Friday, Nov. 11, 2011
Why Income Inequality Suddenly Matters
A few weeks ago, as the Occupy Wall Street protests were first spreading, something amazing happened: For 10 whole seconds, the local reporter on my TV screen actually talked about the realities of the recession. He even uttered the phrase "economic inequality."
My guess is that you've seen something similar on your local affiliate—and that's no minor event. When even the most local of television journalists are compelled to acknowledge this crushing emergency in a country whose media aggressively promotes American Dream agitprop, it means the Occupy protestors have scored a monumental victory. You can almost imagine a Wall Street CEO turning to an aide and muttering a slightly altered riff off LBJ: "If we've lost Ron Burgundy, we've lost Middle America."
In response to this stunning turn of events, conservative politicians are retreating to non sequiturs. They seem to think that if they shout the phrase "class warfare" enough, the nation will go back to not caring about the divide between the rich and poor.
But something has changed.
For most of the post-World War II era, we tolerated relatively high inequality because we envisioned it as a necessary side effect of an exceptional economy that (supposedly) guaranteed opportunities for advancement. As The Wall Street Journal put it, we believed that "it is OK to have ever-greater differences between rich and poor ... as long as (our) children have a good chance of grasping the brass ring."
However, the last three decades have invalidated our standing hypothesis. After the conservatives' successful assault on the New Deal, America has lived a different reality—one perfectly summarized by a new Federal Reserve study revealing that today's increasing inequality accompanies comparatively low social mobility.
"U.S. family income mobility has decreased over the 1969-2006 time span, and especially since the 1980s," notes the Fed paper, adding that "a family's position at (the) end of (the) 2000s was ... more correlated with its start position than was the case 20 years earlier."
Of course, some class mobility still exists. The trouble is that it's primarily of the downward kind. As the Pew Charitable Trusts reports, roughly a third of those who grew up in the middle class have now fallen below that station in adulthood.
This is why, for all the right-wing mythology about "Eurosocialism" snuffing out upward mobility, data from the Organization for Economic Cooperation and Development show that social mobility in uber-capitalist America is actually lower than in most industrialized countries.
This is why almost three-quarters of respondents just told The Hill newspaper's pollsters that income inequality is a problem.
This is why my local TV news is suddenly airing pieces on economic inequality between sports, weather and all the "you stay classy" small talk.
And this is why, among all the fights over economic policy, the debate about taxes is the most crucial of all.
As the Fed noted in a separate report, the federal tax code—which remains vaguely progressive—has been the one proven way to "mitigate income inequality." But with congressional Republicans gradually flattening federal income tax rates and with already-regressive state tax rates in GOP bastions like Texas, Wyoming, Tennessee, South Dakota and Mississippi, the tax system has lately been preserving or exacerbating existing inequality.
The good news is that if we return to the slightly higher tax rates of the Reagan or Clinton eras—i.e., the rates that existed when the economy was doing better—we can begin fixing things. If, though, we keep tax rates the same or make them even more regressive, we'll be seeing a whole lot more about economic inequality on our local news as the current crisis inevitably reaches an ugly boiling point.
David Sirota is best-selling author of the new book "Back to Our Future: How the 1980s Explain the World We Live In Now." He hosts the morning show on AM760 in Colorado. Email him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at DavidSirota.com.
My guess is that you've seen something similar on your local affiliate—and that's no minor event. When even the most local of television journalists are compelled to acknowledge this crushing emergency in a country whose media aggressively promotes American Dream agitprop, it means the Occupy protestors have scored a monumental victory. You can almost imagine a Wall Street CEO turning to an aide and muttering a slightly altered riff off LBJ: "If we've lost Ron Burgundy, we've lost Middle America."
In response to this stunning turn of events, conservative politicians are retreating to non sequiturs. They seem to think that if they shout the phrase "class warfare" enough, the nation will go back to not caring about the divide between the rich and poor.
But something has changed.
For most of the post-World War II era, we tolerated relatively high inequality because we envisioned it as a necessary side effect of an exceptional economy that (supposedly) guaranteed opportunities for advancement. As The Wall Street Journal put it, we believed that "it is OK to have ever-greater differences between rich and poor ... as long as (our) children have a good chance of grasping the brass ring."
However, the last three decades have invalidated our standing hypothesis. After the conservatives' successful assault on the New Deal, America has lived a different reality—one perfectly summarized by a new Federal Reserve study revealing that today's increasing inequality accompanies comparatively low social mobility.
"U.S. family income mobility has decreased over the 1969-2006 time span, and especially since the 1980s," notes the Fed paper, adding that "a family's position at (the) end of (the) 2000s was ... more correlated with its start position than was the case 20 years earlier."
Of course, some class mobility still exists. The trouble is that it's primarily of the downward kind. As the Pew Charitable Trusts reports, roughly a third of those who grew up in the middle class have now fallen below that station in adulthood.
