Wednesday, February 04, 2009

The Rotten Core of the GOPconomy

At the rotten core of the GOPconomy: Too much wealth in too few hands.

The “conservative” policies of the last 30 years have inexorable lead to too much wealth in the hands of the uber-rich and too little in the hands of the poor and middle class. This is a condition that is very bad for our economy, for any economy and our society and democracy as well. One need only look at the conditions of the third world where a very few control the vast majority of the wealth and most of rest are dirt poor to see examples of why this is not a good thing and why we shouldn’t be going there like we have been.

It would be bad enough if this were the fairy-tale “free-market” working to cause the condition of an economy that does not serve most of the people, it is not. The fact of the matter is that there is no such thing as fairies, frog princes or free markets. These changes have been the direct and conscious result of conservative economic ideology put into practice for three decades. Just ask Warren Buffet who complains that his secretary pays a much higher percentage of her modest income in taxes than he does and says that there is indeed a class war in the U.S. and his class is winning.

Consider these changes (inflation adjusted) in our situation as country:
• The country has twice as much wealth as it did 1980
• A worker that produced $1.00 of value in 1980 now produces $1.70 in the same amount of time
• Almost all of the income growth from the two items above has gone to the top 0.1 and 0.01%
• The top 0.11% now reap the largest share of all income since the late 1920s, (coincidence? I think not)
• 90% of Americans have seen their real wages drop over this time
• The average American makes $73/wk less than they did in 1973.

These are the results of a government whose defacto policy has been to further enrich the rich rather than to build and strengthen the middle class as was the case after the depression and WWII. This is a government that has not only backed away from responsible regulation of markets, but actually worked contrary to transparent market forces and then when the inevitable wages of greed and corruption come due, (at least once per decade over the last 30 years and accelerated under Bu$h), the public is stuck with the bill, shifting the burden down the economic ladder.

Spurred on by the likes Greenspan and predatory lenders, the middle class has now used up the equity that they had been borrowing against to support their consumption of their heretofore middle class lifestyle which could longer be supported by their declining real wages. Now the middle class do not have the wealth necessary to continue to support consumption so they are pulling back on their spending which is further hurting their ability to consume as a group since that causes more of their cohort to lose their jobs or at least feel so insecure in their employment that they're saving instead of spending. Saving is a good thing you say, that money will be loaned out and invested? Not so right, not now anyway.

The uber rich have little incentive to loan/invest the vast sums of money they've accumulated since the dawn of Reagan corporatism by hording to themselves almost all the huge gains in productivity realized lo these one score years and ten. In part this is because there's low confidence that they will be paid back even by those with good credit. Why they may lose their jobs and no matter how good your credit is you can't pay your bills if you lose your job. But even more importantly, they don't want to invest because in an economy driven overwhelmingly by consumerism (bigger even than the dysfunctional financial sector) there's no point in investing when your customers, the folks who do the vast majority of consuming in this country don't have the money to buy your product. So rather than invest, the wealthy look for safe havens like T-bills where at least they can preserve most of their wealth for later. These kinds of investments don't produce jobs or pay wages and so this exacerbates the problems on the other side of the tracks.

In short, our economy has become like a battery where all the charge has migrated and there's not enough potential left to support dynamism. Seems to me it's time for a recharge/redistribution of potential back toward the other pole so we can get the flow going again. Instead through the endless bailouts we're distributing even more wealth to wrong pole where it will sit idle.

We need more than the short fix of government spending to kick start jobs and spending. We need a restructuring of government and tax policy to promote the commonwealth more and the exclusivewealth less.

9 comments:

Rich said...

Everyone has the right to make their own opinions, but not to make their own facts:

1) Fact: Real median income has risen since 1967 (except for some lagging during recessions). Source: http://www.census.gov/prod/2008pubs/p60-235.pdf. So your claim that "...policies of the last 30 years...lead to...too little in the hands of the poor and middle class..." seems eschew since real median income has risen since 1967.

2) Fact: the definition of a third world country is one that virtually has no industry or an associated economy. Source: http://en.wikipedia.org/wiki/Third_World. So by definition, the reason that "most of the rest are dirt poor" is because there is no industry there. Not because the wealthy have wealth. So looking to a third world country's economy as some sort of example makes no sense, because by definition THEY HAVE NO ECONOMY!

3) Article 1, section 8 of the Constitution in part says, "...but all duties, imposts and excises SHAL BE UNIFORM throughout the United States." I get that you are jealous of the rich. But please don't advocate that the federal government engage in disparate treatment of the rich. We're all in this together.

As for my opinion, it resembles this: "Most people are about as happy as they make up their minds to be. - Abraham Lincoln” In other words, most people like being middle class. If they didn't they'd change their circumstances just as our current President changed his circumstances.

Perhaps more "Yes we can" is appropriate; instead of "Let's knock down the rich."

socranley said...

