Shocking and Ominous Statistics on Economic Inequality

© Josh Sager – July 2015

This week, Alternet released an amazing compilation of 35 inequality statistics that paint a truly dire picture about the future for a majority of the world population. It illustrates just how extreme income and wealth inequality have become in recent decades and points to several of the mechanisms that could help explain this inequality.

wealthgapmap

Here are a few key facts about income and wealth inequality paraphrased from the Alternet article:

  • World Wealth: The wealthiest 1% of the human race controls 46% of the total wealth, while the bottom 50% controls only 1% of the wealth—within the top 1%, the 85 richest individuals (0.000001% of the population) have more wealth than the poorest 3,500,000,000 (47.8% of the population)
  • Stagnating Wages: In the last 25 years, American workers have been more productive than ever, the economy has grown by 83% and corporate profits have doubled—conversely, the inflation-adjusted value of average wages have actually dropped during this time period, indicating that the money is being syphoned off at the top.
  • The US Income Disparity: The top 1% of American earners capture 20% of wages/compensation—within this top income demographic, the top .01% of earners capture 6% of total wages.
  • The US Wealth Disparity: The bottom 50% of the US population owns 2.5% of the country’s wealth while the top 1% owns 35% of wealth.
  • Recovery for the Rich Only: After the crash of 2008, the top 1% of Americans lost 16% of their wealth, while the bottom 99% lost 47% of their wealth—since the crash, the rich have taken more than 100% of total recovery gains, as their wealth has grown by over 28% while the average family has lost over 4% of its wealth.
  • The Increasing Racial Wealth Gap: The wage gap is particularly extreme when it is looked at in terms of race. An average white family has a net wealth of $113,000, while the average Hispanic family has an average wealth of only $6,300 and an black family has a net wealth of a mere $5,600.

Put simply, this type of inequality is unsustainable in the long-term and a wide-range of consequences will be unavoidable if it keeps increasing.

First and foremost, excessive inequality destabilizes the economy by reducing the total demand for goods (and thus jobs), forcing ever larger-numbers of people onto public welfare programs while reducing the tax base, and eroding the economic stability of a large majority of households. Excessive inequality is strongly correlated with economic crashes and there is no reason to believe that our economy has developed some new method of stabilizing itself that will allow it to survive the current levels of inequality.

Today, our society is the most unequal it has been since the year before the Great Depression, making our current level of inequality the economic equivalent of looking over the edge of a cliff and trying to decide whether to jump or walk away from the edge.

If you look at the above graph (from a study by Thomas Pikitty), you will notice how spikes in our nation’s income inequality occur shortly before the Great Depression in 1929, Black Monday in 1987, the 2000 recession and the Great Recession of 2008, illustrating this pattern. With inequality still on the rise (this graph only goes up to 2012), the danger of a crash will only get worse until something is done to fix the situation or our economy implodes like it did in 1929 or 2008.

In addition to harming the economy as a whole, inequality harms individuals and families. Over the last several decades, the rich have established a system that allows them to reap most of the rewards from private production while opting out of paying for the social safety net (tax cuts)—conversely, the poor and middle classes are forced to compete for a shrinking portion of the pie while taking out even more debt. This means that the rich are able to build their mansions in gated communities, while everybody else works until their late 60s (if not later) at jobs that never translate productivity to fair compensation.

In particular, the next generation bears the brunt of this inequality. Students today are taking out thousands of dollars in debt to go to school, only to graduate and face crushing competition for jobs with low wages, benefits and security—gone are the days when recent graduates can easily get well-paying jobs and quickly pay back the costs of their education.

Many of these students have become the indentured serfs of the modern era. They go into debt so that they can work in a chose field (like how serfs would rent equipment) and they will be scraping to pay back this debt for the bulk of their lives. This constant need to service their debt will force them to live in fear of losing their job (giving their employers greater leverage over them for wages) while putting off buying a house or raising a family in comfort.

Solutions

While the problems of income and wealth inequality are massive and political difficult to address, they are actually not that hard to solve from a purely policy perspective. We know exactly what must be done to address inequality, but are largely unable to do so because the wealthy have been allowed to literally buy power over our political system.

First, we need to implement massive tax reform: Increase the marginal tax rates on the rich, force corporations to stop offshoring and start paying their share, equalize taxation on investment and labor income (capital gains and income taxes), and remove the bulk of the high-income loopholes.

Second, we need to enforce stronger worker protections: Promote unionization and force corporations to pay a living wage rather than offloading the costs of employing Americans onto social safety net programs (ex. Walmart relying on food stamps for employees to eat)

Third, we need to repurpose money that our government is currently wasting to more efficient purposes: Significantly cut our military and end corporate welfare (ex. oil/gas/corn subsidies) in order to pass for massive infrastructure investments, establish universal and free public higher education, start a single-payer healthcare system, and properly fund programs that primarily benefit the middle class.

