capitalism simply cannot work.” —Thomas Piketty

These two numbers are central to the AFL-CIO’s latest ‘Executive Paywatch’ report, released Wednesday, which shows the astronomical disparity between the annual pay of the nation’s top executives—which continue to rise year after year—and the stagnant wages that middle class and the working poor continue to suffer.

On average, according to the report, U.S. CEOs earned $11.7 million in 2013 while the U.S. worker earned $35,293. That means CEOs were paid 331 times that of the average worker.

“Many of the CEOs highlighted in PayWatch head companies, like Walmart, that are notorious for paying low wages,” said the AFL-CIO in a statement. “In 2013, CEOs made 774 times more than those who work for minimum wage. And while many of these companies argue that they can’t afford to raise wages, the nation’s largest companies are earning higher profits per employee than they did five years ago. In 2013, the S&P 500 Index companies earned $41,249 in profits per employee, a 38% increase.”

The AFL-CIO says its findings are contained in a “comprehensive searchable online database” which allows visitors the unique ability to compare their own pay to the excessive pay of executives at the nation’s top companies.

As Dave Johnson, a fellow at the left-leaning Campaign for America’s Future, points out, the study shows that as workers continue to scrape by in an economy that has left them out of the so-called recovery, “CEO pay just keeps climbing and climbing and climbing (and climbing and climbing and climbing and climbing and climbing and climbing).” It is this very real and growing inequality, says Johnson, which is “destabilizing” the entire U.S. economy.

The PayWatch report, which uses data from 2013, highlights five companies—Walmart, Kellogg’s, Reynolds, Darden Restaurants and T-Mobile— all of which which continue to reap huge profits and pay enormous executive salaries while exploiting a low-wage labor force.

“America’s CEOs—as exemplified by the individuals of these companies—are cannibalizing their own consumer base. It’s wrong. It’s unfair, and it’s bad economics.” —Richard Trumka, AFL-CIO president

“These companies are run by short-sighted business leaders, because people who earn minimum wage, for instance, can’t afford cell phones from T-Mobile or dinner at Red Lobster or the Olive Garden, both of which are owned by Darden Restaurants,” said AFL-CIO President Richard Trumka. “America’s CEOs—as exemplified by the individuals of these companies—are cannibalizing their own consumer base. It’s wrong. It’s unfair, and it’s bad economics.”

Analyst Jim Lobe, responded to the report by noting the growing national conversation over inequality that soared into popular consciousness during the short-lived rise of the Occupy movement in 2011, but has been increasingly buttressed by numerous studies by academics, economic think tanks, and both labor and social justice groups.

Lobe notes the recent publication of an English edition the “epic” book ‘Capital in the Twenty-First Century’ by French economist Thomas Piketty, “that compares today’s levels of inequality to those of the Gilded Age of the late 19th century.”

Piketty’s book, says Lobe, “is gaining favorable reviews in virtually every mainstream publication” as it highlights the intrinsic perils of capitalism with a focus on the inevitable rise of income and wealth inequality.

In an interview last week, Piketty himself summarized the basic tenet of his book by saying, “I have proved that under the present circumstances capitalism simply cannot work.”

Placing both the AFL-CIO findings and Piketty’s argument in context, Lobe continues:

Piketty, whose work is based on data from dozens of Western countries dating back two centuries and argues that radical redistribution measures, including a “global tax on capital,” are needed to reverse current trends toward greater inequality, is speaking to standing-room-only audiences in think tanks here this week.

In addition, the Supreme Court’s ruling earlier this month lifting the aggregate limits that wealthy individuals can contribute to political campaigns and parties has added to fears that, in the words of a number of civic organisations, the U.S. political system is moving increasingly towards a “plutocracy”.

Of all Western countries, income inequality is greatest in the United States, according to a variety of measures. In his book, Pikkety shows that inequality of both wealth and income in the U.S. exceeds that of Europe in 1900.

The 331:1 ratio between the income of the 350 corporate CEOs in the Pay Watch survey and average workers is generally consistent with the pay gap that has prevailed over the past decade.

As the AFL-CIO argues in their report:

America is supposed to be the land of opportunity, a country where hard work and playing by the rules would provide working families a middle-class standard of living. But in recent decades, corporate CEOs have been taking a greater share of the economic pie while wages have stagnated and unemployment remains high.

High-paid CEOs of low-wage employers are fueling this growing economic inequality. In 2013, CEOs of the Standard & Poor’s (S&P) 500 Index companies received, on average, $11.7 million in total compensation, according to the AFL-CIO’s analysis of available data from 350 companies.

Today’s ratio of CEO-to-worker pay is simply unconscionable.

_______________________________

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Article printed from www.CommonDreams.org

Source URL: http://www.commondreams.org/headline/2014/04/16-0

The Time for Wealth Redistribution Is Now

Robert Reich’s Blog / By Robert Reich, posted on Alternet,org,  December 6, 2013  |

The President’s speech yesterday on inequality avoided the “R” word. No politician wants to mention “redistribution” because it conjures up images of worthy “makers” forced to hand over hard-earned income to undeserving “takers.”

But as low-wage work proliferates in America, so-called takers are working as hard if not harder than anyone else, and often at more than one job.

Yet they’re still not making it because the twin forces of globalization and technological change have reduced their bargaining power and undermined their economic standing—while bestowing ever greater benefits on a comparative few with the right education and connections (and whose parents are often best able to secure these advantages for them).

Better education and training for those on the losing end is critically important, as will several of the other proposals the President listed. But they will only go so far.

The number of losers is growing so quickly, and so much of the economies’ winnings are going to a small group at the top—since the recovery began, 95 percent of the gains have gone to the richest 1 percent [2]—that some direct redistribution of the gains is necessary.

Without some redistribution, the losers are likely to react in ways that could hurt the economy. They’ll demand protection from global markets they believe are taking away good jobs, and even from certain technological advances that threaten to displace them (rather than smash the machines, as did England’s 19th-century Luddites, they’ll seek regulations that preserve the old jobs).

Without some redistribution, our ever-increasing number of low-wage workers won’t have enough money to keep the economy going. (This is one reason why the current recovery has been so anemic.)

And without some redistribution, America’s growing army of low-wage workers may fall prey to demagogues on the right or left who offer convenient scapegoats for their frustrations.

One way we already redistribute is through the Earned Income Tax Credit [3], a wage subsidy for the working poor, which, at about $60 billion a year, is the nation’s largest anti-poverty program. It’s like a reverse income tax—larger at the bottom of the wage scale (now around $3,000 for incomes around $20,000) and gradually tapering off as incomes rise (vanishing at around $35,000).

The EITC subsidy should be enlarged and extended further up the wage scale before tapering off.

How to pay for this? By cutting subsidies and special tax breaks for the oil and gas industries, big agribusiness, military contractors, hedge-fund and private-equity partners, and Wall Street banks. And by capping individual tax deductions (deductions are the economic equivalent of government subsidies) for gold-plated health care plans, lavish business junkets and interest on giant mortgages.

In other words, we can finance much of this redistribution to the working poor by ending unnecessary redistributions to the wealthy.

