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Who Are You With?

Posted by: Edward Phelps
Date Posted: October 24, 2009

As our once great nation struggles to find its place in the post 9/11 world, we find ourselves immersed in one big mell-of-a-hess (an emphasis term for "hell of a mess" for anyone wondering). Our economy has tanked. The great capitalist experiment has been an overwhelming success, if you're one of the wealthiest 10% of Americans. Healthcare is better than ever. And our private insurance companies have helped costs rise so that only those of us with better than ever pocketbooks can afford it. Our public school system is so bad (how bad is it?) working at McDonald's and Wal-Mart are touted as "careers" to accomodate our poorly prepared workforce and millions of the newly unemployed, and despite lacking superior health and retirement benefits.

So we've done what we do so well, listen to media and external voices and grant them the authority to define the debate for us as we take sides. Do you even wonder why literally everyone you see stating an opinion or getting published in any mainstream media publication or venue is a millionaire. Does it not concern you that they are debating and ultimately deciding the issues and policies that will affect you. Is that in any way democratic? So whether you are liberal or conservative; democrat or republican; jewish; christian or muslim -- you're missing the point when you use any of these identifications and affiliations as part of your political positions.

Here's the deal America, you're either one of the wealthiest 10% of Americans or you're not! Class is the preeminent affiliation that matters in politics and public policy. We're in the financial mess we're in is due to the gross unbalance in the way our economic policies have worked. Throughout the Clinton and Bush years we saw an economy that was deemed to be "growing" and "strong" grossly underserve everyone except the wealthiest 10%. In fact the wealthiest 1% received by far the biggest benefits during these years while the poor (yeah, the unmentioned and often forgotten poor)  and middle class were decimated.

But look, here are some facts about the effects of our policies over the past few decades:

  • In 1998, the top 5 percent had 59 percent of all wealth. Or to put it another way, the top 5 percent had more wealth than the remaining 95 percent of the population, collectively. The top 20 percent had 83 percent of all wealth.
  • The top 10 percent in the U.S. have 70 per cent of the country’s wealth, compared with 61 percent in France, 56 percent in the UK, 44 percent in Germany and 39 percent in Japan.
  • The richest 10 percent of families in the U.S. own about 85 percent of all outstanding stocks. They own about 85 percent of all financial securities and 90 percent of all business assets (anything all businesses have that are valuable). These financial assets and business equity are even more concentrated than total wealth.
  • The median household has wealth of about $62,000. $62,000 is not insignificant by itself, but when you consider that the top 1 percent of households’ average wealth is $12.5 million, you see the huge gap in distribution.
  • Policies in the U.S., including deregulation and tax cuts have caused inequality to rise sharply over the last 25 or 30 years. What is remarkable is that until the early 1970s, the U.S. actually had lower wealth inequality than Great Britain, and even lower than Sweden. But things have really turned around over the last 25 or 30 years. In fact, a lot of countries have actually closed their wealth inequality gap over that time.
  • If you have a society with large concentrations of poor families, average school achievement is usually a lot lower than where you have a much more homogenous middle class population, as you find in most Western European countries. So schooling suffers in this country, and, as a result, you get a labor force that is less well educated on average than in a country like the Netherlands, Germany or even France. So the high level of inequality results in less human capital being developed in this country, which ultimately affects economic performance.
  • We have much lower taxes than almost every Western European country. And we have a less progressive tax system than almost every Western European country. As a result, the rich in the U.S. manage to retain a much higher share of their income than they do in other countries, and this enables them to accumulate a much higher amount of wealth than the rich in other countries.
  • Our tax policies, especially recent tax cut laws, have stimulated the rise of wealth inequality in the U.S.
  • We have a much lower level of income support for poor families than do Western European countries or Canada. Social policy in Europe, Canada and Japan does a lot more to reduce economic disparities created by the marketplace than we do in this country. And, we have much higher poverty rates than do other advanced industrialized countries.

These policies have been promoted by both the left and the right, and they benefit business interests at the expense of broader public interests and those of our communities. The influence of business and minority lobbies on our government is not new. But the relationship is way out of balance and now represents a base of ruling power that undermines any emergence of democracy in favor of policies that protect free pursuit of profits. Today senior management and leading shareholders do very well under these policies. The question you must ask is how well are you doing under them.

If you are not among the top 10% your are with everyone else. Yes, everyone else regardless of race, religion or political affiliation. You work for the Ten Percenters. You buy things from the Ten Percenters. You pay the Ten Percenters for your home, your car, your food, your utilities, your banking fees, your electronics, your vacations, your gas, etc. So if you're not one of the Ten Percenters and you oppose health care reform for example, you are working against your family having real choice and affordable access to a doctor. If you are not among the top 10% and you support free trade you helped ship your job overseas.

These are harsh facts that are well documented. And they cut through all the talk no matter if it's coming from the left, right or any other affiliation. It is important that we know who we stand with when we take action or support a position. The Ten Percenters have the rest of us scurrying to be like them. But they have only a few slots open. You are better served supporting reforms that create more openings for you. The good news? We have a President and Administration that shares your view that government should be of the people, by the people, and for the people.

Big businesses are seeing record profits. Yet in recent years, the U.S. government has given corporations $125 billion a year in economic incentives. I think that our money could be put to better use on a number of things that benefit working and poor Americans.  I suggest they can take care of their own interests.  

Who are you with america?

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