Monday, June 9, 2014

How the Rich Stole Our Money and Made Us Think They were Doing Us a Favor

Back in the dim, distant past when the L.A Dodgers were still the pride of Brooklyn, the cry "we wuz robbed" was a frequently heard, heartfelt lament. As a fervid Yankee fan during the 1950s, I generally dismissed that complaint as "sour grapes." Now though, as David Atkins, founder of Pollux Group, makes starkly clear, the vast majority of Americans "wuz robbed" again and again during the past four decades. What is more, we continue to be "robbed" and, like the helpless urchins of Oliver Twist,  we obsequiously respond "Thank you Sir, and may I have another.?"

For the past four decades, Atkins proclaims, the Super Rich and their political lackeys have been "pushing people toward stocks, real estate, and credit cards." They have largely succeeded in convincing the majority of Americans that the real key to their prosperity lies not in improving salaries and wages, but in dabbling in the Big Casino where the House always wins--at the gambler's expense--: stocks, credit cards, and using the highly inflated value of their homes as collateral for more borrowing. These "passive assets" grew almost exponentially over the past forty years, while "earned income" (wages and salaries) stagnated, even though worker productivity continued to increase at a record pace. Unfortunately for most Americans, almost fifty percent of these passive assets are owned by the top one percent of income receivers, while more than 85% are possessed by the top ten percent.

So why isn't the majority in open revolt?  Part of the answer, Atkins proclaims, is because "the top 1% have done an excellent job disguising the upward transfer of wealth by making the rest of us feel better off than we actually are while enriching themselves in the process." He is quick to point out that "the trend toward greater hoarding of wealth by economic elites and shrinking middle-class is not limited to the U.S."; that it is "present to one degree or another throughout the industrialized world." The current inequality crisis, he asserts, is one part "the self-interested preferences and self-serving ideology of the super-rich," and one part "a series of decisions made in response to the inflation shocks of the 1970s and to the growing threat of globalization and workforce mechanization."

Atkins lists at least four diabolical plots to actuate this ultra-right-wing a agenda:

1. Push people away from defined-benefit pensions and into stocks and 401(k)s.  The switch from     pensions to market-based retirement accounts not only reduced "the obligated burden on
corporate 'bottom lines'," but also helped "to goose the financial sector <which has obviously become 'the tail that wags the economic dog"> upon which the ultra-rich depend for their passive  incomes." Its share of GDP has grown exponentially and its profits now account for nearly one-third  of corporate income. Reading about the ups and downs of Wall Street has become "hot popular culture," while a growing number of people "watched breathlessly as the health of the Dow Jones  was commonly equated with the health of the overall economy." Many more ordinary Americans  "watched their meager stock portfolios rise," and so became less concerned with "the slow growth of  their regular wages."  <misdirection was no longer just the favorite device of magicians and  NFL quarterbacks>

2. Push more people into using the equity in their homes as a "cash cow." Rates of home ownership  surged in the postwar years, due largely to the GI Bill and the FHLA, leveled off during the 1970s,  and exploded from the 1980s to the mid-"Aughts." The government used all the levers of public  policy to encourage home ownership <the New American Dream>  and reduce mortgage interest  rates. The deregulation of Wall Street during the Reagan-Clinton-Bush administrations "not only  boosted the stock market but also enabled large banks to make unprecedented money off of home  loans." Wealthy landlords and asset owners became even richer while rents soared and real wages  declined. Most Americans didn't feel the pinch because rising home values made them feel "paper  rich" <good old misdirection again> Besides, home equity loans allowed them to continue to  consume goods and services at the same or higher rates. The government did its  bit through "quantitative easing" by the Federal Reserve, zero percent interest rates, and numerous homeowner incentive schemes.   

3. "Democratize" consumer debt through the use of credit cards. Their widespread use from the mid-1870s on, about the same times as Wall Street deregulation, 401(k) transitions, and "the birth pangs of the real estate boom." They served a perverse dual purpose: further enrich the same financial services companies whose success disproportionately benefits the ultra-rich; and "to disguise and soften the effects of stagnant wages.' <Ain't misdirection grand?>

4. Reduce the cost of goods through "free trade" policies. It has become increasingly obvious that agreements like NAFTA benefit wealthy stockholders, while reducing jobs in developed nations. Moreover, they reduce the price of goods made overseas, which, in turn, help again to disguise wage stagnation. <Ditto and Double Ditto>

Not only do these policies obviously directly benefit the super-rich, Atkins cogently summarizes,
"they have served to create a more purely capitalist society, hide the decline of the middle class and mitigate public discontent over stagnant wages." The vast preponderance of wealth will continue to accrue to the very top incomes, guaranteeing that assets inflate while wages stagnate. Moreover, an asset-based economy is "bubble-prone, unstable, and given to boom-bust cycles."  The economic disasters of the past half-decade have, at least, partly removed "the blindfold that has been hiding wage losses over the past half-century. Housing prices have skyrocketed, even as household debt nears record highs. Nearly one-half of Americans have absolutely no retirement savings at all, while much of the rest of the developed world "faces a pension obligation crisis. The tools policymakers have used "to distract the public from the raw deal of low wages are no longer working." The only hope, Atkins adamantly and correctly asserts, is that the current crisis will at last "usher in a new era of populist progressivism in the U.S." Perhaps the most startling revelation that Atkins demonstrates is that political party of the New Deal, Fair Deal, and the Great Society has been almost as complicit in this fiasco as have the Republicans. Himself the chairman of the Ventura, California Democratic Party, he boldly proclaims that this "new era of populist-progressivism" can only happen "if the Democratic Party can shift from reinforcing the asset-based economy toward rebuilding a sustainable model that encourages wage growth and a strong labor market."

This is the most cogent and coherent explanation for our horrible situation that I have ever read.


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