Saturday, February 16, 2019

Income Inequality: The State of American Freedom Pt 2



Last week we took a look at where America stands on the issue of freedom when compared to other nations around the world. As we saw, we actually rank pretty low. In some cases, we come in behind some second tier nations. That certainly doesn't bode well for a country which boasts that it's the "freest nation of earth". As the facts proved, we're not even close. This week we're going to look at the issue of income inequality.

Poverty Levels

Most every nation on the planet has some form of national safety net, be it unemployment, healthcare, or community aid which provides clothes, food or temporary shelter. Of course, as one would expect, the richer the country the better the safety net. However, that's not always the case. In terms of poverty levels, the US has the second highest of any developed country with 17.2% with Israel having the largest at 18.6%. We are just about Spain with 15.9% and Greece with 15.%.

According to a UNICEF report from 2012 (the most recent available), almost 25% of all children in the US live in poverty. Among black children that number reaches 36% and 31% for Hispanic children. In terms of obesity, the US leads the pact among developed industrial nations at 36.4% (the average for all industrial nations is 22.7%. If we look at healthcare, America is a latecomer to having some form of national healthcare program. Most of the world's developed countries have had some type of national healthcare in place for decades. Even some second and third tier nations have had some type of national healthcare. In fact, we are the only developed nation which does not have full care coverage for its citizens. In terms of dollars spent, the US tops the list with an average annual per capita cost of $9,400. Yet, we have the fewest number of doctors, hospital beds, and psychiatric facilities of almost any developed nation; failing to near the bottom of the list.

As an example, the country with the most beds per 1000 people is Japan with 13.2, followed by South Korea with 11.7. Among European countries, Germany has the most with 8.2 followed by Austria with 7.6. Meanwhile, the US has a dismal 2.9 available beds per 1000. The average among all industrially developed nations is 4.7. As an aside, when it comes to the costs of prescription drugs, again America ranks at the very top of the list. Another factor is life expediency. America has one of the lowest life expediency of any industrial nation with an average of 79.8 while Japan has the highest at 83.7. The US is also the only developed country where maternal mortality has actually increased over the last 15 years. It also has one of the highest infant mortality rates of any first tier nation.

Decline of Middle Class

The social-economic engine which has propelled the United States since its founding (and even before it) has been the Middle Class. America's Middle Class has been the envy of practically every nation on earth. It has been the hope and dream of almost every immigrant who came to country. The Middle Class offered the opportunity to own a nice home in a safe neighborhood, to send your kids to the good schools, and to have enough money left for leisure activities, purchase some of the finer things in life, take the occasional vacation, and even sock away a few dollars in savings. For the more ambitious types, it was the spring board into the upper classes.

However, since 1970, income levels for the Middle Class have remained largely stagnant according to a 2018 Brooking Institute report. When inflation is considered, the quality of life for the average Middle Class has actually declined by 8%. Meanwhile, the top 2 1% aka the ruling Oligarchy has seen their overall incomes increase from 7% in 1970 to 22% by 2012, and continuing to increase while the top 20% experienced an increase of 95% over the same period!

Employment levels and wages among the Middle Class have also shown a decrease, which seems to coincide with the political influence of unions collapse. However, while the overall wages of the Middle Class have gone down, especially among men, it has slightly risen for women. An increasing side not to all this is that while income levels have dropped, productivity has actually increased by approximately 20% along with a substantial increase in the US economy. Another interesting facet is that over compensation, which is comprised of salary and benefits. has seen a 43% shift from employees to the owners between 1970 and now which means employees are much worse now than they were in the 1970's or earlier.

It should be noted that illegal immigration also affects the decline in wages. It produces a increase in the demand for a jobs, especially low skill, repetitive, or entry level jobs, which in turn drives down wages and benefits. Secondly, since most of these jobs are low paying, they don't even come close to offsetting the use of taxpayers based services which they use (assuming they pay into the system; most do not). The result is typically higher taxes to pick up the slack which always hits the Middle Class the hardest. Meanwhile, just 13% of employees are provided with any type of benefit coverage (however, 67% of union employees still have at least some coverage although their average income dropped just over 11%). In terms of costs, illegal immigration costs taxpayers an estimated $8.2 billion dollars annually.

