Tag: Income Inequality

Another Reason Why People Think The Economy Sucks

The Daily Escape:

Sunrise, Camden Harbor, Camden, ME – January 2024 photo by Daniel F. Dishner Photography

The Economic Policy Institute (EPI) has crunched the latest Social Security Administration (SSA) wage data. It shows the average American workers haven’t made much money since the 1970s:

“The latest SSA data demonstrates how vastly unequal earnings growth has been between 1979 and 2022. Over that period, inflation-adjusted annual earnings for the top 1% and top 0.1% skyrocketed by 171.7% and 344.4%, respectively, while earnings for the bottom 90% grew just 32.9%.”

That’s 33% over 43 years, less than 1% per year. The largest share of total earnings in the US economy have accumulated at the top of the wage ladder. The EPI is describing  “labor market earnings”, the pay (including benefits) of the 80% of workers who are not managers or supervisors at work. For decades before 1980, these workers’ hourly pay largely tracked economy-wide productivity growth.

When productivity growth slowed significantly, hourly pay growth collapsed even faster, leading to a growing gap between these typical workers’ pay and overall growth. That difference in missing pay for typical workers went to workers at the top or to business owners.

The EPI study shows that if you’re in the bottom 90% of wage earners, you’ve seen annual wage growth of less than 1% per year over the past 43 years. If you’re in the “upper middle class” things were very different. Here’s a chart from EPI:

Average wages in the 95th to 99th percentile have almost doubled, from $120K to $234K (all figures are in 2022 dollars). But this leaves out the real winners, the top 1%. Average wages for them went from $289K in 1979 to $786K in 2022. But even this huge growth is eclipsed by the wages of the top .1%, which increased an astounding 344%, going from $634K to $2.82 million.

Note that the data are for average annual wages which for the bottom 90% were $40,845 in 2022. Data on average wages are all that’s available, but it’s misleading. The MEDIAN wage for all workers is around $34k. That means half the bottom 90% are making LESS than 34k. Also, median household income is around $76k; which is two people working in the same household.

The media and the rest of us really have no idea how little the average person is earning.

And this is just income from wages. People at or near the top of the pyramid own the vast majority of the equity capital in the US — the top 10% of households own 85% of the total corporate stock owned by households.

The economic debate in America since the 1880s has been between those in favor of lightly regulated heavily financialized consumer capitalism, with some very modest income redistribution, sufficient — barely — to keep the losers in that economy from starving or freezing to death.

The other side are the Republicans who think England in the Industrial Revolution, is a model for what America ought to look like today. And Chase’s CEO Jamie Dimon says we should listen to Republicans more. He’s specifically talking about NATO and immigration.

And this has been the GOP’s pitch forever:

Democrats need to address the negative impacts of US wage distribution as part of their 2024 pitch to keep the presidency, and return to controlling the House and Senate in November.

The Fields of Wrong are covered in snow, mostly due to temperatures being below freezing for the past several days. We had a tree fall into the road during the big windstorm last Sunday. Now it sits, snow-covered, on our property waiting for our next chain sawing event.

It’s Saturday, and professional football will be all over the television for the rest of the weekend. Good luck to those of you who follow one of the remaining eight teams. It’s time for our Saturday Soother, where we  try to forget about the Red Sea, the New Hampshire primaries and funding the government, and instead try to calm ourselves for a few moments. Hopefully we’ll be in better shape to launch into the roller coaster ride of next week’s horrors.

Take a few minutes and grab a chair by a window. Now, watch and listen as John Williams is persuaded to conduct the National Symphony Orchestra in a performance of his “Imperial March” from Star Wars during a gala to celebrate his 90th Birthday.

There are many seriously talented people on the stage, including track star Florence Joyner, cellist Yo-Yo Ma, Steven Spielberg, violinist Anne-Sophie Mutter, and Star Wars actor, Daisy Ridley. Williams is 91, still going strong, and an example to those who think young Biden is too old to run again. Bravo, Maestro:

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Monday Wake Up Call, MLK Jr Day – January 16, 2023

The Daily Escape:

It’s MLK day, so let’s talk about a topic that was near to his heart: economic inequality. Since 1980, economic inequality has been increasing between the top 1% and the bottom 90% of Americans. It’s become so great that today, America now faces the same level of economic inequality that existed before the Great Depression.

