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The Widening Gap In America's Two Tiered Society

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Americans need to realize that there are no core entitlements imparted by their government representatives, nor any other sources. They have none and should adjust their expectations accordingly. If they somehow imagine that they are viewed any differently than any other populations across the world that are used to produce maximal profits for the top economic class, there's a rude awakening in store ahead.

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Americans, particularly ones from the middle class, need to realize that there are no core entitlements imparted by their government representatives, nor any other sources. They have none and should adjust their expectations accordingly.
If the U.S. populace somehow imagines that its members are viewed any differently than any other populations across the world that are used to produce maximal profits for the top economic class, there's a rude awakening in store ahead. Further, most legislators simply do not care whether middle and lower class interests are or aren't well served as long as they, themselves, can somehow make out well in the times ahead.
Besides, why should any Americans feel that they deserve to be treated more favorably by the transnational moneyed elites and their government backers than their counterparts across the rest of the world? As A. H. Bill reminds: "The richest 225 people in the world today control more wealth than the poorest 2.5 billion people. And... the three richest people in the world control more wealth than the poorest 48 nations."
Occasionally, someone making a staggering amount of money in a crooked sort of way might raise a few officials' eyebrows or induce a mild reprimand. In addition, he might, occasionally, be singled out as the token fall guy so as to be made into a warning example, as was Bernie Madoff. Most of the time, though, no action is undertaken to correct the situation when directors of major companies carry out activities that are, obviously, right on, or over the edge of fraudulent practices.
As Barack Obama, perhaps hypocritically, chastened, "Under Republican and Democratic administrations, we failed to guard against practices that all too often rewarded financial manipulation instead of productive and sound business practices. We let the special interests put their thumbs on the economic scales."
Yet, he, himself, showed no hesitation during his election campaign over collecting $40,925 from the bailout fund recipient and nearly bankrupt investment house Bear Stearns, $161,850 from the bailout fund recipient and mortgage underwriter Morgan Stanley, as well as benefits from countless other institutions that have received government favors at taxpayers' expense. As such,it's hard in actuality to deliver more than just a mild verbal rebuke about these organizations' modus operandi if one picks up a personal windfall from not meddling. Thus, the financial corruption continues at all levels of government.
A case in point is the self-serving oil traderAndrew Hall. Hisrelationship with Citigroup's (C.N) Phibro energy-trading unitbrought himapproximately$100 millionin 2008 despite thathis parent company registered a net deficit of $18.7 billion for the same year and received $45 billion in TARP funds.
However, it's been pointed out that hecould moderately adjusthis current level of gain and continue to maintain the same procurement pattern if hemanages to stay out of the limelight.If he follows thisplan inthe near future,his earnings and bonuseswon't likely duplicate the $250 million personalcompensation that he'd receivedin the past five years. Yet, he could still make out quite well all the same!
In any event, one has to question suchlavish rewards considering that Citigroup suffereda 95% loss of its share valuesince 2007in relation to whichPhibro "occasionally accounts for a disproportionate chunk of Citigroup income."At the same time,the U.S. government will shortly be the owner of34% of this company. Put more bluntly, is Andrew Hall's personal prosperity and propensity toadd to his private art collect the best use of taxpayers' funds?
As long as he's a lavish beneficiary, would he care iftheyweren't? As the economist John Kenneth Galbraith once suggested: "The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself." Naturally,Andrew Hallaims to keep such a cozyarrangement intact.
Besides, hispersonaltake is relatively inconsequential. It's a mere pittance contrasted to thealmost two and a quarter billion dollarsgrand total --roughly$2,217,800,000 --that the top ten U.S. business moguls collectivelygrossed as theirown recompensein 2008. [1]
At the same time, it cannot not be expected, ina market based economy, that politicalinfluence is not also a purchased commodity.Clearly, opinions are bought and sold just as easily as are any other products and services with paymentbeing campaign funds, such as Obama's,from big industry;offers of high paying future jobs and other lavish advantages dangled as bait.
On account of thiskind of shady deal, tax subsidies connected to executive pay amounted to $20 billion in 2008 according to United for a Fair Economy (UFE) and Institute for Policy Studies. (Imagine if this money, instead, were allocated towards improvements in public education, provision of a universal heath-care planor any number of other programs that coulduplift the American public as a whole.)
During the same period,average CEO pay, at $10.54 million,was 344% higher than typical worker pay.This disparity,also, is generally indicative of a trendthat increasingly funnelswealth upward rather than having it more equitably distributed across class lines.
Anothersign of this ascendantdrift can be found in the change between the first Forbes 400 report (1982) andits 2008 version. In 1982,an entrepreneuronly neededslightly more than $100 million dollars to get on the list. By 2008,he wouldn't be in the top 400 unless he'dgarnered at least$1.3 billion. In other words, so much more wealth shot upward in the last twenty years that $100 millionnow isalmost viewed aschump changein comparisonto the new top gains.
In addition, Congressional reports have indicated that widespread tax avoidancetricks, like use ofoverseas banksthat do not report amounts to the IRS,havecost taxpayers more than $2 billion annually. Certainly, these lost moneys could well be used to helppeople less fortunate.For example,the hidden $2 billioncould be used tocreate job training programsfor any ofthe one in nine Americans currentlyforced to rely onfood stamps as an alternative to starvation.