See more stories tagged with:

redistribution [4],

economy [5],

poverty [6],

low-wage workers [7],

Earned Income Tax Credit [8]


Source URL: http://www.alternet.org/economy/time-wealth-redistribution-now

Links:
[1] http://www.alternet.org/authors/robert-reich-0
[2] http://economix.blogs.nytimes.com/2013/09/10/the-rich-get-richer-through-the-recovery/
[3] http://economix.blogs.nytimes.com/2012/02/13/expanding-a-safety-net-program/
[4] http://www.alternet.org/tags/redistribution-0
[5] http://www.alternet.org/tags/economy-0
[6] http://www.alternet.org/tags/poverty-0
[7] http://www.alternet.org/tags/low-wage-workers
[8] http://www.alternet.org/tags/earned-income-tax-credit
[9] http://www.alternet.org/%2Bnew_src%2B

 

Look at the Stats — America Resembles a Broken Banana Republic

 by CJ Werleman, AlterNet, December 9, 2013

Last week, President Obama gave one of the most important speeches of his presidency when he spoke about the rapidly growing deficit of opportunity in this country. It was the president’s most focused and deliberate address on income inequality to date, but for many it wasn’t nearly alarmist enough, for it didn’t recognize how far this nation has fallen. It’s time we call it what it is: we’ve become a third-world nation.

America has become a RINO: rich in name only. By every measure, we look like a broken banana republic. Not a single U.S. city is included in the world’s top 10 most livable cities. Only one U.S. airport makes the list of the top 100 in the world. Our roads, schools and bridges are falling apart, and our trains—none of them high-speed—are running off their tracks. Our high school students are rated 30th in math, and some 30 countries have longer life expectancy and lower rates of infant mortality. The only things America is number one in these days are the number of incarcerated citizens per capita and adult onset diabetes.

Three decades of trickledown economics; the monopolization, privatization and deregulation of industry; and the destruction of labor protection has resulted in 50 million Americans living in abject poverty, while 400 individuals own more than one-half of the nation’s wealth. As the four Walmart heirs enjoy a higher net worth than the bottom 40 percent, our nation’s sense of food insecurity is more on par with developing countries like Indonesia and Tanzania than with OECD nations like Australia and Canada. In fact, the percentage of Americans who say they could not afford the food needed to feed their families at some point in the last year is three times that of Germany, more than twice than Italy and Canada.

The destruction of labor has been so comprehensive that first-world nations now offshore their jobs to the U.S. In other words, we’ve become the new India. Foreign companies now see us as the world’s cheap labor force, and we have the non-unionized South to thank for that. Chuck Thompson, author of Better off Without Em, writes, “Like Mexico, the South has spent the past four decades systematically siphoning auto jobs from Michigan and the Midwest by keeping worker’s salaries low and inhibiting their right to organize by rendering their unions toothless.” Average wages for autoworkers in the South are up to 30 percent lower than in Michigan.

In Sweden, the minimum wage is $19 per hour and workers enjoy a minimum of five weeks paid vacation every year. In the U.S. the minimum wage is a tick above $7 per hour and workers can expect no more than 12 days of annual vacation. So guess what? IKEA has set up a factory in Virginia. Volkswagen has set up in Tennessee, and the likes of Hyundai, KIA, BMW, Honda, and Toyota have all set up in the South to take advantage of the world’s latest cheap labor source. Moreover, the profits of these foreign companies goes toward stimulating their economies instead of ours.

So, it’s amusing when Republicans blame Detroit’s bankruptcy on liberal policies because nothing could be further from the truth. Detroit is bankrupt thanks to the Republican business model that has turned the entire South into a third-world banana republic. A business model that the rest of the country is forced to compete with i.e. lower wages, low corporate tax rates, low property taxes, and low environmental and labor protection, which results in a migration of industry and jobs from the northern states, which means a shrinking of the tax revenue base in cities like Detroit. Since 2000, the population of Detroit has fallen 20% and property tax revenue has plummeted 26%. Take this as an illustration of how we are in a never-ending death spiral race to the bottom.

Obama’s speech clearly depicted an America losing touch with its ideals. Not only is the middle-class fast becoming the working poor, but upward mobility is becoming almost impossible to attain. At a time when America should be investing in its own future, it is dealing with a sequestration that was never meant to have happened. It happened because the GOP congress would rather destroy the economy than see a black president succeed. Also, raising revenues runs against the GOP’s fundamental pro-corporate strategy of “starving the beast” i.e. starving the federal government of the revenues it needs so it can use deficits as an excuse to cut programs like Social Security and Medicare and replace them with for-profit alternatives.

Mattea Kramer and Jo Comerford of the National Priorities Project [3] write:

“Robust public investment had been a key to US prosperity in the previous century. It was then considered a basic part of the social contract as well as of Economics 101. As just about everyone knew in those days, citizens paid taxes to fund worthy initiatives that the private sector wouldn’t adequately or efficiently supply. Roadways and scientific research were examples. In the post–World War II years, the country invested great sums of money in its interstate highways and what were widely considered the best education systems in the world, while research in well-funded government labs led to inventions like the Internet. The resulting world-class infrastructure, educated workforce, and technological revolution fed a robust private sector.”

America is in urgent need of significant investment. We need to, as Obama said, “not be stuck in a stale debate from two years ago or three years ago. A relentlessly growing deficit of opportunity is a bigger threat to our future than our rapidly shrinking fiscal deficit.”

That’s one part of the solution. The other part is a rejection of the Republican Party business model. A higher minimum wage; higher taxes on corporations and the rich; and a greater percentage of the labor force protected by collective bargaining will help restore the America whose middle-class was once the envy of the world, and whose people were among the happiest and healthiest on the planet.

See more stories tagged with:

wealth [4]


Source URL: http://www.alternet.org/economy/america-rich-name-only-look-stats-we-resemble-broken-banana-state

Links:
[1] http://alternet.org
[2] http://www.alternet.org/authors/cj-werleman
[3] http://nationalpriorities.org/
[4] http://www.alternet.org/tags/wealth
[5] http://www.alternet.org/%2Bnew_src%2B

 

Are We Being Ruled by Self-Centered Jerks? What New Studies Reveals About the Ultra Wealthy

By Joshua HollandBillMoyers.com, posted on Alternet.org, August 29, 2013

Two studies released last week confirmed what most of us already knew: the ultra-wealthy tend to be narcissistic and have a greater sense of entitlement than the rest of us, and Congress only pays attention to their interests. Both studies are consistent with earlier research….“higher social class is associated with increased entitlement and narcissism”… “upper-class individuals behave more unethically than lower-class individuals.” This included being more likely to “display unethical decision-making,” steal, lie during a negotiation and cheat in order to win a contest… upper-class individuals also “showed reduced sensitivity to others’ suffering” as compared with working- and middle-class people. Lower-class individuals are more likely to spend time taking care of others, and they are more embedded in social networks that depend on mutual aid. By contrast, upper-class individuals prioritize independence from others: They are less motivated than lower-class individuals to build social relationships and instead seek to differentiate themselves from others…U.S. senators respond almost exclusively to the interests of their wealthiest constituents …From 2007 through 2010, U.S. senators were somewhat responsive to the interests of the middle class, but hadn’t been for the first 6 years Hayes studied. The views of the poor didn’t factor into legislators’ voting tendencies at all...Democrats were not any more responsive to the poor than Republicans.” …analysis “suggests oligarchic tendencies in the American system, a finding echoed in other research.”…this kind of political inequality is a product of widening economic disparities. “It’s a general pattern throughout history…When economic inequality increases, the people who have become economically more powerful will often attempt to use that power in order to gain even more political power. And once they are able to monopolize political power, they will start using that for changing the rules in their favor. And that sort of political inequality is the real danger that’s facing the United States.”

Full text

Two studies released last week confirmed what most of us already knew: the ultra-wealthy tend to be narcissistic and have a greater sense of entitlement than the rest of us, and Congress only pays attention to their interests. Both studies are consistent with earlier research.

In the first study [3], published in the current Personality and Social Psychology Bulletin, Paul Piff of UC Berkeley conducted five experiments which demonstrated that “higher social class is associated with increased entitlement and narcissism.” Given the opportunity, Piff also found that they were more likely to check themselves out in a mirror than were those of lesser means.

