On April 28, 2016, Dave Johnson writes on The Smirking Chimp:
The Trans-Pacific Partnership (TPP) went dormant in Congress after election season began. It became clear that the public despises our country’s corporate-dominated “trade deals” that let companies just lay people off and close factories here to take advantage of conditions in countries that allow people and the environment to be exploited. Candidates who could sense which way the wind was blowing told voters they oppose TPP, and Congress dropped it — for now.
But now people who follow these things are hearing more and more talk behind the scenes that indicate corporate America is going to try to push TPP through in the “lame duck” Congressional session after the elections. This is a session in which the old Congress consisting of the ones who might have gotten voted out minus new ones who just got voted in, and the re-elected incumbents who won’t be up for re-election for two more years can sneak things past the public with little or no accountability.
“I think we’ll probably get it through, but it’s shaky,” Senate Finance Committee Chairman Orrin Hatch, a Utah Republican, said in an interview. “It will probably have to be after the elections. I think we have a better chance to passing it after, but we’ll see” what Senate Majority Leader Mitch McConnellwants to do, he said.
McConnell, a Republican from Kentucky, has indicated plans not to pursue it “certainly before the election,” leaving the door open to a vote in the lame-duck session, according to trade analysts.
[. . .] Business groups are “going to put a lot of pressure on McConnell to make sure this doesn’t fall through, and they have influence,” said Julian Zelizer, a presidential historian at Princeton University.
[. . .] Lawmakers fearing a voter backlash may be more apt to stay quiet on the issue through Election Day and take controversial votes during the lame-duck session, which can last as long as a month after the election and before a new Congress convenes in January, according to Bloomberg Intelligence.
Monday’s Inside Trade newsletter (subscription), had a story, “Obama Signals TPP To Move Forward After Election Cycle Ends”:
President Obama this week said the prospects for congressional approval of the Trans-Pacific Partnership will be best after the election season ends, signaling that the White House still believes it can successfully navigate political headwinds and push the trade agreement through Congress this year.
“And with respect to Congress and Trans-Pacific Partnership, I think after the primary season is over the politics settle down a little bit in Congress, and we’ll be in a position to start moving forward,” Obama said on Sunday (April 24) in Germany at a joint press conference with German Chancellor Angela Merkel. “But I think we all know that elections can sometimes make things a little more challenging, and people take positions, in part, to protect themselves from attacks during the course of election season.”
Where Obama says here that people running for office “take positions, in part, to protect themselves from attacks during the course of election season,” he means they lie and tell voters that they are against TPP, but they intend to vote for TPP after we’ve vote for them. Nice.
A top U.S. business leader expects a vote on a massive Asia-Pacific trade agreement after the November elections.
U.S. Chamber of Commerce President Tom Donohue said Monday that election-year pressures will force the Senate to vote on the Trans-Pacific Partnership (TPP) during a lame-duck session to protect several vulnerable Republican incumbents.
Translation: they understand that the voters hate it, but the giant corporations want it, so they will try to push a vote after the election to “protect” politicians from the voters. And what the Chamber of Commerce “expects” of Congress usually happens.
Call your Representative and both your Senators and let them know how you feel about the possibility of Congress sneaking a vote for TPP after the election.
Not surprisingly, the Trans Pacific Partnership agreement will promote the interests of giant, multinational corporations over the interests of labor, environmental, consumer, human rights, or other stakeholders in democracy, AND FURTHER CONCENTRATE OWNERSHIP OF THE NON-HUMAN PRODUCTIVE CAPITAL MEANS OF PRODUCTION!
The REAL STORY is a story about the collusion among a globally wealthy ownership class to further concentrate private sector ownership in ALL FUTURE wealth-creating, income-generating productive capital asset creation on a global scale. A sorta FREE TRADE ON STEROIDS!
This troubling trend explains why many voters — especially in states dependent on manufacturing — are so fired up about issues like trade. Unfortunately, it is likely we will see job losses continue in the upcoming months, in part because China’s massive industrial capacity continues unabated.
Despite promises from China officials that the country will cut its steel production, for example, one of China’s largest steel companies announced this week that will increase output by 20 percent over the next year.
Already, 12,000 U.S. steelworkers have faced layoffs because of China’s steel overcapacity. It’s not just the United States — across the pond in the United Kingdom, tens of thousands of workers could soon be out of a job permanently. On Friday, Mexico’s Economy Minister called on the United States, Mexico and Europe to come together to stop China’s steel exports.
“It makes full sense that we get together — and we’re going to get together in Brussels — to try to give a common response to the Chinese: Either you reduce your production, stop dumping on us… or we are really going to react violently, trade-ly speaking,” said minister Ildefonso Guajardo. “I’m saying with tariffs and anti-dumping measures.”
Steel imports aren’t the only issue impacting American manufacturing workers, of course. China’s currency manipulation and our growing trade deficit also continue to plague the sector. “That’s not right. American manufacturers can outcompete anyone in the world, but they need a level playing field,” said AAM President Scott Paul.
All of this, of course, has been reflected in the 2016 campaign, both at the presidential level andin down-ticket races. Voters are facing major economic problems like widening inequality and a hollowed-out middle class, in part because of manufacturing’s decline.
That’s why trade, jobs and manufacturing were such big issues in the Michigan and Ohio presidential primary races. They are likely to impact upcoming races in Wisconsin and Pennsylvania as well — which is whyallofthecandidates are touting their manufacturing credentials.
“We’ll never experience a true manufacturing job resurgence in the United States unless we get a lot tougher with China and policy enforcement,” Paul added. “That’s something many Michigan and Ohio voters in both parties got behind, and it is sure to be a principle Wisconsinites will stand up for at the polls next week.”
On February 16, 2016 Zeeshan Aleem writes on Yahoo! News:
Thomas Piketty, perhaps the most influential economic thinker of the left in the Western world, is impressed by the rise of Sen. Bernie Sanders.
In a post for Le Monde republished on Tuesday by the Guardian, the French economist outlined why he felt the populist senator’s ascent spells “the end of the politico-ideological cycle opened by the victory of Ronald Reagan at the 1980 elections.” Piketty argues that regardless of Sanders’ fate in this particular contest, he has created an opening for similar candidates in the future —”possibly younger and less white” — who could successfully make it into the White House and “change the face of the country.”
