Or should that be the 99.9%?
Paul Krugman does some fine-tuning on already shocking comparisons between the super-rich and the everybody-else in this country.
-A large fraction of the top 1 percent’s gains have actually gone to an even smaller group, the top 0.1 percent — the richest one-thousandth of the population.
-...According to an earlier [Congressional Budget Office] report, which only went up to 2005 ... between 1979 and 2005 the inflation-adjusted, after-tax income of Americans in the middle of the income distribution rose 21 percent. The equivalent number for the richest 0.1 percent rose 400 percent. ...NYT
From the Republicans' point of view (or self-justification -- you choose) this is fair because those people at the very top are "job creators."
For who are the 0.1 percent? Very few of them are Steve Jobs-type innovators; most of them are corporate bigwigs and financial wheeler-dealers. One recent analysis found that 43 percent of the super-elite are executives at nonfinancial companies, 18 percent are in finance and another 12 percent are lawyers or in real estate. And these are not, to put it mildly, professions in which there is a clear relationship between someone’s income and his economic contribution.
To say the least. But how do these titans manage to wangle the out-of-scale pay they go home with? Simple: they appoint the people who set the amount of their pay.
Executive pay, which has skyrocketed over the past generation, is famously set by boards of directors appointed by the very people whose pay they determine; poorly performing C.E.O.’s still get lavish paychecks, and even failed and fired executives often receive millions as they go out the door. ...NYT
Okay, but those big shots work hard, do brilliant financial stuff, and deserve every penny because our finance industry is a major contributor to our economy, right?
Wrong.
... The economic crisis showed that much of the apparent value created by modern finance was a mirage. As the Bank of England’s director for financial stability recently put it, seemingly high returns before the crisis simply reflected increased risk-taking — risk that was mostly borne not by the wheeler-dealers themselves but either by naïve investors or by taxpayers, who ended up holding the bag when it all went wrong. And as he waspishly noted, “If risk-making were a value-adding activity, Russian roulette players would contribute disproportionately to global welfare.” ...NYT
So why are we rewarding them with a tax cuts and all this veneration for their ability to create jobs? When they're largely responsible for such high unemployment right across the country (but not on Wall Street)? Because a large number of their employees work here.
And those people are supposed to be our employees, not hit men for the financial industry.
(Maybe we voters don't have 99.9% of the brains.... ?)
___
The government -- that is to say, Congress -- doesn't want us, as individuals, to have a "safety net." Quite apart from the right's attitude towards Social Security and other government life savers, their idea of a great economy is one in which we spend rather than save. Savings accounts? No. We are, to some extent "guilted" into spending on days like today. "The numbers depend on it."
The economy is waiting for you, sucker, to rush to the stores today.
Sheldon Garon writes:
The United States emerged from the war with unparalleled prosperity and hardly needed further savings campaigns. Instead politicians, businessmen and labor leaders all promoted consumption as the new driver of economic growth. Rather than democratize saving, the American system rapidly democratized credit. An array of federal housing and tax policies enabled Americans to borrow to buy homes and products as no other people could.
But from the 1980s, financial deregulation and new tax legislation spurred the growth of credit cards, home equity loans, subprime mortgages and predatory lending. Soaring home prices emboldened the financial industry to make housing and consumer loans that many Americans could no longer repay. Still, Americans wondered, why save when it is so easy to borrow? Only after housing prices collapsed in 2008 did they discover that wealth on paper is not the same as money in the bank.
As we seek to restore a balance between saving and consumption, what aspects of other nations’ experiences might we adapt to our circumstances? The new Consumer Financial Protection Bureau, while politically besieged, possesses broad powers to curb predatory lending. The bureau might also promote the creation of financial education programs in every school. Congress should consider ending costly tax incentives for wealthier savers and homebuyers while creating new incentives to encourage low- and middle-income people to save. Finally, federal intervention is needed to stop the banks from fleecing and driving away their poorest customers. If the banks cannot be encouraged to offer low-fee accounts for young and lower-income customers, the government might consider creating postal savings accounts for small savers.
To improve the balance sheets of America’s households, we must approach saving in a more forthright manner — not an easy thing to do when again and again we hear that individual prudence acts to impair the economy. ...NYT
Prudence? Can you imagine what that would cost the individual member of Congress? After all, our economy depends on effective fleecing of the 99%. Or so we're told.
___
Robert Reich takes a long look at what all this will cost us and for how long -- economically and politically. Not a pretty picture.
... Not to depress you, but our economic troubles are likely to continue for many years — a decade or more. At the current rate of job growth (averaging 90,000 new jobs per month over the last six months), 14 million Americans will remain permanently unemployed. The consensus estimate is that at least 90,000 new jobs are needed just to keep up with the growth of the labor force. Even if we get back to a normal rate of 200,000 new jobs per month, unemployment will stay high for at least ten years. Years of high unemployment will likely result in a vicious cycle, as relatively lower spending by the middle-class further slows job growth.
This, in turn, could make political compromise even more elusive than it is now, as remarkable as that may seem. ...Robert Reich, NYT
