Tag Archives: government

America’s Predicament: Reviving the Middle Class and Suppressing Corporatism

 My country has experienced many serious challenges in its relatively brief history: World Wars, Slavery, and the Great Depression to mention the obvious. The huge disparity of income between the wealthy and the middle class could bring the USA to its knees. Noted  economist and Nobel winner Robert Schiller has said that economic inequality is the largest problem facing America today. Gross inequality in the distribution of wages is an injustice to workers in this country, and it is a time bomb whose fuse is sizzling dangerously. If the  current challenge is not addressed and resolved soon, it could ignite and initiate a social revolution with dire consequences.

 Disenchanted Americans

Disenchanted Americans

To fully analyze how we presently stand, let’s look at recent history in this country as a means of gaining perspective for both good times and bad.

I would like to mention that conservative and liberal ideology do not apply in discussions of economics, civics, and social stratification. It is also senseless to mention either political party as being the culprit  or  a hero. After all, Nixon started the EPA, LBJ was a hawk in Viet Nam, and Eisenhower created the Department of Health, Education & Welfare. Good times and accomplishments transcended politics back in the day. Compromise amongst colleagues, instead of gridlock between adversaries, ruled. Flash-forward to the present where adversaries have evolved into arch-enemies, even hatred.

The American Dream

The American Dream

The three decades from the late 1940’s to the late 1970’s produced the most sustained economic growth and prosperity that the world has ever known. Not coincidentally,  the middle class was strong and  sharing the rewards of their unparalleled production. The GI bill enabled the soldiers returning from war the chance to earn an education and pursue the American dream. The accomplishments of the country during those thirty years catapulted the US into a status of  superpower and enabled the Greatest Generation’s attainment of the upward mobility they deserved. The strength of the middle class was unparalleled in the annals of history. As the middle class goes, so does America.

The US, once a model for the middle class, is now ranked 64th in economic inequality by the GINI index which calibrates such things. We are just ahead (more unequal) than Guyana, The Ivory Coast, and Nicaragua and on a par with Venezuela and Uruguay. Some inequality is tolerable, but we are dead last when compared to all developed countries.

2014_Gini_Index_World_Map,_income_inequality_distribution_by_country_per_World_Bank_svg

The GINN Index indicates income inequality

Currently, 400 Americans control more wealth than 150,000,000 American citizens.

Since the Reagan revolution to the present, family income is down -24%—while the top 1% is up +327%. Our disproportionality in income exceeds even the ancient Roman Empire, (famous for its decadence) where the top 1% controlled 16% of wealth. Currently, 1% of Americans control 22% of wealth, and the ratio is  increasing every quarter. The median worker in America in 1979 earned 48 thousand dollars when adjusted for inflation while the median earner in the top 1% brought in 390 thousand dollars. In 2010 the median earner wages slipped to under 34 thousand while the top 1% surged to 1.1 million dollars.

There is no such thing as a perfectly free market. The government sets rules to regulate the marketplace. The key question is, who do the rules benefit or hurt? The GNP has continued to grow steadily from 1927 to the present. In 1927 the 1% wealthiest total was similar to the 1% in 2007 in regard to distribution of wealth. The economies crashed the next year in both cases, mainly because consumer spending ceased. Unlike the Great Depression recovery years, the gap actually increased from 2007 to the present. In both 1928 and 2007 wealth was concentrated in fewer people while the middle class was stagnant and personal debt increased. Middle class spending accounts for 70% of the economy. The key to a healthy economy is a vibrant middle class.

When the middle class doesn’t share in a countries economic gains a downward cycle occurs:

*Wages become stagnate

Victims of Downward Cycle

Victims of Downward Cycle

*Workers buy less

*Companies downsize

*Tax revenue decreases

*Government cuts programs

*Workers are less educated

*Unemployment rises

*Deficit grows

So what happened in 1979 that ended 30 years of a booming economy? Wages got flat as unions begin to disintegrate. Actually this began when Ronald Reagan fired the striking air traffic controllers. Women also entered the work force about that time. Globalization and a world economy were evolving throughout the world. The technology revolution was commencing. Deregulation was in full swing. Corporation and large companies dissolved most of the unions to compete with cheap manufacturing abroad.

What transpired is that workers started working longer hours and taking second jobs, out of necessity, to  pay the bills which were accumulating. As a further product of globalization and technology, the jobs were beginning to go overseas to emerging nations—-particular in the manufacturing sector. Technological advances allowed for a new business model where fewer employees were necessary to  produce their products. Simultaneously the Reagan administration lowered taxes which top earners (the1%) were making from a peak of 90% during the boom years to current levels. Time has shown that the  trick of “trickle-down economics” proved to be the elites peeing on the poor. trickle

The idea that the wealthy and large businesses prospering and assisting the economy through growth has been proven to be a fallacy. The wealthy along with corporations do not utilize their monetary  resources to assist the economy in any way. Corporations increased profits and bestowed to stockholders and executives in the form of bonuses and stock options. The wealthy invested in gold, silver, and bonds. Savings  generally go overseas to shield the rich from taxes. Currently, large corporations have moved their corporate headquarters overseas to avoid our taxes totally.