What’s most interesting about Piketty’s analysis is that he doesn’t see Sanders as following in the footsteps of Europe’s social democratic models, but rather leading the United States toward a possible return to the nation’s pioneering 20th century experiments with extremely progressive taxation and social spending.
Two women visit a newly opened robot-staffed store run by telecommunications and mobile phone carrier SoftBank Corp. in Tokyo, Japan on March 24.
On March 28, 2016, Bryan Dean Wright writes in the Los Angeles Times:
A viral video released in February showed Boston Dynamics’ new bipedal robot, Atlas, performing human-like tasks: opening doors, tromping about in the snow, lifting and stacking boxes. Tech geeks cheered and Silicon Valley investors salivated at the potential end to human manual labor.
Shortly thereafter, White House economists released a forecast that calculated more precisely whom Atlas and other forms of automation are going to put out of work. Most occupations that pay less than $20 an hour are likely to be, in the words of the report, “automated into obsolescence.”
In other words, the so-called Fourth Industrial Revolution has found its first victims: blue-collar workers and the poor.
The general response in working America is disbelief or outright denial. A recent Pew Research Center survey found that 80% of Americans think their job will still exist in 50 years, and only 11% of today’s workers were worried about losing their job to automation. Some — like my former colleagues at the CIA – insist that their specialized skills and knowledge can’t be replaced by artificial intelligence. That is, until they see plans for autonomous drones that don’t require a human hand and automated imagery analysis that outperforms human eyes.
Human workers of all stripes pound the table claiming desperately that they’re irreplaceable. Bus drivers. Bartenders. Financial advisors. Speechwriters. Firefighters. Umpires. Even doctors and surgeons. Meanwhile, corporations and investors are spending billions — at least $8.5 billion last year on AI, and $1.8 billion on robots — toward making all those jobs replaceable. Why? Simply put, robots and computers don’t need healthcare, pensions, vacation days or even salaries.
Powerhouse consultancies like McKinsey & Co. forecast that 45% of today’s workplace activities could be done by robots, AI or some other already demonstrated technology. Some professors argue that we could see 50% unemployment in 30 years.
Deniers of the scope and scale of this looming economic upheaval point hopefully to retraining programs, and insist that there always will be a need for people to build and service these machines (even as engineers are focused on developing robots that fix themselves or each other). They believe that such shifts are many decades away, even as noted futurist Ray Kurzweil, who is also Google’s director of engineering, says AI will equal human intelligence by 2029. Deniers also talk about all the new jobs they assume will be created during this Fourth Industrial Revolution. Alas, a report from the 2016 World Economic Forum calculated that the technological changes underway likely will destroy 7.1 million jobs around the world by 2020, with only 2.1 million replaced.
With the future value of human labor (read: our incomes) in doubt, what do we do?
One way to cushion the economic blow is to reclaim something from the technology realm that we’ve been giving away for free: our personal data.
Companies that sell personal data should pay a percentage of the resulting revenue into a Data Mining Royalty Fund that would provide annual payments to U.S. citizens, much as the Alaska Permanent Fund distributes oil revenues to Alaskans. This payment scheme would start with traditional data — customer, financial and social media information sold to advertisers — but would also extend to future forms of data like our facial expressions and other biometrics. If Google, Facebook or others were profiting from harvesting timber, oil, gold or any other public resource, it would be illegal and immoral for them not to pay for it. The same logic should apply to our data.
Profound changes lie ahead with implications beyond our paychecks, to be sure. Ethicists and philosophers already are debating what a world without work might look like. It’s clear that no one will escape the outcomes — negative and positive — of this economic and technological revolution.
A Data Mining Royalty Fund isn’t about helping just the unemployed factory worker who used to earn $20 an hour, the truck driver replaced by self-driving vehicles or the minimum-wage barista. It’s about taking steps to guarantee some minimum income to your family, or the one down the block, before any of us are automated into obsolescence.
This is another recent article that looks at a future where there will be hordes of citizens of zero economic value. That is, unless the system can be reformed to empower EVERY citizen to acquire OWNERSHIP in the wealth-creating, income-producing capital assets resulting from technological invention and innovation.
Because productive capital is increasingly the source of the world’s economic growth it should become the source of added property ownership incomes for all. The reality is if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all.
Rather than focus on Job Creation, Job Retraining, and a redistributed Minimum Guaranteed Income that holds back technological invention and innovation, our economic policies should focus on wealth-creating, income-producing capital Ownership Creation.
Given that there is no question that robotic technology will continue to expand the productivity and in large measure destroy jobs and devalue the value of human labor, the question that SHOULD be urgently addressed is WHO SHOULD OWN THE FUTURE TECHNOLOGY ECONOMY? Will ownership continue to concentrate among the 1 percent wealthy ownership class who now OWNS America, or will we reform the system to provide equal opportunity for EVERY child, woman, and man to acquire personal OWNERSHIP in FUTURE non-human capital assets paid for with the FUTURE earnings of the investments in our technological future?
The conclusions should surprise no one who is conscious and who has even causally observed the constant shift to non-human productive inputs in the manufacturing, distribution, and sales of products, as well as the delivery of services, that has been occurring during their lifetime. The first burst of this phenomena was the Industrial Revolution. But now we are in an age of technology sophistication that is permeating every sector of industry and our day-to-day lives.
There’s nothing new about machines replacing people, but the rate of replacement is exponential and the result is that productivity gains lead to more wealth for the OWNERS of the non-human factor of production, but for others who have always been dependent on jobs as their source of income, there has been a steady decline to poverty-level labor incomes.
What must be understood (which unfortunately is not understood by conventional economists) is that there are two independent factors of production––human or labor workers and non-human or physical productive capital––productive land, structures, machines, super-automation, robotics, digital computerized operations, etc.
Fundamentally, economic value is created through human and non-human contributions.
Also what needs to be understood is that human productivity has not advanced (our human abilities are limited by physical strength and brain power––and relatively constant), but that the productiveness of the non-human factor of production––productive capital––is the reason that private sector corporations, majority owned by the “1 percent,” are utilizing the non-human factor of production increasingly to create efficiencies and save labor costs. It is the function of technology to save labor from toil and to enable us to do things that otherwise is humanly impossible without non-human input.
The critical question becomes who should OWN productive capital? The issue of OWNERSHIP is unbelievably overlooked by those in academia and politics, as well as by the author of the MIT Technology Review article. Yet we live in country founded upon private property rights.