Piff looked at how participants scored on a standard scale of “psychological entitlement,” and found that those of a high social class — based on income levels, education and occupational prestige — were more likely to say “I honestly feel I’m just more deserving than others,” while people further down the social ladder were likelier to respond, “I do not necessarily deserve special treatment.”

In an earlier study [4], published last year in the Proceedings of the National Academy of Sciences, Piff and four researchers from the University of Toronto conducted a series of experiments which found that “upper-class individuals behave more unethically than lower-class individuals.” This included being more likely to “display unethical decision-making,” steal, lie during a negotiation and cheat in order to win a contest.

In one telling experiment, the researchers observed a busy intersection, and found that drivers of luxury cars were more likely to cut off other drivers and less likely to stop for pedestrians crossing the street than those behind the wheels of more modest vehicles. “In our crosswalk study, none of the cars in the beater-car category drove through the crosswalk,” Piff told The New York Times [5]. “But you see this huge boost in a driver’s likelihood to commit infractions in more expensive cars.” He added: “BMW drivers are the worst.”

Summing up previous research on the topic, Piff notes that upper-class individuals also “showed reduced sensitivity to others’ suffering” as compared with working- and middle-class people.

Lower-class individuals are more likely to spend time taking care of others, and they are more embedded in social networks that depend on mutual aid. By contrast, upper-class individuals prioritize independence from others: They are less motivated than lower-class individuals to build social relationships and instead seek to differentiate themselves from others.

These findings may appear to represent a bit of psychological trivia, but a study [6] to be published in Political Science Quarterly by Thomas Hayes, a scholar at Trinity University, finds that U.S. senators respond almost exclusively to the interests of their wealthiest constituents – those more likely to be unethical and less sensitive to the suffering of others, according to Piff.

Hayes took data from the Annenberg Election Survey — a massive database of public opinion representing the views of 90,000 voters — and compared them with their senators’ voting records from 2001 through 2010. From 2007 through 2010, U.S. senators were somewhat responsive to the interests of the middle class, but hadn’t been for the first 6 years Hayes studied. The views of the poor didn’t factor into legislators’ voting tendencies at all.

As Eric Dolan noted for The Raw Story [7], “The neglect of lower income groups was a bipartisan affair. Democrats were not any more responsive to the poor than Republicans.” Hayes wrote that his analysis “suggests oligarchic tendencies in the American system, a finding echoed in other research.”

Hayes’ study is consistent with earlier research, including Princeton University scholar Larry Bartels’ 2005 study [8] of “Economic Inequality and Political Representation.”

There are a few of ways of looking at these findings. They could be the result of genuinely held ideological beliefs which happen to justify inequality and privilege.

According to OpenSecrets [9], the average net worth of senators in 2011 was $11.9 million, so it could be a matter of legislators advancing their own interests and those of the people with whom they socialize and associate.

But MIT economist Daron Acemoglu, who co-authored Why Nations Fail [10] with Harvard’s James Robinson, says that this kind of political inequality is a product of widening economic disparities. “It’s a general pattern throughout history,” he told Think Progress [11]. “When economic inequality increases, the people who have become economically more powerful will often attempt to use that power in order to gain even more political power. And once they are able to monopolize political power, they will start using that for changing the rules in their favor. And that sort of political inequality is the real danger that’s facing the United States.”

http://www.alternet.org/economy/are-we-being-ruled-self-centered-jerks-what-new-studies-reveals-about-ultra-wealthy

Links:

Poll Conducted for Aspen Ideas Festival Shows ‘American Dream’ Unreachable for Most Americans 2006

US Newswire | July 6, 2006

Excerpt

…a new survey conducted by Dr. Douglas E. Schoen finds that a majority of Americans say they are not living the American Dream…Some of the key findings of the survey are as follows:– While 81 percent agree that America is the land of opportunity, the idea is not something that is being realized, it is simply an abstract concept. — Today, 61 percent of Americans say they are not living the American Dream.

Full text

Aspen, Colo., Jul 6, 2006 (U.S. Newswire via COMTEX) — With Americans having just celebrated their nation’s independence, a new survey conducted by Dr. Douglas E. Schoen finds that a majority of Americans say they are not living the American Dream. Dr. Schoen’s findings were presented at the Aspen Ideas Festival, a weeklong exploration of ideas across an array of timely topics that is being co-presented by the Aspen Institute and The Atlantic magazine.

Some of the key findings of the survey are as follows:

– While 81 percent agree that America is the land of opportunity, the idea is not something that is being realized, it is simply an abstract concept.

– Today, 61 percent of Americans say they are not living the …

http://business.highbeam.com/1208/article-1G1-147885220/poll-conducted-aspen-ideas-festival-shows-american

How American Society Unravelled After Greedy Elites Robbed the Country Blind

By George Packer, The Guardian, June 20, 2013  – posted on Alternet.org

In or around 1978, America’s character changed…Americans were no less greedy, ignorant, selfish and violent then than they are today, and no more generous, fair-minded and idealistic. But the institutions of American democracy, stronger than the excesses of individuals, were usually able to contain and channel them to more useful ends. Human nature does not change, but social structures can, and they did… In Washington, corporations organised themselves into a powerful lobby that spent millions of dollars to defeat the kind of labour and consumer bills they had once accepted as part of the social contract. Newt Gingrich came to Congress as a conservative Republican with the singular ambition to tear it down and build his own and his party’s power on the rubble…The large currents of the past generation – deindustrialisation, the flattening of average wages, the financialisation of the economy, income inequality, the growth of information technology, the flood of money into Washington, the rise of the political right – all had their origins in the late 70s….A fuller explanation of the Unwinding takes into account… the way they were exploited by US elites – the leaders of the institutions that have fallen into disrepair…there was nothing historically determined about the poisonous atmosphere and demonising language that Gingrich and other conservative ideologues spread through US politics…..American elites took the vast transformation of the economy as a signal to rewrite the rules that used to govern their behaviour: a senator only resorting to the filibuster on rare occasions; a CEO limiting his salary to only 40 times what his average employees made instead of 800 times; a giant corporation paying its share of taxes instead of inventing creative ways to pay next to zero [17]. There will always be isolated lawbreakers in high places; what destroys morale below is the systematic corner-cutting, the rule-bending, the self-dealing…It is no wonder that more and more Americans believe the game is rigged. It is no wonder that they buy houses they cannot afford and then walk away from the mortgage when they can no longer pay. Once the social contract is shredded, once the deal is off, only suckers still play by the rules.

Full text

In or around 1978, America’s character changed. For almost half a century, the United States [3] had been a relatively egalitarian, secure, middle-class democracy, with structures in place that supported the aspirations of ordinary people. You might call it the period of theRoosevelt [4] Republic. Wars, strikes, racial tensions and youth rebellion all roiled national life, but a basic deal among Americans still held, in belief if not always in fact: work hard, follow the rules, educate your children, and you will be rewarded, not just with a decent life and the prospect of a better one for your kids, but with recognition from society, a place at the table.

This unwritten contract came with a series of riders and clauses that left large numbers of Americans – black people and other minorities, women, gay people – out, or only halfway in. But the country had the tools to correct its own flaws, and it used them: healthy democratic institutions such as Congress, courts, churches, schools, news organisations, business-labour partnerships. The civil rights movement of the 1960s was a nonviolent mass uprising led by black southerners, but it drew essential support from all of these institutions, which recognised the moral and legal justice of its claims, or, at the very least, the need for social peace. The Roosevelt Republic had plenty of injustice, but it also had the power of self-correction.