Here’s a chart from Elise Gould and Jori Sandra of the Economic Policy Institute (EPI) showing the percentage change in annual wages by income group for the last 40 years:

From the EPI article: (emphasis by Wrongo)

“The level of earnings inequality that existed in 1979 could have simply continued…to today. Instead, we have seen a growing concentration of earnings at the…very top of the earnings distribution, while the bottom 90% has experienced meager gains. Wages for the top 1% grew more than seven times fast as wages for the bottom 90% between 1979 and 2021. The top 1% now amasses a record share of total earnings, while the bottom 90% share of earnings has hit a historic low.”

Slow growth in real (inflation-adjusted) hourly wages for the vast majority of workers has been a defining feature of the US labor market for most of the last 40 years. Only for about 10 years after 1979 did workers see consistent positive wage growth: in the tight labor market of the late 1990s and in the five years prior to the pre-pandemic labor market peak in 2019.

While some low-wage workers have experienced high wage gains after America reopened from Covid, the truth is that most haven’t even kept pace with where they were in 1979.

Today is Martin Luther King Day in America. We mostly celebrate Dr. King’s birth rather than acknowledging what he was arguing for when he was killed. His focus at the end was on both economic justice, and voting rights. Perhaps more than any other leader in American history, King could see the different strands of political and social injustice. He was able to tie them together to form a coherent narrative, one that was capable of leveraging dissent for concrete policy change.

Those were the enduring lessons of Dr. King’s life.

There’s less than three months between the observance of King’s birthday and his death. The way each is recognized by politicians reveals the contradictions in his legacy. Most politicians extol the virtues of racial equality, while most ignore King’s criticisms of economic injustice.

From his April 30th speech in Atlanta: (emphasis by the Wrongologist)

“A true revolution of values will…look uneasily on the glaring contrast of poverty and wealth with righteous indignation. It will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa, and South America, only to take the profits out with no concern for the social betterment of the countries, and say, ‘This is not just’…this business of…injecting poisonous drugs of hate into the veins of peoples normally humane….cannot be reconciled with wisdom, justice, and love. A nation that continues year after year to spend more money on military defense
than on programs of social uplift is approaching spiritual death.”

As the EPI report above shows, over the last four decades, policies promoted by the GOP have reduced the opportunities for most workers to achieve wage growth at rate similar to the top 10%.

Time to wake up America! Develop your narrative, one that fights against economic injustice and for voting rights. Add any other issues that are pertinent to you. Take your narrative to your neighbors. Then work to get out the vote.

To help you wake up, watch “People Get Ready”, a Curtis Mayfield tune that foretold the turning tide in the battle for racial equality. It topped the R&B charts after its 1965 release by The Impressions. It’s been covered by scores of artists, including Bob Dylan, Bruce Springsteen and by Rod Stewart and the late Jeff Beck, who died last week. Early in their careers, in 1969, Beck and Stewart performed together in the Jeff Beck Group. Here’s Beck’s official music video for “People Get Ready” featuring Rod Stewart:

Jeff Beck was one of one as a guitarist. There was no one better. He had the mindset of a jazz musician playing blues rock. His guitar sound wasn’t anything like traditional jazz guitar. He didn’t cut his teeth playing the old jazz standards, but he could improvise something fresh every time. OTOH, Wrongo didn’t love Beck the recording artist.

Rod Stewart has a secret hobby; he builds model trains. He would take his trains on tour with him, requesting an extra room so he could work on them while staying in hotels. Stewart recently unveiled his 1,500 square-foot replica of post-war Chicago and New York railway systems that took him 23 years to build.

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Monday Wake Up Call – September 12, 2022

The Daily Escape:

Harvest Moon, Cape Cod National Seashore, MA – September photo by Tom Baratz

With all of the media’s coverage of the comings and goings of the British monarchy, Wrongo’s certain that you missed the reviews of a new book, “Slouching Towards Utopia” by Brad DeLong, an economist from UC Berkeley. Dylan Matthews in Vox quotes DeLong from the book:

“The 140 years from 1870 to 2010 of the long twentieth century were, I strongly believe, the most consequential years of all humanity’s centuries.”

Matthews thinks it’s a bold claim. After all, homo sapiens has been around for at least 300,000 years; DeLong’s “long twentieth century” represents 0.05% of that history.

But DeLong says an incredible thing happened during that sliver of time that had eluded our species for the other 99.95% of our history: Before 1870, technological progress was glacial, but after 1870 it accelerated dramatically. More from Vox:

“DeLong reports that in 1870, an average unskilled male worker living in London could afford 5,000 calories for himself and his family on his daily wages. That was more than the 3,000 calories he could’ve afforded in 1600, a 66% increase….But by 2010, the same worker could afford 2.4 million calories a day, a nearly five hundred fold increase.”

