Why the Rich Are Getting Richer (and you and I are getting poorer)

The news recently has it that income inequality in the United States is at its greatest since the 1920s. That upper 1% owns a staggeringly disproportionate share of the nation's wealth: I think the number is that 1% owns 19% of the wealth.

And if you go "down" to the upper 10%, they control 47% of the nation's wealth.

• The declining membership and power of unions is one factor. Think Wisconsin Governor Scott Walker's successful efforts to strip bargaining rights from public employees. Similar things have recently happened in a few other states.
• For another thing, it's been laws that favor wealthy individuals and large corporations and keep tax rates on the upper income brackets low. Thank your Republican senators and congressmen for that. (In the days of FDR and the New Deal, the top incremental rate of the income tax actually was 98%; today it's 38.5%. Yet the super-rich organize Tea Party rallies and shout that taxes are too high, but they are not trying to lower taxes for you and me, but for themselves.)
• And the lobbyists who do the bidding of extremely wealthy individuals and corporations and even submit to legislatures draft laws which are friendly to their bosses. A number of corporations have banded together in a consortium called ALEC for the purpose of lobbying, and ALEC has been quite effective. (Generally, corporations' legislative aims are fewer regulations as well as lower taxes.)
• And of course court decisions, such as the infamous Citizens United decision which gave essentially free reign to the super-rich to anonymously contribute to election campaigns.
• Yet another culprit: It was recently asserted—and I've heard this twice, now--that the policies of the Federal Reserve Board favor the rich by fostering low inflation over low unemployment. Obviously, if a lot of people are unemployed, that lowers their personal income level and income levels overall.
• Another way that the Federal Reserve's low interest policies are supposed to be favoring the rich: The low interest rate lets the rich borrow cheaply. They borrow, using their homes and/or their wealth as collateral, and buy commodities. (More properly, commodities futures, which are contracts to buy or sell commodities such as precious metals; oil; wheat or corn; coffee, orange juice; and the infamous "pork bellies.") It is true that it's mainly the rich who trade in commodities because the amounts of the contracts, in dollars, are very large.

Update, September 17, 2013. This is truly an update because this is two news items that came out yesterday:
1) In the past year, the individuals on the Fortune 400 (list of 400 wealthiest individuals) saw their incomes rise 19%.
2) Unemployment among those with an annual income of $20,000 is 23%, whereas unemployment among those with an income of $150,000 was 3.2%.
Update, September 18, 2013. Here is a link to a Huffington Post article that says inequality is at a record high, and that the median income has fallen for five years in a row: Median income falls 5 straight years, inequality at record high

Copyright © 2013.

Growing Social Inequality in America

A little survey of man-in-the-street–type individuals by a TV show showed them all saying that what America needs is to raise the taxes on the rich—and maybe also reduce taxes on the poor.

And that is a core message of the "Occupy Wall Street" and other "occupy" demonstrations.

So millions of Americans feel this way. But—you know what? It's not going to happen. At least not as long as some of the fundamental facts of the American political system do not change.

The fact is that wealthy interests control our government. They can effectively buy Congress through lobbying, and through campaign contributions. Wealthy individuals and corporate-organized and -funded lobbying organizations buy Congress. Whereas political contributions from individuals are limited to $2500, the so-called "Super PACs" (political action committees) have little or no limitations on them. This state of affairs was made possible by the disastrous Supreme Court decision known as Citizens United (discussed elsewhere in this blog).

A recent book by Hacker and Pierson, two social scientists, called Winner Take All Politics, shows how the concentration of wealth in America has worsened. That is, the top few as regards wealth have grown wealthier—in fact vastly, astronomically wealthier—in the last 25 or 30 years.

The concentration of wealth in America is worse than in other Western countries: in Europe, in Canada, in Australia. And of course money is power. It can even be concluded that we no longer have a democracy.

The situation is the result of money buying influence; of the tax code; and of lax or even lack of regulation of Wall Street. (The countries named above, for example Canada, did not have as severe an economic crisis as the US four years ago, because they have more effective regulation of their financial systems.)