Americans were no less greedy, ignorant, selfish and violent then than they are today, and no more generous, fair-minded and idealistic. But the institutions of American democracy, stronger than the excesses of individuals, were usually able to contain and channel them to more useful ends. Human nature does not change, but social structures can, and they did.

At the time, the late 1970s felt like shapeless, dreary, forgettable years. Jimmy Carter was in the White House [5], preaching austerity and public-spiritedness, and hardly anyone was listening. The hideous term “stagflation”, which combined the normally opposed economic phenomena of stagnation and inflation, perfectly captured the doldrums of that moment. It is only with the hindsight of a full generation that we can see how many things were beginning to shift across the American landscape, sending the country spinning into a new era.

In Youngstown, Ohio [6], the steel mills that had been the city’s foundation for a century closed, one after another, with breathtaking speed, taking 50,000 jobs from a small industrial river valley, leaving nothing to replace them. In Cupertino, California, the Apple Computer Company released the first popular personal computer, the Apple II [7]. Across California, voters passed Proposition 13 [8], launching a tax revolt that began the erosion of public funding for what had been the country’s best school system. In Washington, corporations organised themselves into a powerful lobby that spent millions of dollars to defeat the kind of labour and consumer bills they had once accepted as part of the social contractNewt Gingrich [9] came to Congress as a conservative Republican with the singular ambition to tear it down and build his own and his party’s power on the rubble. On Wall Street, Salomon Brothers pioneered a new financial product called mortgage-backed securities [10], and then became the first investment bank to go public.

The large currents of the past generation – deindustrialisation, the flattening of average wages, the financialisation of the economy, income inequality, the growth of information technology, the flood of money into Washington, the rise of the political right – all had their origins in the late 70s. The US became more entrepreneurial and less bureaucratic, more individualistic and less communitarian, more free and less equal, more tolerant and less fair. Banking and technology, concentrated on the coasts, turned into engines of wealth, replacing the world of stuff with the world of bits, but without creating broad prosperity, while the heartland hollowed out. The institutions that had been the foundation of middle-class democracy, from public schools and secure jobs to flourishing newspapers and functioning legislatures, were set on the course of a long decline. It as a period that I call the Unwinding.

In one view, the Unwinding is just a return to the normal state of American life. By this deterministic analysis, the US has always been a wide-open, free-wheeling country, with a high tolerance for big winners and big losers as the price of equal opportunity in a dynamic society. If the US brand of capitalism has rougher edges than that of other democracies, it is worth the trade-off for growth and mobility. There is nothing unusual about the six surviving heirs to the Walmart fortunepossessing between them the same wealth as the bottom 42% of Americans [11] – that’s the country’s default setting. Mark Zuckerberg and Bill Gates are the reincarnation of Henry Ford and Andrew Carnegie,Steven Cohen [12] is another JP Morgan, Jay-Z is Jay Gatsby.

The rules and regulations of the Roosevelt Republic were aberrations brought on by accidents of history – depression, world war, the cold war – that induced Americans to surrender a degree of freedom in exchange for security. There would have been no Glass-Steagall Act [13], separating commercial from investment banking, without the bank failures of 1933; no great middle-class boom if the US economy [14] had not been the only one left standing after the second world war; no bargain between business, labour and government without a shared sense of national interest in the face of foreign enemies; no social solidarity without the door to immigrants remaining closed through the middle of the century.

Once American pre-eminence was challenged by international competitors, and the economy hit rough seas in the 70s, and the sense of existential threat from abroad subsided, the deal was off. Globalisation [15], technology and immigration hurried the Unwinding along, as inexorable as winds and tides. It is sentimental at best, if not ahistorical, to imagine that the social contract could ever have survived – like wanting to hang on to a world of nuclear families and manual typewriters.

This deterministic view is undeniable but incomplete. What it leaves out of the picture is human choice. A fuller explanation of the Unwinding takes into account these large historical influences, but also the way they were exploited by US elites – the leaders of the institutions that have fallen into disrepair. America’s postwar responsibilities demanded co-operation between the two parties in Congress, and when the cold war waned, the co-operation was bound to diminish with it. But there was nothing historically determined about the poisonous atmosphere and demonising language that Gingrich and other conservative ideologues spread through US politics. These tactics served their narrow, short-term interests, and when the Gingrich revolution brought Republicans to power in Congress, the tactics were affirmed. Gingrich is now a has-been, but Washington today is as much his city as anyone’s.

It was impossible for Youngstown’s steel companies to withstand global competition and local disinvestment, but there was nothing inevitable about the aftermath – an unmanaged free-for-all in which unemployed workers were left to fend for themselves, while corporate raiders bought the idle hulks of the mills with debt in the form of junk bonds and stripped out the remaining value. It may have been inevitable that the constraints imposed on US banks by the Glass-Steagall Act of 1933 would start to slip off in the era of global finance. But it was a political choice on the part of Congress and President Bill Clinton to deregulate Wall Street so thoroughly that nothing stood between the big banks and the destruction of the economy [16].

Much has been written about the effects of globalisation during the past generation. Much less has been said about the change in social norms that accompanied it. American elites took the vast transformation of the economy as a signal to rewrite the rules that used to govern their behaviour: a senator only resorting to the filibuster on rare occasions; a CEO limiting his salary to only 40 times what his average employees made instead of 800 times; a giant corporation paying its share of taxes instead of inventing creative ways to pay next to zero [17]. There will always be isolated lawbreakers in high places; what destroys morale below is the systematic corner-cutting, the rule-bending, the self-dealing.

Earlier this year, Al Gore made $100m (£64m) in a single month [18] by selling Current TV to al-Jazeera for $70m and cashing in his shares of Apple stock for $30m. Never mind that al-Jazeera is owned by the government of Qatar, whose oil exports and views of women and minorities make a mockery of the ideas that Gore propounds in a book or film every other year. Never mind that his Apple stock came with his position on the company’s board, a gift to a former presidential contender. Gore used to be a patrician politician whose career seemed inspired by the ideal of public service. Today – not unlike Tony Blair [19] – he has traded on a life in politics to join the rarefied class of the global super-rich.

It is no wonder that more and more Americans believe the game is rigged. It is no wonder that they buy houses they cannot afford and then walk away from the mortgage when they can no longer pay. Once the social contract is shredded, once the deal is off, only suckers still play by the rules.

George Packer’s The Unwinding is published by Faber & Faber.

See more stories tagged with:

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congress [29],

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Source URL: http://www.alternet.org/news-amp-politics/how-american-society-unravelled