DeLong is speaking of the nations of the rich north, not about all nations. He’s saying that food surplus was the key driver of progress. What’s implied is that the greatest difference between the wealthy and everyone else was that the poor were living on the verge of starvation. Those basic economic facts shifted once having enough to eat ceased being society’s most critical status distinction.

Another interesting statistic from the book:

“…the average number of years of a woman’s life spent either pregnant or breastfeeding…has gone down dramatically, from 20 years of a typical woman’s life in 1870 to four years today.”

Most historians present modern history as a long 19th century (from the French revolution in 1789) to the crisis of 1914. Which is then followed by a shorter 20th century ending with the fall of communism. DeLong, by contrast, argues that the period from 1870 to 2010 is best seen as a coherent whole: the first era, he argues, in which historical developments were overwhelmingly driven by economics.

From the Economist:

“…despite the Industrial Revolution…for millennia, technological improvements never yielded enough new production to outrun population growth. Incomes had stuck close to subsistence levels. Yet from around 1870, growth found a new gear, and incomes in leading economies rose to unprecedented levels, then kept climbing.”

DeLong says that economic policy in this period was a duel between the ideas of Friedrich von Hayek, who extolled the power of the free market, and Karl Polanyi, who warned that the market should serve man, not man serving the market.

Before WWI, markets generated rapid growth along with soaring inequality. People pushed back, demanding greater political rights, which they used to pursue regulation of the economy and improved social insurance.

After WWII, a mix of a market economy and a generous safety-net made for a happy marriage of Hayek and Polanyi, improved by Keynes, who said that governments should act to prevent economic recessions. This led to a three-decade post-war period of growth unmatched before or since. DeLong calls them the Thirty Glorious Years; from 1945 to 1975, as the US and Europe recovered from World War II.

But when growth sagged and inflation rose in the 1970s, voters supported politicians promising market-friendly, or “neoliberal”, economic growth reforms, like lower taxes and reduced regulation. But those reforms didn’t keep economic growth high. And they also led to even worse inequality. Still, the US and other rich countries pressed on with them, right up to the 2008 global financial crisis, which marks the end of DeLong’s 20th century.

According to a paper by Carter C. Price and Kathryn Edwards of the RAND Corporation, had the more equitable income distribution that America experienced in those thirty glorious years stayed constant, the aggregate annual income of Americans earning below the 90th percentile would have been $2.5 trillion higher in just the year 2018. That’s an amount equal to nearly 12% of GDP.

Price and Edwards say that the cumulative inequality cost for our 40-year experiment in government-supported income inequality added up to $47 trillion from 1975 through 2018. And probably equaled $50 trillion by 2020.

That’s $50 trillion that would have made the vast majority of Americans far more healthy, resilient, and financially secure.

So, the big unanswered question is: Can we again return to a period where we see both economic growth and equitable growth? It’s highly doubtful. As DeLong says in Time:

“Our current situation: in the rich countries there is enough by any reasonable standard, and yet we are all unhappy, all earnestly seeking to discover who the enemies are who have somehow stolen our rich birthright and fed us unappetizing lentil stew instead.”

The problem here is that our entire culture, economy and even our civilization is predicated around growth and people haven’t known anything else. Hope you’ve enjoyed the ride.

Time to wake up America! We need to reimagine capitalism, our taxation policies and our welfare scheme if we are to survive. Expect a rough adjustment.  To help you wake up, listen, and watch Bruce Springsteen perform “Darlington County” live in London in 2013:

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Saturday Soother – April 23, 2022

The Daily Escape:

North Landing River, near Virginia Beach, VA – April 2022 photo by Erik Moore

Our media ecosystem is overwhelming us. Some of the information is accurate, some is bogus, and much is intentionally misleading. And that’s a deliberate strategy. While it didn’t originate with Steve Bannon, he perfected it with his thought that:

“…the Democrats don’t matter….The real opposition is the media. And the way to deal with them is to flood the zone with shit.”

This is why the ongoing cultural war works so well for Republicans. There’s always some petty war going on between the Parties that’s stoked by the media. And it’s almost always about cultural issues since Republicans really don’t have a policy platform, and don’t want to go against large corporate America. When you go against corporations, you lose the money needed to get elected.

But we should see the big corporations as our common enemy. Time Magazine has an article about how overtime pay has disappeared:

“If it feels like you’re working longer hours for less money than your parents or grandparents did, it’s because you probably are. Adjusted for inflation, average hourly wages have actually fallen since the early 1970s, while average hours worked have steadily climbed. American workers are increasingly underpaid, overworked, and overwhelmed.”

