Americans Are Shorter, Fatter, And Have Less Longetivity

 These charts (from The Wahington Post) are troubling. They show that Americans are getting shorter and fatter, and their longevity compared to other nations has dropped significantly. One might ask why this is happening. I think a big clue is contained in the charts (especially the chart below).

Note on the charts that the problems with height, weight, and longevity started about 1980. What happened in 1980 that could have caused this? The Republicans gained enough power to change the country's economic system.

Their new "trickle-down" system tilted the economic playing field to favor the rich to the detriment of 90% of Americans. They said giving the rich more money would benefit everyone, because that money would trickle down to the rest of the country.

That didn't happen. The rich did get richer, but nothing trickled down. The bottom 90% saw their wage remain stagnant and be gobbled up by inflation.

How does this relate to height, weight, and longevity? Because if a person has less money, then they get less food, shelter, and adequate medical care (because the price of all three has grown significantly). Income/wealth is a big determiner of health, and the poorer the health, the more it affects height, weight, and longevity.

The Republican's horrendous economic system is not just unfair, it is actually affecting the health of most Americans. This can be fixed, but not until the Republicans are voted out of power!

The Wealth Gap In The United States

 From the Pew Research Center.

Pew Research Center’s analysis in this report is based on data from the U.S. Census Bureau’s 2020, 2021 and 2022 Surveys of Income and Program Participation (SIPP). These are the three latest years in which SIPP was conducted. It is a nationally representative survey that focuses on the income of U.S. households and their participation in government programs. SIPP is a longitudinal survey that interviews participants multiple times over a four-year period.

The Republicans Have It Backwards On Wealth And Rights

Two things that make a huge difference in a country are wealth and human rights. The Republican Party has it backwards on both.

Republicans want you to believe that human rights is like a pie. They say that when one group earns a right they never had before, another group will lose some degree of that right. Of course, that is not now, and never has been true. 

This lie is done by those who want to maintain the white patriarchy in this country. When minorities achieve a right that white men have always had, no one loses anything. It just means that rights are equally recognized under the law. White men don't have less rights when nonwhites and women get more rights.

What they have less of is white male privilege -- an unfair advantage that they never should have had.

Republicans also have it backwards on wealth. They want you to believe that when the rich get richer, it benefits everyone in society, because much of that increased wealth will "trickle down" to those on lower economic levels -- the middle class, working class, and the poor.

This has always been a lie also. Wealth is like a pie, because there is a finite amount of wealth in a country at any given time. When one group gets a larger percentage of that wealth, all other groups must share a smaller percentage.

Note the chart at the top of this page. It shows the percentage of wealth that certain groups have had in the United States between 1990 and 2019. Note that as wealth has grown for the top 10% (and especially the top 1%0, the percentage has shrunk for the bottom 90% (and especially the bottom 50%).

They want you to believe that as the wealth of a country grows, that new wealth benefits everyone. That also is not true. Thanks to the GOP laws benefitting the rich, they currently get almost all of that growth in wealth, while the rest of the country must share only a tiny percentage (and most see no growth at all in their wealth).

As long as the Republicans stay in power (or at least retain enough power to block any changes in economic policy), it will stay this way. The rich will get richer, while the bottom 90% does not (and actually loses ground when inflation is considered).

It does not have to be that way. Before the Republicans re-instituted their Trickle-Down Economic Theory about 1980, rising wealth was fairly equally shared among the sectors of U.S. society. As productivity rose, it benefitted everyone. It could be that way again. But fairer economic policies cannot be achieved while the GOP has veto power. They only care about the rich.

The same is true about human rights. Equal rights will not be achieved as long as Republicans have a veto power over them. In fact, they are currently engaged in trying to take rights away from many (like women, LGBT community, and nonwhite voters).

We could have a country where equality in rights and fairness in economics was a fact. But it will only happen when Republicans are voted out of power (and Democrats feet are held to the fire). We have the power to fix this, but only if we vote!

Wealth/Income Inequality Hurts Economic Growth In U.S.

The United States has a vast, and growing, inequality in wealth and income between the rich and the rest of the population. It is now as large as it was right before the Great Depression. Republicans would like you to believe that when the rich do better, everyone benefits (because much of that money trickles down to the rest of the population. But that doesn't work -- it only fattens the bank accounts of the rich, and little to nothing actually trickles down.

