We as a society have this delusion that we like to call the American Dream – big house, 2 cars (new and probably big) in the garage, exotic vacations, all the latest gadgets, etc. If we work hard we will be able to pull ourselves up by our bootstraps and join the rich and possibly famous. Except this is actually a delusion. You are not likely leave the class that you were born into in America these days. Your ability to get a good education quite likely rests on the income of your parents or perhaps their legacy at a college. Yes, there are a few that hit the latest and greatest invention and make millions or billions. And there are celebrities and athletes that will make millions. But what percentage of the population will fall in those into those categories? Very few. Studies of college students have shown that they desire to have income that is more than twice the median income for their geographical region.
The inconvenient fact is that income inequality is growing and has been for decades. The top 1% of our population now gets 25% of the income. While the wages and salaries of the middle and lower classes has declined in real terms (adjusted for inflation). So, the old saying that the rich get richer and the poor get poorer is holding on strong in the United States. Yet we still have this delusion that it is the land of opportunity. Let’s compare how CEOs are faring compared to their production workers in this country.
As we can see CEOs, the stock market (as judged by the S&P 500) and corporate profits have done pretty well over the last decade. But workers have not. Note: all of the figures in the graph have been adjusted for inflation. Workers earning minimum wage have not even been able to keep up with inflation. This means that they are actually worse off in 2005 than they were in 1990. So much for getting ahead.
Yet this idea of the American Dream and the idea of striking it rich persists in our collective thinking. We shouldn’t tax the rich very much just because they did well for themselves. But what I think lies under that is “we shouldn’t take the rich in case I’m rich one day”. But the odds of that actually panning out are ridiculously low.
So, here we are in the worst economic downturn in history since the Great Depression. The country is still engaged in now the longest conflict in our history. We have spent trillions in Iraq and Afghanistan and are we so much safer? No, we would have done better to spend those dollars as economic development or aid. We have record debt and deficits that will need to be dealt with. The housing market is still in the toilet and not likely to return anytime soon and actually may soften with some of the budget measures being proposed. Congress is planning on “balancing the budget” by slashing spending on discretionary spending. Let’s we interpret that shall we. Congress is going to balance the budget using only 12% of spending. That is some interesting math! And who will be impacted by those cuts in 12% of the budget? Middle and lower class citizens. The other way to balance a budget is to increase revenues or taxes, tariffs and other fees collected by the government. But Congress and the President have already preserved the tax cuts for not only the middle class but also those that have been doing very, very well. Corporations while earning record profits are exploiting tax loopholes and paying either no taxes or after taking into account government subsidies a negative tax rate.
So, as that American Dream is fading in the rear view mirror. What is the latest assault? Unions! How dare those union workers actually have decent benefits and wages!! They must be stopped and in the private sector they have for the most part because they have been under attack for years. The last holdout is in the public sector and so the Teabagger Republicans that came to power will strip public unions of their bargaining rights. Instead of knocking down those public employees a notch shouldn’t we be trying to bring everyone else up a notch? Isn’t that the American Dream that we move up or at least have the ability to move up?
So how do we get the American Dream back? I’m not entirely sure but I do know that cutting social safety nets, education, and research and development isn’t going to help. I know that allowing speculators on Wall Street or the very top 1% to pay a lower effective tax rate doesn’t help. I know that deciding who to vote for based on 30-60 second campaign ads won’t help. We have to start seeing through the smoke and mirrors that Wall Street and Washington is putting up. We have to stop this race to the bottom.
A couple of interesting reads on some of the things I discussed in the post would be the Joseph Stiglitz article in Vanity Fair titled “Of the 1%, by the 1%, for the 1%, http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105 and G. William Domhoff’s paper on Wealth, Income and Power, http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
mad political economist 