One reason is the loss of overtime pay:

“If you’re under the age of 45, you may have no idea that overtime pay is even a thing. But…middle-class workers used to get a lot of it….That means that [for] every hour you work over 40 hours a week you work for free, contributing…a giant pool of free labor that modern employers have come to expect and exploit. Profits are up, real wages are down, and income inequality has soared to its highest level since the Gilded Age.”

Overtime pay was one of the great New Deal reforms. It was a core provision of the Fair Labor Standards Act (FLSA). The FLSA set the minimum wage at one-half the median wage and the overtime threshold at three times the minimum—an amount equal to 1.5 times the median wage.

But both the minimum wage and the overtime rules began to change in 1975, and rising income inequality since 1975 is responsible for a $50 trillion upward redistribution of wealth and income from the bottom 90% households to those in the top 1%. Here’s a chart showing the impact of losing overtime. Productivity goes up, but is completely decoupled from income:

Source: chartr

The Economic Policy Institute has a tool called “Company Wage Tracker” that allows you to select any big corporation and see what percentage of their employees make below a certain wage. For example, it shows that 51% of Walmart employees earn below $15/hr.

The NYT wrote about Mary Gundel, a manager at a Dollar General store in Tampa, FL who was fired for speaking out about the chain’s policies regarding overtime and short-staffing:

“The store used to have about 198 hours a week to allocate to a staff of about seven people….But by the end of last month, she had only about 130 hours to allocate….With not as many hours to give to her staff, Ms. Gundel often had to operate the store on her own for long stretches, typically working six days and up to 60 hours a week with no overtime pay.”

Ms. Gundel was working 60 hours a week and making $51,000 a year. That means she’s making only a little more than the minimum wage. Dollar General is one of the most profitable retail chains in the country.

Prices are going up everywhere across America, and corporations are making proportionately more income. This is what the Democrats should be focusing on, standing up for workers, doing what is right as opposed to groping for answers to the Republican’s culture war issues.

There’s plenty that’s wrong in America. But what’s wrong doesn’t see the light of day alongside all of the pissing contests about Critical Race Theory, or predator grooming or LGBTQ issues. These are ginned-up to make sure you won’t pay attention to what’s really going on.

Something seems to be brewing. We’re seeing halting attempts at unionization at Starbucks and Amazon. Those employees want a better life; they want to have a seat at the table about the future of the company.

We need to remember that without the “essential workers” the country grinds to a halt. We need to support those who try to organize. We need to wrest some economic power away from politicians and big businesses. And finally, some faceless people who are sick of being wronged are trying to do just that.

Enough for another week. It’s time to let go of the news. It’s time for our Saturday Soother. On the Fields of Wrong we’re preparing our vegetable garden, although it will be a few weeks before it’s warm enough for the plants to survive. We had an overnight temperature of 32° earlier this week.

Now, grab a seat by a large window and listen to violin soloist Soojin Han play Chopin’s “Nocturne No.20 in C# minor” in August 2019. She’s playing on a 1666 Stradivarius:

It sounds beautiful.

Chopin composed the piece in 1830, but it was published in 1875, 26 years after his death. It was featured in the movie “The Pianist” in 2002.

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Nomadland Is Best Picture

The Daily Escape:

Desert Lilies, Desert Lily Preserve, Desert Center, CA – photo by Bob Wick for BLM

The film “Nomadland” won best film, best director, and best actress at this year’s Oscars. Wrongo and Ms. Right kept our tradition, and didn’t watch the Oscars, but we have seen the film twice.

If you haven’t seen it , the film is worth your time. It offers a sympathetic view of what’s happening to the American working class in what’s becoming a de-industrialized America. It shows the hollowing out of middle America, and the growing regional inequality that stems from the US economy being concentrated in fewer and fewer corporate hands, and often, in fewer places.

Our changing economy has left wide swaths of rural America in decay. The movie’s story centers on Fern, an older widow. She worked in the US Gypsum plant in Empire, Nevada until the Great Recession reduced demand for drywall, and thus the mine and the plant were closed.

Once the factory went, so did the town. It became so de-populated that it even lost its zip code. Now, Fern, (played by Frances McDormand), sleeps in an old, converted van and works a seasonal job with one of the few employers left in the area: An Amazon shipping center.

But the film isn’t about Amazon. It’s about coping with downward mobility. Fern travels the southwest mountains, working a variety of gig jobs: In addition to Amazon, she’s kitchen help in a Wall Drug. She works at a beet processing plant throwing cases of beets into a hopper. She helps run a small RV park.