Today, large streams of data, coupled with statistical analysis and sophisticated algorithms, are rapidly gaining importance in almost every field of science, politics, journalism, and much more. What does this mean for the future of work?
But what about China and Asia, the place where all the manufacturing jobs are supposedly going? True, China has added manufacturing jobs over the past 15 years. But now it is beginning its shift to super-robotic automation. Foxconn, which manufactures the iPhone and many other consumer electronics and is China’s largest private employer, has plans to install over a million manufacturing robots within three years. Thus, in reality off-shoring of manufacturing will eventually be replaced by human-intelligent super-robotic automation.
The pursuit for lower and lower cost production that relies on slave wage labor will eventually run out of places to chase. Eventually, “rich” countries, whose productive capital capability is owned by its citizens, will be forced to “re-shore” manufacturing capacity, and result in ever-cheaper robotic manufacturing.
“The era we’re in is one in which the scope of tasks that can be automated is increasing rapidly, and in areas where we used to think those were our best skills, things that require thinking,” says David Autor, a labor economist at Massachusetts Institute of Technology.
Businesses are spending more on technology now because they spent so little during the recession. Yet total capital expenditures are still barely running ahead of replacement costs. “Most of the investment we’re seeing is simply replacing worn-out stuff,” says economist Paul Ashworth of Capital Economics.
Yet, while the problem is one that no one can no longer ignore, the solution also is one starring them in the face but they just can’t see the simplicity of it.
The fundamental challenge to be solved is how do we reinvent and redesign our economic institutions to keep pace with job destroying and labor devaluing technological innovation and invention so not all of the benefits of OWNING FUTURE productive capacity accrues to today’s wealthy 1 percent ownership class, and ownership is broadened so that EVERY American earns income through stock OWNERSHIP dividends so they can afford to purchase the products and services produced by the economy.
None of this is new from a macro-economic viewpoint as productive capital is increasingly the source of the world’s economic growth. The role of physical productive capital is to do ever more of the work of producing more products and services, which produces income to its owners. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 235 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advance amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.
People invented tools to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive––the core function of technological invention. Binary economist Louis Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in Kelso’s terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, Kelso asserted that, “free-market forces no longer establish the ‘value’ of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.”
Furthermore, according to Kelso, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. Kelso postulated that if both labor and capital are interdependent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive.
The 400 wealthiest Americans and the other 1 to 10 percent richest Americans are rich because they OWN wealth-creating, income-generating productive capital assets. The disenfranchised poor and working and middle class are propertyless in terms of OWNING productive capital assets.
Because productive capital is increasingly the source of the world’s economic growth, shouldn’t we be asking the question why is not productive capital the source of added property OWNERSHIP incomes for all? Why are we not addressing how the system facilitates greed capitalism and envy while concentrating productive capital OWNERSHIP among the 1 to 10 percent of the population?
The change that is necessary is to reform the system to provide equal opportunity for EVERY American to acquire wealth-creating, income-generating productive capital assets on the basis that the investments will pay for themselves––and on the same terms that the wealthy OWNERSHIP class now utilizes. They are able to use the investment’s earnings to pay off the capital credit loans used to finance their investments, without having to use their own money or deny themselves consumption.
A National Right To Capital Ownership Bill that restores the American dream should be advocated by the progressive movement, which addresses the reality of Americans facing job opportunity deterioration and devaluation due to tectonic shifts in the technologies of production.
There is a solution, which will result in double-digit economic growth and simultaneously broaden private, individual OWNERSHIP so that EVERY American’s income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.
The solution is obvious but our leaders, academia, conventional economist and the media are oblivious to the necessity to broaden OWNERSHIP in the new capital formation of the future simultaneously with the growth of the economy, which then becomes self-propelled as increasingly more Americans accumulate OWNERSHIP shares and earn a new source of dividend income derived from their capital OWNERSHIP in the “machines” that are replacing them or devaluing their labor value.
The solution will require the reform of the Federal Reserve Bank to create new OWNERS of FUTURE productive capital investment in businesses simultaneously with the growth of the economy. The solution to broadening private, individual OWNERSHIP of America’s FUTURE capital wealth requires that the Federal Reserve stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every child, woman, and man to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Policies need to insert American citizens into the low or no-interest investment money loop to enable non- and undercapitalized Americans, including the working class and poor, to build wealth and become “customers with money.” The proposed Capital Homestead Act would produce this result.
Through Just Third Way reforms, economic growth would be freed from the slavery of past savings (“old money”), while creating a domestic source of new asset-backed, interest-free (but not cost free) money and expanded bank credit to finance new capital repayable out of future savings (earnings). To ensure that OWNERSHIP of future private sector growth and newly created wealth is universally accessible to every citizen, such newly created money and credit would only be available through economic democratization vehicles, administered through the competitive member banks of a well-regulated Federal Reserve central banking system.
Under the first tier, future increases in the money supply (“new money”) would be linked to actual growth of the economy’s productive assets, creating new OWNERS of new capital asset wealth through widespread access to interest-free capital credit repayable with future profits. The Federal Reserve would create (i.e., “monetize”) interest-free credit, with lenders adding their normal markup as service fees above the cost of money. This would establish an unsubsidized minimal rate for financing technological growth. This would provide the public with a currency backed by increasingly more efficient instruments of production, real wealth-producing capital assets, rather than unsustainable government debt.The creation of new money and credit would be non-inflationary and would simultaneously broaden purchasing power throughout the economy. To accomplish this, a key reform is a two-tiered interest policy by the Federal Reserve that would distinguish between productive and non-productive uses of credit.
The second tier would allow substantially higher, market-determined interest rates for non-productive purposes, for which “past savings” would remain available. The Federal Reserve would be restrained from future monetization of national deficits or encouraging other forms of non-productive uses of credit, causing upper-tier credit to seek out already accumulated savings at market rates.
Capital Homesteading would also provide through capital credit insurance a rational way to deal with risk, as well as an additional check on the quality of loans being supported by the Federal Reserve. Capital credit insurance and reinsurance policies would offset the risk that the enterprises issuing new shares on credit might fail to repay the loans. Such capital credit default insurance would substitute for collateral demanded by most lenders to cover the risk of non-payment, thus enabling the poor and others with few assets to overcome the collateralization barrier that excludes poor people from access to productive credit.