Links:
[1] http://www.guardian.co.uk/environment/
[2] http://www.alternet.org/authors/george-packer
[3] http://www.guardian.co.uk/world/usa
[4] http://www.whitehouse.gov/about/presidents/franklindroosevelt
[5] http://www.whitehouse.gov/about/presidents/jimmycarter
[6] http://www.allthingsyoungstown.net/articles/in_youngstown_we_made_steel/article.htm
[7] http://oldcomputers.net/appleii.html
[8] http://en.wikipedia.org/wiki/California_Proposition_13_(1978)
[9] http://www.guardian.co.uk/world/newt-gingrich
[10] http://www.slate.com/articles/news_and_politics/explainer/2008/03/what_is_a_mortgagebacked_security.html
[11] http://www.motherjones.com/mojo/2012/07/walmart-heirs-waltons-wealth-income-inequality
[12] http://en.wikipedia.org/wiki/Steven_A._Cohen
[13] https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act
[14] http://www.guardian.co.uk/business/useconomy
[15] http://www.guardian.co.uk/world/globalisation
[16] http://www.salon.com/2012/09/14/clintons_no_liberal_hero/
[17] http://www.huffingtonpost.com/2013/06/03/apple-tax-havens_n_3378935.html
[18] http://www.businessinsider.com/al-gore-wealth-money-current-sale-al-jazeera-2013-5
[19] http://www.guardian.co.uk/politics/2009/dec/01/mystery-tony-blair-finances
[20] http://www.alternet.org/tags/al-gore
[21] http://www.alternet.org/tags/america
[22] http://www.alternet.org/tags/american-enterprise-institute
[23] http://www.alternet.org/tags/andrew-carnegie
[24] http://www.alternet.org/tags/apple-computer-company
[25] http://www.alternet.org/tags/bill-clinton
[26] http://www.alternet.org/tags/bill-gates
[27] http://www.alternet.org/tags/ceo
[28] http://www.alternet.org/tags/california
[29] http://www.alternet.org/tags/congress-0
[30] http://www.alternet.org/tags/council-foreign-relations
[31] http://www.alternet.org/tags/cupertino
[32] http://www.alternet.org/tags/economy-united-states
[33] http://www.alternet.org/tags/glass-steagall-act
[34] http://www.alternet.org/tags/henry-ford
[35] http://www.alternet.org/tags/ipo-0
[36] http://www.alternet.org/tags/jp-morgan
[37] http://www.alternet.org/tags/jay-gatsby
[38] http://www.alternet.org/tags/jay-z-0
[39] http://www.alternet.org/tags/jimmy-carter
[40] http://www.alternet.org/tags/mark-zuckerberg-0
[41] http://www.alternet.org/tags/natural-disaster-0
[42] http://www.alternet.org/tags/newt-gingrich
[43] http://www.alternet.org/tags/ohio
[44] http://www.alternet.org/tags/person-career
[45] http://www.alternet.org/tags/political-positions-newt-gingrich
[46] http://www.alternet.org/tags/president-0
[47] http://www.alternet.org/tags/qatar
[48] http://www.alternet.org/tags/salomon
[49] http://www.alternet.org/tags/senator
[50] http://www.alternet.org/tags/steven-cohen
[51] http://www.alternet.org/tags/tony-blair
[52] http://www.alternet.org/tags/usd
[53] http://www.alternet.org/tags/united-states-federal-banking-legislation
[54] http://www.alternet.org/tags/united-states
[55] http://www.alternet.org/tags/walmart
[56] http://www.alternet.org/tags/washington-0
[57] http://www.alternet.org/tags/white-house
[58] http://www.alternet.org/tags/youngstown
[59] http://www.alternet.org/tags/bank-failures
[60] http://www.alternet.org/tags/finance-0
[61] http://www.alternet.org/tags/financial-product
[62] http://www.alternet.org/tags/information-technology
[63] http://www.alternet.org/tags/investment-bank
[64] http://www.alternet.org/tags/investment-banking
[65] http://www.alternet.org/tags/oil-exports
[66] http://www.alternet.org/tags/patrician-politician
[67] http://www.alternet.org/tags/steel-mills
[68] http://www.alternet.org/tags/steel
[69] http://www.alternet.org/%2Bnew_src%2B

 

Guess What? Fewer Americans Call Themselves Economic Conservatives

By Lynn Stuart ParramoreAlterNetMay 30, 2013  |

2013 has not exactly been an inspiring year on the economic front so far: Between the news of banks too big to prosecute, consumer protection stalled, financial reform thwarted, corporate taxes dodged, privatization pushed, and Social Security attacked, it has been hard to find something to smile about. But then, suddenly, out comes a little ray of sunshine from behind the clouds.

A new Gallup survey [3] shows significant changes in the way we Americans see ourselves. The big news? We don’t like to call ourselves economic conservatives as much as we used to; in fact, that number is at a five-year low. On top of that, more of us say we’re social liberals.

What’s going on? How did something good happen when everything feels so bad?

After the shattering experience of WWI, Freud wrote about the pervasive discontent and unease with society, and he examined how humans tend to react to these feelings. In facing misery, would we throw in the towel? Would we become more aggressive? Or could we embrace the opportunity to improve our reality and transform our thinking? Freud, it must be said, was not overly optimistic about the answers to these questions.

Today, there’s a widespread feeling of skepticism about the form of capitalism we’re saddled with, which works well for a few and causes the rest of us various kinds of misery. Many Americans are beyond sick and tired of bankers, financiers and political hucksters. We see that crony capitalism is destroying our communities, our democracy, our economic well-being, and the natural world.

But will anything ever change it? I have been writing about economic matters since the Great Recession hit, trying to foster different ways of thinking. Honestly, most days it seemed like what I was trying to say was falling on deaf ears – that smart regulation was vital, that jobs must be our primary focus, that austerity was a foolish and deadly policy, and that, at a fundamental level, we need an economy that will serve society rather than the other way around.

Meanwhile, monopolies flourished, financial fraud ran rampant, deficit hawks commanded the scene in Washington, economic quacks were treated as oracles in the mainstream media, the rich got richer, and the poor got poorer.

Republicans won big-time in the 2010 midterm election, seizing control of the House and many state legislatures, including my home state of North Carolina, where they are bent on turning one of the most progressive states in the South into Mid-Atlantic Mississippi. Polls in 2010 showed that the number of Americans labeling themselves conservative, especially on the economy, jumped. Things looked pretty bleak.

Relinquishing old ways of thinking is a painful process, and more often not, a slow journey fraught with setbacks and reversals. It’s not easy to examine old assumptions about how we work, view money and allocate power. Older generations were also challenged to change the way they thought about the economy.  The Great Depression etched itself deeply into America’s collective memory: The idea that the government had to step in with jobs programs, education, housing, transportation, and research investments in order to save the economy from Wall Street-driven ruin impressed itself on our grandparents. That view held sway until Ronald Reagan came along and convinced everyone that government was the problem, not the solution, and recommended that the wild horses of capitalism be set free.

America became more “economically conservative.” The idea that economic conservatism equals prudence is an old association, dating all the way back to 18th-century thinker Edmund Burke, and it’s one that proponents of reckless free-market fundamentalism took full advantage of. They vigorously repeated the lie that markets can regulate themselves, that they are resistant to fraud, and that things would be fine if the government would just let the capitalists alone. They claimed, ad nauseum, that liberals were financially naive and irresponsible spendthrifts. They more or less got away with this package of deceit until the financial crash, which happened on the watch of a free-marketeer, and one who, by the way, had the worst record on job creation in modern history [4]. That was a serious blow to their mythology.

Gradually it become harder to argue that government should be shrunk to the size where it could be drowned in a bathtub because it grew obvious that government intervention and things like unemployment benefits (what economists call “automatic stabilizers”) kept us from plunging into a Great Depression. Slowly, painfully, Americans have begun to see that focusing on austerity and debt reduction is a road to nowhere, and that the economists whose work is frequently cited by proponents of this view doesn’t hold up to scrutiny [5]. We’re gradually getting the message that economic prudence means government making long-term commitments to investing in the kind of robust education, research and infrastructure that our future well-being depends on.

The new Gallup poll reveals that only 41 percent of Americans now characterize their economic views as “conservative,” or “very conservative,” the lowest since President Barack Obama was elected, and substantially lower than the 50 percent who labeled themselves that way in 2010. Thirty-seven percent of Americans now call themselves “economically moderate,” up from 32 percent last year. The percentage identifying themselves as economic liberals has stayed put since 2001, when Gallup started its annual Values and Beliefs poll. But part of this may be semantics – the association of the word “conservative” with “prudence” or “care” in economic matters is hard to shake. Yet the polls suggest that a shift may finally be happening. “Moderate,” at least, is a start. We may see a new notion of fiscal responsibility emerge that doesn’t involve casting people into unemployment and allowing our schools and roads to crumble.