To be eligible for such aid, a family of four, for example, has tohave no more than $2,389 as itsgross monthly income or 130% of the official poverty level and no more than $1,838 net monthly income or 100% of the poverty level. (There are few deductions and exceptions to the requirements allowed, along withlimitsfor ownedproperty value imposed,that further determine whether one meets qualifications.)
In other words,a typical household of four cannot receive thishelp if the gross income for thefoursome exceeds $28,668 annuallyand, for anindividual, the gross not to be surpassed is $14,088.Additionally, recipients cannot have a great deal of assets with a clearly defined, too high level of worth.
As such, they have to be nearly broke across the board. Meanwhile, it's clearly disgracefulthat more than 27,651,388 Americans are so extremely poorthey require food assistance totry to make ends meet.
Even that help, though,is often not enough to preventfurtherpoverty and many folks are unable to avoid outright destitution across the so-calledwealthy U.S.A.So next, they lose their homes... and they lose themin droves.
Thehugeportion of Americans whodo so are staggering: While thenumber of U.S. foreclosure filings climbedby more than 81% in 2008, thetotalis still sharply rising in 2009.In relation,300,000 homes foreclosed per month from March to May in 2009 and 1.8 millionhomesrepresented theanticipated total for the first half of the year. With such a backdrop, one out of every 398 homes received a filing in April anda whooping 6.4 million homes are anticipated to be in foreclosureby mid-2011.Simultaneously,a record number of individuals, also,applied for bankruptcy.
In a similar vein,the jobless rate, despite some minor dips downward,is still seemingly on the rise. Therefore, the current number ofout of workadults could well exceed20% if all of the hopelessones, who are no longer collecting unemployment benefits and who gave up looking foropportunities, are added into the mix.
Moreover, they will not be able to jumpstart the economy so long as they cannot find work, and especially work at a living wage. After all, how can anyone make lots of purchases or take out bank loans ifhe has no reasonable income? So it follows thateven moreretail and wholesale stores, along withbanks, willgo belly up.
At the same time, the supply side of the market, itself, has created labor troubles. This is becausegoods have been overproduced. Consequently, there is overstockpiledhighin warehouses and shipping containers across the world ready to resumeits path to themarket once the spending reinitializes. However,spending cannot resume as long as the money has largely flowed to the top economic tier and away from average former and low wageworkers, who can not expect to havedecent paying jobs to create more goods until the current product glut diminishes.
In other words,consumers can'tbuy muchwhen money's tight andwork won't be provided when there's an oversupply ofmerchandiselargely produced insecond worldsweatshops whose workers are paid so little that they hardly can put food on their own tables let alone make many more extravagant purchases -- oneslike toothpaste, soapand shampoo. Besides,they, too, face employment opportunitiesdiminishing becauseworldwide sales are down for many of the products that, previously, theircompanies too copiously produced.
Concurrently, the bailouts, oriented towards fixing the credit side of the equation,are not addressing these sorts ofsupply side problems. Therefore, they will not keep thefinancial collapse from worsening.
Alternately put, TARP and otherpayoffs to the self-serving, unconscionable banksters and Wall Street high rollers largely responsible for the downturn will notproducean abundance ofjobs. So the reasonable salaries, ultimatelyneeded to buy the wares to cause industrial output to resume, won't materialize any time soon.
It's rather simple to understand, really. Sowhy don'tBen Bernanke and hiscolleaguesseem to notice thatmassivejob loss, itself, needs to be addressed posthaste? Why hasn't a public works program been initiated? Why don't they grasp that the act of offshoringall kinds of Americanjobs to maximize profits at the top tierdoes not ensure that products will be avidly snapped up by agreatly unemployedand underemployed public?
Since they, apparently,don't understand,the downturn, with a fewsmallupward twists,willremain inits plunging slide, which in turn will create further layoffs. All the while,the über-wealthy and their corporate supporters, such asmost members of Congress, will continue topamper themselves with capital largely derived fromstruggling taxpayers and massive loans that raise the federal deficit.
More to the point, howcouldtheslumpnotlast when theaffluent elites gamble away huge fortunes comprising of their own and others' money whilemanufacturing bubbles and Ponzi schemes in the process? How could anything change when they keepamassing more and moreassets for themselves while indifferent to their impact on society as a whole?
Such practices as theirs, obviously,cannot sustain theAmerican middleand under classes and it cannotbuoy up theutmost bottom rungeither.On account,scores ofindividuals of allagescontinue towind up in tent citiesorensconced on public park benches.(Supposedly,families with children represent the fastest growing subset of the homeless population in the U.S.A. at present and the average age of a homeless person is nine years old.)
When the upper-crust keeps getting richer by taking an ever greaterportion of the overall wealth and government schemes assure that the process continues, nearly everyone else becomes increasingly cash poor. When every now and then big investors suffer hefty losses, the government steps in to shore them up again and again. However, this practice, clearly,does not help the populace in general. The evidence that it does notcan be seeneverywhere acrossthe American landscapeand the entire world.
It follows, then, that, "in the United States, wealth is highly concentrated in a relatively few hands. As of 2004, the top 1% of households (the upper class) owned 34.3% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.3%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.2%...",according toG. William Domhoff, a sociology professor at University of California at Santa Cruz. [2]
Another way tomeasure the shift in wealth isby noting some of the corporate trends, themselves. AsSarah Anderson and John Cavanagh, at the Institute for Policy Studies, point out:
  1. Of the 100 largest economies in the world, 51 are corporations; only 49 are countries (based on a comparison of corporate sales and country GDPs).