In 1986 legislation was enacted that closed many of the loopholes in the tax code that enabled the super-rich to escape taxation. But in the years since, those tax reforms have been very largely undone.

It's a sad situation in America. People are speaking out and voicing their dissatisfaction. But have they got power to effect change? Are any of the political candidates even promising to do something about the situation? It does not seem to be one of the issues discussed in candidate debates. The Occupy people are aware of all this but otherwise it all seems to be a big secret.

Copyright © 2012 by Richard Stein

The People vs. the Republicans

The Republicans are getting some backlash which is much deserved, in my opinion. The shining example recently occurred when Kathy Hocul, a Democrat, defeated the heavily-financed Republican candidate in a special election for the Congressional seat in the 26th District of New York State.

All eyes were on this election, and it was viewed as very largely a referendum on Medicare: That is, the defeat of the Republican is thought to have been because the Republicans are now perceived to favor cuts in Medicare, since the federal budget proposed by Republican budget-writer Paul Ryan would cut Medicare benefits.

Now, seniors (those who benefit from and who are literally the beneficiaries of Medicare) tend to be conservative in their voting, particularly on social issues. But they are a well-organized lobby, and when it comes to even threatening their government benefits (or, I should say, entitlements), they will get their backs up.

So, if the election which Hocul won really was a referendum on Medicare, I am glad that, for once, a popular message has been sent to Republicans. (Let's hope they get the message. We'll only know that they did when they begin to moderate some of their positions. You'd think they'd perceive what is in their self-interest, but they have not always been smart enough to do so.)

In my view, too often the "man in the street" does not, cannot, perceive that the Republican party is the representative of wealthy individuals and corporations. Corporate interests (made all the more influential since the Supreme Court's Citizens United decision, which removes restrictions on corporate political contributions) buy the votes, in Congress, through their army of highly paid lobbyists, and through out-and-out contributions to those candidates' election and re-election. Thus, Republican legislators are unabashedly beholden to corporate interests, which tend to have interests contrary to those of the public.

The Medicare thing should make people realize that they Republicans pretty generally have no sympathy for the poor, the elderly, the unemployed--anyone for whom a more compassionate government provides a "safety net." The latest example—more recent than Paul Ryan's to-hell-with-Medicare budget—is that Republicans now want to cut funding for the FDA (Food and Drug Administration), which is charged with keeping our food (and medicines) pure and safe. In a rather typical example of their very odd logic (to put it mildly), the Republicans claim that reducing the funding to the FDA—which already lacks adequate resources to inspect food producers and processors, so that we have had numerous outbreaks of food-borne illness like Salmonella—will somehow contribute to, rather than undermine, the safety of the food which every single American must eat. Evidently it's again that extreme free-market thinking that says, Just leave them alone (free from regulation and other government "interference" such as inspections) and they will do the right thing, and we'll all be better off. How absurd. Any time—and let's acknowledge that this happens, often—that the corporate bottom line conflicts with what benefits customers and the public, you know which gets put first by the corporations—and by their Republican lackeys in Congress.

Update/Correction, May 26, 2011
1) The election which Hocul won was indeed regarded as a referendum on the treatment of Medicare in the Paul Ryan budget proposal because Hocul's opponent had specifically endorsed the proposed Medicare changes.
2) It was not exactly correct to say that the Ryan budget proposal would cut Medicare. Ryan's idea is to replace government-run Medicare with private insurance. This is in line with far-right ideological notions that Medicare and even Social Security are "socialist" programs, that everything should be left to the private sector and as little as possible administered by the government. Going back at least to Ronald Reagan, conservatives have been telling us that government is bad, or is bad as long as it is as big as it is--never mind that they themselves are part of "government." Somehow the inconsistency does not occur to them. "Oh yes, the body politic is evil and too big, so I guess (being part of it) I'll cut my arm off."