Even conservatives are beginning to rethink what it means to be an economic conservative. They have begun to focus on breaking up the big banks, and a few, as Ryan Cooper reports in the Washington Monthly [6], are going even further and bringing out their closeted inner Keynesians. It remains to be seen whether or not they can get anywhere with their recalcitrant party, but there is dissent in the ranks.

The link between self-identification and voting is tricky. If you think about it, the fact that the number of Americans calling themselves economically conservative in 2010 increased in the polls might not have been so much a sincere expression of ideology as an expression of discontent with the political and economic status quo, whatever it happened to be. After the election, political scientist Thomas Ferguson noted [7] in an interview that in periods of turmoil, the prevailing sentiment is usually “throw the bums out.”

“What the election really shows,” Ferguson said, “is not that the parties can’t agree — Democrats and most of the GOP leadership finally agreed on the bank bailouts, for example — but that the American people will not accept the policies that leaders in both parties prefer.”

The Gallup poll also shows that the percentage of Americans describing their social views as “liberal” or “very liberal” has reached an all-time high: 30 percent. That’s considerably higher than the 22 percent who identified that way in 2010. (Thirty-five percent of Americans say they are conservative or very conservative on social issues, while 32 percent call themselves socially moderate.)

Maybe, just maybe, more people will realize that being socially liberal and economically liberal are really the same thing. That wanting gay people to have the right to marry and women to have the right to decide what to do with their bodies are intimately connected with economic equality and the influence of money in politics.

Until then, the idea that Americans are at least trying out new political identifications is a promising trend. It’s up to us on the left to make sure that “economically liberal” has a clear, positive meaning that a wider swath of people can get behind.

See more stories tagged with:

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Person Career [16],

president [17],

Quotation [18],

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Ryan Cooper [21],

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Source URL: http://www.alternet.org/news-amp-politics/guess-what-fewer-americans-call-themselves-economic-conservatives

Links:
[1] http://www.alternet.org
[2] http://www.alternet.org/authors/lynn-stuart-parramore
[3] http://www.gallup.com/poll/162746/fewer-americans-identify-economic-conservatives-2013.aspx
[4] http://blogs.wsj.com/economics/2009/01/09/bush-on-jobs-the-worst-track-record-on-record/
[5] http://www.alternet.org/economy/meet-28-year-old-student-who-exposed-two-harvard-professors-whose-shoddy-research-drove
[6] http://www.washingtonmonthly.com/magazine/may_june_2013/features/reformish_conservatives044510.php
[7] http://www.huffingtonpost.com/lynn-parramore/money-and-the-midterms-ar_b_782660.html
[8] http://www.alternet.org/tags/america
[9] http://www.alternet.org/tags/barack-obama
[10] http://www.alternet.org/tags/conservatism-united-states
[11] http://www.alternet.org/tags/democratic-party
[12] http://www.alternet.org/tags/edmund-burke
[13] http://www.alternet.org/tags/mississippi-0
[14] http://www.alternet.org/tags/north-carolina
[15] http://www.alternet.org/tags/north
[16] http://www.alternet.org/tags/person-career
[17] http://www.alternet.org/tags/president-0
[18] http://www.alternet.org/tags/quotation
[19] http://www.alternet.org/tags/republican-party
[20] http://www.alternet.org/tags/ronald-reagan
[21] http://www.alternet.org/tags/ryan-cooper
[22] http://www.alternet.org/tags/thomas-ferguson
[23] http://www.alternet.org/tags/washington-0
[24] http://www.alternet.org/tags/bank-bailouts
[25] http://www.alternet.org/tags/mainstream-media
[26] http://www.alternet.org/tags/political-scientist
[27] http://www.alternet.org/tags/washington-monthly
[28] http://www.alternet.org/tags/transportation
[29] http://www.alternet.org/%2Bnew_src%2B

The Astonishing Collapse of Black and Latino Household Wealth

By Adam Hudson, AlterNet, May 31, 2013 

Excerpt

…The Great Recession has increased racial inequality and set back the modest socioeconomic gains of the civil rights movement…while the racial wealth gap has existed for decades, it’s drastically expanded during the last 30 years….The 2007-2009 recession devastated the American economy and all families suffered decreasing wealth. However, African American and Latino families were hit the hardest… the racial wealth gap is not new. It has deep historical roots and current policies perpetuate and exacerbate it….Practices in employment and education also contribute to the racial wealth gap…

Full text

Despite growing economic inequality and mass unemployment, Washington is focused on austerity. Politicians and pundits debate how much to cut and how much revenue to raise rather than creating jobs or alleviating the suffering of millions of people. What also gets lost in the dominant discourse about the economy is the suffering of the black community. The Great Recession has increased racial inequality and set back the modest socioeconomic gains of the civil rights movement.

Recently, the Urban Institute released a study [3] on the racial wealth gap titled “Less Than Equal: Racial Disparities in Wealth Accumulation.” The study found that, while the racial wealth gap has existed for decades, it’s drastically expanded during the last 30 years. It says the “average wealth of white families was $230,000 higher than the wealth of black and Hispanic families in 1983.” In that year, white families had an average wealth of nearly $300,000 in 2010 dollars. Wealth for all families increased, but not evenly.

The 2007-2009 recession devastated the American economy and all families suffered decreasing wealth. However, African American and Latino families were hit the hardest. According to the study, “between 2007 and 2010, Hispanic families saw their wealth cut by over 40 percent, and black families saw their wealth fall by 31 percent.” In comparison, white family wealth “fell by 11 percent.”

The average wealth of white families, in 2010, was $632,000 but $110,000 for Latino families and $98,000 for African American families — a wealth gap of over half a million dollars. Median wealth shows the same trend: $91,000 for white families versus $10,000 for Latinos and $11,000 for African Americans in 1983; for 2010, it’s $124,000 for white families, $15,000 for Latino families, and $16,000 for African American families. These are all in 2010 dollars. Therefore, between 1983 and 2010, the racial wealth gap nearly tripled.

The largest sources of wealth within black and Latino communities are homes and retirement. White families derive wealth from their homes and many other sources, such as stocks and other financial investments. Moreover, one needs to have a certain level of disposable income to make such investments. Low-income families have to spend their income on rent, supporting their families, and other necessities just to survive. As a result, they don’t have enough excess cash to save and invest. Those with higher incomes can afford not only to take care of themselves but have enough money to save and invest. Since white families have higher incomes than black and Latino families, they have more money to invest, hence their larger amounts of wealth.

The housing bubble seemed to provide an opportunity for blacks and Latinos to build up wealth, enter the middle class, and achieve the “American Dream.” However, this proved to be a ruse. Black and Latino communities were targeted by major banks, such as Wells Fargo [4] and JPMorgan Chase [5], for subprime mortgage loans, even if they qualified for normal prime loans. Subprime is a form of risky, high-priced lending to people with poor credit histories, giving the loans higher interest rates.

According to a 2009 NAACP study [6], “even when income and credit risk are equal, African Americans are up to 34 percent more likely to receive higher-rate and subprime loans” than whites. This drove up home ownership in those communities but the foundation was on a flimsy stack of cards. When the housing bubble burst and the recession hit, black and Latino communities were hit the hardest.

The Urban Institute study is not the only one to point this out. Other studies, such as a February 2013 study by Brandeis University [7] and another by Pew Research Center [8] in July 2011, while using different methodologies and coming up with different numbers, show the same trend — the racial wealth gap was large to begin and grew exponentially after the recession.