But that is not the only problem. This vast inequality is also a drag on the economy -- hurting the nation's economic growth. The Economic Policy Institute has written an excellent article on this, and I recommend you read it. Here is their conclusion:

Since the late 1970s, income inequality has risen sharply enough and been sustained long enough to have significant macroeconomic and fiscal effects. This inequality has led to chronic shortfalls of demand stemming from weakened household spending. These chronic demand shortfalls have constrained economic growth—by as much as 3.4% of GDP per year—and contributed strongly to the very slow recoveries following the most recent three recessions predating the coronavirus recession. The early 1990s recovery was the first one dubbed “jobless,” but employment recovered even more slowly in the early 2000s recovery and the recovery from the Great Recession of 2007–2009 (Bivens 2016).

Even as rising inequality dragged on demand growth and harmed recovery from these three recessions, policy levers meant to help the economy bounce back faster were either becoming less effective (interest rates were near or at zero and couldn’t be lowered further) or were left unused (Congress failed to provide sufficient fiscal stimulus by boosting spending). So far, the recovery from the recession caused by the COVID-19 shock has been happily much more rapid, almost entirely due to the much greater fiscal effort—spending increases—put into recovery. But the fiscal push that aided recovery so far is gone, while almost certainly little progress has been made in lessening inequality. As time marches on, the demand-depressing effect of this higher inequality could start to reassert itself.

In fiscal terms, the key effect of rising inequality has been to redistribute income from the low- and moderate-income households that tend to be net recipients of disposable income from the tax and transfer system toward the higher-income households that tend to be net payers to this system. As income gets transferred from low-savings to high-savings households, where is the increased savings going? A good chunk of it goes to reducing measured budget deficits. As we note in the text box explaining why some measures of aggregate personal savings haven’t risen over recent decades, the reduced budget deficits that accompanied the rise in inequality is in some sense “where” the extra savings one would expect from a rise in inequality have shown up.

There are economic circumstances in which moving closer to federal budget balance might aid economic growth. But the U.S. economy has not enjoyed those circumstances for much of the last four decades. Economic growth has been constrained by weakened demand for sustained periods since 1979, which means that there was no particular economic benefit from lower budget deficits. Essentially, the macroeconomic downside of higher inequality—the drag on economic growth—likely neutralized any fiscal upside.

The Huge Wage Gap Continues To Grow Even Larger

The United States used to have a fair economy, where productivity increases were shared among all classes. But since the Republicans seized control of our government about 1980, they changed the economic rules. Now the rich hog most of the increase in production -- resulting in massive income increases for the rich, while workers struggle to just stay up with inflation.

Here is part of a recent report on this from the Economic Policy Institute:

Newly available wage data from the Social Security Administration allow us to analyze wage trends for the top 1.0% and other very high earners as well as for the bottom 90% during 2020. The upward distribution of wages from the bottom 90% to the top 1.0% that was evident over the period from 1979 to 2019 was especially strong in the 2020 pandemic year, yielding historically high wage levels and shares of all wages for the top 1.0% and 0.1%. Correspondingly, the share of wages earned by the bottom 95% fell in 2020.

Two features of the pandemic economy distorted wage patterns in 2020 and led to faster wage growth, especially at the top. One feature was that inflation grew at a subdued 1.2% rate, boosting the average real wage (but not affecting distribution). A second feature was that, as employment fell (the number of earners fell by 1.7 million, or 1.6%) and unemployment rose (to 8.1%), the composition of the workforce changed. Specifically, job losses were heaviest for lower wage workers so the mix of jobs shifted toward higher paying ones, artificially boosting average wages (see Gould) and generating faster measured wage growth especially in the bottom half.

For last year, the data show annual wages rising fastest for those in the top 1.0% (up 7.3%) and top 0.1% (up 9.9%) while those in the bottom 90% saw wages grow by just 1.7%.

This continuous growth of wage inequality undercuts wage growth for the bottom 90% and reaffirms the need to place generating robust wage growth for the vast majority and rebuilding worker power at the center of economic policymaking. See Mishel and Bivens (2021) for the evidence that an erosion of worker power due to excessive unemployment, eroded collective bargaining, corporate-driven globalization, weaker labor standards, new employer-mandated agreements (such as noncompetes), and supply-chain dominance explains wage suppression and wage inequality growth.

As Figure A shows, the top 1.0% and 0.1% were the clear winners over the 1979–2020 period:

• The top 1.0% saw their wages grow by 179.3%.
• Wages for the top 0.1% grew more than twice as fast, up a spectacular 389.1%.
• The other segments of the top 10% also had faster-than-average wage growth since 1979, up 53.9% and 83.1%, but nowhere near as fast as the wage growth at the top.
• In contrast, those in the bottom 90% had annual wages grow by 28.2% from 1979 to 2020.