On March 28, 2016, John Nichols writes in The Nation:
Any honest discussion of balancing budgets has to begin with an acknowledgement that it is necessary to audit Pentagon spending and address the bloated budgeting of the Department of Defense. As Senator Rand Paul explained back when he was Time magazine’s “most-interesting man in politics”: A serious plan for balancing the federal budget must feature a plan for the “draw-down and restructuring of the Department of Defense.”
When he entered the Republican Party’s bloated 2016 presidential race, Paul became less interesting. But he still asked some of the best questions. For instance, in Paul’s finest GOP debate performances, he demanded to know, “How is it conservative to add a trillion dollars in military expenditures?” As the only serious candidate in the Republican race, Paul informed his opponents: “You cannot be a conservative if you’re going to keep promoting new programs that you’re not going to pay for.”
A recognition of the need to address the Pentagon’s excessive and irresponsible spending should be at the center of the politics of both major parties. Unfortunately, despite some attempts by Paul on the Republican side andBernie Sanders (and, while he was still in the race, Lincoln Chafee) on the Democratic side, the 2016 presidential competition has not featured sufficient discussion of the pathologies that develop when Pentagon excess is encouraged.
But the Congressional Progressive Caucus has steered the discussion in a sensible direction with its 2017 “People’s Budget,” which proposes a “Prosperity, Not Austerity; Invest in America” agenda. At the heart of the CPC proposal is a commitment to a $1 trillion infrastructure investment program that includes $765 million to address the infrastructure crisis in Flint, Michigan, which has evolved into a humanitarian crisis. There are also proposals for necessary investments in healthcare, education, and programs to address hunger. And, as usual with the most fiscally and socially responsible caucus in the Congress, there is a plan to pay for it all.
The CPC retains its commitment to a financial-transactions tax on Wall Street speculation, as well as proposals to close loopholes and end practices that allow corporations and CEOs to avoid paying taxes. By combining smart policies and smart economics, says Congressman Mark Pocan, the Wisconsin Democrat who serves as the first vice chair of the CPC, which now has more than 70 members. The People’s Budget “reverses harmful austerity cuts and fixes a system that for far too long has only benefited those at the top. The Progressive Caucus Budget rebuilds our crumbling roads and bridges, creates good paying jobs, and increases educational opportunities from pre-kindergarten to college. Our budget invests in the American people and gives working families the best opportunity to get ahead.”
But what may be most striking about the CPC budget is the determination of the caucus to address the excessive Pentagon spending that eats up so much of the hard-earned tax money Americans send to Washington.
“Pentagon spending has doubled over the last decade at the expense of investments in working families,” explains the CPC document. “But as the war in Afghanistan draws to a close, we need a leaner, more agile force to combat realistic twenty-first-century threats. The People’s Budget responsibly ends operations in Afghanistan, brings our troops home, focuses Pentagon spending on modern security threats instead of Cold War-era weapons and contracts, and invests in a massive job creation program that will help workers transition into civilian jobs. The People’s Budget also increases investments in diplomacy, sustainable development, and humanitarian assistance to address the ongoing crises in Syria and Iraq.”
The CPC plan features a proposal that progressives, responsible moderates, and thinking conservatives have embraced: auditing the Pentagon. “As the only federal agency that cannot be audited, the Pentagon loses tens of billions of dollars annually to waste, fraud, and abuse,” argues the CPC. “It is past time to check the wasteful practices with little oversight that weaken our financial outlook and ultimately, our national security.
With real information about current defense spending, and about the sort of spending cuts that might realistically and responsibly be made as part of a shift in priorities, the CPC outlines an approach there steers the United States toward a better balance when it comes to budgeting.
On March 19, 2016, Robert Reich writes on Nation Of Change:
The fact is, recent trade deals are less about trade and more about global investment.
I used to believe in trade agreements. That was before the wages of most Americans stagnated and a relative few at the top captured just about all the economic gains.
The old-style trade agreements of the 1960s and 1970s increased worldwide demand for products made by American workers, and thereby helped push up American wages.
The new-style agreements increase worldwide demand for products made by American corporations all over the world, enhancing corporate and financial profits but keeping American wages down.
The fact is, recent trade deals are less about trade and more about global investment.
Big American corporations no longer make many products in the United States for export abroad. Most of what they sell abroad they make abroad.
The biggest things they “export” are ideas, designs, franchises, brands, engineering solutions, instructions, and software, coming from a relatively small group of managers, designers, and researchers in the U.S.
The Apple iPhone is assembled in China from components made in Japan, Singapore, and a half-dozen other locales. The only things coming from the U.S. are designs and instructions from a handful of engineers and managers in California.
Apple even stows most of its profits outside the U.S. so it doesn’t have to pay American taxes on them.
Recent “trade” deals have been wins for big corporations and Wall Street, along with their executives and major shareholders, because they get better direct access to foreign markets and billions of consumers.
They also get better protection for their intellectual property – patents, trademarks, and copyrights – and for their overseas factories, equipment, and financial assets.
That’s why big corporations and Wall Street are so enthusiastic about the Trans Pacific Partnership – the giant deal among countries responsible for 40 percent of the global economy.
That deal would give giant corporations even more patent protection overseas. And it would allow them to challenge any nation’s health, safety, and environmental laws that stand in the way of their profits – including our own.
But recent trade deals haven’t been wins for most Americans.
By making it easier for American corporations to make things abroad, the deals have reduced the bargaining power of American workers to get better wages here.
The Trans Pacific Trade Partnership’s investor protections will make it safer for firms to relocate abroad – the Cato Institute describes such protections as “lowering the risk premium” on offshoring – thereby further reducing corporate incentives to make and do things in the United States, using and upgrading the skills of Americans.
Proponents say giant deals like the TPP are good for the growth of the United States economy. But that argument begs the question of whose growth they’re talking about.
Almost all the growth goes to the richest 1 percent. The rest of us can buy some products cheaper than before, but most of those gains would are offset by wage losses.
In theory, the winners could fully compensate the losers and still come out ahead. But the winners don’t compensate the losers.
For example, it’s ironic that the Administration is teaming up with congressional Republicans to enact the TPP, when congressional Republicans have done just about everything they can to keep down the wages of most Americans.