As shown in the studies, the racial wealth gap is not new. It has deep historical roots and current policies perpetuate and exacerbate it. Black African slaves were first imported from Sub-Saharan Africa to North America by European slave traders in the early 1600s. European colonists used African slave labor to work on plantations growing profitable cash crops like cotton, indigo and sugar. African labor was appealing to European colonizers because, unlike native Americans and indentured white European servants, it was plentiful (if one died, they could be replaced by another African), Africans had no connections to Americans land, and Africans knew how to grow cash crops, like cotton and sugar, that grew on the African continent, the Caribbean, and southeastern United States. Thus, the trans-Atlantic slave trade, which lasted from the early 1500s to mid-1800s, saw the importation and exploitation of anywhere between 12 to 30 million African slaves to European colonies in the Caribbean, South America and North America. 

The trans-Atlantic slave trade built [9] the foundation for modern capitalism and current racial inequality. Wall Street itself was a slave trading market [10] with many companies and financial institutions profiting from it, including [11] the Royal Bank of Scotland, Bank of America, Aetna Insurance, now-bankrupt Lehman Brothers, Wachovia, and J.P. Morgan Chase, with lawsuits [12] against many of them for their role in slavery. Banks, particularly predecessors of Wachovia and JPMorgan Chase, Bank of America, accepted [13] slaves as “collateral” and issued loans [14] to slave owners. If a slave owner defaulted on his loan, the slaves, since they were “property,” became owned by the bank. Aetna Insurance had a policy compensating slave owners for their loss of property, such as when a slave died. Slaves also produced commodities that were sold in international markets for profit, which is characteristic of modern capitalism.

The exploitation of black African labor by white slave owners transferred wealth from black African slaves, and their descendants, to white European slave masters, their progeny, and other whites who benefitted from the system. Since African slaves were not financially compensated, they had very little chance to accumulate and pass down wealth in their communities. Even after slavery ended, that transfer of wealth ensured that blacks would remain socioeconomically subordinate to whites for future generations. This is how the present racial wealth gap was formed.  

Just as there were laws protecting slavery, many policies, practices and institutions maintain the racial wealth gap. According to the Brandeis study [7], “homeownership, income, college education, inheritance, and unemployment” are the “major drivers of the racial wealth gap.” The study points out that “for many years, redlining [denying or raising price of insurance or other financial services to particular neighborhoods based on race], discriminatory mortgage-lending practices, lack of access to credit, and lower incomes have blocked the homeownership path for African Americans while creating and reinforcing communities segregated by race.” Many of these practices are perpetrated by the financial sector — the same sector whose roots go back to slavery.

Practices in employment and education also contribute to the racial wealth gap. Currently, black unemployment lies [15] at 13.8%, while 6.8% for whites. According to a Center for American Progress study [16], the weekly median earnings of African Americans (in 2011) were $674 compared to $549 for Latinos, $744 for whites, and $866 for Asian Americans. Much of this is due to “long-standing patterns of discrimination in hiring, training, promoting, and access to benefits” that make it “much harder for African Americans to save and build assets,” said the Brandeis study. In addition, neighborhoods are deeply segregated [17] by class [18] and race. This leaves many lower-income students, particularly students “isolated and concentrated in lower-quality schools, and less academically prepared to enter and complete college.”

The latest emphasis on austerity disproportionately harms African Americans, as well. Cuts to government spending forces the public sector lay off workers. This hurts [19] African Americans since they are 30% more likely to work in the public sector than the general workforce, according to [20] a United for a Fair Economy study. The private sector has a long history of racial discrimination against African Americans, which is why the public sector has been more reliable for black workers. Austerity, therefore, has a detrimental impact on African American employment. It curtails their ability to accumulate wealth, thereby, reinforcing the racial wealth gap. The latest round of sequestration will only exacerbate [21] this trend. This comes at a time when corporate America and Wall Street recovered very well [22] after the recession, experiencing high profits, while the rest of the country still suffers [23] unemployment, low wages, slow job growth, and poverty.

Wealth provides communities with a stable economic foundation. During hard economic times, when employment is difficult to find, possessing wealth helps people stay economically afloat. People can also have income from certain kinds of wealth, like stock or property, meaning that they can make money without working, simply by owning stuff. In addition, wealth can be passed on to future generations, which makes it easier for one’s children and grandchildren to survive economically. Put simply, wealth builds economically stable communities.

Depriving certain communities of opportunities to accumulate wealth makes it harder for them to survive economically. Those who have massive amounts of wealth do what they can to protect it, even influencing the political system [24]. This drives the wealth gap, especially the racial wealth gap, even wider and undermines democracy by putting political and economic power in the hands of a relative few. Tackling the racial wealth gap would advance racial equality, justice and true democracy.

See more stories tagged with:

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black [26],

latino [27],

urban institute [28],

washington [29],

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economy [32],

african-american [33]


Source URL: http://www.alternet.org/economy/black-and-latino-household-wealth-has-collapsed

Links:
[1] http://www.alternet.org
[2] http://www.alternet.org/authors/adam-hudson
[3] http://www.urban.org/UploadedPDF/412802-Less-Than-Equal-Racial-Disparities-in-Wealth-Accumulation.pdf
[4] http://www.nytimes.com/2009/06/07/us/07baltimore.html?pagewanted=all
[5] http://www.nytimes.com/2011/12/01/opinion/kristof-a-banker-speaks-with-regret.html?_r=1
[6] http://www.naacplv.org/lending.pdf
[7] http://iasp.brandeis.edu/pdfs/Author/shapiro-thomas-m/racialwealthgapbrief.pdf
[8] http://www.pewsocialtrends.org/files/2011/07/SDT-Wealth-Report_7-26-11_FINAL.pdf
[9] http://www.bloomberg.com/news/2012-01-24/how-slavery-led-to-modern-capitalism-echoes.html
[10] http://adamhudson.org/2012/01/28/wall-street-was-founded-on-slavery/
[11] http://www.africaresource.com/rasta/sesostris-the-great-the-egyptian-hercules/the-slavers-of-wall-street-investment-banks-and-trans-atlantic-slave-trade-oguejiofo-annu/
[12] http://www.business-humanrights.org/Categories/Lawlawsuits/Lawsuitsregulatoryaction/LawsuitsSelectedcases/SlaveryreparationslawsuitreUSA
[13] http://www.workers.org/2008/us/lehman_1030/
[14] http://www.nbcnews.com/id/15037694/#.UZWPyyvwIRg
[15] http://www.huffingtonpost.com/2013/03/29/black-unemployment-nancy-ditomaso_n_2974805.html
[16] http://www.americanprogress.org/issues/poverty/report/2012/04/12/11423/the-state-of-communities-of-color-in-the-u-s-economy/
[17] http://www.huffingtonpost.com/2011/08/02/study-race-plays-bigger-r_n_916391.html
[18] http://www.pewsocialtrends.org/2012/08/01/the-rise-of-residential-segregation-by-income/
[19] http://www.nytimes.com/2011/11/29/us/as-public-sector-sheds-jobs-black-americans-are-hit-hard.html
[20] http://www.faireconomy.org/files/State_of_the_Dream_2011.pdf
[21] http://www.nytimes.com/2013/05/03/business/economy/government-spending-cuts-contribute-to-slower-growth.html
[22] http://www.nytimes.com/2013/03/04/business/economy/corporate-profits-soar-as-worker-income-limps.html?hp&_r=0
[23] http://www.theatlantic.com/business/archive/2013/03/corporate-profits-are-eating-the-economy/273687/
[24] http://adamhudson.org/2011/12/13/occupy-wall-street-a-movement-against-oligarchy/
[25] http://www.alternet.org/tags/household-wealth
[26] http://www.alternet.org/tags/black
[27] http://www.alternet.org/tags/latino
[28] http://www.alternet.org/tags/urban-institute
[29] http://www.alternet.org/tags/washington-0
[30] http://www.alternet.org/tags/usa-0
[31] http://www.alternet.org/tags/dc
[32] http://www.alternet.org/tags/economy-0
[33] http://www.alternet.org/tags/african-american-1
[34] http://www.alternet.org/%2Bnew_src%2B

The Real Numbers: Half of America in Poverty — and It’s Creeping toward 75%

By Paul Buchheit, AlterNet, May 26, 2013 

The Census Bureau [3] has reported that one out of six Americans lives in poverty. A shocking figure. But it’s actually much worse. Inequality is spreading like a shadowy disease through our country, infecting more and more households, and leaving a shrinking number of financially secure families to maintain the charade of prosperity.

