If You Think
the GOP Is 'Refocusing' on the Wealth Gap, I've Got a Bridge to Sell You
Posted: 01/27/2015 8:31 am EST Updated: 4 hours
ago
The New York
Times reported last week that in the closed-door Republican Senate Caucus
retreat, Republican Leader Senator Mitch McConnell "encouraged the
Republican troops to refocus policy on the stagnant middle class."
That would be like asking the wolves of the world to stop
hunting and refocus on cultivating asparagus.
But, of course, McConnell didn't
really mean he wanted his fellow Republicans to do something about the
wealth gap. He wanted them to look like they were doing
something about the wealth gap while they actually deliver the goods for the
owners of the Republican Party. The Republican Party, after all, is now a
wholly owned subsidiary of the .01% and doing something meaningful about the
gap in wealth and income in America -- revitalizing the middle class --
requires taking wealth and income that is now being siphoned off by the .01%
and giving it to the people who earned and created it -- the vast majority of
ordinary Americans.
Of course, Republicans and apologists for Wall Street dispute
that assumption. They argue that the economy is not a so-called "zero sum
game" -- that the best way to improve the standard of living or ordinary Americans
is to grow the economy. And they say that the best way to do that is to allow
the wealthy to control more and more of the nation's wealth, since they invest
that wealth in new productive enterprises that create more and more new jobs.
That premise, of course, is the essence of "trickle-down
economics." The problem is that we know empirically that
"trickle-down economics" doesn't work. Economic growth does not
necessarily increase the incomes of ordinary Americans.
In fact, over the last 35 years we've had lots of economic
growth. Over that period per capita income has increased by a whopping 77% and
made America wealthier per capita that any society in the history of the world.
That should mean the average American is 77% better off today then he or she
was three and a half decades ago. Problem is, we aren't. Instead, the real
buying power of the wages of ordinary Americans has barely increased at all.
Instead, all of that growth had been siphoned off to the top one percent -- and
most to the top .01%. That is not a theory. It is a documented fact.
Don't get me wrong. Economic growth -- growth in productivity --
is a very good thing. It is the foundation of a better life. But growth by
itself doesn't guarantee that the growing economic bounty will be widely
shared.
In fact, today the stock market is at record heights, corporate
profits are at record highs and the percentage of national income going to
wages is at a record low.
Fixing these things requires that we change the rules of the
economic game so they require that those who do the work to create the new
wealth can share its benefits.
Rules like:
·
Minimum wage laws that guarantee that
everyone who works 40 hours a week must be paid a living wage -- a wage that
allows them to support a family;
·
Laws guaranteeing that workers in
every workplace can bargain through their unions and demand middle class wages
and good working conditions -- since union wages are consistently higher than
non-union wages;
·
Laws that require that women who do
similar work are paid just as much as men;
·
Rules that require employers to pay
overtime to all employees except well-paid executives and professionals;
·
Financial regulation that prevents
big Wall Street banks from siphoning off and then risking billions of dollars
on speculative gambling schemes;
·
Laws preventing the sons and
daughters of multi-millionaires from using the Trust Fund loophole to avoid
paying billions in taxes -- thereby forcing the rest of us to pay the
difference if we want decent public services.
·
In his State of the Union Speech, President Obama outlined a
program for Middle Class Economics that does just that. Not surprisingly, it
was met with a resounding NO from the GOP -- all the while they feigned
increased interest in addressing the problem of stagnating middle class wages.
In fact, in his State of the Union speech, President Obama
outlined the terms of the debate that will define the political dialogue over
the next decade in American politics.
Recall that when President Obama was inaugurated, the economy
was bleeding 800,000 jobs per month. The President that preceded him, George
Bush, was the first President since the depression to preside over an economy
that did not produce one new net private sector job. The financial markets were
melting down because of the reckless speculation of the country's biggest
banks. The auto industry was on the verge of collapse.
The Obama administration intervened immediately to save the auto
industry, and prevent the collapse financial markets from causing another Great
Depression. And it proposed and passed an economic stimulus bill that
jump-started the economy and led to 58 months of private sector job growth --
the longest recovery in history. The federal deficit fell at a faster rate than
ever before in history as well.
The Republicans tried to stop him at every turn, claiming that
his actions would explode the deficit, and stifle new investment. Turns out
just the opposite was true. But the GOP did succeed in defending the share of
the recovery that went to the richest .01%. Proving again that economic growth
does not automatically guarantee that the benefits are widely shared.
That's why President Obama has proposed robust new steps to
change the rules of the economic game.
You'd think that the fact that we've had 35 years of long-term
economic growth without any increase in the wages of ordinary Americans would
be enough to completely discredit the Republican "trickle down"
economic narrative. But history shows that if the facts undercut your own self-interest,
there are no limits to lengths the rich and their minions will go to
rationalize their privileged status.
