Do you ever wonder why it takes the average family 47 years to make as much as a hedge fund honcho makes in one HOUR?
Does it bother you that in 2010, after the crash, the top 25 hedge fund chiefs made as much as 685,000 teachers who educate 13 million children?
Are
you worried that cutting government debt means raising your social
security eligibility age and cost of living adjustment, so that you have
to work longer and receive lower retirement benefits?
Have
no fear. The super-rich are spending hundreds of millions of dollars to
sell you their economic fabrications. Why so much inequality? They say
because the rich have the most important skills and you don't. Why so
much unemployment? They say it's because our skimpy unemployment
insurance keeps people from looking for work. Why so much government
debt? They say it's because you have too many "entitlements." Why the
Wall Street crash? They blame poor people for buying homes they couldn't
afford.
In short, the super-rich want
us to believe that any effort to tax them a bit more or control Wall
Street will only kill more jobs and harm our economic well-being. And
most of all they don't want us to know the six economics facts of life
that explain how the super-rich are running away with our nation's
wealth.
1. The super-rich are stealing our fair share of productivity.
The U.S. economy is enormously productive. Since 1947, the amount of
goods and services we produce per hour of labor has risen by nearly 300
percent. That's because as a nation, we blend together a potent mix of
effort, skills, technology and organizational capacities. Our enormous
productivity is why we are the richest nation on earth.
Yet, why don't we feel that rich? Why are we told we must tighten our belts?
Until
the mid-1970s, the more productivity increased, the higher the real
wages of the average working person (after taking out the impact of
inflation). As a result, our standard of living doubled in 25 years.
But, as you can see from the chart below, after the mid-1970s,
productivity (the red line) continued to boom, but the average wage
stalled.
It
wasn't an accident, or market forces, or an act of God. It was a result
of human polices designed by and for the rich. Tax cuts for the rich,
financial deregulation, support for moving jobs overseas and
union-busting combined to give the super-rich more and more of our
economy's productivity gains. In 1970, the top 100 average corporate
executive earned $45 for every $1 earned by the average worker. By 2006
it had jumped to a whopping $1,723 to $1. That's the very definition of
greed run wild.
Think
about this: If the average wage had continued to rise along with
productivity as it did after WWII, your real wage today (after
inflation) would be twice as high!
We've been had.
2. Americans really want a wealth distribution more like Sweden's. Here's
a nightmare fact of life the super-rich don't want you to know. Two
researchers recently tried to find out just how much economic inequality
Americans were comfortable with. Michael Norton of Harvard Business
School and Dan Ariely of Duke University conducted a nationwide poll
with more than 5,000 respondents to see how Americans saw our current
level of equality, and what level they wanted to see. (“
Building a Better America – One Wealth Quintile at a Time”)
The
results were startling. First, virtually all Americans greatly
underestimated the degree of inequality in our economy today. They had
no idea how extreme the U.S. wealth distribution really is -- which goes
to show you what a good job the super-rich have done in mis-educating
us.
Second, when asked to construct an
ideal distribution of income, 92 percent of Americans preferred
radically more equality – on a par with the social democratic state of
Sweden! What’s more, it didn’t matter whether the respondent was a
Republican or Democrat, rich or poor, black or white, male or female.
Everyone wanted more economic fairness.
Imagine
that! Americans, even Republicans who voted for Romney and Ryan, would
rather live with the Scandinavian distribution of wealth. Little wonder
that the super-rich and their minions do all they can to belittle
so-called "Euro-socialism." They don't want us to know that maybe we are
hard-wired for fairness instead of the staggering inequality that helps
no one but the super-elites.
3. Everything we hear about government debt is wrong. Right
now, the biggest target of public mis-education is the government debt
debate. And the biggest spender on the mis-education of the American
public is billionaire Pete Peterson (who personally has added to the
government's debt by dodging hundreds of million in taxes through the 15
percent "carried interest" loophole that blessed his private equity
fund). Having no sense of shame, he and other super-elites want to
convince us that government spending and debt will ruin us all.
Unfortunately, very little of what they claim is true:
China owns our all our debt?
Wrong! There's a chilling ad put out by a Peterson front group that
features a Chinese lecturer in the year 2030 addressing (with English
subtitles) a packed audience of Chinese students about the rise and
decline of the U.S. The confident, smirking teacher describes how the
U.S. abandoned its principles as it "tried to spend and tax its way out
of a great recession" and then crumbled beneath its "crushing debt." He
then provides the kicker: "Of course we owned most of their debt...ha ha
ha, and now they work us," he says to the raucous laughter of the
students. The ad is a complete Peterson lie. China owns only 8 percent
of our debt. Most of our debt is actually owned by our own quasi
governmental agencies like the Federal Reserve and Social Security.
Social Security, Medicare and Medicaid are bankrupting the country?
Wrong! The current deficits are the result of two unfunded wars, the
Bust tax cuts for the super-rich and the Wall Street crash of the
economy that killed 8 million jobs, and led directly to the ensuing
bailouts, lost tax revenues and increases in unemployment insurance
payments.
We will become like Greece if we don't balance our budget?