This is why, for all the right-wing mythology about "Eurosocialism" snuffing out upward mobility, data from the Organization for Economic Cooperation and Development show that social mobility in uber-capitalist America is actually lower than in most industrialized countries.
This is why almost three-quarters of respondents just told The Hill newspaper's pollsters that income inequality is a problem.
This is why my local TV news is suddenly airing pieces on economic inequality between sports, weather and all the "you stay classy" small talk.
And this is why, among all the fights over economic policy, the debate about taxes is the most crucial of all.
As the Fed noted in a separate report, the federal tax code—which remains vaguely progressive—has been the one proven way to "mitigate income inequality." But with congressional Republicans gradually flattening federal income tax rates and with already-regressive state tax rates in GOP bastions like Texas, Wyoming, Tennessee, South Dakota and Mississippi, the tax system has lately been preserving or exacerbating existing inequality.
The good news is that if we return to the slightly higher tax rates of the Reagan or Clinton eras—i.e., the rates that existed when the economy was doing better—we can begin fixing things. If, though, we keep tax rates the same or make them even more regressive, we'll be seeing a whole lot more about economic inequality on our local news as the current crisis inevitably reaches an ugly boiling point.
David Sirota is best-selling author of the new book "Back to Our Future: How the 1980s Explain the World We Live In Now." He hosts the morning show on AM760 in Colorado. Email him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at DavidSirota.com.
© 2011 Creators.com
I am so tired of your bullsh*t lies and regurgitated conservative talking points. Allow me to inject some actual facts into this discussion, mkay? Currently, 16% of all Americans are living in poverty (24% of children 0-18), however, people receiving welfare benefits only comprise a mere 8% of the total population, with only 1.7% receiving more than 50% of their total income from government sources. So, assuming your fairytale about poor people refusing to work so they will not lose their welfare benefits were true, how do you explain why the other 91% of people are currently getting f*cked by the system? 91% comes from subtracting the 8% on welfare and the wealthiest 1% from 100% leaving you with 91% of people who work and many of whom pay taxes but have little to nothing to show for it.
You are on crack David. Who do you suppose eats at place like Bacchus and Sanford, because most middle class people cannot afford to eat at those places save for once a year or so for special occasions like wedding anniversaries or birthdays. These special occasion restaurants will always have a demand for them. Milwaukee has plenty of affordable restaurants like Comet and Centro Cafe, it's the ones that are a step up from Comet but below Bacchus that are hurting. Places like Charro and Sabor are revamping their menus adding less expensive small plate items so they stay afloat in these rocky economic times.
As for Walmart and Target having a building frenzy in and around Milwaukee, I am not aware of a single Walmart or Target that is currently under construction in the area. Greater Milwaukee is one of the most underserved metropolitan areas in the US as far as attracting national retailers is concerned. We only have one Walmart Supercenter in all of Milwaukee County and it's not even open 24 hours, the rest are regular Walmarts with a very limited grocery selection. Many local Targets have been renovated into PFresh stores with expanded grocery departments, but there is not a single Target Greatland or Super Target in the entire state of Wisconsin. I might believe you that the economy was doing better if Milwaukee were getting a Nordstrom or a Burberry store, but pointing to the prevalence and success of major discount retailers and bulk grocers in our area strikes me more as times are still very hard for most people, hence they are penny-pinching by shopping at Walmart.
There are two Walmart Suprecenters on S. 27th St in Milwaukee Co. A new Target is under construction on Blue Mound in Brookfield. Walmart has proposed 15 Neighborhood Markets, replacement stores and new Supercenters in the metro area. Many Walmart are doing in-the-box conversions adding grocery. Woodmans is building another store in Waukesha. Fresh Markets is building in Fox Point. Look for another Trader Joes and Whole Foods to come. Costco just opened another store in Pewaukee. They are openng because the economy is good for them here. The economy is always good for good people, good stores, and good restaurants. If you can't compete with the best you deserve to fail. The exonomy is not causing businesses to fail or people to lose jobs. People lose jobs because they have no worth to their employers. They are not profitable to keep around. Restaurants and stores fail because they don't do a better job compared to their competitros. Look at McDonald, they have a business model that does well despite the exonomy. Walmart has a business model that does well despite the exonomy. As a person, you need to develop vocational skills, like nursing, etc, that are in demand despite the economy. Believe me, this doesn't have to be hard.
I don't care who eats at the upscale restaurants, the fact is they are pact to the rafters every weekend. Even is Comet is busy. Its one of my favorites but try getting a seat on a Sunday.
Are you learning disabled? McDonald's and Walmart do not succeed in spite of the bad economy, they succeed as a result of the bad economy. People are choosing to save their money by shopping at Target instead of Crate and Barrell and eating at Panda Express instead of PF Chang's. This is not rocket science. Guess who else is doing well in this rough economy? Repo men, companies that make foreclosure signs, and manufaturerers of riot gear for police departments.
P.S. There is only ONE Walmart Supercenter in Milwaukee County located at 27th & Morgan, where is this other mythical Walmart you speak of?