This disparity in wage growth reflects a sharp long-term rise in the share of total wages earned by those at the very top: the top 1.0% earned 13.8% of all wages in 2020, up from 7.3% in 1979. That marks the second highest share of earnings for the top 1.0% since the earliest year, 1937, when data became available (matching the tech bubble share of 13.8% in 2000 and below the share of 14.1% in 2007). The share of wages for the bottom 90% fell from 69.8% in 1979 to just 60.2% in 2020.

Why Won't Democrats Tax The Wealth Of Billionaires?

 

To pay for their "soft" infrastructure plan, Democrats have proposed raising the tax on corporations from 21% to 28%, and raising the tax on the rich back to where it was before the Trump tax cuts. They also want to fully fund the IRS, so it has to ability to more effectively go after tax cheaters. Those are all good things. But they left the growing wealth of billionaires untaxed. During the pandemic, while most Americans suffered, billionaires increased their wealth by trillions of dollars. Shouldn't that wealth be taxed? Why won't congressional Democrats do it?

Following is the opinion of former Labor Secretary Robert Reich on the matter:

I have to get this off my chest. Last week, the House Ways and Means Committee released its proposed tax increases to fund President Biden’s $3.5 trillion social policy plan.

Here’s the big thing that hit me: Democrats didn’t go after the huge accumulations of wealth at the top – representing the largest share of the economy in more than a century.

You might have thought they’d be eager to tax America’s 660 billionaires whose fortunes have increased $1.8 trillion since the start of the pandemic – an amount that could fund half of Biden’s plan and still leave the billionaires as rich as they were before the pandemic began.

I mean, Elon Musk’s $138 billion in pandemic gains could cover the cost of tuition for 5.5 million community college students and feed 29 million low-income public-school kids, while still leaving Musk $4 billion richer than he was before Covid.

But House Democrats on Ways and Means decided to raise revenue the traditional way, taxing annual income rather than immense wealth. They aim to raise the highest income tax rate and apply a 3 percent surtax to incomes over $5 million.

Yet the dirty little secret – which House Democrats certainly know -- is the ultra-rich don’t live off their paychecks.

Jeff Bezos’s salary from Amazon was $81,840 last year, yet he rakes in some $149,353 every minute from the soaring value of his Amazon stocks – which is how he affords five mansions, including one in Washington D.C. with 25 bathrooms.

House Democrats won’t even close the gaping “stepped-up basis at death” loophole, which allows the heirs of the ultra-rich to value their stocks, bonds, mansions, and other assets at current market prices -- avoiding capital gains taxes on the entire increase in value from when they were initially purchased.

This loophole allows family dynasties to transfer ever larger amounts of wealth to future generations without it ever being taxed. Talk about an American aristocracy. We’re on the cusp of the largest inter-generational transfer of wealth in American history, as rich boomers pass it on to their millennial heirs. Closing this loophole may be our one big opportunity to stop this new aristocracy in its literal tracks. 

Biden wanted to close this loophole, but House Democrats balked.

You might also have assumed they’d target America’s biggest corporations, awash in cash but paying a pittance in taxes. But remarkably, House Democrats have decided to set corporate tax rates below the level they were at when Barack Obama was in the White House. Hell, Democrats even kept a scaled-back version of private equity’s “carried interest.” And listen to this: they retained special tax breaks for oil and gas companies.

What’s going on here? It’s not that House Democrats lack the legislative power. They’re in one of those rare trifectas when they hold a majority of the House plus a bare majority of the Senate and the presidency.

It’s not the economics. Americans have been subject to decades of Republican “trickle-down” nonsense and know full well nothing trickles down. Billionaires hardly need to have their fortunes grow $100,000 a minute to be innovative. And as I’ve stressed, there’s more money at the top, relative to anywhere else, than at any time in the last century.

Besides, Democrats need the revenue to finance their ambitious plan to invest in childcare, education, paid family leave, health care, and the climate.  

So what’s holding them back?

Put simply, Democrats are reluctant to tax the record-breaking wealth of the rich and big corporations because of … the wealth of the rich and big corporations.

Many Democrats rely on that wealth to bankroll their campaigns. They also dread becoming targets of well-financed ad campaigns accusing them of voting for “job killing” taxes. (For the record, there’s no evidence that tax increases have “killed” jobs, especially when those tax increases have been targeted at higher incomes.)