Wrong! Greece can't print money to pay back its debt because it no
longer has its own currency (and neither does Mississippi). The United
States does. Also, our economy is more than 50 times larger that
Greece's. The chances of the US ending up in a Greek debt crisis are
about the same as finding a Martian in your bathtub.
We have to solve the "debt crisis" right now or the economy will crash?
Wrong! We have an unemployment crisis, not a debt crisis. Interest
rates are at all-time lows because the world wants to park its money
here in dollars. In fact, this is the time to borrow more to put our
people back to work by rebuilding our crumbling, fossil fuel-dependent
infrastructure and educating our children. If our people go back to
work, the economy grows, unemployment costs go down, tax revenues rise,
and the debt ratio shrinks without paying back one penny of it.
Why
so many lies? Because financial elites like Peterson don't want to pay
their fair share of taxes. They don't believe in funding a safety net
for all Americans. They don't want to the government to help put
Americans back to work. Instead, they want an economy by and for the
elites.
4. We are under-taxed, not over-taxed. The
super-rich want us to believe that taxes are too high and that those
taxes are harming job creation and economic growth. It's a fabrication.
First of all, taxes for most Americans have declined, according to a
recent New York Times analysis:
.....
most Americans in 2010 paid far less in total taxes — federal, state
and local — than they would have paid 30 years ago. According to an
analysis by The New York Times, the combination of all income taxes,
sales taxes and property taxes took a smaller share of their income than
it took from households with the same inflation-adjusted income in
1980.
Second, we have much
lower tax rates that our chief European competitors. For example,
Germany, an economic powerhouse, has an average tax rate of 40.6 percent
while the U.S. rate is only 26.9 percent. Germany uses that money to
rebuild its infrastructure, invest in education and find creative ways
to nearly eliminate unemployment.
Third,
the super-rich use a sleight of hand to make middle-class taxpayers
believe that lower-income people are moochers. Like Mitt Romney, they
are found of saying that 47 percent of Americans don't pay income taxes
and that the rich pay most of those taxes. But income taxes are but a
small portion of the tax bite on lower-income people who pay through
payroll tax deductions, sales taxes and property taxes.
Finally,
because our taxes are declining, it means that our public services are
decaying as well. This creates a downward spiral the super-rich want to
encourage: the more services decline, the less we want to pay in taxes,
the more services decline. If you're really wealthy you don't care about
public services since your life is entombed in private services --
private schools, private airports, private planes, private gated villas
and so on.
5. Government jobs are just as good as private sector jobs. Another
major con job concerns the attack on public employees. The greedy rich
are trying to pit public and private sector workers against each other
in large part because public employees still seem to have benefits the
rest of us have lost (and they have unions and vote mostly Democratic).
Corporate greed demands that we snuff out those benefits so workers
won't demand them in the private sector. To further denigrate
government, elites want us to believe that a private sector job is
somehow more righteous that a public one -- that public employment is
sort of like being on the dole because government workers are immune to
the rough and tumble of competitive pressures that drives the private
sector.
It's another hoax.
The
truth is that some jobs are better done by government on behalf of the
public. We learned almost 200 years ago that it didn't make sense to
have competing fire and police departments. We also learned that if we
wanted the average person to go to school, we needed public school
systems, and not just private ones. Most countries (but not ours) have
learned that much of the healthcare system runs better when it's
publicly financed and controlled -- that for-profit hospitals and
clinics do not provide the best care. In short, every modern economy is a
combination of private and public sector jobs that are valuable to our
society.
6. Wall Street needs to be shrunk (until we can drown it in a bathtub). The
function of finance is simple: moving our savings into productive
investments. By doing so, money supposedly moves to where it will do the
most good for our economy. This function is considered so simple that
most economics textbooks ignore Wall Street entirely.
However,
when Wall Street is left to its own devices, it tends to create vast
casinos that dramatically increase financial profits at the expense of
the real economy. Worse still, as the speculative casinos grow and grow,
the economy as a whole is endangered. Wall Street's grew rapidly just
before the great crash of 1929 and just before the Great Recession of
2008-'09. It was stock manipulation during the 1920s and it was the
housing casino over the last two decades. But in both cases it happened
because Wall Street was deregulated and got too damn big. As the chart
below shows, Wall Street is gobbling up more and more of our country's
profits.
We
learned after 1929 that economic stability required severe financial
regulation. We sat on Wall Street for nearly 50 years and it worked
beautifully, especially between WWII and the 1970s. There were virtually
no financial crashes anywhere in the world. But once we deregulated
finance again, all hell broke loose as the world suffered through more
than 150 smaller financial crashes. Finance grew and grew until it took
down the entire U.S. economy.
Along the way, Wall Street offered the
easiest path to great riches for the few.
The
simplest solution is the one hated by the super-rich: a small sales tax
on each and every financial transaction involving stocks, bonds and
every kind of derivative. By taxing the casino, we shrink its size and
make it less dangerous to the rest of the economy. We also create new
revenues for our economy, nearly all of it coming from the top fraction
of the top 1 percent. No wonder they don't want us to know that.
Is Knowledge Power?
It's
not enough for the greedy rich to buy politicians. They also need to
buy our minds. That's why they pay for all this misleading economic
education. But if we master the basic economic facts of life, we won't
get conned. And we will have a much better chance at building a more
just and healthy economy.
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