You don’t have to look very far these days to see economic disparity, divergence, and contrary counterparts. The rich have never had it so good. A rising stock market, rising home values, and record corporate profits have the top 10 percent of earners taking home more than half the nation’s total income.
Meanwhile, the middle class has been completely shredded. Well-paying white collar jobs have been downsized. Good manufacturing jobs have been offshored.
In return, former middle class professionals must compete for low-paying service jobs. Is it any wonder why the labor force participation rate is at a 36-year low? What’s more, the labor force has been steadily falling since the turn of the new millennium.
Quite frankly, it’s demoralizing for someone to go work for a third of the pay they made not long ago…especially when the Fed’s zero interest rate policy has stolen the rewards of hard work, saving money, and paying your own way. Many would rather drop out of the labor force than do mind numbing work in return for peanuts.
Just what kind of economy is this, really? Obviously, something’s not right. What follows attempts to offer clarity…
Several weeks ago, Pulitzer Prize winning economics reporter David Cay Johnston, wrote an article titled Americans fared better after the Great Depression than today. You likely didn’t hear about it because it was published by Al Jazeera America…presumably the mainstream American media wanted nothing to do with it. Following extensive investigation, here’s a selection of Johnston’s findings…
“News reports tend to focus on the short term — on yesterday, on last year compared with the year before. But look back farther in time and an overwhelming case can be made that the vast majority of Americans are worse off. Indeed, coming out of the Great Depression eight decades ago, the vast majority fared vastly better than most people have coming out of the Great Recession, which officially ended on June 30 six years ago.
“It may be jarring to hear that the vast majority of Americans, the 90 percent, enjoyed bigger income gains in the 1930s than in recent years, but that is what the data show.
“The 90 percent, the vast majority, saw their income decline in 2012 compared with 2009, the year the Great Recession officially ended. Average annual income was down $556, or almost 2 percent, adjusted for inflation, to $30,997.
“But in 1936, three years after the Great Depression ended, the vast majority enjoyed 31 percent more income than in 1933. The average increase, in today’s dollars, was $2,146 per household.
“So while absolute incomes are much higher today, even adjusted for inflation, relatively the vast majority are becoming worse off instead of enjoying rapidly rising incomes, as happened eight decades ago.”
What to do about it…
The Trifecta of Depravity
French economist Thomas Piketty has topped the best sellers list as of late pointing out the disparity between the wealthy and the rest of us. He’s been called “Brilliant” and a “Visionary”. But when it comes to the question of what to do about inequality, he quickly becomes a stooge.
Piketty’s thinking is limited by his over attention to disparity of the haves and the have nots. He seems to think it is a failing of capitalism. Thus, he misses the point entirely. His solution, like most academics, is more government. He wants more taxes…lots of them.
Here at the Economic Prism we see the problem being not a failure of capitalism or the disparity of the haves and the have nots. But, rather, we see the problem being the inherent wickedness of a system that’s been stacked entirely in favor of the haves and entirely against the have nots.
What we mean is central banking, dishonest money, and big bank bailouts. This trifecta of depravity perverts capitalism into a sort of democratic cronyism that protects the wealthy elite. Piketty conveniently never mentions that the ultra-wealthy are playing with a deck of cards overwhelmingly stacked in their favor. Paul Krugman openly promotes it.
By now you should know how it works. Through the Fed’s mechanism of mass money creation using an unbacked paper currency they float up financial assets, which are overwhelmingly owned by the wealthy. The big banks are given near unlimited access to near free money to lever financial bets up to the moon…and collect massive fees in return. Yet they operate with no personal risk. For when their insane bets occasionally cascade out of control, the Treasury steps up with taxpayer money – your money – to socialize the losses.
The whole time the Fed says they’re mad policies will somehow create jobs. Alas, for the middle-class, the Fed’s mass money debasement makes it near impossible to get ahead through hard work and disciplined savings. Seeking to narrow the spread between the rich and poor through extreme taxation only promotes the system of big government corruption that spawns it to begin with.
Terminating the Fed, returning to honest gold and silver based money, and removing bailouts from the business of government would go a long way to leveling the playing field. While they may not guarantee equality, they would bring power and autonomy back to the individual to make of things what they will…without getting sucker punched by Washington upon stepping out the door each morning.
for Economic Prism