Republicans have been in the pockets of moneyed interests at least since they championed Reagan’s tax cuts, regulatory rollbacks, and dismantling of labor protections. But the timidity of House Democrats shows just how loudly big money speaks these days even in the party of Franklin D. Roosevelt.  

That’s partly because there’s so much less money on the other side. Through the first half of 2021, business groups and corporations spent nearly $1.5 billion on lobbying, compared to roughly $22 million spent by labor unions, and $81 million by public interest groups, according to OpenSecrets.org. Plus, the anti-taxers are well-organized. Thousands of industry groups, platoons of trade associations, every large corporation in America, along with small business associations — all are marching in step against corporate tax increases. There’s no similar pressure on the other side. How many pro-corporate-tax organizations can you name?

Progressive House Democrats will still have their say (AOC and other progressives will demand something more from the super-rich) and Senate Democrats haven’t yet weighed in (I’m sure Elizabeth Warren will continue to push her wealth tax).

But so far, the House Ways and Means Committee is where it all begins. 

Let me step back a bit. The looming debate over taxes is really a debate over the allocation of wealth and power in America. As that allocation becomes ever more grotesquely imbalanced, this debate over wealth and power will loom ever larger over American politics.

Behind it will be this simple but important question: Which party stands up for average working people? 

Democrats, take note.

Wealth Inequality Is Bad - Racial Wealth Inequality Is Worse

The United States is more unequal when it comes to wealth and income than any other developed nation, and worse than even some third-world countries. For the economy to flourish, that needs to be fixed. But as bad as the general wealth inequality is, the racial wealth inequality is much worse. 

The following is part of an excellent op-ed by the editorial board of The Washington Post:

Narrowing the U.S. wealth gap in general is important; narrowing the racial wealth gap is urgent. It is not the outcome of impersonal market forces but the legacy of oppressive policy. As a country we have already wasted too many opportunities to tackle it head-on.

It won’t be easy, in part because Supreme Court rulings have limited government’s authority to use overtly race-conscious remedies to address Black economic disadvantage. The court has held, essentially, that such measures can amount to racial discrimination against people who are not Black. This is a bitter irony given that many race-conscious policies that disadvantaged Black people were either not challenged or deemed consistent with the U.S. Constitution over the decades. Still, it is a reality that could preclude measures explicitly for the benefit of Black people.

That includes reparations, which nevertheless merit a study such as the one called for in a pending bill, H.R. 40. Even if general compensation for slavery and segregation could not be feasible, or pass muster under current constitutional law, financial restitution may be available for identifiable victims of specific contemporary injustices, analogous to payments the United States made to those of Japanese ancestry interned during World War II. There needs to be focused attention on such quietly devastating barriers to wealth-building as the prevalence of informal land title among rural Southern Black families, which The Post’s Hannah Dreier and Andrew Ba Tran documented in a recent report. This legacy of Jim Crow has cost many families government disaster relief, and sometimes their property itself.

Meanwhile, the racial wealth gap can and should be addressed through measures that are race-neutral but foreseeably bestow disproportionate benefits on people of color — thus flipping the script on past policies that were officially colorblind but favored Whites. We have mentioned some in previous editorials: direct support for first-time home buyers and for retirement savings, in place of current tax incentives that tilt toward the upper middle class; grants for college tuition in place of loans.

Each low-income child born in the United States could be staked to a federally funded $1,000 “baby bond,” with annual payments, varying by family income, added until age 18, as Sen. Cory Booker (D-N.J.) and others have advocated. Invested in safe government bonds, the money would accumulate tax-free. It could only be withdrawn for investment in further wealth-building purposes such as education, entrepreneurship or homebuying. An analysis by the financial research firm Morningstar suggests that “baby bonds” could cut the racial wealth gap in half in terms of resources available per child at age 18.

Reform of the country’s current equivalent of a wealth tax — state and local property taxes — could also foster racial equity. Recent research by finance professors Carlos Avenancio-Leon of Indiana University and Troup Howard of the University of Utah has shown that existing systems result in higher property assessment growth rates for homeowners of color relative to similarly situated White homeowners.

Unjustifiably wide though it still is, the Black-White wealth gap is narrower than it was three decades ago: Median Black household wealth was 12 percent of White in 2019, but an even lower 6 percent in 1989. The lesson is that the United States has proved capable of reducing racial wealth inequality — even during a time when it was not consciously trying to do so and, in some respects, was raising new obstacles. Think how much more progress can be achieved if the country actively pursues it.

