Jeremy Bishop

Two Words That Dare Not Speak Their Name: Income Inequality

Filed By Jeremy Bishop | March 29, 2009 10:00 AM | comments

Filed in: Politics
Tags: AIG, income inequality, inflation, labor movement, poverty, poverty gap

Like many Americans, I was outraged about the AIG bonuses that were lavished on executives that have brought ruin to so many Americans, hell, the world. Outraged, but not surprised.

We all know there are separate rules for our separate classes. For the majority of us, the 99%, if you don't do your job, you don't meet performance minimums, you're fired. elephant_in_living_room.jpgNo bonus, no severance, you're at will - not yours but your employer's. But for the top 1%, there are different rules. Fuck up the financial system for the entire world, well, you'll still get a bonus - just maybe 2 or 3 million dollars less than you expected.

Its outrageous of course, but our current dialogue is a typical Washington, DC dog and pony show. Watch as the House votes to tax back those bonuses, watch as the Senate stymies, but regardless, the witch hunt over the AIG bonuses is a lovely diversion and it does nothing to fix the systemic problems that run through the bedrock of the country, and that, unless fixed, will just doom us to further misery.

The two words that dare not speak their name: Income Inequality.

Income Inequality in this country is at levels not seen since the roaring twenties, and we all know what happened after that. Yet, our politicians are still afraid to name the $100 trillion elephant sitting on our dining room table.

The right-wing has done an absolutely fantastic job in demonizing anything that might be considered socialist in nature. That was not by accident. The harms done by the red trials of McCarthyism and the constant promotion of the "free market" have made anything that even sounds like "redistribution of wealth" on equal footing as having Osama bin Laden as honorary chair of the Veteran's Day parade. All the while, the redistribution is happening its just heading to the top instead of the bottom.

We have an opportunity to kick this bullshit to the curb, and we need our President to not be afraid to be bold and tackle these problems head on - and if you must call it socialism, so be it.

After 2009, it should be clear to every American that there is no such thing as the "free market". The tooth fairy is more real, and brings better returns than the "free market" ever has.

My generation and those coming after us, don't have the same ingrained "socialism is evil" mantra bombarded into us. Sure the residue is there, but we're open to another way. Many of us, if not our friends, have been to Western Europe - it doesn't seem like hell in a hand basket. Even socialist healthcare is better than no healthcare at all.

Am I suggesting President Obama just say, "Socialism now, socialism forever!"? No. But its time to acknowledge the elephant in the room - America is not going to get better until we deal with the huge ill of income inequality.

Bankruptcy rates in this country are not astronomical because we're all loading up on big-screen TVs and prostitutes. Most bankruptcies filings in this country are people unable to pay medical bills. How many times have you had to use a credit card to pay for necessities like food or medicine?

It is long past time for some of the wealth at the top 1% to "trickle down" to the 99% rest of us.

In Social Science Quarterly, Economist Timothy Smeeding sums it up stating,

"Americans have the highest income inequality in the rich world and over the past 20-30 years Americans have also experienced the greatest increase in income inequality among rich nations. The more detailed the data we can use to observe this change, the more skewed the change appears to be... the majority of large gains are indeed at the top of the distribution."

When was the last time you got a raise that actually raised your salary higher than the rate of inflation?

The problem is, more and more wealth in this country sits with the top 1% as the rest of the country see our wages stagnate or, like me, recently fall with the economic downturn. So what can be done?

I freely admit that economics is not my strong point. I am dyslexic with numbers, always transposing them, so doing a simple bank deposit can be an exercise in frustration.

So I turn to higher minds on this stuff, mainly Paul Krugman. Krugman in the video link below, debunks the myth that the middle class gradually evolved. According to Krugman, the middle class was created quickly after the great depression in what was called the great compression.

Krugman says that there are several public policy factors that can lead to growing the middle class and decreasing income inequality. They are:

  • Increasing taxes on wealthy individuals
  • Increasing taxes on corporations
  • Increasing the ability of workers to organize into labor unions
  • Increasing the minimum wage

President Obama's agenda includes many of these policy pieces although Republicans are doing everything in their power to stop the very pieces of Obama's agenda that could revive our middle class.

I challenge President Obama, our LGBT organizations, and anyone who cares about the middle class to name the issue we seem to be afraid to name.

While our treasury department can print more cash there is only a limited supply and that supply has been being gobbled up by the top 1% for far too long. Call it socialism, income re-distribution, or whatever you'd like, but we have to address it.

So tell me about your situation.

What direction are your wages heading? What solutions do you think we could implement to deal with income inequality and bring the promise of America closer to the reality?


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Brynn Craffey Brynn Craffey | March 29, 2009 1:51 PM

Great post, Jeremy!!

