• Does Income Inequality Matter to the Richest Americans?

    June 24, 2015

    Tags: , ,
    Posted in: #99Percent, Minimum Wage

    Scrooge McDuck



    Does income inequality matter to the richest Americans? Not very much. Here’s why. And it’s more than just greed-is-good; the rich will just get richer.

    A study by economists at Washington University in St. Louis tells us stagnant income for the bottom 95 percent of wage earners makes it impossible for them to consume as they did in the years before the downturn. Consumer spending, some say, drives the U.S. economy, and is likely to continue to continue to dominate, as the decomposition of America’s industrial base dilutes old economy sales of appliances, cars, steel and the like. That should be bad news for the super-wealthy, us buying less stuff?

    But that same study shows that while rising inequality reduced income growth for the bottom 95 percent of beginning around 1980, the group’s consumption growth did not fall proportionally at first. Instead, lower savings and hyper-available credit (remember Countrywide mortgages and usurous re-fi’s?) put the middle and bottom portions of our society on an unsustainable financial path which increased spending until it triggered the Great Recession. So, without surprise, consumption fell sharply in the recession, consistent with tighter borrowing constraints. Meanwhile, America’s the top earners’ wealth grew. The recession represented the largest redistribution of wealth in this century.

    The gap between most Americans and those few who sit atop our economy continues to grow. For two decades after 1960, real incomes of the top five percent and the remaining 95 percent increased at almost the same rate, about four percent a year. But incomes diverged between 1980 and 2007, with those at the bottom seeing annual increases only half of that of those at the top.

    This leaves the very real issue for the rich of who will buy all the stuff their big corporations make? But don’t worry. They’ve got it handled.

    Taxpayer Subsidies to Big Corporations

    Don’t worry about the big guys; they have figured out how to profit off poverty. Wal-Mart, Target and Kroger have made profits of $75.2 billion off food stamp purchases, even setting a new record in 2012.

    And never mind how food stamps and other benefits are used by those same retailers to subsidize the low wages they pay their workers. Meanwhile, the same bill in Congress that would cut food stamps pays out farm subsidies to America’s billionaires, including Microsoft co-founder Paul Allen, Charles Schwab and S. Truett Cathy of Chick-fil-A.

    The American Beverage Association, a lobby group that includes Coca-Cola, strongly opposes restricting soda purchases by food stamp recipients. Why? Recipients spend from $1.7 to $2.1 billion annually for sugar-sweetened beverages. While alcohol and other unhealthy items are restricted for purchase with stamps, soda stands available.

    Government Defense Spending

    About the only manufacturing-industrial sector of the American economy left prevailing over all foreign competition is defense. America buys its military hardware almost exclusively from domestic corporations (with a few crumbs tossed to allies like the UK and Israel) and fills the job ranks of the industry, contractors, and military with Americans.

    In 2011, the U.S. government spent about $718 billion on defense, including arms sales and transfers to foreign governments. Hardware alone accounted for $128 billion. The total figure does not veterans benefits of $127 billion in 2011, or about 3.5 percent of the federal budget. America’s newest aircraft carrier cost $13 billion, not including development costs.

    The Stock Market

    The stock market (which set record highs in 2013) is a significant source of wealth in America. Indeed, what could be easier than placing money into an investment and, with no sweat or effort of one’s own, seeing it grow. A rising market lifts the national economy, and a rising tide lifts all boats.

    The truth is closer to a rising tide lifts all yachts, as historian Morris Berman observed. Less than half of Americans own any stock at all. The wealthiest five percent of Americans meanwhile hold some 70 percent of all stock.

    Bump the “top” group to the wealthiest ten percent of Americans and they own over 80 percent of all stock. At the same time, the lowest 90 percent own the leftover 20 percent.

    So Don’t Worry about the Rich

    These examples– and there are more– see tax write-offs, use of trusts to limit inheritance tax, offshore banking, large scale real estate (the top ten percent own about 40 percent of America’s land) show that income inequality is not a problem for the rich, and it is not a problem for America’s “economy” per se. The huge concentration of wealth in a small number of hands, and the methods by which those few acquire and maintain their wealth, means that the 99 percent of us edge closer and closer to playing no significant role in the economy anyway. We are becoming merely the collateral damage of income inequality.



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  • Recent Comments

    • RICH BAUER said...

      1

      Obomba’s fast track trade osmosis: our economy travels through a semi-permeable membrane that tends to equalize the concentrations on either side.

      We are becoming more like Mexico.

      06/24/15 9:38 AM | Comment Link

    • John Poole said...

      2

      I have never worried about the physical or spiritual well being of the rich. All of them know they are going to heaven. Their consciences are clear. God obviously approves of the way they live their lives and they damned well know that. I’ve never expected any Saul to Paul conversions happening for any of them between the club house and the greens or the yacht club and the dock.

      06/24/15 10:12 AM | Comment Link

    • John Poole said...

      3

      Bauer_ I’d offer Brazil as America’s fate instead of Mexico although both are valid speculations.

      06/24/15 1:19 PM | Comment Link

    • RICH BAUER said...

      4

      The clown is spineless. He caves on drones but drones on about the need for free trade that will cave the middle class.

      06/24/15 3:55 PM | Comment Link

    • John Poole said...

      5

      Obama: “You’re in my house.” (to a heckler), The White House is not his house. I assume it is owned by the tax payers and he is only a temporary guest/resident. What an arrogant and foolish thing to say.

      06/25/15 8:19 AM | Comment Link

    • RICH BAUER said...

      6

      The Whore House is his house. I don’t know if he is a whore or a pimp to supply the Rich patrons.

      Speaking of serving the Rich, why does the corporate media give frontpage coverage every time some Google “executive” gets killed? Really, who gives a shit, and what did he do to deserve notice–other than being rich?

      Today is my birthday, and I wish the Rich would blow out my candle.

      06/25/15 8:28 AM | Comment Link

    • RICH BAUER said...

      7

      Speaking of collateral damage, it seems as if the Rich wouldn’t mind if we all killed ourselves.

      http://pjmedia.com/tatler/2015/06/24/sen-murphy-confederate-flag-controversies-a-cover-for-doing-absolutely-nothing-about-guns/

      06/25/15 12:00 PM | Comment Link

    • bloodypitchfork said...

      8

      Don’t worry about the big guys; they have figured out how to profit off poverty. Wal-Mart, Target and Kroger have made profits of $75.2 billion off food stamp purchases, even setting a new record in 2012.

      Worry. Right. Why would I worry about them when I worry 24/7 about making our SNAP purchased food last to the end of the month. Thing is, at one point I stopped shopping at Wal-Mart. But given we have to make every cent stretch, we shop for groceries at Wal-Mart now. It’s a catch-22. What’s really worrying me though is the cost of food. It’s skyrocketing. Yet, some of the scum in Congress want to cut SNAP again.

      I know one thing though. “Something” is going to SNAP, and it ain’t gonna be pretty. Nor is it going to be from inequality. It’s going to be from repealing the 2nd Amendment. Which some of those same scum in Congress are pitching right now as they worship at the alter of a governments monopoly of violence in the guise of gun control. Unfortunately, what these bloodthirsty collectivists don’t understand is… the iron clad rule of Unintended Consequences, which in this case will be a bloody civil war. And don’t think the USG isn’t already considering it…

      06/26/15 6:46 AM | Comment Link

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