Income Inequality, American Style

As 1,700 private jets descended on the recent elite summit in Davos, Switzerland, income inequality was a hot topic on the agenda of these movers and shakers. As the Oxfam report states (and was a focus at Davos), summarized in my January 19^th blog (Cause or Effect?), trend lines suggest that 1% of the entire planet will soon control 50% of global wealth – already the truth in the United States. Too many politicians have told us the hard truth: whatever limited “recovery” might exist in the global economy has overwhelmingly benefited the upper income brackets.

As real estate and stock prices soared and as money generated from long term capital gains (taxed as the lowest rate) parallels rewarded those at the top, the middle and lower classes instead saw contraction in earning power. The U.S. jobless rate fell mostly because too many people have given up looking for work or accepted temporary or low-paying jobs. Davos participants addressed the issue in deeply selfish terms. Some high-flyers simply stated that with a growing global population, average and lower class citizens are simply facing a permanent global economic reset; most folks will live with less, expect less and better learn to be happy with it. It’s the 21^st century equivalent of the infamous “Let them eat cake” speech.

Others clung to that disproven theory that they are doing their best as job-creators, because supply-side economics (trickle-down economics that marked the Ronald Reagan presidency but never generated the promised quality jobs) works. It doesn’t, as the above Oxfam-cited report underscores. “WPP (WPPGY) CEO Martin Sorrell said the wealth his company creates eventually trickles down to the poorest through taxation… ‘Billions of people in emerging markets are lifted to the middle class,’ he said. ‘I am not going to apologize for creating a company that employs 179,000 employees.’” CNN.com, January 23^rd. Easter Bunny, anyone? A few developing nations, like China, indeed are growing, but hardly because big corporations are the driving force. Government policies are the source, not companies where CEOs make hundreds of times the earnings of their average employees.

In the American body politic, there is a clear schism between the new GOP-controlled Congress, on the one hand, and the Democrats on the other. Democrats: Tax the one percenters – the biggest contributors to and supporters of GOP candidates – to pay for a community-college upgrade in our employment skills to earn more? “Class warfare” and using a new phrase – “job creation” – to replace the discredited trickle-down economic theory, respond the Republicans who remain fiercely loyal to their funding partners. The trickle down mantra will create jobs and eliminate income inequality, GOP leaders say, and there are enough fools out there who are willing to ignore the historically-proven fact that this theory is just plain wrong… so…

No new taxes, even as the mega-wealthy use off-shore tax planning to avoid most of their income tax obligations anyway. Kill health care for the masses because the rich “job creators” can’t afford it. Cut regulations –environmental and financial – despite the billions and billions of dollars spent on cleaning up natural disasters traced to severe weather patterns generated by global warming, and the trillions and trillions of dollars of damages fomented by an under-regulated financial sector. “Regulation is killing job creation” remains the Republican cries, who are still officially denying that global warming is man-induced. They don’t seem to care about the impact of these environmental and financial costs that continue to decimate our deficit.

Where is the GOP of yesteryear, conservatives “conserving” our natural resources (Republican President Teddy Roosevelt’s commitment to conserving the environment), fiscal conservatives who understand the difference between investing in our economy (education, infrastructure and research) and mere spending? Why did we ignore Republican President, Dwight D. Eisenhower, as he warned the nation against giving in to the spending-mongers of the “military-industrial complex,” a phrase he coined? I’ve explained the “smart trend” among GOP regulars to dupe social conservatives – the Tea Party Evangelical movement – into supporting their “moral imperatives” in exchange for letting the rich get richer than they have ever been in the entire history of the United States by cutting needed regulations and keeping their taxes unsustainably low at the expense of everybody else (particularly those modest earning Tea Party constituents).

Does the fact that our educational standards are falling like a stone dropped from the Empire State Building help sustain political directives with lower political credibility than Dr. Seuss’ Green Eggs and Ham? How long before we reach the point of no return?

I’m Peter Dekom, and if so many people are so easily duped, exacerbated by voter ID laws and gerrymandering, is there really any hope to return to a reality-based program that benefits most Americans?