The film avoids clichĂŠs about the formerly middle-class, mostly White Americans it depicts. None of them blame Black people or immigrants or the left-wing media for their problems. They simply no longer play by the norms of an economy that ruined their lives.

Ironically, these characters don’t follow the usual White working-class stereotypes. Unlike Trump voters interviewed by the media in diners across America, they don’t turn to racism or blind acceptance of patriotism because of their economic uncertainty. Fern and the rest of the characters in “Nomadland” demonstrate dignity, decency, and stoicism in the face of the structural forces grinding them down. They teach each other how to survive while living off grid. They help each other when the chips are down.

Eric Cortellessa at Washington Monthly offers great insight:

“Unlike JD Vance’s flawed Hillbilly Elegy…this film does not blame the victims for their own downward mobility. It doesn’t point to bad habits (drugs and laziness), bad morals (racism and Trumpism), or bad attitudes (toxic masculinity and perverted Christianity). Instead, it shows humble men and women who don’t scapegoat others and who manage to preserve their dignity and, to a large extent, their own personal freedom in the face of systemic forces that are exploiting them.”

Let’s point out that since 1985, the average Wall Street bonus has increased 1,217%, from $13,970 to $184,000 in 2020. If the minimum wage had increased at that rate, it would be $44.12, instead of $7.25. And $7.25 equates to $15,080/year, nowhere near enough to make a payment on the US median home that’s priced at $301,000. It’s not even enough for a tiny dump of a house, like the one Fern left in Empire NV, which probably cost one-third of the median price.

Jessica Bruder, the author of “Nomadland: Surviving America in the Twenty-First Century,” that the movie is based on, wrote over the weekend about her exploration of this growing subculture. Bruder says a scene depicting Fern spending a night in her van when she hears “the knock” is chillingly accurate:

“No overnight parking! You can’t sleep here.”

The knock, Bruder explains, “is a visceral, even existential, threat,” one that nomads try to evade by hiding in plain sight: “Make yourself invisible. Internalize the idea that you’re unwelcome.”

Some places forbid overnight parking. Others outlaw living in a vehicle. Penalties can pile up fast. Unpaid, they can lead to the cruelest punishment of all: Your home gets towed. Failing to pay the impoundment fee means losing your home. Bruder says that people ask her what they can do for the nomads:

“Letting vehicle dwellers exist in peace would be a fine start. Individuals have the power to help. When you see someone living in a car, van, or RV, don’t call the police.”

Wrongo was struck by how the nomads helped each other. In our little New England town, people do the same, they try to help. The bystanders at George Floyd’s murder tried to help prevent Floyd’s death.

The only people who don’t seem to care about helping one another are corporate executives and Republican politicians. How did they get like that?

See the film.

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Monday Wake Up Call – March 2, 2020

The Daily Escape:

St. Augustine, FL – photo by Wrongo

Hot takes:

First to politics: Joe Biden rolled to a big win in South Carolina, and billionaire Tom Steyer and former mayor Pete Buttigieg both folded their tents. Some in the media say that Biden is once again the front runner, but Sanders’s win in Nevada remains significant, and he remains on track to pick up a lot of delegates in California and Texas.

The real news from South Carolina is that Biden has become the Not-Sanders candidate. For Super Tuesday, Bloomberg essentially replaces Steyer as the billionaire in the race. Super Tuesday results are less than 48 hours away, and after that, we’ll have a real idea of who really remains a viable candidate.

Second, peace in Afghanistan: After 18 years of war, we signed an agreement with the Taliban. The deal does not end the civil war, but it has placed the outcome of the conflict in the hands of the Afghan people. Heather Cox Richardson quotes Laurel Miller, the former deputy and then acting Special Representative for Afghanistan and Pakistan from 2013 to 2017 for the State Department: (emphasis by Wrongo)

 “There’s nothing new in the Joint Declaration signed in Kabul today. It reaffirms existing commitments and it re-states some of US-Taliban agreement. Its purpose is evidently political symbolism.”

She explained: It includes the Afghan government and its opposition in future discussions. It draws down US troops to 8600 people—the number who were there when Trump took office, and promises “all” will be gone within 14 months. The 8600 drawdown has long been planned. In exchange, the Taliban will “not allow any of its members, other individuals or groups, including al-Qa’ida, to use the soil of Afghanistan to threaten the security of the United States and its allies.”