Some of the best writing on the economic crash and its aftermath is being published in Rolling Stone magazine and Harpers. The current RS has a must-read piece by Matt Taibbi. Then the April Harpers has an article by Thomas Geoghegan that traces how the removal of caps on interest rates on credit cards, coupled with the busting of unions, trashing of labor contracts, destruction of many working Americans' pension funds, and stagnating wages has led to a hopelessness in American workers that contributed to their taking on staggering levels of personal debt.

The very idea that banks can charge 35% interest! My god, and that's when we're bailing their asses out of bankruptcy! It's usury, pure and simple. Especially considering that the annual prime interest rate right now is .016% That's the rate banks charge one another for borrowing--although few banks are loaning to other banks at the moment because they all know they're insolvent.

Where is the American rage?!!

Hi Brynn:

Thanks for the words of support. I love Matt Taibbi! His book that he recently released was one of the most insightful and funny as fuck books I've ever read. Not to mention he's one of the cutest talking heads that has ever talked.

I'm not sure if you watch NOW on PBS, but Bill Moyers had a guy on that stated that this country had usery laws until democrats repealed them in the 1970s. I didn't know that, but I'm not surprised.

jb

A. J. Lopp | March 29, 2009 3:33 PM

The only among my friends who are doing well are the ones that started their own businesses at least ten years ago --- if you are an entrepreneur, a good businessperson, good at what you are attempting to deliver to your customers, and you've been at it a while so that your pains of start-up are already behind you, then you have a chance at surviving with a fair amount of comfort.

The rest of us, it seems, are all slowly going down the toilet.

So Jeremy,
What's the deal with the "compromise" that CostCo, Whole Foods, and Starbucks are trying to broker that would eliminate the card check and binding arbitration provisions? Should I be thinking about new places to buy coffee and groceries?

Hi Greg:

Whole Foods is notoriously anti-union. They rank up there with Wal-Mart in terms of trying to stop any organizing. So their progressive outward image is merely a show.

I must say I used to shop there, when I lived a block from one in Arlington, VA- but I stopped going there when I realized even going in for a quick meal at night was leaving me with at least a $50 tab.

Here is some more info on them:
http://michaelbluejay.com/misc/wholefoods.html

The compromise bill that those companies brought forward was no compromise. To me, I would be willing to give up on the card check piece, because I think the mandatory first contract arbitration is the most important piece of the legislation.

Not sure if my employer would agree, but that's my view.

jb

Robert Ganshorn Robert Ganshorn | March 30, 2009 12:15 AM

Income inequality? How about we discuss mandatory high school graduation? That would help a lot for starters. Reading, math and science proficiency for everyone. (allowing for those who have dyslexia to advance at a slower pace)

What a surprise. Wealthy individuals make sure their kids get an education who in turn become wealthy in their own right. Gosh, independent decisions of individuals to try and hold on to their own money are diabolical.

We (American Taxpayers) own 80% of AIG we had better hope they are successful...or that money is gone.

Privately owned small businesses had best not be overtaxed because they will employ fewer people. They already pay the lion's share of unemployment compensation for which no employer ever receives a thank you.

Hard working executives who are overtaxed will work less hard ("as it all goes to taxes") and the net result will be less employment. The French socialist experiment of cutting the work week to 35 hours has not led them toward financial liberation, but recently riots in the streets.

America will be a more socialist country, but we should approach this "with the brakes on" and learn to work together rather than just for ourselves. I knew Chicago families on the third generation of welfare who were stupid and hopeless and bored, and unmotivated and amazed that their neighbor worked so hard. They could never "find the time" to work as hard.

The French socialist experiment of cutting the work week to 35 hours has not led them toward financial liberation, but recently riots in the streets.

Ummmm.... no.

Robert Ganshorn Robert Ganshorn | March 30, 2009 9:18 AM

If you google "riots in France 2009" and go to any of the many listings you will have your answer. More specifics? Try "riots in France over the economy"

Bill Perdue Bill Perdue | April 1, 2009 7:39 AM

Are you trying to say that French workers and their friends are demonstrating to get rid of the 35 hour week? That seems very unlikely. Or are they demonstrating against right centrist Sarkozy’s harsh austerity measures which will prove to be as odious and anti-worker as those of the right centrist named Obama.

Why are the nortiously repressive French police rioting?

I think we should all wish the socialist and communist workers of France and their allies among student and minority youth the best of luck in their fight for economic justice.

Robert Ganshorn Robert Ganshorn | April 6, 2009 5:19 AM

This and other "noble rot."

