Surprise, surprise : Plutocracy 1, Everybody else 0

Yesterday I blogged about the current crop of suburban ghost towns, and how the middle class "goal posts" have been moved so far away from where my parents had them, that I really need to find a different word to what exactly is my current social class.

Well, the Wall Street Journal published Income-Inequality Gap Widens just this morning :

The wealthiest 1% of Americans earned 21.2% of all income in 2005, according to new data from the Internal Revenue Service. That is up sharply from 19% in 2004, and surpasses the previous high of 20.8% set in 2000, at the peak of the previous bull market in stocks.

The IRS data go back only to 1986, but academic research suggests the rich last had this high a share of total income in the 1920s.

This, by the way is not actual wealth. This is just income gap. If we considered actual capital holdings, we the non-wealthy are even more screwed and deeper in the proverbial debt hole than before.

The IRS data don't identify the source of increased income for the affluent, but the boom on Wall Street has likely played a part, just as the last stock boom fueled the late-1990s surge. Until this summer, soaring stock prices and buoyant credit markets had produced spectacular payouts for private-equity and hedge-fund managers, and investment bankers.

In other words, the economy is not riding on a strong middle class at all. The economy is good if you are in that top 1%. Everybody else? This is how Ezra Klein, who's been on a roll this week, breaks it down :

To think of this a bit more concretely, if you took a representative 100 Americans and split $5 of income between them, here's how it would look: One guy would get $1.06, forcing the other 99 to split the remaining $3.94, while the bottom 50 would split 64 cents among themselves. The leftover $3.30 would be divvied up among the remaining 49 folks.

That's how fucked up is the neo-con capitalism the trickle down tyranny brought to us by the Reagan-Bush-Clinton-Bush plutocracy.

It's really a push-back against the growing middle class of the 1970s, and a deliberate attempt to indenturing generations of americans to the new rising corporate Empire. And you don't have to take my word. Read this whole article written by Paul Krugman back in 2002.

First, the share of the rich in total income is no longer trivial. These days 1 percent of families receive about 16 percent of total pretax income, and have about 14 percent of after-tax income. That share has roughly doubled over the past 30 years, and is now about as large as the share of the bottom 40 percent of the population. That's a big shift of income to the top; as a matter of pure arithmetic, it must mean that the incomes of less well off families grew considerably more slowly than average income. And they did. Adjusting for inflation, average family income -- total income divided by the number of families -- grew 28 percent from 1979 to 1997. But median family income -- the income of a family in the middle of the distribution, a better indicator of how typical American families are doing -- grew only 10 percent. And the incomes of the bottom fifth of families actually fell slightly.

Let me belabor this point for a bit. We pride ourselves, with considerable justification, on our record of economic growth. But over the last few decades it's remarkable how little of that growth has trickled down to ordinary families. Median family income has risen only about 0.5 percent per year -- and as far as we can tell from somewhat unreliable data, just about all of that increase was due to wives working longer hours, with little or no gain in real wages. Furthermore, numbers about income don't reflect the growing riskiness of life for ordinary workers. In the days when General Motors was known in-house as Generous Motors, many workers felt that they had considerable job security -- the company wouldn't fire them except in extremis. Many had contracts that guaranteed health insurance, even if they were laid off; they had pension benefits that did not depend on the stock market. Now mass firings from long-established companies are commonplace; losing your job means losing your insurance; and as millions of people have been learning, a 401(k) plan is no guarantee of a comfortable retirement.

So it's not that nothing has changed since Krugman wrote this. The war against the middle class is actually getting much worse.

Bookmark/Search this post with:

| | | | |