1. Almost half of Americans had NO assets in 2009

Analysis of Economic Policy Institute [4] data shows that Mitt Romney’s famous 47 percent [5], the alleged ‘takers,’ have taken nothing. Their debt exceeded their assets in 2009.

2. It’s Even Worse 3 Years Later

Since the recession, the disparities have continued to grow. An OECD report [6] states that “inequality has increased by more over the past three years to the end of 2010 than in the previous twelve,” with the U.S. experiencing one of the widest gaps among OECD countries. The 30-year decline in wages [7] has worsened since the recession, as low-wage jobs have replaced [8] formerly secure middle-income positions.

3. Based on wage figures, over half of Americans are now IN poverty.

According to IRS data, the average household in the bottom 50% brings in about $18,000 [9] per year. That’s less than the poverty line [10] for a family of three ($19,000) or a family of four ($23,000).

Census [11] income figures are about 25% higher, because they include [12] unemployment compensation, workers’ compensation, Social Security, Supplemental Security Income, public assistance, veterans’ payments, and various other monetary sources. Based on this supplemental income, the average household in the bottom 50% brings in about $25,000, which is just above the $23,000 poverty line for a family of four.

4. Based on wage figures, 75% of Americans are NEAR poverty.

According to IRS data, the average household in the bottom 75% earns about $31,000 [9] per year. To be eligible for food assistance, a family can earn up to 130% [13] of the federal poverty line, or about $30,000 for a family of four.

Again, Census [11] income figures are about 25% higher because of SNAP reporting [14] requirements, bringing average household income for the bottom 75% to about $39,000.

Incredibly, Congress is trying to cut [15] food assistance. Republican Congressman Stephen Fincher of Tennesseereferred [16] to food stamps as “stealing.” He added a Biblical quote: “The one who is unwilling to work shall not eat.” A recent jobs hearing [17] in Washington was attended by one Congressman.

5. Putting it in Perspective

Inequality is at its ugliest for the hungriest people. While food support was being targeted for cuts, just 20 rich Americans [18] made as much from their 2012 investments as the entire 2012 SNAP [19] (food assistance) budget, which serves 47 million people.

And as Congress continues to cut life-sustaining programs, its members should note that their 400 friends on theForbes list [20] made more from their stock market gains last year than the total amount of the food [19], housing [21], andeducation [21] budgets combined.

Mr. Fincher should think about the tax breaks that allow this to happen, and then tell us who’s stealing from whom.

See more stories tagged with:

don poverty [22]


Source URL: http://www.alternet.org/economy/real-numbers-half-america-poverty-and-its-creeping-toward-75-0

Links:
[1] http://www.alternet.org
[2] http://www.alternet.org/authors/paul-buchheit
[3] http://www.census.gov/hhes/www/poverty/about/overview/
[4] http://epi.3cdn.net/2a7ccb3e9e618f0bbc_3nm6idnax.pdf
[5] http://newsfeed.time.com/2012/12/13/mitt-romneys-47-percent-gaffe-tops-yales-quotes-of-the-year/
[6] http://www.oecd.org/els/soc/OECD2013-Inequality-and-Poverty-8p.pdf
[7] http://stateofworkingamerica.org/who-gains/#/?start=1979&end=2008
[8] http://www.nelp.org/page/-/Job_Creation/LowWageRecovery2012.pdf?nocdn=1
[9] http://www.usagainstgreed.org/TaxFoundnSumm2_brief_append.xls
[10] http://aspe.hhs.gov/poverty/12poverty.shtml
[11] http://www.usagainstgreed.org/CensusIncomeSummary2011.xls
[12] http://www.census.gov/hhes/www/poverty/about/overview/measure.html
[13] http://www.fns.usda.gov/snap/applicant_recipients/eligibility.htm
[14] http://www.massresources.org/snap-financial-eligibility.html#incomecounted
[15] http://thinkprogress.org/economy/2013/05/14/2010531/senate-committee-approves-4b-in-food-aid-cuts-as-house-preps-even-worse-measure/
[16] http://www.forbes.com/sites/rickungar/2013/05/22/gop-congressman-stephen-fincher-on-a-mission-from-god-starve-the-poor-while-personally-pocketing-millions-in-farm-subsidies/
[17] http://www.huffingtonpost.com/2013/04/24/lawmaker-unemployment-hearing_n_3148362.html
[18] http://www.usagainstgreed.org/Fortune400_2011-12.xls
[19] http://www.obpa.usda.gov/budsum/FY13budsum.pdf
[20] http://www.forbes.com/sites/edwindurgy/2012/10/05/who-got-rich-this-week-a-new-billionaire/
[21] http://en.wikipedia.org/wiki/2013_United_States_federal_budget
[22] http://www.alternet.org/tags/don-poverty
[23] http://www.alternet.org/%2Bnew_src%2B

 

CEO-To-Worker Pay Ratio Ballooned 1,000 Percent Since 1950

Report from Huffington Post, 04/30/2013

We’ve made progress on a lot of things since the 1950s and so have CEOs — in their quest for more money that is.

The ratio of CEO-to-worker pay has increased 1,000 percent since 1950, according to data from Bloomberg. Today Fortune 500 CEOs make 204 times regular workers on average, Bloomberg found. The ratio is up from 120-to-1 in 2000, 42-to-1 in 1980 and 20-to-1 in 1950.

“When CEOs switched from asking the question of ‘how much is enough’ to ‘how much can I get,’ investor capital and executive talent started scrapping like hyenas for every morsel,” Roger Martin, dean of the University of Toronto’s Rotman School of Management, told Bloomberg.

The findings come just one day after the S&P 500 soared to a new record, indicating that perhaps the only ones not reaping the benefits from the companies’ historic profitability are workers. Other reports have come to similar conclusions. An analysis from the AFL-CIO, the umbrella organization for many of America’s unions, found earlier this month that CEO pay was 354 times that of the average employee.

The Dodd-Frank financial reform law aimed to make it easier for the public to know how much CEOs are getting paid in comparison to their workers. The law includes a provision requiring public companies to disclose their CEO-to-worker pay ratios, but nearly three years after the law passed, the Securities and Exchange commission still hasn’t put the rule in place, thanks in part to business opposition to the proposal, according to ABC News.

Sen. Robert Menendez (D-N.J.), who authored the provision told ABC last year: “It might embarrass some companies to reveal that they pay their CEO in the range of 400 times what they pay their typical worker.”

It can be especially embarrassing when the CEO doesn’t perform. Former J.C. Penney head Ron Johnson, whose compensation was 1,795 times the average worker pay, according to Bloomberg, was recently ousted from his post after failing to turn around the struggling company.

http://www.huffingtonpost.com/2013/04/30/ceo-to-worker-pay-ratio_n_3184623.html