For years. the tobacco companies hired fleets of scientists to
contest the indisputable evidence that smoking can cause cancer.
For decades. Big Oil has done everything in its power to
discredit the fact that human activity is warming the world's climate.
Wall Street speculators -- and their apologists like Mitt Romney
-- brazenly try to convince the world that they are the "makers" and
that people who get on the train at 5 a.m. to work two jobs doing hard physical
work are somehow the "takers." In fact, of course, most of the
"masters of the universe" that are attracted by Wall Street's
gigantic bonuses do nothing for a living but gamble. They themselves are the
"takers" in America who don't create a dollar of new value and live
off the labor and creativity of ordinary American workers.
And this kind of self-justifying, fact-defying, logic is nothing
new. The Kings and Queens who dominated Europe in the Middle Ages convinced
their subjects that they ruled by "divine right."
The aristocrats of the 19th and early
20th century that we watch struggle to protect their privilege in PBS's Downton Abby justify their privilege by claiming
to use their superior breeding and education to paternally protect the
interests of the lower classes.
Of course none of this is any more than an elaborate
justification for kleptocracy -- for the right of the few to live off of the
labor of the many. And it completely flies in the face of the core democratic
principles that define America.
In the end, economic systems are not simply about efficiency and
productivity. They are about right and wrong.
In America we believe that if someone works hard, they should
have the ability to get ahead -- to earn their way to a better life.
We believe the accident of birth should not define your future.
Yet an increasing percentage of the America's store of wealth is owned by
people who inherit it, rather than people who create it themselves.
In fact, over the last several decades an increasing percentage
of our national income goes to people who own something -- land or capital --
and a smaller and smaller percentage goes to people who earn it by working for
it.
This fact alone guarantees that more and more wealth is
concentrated in fewer and fewer hands. It is a mathematical certainty. Today,
75% of wealth is already concentrated in the hands of the top 10% and almost
35% in the hands of the top 1%. That means that only 25% of the country's wealth
is controlled by the bottom 90% of the population. So, the top 1% -- that own
35% -- own more of the nation's wealth than the bottom 90%.
If more and more of our national income accrues to those who get
it from owning wealth, it stands to reason that more and more income -- and
ultimately more and more wealth -- will be concentrated in the hands of a few.
But none of this is inevitable. By changing the rules of the
economic game -- through the kind of Middle Class Economics outlined by
President Obama in his State of the Union speech -- it is entirely possible to
end the cycle of increasingly concentrated wealth and once again allow the
millions of Americans who actually produce the wealth to share in its benefits.
We know it's not impossible because we've done it before. Just
half a century ago, America was in the midst of what economist Paul Krugman
calls "the great compression" -- decades of declining concentration
of wealth and income -- and widely spread, robust economic growth that benefited
everyone. That, not incidentally, coincided with the New Deal and with growing
union membership.
And that gets us to the most ironic fact of all. It turns out
that far from being the enemy of robust economic growth, higher wages for
ordinary Americans spur long-term growth by putting more money in the hands of
consumers who buy more products and services. That in turn entices more
investment and creates more jobs.
The real job creators are consumers with money in their pockets,
not corporations and Wall Street titans. Don't worry, you don't have to do
these guys any special favors. If there are consumers out there ready to buy,
they will put up the money to invest in the capacity to meet the demand. And
without that demand, they won't invest no matter how many tax breaks the rest
of us dole out to provide them incentives.
In fact, if consumer incomes don't keep pace with growing
economic productivity, it turns out that they don't have enough money to buy
all of those new goods and services that increased productivity produces and
the economy stagnates.
That's why in the long run, Republican economics is bad for
everyone - even some of those corporate CEO's who would happily use slave labor
if the law allowed.
In fact, history shows us indisputably that the most robust
economic growth goes hand in hand with high wages and declining economic
inequality.
Of course, the Republicans and Wall Street never tire of making
dire warnings that any action by government that increases the share of income
going to the middle class will cause the economy to collapse.
But it turns out, in fact, that over the last quarter century,
Democratic administrations have massively out-performed Republican
administrations when it comes to economic growth.
Annual per-capita real economic growth was just a tad over $200
per year during the two Bush administrations. Under the Clinton administration
it was over $1,000 per year, and even though President Obama took over with the
economy in a free-fall, per capita income grew about $750 per year during his
administration -- more than three times the rate that it grew during the two
GOP Presidents who occupied the White House since 1988.
I guess that's why they used to say, "if you want to live
like a Republican, vote like a Democrat."
_________________
Robert Creamer is a long-time
political organizer and strategist, and author of the book: Stand Up Straight:
How Progressives Can Win, available on Amazon.com. He is a partner in Democracy Partners and a Senior
Strategist for Americans United for Change. Follow him on Twitter @rbcreamer.