Update, May 26, 2011
Tim Pawlenty, a possibility for the Republican presidential nomination, has announced he supports Paul Ryan's Medicare proposals. Is he too stupid to have learned from the Hocul election? Of course I don't mind if any particular Republican, or even the whole party, self-destructs.

Update, May 27, 2011
Here I mention, for the third time, the Citizens United decision. I gave an incorrect impression, that that decision permits corporate contributions directly to candidates. It does not; rather, it permits corporations to fund, for example, advertising on issues rather than candidates. (Thus we see TV "public service announcements" that advocate for or against a certain position or proposed law, and their sponsorship by corporations or industry trade groups is disguised by a statement such as "Paid for by Citizens for Such-and-Such.") However, in today's news, a judge has ruled that corporate contributions to candidates are legal.

Copyright © 2011 by Richard Stein

Greed and Political Influence of Corporations Makes U.S. Rate as More Corrupt

A recent online article,

http://www.aolnews.com/money/article/perceived-us-corruption-grows-amid-financial-scandals/19690043

notes that, in a ranking of countries of the world according to corruption (at least as defined in this study) shows the U.S. as having slipped to No. 22 (with No. 1 being the least corrupt). The U.S. is remarkably free of bribery in public office compared to other countries; but

the past year of headline-making investigations into Wall Street practices and associated government lapses has brought to light a narrative of unbridled greed that has undermined confidence in public institutions and stoked perceptions of corruption here.

Another factor, as noted in the article, is the increasingly unrestrained and covert role of private money in the political system -- especially since the Supreme Court's Citizens United decision in January, which former Justice Sandra Day O'Connor criticized as a threat to judicial independence and checks on campaign spending.

Update, May 27, 2011
Here I mention the Citizens United decision. I gave an incorrect impression, that that decision permits corporate contributions directly to candidates. It did not; rather it permits corporations to fund, for example, advertising on issues rather than candidates. (Thus we see TV "public service announcements" that advocate for or against a certain position or proposed law, and their sponsorship by corporations or industry trade groups is disguised by a statement such as "Paid for by Citizens for Such-and-Such.") However, in today's news, a judge has ruled that corporate contributions to candidates are legal.

Copyright © 2010 by Richard Stein

How Corporations Are Controlling America

The trend continues for America to be controlled more and more by big business—who want everything to go according to what is in their interests—meaning their profits.

For a long time this was accomplished by lobbyists. Many industries have their trade associations who maintain offices in Washington because their chief activity is to marshal lobbyists who try to persuade Congressmen and Senators to vote their way. They do this with persuasion, which is completely legal; but also with favors to Congressmen like gifts, trips, and entertainment, which is not legal. Or with promising campaign contributions, which has become legal since the recent Supreme Court decision known as Citizens United.

Here is an article on how industry influence has prevailed over the interests of the public in the case of the Toxic Substances Control Act.

http://www.politicsdaily.com/2010/10/13/reform-of-toxic-chemicals-law-collapses-as-industry-flexes-its-m/

Here is a bit of the history of efforts to rein in industry influence on federal governmental regulation and law-making. Some progress to reduce the influence of corporate contributions to politicians was made by the Bipartisan Campaign Reform Act of 2002, often referred to as the McCain–Feingold Act.

McCain-Feingold was upheld by the courts in a 2003 case known as McConnell v. Federal Elections Commission.

A later ruling (2007), known as Federal Election Commission v. Wisconsin Right to Life, Inc., created a very big exemption—but the consequences of this supposedly are still up in the air.

Most recently (2010), Citizens United partly overturned McConnell. Now corporate contributions can once again have a great influence on our elections. The party or candidate who has the most money can buy the most TV commercials. That means more persuasion, which is likely to be effective with voters. And those corporate contributions go much more heavily to Republican candidates. (Maybe now some is going to Tea Party candidates, too; I don't have information on that.) Thus corporate money is achieving a more "business-friendly" America and will continue the process of turning our country toward the Right that got such a big boost when the likes of Scalia, Roberts, and Alito gained seats on the Supreme Court.

Copyright © 2010 by Richard Stein