The giant economy size, continued

Okay, so it's not tomorrow. Moving on....

In a comment on a post from the beginning of the month, Tim said

I don't mean to sound like a 'Socialist' or worse, a dreaded 'Marxist', but I don't really know any other way to say this: Most of us are forced to sell and rent something called labor to those who 'own' the means of production in order to survive.

Well, sounding socialist or Marxist or whatever makes it no less true. (And what's wrong with sounding socialist, anyway?) As I noted in the post from this past weekend to which this is a follow-up, an article at DailyFinance.com by Charles Hugh Smith, who writes on economics and market analysis, described the economic problems as "structural." And indeed they are. They are part and parcel of the way our economy, our society, is structured. And whenever we let down our guard, whenever we relax, whenever we pause in presenting a constant, active opposition to that structure, a continuing counterweight to its tilt, the inherent bias in that structure - a bias toward wealth over working and owners over workers, a bias toward concentration of ownership and wealth and therefore power, a bias toward increasing inequality - reveals itself.

Last September, management consultant Peter Cohan, also writing at DailyFinance.com (it's interesting how the financial pages often contain the most damning information), noted that in 2008, income inequality "pierced its previous record high."

Fresh census figures reveal that the ratio of the incomes of the top 10 percent of Americans - over $138,000 a year - to those at the poverty level - $12,000 - was 11.4 times. (The previous record was 11.22 in 2003.)

After referring to how well the richest 1% had done, he went on to say:

Too bad things were so much worse for the other 99 percent of Americans. With median incomes unchanged since 1997 and prices rising, consumers made up the difference by borrowing on their homes and credit cards. Then, at the end of the year, the current recession kicked off, throwing millions out of work. This drove median income down from $52,163 in 2007 to $50,303 in 2008, wiping out a decade's worth of gains and bringing median income down to its lowest level since 1997.

For his part, Smith expressed that same idea another, broader, way, presenting how income levels had changed over the 25-year span from 1975 to 2001. (The figures are all in 2001, inflation-adjusted, i.e., "real," dollars.)

The bottom 20% saw household income increase by 10.7% over that time (to a whopping average of $14,000 a year). For the middle 20%, the increase was 29.4%; for the top 20% it was 73.8%. For the richest 5%, the increase was 108%: Their household income more than doubled to an average of over $280,000 a year - or from about 10 times that of the lowest 20% to 20 times as much.

Remember, these are real dollars. So to put it a different way, in 2001 the richest among us could buy twice as much stuff as they could in 1975. For every quart of milk the poorest 20% could buy in 1975, they could buy 1.1 quarts in 2001. For every 10 pounds of Beluga caviar the rich could buy in 1975, they could buy more than 20 pounds in 2001. The haves have ever more and the havier your were, the havier you are.

That is the very essence of class warfare: "Them that has, gets." Yes, of course the rich and their acolytes among the politicians and media just love to accuse the left of engaging in the supposedly self-evidently evil of "class warfare" whenever such truths are told, but as I am far from the first to say, the reverse is true. There has been an unrelenting war waged by the rich against the poor and the middle class - what little of the latter remains today. Over the past 30-plus years, that war has been waged with particular virulence and effect as the resistance to it has been alternatively undermined, misled, and simply beaten down to the point of exhaustion.

There was a period of time - truly not that long ago - when income inequality was actually declining and economic growth was benefitting more than the few, a period running essentially from the end of World War II to the start of the Reagan administration.

The two graphs on the left make that abundantly clear. The top one (from a post at Demos.org) is based on an analysis of Census Bureau data by the Economic Policy Institute. The bottom one, also via Demos.org, is from the Congressional Budget Office.

It's true that the measures are slightly different (changes in real income versus changes in after-tax income, with the latter lacking an indication it was adjusted for inflation), but even after allowing for that the difference is stark and undeniable: For more than three decades the many have gained little and the few have gained much.

Our current straits only emphasize the fact. Here is yet another item from DailyFinance.com, this one referring to a study done at the Center for Labor Market Studies at Northeastern University:

"A new report on the impact of unemployment and underemployment during the Great Recession suggests that higher-paid workers have enjoyed practically full employment during the worst economic conditions in 80 years, while the lowest-paid workers have suffered through an unemployment rate above 30%."

