5 Obscene Reasons Why Richest Americans grow Richer As Middle-Class Declines
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Say what you will about unions, but the fact remains that when unions are strong, the middle-class prospers and the income gap closes. It’s remarkable how the rise of the super-rich and the decline of the middle-class correspond to the generation-long assault on unions. National Labor Relations Board (NLRB) and court rulings combined with new anti-union tactics by employers to make organizing new members more difficult. Also the decline of domestic manufacturing, aided and abetted by rapacious financial engineers, further eroded labor’s base. Until this turns around, the middle-class, as well as the poor, will suffer.
4. The Wall Street Crash and Bailouts
The financial crash devastated the middle-class, largely because its wealth is largely dependent on housing values. When the financial casinos went under, the housing bubble imploded. As the economy nearly came to a standstill in 2008-'09, 8 million jobs vanished in a matter of months, all destroyed by Wall Street’s reckless adventurism. To prevent another Great Depression, Washington bailed out the big banks and hedge funds, but not homeowners. The idea, successfully marketed by Wall Street’s minions in government, was that by saving Wall Street, the economy as a whole would be resurrected. Again, trickledown failed to aid the middle-class as unemployment grew to depression-era levels. Yes, GM and Chrysler received support as well, which kept employment from crashing even further. But Wall Street received most of the booty. No wonder super-rich financiers are prospering.
5. Corporate Money in Politics
As more and more money gushed to the top, more and more money entered into politics and lobbying. The net result was more government goodies for the super-rich. Corporate America, in every shape and form, took effective control of the legislative process so that both parties continued to shower the wealthy with tax breaks, and their industries with direct subsidies. While conservative political theorists sang praises to the all powerful free market, the largest corporate players raided the treasury again and again. And while some complain about the undo influence of liberal “special interests,” the biggest interest of all is business which outspends labor to the tune of $14 to $1…and that was before Citizens United.
Why the Ryan-Romney Plan has zero chance of resurrecting the middle-class
Ryan and Romney are in love with wealth and the few who amass it. As a result, they are fully committed to precisely the same policies that created the obscene wealth gaps in the first place. They want even more tax cuts for the rich, even more regulatory freedom for Wall Street, and even more attacks on unions. If they reinstitute these failed policies, we certainly will see larger too-big-to-fail banks that will gamble and fail, and again grab bailouts from us. All the while, those juicy tax cuts for the super-rich will float over to the Grand Caymans, while average middle-class incomes decline. Maybe before the 2008 crash we could have had a serious argument about the merits of tax cuts and deregulation. But we just lived through a real-life experiment using precisely those policies, and the results are in: This dog don’t hunt.
What will it take to resurrect the middle-class?
Americans don’t begrudge the accumulation of wealth as long as our own standard of living improves and our children have a good shot at doing better. We do not expect to work hard and then watch our standard of living decline, while the uber-rich live lavishly by skimming away our collective wealth.
There is a way out -- but it won’t come easy. It’s a hard road because it runs counter to nearly everything we hear about the economy. Revitalizing the middle class (and lower-income groups as well) starts with one central observation – the private sector on its own will never create enough jobs for all who need them. And without full-employment we will continue to see our incomes stagnate and decline.