The realities of our economic climate are quite harsh and getting harsher. That is, if you aren't among the top 10% of wage earners. So for instance though productivity is on the rise, median income is not. The total share of income of the top 1% is skyrocketing, from about 10% of the total in 1980 to a whopping 23% today.
Citigroup can see this quite plainly. They issued a couple of reports outlining an investment strategy based on the structure of our economies and these were leaked. Part 2 is not easy to find, but I was able to track down both Part 1 and Part 2. In fact Citigroup is trying to scub these studies out, so that link may not work forever. They read like left wing screeds, except rather than being depressed the authors sound jubilant. The worldwide economic order is organized such that the poor will have to get by with an ever decreasing share of the income and the rich will take more. So you should invest in companies that cater to the needs of the rich. Here are a couple of excerpts as culled by Bill Moyers in a speech that is available here.
"Asset booms, a rising profit share and favorable treatment by market-friendly governments have allowed the rich to prosper... [and] take an increasing share of income and wealth over the last 20 years."
"...the top 10%, particularly the top 1% of the United States - the plutonomists in our parlance - have benefited disproportionately from the recent productivity surged in the US... [and] from globalization and the productivity boom, at the relative expense of labor."
"... [and they] are likely to get even wealthier in the coming years. Because the dynamics of plutonomy are still intact."
So now we're getting a tax cut from Obama and the Republicans. Huge reductions in the estate tax. Making permanent the Bush era tax cuts, the consequence of which are outlined in Citigroup's reports. There's only one group that will see an increase in their overall tax burden. The poorest Americans. We should expect the share of the pie going to the rich to increase ever more aggressively.
I speak with right wingers and explain these matters and I get a variety of responses that I'd like to address here.
I'm told that the increase in inequality is due to the changing family structure. More single family homes. It's interesting that a lot of these responses I get come without evidence. It's just a claim that sounds plausible. But I think right wingers should allow real world data to inform their claims rather than just spinning them out of their head. When you do that you find that your theories, which sound plausible in your head, in fact don't correlate to the real world.
Though I'm not offered evidence in support of this claim I do go look for it on my own. You can go here to see divorce rates and the number of children affected by divorce through the years. You'll notice that divorce began increasing in the 60's, when inequality wasn't as much of a problem, and then leveled off just prior to the 80's, when inequality began to skyrocket. So these are not correlative.
I also found a report on working hours contrasted with income. Looking at that you can see that working hours for families are on the rise. From my link above we know this is happening while productivity was increasing. And yet the income gains are not there. The claim regarding family structure would presume that total family working hours are decreasing. Maybe a two parent family can work 50 or 60 hours a week, whereas a single parent family might not be able to work more than 40. The data show that this is not the case.
I'm told that it makes more sense to evaluate total compensation, rather than simply income. 401k's are on the rise, as are health care costs. Once again that sounds plausible, but is it true? This source says that yes, considering overall compensation does reduce the inequality gap, but does not eliminate it. And pensions have been eliminated as 401k's have come in and 401k's are not better than pension plans. Note that the total savings rate for Americans is down even accounting for 401k's.
Why not blame the immigrants? That's a frequent right wing ploy and it usually comes without evidence. Presumably legal immigration is not the problem. Those that come here legally are usually well off and well educated. It's the illegals. I haven't found data on illegal immigration going back to the 70's, but it looks like it has dipped since 2007 though inequality continues to set records. So the data that is available to me doesn't support this claim.
I'm sometimes told that the poor don't have it so bad if you consider the massive benefits paid to them via welfare. We should really be concerned about so called "welfare queens." Black women having as many babies as possible so as to the game the system. Truthfully this is what I'm told. It's worth noting though that welfare spending on the poor is not necessarily as much as you would think. But in fact it is not true that having more babies is helpful. It's also worth noting that welfare benefits don't continue indefinitely. Unlike our massive war spending.
It's not surprising to me that Americans vastly underestimate inequality and would prefer something much different than what we have. Americans are inundated with news and stories about how we should enact policies that are for the betterment of the super rich. "They drive the economy" we're told. If only we let them keep more of the money it will trickle down to the rest of us. Maybe if we stuff their pants fuller and fuller some money will fall out and the poor can enjoy it.
The argument is that the rich are the investors/job creators. But studies directly contradict these plausible sounding assertions. Not only that, but companies are flush with cash now, but simply won't spend it. Instead they hoard it.
And it's not that these companies are evil. They simply aren't designed to be concerned that people are suffering and unemployed. What they do is what I'd expect them to do based on the incentive structure that exists. Why not simply do stock buy back plans which inflates the price of stock for the betterment of stock holders (the majority of whom of course are already rich). I'd likewise expect that Citigroup is right. Our economic order will be revised to cater to the rich, not the poor, since the rich will have everything and the poor will have nothing. We will become more and more like third world countries. This is not because people are evil. This is the product of the system we have. Under Obama it continues.