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INEQUALITY – HOW IT STARTED AND WHY IT MUST END (PART III)

July 2, 2013

INEQUALITY – HOW IT STARTED AND WHY IT MUST END (PART III)

My followers have seen in parts I and II of this essay that (from both expert and homespun views) the cancer of deepening inequality has settled as the norm over the land; that people who work for a living (if they can get a job or a job that pays a living wage) are continuing to receive a smaller and smaller portion of the economic pie no matter how hard and/or efficiently they work in increasing productivity for their employer(s). Capital (Wall Street) is hogging the new wealth created by improved productivity of its workforce, whose “reward” is a smaller paycheck, right to work laws, off-shoring (or the threat of it) if the workers ask for a raise or otherwise raise a ruckus on the job (as Carville might say). Wages and minimum wage levels are so ridiculously low that spouses have had to go to work, and sometimes have to hold two jobs in order to pay their bills (including bills for babysitters, which even further reduces what such workers have to spend from their meager take-home pay).

Carville: “You know how people are always getting all misty-eyed when they’re hearkening back to the decades after WW II? When it comes to the economy in that era, it’s hard not to get a little nostalgic. I can tell you this – it was one hell of a time to be growing up. After World War II, this country entered a period of unprecedented economic growth. Thanks in part to the G.I. Bill and a heavy-duty commitment to public education, this country built the largest and strongest middle class in the world. It was an unbelievable cycle of prosperity. The more people who rose into the middle class, the more demand there was for cars and appliances that other middle-class workers were producing. The economy just kept growing and creating millions of jobs. And best of all, everyone made out in the deal. In the three decades following World War II, the wealthiest 20 percent of American families saw their incomes double. So did the poorest 20 percent and everyone in between.”

Carville: “Let’s say you had invested $8,000 in the Washington Post Co. stock in 1972. By the end of the year in 1992, that stock would be worth a cool $432,000. By December of last year it would have been worth $589,000. In 1972, an average thirty-year-old high school-educated man was making $9,000. By the time he turned fifty in 1992, that same worker was making $28,000. When you adjust for inflation, the guy’s making less money than he was in 1972. Let me repeat: AFTER TWENTY YEARS ON THE JOB, HIS PAYCHECK BUYS HIM LESS.”

“A lot of people at the Post are telling workers that it’s not a crisis that their salaries haven’t gone up. Would it be a crisis if the stock market had been handing out stagnant returns for the past twenty years? How do you think that would go over? Food for thought, my friends.”

I think that those “people at the Post” (and especially their shareholders) might have a different view of “the crisis” if their shares in the Washington Post (from 1972 to 1995) which increased from $8,000 to $589,000 in 23 years were worth (in 1995 dollars) LESS than their original investment of $8,000. It is plain from this little vignette that it makes a difference in whose ox is being gored. What’s sauce for the goose is NOT sauce for the gander, as the following quote from the Post’s George Will conclusively demonstrates:

Will: “A society that values individualism, enterprise and a market economy is neither surprised nor scandalized when the unequal distribution of marketable skills produces large disparities in the distribution of wealth….. Promoting a more equal distribution of wealth might not be essential to, or even compatible with, promoting more equitable society.”

Nice going, George, and was that last name Will – or Orwell? He is 180 degrees off the mark in his pro-Wall Street pronouncement lending some intellectual heft to his “keep the rich in a position to forever beggar the poor and working classes” and a resulting “more equitable society.” Will either doesn’t have a clue as to what he is talking about, or knows perfectly well what he is talking about but has long since sold out to the Wall Street propaganda machine in furtherance of an economy which reduces additional compensation for a worker who works hard and efficiently, thus producing new wealth as a result of such improved productivity, and at the same time increases bonuses for Wall Street banks’ CEOs who lost billions and had to come to you and me for bailouts for their adventures in reckless greed on the public till. Will (Orwell) wears glasses, but his myopia is uncured and selective. He needs some tutoring in reality.

Stiglitz writes of the potential loss of social cohesion in this country unless our deepening inequality is reversed, but such observation was hardly novel. Carville noted seventeen years earlier that: “The kind of economic inequality we have in this country is a nation-busting tragedy.” He further points out that Alan Greenspan (then the Fed chairman) has stated that it could be “a major threat to our society.”

He also quoted the then president of the Federal Reserve Bank of New York (certainly no pinko redistributionist), William McDonough, who invited some three dozen VIPs to the New York Fed’s headquarters to discuss “the growing disparity in wages earned by the different segments of our labor force.” The Fed president told such moneyed bigwigs that the wage problem “raises profound issues for the United States  – issues of equity and social cohesion, issues that affect the very temperament of the country.” He further told the gathered rich and corporate audience that “We are forced to face the question of whether we will be able to go forward together in a unified society with a confident outlook or as a society of diverse economic groups suspicious of both the future and each other.”

This, some twenty years ago, and from a Republican whose Fed bank in New York City encompassed Wall Street! Apparently none of his audience from Wall Street was listening; they went back to their offices and continued the deepening of the inequality they had been warned to stop, and by one of their own! The process has continued since, and at an accelerated rate. Greenspan and McDonough, who are not my people, were right to warn of the potential of a loss of social cohesion (which means, essentially, that the country falls apart). We have never been nearer such a tipping point; it is a perilous time.

The Republican banker McDonough was right on the mark when he stated that he fears that we may become “a society of diverse economic groups suspicious of both the future and each other.” That is precisely what has happened in the last twenty years or so. We ARE diverse economic groups, we ARE suspicious of the future, and we ARE certainly suspicious of each other. Would I trust the mentality of a George Will (rich and poor good – let’s keep it that way) or a Mitt Romney (the old 47 percenter) to chart this country’s economic future in a fair and equitable fashion? Answer: Not if I’m awake, and sane.

So where are we? Are we going to reverse this post-1974 inequality policy or not, and if not, are we ready to face the consequences (which even Republicans tell us could lead to a loss of social cohesion)? We are in uncharted and dangerous waters. We must take a new and different course – now. GERALD E

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