They’ve refused to raise the minimum wage (whose inflation-adjusted value is now almost 25 percent lower than it was in 1968), expand unemployment benefits, invest in job training, enlarge the Earned Income Tax Credit, improve the nation’s infrastructure, or expand access to public higher education.
They’ve embraced budget austerity that has slowed job and wage growth. And they’ve continued to push “trickle-down” economics – keeping tax rates low for America’s richest, protecting their tax loopholes, and fighting off any attempt to raise taxes on wealthy inheritances to their level before 2000.
I’ve seen first-hand how effective Wall Street and big corporations are at wielding influence – using lobbyists, campaign donations, and subtle promises of future jobs to get the global deals they want.
Global deals like the Trans Pacific Partnership will boost the profits of Wall Street and big corporations, and make the richest 1 percent even richer. But they’ll contribute the to steady shrinkage of the American middle class.
Robert Reich is absolutely correct when he states: “The fact is, recent trade deals are less about trade and more about global investment.
“Big American corporations no longer make many products in the United States for export abroad. Most of what they sell abroad they make abroad.
“The biggest things they “export” are ideas, designs, franchises, brands, engineering solutions, instructions, and software, coming from a relatively small group of managers, designers, and researchers in the U.S.
“Global deals like the Trans Pacific Partnership will boost the profits of Wall Street and big corporations, and make the richest 1 percent even richer.”
And they will contribute to steady shrinkage of the American middle class, essentially reducing the vast majority of Americans to slave wages, under-employment or unemployment.
Jo-Ann was a child Jo-Ann was a child prodigy who went to college at age 14. She graduated and landed a coveted job at Citigroup.
Soon she was flying around the world leading meetings. Then she jumped to a management role at a financial printer. She was middle class, maybe even on her way to the upper middle class … until the tech bubble burst. And September 11th hit.
The U.S. fell into a recession and companies cut back. In 2002, Jo-Ann was forced to train the Indian workers that would replace her.
After she was laid off, she struggled to find a good paying job. She melted down her savings and 401k. She got into the trap of working “dead-end crap jobs with crap wages,” including a stint at Walmart.
Her life went from American Dream to Bust. Today she’s in her mid-40s and makes $11 an hour processing payments at a financial firm despite being college educated.
Her story is exactly what so many Americans fear — that they are one step away from financial ruin. It’s why they are drawn to Donald Trump and Bernie Sanders in the 2016 election.
The anger is boiling over
“The anger is boiling over. Enough of the American people have got it through their heads that the American Dream is dead for us,” says Jo-Ann, who lives in Pennsylvania. She requested that her last name be withheld for this article so it wouldn’t impact her ongoing search for a better job.
“I thank God I don’t have a kid. I don’t know what I would tell them,” she says. Her advice to young people is to skip college and learn a trade like plumbing that probably won’t be shipped overseas. She supports Sanders. She agrees with him (and Trump) that trade deals like NAFTA are part of the problem.
Great Recession fears linger
Americans are on edge. Many CNN readers responded to a recent survey about their economic worries. Over and over, people said they were fearful of losing a job, of a health problem that would drain their savings, of wages that aren’t growing and of diminished prospects for their children.
Billionaire investor Warren Buffett argues people are way too pessimistic about the economy. He says babies born in America today are “the luckiest crop in history.”
But Americans fear life could derail quickly, much as it did for many during the Great Recession.
“The job market is tough. People are scared. They aren’t leaving their jobs,” says Ashley Brinkman, 28, of Anchorage, Alaska. She and her husband have jobs they enjoy, but they look around and see mass layoffs in Alaska’s energy sector and cuts to education.
“We are living the middle class dream. We vacation once a year and own a camper,” says Brinkman, who recently received an $11,000 raise as she moved up the ranks from being a bank teller to a management job. But life hinges on staying employed.
Brinkman grew up in a small South Dakota town. She says people there describe this presidential race as akin to “picking the cleanest turd out of the bunch.”
Americans worry for their kids
People are especially concerned about the future for their children.
In a CNNMoney/E*Trade survey this year, 56% of people said they think their kids will be worse off financially than they are.
Ricardo Bustamente has worked for years as a technician at Verizon. He’s often told “do more with less.” He’s learned that means more work for him as others get laid off, but no extra pay.
“My biggest fear is that this country is going to become a nation of have and have nots. People at my level are slowing dying out,” says Bustamente, who is about to turn 43 and has three kids.
He hasn’t gotten a raise in almost 8 years, but his expenses keep going up. He drives a 10-year old car and his wife diligently clips coupons and buys items on sale.
“I’m literally making less money every year,” he says. If he loses his job, his family might lose their house.
Bustamente likes a lot of what Sanders is saying, especially on making college and health care more affordable, but he doesn’t think Congress would ever enact Sanders’ policies. Still, he is glad Sanders entered the race and has influenced Hillary Clinton.
“Slowly but surely I see myself and others around me eroding. We’re definitely not moving up. We’re moving backward,” he says.
Trade isn’t the only culprit. Technological change has also played a part.
When I visit one of America’s remaining factories, I rarely see assembly-line workers. I don’t see many workers at all. Instead, I find a handful of technicians sitting behind computer screens. They’re linked to fleets of robots and computerized machine tools who do the physical work.
There’s a lively debate among researchers as to whether trade or technology is more responsible for the decline in factory jobs. In reality, the two can’t be separated.
Were it not for technological breakthroughs we wouldn’t have the huge cargo containers, massive container ports and cranes, and satellite and Internet communications systems that have created highly-efficiently worldwide manufacturing systems.
These systems have relocated factory jobs from the United States to Asia, especially to China. Researchers find the biggest losses in American manufacturing started in 2001 when China joined the World Trade Organization, requiring the U.S. to lower tariffs on Chinese goods.
MIT economist David Autor and two co-authors estimate that between 2000 and 2007 the United States lost close to a million manufacturing jobs to China – about a quarter of the total decline in those years. Robert Scott of the Economic Policy Institute puts the loss since then at about 3 million.
This doesn’t mean free trade has been entirely bad for Americans. It’s given us access to cheaper goods, saving the typical American thousands of dollars a year.
A recent study by economists at UCLA and Columbia University found that trade has increased the real incomes of the U.S. middle class by 29 percent, and even more for those with lower incomes.
But trade has widened inequality and imposed a particular burden on America’s blue-collar workers.
If you’re well educated, free trade has given you better access worldwide markets for your skills and insights – resulting directly or indirectly in higher pay.