Wealth Is Concentrated Among The Rich & It's Getting Worse

Most of the wealth in the United States is concentrated among the rich. The pandemic didn't help, and neither has the economic policies of the government. Both have combined to make the rich even richer, while the bottom 90% gets poorer. We are truly becoming a nation of "haves" and "have-nots", and the wealth/income inequality is already worse in the U.S. than in many third world countries.

In the following article at MSNBC.com, Stephanie Ruhle lays out the ugly truth. Here is part of it:

A lot of progress has been made when it comes to power and influence in business and politics over the past 25 years. Or has it?

CEOs of the largest U.S. companies in 1996 made 154 times what their workers madeon average. In 2020, the CEO-to-worker pay ratio ballooned to as high as 830 for some of the worst offenders. We’ve put on conferences, led campaigns and certainly done a lot of talking. But when it comes to the concentration of power and wealth, things actually seem to be getting worse, not better. The big guy has continued to win big time.

This in turn has driven the economic and cultural divide wider as we’ve become a country that we often say is divided by red and blue. But it's also divided by green. . . .

In other words, as rich people have gotten richer, poor people have gotten poorer ... and angrier.

A lot of this anger stems from the fact that many of the perpetrators of the financial crisis didn’t get the severe punishment lawmakers on both sides of the aisle demanded. E-commerce behemoths have steadily squeezed out brick-and-mortar small businesses, and professional investors bought up massive swaths of distressed real estate, outbidding families.

Somewhat ironically, anti-corporate America sentiment helped elect Donald Trump, the richest president in U.S. history, who flanked himself with senior staff and Cabinet members from Goldman Sachs and the hedge fund industry after attacking Wall Street on the campaign trail. . . .

During Trump’s presidency, the economy generally improved and the pro-business policies supercharged markets. But those overall gains were exponentially better for wealthy people. The inequality divide deepened, and even though some business leaders have worked to transform corporate culture and promote "stakeholder capitalism," these efforts, too, have faced much criticism, with critics labeling the changes "woke economics.". . .

Rich people will continue to get richer and poor people poorer, and inevitably attention will return (as it should) to Washington. Lawmakers will point fingers, call for hearings and excoriate business leaders. But if history is our guide, little will change.

Despite public outrage, for the richest Americans and our most powerful businesses, enjoying and exploiting loopholes is the law of the land in the United States of America. Regulation and tax policy seem to always find a way to favor the ones with the deepest pockets.

The future may be different. There may be a whole new set of winners and losers, new technologies and new visionaries. Or maybe the names will change but the story will stay the same.

Warren Calls For A Wealth Tax On The Richest Americans

Currently, there is a large gap in wealth between the richest Americans and the rest of the country -- a gap as large as it was in the 1920's.

And with the rich getting much richer in the current economy while workers struggle just to stay even, that gap is growing much larger with each passing week. We are becoming a nation of "haves" and "have-nots" -- surpassing even some third world countries in inequality.

We must change the economic rules in this country, so they no longer favor the rich to the detriment of everyone else. One of the ideas to help narrow the wealth gap has been proposed by Senator Elizabeth Warren (D-Massachusetts). It is a wealth tax on the richest Americans.

Here is how she describes it in an e-mail she sent to progressives:

This week, Jeff Bezos -- the wealthiest person in the world -- launched into space.

Meanwhile, in America today, over half of the country lives paycheck to paycheck. Nearly 43 million people are saddled with student loan debt, preventing many from buying a home or starting a family. And for those who do start a family, the astronomical costs of child care are squeezing budgets even harder, forcing millions of young parents -- especially women -- out of the workforce.

Our economy has worked better and better for the rich and powerful, and worse and worse for everyone else. How did we get here? We got here in part because billionaires like Jeff Bezos and giant corporations like Amazon have spent years avoiding paying their fair share in taxes. They’ve lobbied for loopholes, cooked up schemes with the best accountants money can buy, and hollowed out our government’s ability to invest in our people, from roads and bridges to child care and higher education.

Our tax system is rigged for those at the top. That’s why I’m fighting every day in the Senate to pass a wealth tax and level the playing field for working families. The PCCC has been right alongside me organizing grassroots supporters for a wealth tax since the beginning. We've got to keep pushing.

Look, I get it. Jeff Bezos can do what he wants with his money. But to use his enormous wealth to go to space after years of systematically paying less than his fair share of taxes is a punch in the gut to the tens of millions of Americans who struggle to make ends meet.

Just look at the numbers: Between 2014-2018, Jeff Bezos’ wealth grew by $99 billion. He paid only 0.98% of that in taxes. The rest of America? Last year, the 99% paid an average of 7.2% of their total wealth in taxes.