Rick Elliott | March 30, 2009 1:05 AM

A look at conditions that led to revolutions is a good place to start. An article in Christian Century shocked me to my core. The discrepancy between upper management and the average worker is 340-1. Britain comes the closest to us with 25-1. France, Germany and Japan are around 10-1. I find that differential appalling! What skill could these at the top offer that the rest of us cannot? Is their compensation at all related to their contribution to the company?
One difference I can see over my 63 years is the sharp drop-off of employee loyalty and employer loyalty. In 1950 a man had been working for a company as an engineer for 5 years. He required ground-breaking surgery due to an accident as an infant. He was kept on the payroll at full pay for 6 months when he didn't work and another 3 months of part-time work. he individually broke ground on a new technology that put his employer way ahead of competition.Recently a man was shot in the head during a robbery. After one month of hospitalization his company tried to fire him to lessen their medical costs. Because of publicity of the robbery they failed. This man went on to be their chief person who could turn around failing districts. That company saved millions by being forced to keep him.
An engineer for a refinery worked out a way to clean up gasoline economically. What do you think their next step was? subtly forcing him to retire at 53.
There's something wrong with this picture. It seems to me that it would be cost-effective to retain good employees and not encouraging the revolving door that currently exists.
But back to the point of this story--America is heading for a major revolution. The recent election was only the tip of the iceberg. If the 340-1 gap were reduced, companies would save money that would improve their ability to compete in a worldwide market.

Robert Ganshorn Robert Ganshorn | March 30, 2009 9:30 AM

Rick, I certainly agree that this is egregious. I also would want to look at the tendency of fortune 500 companies to have "interlocking" boards of directors who approve these salary gaps. It is entirely possible for the well connected to serve on a half dozen boards which assures ther is a lack of oversight. Stockholders care about it and have been toothless to change it in good economic times, but the "Asian model" is coming. The throw weight of the new world order will be Asia and those Western companies that wish to play had better adopt the efficiencies required.

I would add that a teacher in Japan is in the top 10% of the wage earning force and 95% of students graduate from high school. America is pathetic by comparison both in the way they value teachers and the dropout rates parents allow.

Bill Perdue Bill Perdue | April 1, 2009 7:48 AM

Good post Jeremy.

Contrast what Obama is doing to UAW retirees and what he did about preserving the bonuses paid to AIG looters, managers and stockholders. What Obama is doing to the UAW is the same thing Bush did to airline unions after 9-11. Bush refused loans to unionized airlines and many of them failed while the rest of the airlines forced deep concessions from unions.

Obama recently selected Steve Rattner, a blood thirsty corporate looter and major Democratic (sic) fundraiser to ‘oversee’ the auto industry. He’ll oversee it the same way a wolf oversees a rabbit. Rattner appointment naturally had nothing to do his ‘campaign contributions’ to the Democrats, which by my rough count were about $456,345.00 and included, for some unknown reason, proportionality large amounts for Rahm Emanuel, Obama’s chief of staff. http://www.newsmeat.com/fec/bystate_detail.php?st=NY&last=RATTNER&first=STEVEN&city=&zip=&xst=&next=0

Rattner’s an experienced corporate raider and looter who runs the Quadrangle Group. Obama, himself an unashamed lap dog of Wall Street, to run the UAW, and especially retired autoworkers into the ground.

The [Wall Street Journal http://online.wsj.com/article/SB123845522845271355.html] headlines their article on Rattner as “Blame Is Put on Management, but Hourly Workers, Retirees Face More Pain”. The article says that “

President Barack Obama's recovery plan for General Motors Corp. and Chrysler LLC appears to take aim at union retirees, a usually reliable Democratic constituency.
… the president's auto task force concluded GM and Chrysler's survival is dependent on greater concessions from the United Auto Workers union… In his address Monday, Mr. Obama … called on hourly workers and retirees at the companies to be ready to accept more sacrifice if they hoped to keep their employers afloat.(!!!)
Clem Wittman, 68 years old, spent three decades working the assembly line for GM… said ‘What 85-year-old can go out and get another job? … Mr. Wittman said that for 30 years he paid for those benefits and shouldn't be asked to give them back.”

In other news the national debt recently passed $11,043,588,980,678.90 today according to the [US Treasury http://www.treasurydirect.gov/NP/NPGateway] The vast majority of that money is being given to the looters who wrecked the economy and bought by other countries.

Nothing is ever going to be done to the execs at AIG and hundreds of other companies that looted the economy and rubbed salt on the wound by giving themselves multimillion bonuses and parties. Nothing. Obama told Congress that he wanted them left alone. But he’s going to try to wreck the lives of retirees.

Obama is some piece of work.

And it's ok to to start saying "Socialism now, socialism forever! As people recover from the shock of mass unemployment and as Hope turns to Rage a lot of people are going to be saying it.