The average American in the early 80’s had the wife working to make ends meet.  Now new expenditures in the form of child care, health care, and educational expenses drain the bank balance  of two-earner families.

The fact that so many people bought into trickle-down economics can only be explained by the communication skills of a great man and the naïve vulnerability of the American people. After all, the Berlin wall had come down and the Iranian hostages had been released,  so the citizens were “all in” with their charismatic leader.

Ronald Reagan- working

Ronald Reagan- working

Reaganomics was in fact administered to the American people, and with it, the genesis of new political partisanship the precursor to polarization.

This concept of lowering taxes was levied disproportionally to the American people. The average American received a small sniff of a reduced tax burden while the corporate tax and the decrease for the wealthy were unprecedented. The rate for top earners fell from 70% to 28% during his administration. Surprisingly the rate for most Americans rose during his tenure when the 1986 Tax Reform Act raised taxes on the average American to levels higher than when he first took office. Prior to that in 1983 Ronald Reagan increased the hidden taxes payroll taxes of Social Security and Medicare.

Meanwhile the labor unions eroded, and the voices of workers were silenced. The American workers were working longer hours for less money and benefits. Women entered the work force in larger numbers out of necessity. Their pay was only a small fraction of what their male counterpoints collected. Simultaneously Defense spending increased 33% and money earmarked for education was eliminated. The cost of college increased geometrically as new middle class expenditures appeared in the form of health care and child care.

While we were flexing our muscles with defense spending, Japan, Germany, and South Korea were committing money towards higher education. As globalization and technology were emerging in the world, we were caught up on winning a cold war which didn’t exist anymore.

iphone_4_colors

What countries benefit from the production of our I-phones?  Take a guess from this list of candidates:

  • USA
  • China
  • Japan
  • South Korea
  • Germany

The sad reality is:

  1. Japan————34%
  2. Germany———17%
  3. South Korea—-13%
  4. USA—————-6%
  5. China————-3.6%

Yes, we missed out on a giant opportunity. The sad fact is our workers were worker 300 hours a year more than Europe and even exceeded the notoriously Japanese whose work ethic is legendary. And for what I ask you? So that the profits of corporations can increase… so the top executives might receive huge bonuses… so they can lay-off thousands of workers…so they can move their operations offshore so they can donate money to political campaigns?  This is where deregulation, tax reform (for the wealthy), and  our strong defense lead us to. Looking back now, 25 years after the wall fell, allows me to see the inevitable outcome of a flawed domestic program.

Of course the “read my lips” promise of Reagan’s successor led to a continuation of the “great communicators” policies and priorities. The 41st president who inherited a 300 billion dollar deficit from his predecessor was of the opinion that “the economy was not as exciting as foreign policy.” Perhaps in his lack of interest, in such, his term was undistinguished in regard to domestic issues such as the economy, labor, and unemployment. The original Bush left a deficit of about 300 billion pretty much what he inherited from Reagan. The caretaker president, George H. Bush really just allowed Reagan’s domestic policies to continue and focused on an  international agenda.

Bill & Al installing computer cable in the White House

Rhodes educated Bill Clinton running on a “putting people first” slogan and philosophy upset his opponent in November of 1992. The kinder, gentler nation that the elder Bush envisioned was now in the hands of a progressive thinker from Arkansas. It was under Bill Clinton’s watch that the 300 billion dollar deficit turned into a 400 billion dollar surplus. America had a brief reprise of the glory days of yester-years. Under Clinton, causes for the middle class were championed.  The first bill he signed was the Family Medical Leave Act. He continued contributing domestically with educational technology expenditures and eventually tax credits for higher education.

Clinton was a centralist and his failure to get health care reform passed was his biggest disappointment of his domestic agenda. Under Bill Clinton’s administration we welcomed the first budget surplus in 30 years. The economy boomed and unemployment decreased from 7.5 percent to 4.2. Inflation was virtually non-existent. As fate would have it, before the surplus could be reinvested in education, a sexual scandal the likes the country had never seen before, enveloped the nation. The political will to mastermind the revitalization of the middle class eroded, and poor Bill was left to explain his definition of sex to a shocked nation.

Clinton would rival Watergate and the  JFK assassination as  the 20th Centuries’ most tragic (and bizarre) exits from the oval office. The irony is that “Slick Willie” might re-enter the oval office as the first, “first gentleman.”

Before I comment or highlight George W. Bush, I would like to make mention how absolutely vital it is for all Americans to exercise their right of suffrage. As most everyone know, the 43rd president received half a million fewer votes fewer than Al Gore his opponent. Additionally, Florida was so close that a recall was necessary, and when that dragged-on due to state-wide partisanship and litigation, the issue went to the Supreme Court. By a 5 to 4 vote the highest court settled the presidential election on grounds that Florida would not have enough time for a manual recount in four disputed counties.

