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February 25, 2015


My followers are probably tired of my constant harping on income inequality, but the issue is simply too big and too important to our economy (and perhaps even our survival as a First World country) to ignore. It appears, finally, that ordinary Americans may be getting the picture, and it is not a pretty one. A recently published article in the St. Louis Post-Dispatch which treats our growing awareness of the problem has triggered my determination to stay focused on by far the biggest issue in our economy today, an issue which won’t go away given the determination of our economy’s owners, the rich and corporate class, to continue to hog all of the fruits of our economy which all of us helped create but for which only the few of the rich and corporate class are compensated.

The latest dodge manufactured by the rich and corporate class to avoid sharing what all of us helped create as producers and consumers and taxpayers is the tax game. They are pretending to favor a middle class tax cut in return for certain tax tradeoffs to their ilk, but here’s the catch: Our ruling class wants to substitute tax cuts for wage increases on the theory that now enlightened corporate workers will back off wage demands if they have more money in their pockets via a tax cut. This is a phony exercise since the rich and corporate class under such a scheme will enjoy less taxes, continue to avoid sharing of our economy’s fruits, avoid paying increased wages, and saddle our treasury instead of their bottom lines in putting more money (our own!) into our pockets.

Such a plan as fleshed out effectively means that we are paying ourselves out of our own treasury, i.e., our government (and NOT corporate employers) is paying our increased “wages,” and worse – such a phony “tax cut” reduces our government’s ability to fund already tattered social services in such critical areas as education, healthcare, R & D etc. As noted in this connection by the Economic Policy Institute: “Cutting taxes gives away revenue needed to protect and expand funding for education, infrastructure and domestic programs like social security.” If we fall for this toxic carrot dangled before us by the rich and corporate class and their congressional toadies, then they will once again have not shared or paid anything, have less taxes to pay, and have saddled us with dwindling revenues to our treasury to fund social services now of Third World variety while they once again run away with the store.

The penultimate irony of this so-called “tax cut plan” is that any resulting increase in pocket change to working consumers will be eaten up in short order by price inflation which is controlled by (guess who?) the rich and  corporate class. The final and disgusting irony is, of course, the impoverishing effect of increased rates of inflation on fixed incomes of the retired, the poor and disabled.

Thanks for the “tax break,” but it is clear that “tax breaks” (as here unmasked) are no substitute for substantial wage increases and sharing of marginal productivity with corporate workers. Let’s not agree to greed as policy under the cover of paying wages from our own pockets to ourselves, wages corporations should be paying from their historic profits of late. We need higher wages paid by corporations, not tax breaks we pay for ourselves. Let’s not be taken in by such con jobs hatched by the rich and corporate class to further fleece both working and non-working America.

A new study by Pew Research Center reports that many Americans have begun to figure out the new economic reality. About a third of Americans who self-identified as part of the middle class in 2008 now identify themselves as part of the “lower-middle” or “lower” classes. Much of the change occurred over the past 18 months because the reality is now too stark to ignore. They are finally beginning to connect the dots: Things cost more than they used to and there’s less money to pay for them. A job may have been lost or a home foreclosed upon and/or their kids may have been forced to drop out of college.

Thus when Americans read that the richest 1 percent of  households took home 95 percent of all the income gains after Bush’s Great Recession of 2007 – 2008; that the world’s richest 85 people control the same amount of wealth as the poorest half of the entire world’s population of 7 billion people; and that median household income since Bush’s Great Recession has dropped $4,610 per annum from what it was in 1996 – they are finally seeing through the propaganda and pretense of the rich and corporate class and coming to understand that they are being had; that what they should be seeing in their paychecks is resting instead in corporate dividends, buybacks, capital gains and outlandish executive compensation (including bonuses and stock options). The response from the rich and corporate class? Give yourselves a raise from your own money. Disgusting!

It must be plain by now to all those who have a pulse that the whole middle class dream – a home of your own, a good job with good benefits, good schools for the kids, money in the bank for retirement – is just that, a dream, but one divorced from harsh economic realities. The old ethic of “work hard, get an education, keep your nose clean etc.” doesn’t work anymore, not when corporate employers are in charge of your life via political toadies and politically crushed labor unions and anyone else in favor of a fairer and more equitable distribution of the fruits of our economy. The wage inequality sponsored by the rich and corporate class (per Pew) is making their sponsors richer and richer and their workers poorer and poorer, a situation that cannot continue indefinitely (per Piketty and my earlier blogs on its ultimate damage to aggregate demand), but it can and is putting an end to what we thought America is about. It appears Ebenezer Scrooge has won his fight with Norman Rockwell, and we are all losers (even, eventually, the rich and corporate class among us today per Piketty’s r > g formula based on three centuries of research).

The St. Louis Post-Dispatch: “There are vast inequalities in America, both in wealth and how government   treats people. More Americans are beginning to realize it. Now let’s see what they do about it.”

My activist take on what to do about the question posed by the Post-Dispatch is to adopt Keynesian economics as policy and put an end to austerity economics while simultaneously ridding ourselves of the political toadies of whatever political stripe in the Congress and state legislatures who have long since sold their political souls to the rich and corporate class in exchange for “political contributions” (aka bribes). Whatever happened to Lincoln’s observation that our country exists to serve the interests OF the people, FOR the people and BY the people? Are the people being served by political toadies who arrange the bullying tactics and greed of the rich and corporate class while impoverishing ordinary Americans?

Not in my book.   GERALD    E

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