The public policy issue that needs to be addressed: wealth inequality

I had to sit in a waiting room while waiting for service, and some jerk had the TV tuned to FAUX News. The segment I was forced to endure essentially was about trashing the “takers” of the working class who are part of an “entitlement society” who are destroying America and . . . oh boo-fucking-hoo — bite me!

monopolybThis is pure über-rich elitist Plutocrat propaganda, and how the Plutocrats deflect and distract the easily distracted low information viewers of FAUX News from the fact that nobody receives more largesse from the government than do Plutocrats.

This is the true definition of “class warfare” as Warren Buffett so accurately described:  “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

The rich may pay a lot of taxes as a total percentage of taxes collected, but they do not pay a lot of taxes as a percentage of what they can afford to pay. Their accumulation of wealth has continued to grow exponentially, at the expense of and to the detriment of the middle class.

Working class income is taxed at a much higher rate than is wealth (capital gains), and all those special interest tax breaks in the tax code that allows most corporations to escape paying income tax do not go to the working class. If the working class does not pay taxes, it is because they did not have enough income to tax, not tax avoidance schemes only available to the wealthy.

Real income adjusted for inflation has been flat since 1973, while almost all of the benefits of increased productivity by the working class has gone to to the owners of capital and the Predator Class, “a professional, well-trained elite, supported by large institutions, that is adept and willing to use corrupt practices to accumulate wealth,” not to the working class.

This has become more pronounced since the Bush Great Recession and the collapse of  housing values (the only wealth most people possess). The Predator Class and the banksters of Wall Street have perfected their ability to rig the new economy to benefit their accumulation of wealth to the exclusion of the working class. Pew Research Center reports this week that America’s wealth gap between middle-income and upper-income families is widest on record:

FT_14.12.16_wealthInequalityThe wealth gap between America’s high income group and everyone else has reached record high levels since the economic recovery from the Great Recession of 2007-09, with a clear trajectory of increasing wealth for the upper-income families and no wealth growth for the middle- and lower-income families.

A new Pew Research Center analysis of wealth finds the gap between America’s upper-income and middle-income families has reached its highest level on record. In 2013, the median wealth of the nation’s upper-income families ($639,400) was nearly seven times the median wealth of middle-income families ($96,500), the widest wealth gap seen in 30 years when the Federal Reserve began collecting these data.

In addition, America’s upper-income families have a median net worth that is nearly 70 times that of the country’s lower-income families, also the widest wealth gap between these families in 30 years.

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The tabulations from the Fed’s data indicate that the upper-income families have begun to regain some of the wealth they lost during the Great Recession, while middle-income families haven’t seen any gains. The median wealth among upper-income families increased from $595,300 in 2010 to $639,400 in 2013 (all dollar amounts in 2013 dollars). The typical wealth of middle-income families was basically unchanged in 2013 — it remained at about $96,500 over the same period.

FT_14.12.16_wealthInequality4

As a result, the estimated wealth gap between upper-income and middle-income families has increased during the recovery. In 2010, the median wealth of upper-income families was 6.2 times the median wealth of middle-income families. By 2013, that wealth ratio grew to 6.6.

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The latest data reinforce the larger story of America’s middle class household wealth stagnation over the past three decades. The Great Recession destroyed a significant amount of middle-income and lower-income families’ wealth, and the economic “recovery” has yet to be felt for them. Without any palpable increase in their wealth since 2010, middle- and lower-income families’ wealth levels in 2013 are comparable to where they were in the early 1990s.

It could help explain why, by other measures, the majority of Americans are not feeling the impact of the economic recovery, despite an improvement in the unemployment rate, stock market and housing prices. In October, just one-in-five Americans rated the country’s economic conditions as “excellent” or “good,” an improvement from the 8% who said that four years ago, but far from a cheery assessment. And a new poll released this week found higher-income adults are hearing about better economic news than lower-income adults, with 15 percentage point difference between the two groups on the “good news” they’re hearing about the job situation, for example.

While most American families remain financially stuck, upper-income families have seen their median wealth double from $318,100 in 1983 to $639,400 in 2013. The typical wealth level of these families increased each decade over the past 30 years. The Great Recession did set back the median wealth of upper-income families, but over the past three years these families have recouped some of their losses.

The New York Times reported, Fueled by Recession, U.S. Wealth Gap Is Widest in Decades, Study Finds:

A report released on Wednesday by the Pew Research Center found that the wealth gap between the country’s top 20 percent of earners and the rest of America had stretched to its widest point in at least three decades.

Screenshot from 2014-12-20 13:38:55Last year, the median net worth of upper-income families reached $639,400, nearly seven times as much of those in the middle, and nearly 70 times the level of those at the bottom of the income ladder.

There has been growing attention to the issue of income inequality, particularly the plight of those earning the federal minimum wage of $7.25 an hour or close to it.

But while income and wealth are related (the more you make, the more you can save and invest), the wealth gap zeros in on a different aspect of financial well-being: how much money and other assets you have accumulated over time, including the value of your home and car plus any investments in stocks, bonds and the like.

Think of it as “a measure of the family ‘nest egg,’ ” as Pew calls it — a hoard that can sustain a household during an emergency, like the loss of a job, and in the long run can see someone through retirement.

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While those at the top have managed to recoup much of the wealth lost during the economic downturn, middle-income families have not made any gains.

“The Great Recession destroyed a significant amount of middle-income and lower-income families’ wealth, and the economic ‘recovery’ has yet to be felt for them,” the report concluded.

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The median household net worth last year for those in the middle was $96,500, only slightly above the $94,300 mark it hit in 1983 (after being adjusted for inflation). A poor household actually had a higher median net worth 30 years ago ($11,400 in 1983) than it counted last year ($9,300). Compare those results with the top fifth of income earners. In 1983, when the Fed began collecting the data, that group had a median wealth of $318,000; in 2013 it owned more than twice that.

Other economists have traced the growing wealth gap to a much narrower slice of the population. In a working paper recently released by the National Bureau of Economic Research, Emmanuel Saez and Gabriel Zucman argued, “The rise in wealth inequality is almost entirely due to the rise of the top 0.1 percent wealth share, from 7 percent in 1979 to 22 percent in 2012.” [The über-rich elitist Plutocrats for whom FAUX News shills.]

The share of wealth controlled by the bottom 90 percent of Americans, they concluded, has steadily declined since the mid-1980s.

The Nobel laureate Joseph Stiglitz is part of a growing group of economists who argue that wealth inequality hurts economic growth. The latest increases in wealth, Mr. Stiglitz said, are the result of existing assets ballooning in value — like a penthouse apartment with a river view — rather than productive investment.

“If more of the savings of the economy leads to an increase in the value of land rather than the stock of capital goods, then worker productivity won’t go up,” Mr. Stiglitz explained on the blog for the Institute for New Economic Thinking, where he serves on the board. “Wages won’t go up. So some of what is going on is that we haven’t been doing the kind of investment that we should be doing.”

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The evidence from the report, Pew said, “could help explain why, by other measures, the majority of Americans are not feeling the impact of the economic recovery, despite an improvement in the unemployment rate, stock market and housing prices.”

The conservative media entertainment complex loves nothing better than to complain about Democratic tax and social safety net policies as a “redistribution of wealth” from the deserving rich to the undeserving working class. “Evil Socialists!'”

Pro Tip: all tax policies are a redistribution of wealth. American tax policies since the 1980s have redistributed income and wealth from America’s middle class upwards to the über-rich elitist Plutocrats at the top. This has to stop. The American middle class has to be restored to ensure greater economic prosperity for all. This is the public policy challenge of our time.

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