First let me address your comment "I get that you are jealous of the rich." No you don't. I'm neither jealous of the rich nor do I begrudge them nor am I engaging in the "politics of envy" as the diversionary rightwing radio gandabyte goes. I'm good actually. I'm happy too by the way, for what it's worth.

Sencondly, I didn't say that median income had dropped, nor would I in a country that is, as I said, about twice as wealthy (pre 2008 crash) than it was 30 years ago. I said the real wages had dropped for 90% of workers. When you factor in the wealth increases of the top 0.11% then of course the median goes up for the country as a whole, not really for 90% of us. Be careful also that you're not citing median household income, which has only gone up for 90% of us because most houshold are now out of necessity two income house, which was not the case 30 years ago.

What I think you are failing to understand is that the rich through their undo influence on our political system, have been rigging things to get better treatment for themselves and if we're really all in this together, then we need to stop and reverse that condition.

Finally, when I look at the third world, I see lots of industry . . .ours! Anyway my point is about gross wealth disparity, which is a bad thing all around.

Anyway welcome to the BAP site. you mind find more action and response on the yahoo group which is linked to on the left hand side of the blog pages.

Regards,

Sean

socranley said...

First let me address your comment "I get that you are jealous of the rich." No you don't. I'm neither jealous of the rich nor do I begrudge them nor am I engaging in the "politics of envy" as the diversionary rightwing radio gandabyte goes. I'm good actually. I'm happy too by the way, for what it's worth.

Sencondly, I didn't say that median income had dropped, nor would I in a country that is, as I said, about twice as wealthy (pre 2008 crash) than it was 30 years ago. I said the real wages had dropped for 90% of workers. When you factor in the wealth increases of the top 0.11% then of course the median goes up for the country as a whole, not really for 90% of us. Be careful also that you're not citing median household income, which has only gone up for 90% of us because most houshold are now out of necessity two income house, which was not the case 30 years ago.

What I think you are failing to understand is that the rich through their undo influence on our political system, have been rigging things to get better treatment for themselves and if we're really all in this together, then we need to stop and reverse that condition.

Finally, when I look at the third world, I see lots of industry . . .ours! Anyway my point is about gross wealth disparity, which is a bad thing all around.

Anyway welcome to the BAP site. you mind find more action and response on the yahoo group which is linked to on the left hand side of the blog pages.

Regards,

Sean

Rich said...

Please forgive my assumption of jealousy. I will do better in the future. But to explain myself, since I saw no support for your point ("...my point is about gross wealth disparity, which is a bad thing all around...) I wrongly assumed jealousy. My bad.
As for your opinion about real wages dropping, please show your source so that I can investigate for myself. However, even if you provide a source that shows that real wages dropped, that still does not prove that gross wealth disparity is bad. “Nothing is either good or bad, but thinking makes it so.” - Shakespeare
"What I think you are failing to understand is that the rich through their undo influence on our political system, have been rigging things to get better treatment for themselves and if we're really all in this together, then we need to stop and reverse that condition." Are you really advocating censorship?

"Undo Influence?" Does that imply that there is fair or "Do" influence? Who decides which is undo and which is fair? YOU? Um, no thank you. I prefer our (yours and my) First Amendment Rights just as they are. For a reminder, "Congress SHALL make NO law ...abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances."

Sean, you have your opinion that gross wealth disparity is bad. I don’t blame you one bit for feeling as you do. If I were you I’m certain that I’d feel the same way. However, I believe that your feelings and opinions would hold more weight if they were 1) Constitutional and 2) better supported.

Sean Cranley said...

Censorship? You're way way of course.

Rich said...

Way way of[sic] course?

Here's your own words: "...the rich through their undo influence on our political system, have been rigging things to get better treatment for themselves and if we're really all in this together, then we need to stop and reverse that condition."

If your words are not advocating the censoring of the rich, then what would you call it?

OBTW, here is the definition of censoring: "...to remove or suppress what is considered morally, politically, or otherwise objectionable."

http://dictionary.reference.com/browse/censoring

Sean Cranley said...

Why don't you see if giving it some critical thinking might lead you to come up with some answers on your own? Here are a couple clues, it has nothing to do with censorship (how you jumped to that errant conclusion I can only begin to imagine), it has to do with "undue infuence".

Rich said...

"Why don't you see if giving it some critical thinking might lead you to come up with some answers on your own?"

No need for me to come up with answers on my own. Rather than making stuff up, instead I prefer to perform research (part of critical thought is researching the subject). Doing so often ensures a supported argument. For example:

"Congress SHALL make NO law ...abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances." In other words, the rich, as do we all, have Constitutionally protected rights.

As for where did censorship come from? Answer: Your own words about stopping and reversing (i.e. SUPRESSING) undue influence (i.e. politics that YOU find objectionable) AND the definition of censorship (suppressing objectionable politics).

Sean Cranley said...

I've neither made things up, nor advocated censoring anyone. You appear to be jumping to faulty conclusions, perhaps based on faulty premises and/or preconceptions.