The worst part? Under our broken tax system, it’s completely legal.That’s because billionaires like Elon Musk, Jeff Bezos, and Mike Bloomberg don’t make their fortunes through income like working families do. Their wealth comes from assets -- like stock portfolios, art collections, and super-yachts. In fact, Jeff Bezos reportedly paid $0 in federal income taxes in 2007 and 2011 -- despite already being a multi-billionaire.

My wealth tax bill would place a two-cent per dollar tax on people with a net worth above $50 million -- a few cents more for the billionaires. That means Jeff Bezos would pay $5.4 billion of his estimated net worth of $181 billion -- and he’d still have more than enough money for his space missions and super-yachts.

This small tax on America’s richest 100,000 families would generate huge amounts of revenue totaling at least $3 trillion, providing money for President Biden's big agenda to build back better and more. Policies like expanding the caregiving economy -- everything from child care to nursing homes -- rebuilding infrastructure, high quality k-12 education, and tuition-free public college and technical schools.

A wealth tax is critical for raising revenue, and that revenue is critical for raising opportunity. We build a future for all of our kids by investing in opportunity. This is one way we can make this government work for everyone -- not just the rich and powerful.

Thanks for being a part of this,

-- Elizabeth Warren 

Huge Income/Wealth Gap Is Our Nation's Biggest Problem

 

Prior to the 1980's, the rich did very well, but so did other Americans. That's because the rising productivity was shared among all groups. The rich got their share, workers got their share through rising wages, and the poor benefitted through government programs.

But when the Republicans gained enough power around 1980, they changed economic policy to the benefit of the rich and the detriment of everyone else. Their economic theory (commonly called the "trickle-down theory) stated that by giving more to the rich, everyone would benefit.

That did not happen. The rich gobbled up most of the rising productiviy, giving them enormous profits, while workers wages were virtually stagnant, and the poor suffered through program cuts. This policy created a huge (and growing) gap in income and wealth between the rich and everyone else -- a gap larger than it's been in about a century. 

The last time the gap was this big, it resulted in the Great Depression. Unless we fix this by instituting a fairer economic policy, we will likely experience that same economic devastation.

Here is what former Labor Secretary Robert Reich has to say about this growing problem on his own website:

Policymakers and the media are paying too much attention to how quickly the U.S. economy will emerge from the pandemic-induced recession, and not nearly enough to the nation’s deeper structural problem – the increasing imbalance of wealth that could enfeeble the economy for years. 

Seventy percent of the US economy depends on consumer spending. But wealthy people, who now own more of the economy than at any time since the 1920s, spend only a small percentage of their incomes. Lower-income people, who were in trouble even before the pandemic, spend whatever they have – which has become very little.  

In a very practical sense, the U.S. economy depends on the spending of most Americans who don’t have much to spend. That spells trouble ahead. 

It’s not simply a matter of an adequate “stimulus.” The $2,000 checks contained in the American Rescue Plan have already been distributed and extra unemployment benefits will soon expire. Consumer spending will be propped up as employers add to their payrolls. Biden’s spending plans, if enacted, will also help keep consumers afloat for a time. 

But the underlying imbalance will remain. Most peoples’ wages will still be too low and too much of the economy’s gains will continue to accumulate at the top, for total consumer demand to be adequate.  

Years ago, Marriner Eccles, chairman of the Federal Reserve from 1934 to 1948, explained that the Great Depression occurred because the buying power of Americans fell far short of what the economy could produce. He blamed the increasing concentration of wealth at the top. In his words:

“A giant suction pump had by 1929-1930 drawn into a few hands an increasing portion of currently produced wealth. As in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.” 

The wealthy of the 1920s didn’t know what to do with all their money, while most Americans could maintain their standard of living only by going into debt. When that debt bubble burst, the economy sunk. 

History is repeating itself. The typical Americans’ wages have hardly increased for decades, adjusted for inflation. Most economic gains have gone to the top, just as Eccles’s “giant suction pump” drew an increasing portion of the nation’s wealth into a few hands before the Great Depression. 

The result has been consumer spending financed by borrowing, creating chronic fragility. After the housing and financial bubbles burst in 2008, we avoided another Great Depression only because the government pumped enough money into the system to maintain demand, and the Fed kept interest rates near zero. Then came the pandemic. 

The wealth imbalance is now more extreme than it’s been in over a century. There’s so much wealth at the top that the prices of luxury items of all kinds are soaring; so-called “non-fungible tokens,” ranging from art and music to tacos and toilet paper, are selling like 17th-century exotic Dutch tulips; cryptocurrencies have taken off; and stock market values have continued to rise even through the pandemic.  