On the other hand, if you’re not well educated, the trade deals of the last quarter century have very likely taken away the factory job you (or your parents or grandparents) once relied on for steady work with good pay and generous benefits.
These jobs were the backbone of the old American middle class. Now they’re almost all gone, replaced by lower-paying service jobs in places like retail stores, restaurants, hotels, and hospitals.
The change has been dramatic. A half century ago America’s largest private-sector employer was General Motors, whose full-time workers earned an average hourly income (including health and pension benefits) of around $50, in today’s dollars.
Today America’s largest employer is Walmart, whose typical employee earns just over $9 an hour. A third of Walmart’s employees work less than 28 hours per week and don’t even qualify for benefits.
The core problem isn’t really free trade, or even the loss of factory jobs per se. It’s the demise of an entire economic system in which people with only high-school degrees, or less, could count on good and secure jobs.
That old system included strong unions, CEOs with responsibilities to their employees and communities and not just to shareholders, and a financial sector that didn’t demand the highest possible returns every quarter.
Trade has contributed to the loss of this old system, but that doesn’t necessarily mean we should give up on free trade. We should create a new system, in which a greater share of Americans can be winners.
But will we? The underlying political question is whether the winners from America’s current economic system – people with college degrees, the right connections, and good jobs that put them on the winning side of the divide – will support new rules that widen the circle of prosperity to include those who have been on the losing side.
Those new rules might include, for example, a much larger Earned Income Tax Credit (effectively, a wage subsidy for lower-income workers), stronger unions in the service sector, world-class education for all (including free public higher education), a single-payer healthcare plan, more generous Social Security, and higher taxes on the wealthy to pay for all this.
If the winners refuse to budge, America could turn its back on free trade – and much else. Indeed, there’s no telling where the anger we’ve seen this primary might lead.
If the winners refuse to budge, America could turn its back on free trade – and much else. Indeed, there’s no telling where the anger we’ve seen this primary might lead.
While the fate of the presidential campaign that talks about the issue more than any other remains uncertain, this much is clear: Despite the general public’s mounting anxiety and awareness, the economic inequality that’s done so much to change American society over the past 40 years has not abated. It may, in fact, be getting worse.
For this reason alone, “Runaway Inequality: An Activist’s Guide to Economic Justice,” the new book from Labor Institute executive director and president Les Leopold, would be worth reading. Thankfully, however, the book has many virtues besides its timeliness. And more than most of the other high-profile books on inequality in recent years, “Runaway Inequality” doesn’t just explain where the U.S. economy went wrong; it also explains how American citizens can organize to get it back on track.
Recently, Salon spoke with Leopold over the phone about the book and economic inequality in general. Our conversation has been edited for clarity and length.
There are a lot of books about inequality out there now, especially in the past five or so years. What does your book bring to the conversation that was otherwise lacking?
I think there were three things that I thought would differ from the ongoing conversation. The first one was that runaway inequality was accelerating. It isn’t just there, it’s growing. The fact that 95 percent of all the new income in the current so-called recovery is going to the top 1 percent is indicative of what’s happening. I don’t think that’s ever happened before in American economic history that I can find. There’s no recovery at the bottom, it just keeps going to the top.
The second one, which I think is even more important, was that I saw runaway inequality as a core issue that linked so many diverse issues. I think it’s kind of funny when someone says, “Well, Bernie Sanders is just interested in inequality or Wall Street. It’s just one issue.” I see it quite differently. I see it as the issue that connects so many other issues, and therefore that leads to the third reason.
I thought that connective tissue could be the basis for building an analysis that could help foster a broad-based progressive-populist movement. That if people could see that their issue silos were actually connected to inequality, it could build bridges amongst various progressive groups that have gotten siloed. Much of the last generation’s worth of progressive action has been within an issue category, be it identity politics or education or housing or environment or so on. There has been a fracturing of what could be a more coherent movement, and I thought “Runaway Inequality,” with its focus on Wall Street and the financialization of the economy, could provide that connective tissue. I didn’t see that anywhere else.
How does your analysis differ from some of the other recent work on inequality?
The slant on Runaway Inequality was different from Piketty and others. There tends to be a story that goes something like this: “American workers kind of got lost in the global shuffle. They don’t have the skills that the more elite people have and we don’t need the manual labor, et cetera. It’s kind of a skill problem, a mismatch between skills and jobs.” I just don’t think that’s true. I think, in fact, the deregulation of the financial system is the driving force of runaway inequality.
I think the way to build a coherent, broad-based populist movement is to focus on runway inequality and Wall Street. That’s what I’m hoping to contribute to.
Why is it that so much of the recovery has gone to those at the top?
That’s the question that takes us to the core analysis. In the late ’70s, roughly, a new economic philosophy really caught hold in both political parties. It originally came from the right, from Milton Friedman and the free marketeers. Academics call it neoliberalism; in the book, we call it the “Better Business Climate.”
It basically was kind of a simple model. Cut taxes, cut regulations, cut back social spending so people will be more eager to find work and be less dependent on the government, and basically undermine the power of labor unions so the economy would run more on market principles and have less inefficiencies in it. There would be more investment and profits, and therefore, all boats would rise. It would lead to kind of a boom economy. That was the theory. I was in graduate school when that was going on, and it was pretty strong, even more liberal economists were sort of giving up on Keynesianism and going in this direction.
What they didn’t teach us and what they never discussed is that it’s one thing to deregulate trucking or airlines or telecommunications, but it’s quite another thing to deregulate the financial sector. When they started deregulating the financial sector, it put in motion something that we refer to as “financial strip mining.” It’s an incredible, insidious process. It started with a lot of corporate raids – we know call them hedge funds, takeovers, private equity companies – financiers who use a little bit of their own money, borrow a huge amount of money, and start buying up companies. In the deregulated atmosphere they bought up thousands of them over time. The debt that was accumulated to do that was basically put on the company. It’s a little bit like if you went out and bought a car with a loan, instead of you paying back the loan the car pays back the loan. That’s what they were doing.
How did this practice change the way those companies were run?
They changed the way the CEOs were paid, so that the CEO acted in behalf of the Wall Street investors. This was really powerful. In 1980, 95 percent of the CEOs’ pay was salary and bonuses, and five percent was stock incentives. Today, it’s virtually reversed. About 85 to 95 percent is stock incentives, and only five percent is salaries and bonuses. So that means the price of the stock is all that matters to the CEO, and of course that’s all that matters to the investors – the hedge funds, the private equity companies. They want to see the stock go up.