Miller’s conclusion:

“The Taliban got a lot. It got its main goal—a clear timeline for US withdrawal—and fast removal of sanctions and prisoner releases. The US got the power to decide whether “vaguely-stated conditions are met, so that in reality can withdraw when it chooses—will be political not military decision.” The Afghan government didn’t get much, but “this deal wasn’t really about the Afghan government.”

Trump, America’s Man of Peace. This looks a lot like what he did in North Korea, a PR moment that resembles a deal, but turns out not to be much of a deal.

Finally, the WaPo features a new report published by the Manhattan Institute, a conservative think tank, that clearly demonstrates the disconnect between the “great” economy described by economists, and the economy experienced by regular people. This chart shows the problem:

 

From the article (emphasis by Wrongo)

“In 1985, the typical male worker could cover a family of four’s major expenditures (housing, health care, transportation, education) on 30 weeks of salary….By 2018 it took 53 weeks. Which is a problem, there being 52 weeks in a year.”

Lead study author Oren Cass (formerly Mitt Romney’s domestic policy director) calls this calculation the Cost-of-Thriving Index. It measures the median male annual salary against four major household expenditures:

  • Housing: the annual rent for a three-bedroom house in the 40th percentile of the local housing market
  • Health care: the annual premium on a typical family health insurance policy
  • Transportation: the average cost of owning and operating a car driven 15,000 miles per year
  • Education: the average cost of tuition, fees, and room and board at a four-year public college

In 1985, the typical male breadwinner could cover those costs, and still have 22 weeks of pay left for other family needs, such as food, clothing, entertainment and savings. Today, the typical salary doesn’t even cover the four basics.

They also looked at female earners. The typical woman needed to work 45 weeks to cover the four big annual expenses in 1985. Today she needs 66 weeks. The most astonishing conclusion is that it was easier for a female breadwinner to provide for her family in 1985 than it is for a lone male earner today.

Remember that the study comes from a conservative-leaning institute. Here’s Cass:

“You can have a rising GDP….but if it’s in the context of collapsing families and people no longer getting married and declining fertility rates and so on and so forth, you haven’t necessarily enhanced well-being.”

Wake up America! The GOP has undone 50 years of economic gains that produced a robust middle class and vastly more economic and social justice than the country had ever known before, or since.

They have chosen candidates whose real agenda was to assist the corporatocracy in fleecing the very people who voted for them. Their candidates ran on issues like the Second Amendment, abortion, gay marriage and immigration. And then, the GOP shifted the tax burden onto the middle class. They deregulated industry and socialized corporate losses, eliminating any downside risk for banks.

We can begin undoing these things by electing Democratic majorities in the  House and Senate in November.

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Is Ending Income Inequality a “Radical” policy?

The Daily Escape:

Mount Robson & Berg Glacier, BC, Canada – June 2019 photo by DrTand the women

New York Magazine’s Eric Levitz writes: (brackets and emphasis by Wrongo)

“…the Federal Reserve just released…its new Distributive Financial Accounts data series [that] offers a granular picture of how American capitalism has been distributing the gains of economic growth over the past three decades. Matt Bruenig of the People’s Policy Project took the Fed’s data and calculated how much the respective net worth of America’s top one percent and its bottom 50 percent has changed since 1989.

He found that America’s super-rich have grown about $21 trillion richer since Taylor Swift was born, while those in the bottom half of the wealth distribution have grown $900 billion poorer.”

This is what a few of the Democratic presidential candidates have been talking about, some loudly and some quietly, for the past few months. Levitz asks the right question:

“So, is an economic system that distributes its benefits in this manner consistent with Americans’ common-sense views of economic justice? If not, would incremental changes be sufficient to bring it into alignment with the median American’s values? Or would more sweeping measures be required?”

In a sense, Democrats are testing whether advocating for changing Capitalism is an argument that voters will accept in 2020. More from Levitz:

 “Some Democratic presidential candidates say that America’s economic system is badly broken and in need of sweeping, structural change. Others say that the existing order is fundamentally sound, even if it could use a few modest renovations. The former are widely portrayed as ideologues or extremists, the latter as moderates.”

Essentially, the question is “who’s the extremist?” in the Democratic Party. This conflation of “extreme” or “radical” with “bad” is what the GOP and the Main Stream Media do every day, and it weakens our policy-making.

We use “extremist” or “radical” as a way of signaling that a policy position is too awful to consider.

If you simply say that something is bad, then you are forced to defend your position. But, when you describe it as “extreme“, you’ve called it bad, and people will HEAR that you think it’s much too big a change to even discuss.

Respectable talking heads like Judy Woodruff will ask: “Will Americans really go for THAT?”