The second Walmart Supercenter is located on S. 27th, just south of College in Franklin -- that is Milwaukee County.
You make good points about succeeding in a down economy - businesses like Walmart, Target, McDonalds, repo men etc. Thats why in a down economy you shift your capital investments into these areas. I invested heavily into redeveloping real estate in New Orleans after Hurricane Katrina -- and let me tell you, its the give that keeps on giving. The whole point is that instead of standing around like a dumbass, focus your vocational kills in areas that compliment the economy. Open a payday loan store. One of my friends converted a collectable coin shop into one now just buys scrap gold. He's doing great and adding employees!!! People could not afford to buy rare coin investments but with high gold prices, they are seeking to get cash. You simply change with the economy like you change clothes with the weather. Like I said, it doesn't have to be hard. Whole Foods and Trader Joe's - two very upscale retailers are on a growth frenzy. Whole Foods is very expensive, is having record profit and sales, and just raised their dividend. Obvoulsy the economy is good for so many people to afford to shop at Whole Foods.
I looked at my favorite tax propaganda website, ntu.org, the heading under Tax facts called "Who pays Taxes?" It had the 2009 numbers posted, (it takes a few years to post the IRS's own data). The have the "convincing" practice of dividing up the upper brackets to state their case of why the top 50% MUST vote for tax relief for the upper brackets, if only to save their own hides. Being in the Top 1% in 2009 was a 1040 Adjusted Gross Income of 343K or better, back in 2008 that figure was 380K.
Funny thing, all brackets fell in income, whether it be top 1%, 5%, 10%, 25%, 50%, or bottom 50% all rolled together, ALL brackets were lower! But how many of any of you have seen your true cost of living get lower?
Looking at the charts, one should pay attention to what it takes to be a top 1%, it's not some million-dollar compensated fat-cat. Then take a look at how far down it is to be a six-figure man, I would roughly guesstimate it as about 12% (top 8th) Looking at another statistic, "maximum happiness" has been pegged at 75K. Top 25% was placed at 66K. So the bottom 3/4 is less than happy! Gee, I wonder how that vote would carry out, that's constitutional ratification material!
Here's the way I look at it, take the price of ANYTHING, and convert it to the TIME you spent working for those dollars? Compare that to 10 years ago, 20 years ago, even 30 or 40 years ago (covers all the conservative-leaning baby boomers and seniors, think of your own kids and grandkids).
About 30 years ago, my in-state tuition at UW-Madison was about 375 hours of minimum wage work for 1 year's "tuition and fees". Today, 1 year in-state is over 1200 hours of minimum wage work. Now, how many of YOUR career positions have a starting pay that kept pace with even minimum wage? No wonder your kids can't move out of your home when they graduate with the equivalent of a home mortgage to pay off, how can they pay rent while paying a mortgage-size bill? How can they be "valuable consumers" under those terms?
Before you say one hateful word about how "all of *them* screwed things up", step back and take a look at how you started out in life, and what your own kids are being able to start out with in life... Now vote selfishly for what it takes to help out your own descendants!
Is it any wonder that Occupy idiot in Milwaukee said "Free everything"? Not being an A-student at Harvard, he knows how his future is ridiculously limited! Vote for the president who can lead the way to fairness, but make sure you also vote in a congress that will support him, not vote to satisfy the corporate lobbyists. Locally, what changes has Walker and Wisconsin Republicans done to help workers? All they have done is help businesses "reduce their costs", does not generate any new demand when other workers... er customers... are having their pay-checks cut, eliminated, or raised slower than the rising cost of living.
A lot of countries don't have income equality. I travel a lot to Latin America and it works out well for the hardest workers. How many regular joes here in the USA, like lawyers, pilots, upper mid level managers, CPAs, can afford a live-in housekeeper? Well in most of Latin America the averge joe can. Not ony that, you can get a nice home - I mean a really nice one for about $100k. They don't have all the welfare like we do that equals out the income. Why would some woman want to be my housekeeper for $40k a year when she lay in a hammock drinking tall boys for $40k in welfare? Income inequality and reduced entitlements will put people back to work because they will have to work to survive. Its the way it should be. Look at China, India, Thailand and other great countries. You don't see their peopel whining about income inequality. Hell, just be glad you don't live in a tent in China buring pig poop for heat. No more complaining - get to work.
Trying to compare college tuition to minimum wage is not a good way to do it. The governent has had the good sense not to raise the minimum as fast as other costs. Raising the minimum wage hurts business owners and consumers. Its also unfair to pay someone $7 a hour when they are basically worth nothing. Tuition is what it is. The market of supply and demand. If kids stop going to college then they lower it until they get enough students.
I know one black college that gave away free tuition to white kids so they would not lose fed funds. They needed to get at least 10% white. So you can still get free college if you look.
Income inequality works out really nice for smart hardworking people. You don't have to be in the top 1% to benefit. You can probably be in the top 50% and have it work out quite well for you.