There is nothing inevitable about such vast, fast-rising income-wealth inequality; it is the only possible output of our financial and pay-to-play political system.
One chart defines the 21st century economy and thus its socio-political system: the chart of soaring wealth/income inequality. This chart doesn’t show a modest widening in the gap between the super-wealthy (top 1/10th of 1%) and everyone else: there is a veritable Grand Canyon between the super-wealthy and everyone else, a gap that is recent in origin.
Notice that the majority of all income growth now accrues to the the very apex of the wealth-power pyramid. This is not mere chance, it is the only possible output of our financial system. This is stunning indictment of our sociopolitical system, for this sort of fast-increasing concentration of income, wealth and power in the hands of the very few at the top can only occur in a financial-political system which is optimized to concentrate income, wealth and power at the top of the apex.
Well-meaning conventional economists have identified a number of structural causes of rising wealth/income inequality, dynamics that I’ve often discussed here over the past decade:
- Global wage arbitrage resulting from the commodification of labor, a.k.a. globalization
- A winner-takes-most power law distribution of the gains reaped from new technologies and markets
- A widening mismatch between the skills of the workforce and the needs of a rapidly changing economy
- The concentration of capital gains in assets such as high-end real estate, stocks and bonds that are owned almost exclusively by the top 10% of households
- The long-term stagnation productivity
- The secular decline in the percentage of the economy that flows to wages and salaries
While each of these is real, the elephant in the room few are willing to mention much less discuss is financialization, the siphoning off of most of the economy’s gains by those few with the power to borrow and leverage vast sums of capital to buy income streams–a dynamic that greatly enriches the rentier class which has unique access to central bank and private-sector bank credit and leverage.
Apologists seek to explain away this soaring concentration of wealth as the inevitable result of some secular trend that we’re powerless to rein in, as if the process that drives this concentration of wealth and power wasn’t political and financial.
There is nothing inevitable about such vast, fast-rising income-wealth inequality; it is the only possible output of our financial and pay-to-play political system.
Policy tweaks such as tax reform are mere public relations ploys. The cancer eating away at our economy and society arises from the Federal Reserve and the structure of our financial system, and the the degradation of our representative democracy into a pay-to-play auction to the highest bidder.
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The author hits the nail right on the head. The “elephant in the living room” is financialization of the economy. These jackasses at the tippy-top of the political and economic pyramid-shape structures are investing in financial abstractions like derivatives and credit default swaps. No commensurate benefits whatsoever accrue for the “everyday person” who is simply trying to make an honest living. So unless you’re exceptionally clever and lucky, there is nothing to look forward to except high inflation (dollar devaluation), high taxes, astronomical health care costs, etc. This is taking the concept of indentured servitude to a whole new level. Welcome to the wondrous 21st Century! (By the way, the term “commidification” is very appropriate when discussing labor. Obviously, workers have no choice but to sell their labor to the highest bidder. But with more workers chasing increasingly fewer job opportunities, we’re seeing continued downward pressure on wages and benefits. And there’s no end to this grievous scenario for the foreseeable future!)
Last year, the top hedge fund managers (whom Trump in the campaign called “murderers”) made over a billion dollars and paid lower tax rates than the owner of a small business. Under the new Trump tax reforms, they will pay even less. Trump has hired a handful of these murderers to run the economy and devise a tax plan which pretends to help the middle class while in fact enriching people like Trump by millions and top hedge fund managers by tens of millions, if not hundreds of millions.
The author is on target; “Policy tweaks such as tax reform are mere public relations ploys. The cancer eating away at our economy and society arises from the Federal Reserve and the structure of our financial system, and the the degradation of our representative democracy into a pay-to-play auction to the highest bidder.”
The only corrections is: we were never a representative democracy and in fact, the Constitution is constructed to thwart the will of the majority, as in the Senate with small rural states having up to 98% more voting weight (Wyoming, Montana) than populous states lie California. The result: 22 rural, conservative, easily bought off states have the power (enough votes to thwart Senate majority rule) despite having fewer citizens than California. Montana and Wyoming with only 3% the number of citizens have twice as many Senators and votes.
And then the Electoral College, specifically designed to ensure the rule of the slave owning oligarchy (10 of first 12 Presidents were slave owners, tho representing a the minority), has in the last 2 of 3 Presidents overturned the public vote to declare the loser the winner!
As Founding Father, First Chief Justice, and slave owner John Jay said: “The country should be run by those who own it.” When slavery was finally abolished, the oligarch rule was taken over by the banks and the dominant corporations, who continue to own and run the country today.