This is bad faith messaging about important questions. This is so ingrained into people who talk about politics that it largely goes unquestioned. We shouldn’t care about pundits and broadcasters saying how extreme or not extreme something is. We should care about the merits of the argument.

Republicans have been calling Democrats “extreme” “radical” and “Socialist” for decades. They’re using bad-faith tactics; de-legitimizing an idea or a candidate without having to debate on the merits.

Bernie Sanders and Elizabeth Warren are offering “extreme” policies only if our baseline is what the average Congress critter’s economic agenda looks like. It’s not clear why that’s an appropriate yardstick.

Did we think calls for sweeping change in Egypt were extremism when students took to the streets demanding basic civil rights? Do we think the young people demonstrating today in Sudan are radicals?  Our assessment (and support) of these dissenters’ ideologies has more to do with how far their values are from those of their corrupt political and military leaders.

And also by how close they seem to be to our core values.

Whether it is extreme or moderate to propose sweeping changes to American capitalism should depend on how close our existing system is to how a just economic system operates. And these latest data show that the one percent have gotten $21 trillion richer since 1989, while the bottom 50% have gotten $900 million poorer.

This is what economic class warfare looks like. Saying that isn’t hyperbole. The earnings and wealth of a majority of our citizens has been systematically declining with the complicity and power of our government, in order to benefit the rich.

It shows how bad things are when the “radical” in American politics is anybody who argues that the American economy isn’t working for a huge percentage of the population.

Judy Woodruff may think that the economy is great, but incrementalism has failed most of us for the past 40 years.

Given all this, any politician who insists that American capitalism is “already great” is clearly someone who is indifferent to economic inequality.

We need to adopt redistributive economic policies. That may sound like an extreme position, but the alternative of continuing our growing wealth inequality, should really be thought of as far more radical.

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Today’s Wages Have the Same Purchasing Power as in 1978

(Email publishing of The Wrongologist should be restored as Wrongo is using a different vendor, WordPress. Apologies to those who read in email.)

The Daily Escape:

Cliff Palace, Mesa Verde National Park, Colorado, as it might have looked at night in the 12th Century lit by camp fires. Mesa Verde is unique since it is the only NP that preserves the works of man – photo by Rick Dunnahoo

This is going to be a historic year, even when compared to 2018. And it’s starting out with a bang. The government is shut down, half the cabinet is empty, the 2020 presidential race has officially started, and the Democrats are taken over the House.

And that’s without whatever Mueller shoe will drop sometime in the year, or whatever Twitter atrocities Trump decides to commit. In other words, we’re going to have our hands full.

But today, let’s talk about how bad the economy is below the surface of the headline numbers. Debt is rising, and rising debt is supposed to be matched by rising income. It shouldn’t be a surprise that more income is required in order to service more debt. But so far, in the 21st century, for the bottom 90%, debt is growing while income is stagnating.

Pew’s Fact Tank has an analysis that speaks to this problem. Average hourly earnings for non-management private-sector workers in July were $22.65, 2.7% above the average wage from a year earlier. But in the years just before the 2007-08 financial collapse, average hourly earnings often increased by around 4% year-over-year.

And during the high-inflation years of the 1970s and early 1980s, average wages commonly jumped 7%, 8% or even 9% year-over-year.

However, after adjusting for inflation, today’s average hourly wage has about the same purchasing power it did in 1978. In fact, in real terms average hourly earnings peaked more than 45 years ago: The $4.03-an-hour rate recorded in January 1973 had the same purchasing power that $23.68 would today.

Here is Pew’s chart demonstrating the problem:

Because there’s been little growth in wages, the growth in the standard of living for those below the 90th percentile has been largely fueled by additional consumer debt. The WSJ reports that consumer debt, including credit cards, auto and student loans and personal loans, is on pace to top $4 trillion in 2019, the highest in history. Debt allows you to furnish your home, pay for education, and get a car without having to save for them. In that way, it supports the growing economy.

But Pew also shows how most of the income gains went to those at the top of the food chain:

 

 

Among people in the top 10th of the distribution, real wages have risen a cumulative 15.7%, to $2,112 a week – nearly five times the usual weekly earnings of the bottom tenth ($426).

This lack of symmetrical growth in debt and income actually matters. At some point household borrowers will default in greater numbers than they do today. When those losses occur, the monetary system won’t be able to bail out debtors (or banks) this time around as handily as we did in 2008.

 

Sluggish and uneven wage growth is a key factor behind widening income inequality in the US. Another Pew Research Center report found that in 2016, Americans in the top tenth of the income distribution earned 8.7 times as much as Americans in the bottom tenth ($109,578 versus $12,523).

