We (most of us) know there is something deeply wrong with the swelling economic inequality in our country. The statistics are beginning to lose their shock value after decades of political indifference from both parties. But these numbers are the measure of a growing immiseration and shrinkage of life prospects for a majority of Americans.
In November of 2017, the Institute of Policy Studies reported that Bill Gates, Jeff Bezos and Warren Buffett together "own more wealth than the entire bottom half of the American population combined, a total of 160 million people." The billionaires making up the Forbes 400 list "now own more wealth than the bottom 64 percent of the U.S. population [204 million people]."
A major cause of the runaway growth in wealth inequality is the combination of decades of stagnantwages for workers and rapid income growth for the already wealthy. According to the Economic Policy Institute, from 2000 to 2017 median household income declined by .8% while the income of the top 5% grew by 9.3%. As Inequality.org notes, "The top 1 percent of America's income earners have more than doubled their share of the nation's income since the middle of the 20th century." Their share went from 10% at the beginning of the Reagan presidency to 22% in the final years of Obama. The ratio between the average compensation of CEOs and that of workers in the top 350 corporations went from 20:1 in 1965 to 312:1 in 2017.
The news media mindlessly refer to our "booming economy" and "low unemployment rate" without looking at what life is like for most people. Nearly 80% of workers live from paycheck to paycheck, unable to cope with unforeseen expenses (including medical care) without going into debt. Last October, Bloomberg reported that student debt over the previous eleven years had increased 157% to a total of $1.5 trillion, and rising tuition rates were at an all-time high. The indebtedness of graduates delays their entry into economic and social life. In 2014, for the first time, living at home with parents became the most common living arrangement for adults aged 18-34.
In case anyone hadn't noticed what a capitalist economy is all about, the 2017 tax bill made it perfectly clear. Trump's tax cuts gave corporations and wealthy investors a giant gift funded by annual deficits that are predicted to reach $1.5 trillion in 2027. As Howard Gold of Marketwatch put it: "The numbers couldn't be clearer: Corporations, big shareholders and top corporate executives reap the lion's share of the gains from the 2017 tax cut, which should be renamed the Shareholder and CEO Enrichment Act of 2017."
The justification offered for the Trump tax bill is the same nonsense regurgitated by Republicans for the last 40 years of growing economic inequality--the "trickle-down theory" (which deserves to be called "peeing on the heads of the 90%"). The premise is is that the greater the share of profits our tax system leaves to the already wealthy, the more they will invest in production. This in turn will accelerate economic growth, and thereby increase tax revenues enough to make up for revenue lost in tax cuts. As Mitch McConnell said at the end of 2017, "I not only don't think [the bill] will increase the deficit, I think it will be beyond revenue neutral." He was off by $1.5 trillion.
After the treasury department announced last October that the federal deficit was 17% higher than the previous year, McConnell and the Republicans insisted this had nothing to do with tax cuts. Instead, he said "the real driver of the debt by any objective standard" is government spending on medicare and other social-insurance programs.
McConnell's response is the second step in a two-step scam the GOP has repeated over four decades. Step 1 is the "trickle-down" tax-cut move, which creates a deficit, and step 2 is pushing cuts in social programs to remedy the deficit--the "fiscal-responsibility" move. Both steps increase economic inequality: the rich get richer while recipients of government aid get poorer.
Putting an end to this scam needs to be the prime imperative of the Democratic Party. For the last 40 years, the investor class has been the victor in a class war. Take it from Warren Buffett: "My class has won." Our image of this class shouldn't be limited to their decadent luxuries--multiple mansions, fawning servants, private jets and chauffeur-driven cars. Money is power. The laws and institutions of our economy that nurtured the Fortune 400 have spawned a political colossus capable of dominating government by funding election campaigns and think tanks, and buying mass media.
Capitalism is a perverse ideology that makes capital an -ism, and the creation of capital an end in itself. It sees people (human resources) and the environment (natural resources) merely as factors of production. Capital grows on profit, and profit grows when production consumes a maximum of resources at minimum prices (including wages). Capitalism has an essentially predatory relationship to society and the planet. It sees as an existential threat the large-scale economic reorganization necessary to mitigate global warming.
Republicans have stereotyped Scandinavian countries as "socialist," hobbled by high taxes and state interference with markets. In fact, they have thriving economies rife with free enterprise. In the 2019 edition of its Best Countries for Business list, Forbes ranks Sweden second, Denmark 7th and the U.S. 17th. What makes the first two countries "socialist" is not a lack of free enterprise. They are "socialist" because they treat production and profit as means to create the revenue needed for generous social benefits such as universal health care and parental leave.
In calling himself a Democratic Socialist, Bernie Sanders shows that he gets it. When Kamala Harris assured an audience last week that "I am not a democratic socialist," and Elizabeth Warren proclaimed on July 16 that "I am a capitalist to my bones," I knew they didn't get it.