We have never had representative democracy so it is time to complete the American Revolution, with its core values of equality (at a minimum, an equality of votes) and consent of the governed (at a minimum, the person with the most votes) established AT LAST.
We were set up as a constitutional republic NOT a representative democracy.
Democracy (often referred to as two wolves and a sheep deciding whats for dinner) does not protect minority rights. The electoral college was set up to protect rural areas such as Kansas, Missouri, Oklahoma not the slave owning states of Virginia, NC, Georgia. Understand that those small states NEVER would have joined the republic if the electorial college system was not in place. Why would they? Did they want to be the slaves of the populous cities of NY? No. Republic means we are states that join together and each State has an equal say in the Senate.
1. I have heard that before, but unless you define your terms, they are meaningless.
Nazi Germany was a constitutional republic, as was the Soviet Union. Both had constitutions and both had laws.
study.com makes this point: “Whereas constitutional monarchies often took centuries to slowly wrest control of the government from the monarchy, its more radical counterpart, the republic, denies the very existence of any monarchy and places all of the power to govern in the hands of the people. Republics also often possess the directly elected, representative assemblies that constitutional monarchies also have; however, instead of a figurehead monarch, most republics exhibit an executive branch with real power.”
All power in the hands of he people thru direct elections is democracy. Thus, what our nation’s independence was based on was the promise of a democratic republic, which in its first iteration did not have a constitution but rather The Articles of Confederation.
Our nation was founded on democratic principles, as articulated in our founding document, the Declaration of independence, which justifies armed revolution to form a separate nation based on the LACK of equality and consent of the governed, or in other words, representative democracy, which these two principles define.
Now the problem is that the Constitution rejects both principles and forms a counter-revolution to the democratic revolution expressed in the Declaration (and Jefferson made clear in his writing that by consent, he meant consent of the majority (or at very least, of the leader with the most votes).
The men who wrote the Constitution were a very different group, composed of slave owners (about half), land speculators, war profiteers, and lawyers, a group which rejected equality and consent, who feared and despised democracy, and some of whom had opposed the Revolution. They created, to replace the failed Confederacy under the Articles, a strong centralized government which had firewalls against democracy in the misrepresentative Senate voting set up and the Electoral College, where a few hundred men had the power to overturn the public vote (and down the drain went both equality AND consent).
This new system ensured the rule of minority slave-owning class, and indeed the of the first 12 Presidents, 10 were slave owners. When slavery was abolished, the oligarchy (for what we have always been is a plutocratic oligarchy), the bankers and corporate tycoons took power and still rule. Trump has for instance chosen 7 former Goldman-Sachs alumni and other billionaires to run the country. Indeed, we are not a democracy, but our nationhood was founded on democratic principles, in which the Declaration declares that to rule without consent, under conditions of equality, is to rule unjustly and without legitimacy
The Constitution reversed these principles and replaced the promise of a democratic republic with a slave-owning oligarchy, which today has been replaced by a financial and corporate oligarchy, creating what in historical terms, according to Mussolini’s 1931 Doctrine of Fascism, is technically corporate fascism, the merger of state and corporate interests, also called crony capitalism, and plutocracy, the rule of the rich.
And so most Americans do not know that the Constitution bertrays the principles upon which our nation was founded and so there is a meaningless debate about whether we are a representative democracy or a constitutional republic.
In fact, we are an oligarchy pretending to be a democracy. And so, i urge you to abandon the fairy tale version of US HISTORY you have been taught and learn how the Constitution overturned the democratic principles of equality and consent which justified the American Revolution. When you accept that reality (a good book to learn how this happened is Jensen’s classic New Nation), you will understand that semantic debates are pointless since the real issue is that we must complete the American Revolution to create, at last, a democratic republic, with a Constitution based on the core values of equality, consent, and inalienable rights.
I have taken time to help you understand these issues and i pray you will consider them and do some research before having a knee jerk reaction and rejecting them because they are perhaps unfamiliar and challenge you to form your view in a different context from what you have been taught.
I too once shared your ideas, but much study and exposure to historical evidence forced me to adopt a different perspective. it took over 50 years, as i am a slow learner. I wish you the best.
Yes indeed…Micheal Hudson, Richard Wolff and others have been hammering away on these same facts for years now but it appears no one is listening while the situation just keeps getting worse.
https://www.youtube.com/watch?v=KIaXVntqlUE