Kayaktivists Across the Country Paddle in Protest of Arctic Drilling

Shell oil exploration could begin any day now, activists warn

by: Lauren McCauley

Environmentalists furious with President Barack Obama’s continued support for Arctic drilling on Saturday descended on the White House and paddled onto waterways across the United States united in a call to end this dangerous expansion of our fossil fuel energy system.

In a display of solidarity with Seattle’s ‘kayaktivists’—who through repeated direct actionshave tried to thwart Royal Dutch Shell’s Arctic drilling plans—activists in Minnesota, Florida, Boston, Detroit, and elsewhere launched floating protests to denounce what theysay is a “fool’s journey” to drill for oil in the Chukchi Sea in the Alaskan Arctic.

Meanwhile, in Washington D.C.’s Lafayette Park, protesters donned polar bear and walrus suits and held signs calling on the president to suspend Shell’s permit. The oil giant’s drilling fleet is currently making its way from the Port of Seattle to the Alaskan coast, where it could begin exploratory drilling as soon as next week, activists warn.

Environmentalists have repeatedly criticized Arctic drilling as one of the most dangerous and extreme forms of fossil fuel extraction, as it threatens one of the world’s most pristine ecosystems while concurrently ensuring even greater carbon emissions.

“The fossil-fuel industry wants us to believe we’re stuck with oil and all the damage, danger, and destruction it brings,” Rhea Suh, president of the Natural Resources Defense Council, wrote this week. “That we have no choice but to accept that 30 years from now we might need Arctic oil — based on demand assumptions, which the International Energy Agency says would result in an average global temperature increase of at least six degrees Celsius — three times what science states the planet can sustain.”

“Well, we’re not stuck with oil,” Suh continued. “We can do better than assume climate failure.”

The Day of Action was organized by citizen activists with support from national environmental groups including 350.org, Alaska Wilderness League, Friends of the Earth, Greenpeace, Natural Resources Defense Council, and Sierra Club.

Those who couldn’t paddle out were encouraged to take to social media to share their disapproval over the drilling plan. Images of the actions were shared online with the hashtag #ShellNo.

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License

Source: Kayaktivists Across the Country Paddle in Protest of Arctic Drilling | Common Dreams | Breaking News & Views for the Progressive Community

Clinton Challenged to Break Up—and Break Up With—Wall Street Banks

Comments from progressive Senators Elizabeth Warren and Bernie Sanders, Clinton’s chief rival, highlight former Secretary of State’s ties to financial elite

by: Lauren McCauley

Faced with the possibility of yet another Wall Street crony taking over the Oval Office next year, progressive lawmakers are directly challenging Democratic frontrunner Hillary Clinton to break up—and break up with—the big banks.

Speaking at an annual meeting for progressive organizers and advocacy groups on Friday, Sen. Elizabeth Warren (D-Mass.) called on presidential hopefuls to support recently introduced legislation that would stem the ever-turning revolving door between government and the financial industry.

We have a presidential election coming up. I think anyone running for that job—anyone who wants the power to make every key economic appointment and nomination across the federal government—should say loud and clear that they agree: we don’t run this country for Wall Street and mega corporations. We run it for people,” Warren said, according to her prepared remarks, during the keynote address.

“So let’s turn that into something specific,” Warren told the thousands convened at theNetroots Nation annual convention, held this year in Phoenix, Arizona from July 16-19.

The new bill, introduced by Sen. Tammy Baldwin (D-Wis.) this week, “won’t fix everything, but it will throw some heavy sand in the gears of the revolving door—and it’s a bill any presidential candidate should be able to cheer for,” Warren said.

As Nation columnist George Zornick notes, Warren’s address “can fairly be read as a direct challenge to Clinton,” who is known for her long-standing ties to Wall Street.

Indeed, the Wall Street Journal reported on Thursday that in her first few weeks as a presidential contender, Clinton’s campaign “collected about $300,000 from employees at the nation’s six largest banks, with about $88,000 coming from Morgan Stanley executives alone, and about $62,000 from workers at J.P. Morgan Chase & Co.”

Speaking at a campaign event in Iowa on Friday, Clinton’s primary challenger for the Democratic ticket, populist Sen. Bernie Sanders (I-Vt.), advised reporters to “ask Hillary Clinton about her views on whether she thinks we should break up these large financial institutions. I do.” He added, “You will have to ask her views on whether we should re-establish Glass-Steagall.”

The New York Times reports:

Asked whether Mrs. Clinton would seek to break up the country’s largest banks or reinstate Glass-Steagall, an aide to Mrs. Clinton said she would speak in more detail about both issues in the coming weeks. (Alan Blinder, an economist who is advising Mrs. Clinton, said this week that she would not attempt to revive Glass-Steagall.)

Further, the Times continues, “Sanders boasted that he had not received financial contributions from Goldman Sachs, which he said sought ‘undue influence’ in American politics.” Of the $50,000 in donations the Clinton team has thus far received from employees of the Wall Street giant, Sanders said, “That’s her decision.”

Source: Clinton Challenged to Break Up—and Break Up With—Wall Street Banks | Common Dreams | Breaking News & Views for the Progressive Community