Corporations don’t know what to do with all their cash. Trillions of dollars are sitting idle on their balance sheets. The biggest firms have been feasting off the Fed’s corporate welfare, as the central bank obligingly holds corporate bonds that the firms issued before the recession in order finance stock buybacks.

But most people have few if any assets. Even by 2018, when the economy appeared strong, 40% of Americans had negative net incomes and were borrowing money to pay for basic household needs.

The heart of the imbalance is America’s wealthy and the corporations they own have huge bargaining power – both market power in the form of monopolies, and political power in the form of lobbyists and campaign contributions. 

Most workers have little or no bargaining power – neither inside their firms because of the near-disappearance of labor unions, nor in politics because political parties have devolved from giant membership organizations to fundraising machines.

Biden’s “stimulus” programs are fine but temporary. The most important economic reform would be to correct this structural imbalance by reducing monopoly power, strengthening unions, and getting big money out of politics. 

Until the structural imbalance is remedied, the American economy will remain perilously fragile. It will also be vulnerable to the next demagogue wielding anger and resentment as substitutes for real reform.

Most Want A Fairer Economy (But Don't Call It Socialism)

 

The charts above reflect the results of a new Axios / Momentive Poll -- done between June 11th and 15th of a national sample of 2,309 adults in the United States. (no moe given).

It shows that the word socialism still scares most Americans (although younger Americans, between 18 and 34, view it more positively). Overall, about 41% view it positively and 52% negatively. 

But that does not mean they don't like the policies pushed by socialists and progressive. About 58% say the economic system favoring the rich is a bigger problem than over-regulation of the marketplace, while only 36% disagree.

And a whopping 66% say the federal government should pursue policies to reduce the wealth/income gap between the rich and the rest of the country, while only 30% disagree.

In other words, most Americans like socialist policies, as long as you don't call them socialism. Too many years of right-wing propaganda has a majority scared of the word.

U.S. Is Attacked By White Supremacy & Wealth Supremacy

 

A lot has been said in recent weeks about how the United States democracy is being attacked by white supremacy. But there is also another force, and possibly a more powerful one, that is also attacking our democracy -- the wealth supremacists. Here is how former Labor Secretary Robert Reich puts it:

ProPublica’s bombshell report on America’s super-wealthy paying little or nothing in taxes reveals not only their humongous wealth but also how they’ve parlayed that wealth into political power to shrink their taxes to almost nothing.

Jeff Bezos, the richest man in America, reportedly paid no federal income taxes in 2007 and 2011. Elon Musk, the second richest, paid no taxes in 2018. Warren Buffett, often ranking number 3, paid a tax rate of 0.1 percent between 2014 and 2018. 

The real scandal is it’s legal. 

Wealth and power are inextricably connected. The super-rich have bought armies of lobbyists to keep their taxes miniscule and to create and maintain tax loopholes large enough to drive their Lamborghini’s through. 

The loopholes are tougher than kryptonite. Remember the notorious “carried interest” loophole that almost every presidential candidate over the last five elections has promised to close? It’s still there. 

The armies of the wealthy also prevent any major changes in the system that might threaten their wealth, such as a wealth tax, stronger unions, or tougher antitrust. 

American democracy is being attacked from two directions right now – from the white supremacist followers of Donald Trump who are suppressing votes, and from the wealth supremacists who are bribing lawmakers with campaign contributions. 

Some of the wealth supremacists are quietly bankrolling the white supremacists (see: Koch network, US Chamber of Commerce, Trump and his business boosters), because their mutual enemy is democracy. 

A few weeks ago, hundreds of US corporations and CEOs lent their names to a two-page ad in the New York Times and Washington Post in support of voting rights. 

It turns out many of these companies and CEOS are also members of the US Chamber of Commerce, the powerful Washington business lobby that recently put out a “key vote alert” against the For the People Act – designed to protect voting rights from state laws suppressing votes as well as the from the moneyed interests buying votes. 

The hypocrisy is running thicker than ever. Corporate public relations departments put out noble statements while corporate legislative departments continue to put out legislative bribes. Billionaires like Warren Buffett publicly advocate higher taxes while privately paying almost zilch.  

The For the People Act targets both white supremacists and wealth supremacists, which is why it’s hugely popular with the public but is running into roadblocks even among Senate Democrats. 

This is the fight of our time.