My point is two-fold: why not award electors by state on an equatable “pro-rata” basis as opposed to the “winner take all” indoctrinated by the constitution? Secondly, Al Gore (who did not carry his home state of Tennessee) took the high road and conceded defeat even though he had plenty of legal options available to pursue. Say whatever you want to about Al Gore, His unselfish decision prevented our country from being hopelessly divided as we entered the new millennium.  It also permits one to wonder how “dangling chads” might decide our countries fate concerning future wars— along with the state of our economy and with that the plight of middle-class Americans.

To his credit George W. named a terrorist czar and began the war on terror after 911. He also created the “No Child Left Behind Act” initiative with his wife, Laura’s, support and assistance. Medicare reform was accomplished during his watch.

The second Bush Administration will be forever associated with failure. The Iraq War cost the American taxpayer over a trillion dollars.An invasion into Afghanistan which was suppose to capture the terrorist, Ben Laden,  developed into “nation building” and another trillion or so in expenditures for nothing other than to create more enemies. Unemployment rose to unheard of levels and the stock market tanked.

Mission Accomplished

Mission Accomplished

His anti-terrorism policy violated the Geneva Convention and amounted to nothing short of torture. In 2008, his last year in office, 2.1 million Americans lost their jobs. Corporations had record profits as the rich got richer and the poor got poorer. He showed his true elitist colors by ignoring the victims of Hurricane Katrina. Our country was in worse shape domestically, economically, and internationally than at any point since 1928.

The 2008 election brought a record turnout in a presidential election. A reversal of Bush’s policy brought a mandate and the United States first black president.

In 2010 the Supreme Court decided in Citizens United vs. FEC that corporation were like individuals and they could without limits donate as much money as they desired to political campaigns. PAC’s and wealthy Americans could now could virtually buy any election. Special interest groups and lobbyist had blank checks to counter the meager contributions of middle class America. Our 2 parties, were puppets of corporations and the wealthy,  they had the real power now, not the people.

The 2012 election pitted elitist Mitt Romney against the skilled orator from Hawaii. The election turned when a video tape of Romney went public, with the candidate admitting he didn’t care about 47% of Americans. Barrack Obama won handily with another record turnout, when it was finally disclosed that Romney only paid 13.8% in federal taxes the previous year. The middle class obviously doesn’t like the privileged when they are arrogant.

374515_Obama-va-signing

Barack Obama Signing Tax Relief Bill

Barack Obama entered the White House with unemployment at 10%, the stock market at 7000, and a global financial crisis in his lap. His first major bill was the massive American Recovery and Reconstruction Act which was signed on February 13th, 2009. He later lifted the restrictions for Federal spending on Embryonic Research. He compromised with Republicans in getting a tax bill passed which continued Bush’s tax cuts for all Americans. Obama wanted the cuts (continuation of Bush’s cuts) to apply to Americans making less than 250,000 dollars annually. Instead, the final bill was changed so much that liberals and conservatives both disliked it. After a filibuster in the senate, the super-wealthy still got their tax relief (sorely needed) and the middle class got a tax holiday and also a one year reduction in FICA to assist the middle class temporary. The package increased the deficit to record amounts. Surprise- big business won again and the middle-class gots what the frog left on the lily pad (thanks, dad, RIP for the imagery).

 President Obama in his state of the union address in 2010 declared, “Last week, the Supreme Court reversed a century of law to open the floodgates for special interests—including foreign corporations—to spend without limit in our elections. Well I don’t think American elections should be bankrolled by America’s most powerful interests, or worse, by foreign entities.” That is a scary thought indeed that our elections could be bankrolled by our enemies. But what can we do since it is the law of the land voted on by the highest court?

Now that the mid-term elections have been tabulated it appears that our country has more gridlock, filibuster, and veto in its future. The sorry precedent was set by a junior senator from Texas, filibustering to shut down the government— because he couldn’t accept the health care bill which was signed, sealed, and delivered to the American public. Payback will be fair play for the donkeys. I see no reason to expect anything but the status quo, a do nothing Congress full of finger pointing. Politicians continuing to acquire power as special interest groups, lobbyists, PAC’s, & Super-PAC’s tell them how to react and how to spin their rhetoric into deceptive propaganda for our citizens to consume. I am an optimist so I will try to find a half-full, slither of light in the gathering gloom.

Our Future

Our Future

We need to have campaign reform immediately. We need limits and controls on how much money can be donated by individuals and corporations in order to have their candidates elected. We need to  eliminate media’s influence and  bias (both conservative and liberal) in reporting news events. We need to amend the constitution to put limits on lobbyist ability to influence our representatives. We need to make our representatives public servants (not paid officials) like the founding father’s original designed for  their country. We need to implement a means of recall so when our representatives wander from the wishes of the people whom elected them-there are repercussions. We need to utilize modern technology so citizen can vote directly on important legislation.

Who is looking out for the middle class in America today? We the people need to take back the government from the tyrants who stole it from us. I think with  more dollars spent on education, instead of defense we can cultivate the young leaders today…who can indeed modify our democracy. We are in a serious pickle; we have dug ourselves a giant hole in which to bury ourselves. I have faith in the young intellects in this country. They can turn the terrible tide away from the mega-corporations and give the middle class a voice again. I just hope and pray that they have the courage to stand up for what is theirs.

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