Income Redistribution

Dick Armey spoke yesterday at the CPAC summit on the subject of how angry he was at Obama and Democrats over "income redistribution," a topic he returned to at least three times, as I recall. And he's right, we have a serious problem with income in this country being redistributed, though I have every reason to think Armey is delighted by it:

... Paul Buchheit, from DePaul University, revealed, "From 1980 to 2006 the richest 1% of America tripled their after-tax percentage of our nation's total income, while the bottom 90% have seen their share drop over 20%." Robert Freeman added, "Between 2002 and 2006, it was even worse: an astounding three-quarters of all the economy's growth was captured by the top 1%."

Due to this, the United States already had the highest inequality of wealth in the industrialized world prior to the financial crisis. Since the crisis, which has hit the average worker much harder than CEOs, the gap between the top one percent and the remaining 99% of the US population has grown to a record high. The economic top one percent of the population now owns over 70% of all financial assets, an all time record. ...

The Working Group on Extreme Inequality has another snapshot of the way economic productivity has been redistributed upward, also noting that the last time income inequality was as high as it was in 2007 was in 1928, a year before the stock market crash of 1929 that ushered in the Great Depression:

· Percentage of U.S. total income in 1976 that went to the top 1% of American households: 8.9.
· Percentage in 2007: 23.5.
· Only other year since 1913 that the top 1 percent’s share was that high: 1928.
· Combined net worth of the Forbes 400 wealthiest Americans in 2007: $1.5 trillion.
· Combined net worth of the poorest 50% of American households: $1.6 trillion.
· U.S. minimum wage, per hour: $7.25.
· Hourly pay of Chesapeake Energy CEO Aubrey McClendon, for an 80-hour week: $27,034.74.
· Average hourly wage in 1972, adjusted for inflation: $20.06.
· In 2008: $18.52.

How's that been happening, anyway? For one thing, there's the overdraft fees, which nearly doubled from 2000 to 2009:

U.S. banks will collect a record $38.5 billion in overdraft fees this year, with nearly all the revenue paid by just 10% of customers, according to a research report released Monday. ...

The national median overdraft fee rose to $26 from $25 in 2008, while larger Wall Street banks charge a median of $35, Moebs said. ...

And then there's the wage theft against the bottom 15 percent of the workforce that's "so widespread that workers in just three cities-Los Angeles, Chicago and New York City (total population about 15 million)-had roughly $2.9 billion in wages stolen from them in 2008."

Productivity goes up, but half the households in the US in 2006 made over $15,000 less than the value added by one, average worker. If the minimum wage had tracked productivity for the past 30 years, it would be $19/hour, a fact that I think should be mentioned about as often as possible.

Then there's the offshoring of the manufacturing sector, which still allows the investor class to make money off the production of goods, but entirely cuts out people who can only invest their labor in the productive economy. Conservatives pretend to care, but they just end up using the situation they've helped create to undermine the few good jobs that are left. From Rep. Eric Cantor's CPAC speech:

“Let me share with you some very troubling figures. According to the Department of Labor, today there are over four million more Americans working for government than are working in the goods-producing segment of our economy. And these government jobs, they're pretty good jobs. As Mark can tell you, most federal employees are protected by pretty powerful unions. And in fact, in January, our country passed another very troubling milestone.

“There are now more union members who work for government than work in the private sector. And they've negotiated some pretty darn good deals for themselves too. Did you know that the average salary in the Department of Education is now over $100,000 a year? Average. Anyone who is following the news right now in Greece, a country in bankruptcy, where the public employee unions are striking against the government's effort to rein in spending has to wonder, is this the America that we know? Is this America's future?

"If we're going to save freedom, we've got to begin focusing not just on jobs, but on private sector jobs. To preserve freedom, we need more individuals who are worried about how high their taxes are and less worried about how rich their government benefits are.

"I'm sure all of us will agree that across the board tax cuts are the key to reviving our economy. Encouraging entrepreneurs, and creating jobs."

Cantor's remarks are troubling, and revealing.

Regarding the compensation claims, only 19% of federal employees make over $100,000, and it seems unlikely that there's such a concentration of them at the not-especially-powerful 5,000 person Dept. of Education. However, conservatives are also fond of mixing wages and benefits when talking about federal employees, who, because they've been getting steady cost-of-living increases during years when everyone else's wages have been either stagnating or regressing, seem comparatively well off.

Conservatives do this a lot, though, use the undermining of the wage economy to raise outrage against the few people still making a living wage. Their answer is to tear down the wages of these last good jobs rather than lifting up wage standards for the rest of the workforce. Cantor himself voted against assistance to workers who lose jobs to globalization through the offshoring of their workplaces.

For example, Brooklyn's Hugo Boss plant is preparing to close if workers didn't agree to a $4/hr pay cut. Hugo Boss clothes will still be sold in US stores, they're still in demand, but the goods-producing economy will lose another factory and 375 more, mostly unionized employees.

Raise Hugo Boss to the power of Whirlpool, add an ailing auto industry, stir, and you get a goods-producing economy that lost 5 million jobs between 2000 and 2009. Cantor, an obedient representative of society's malefactors of great wealth, doesn't want to do anything about any of that besides continue to cut taxes "across the board," in spite of it not having helped that taxes were cut at every session of Congress between 2000 and 2009

It must be admitted though, getting your pay reduced by $4/hour will indeed cut your tax bill. If you lose your job, whoa, then your taxes really go down. Yet you may at that point become concerned about the "richness" of your government unemployment benefits, because they'll be the only income you'll have to save up from so that you can someday become one of the entrepreneurs Cantor's so keen to encourage.

And that's how income gets redistributed in America; bank accounts are pilfered, wages are stolen, jobs are sent away never to return, and things get worse and worse for young people just starting out. Everyone who's left looking for work faces higher costs for the education, or re-education, that conservative tax cuts made more expensive. Everyone who's still got a job, or wants one, has less access to health care because they now have to compete with workers in countries that either provide it for everyone or provide it to no one; either way, employers in other countries mostly don't have to pay insane prices for US health insurance and we all have to compete with them. The market power of the remaining employers and abusive service providers ensures that ever greater portions of our dwindling wages wind up in the well-lined pockets of executive managers and wealthy investors.

Or, as Avedon Carol said, "Billionaires are the most dangerous weapon of mass destruction there is."

So yeah, I am worried about income redistribution, Mr. Armey. Would you be a dear and ask your friends in the business community to stop robbing the country blind, or maybe ask that nice Rep. Cantor to change his mind about helping US workers who lose their jobs to crazy free trade schemes?

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