  2. The Top 200 corporations' sales are growing at a faster rate than overall global economic activity. Between 1983 and 1999, their combined sales grew from the equivalent of 25.0 percent to 27.5 percent of World GDP.

  3. The Top 200 corporations' combined sales are bigger than the combined economies of all countries minus the biggest 10.

  4. The Top 200s' combined sales are 18 times the size of the combined annual income of the 1.2 billion people (24 percent of the total world population) living in ''severe'' poverty.

  5. While the sales of the Top 200 are the equivalent of 27.5 percent of world economic activity, they employ only 0.78 percent of the world's workforce. [3]

Especiallyexemplifying thistype of corporateimmensity is the Wal Mart company. For example,the Walton heirs have a collective worth of around $65 billion and over 1.7 billion shares, or 43%, of Wal Mart stock in addition to earning $29 billion off the stock price rise alone from November 2007 to June 2008.
Meanwhile,the Waltons pay theirjean laborers in Nicaragua approximately $1.50/ day.Simultaneously, their average U.S.workersare givenwages of about $12,000/ annum causing a full one half of Wal Mart's 720,000employees to qualify for food stamps.
At the same time,the clearly exploitive Wal Mart businessmodel is considered an unqualifiedsuccess -- one that should be more often duplicated across the board. After all, itshows the capitalistic free market with its best possible outcome -- profits beyond imagination and the American Dream come true (for the few who manage to take unfair advantage of the actual wealth producers)!
Perhaps, though,the best way to look at the new arrangement between citizens, State and the rising corporate structures isthrough this superlative summationby Benito Mussolini:

The corporate State considers that private enterprise in the sphere of production is the most effective and useful instrument in the interest of the nation. In view of the fact that private organisation of production is a function of national concern, the organiser of the enterprise is responsible to the State for the direction given to production.

State intervention in economic production arises only when private initiative is lacking or insufficient, or when the political interests of the State are involved. This intervention may take the form of control, assistance or direct management. [4]

Even if Benito Mussolini's position has an alarminglyfamiliar ring to it, no one stillshould expect U.S.legislators to create laws any time soon that wouldenacttax codechanges in order to remove subsidies that encourage overpayment to executives and that cost taxpayers $20 billion a year. Indeed,nobody should expect any major changes at all that would level the financial playing field,remove a sense of economicinjusticeor bring back jobs and reasonable wages to the American people.
As Joel H. Rassman, Toll Bros. CFO in 2006, explained aboutCEO Robert I. Toll's $20 million compensation while shareholders were suffering a 22% loss: "I have yet to meet the person who has enough money."
Like Toll, a majority of Congressional representatives, of whom many are multi-millionaires,apparently imagine that they never have quite enough for themselves and justify theirdodgychoicesaccordingly. They, also, know who butters their bread and it surely is not the increasingly impoverished averageU.S. citizens,who continue to be the indirect victims of corporate rapacity andpathetic corporate oversight by executives and Congressmen alike.
In relation,one wonders whena significant number ofAmericanswill, finally, recognize that they've been had. Put another way by Andrew Greeley:"It should be no surprise that when rich men take control of the government, they pass laws that are favorable to themselves. The surprise is that those who are not rich vote for such people, even though they should know from bitter experience that the rich will continue to rip off the rest of us. Perhaps the reason is that rich men are very clever at covering up what they do."
Thisexplanation in mind, we need not worry as much about the terrorists from abroad as the terrorists from above and the duped voters who repeatedly fall for political candidates pandering to this broadly malignant upper class. The latter bunch and their sycophantic legislative admirers, more than any foreign guerrillas, are leading the world's wealthiest nation into ever deeper ruin.
REFERENCES:
[1] Top CEO collected $702 mln in 2008: US survey - Yahoo! News
(http://news.yahoo.com/s/afp/20090813/ts_alt_afp/usbusinessexecutivepaypolitics_20090813190411).
[2] Who Rules America: Wealth, Income, and Power (http://sociology.ucsc.edu/whorulesamerica/power/wealth.html).
[3] CorpWatch : Top 200: The Rise of Corporate Global Power(www.corpwatch.org/article.php?id=377).
[4] Benito Mussolini, 1935, Fascism: Doctrine and Institutions, Rome, 'Ardita' Publishers. pp. 133-135.

 

Emily Spence is a progressive living in MA. She has spent many years involved with assorted types of human rights, environmental and social service efforts.
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

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