At this point it's necessary to be absolutely clear: This worsening inequality is not because workers have not been productive. In fact, productivity has soared of late:

The Labor Department revised upward its gauge of productivity growth for the fourth quarter of 2009 from an annual rate of 6.2 percent to 6.9 percent. Unit labor costs, it said, fell 5.9 percent, as compared to its original estimate of 4.4 percent....

For all of 2009, productivity rose 2.9%, the biggest increase since 2003.

Productivity, the measure whose increase was supposed to be the basis for improving wages and income for ordinary workers, has more become a measure of how the bosses use the crappy labor market to squeeze more work for no more (or less) pay out of those who still have jobs.

And let's also be clear that it is not because the rich, the highly-paid who have barely been touched by the recession, are "worth more." Quite the contrary, reported the Guardian (UK) a bit back:

Hospital cleaners are worth more to society than City bankers, according to a report that shows many low-paid workers increase the wellbeing of the nation more than the high-flying and much better-paid financial-sector staff.

The New Economics Foundation said today that a study of the social impacts of several jobs revealed that City workers, advertising executives and tax advisers destroyed value, while hospital cleaners, childcare workers and staff in the waste-recycling industry gave much more to the country than they took out.

The thinktank said it had found a way to calculate how much someone should be paid in relation to the value they create through a series of measures including conventional economic returns, environmental impacts, and knock-on effects for jobs and wellbeing in society.

No, worsening inequality is not because of slack workers - who are more productive than ever - and it is not because of the supposed greater contributions to society of the rich - who often destroy more value than they create. The inequality exists and persists because it is inherent in the structure of our economy. And it increases whenever we cease a relentless pushback against it - because such an increase is also inherent in that same structure.

That's why workers striving for better wages - or just to avoid seeing those wages shrink - are "selfish" or, at best, "unrealistic." That's why unions are "outmoded" if not "a threat to our way of life." That's why a company that undermines communities by shutting down facilities and demanding givebacks and throwing people out of work because they can get others somewhere else to work cheaper is simply engaging in "sound business practices" that it would be inane to ignore. That's why the unemployed poor are suspected of being "lazy" or preferring to "live off welfare" while the idle rich are venerated as deserving all they have. It is the nature of the beast, the beast of American capitalism - a beast that, as Michael Moore said in an interview with the Guardian,

"is an evil, and you cannot regulate evil. You have to eliminate it and replace it with something that is good for all people and that something is democracy."

Or, I would say more exactly, democratic socialism. I expressed some of my ideas of what that term means about a year ago but rather than going over that here I want to end with something I wrote in a post a few months before that one:

Look, the bottom line - a particularly apt reference here - is that what we have been through and are going through has proved that the "free market" is a failure. Without public oversight, without public regulation, without direct input and yes, direct aid from the public, the "free market" will regularly collapse into a greed-lined pit of its own making, dragging the dreams (as well as the homes, jobs, and savings) of many millions who bear none of the blame along with it.

We have two choices: We can accept that or we can turn away from it to an economy based on some version of democratic socialism. An economy, as again I said the other day, "built on need, not greed." ... I've long favored the idea of the I Ching that, as one form puts it, "the only ultimate answer is that there is no other ultimate answer." I don't believe in true utopias and no society, no social or economic system, is perfect. But dammit, some are better than others and democratic socialism is better than what we have.

And while I have been known to argue with myself from time to time, I can't argue with that.

Footnote: Earlier today, HousingWatch.com put up a piece on the "good news" that mortgages foreclosures were declining. Later on, the site had to put up a second article correcting the first as "misleading." The news was not as good as it seemed.

Indeed, the "good" news was that in February, the rate of foreclosure filings rose at the slowest rate since 2006. Foreclosures were still going up, there were still more and more properties under foreclosure, but that rate at which that number was climbing had dropped.

More bluntly, things are still getting worse, just more slowly. That is not good news. Any more than businesses dropping fewer jobs than expected was. Tell me about fewer people losing their homes, tell me about an increase in the number of jobs, and that will be good news. but don't tell me that things are getting worse but more slowly and expect me to cheer.

And another Footnote: Thanks to Avedon Carol for the link to the FDR footage; for a bit of background on how it came to light, check out the Guardian's interview with Michael Moore, linked above.