Also, between 1998 and 2008, 23% of all manufacturing jobs (mostly unions) were shipped overseas. Household debt increased from 47% of the Gross Domestic Product (GDP) in 1980 to 96% in 1990. While it dropped in 2008, it still remained at a high of 72% . 92% of the 1.6 million bankruptcies filed in 2003 were people in the Middle Class. Lastly, just 1 in 3 workers have any type of savings. In effect, we're seeking the creation of two classes in America, the very wealthy and everyone.

The CEO/Employee Deferential

So, while the average salary of most working class Americans decline and the overall income level of the Middle Class stagnates, income levels for the wealthy continues to increase. In the 1950's and early 1960's, the average CEO/President earned roughly 20 times more than their average employee. However, things have changed since then. Unions, which were on a decline, were still influential and packed a potent political punch. Today, most unions are a pale shadow of their former selves; existing primarily to keep employees off the picket lines and on the production lines. Activist unionism, which had made unions to popular and powerful, especially from the 1930's to the 1960's, are a thing of the past. Politically, unions remain a cash cow for a largely indifferent Democratic Party which is more interested in appeasing its new corporate paymasters. Corporate lobbyists can easily deliver $34 dollars for every $1 dollar unions raise.

Today, the average CEO/President makes 361 times more money than the average employee; 6% in 2017 according to a 2018 Forbes article. Since 1950, as the working class struggles, the salaries of CEOs and Presidents have increased a whopping 1000%. They are given benefit packages that the ordinary employee could only dream of, and "golden parachutes" in case things go south while employees get pink slips. It used to be that employees were viewed as essential members of the business family. Nowadays they are seen as necessary liabilities to be used and terminated with no further thought than a discarded broken tool. Very few even get the gold watch let alone a "thank you" for all their efforts.

Summing It All Up

So what does all this mean? Simply this, the divide between the upper 20% and the rest of us rapidly spreading and has effectively created a two tier economic class. The Middle Class, which has been the chief bastion of America's economic, social, and political success has been virtually wiped out due to taxes, restrictions, loss of jobs, stagnate or declining incomes and even social mobility. America is a defacto Oligarchy; a neo-feudalism complete with its own political class responsible for protecting the interests of the elites. There can be no argument about that point. It operates through its own rules and laws, applying a different standard between us and them.

It can be changed, if we have the will to do so. It means forcing the ruling elite and political class to apply the laws its passes for us equally to themselves. It means instituting term limits in order to force out the entrenched power players who get rich off both the public's tax dollars and the legalized bribery of their corporate masters. It means ending political gerrymandering of districts to ensure that incumbents remain in office by rigging the demographics. It means real campaign finance reform. Political campaigns have become so expensive--intentionally so--to keep out the average American. That has to change. It also means removing corporate ownership of the two main political parties.

Despite the Supreme Court's ruling, corporations aren't "people" and entitled to not just the same rights as you and I, but to greater righter. Corporations are legal fictions. Nothing more. They should not be able to provide unlimited money to politicians and parties. They should not be able to help write legislation let alone influence its outcome. Government should be about creating a level playing field and protecting people.

The average American does not have someone looking out after their interests. Corporations do and on a day-to-day basis. They provide Congress with private jets, beach houses, access to resorts, and a host of other not to subtle bribes. Most members of Congress and their staff aspire to becoming lobbyists, earning upper six figure salaries and lobbying their former colleagues and keeping their taxpayer funded salaries all the while. The salaries should stop when they leave government. Transparency in government would go a long way to stopping that.

Regarding corporate greed, we can shame corporations into reforming by protesting them everywhere they go and on every social platform out there. We can buy shares of their stock and, as shareholders, speak at stockholder meetings against these outrageous salaries. We can stop buying their products. Boycotts work well. Nothing gets a corporation's attention like attacking their bottom line.

We also have to find a solution to the impotence of unions, be it employee associations, employee owned companies, or for union members, electing activist leadership instead of management lap dogs. Of course, this also involves building public support and networking locally, nationally, and even globally, something unions have been weak at doing. Lastly, we need to stop illegal immigration. It hurts the average working class American. It hurts the economy. The only real problem is realizing that we have the power---not Washington, not corporate lobbyists, and not the ruling Oligarchy. Their power is not their wealth or their influence over government. Their real power is in convincing us that we have no control over what's happening to us. We do. We only need to have the will to stand up together and shut them down.

Next week will be our third installment in this series. We'll focus on education and how America stacks up against the rest of the world. Hope you'll join us!


The US has a lot of money, but it doesn't look like a developed country



Seven reasons to worry about the American middle class



CEO Pay Skyrockets To 361 Times That Of The Average Worker