Compare that to 1970, when the top 10th earned 6.9 times as much as the bottom 10th ($63,512 versus $9,212).

There is no simple solution to get American workers back on the right track. At a minimum, it will take a political groundswell aimed at overturning the way the tax code favors corporations. Along the way we will have to displace the political power of our corporate oligarchs.

Government must be made to serve the public interest, not Mr. Market.

Democracy is the sole mechanism enabling our citizens to have political and economic agency. But, democracy will cease to matter in a corporate-controlled, globalized system of government influence.

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Who The Dems Should Nominate for President

(There will be no Thursday column this week. Wrongo is in NYC.)

The Daily Escape:

The Passion Facade, La Familia Sagrada by Gaudi, Barcelona, Spain

Wrongo has been highlighting several people who have big ideas that could move our country toward reform of capitalism. One issue that impacts that reform is health insurance, and many Congressional candidates who won in the 2018 mid-terms ran either on preserving the ACA, or on implementing Medicare for All.

Talk has started on the 2020 presidential election, and the almost 30 potential candidates that seem set to try for the White House. Now that a Texas judge has declared the ACA unconstitutional, and should that decision be upheld, health insurance should be a big issue in 2020.

For Democrats, politics is a game of good policies badly presented. For Republicans, politics is a game of bad policies skillfully presented. With that in mind, let’s turn to Sen. Chuck Schumer (D-NY), who on Sunday with Chuck Todd, refused to endorse Medicare for All. Instead, he said: “there are lots of different routes” to a universal healthcare system.

Though Schumer says he will support a “healthcare plan that can pass,” there is no evidence that any of the alternatives to Medicare for All have a better chance of passing than Sanders’ single-payer plan that was introduced last year. In the House, a majority of the Democratic caucus supports single-payer.

This is what we have to look forward to in 2019 and 2020. The Dems old guard will try and triangulate on policy in an attempt to corral a few Republican Senators. Nancy Pelosi is not a fan of Medicare for All.

A few of the old guard are running for president, including Bernie and Joe Biden. On the progressive side of the Democratic Party, there is a big age gap to a few relatively young politicians who are clearly progressive-purists.

Benjamin Studebaker has a provocative column, “Why We Cannot Nominate a Young Person in 2020”. His argument is that Democrats who are between 40 and 60 may have the right level of experience and political gravitas, but they all grew up in the Party of the Clintons:

…the overwhelming majority of Democratic politicians in their 40s and 50s are centrists who came of age politically in the ‘90s and ‘00s. These are people who got into Democratic Party politics because they grew up admiring the Clintons….They have spent their political lives working with Gore and Kerry and Obama and that’s the discourse they swim in. Corey Booker is 49. Kamala Harris is 54. Beto O’Rourke is 46. Kirsten Gillibrand is 52. Amy Klobuchar is 58. This group has…been tutored in triangulation from the time they were political toddlers.

Studebaker says that we can’t count on any of these candidates if we want Medicare for All, or a host of other policy improvements. He thinks we need someone who was too left-wing for the Democratic Party in the 1970s, and there is only one such person left alive: Bernie Sanders.

Wrongo isn’t sure. The NYT’s David Leonhardt, in his “Secret to Winning” column, says that the Democrats need a candidate who can, and will run as an economic populist:

They need a candidate who will organize the 2020 campaign around fighting for the little guy and gal….It would be a campaign about Republican politicians and corporate lobbyists who are rigging the game, a campaign that promised good jobs, rising wages, decent health care, affordable education and an end to Trumpian corruption.

Leonhardt thinks that several of those younger Democrats can do the job. He says that the formula is: Return to an updated New Deal. Put the public interest first, not the interests of the over-privileged elites. Force corporations and the rich to pay increased taxes.

Norm Ornstein notes that by 2040, 70% of Americans will live in 15 states, which means that the other 30% of the country will choose 70 of our 100 senators. And the 30% that are in charge of the Senate will be older, whiter, more rural, and more male than the 70%.

Whomever the Dems nominate must have a plan to successfully strip away a few red states. Economic populism can help do that, since it helps the working classes and unemployed. Higher taxes on corporations and the wealthy, a higher minimum wage, and universal health care coverage are the cornerstones of the winning strategy.

The nominee must be someone who is authentic, not someone who is simply an ideologically pure lefty.

Being authentic means someone who doesn’t poll test every idea, and doesn’t base their messaging on what the editorial board of the NYT or WaPo thinks are the right ideas.

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