It’s a huge change in corporate culture. Now the CEO cares only about raising the stock. What’s the best way to do that? In workshops, we ask working people and community activists this question, and they start talking about, “Well, you’ve got to create a better product, you want to get more market share,” all of the things you would think would lead in that direction. In fact, they did something else.
There was a rule change in 1982, under Reagan. A guy who was the former Head of E.F. Hutton became head of the Securities and Exchange Commission, and he changed the rule about companies buying back their own shares. Before 1982, it was virtually illegal to do that because it was considered stock manipulation. When a company buys back its own shares, it reduces the number of share owners, and therefore every share is worth a little bit more. If you do this, all things being equal, you’re going to boost the share and manipulate the price. The free market’s not doing it, you’re doing it. This guy thought, “Well that’s very efficient. Anyway, competition will even all of that out.”
CEOs and their corporate raider Wall Street partners are thinking, “Oh, this is fantastic. Let’s use the company’s money to raise the price of the share, and then we can cash in on our stock incentives. The outside investors can cash in and leave, ‘pump and dump.’ This is great.”
How prevalent have stock buybacks become, and what are the implications of that?
In 1980, about two percent of a company’s profits were used for stock buybacks. By 2007, 75 percent of all corporate profits were used to buy back their own shares. Forget about R&D, forget about workers’ wages, forget about all that kind of stuff. All that matters to a CEO today is raising the prices of the shares through stock buybacks.
Yesterday, I was at a United Steelworkers meeting and they were very concerned about Carrier moving to Mexico. They’re negotiating and they’ve been making concessions and they still can’t get a deal. It’s a really bad situation. Donald Trump has actually been talking about it as well.
The difference between the negotiations, things are $10 million, $20 million, $30 million dollars. So I quickly go to Google and look up United Technologies, which owns Carrier. In October, United Technologies bought back $9 billion of their own shares. So they’re strip mining the company, and they’re using the worker contracts and the moving to Mexico as a way to generate more cash flow so that they can buy back their own shares. This financial strip mining is phenomenal. The net result is, in 1970 the ratio between a top-100 CEO’s pay and an average worker was 45-to-1. Which is a lot if you think about it this way: if an average worker could afford one car, the CEO could afford 45 cars. Or one home versus 45 homes, or one home that’s 45 times the size of an average worker’s home. We just crunched the numbers again for 2014: it’s 844-to-1. You can’t even conceive of how big that gap is, and it’s a direct result of financial strip mining.
That’s what leads to that acceleration. There’s nothing to stop it now. This is just what they do. When they run out of cash flow to buy back their own shares, they go deeper into debt. They’ll go to the debt market and try to get more money and then turn around and buy back their own shares. This has an incredible effect on virtually every other issue.
I can just give you one example that really galls me, but it says a lot and shows how many different issues are connected. The Obama administration bailed out the auto industry, and it’s great that they did. The industry was going under due to the Wall Street crash and there was no other reason at all at the time. It was a financial crunch that was taking General Motors under. The guy who negotiated that deal, one of the key negotiators for the Obama administration, left and went to a hedge fund. GM built up a cash cushion because it’s doing better now. I think all of the American people, at the very least, hoped that when GM built up its cash reserves it would do what needed to be done, which is build the best, highest quality, most efficient cars they possibly could for the future generations. This is what we all needed. I think that was the hope.
Well, this guy goes to a hedge fund and takes a position, buys a bunch of shares of GM. And what does it do? It demands that instead of that cash going to R&D, that it goes to the investors through stock buybacks. And about three weeks ago, GM also announced a $9 billion stock buyback plan. It’s shameless financial strip-mining. It does nothing whatsoever for society, but it undermines other goals.
What the book then does is show how this process has huge impact on the public sector. This whole Better Business Climate has a direct connection to the rise of the prison population. So we show how issue after issue is deeply connected to this process of financial strip mining and runaway inequality.
Capitalism has never been particularly warm and fuzzy towards workers, but there was a time before this Better Business Climate concept when businesses were seen as part of communities and were perceived as having obligations to society. They weren’t just doing financial strip mining — even if it made economic sense, hypothetically.
That’s a very good point. Our story kind of starts there. I personally think that this is a transformation of capitalism. Capitalism was still capitalism from World War II to the late 1970s, but the productivity, which is output per worker hour, basically has risen every year except five from 1947 to today. The line just goes up on a 45-degree angle. Average worker wages, taking into account inflation, also grows from 1947 to around 1977. Rose every single year. When we were in grad school, they taught us this was the iron law – that corporations needed to do this. In other words, being more community minded was part of what made a corporation a corporation, and supply and demand led them, if they wanted to keep that productivity going, to pay their workers reasonably well.
The philosophy at that point was basically “retain and reinvest.” CEOs viewed stakeholders as labor, community and their shareholders. It wasn’t that shareholders were somehow in there for the share price over everything else. Once this Better Business Climate model hit, you look at these same two lines and they just split apart. Worker wages actually go down in terms of real buying power. The gap between the two lines today is so large that if worker wages stayed on that productivity line that they taught us was an iron law, which of course they then repealed as soon as I graduated, if the two lines kept going up together the average weekly wage would be double what it is today. That’s how big a gap took place. Something really big changed.
Where else can we see evidence of that change?
You can see the change most clearly if you look at financial sector wages and non-financial sector wages. From 1947 to 1980, the two lines go up together. There was no premium for working on Wall Street. You could work for Chase Manhattan Bank or Manufacturers Hanover or whatever, or General Motors or Ford, and given your general level of skill, education, experience and so on, you’d earn about the same. There was no premium. And then basically the lines split apart again. Financial sector wages go through the roof after deregulation takes hold, so you get a different kind of capitalism.
Piketty, I think, doesn’t really emphasize that. I think very few people have really stressed what a huge change that is – to have the financial sector draw so much money to itself. By 2006, 40 percent of all corporate profits were going to the financial sector. They only have five percent of the workforce, but they’ve got 40 percent of the profits. The strip mining of wealth was being collected there, going from everybody else to them. I think that’s different than the Robber Baron era, where the industrialists were getting a lot of money, but there was a rising standard of living for everybody else. That has stopped.