White House Issues Proclamation On The Racial Wealth Gap

The statement above was issued by the White House just before President Biden made his visit to Tulsa on the 100th anniversary of the Tulsa Race Riot (when whites in that city bombed and burned down the successful Black community and killed hundreds of its inhabitants). 

The White House also listed what they want to accomplish to narrow the wealth gap between Blacks and Whites in this country, and you can access that here.

College Alone Will Not Solve The Racial Wealth Gap

There is a huge gap between the wealth of White families and Black families. One fairly simple solution offered was to just admit more Blacks to colleges. But like with most simple solutions, it turns out the problem is more complicated. 

Dorothy A. Brown explains those complications in an excellent article in The Washington Post. I urge you to read the whole article, but here is a part of it:

Higher education is supposedly the ticket to a better future, and it usually translates to a larger salary regardless of race, according to a 2011 study from the Georgetown University Center on Education and the Workforce. But college does not pay off for Black students the way it does for White students. At virtually every step — from taking out loans to facing a racist job market to dealing with repayment plans — Black students and their families have disadvantages. As a result, the Black-White wealth gap widens.

Black college graduates have higher debt loads, on average, than White college graduates. Black debt rises over time, White debt diminishes. Upon graduation, the average Black graduate owes $23,400 vs. the White graduate’s $16,000, according to the Brookings Institution. Four years later, the gap triples. Even at the top end of the income spec­trum, Black students have higher student loans ($4,643, on average) than White students ($3,835), and Black parents take out larger loans to help pay for college ($3,303 vs. $1,903).

What accounts for that difference? First, it’s the schools students attend. Wealthier colleges, which can afford to award financial aid and scholarships, disproportionately admit White students: White students are almost five timesas likely to go to a selective university than Black students, even when controlling for income. Meanwhile, a higher share (12 percent) of Black students attend for-profit colleges than very selective universities (9 percent), because online and part-time features allow them to work while getting their degrees. These schools usually do not award any financial aid and are in effect extremely expensive, given their low graduation rates.

Another factor is the wealth disparity between Black and White families. Black college students are less likely than their White peers to receive tax-free gifts from their parents and grandparents. A study examining financial transfers of at least $10,000 in Black and White families between 1989 and 2013 found that only 9 percent of Black households received such a gift, compared with 32 percent of White ones. And the scale of the gifts was remarkably modest: “White college-educated families received $55,419 at the median and $235,353 at the mean, while their Black counterparts received $36,260 and $65,755, respectively.”

But even parental wealth cannot fully protect Black students from higher debt loads. Black parents hold their assets differently than White parents: They are tied more heavily to homeownership than to the stock market, which makes them illiquid. Research that compared Black and White parents in the highest wealth quintile showed that White parents had $81,827 in financial assets such as stock, but Black parents had just $46,579. White parents had $154,627 in home equity, but Black ones had just $92,555. As a result, even Black students whose families are well-off on paper usually do not have resources readily available to support them. . . .

When a Black student, through herculean efforts, actually obtains a college degree, he or she faces a racist labor market that makes it harder to pay down debt and build wealth. A 2014 study showed that a Black Harvard graduate had to send out eight résumés before getting an interview offer, while a White one had to send out only six. As the selectivity decreased, the disparity increased: For example, with a University of Massachusetts at Amherst degree, White graduates submitted nine résumés before getting an interview offer, while Black graduates had to send out 15. This suggests that, while the credential makes a huge difference for a Black applicant, White students can afford to go to less-prestigious (and generally less-expensive) institutions and receive roughly similar rewards from the labor market. Worse, that same study showed that Black applicants — but not the White ones — were asked to interview for lower-paying jobs than those they applied to. . . .

Layered on top of all of these inequities is our tax code. Within four years of graduation, average Black debt is $53,000 and White debt is $28,000. The tax implications help White graduates and harm Black ones. The deduction for student loan interest, capped at only $2,500 a year, does little to help the average Black borrower, who has higher debt and more interest; the average White borrower, meanwhile, can deduct all of their student loan interest in their first year. (God forbid two Black college graduates get married, since their maximum deduction, combined, remains $2,500.) Meanwhile, when (mostly White) families help pay for children and grandchildren’s educations, those gifts are tax-free.

All of this student debt widens the overall Black-White wealth gap. In 1989, college-educated White households had roughly five times greater wealth than their Black peers. By 2013, that gap had tri­pled. Student debt represents roughly 10 percent of the racial wealth gap when a college graduate is 25 years old, according to professors Fenaba R. Addo and Jason Houle. By age 30-35, it explains about 25 percent of the gap.