The average American worker knows about inequality, but they may also wonder why it should matter to them so long as their own standard of living is improving. How do you reach people who think inequality is more of a problem in the abstract than in their daily lives?
Basically there are two competing narratives. “Who cares about inequality if everybody is doing better in America?” and the narrative that’s in the book, which is, “It’s happening at your expense.” We have a couple of chapters that do nothing else but compare the United States to other countries around the world, indicator after indicator after indicator, and just show how far we’ve fallen. We do lead the world in inequality, military spending and number and percent of prisoners. Of all the developed countries, we are second-to-last in child poverty. Romania is the only country behind us.
They did a nice study of seven countries, according to upward mobility, what are the odds that you would be in an income bracket higher than your parents’, and it turned out in the United States it was about 50-50. We were at the bottom of the list. Number one was Denmark, where the odds were seven-to-one that you would do better than your parents. So even upward mobility, our most cherished dream. It goes on and on. Education – in terms of what we pay our teachers, it’s low. The amount of money we invest in 3-year-old and 4-year-old education, we’re near the bottom of the list. An indicator like longevity, we actually showed a decline in comparison to other countries.
So there’s something really going on. Of course, if you were in the top one-percent, this is the greatest country on earth, I’m sure, because you live in your own world. You have your gated community, your private schools, virtually a private healthcare system. You pay very little tax because your money is offshore, and so on. So there’s this breaking apart of America. American exceptionalism, the American dream is sort of collapsing.
How does this financial strip mining impact the public sector?
Two things are very important to realize about this financialization of corporations. The first is that the interest payment on debt is not taxable, just like the interest payment on the mortgage on someone’s home is tax deductible. There was virtually no corporate debt up until about 1980; corporations used their own resources to fund what they needed. Then, through this corporate raiding process debt became the rage and now there’s like $12 trillion in corporate debt. And as corporate debt goes up, tax payments go down.
For example, corporate tax contributions to state and local government have virtually fallen in half since 1980, which puts more pressure on individual tax receipts. But the wealthy have moved so much money offshore that their taxes have also gone down. So we now have, when it comes to state and local government, a perfectly regressive tax system. The top one percent pay about half the tax rate as the bottom 20 percent. As you go down the brackets, the tax rate actually goes up and up – the actual percentage that people pay gets higher and higher.
And that decline in overall revenue leads to deficits and calls to cut safety net programs.
That leads to a fiscal crisis. You have this great squeeze on the public sector, because you’ve got workers who haven’t had a raise in a generation in terms of real buying power and you’ve got the wealthy not paying their share. We estimate there’s something like $21 trillion offshore, and we’re losing at least $150 billion in tax revenues on money that should be taxed but isn’t. Now you have corporate inversions, which are putting more downward pressure on corporate taxes.
So the people in the middle that are paying most of the taxes are tapped out. They’re easy prey to a politician who says, “We want to cut the public sector. Teachers are getting paid too much, we can’t afford their pensions.”
Why are programs like education such an easy target for spending cuts?
We’ve got a new philosophy that comes with the Better Business Climate, and it’s total individual responsibility — the idea of a Great Society or a New Deal taking care of people goes out the window. If you want a job, go find it. If you’re poor, it’s your fault. If you want to go to school, take out a loan. The idea of the government providing anything is greatly diminished.
Ask yourself when was the last time a politician said, “I want to create more public sector jobs so we can create jobs for inner-city youth, where unemployment is high.” I don’t think there’s a politician in the country that directly would say that anymore, yet that was common in the ’60s and early ’70s because we knew there was a crisis of employment in rural places and inner cities. There were lots of experiments to figure out how to get employment in those areas, and the public sector grew. It was the track of upward mobility for African Americans, especially African American women, that was their ticket into the middle class: public employment.
Since then, the number of government jobs as a percentage of the U.S. population has gone down as the Better Business Climate model took hold. As runaway inequality accelerated, it put more and more pressure on the public sector, and we basically gave up on the idea of a poverty program.
The problem is rooted in the money system, which MUST change if we are to achieve equal opportunity and economic justice. I address the core problem which has resulted in the subject of this article in my latest article published by The Huffington Post entitled “Bernie Sanders Can Win By Empowering Every Child, Woman, And Man To Become A Productive Capital Asset Owner at http://www.huffingtonpost.com/gary-reber/bernie-sanders-can-win-by_1_b_9441438.html. This article addresses the wealth divide. I believe this article to be significantly timely in light than NONE of the candidates for president are raising the issue of broadening wealth-creating, income-producing capital asset wealth OWNERSHIP in speeches, interviews, press conferences, debates or political ads. This is the issue that can bolster massive support Bernie Sanders during the primaries and the general election.
On March 11, 2016, Thom Hartmann writs on The Thom Hartmann Program:
Young Americans are now poorer than retired people. That’s the stunning take away from a new study by The Guardian Newspaper, and they say that the problem not unique to the United States.
According to the data, unemployment, debt, and rising home prices have cut Generation Y out of nearly all the new wealth generated in western societies. In other words, in the United States and Europe, people born between 1980 and the mid ’90s are earning about 20% less than the national average.
These are young individuals and families who were already lagging behind before the crash of 2008, and their low wages haven’t allowed them to catch up during the recovery.
That’s why the secretary general of the OECD said, “Current working-age, middle-class groups are increasingly concerned with their and their children’s job prospects.” He added, “An increasing number of people think children in their country will be worse off financially than their parents.” And, that type of intergenerational inequality only makes the overall wealth divide even worse.
As Paul Johnson of the Institute of Fiscal Studies explained, that means that young people with rich parents will have an unfair advantage over their peers in the early years of their adult life. Mr. Johnson said, “I think the real unfairness issue comes in the sense that it’s become more and more important whether your parents happen to have a house.”
And, he shared the sentiment of many economists who said that policymakers must do more to close the wealth divide between young and old.
If we fail to do so, we are telling an entire generation that they don’t deserve the American Dream that their parents enjoyed. And, we are damning ourselves to the economic stagnation that results when too many people are too broke to spend money in their economy.
This problem may be hitting young people the hardest, but it isn’t just young people who will feel the effects. It’s time to bridge the generational wealth gap and make sure that the American Dream doesn’t simply disappear.
Socialism has been discredited. Plutocracy is in the process of being discredited. Democratic capitalism has yet to be tried.