The Wrongologist

What’s
Wrong Today:

Today, the Wrongologist turns up HIS voice: Our economy is
failing our citizens despite the wonderful stock market.

Consider that in the
past 6 months:

• The working age
  population has grown by 1.1 million; the number of employed Americans is up by 500k,
  but the number of people who have left the labor force has increased by 600k

• The number of Americans
  entering the Food Stamp Program increased 1 million, to 47.8 million

• Existing home sales have
  increased by a scintillating 2.9% on a seasonally adjusted annual basis and
  average prices have fallen by 6%

• The National Debt has
  gone up by $750 billion, while Real GDP has increased by $150 billion

• Real hourly earnings have
  not increased in the last six months

• Consumer debt has risen
  by $65 billion 
  

• Retail sales have
  increased by less than 2%

With 71% of our GDP driven by consumers,
these numbers show that we are institutionalizing our low growth economy, and
perpetuating income inequality.

As Timothy Fenwick Jr. said in
the movie, Diner:

At the close of the movie, he is
driving by a long white fence in some ritzy, horse farm section outside
Baltimore. He could feel that they lived better than he did. Awareness can be a bitch. 

Income
inequality has been around and studied for some time. In 1954, Simon Kuznets
published his classic paper on whether income inequality
affects growth. In the late 1990′s income inequality reached modern historic
highs and has stayed there.

Viewed
from below, income inequality is about how much better the rich live than do the
people below them. In the realm of politics, being rich gives the ability to
buy political power. The more power that can be reliably bought, the more money
and political power become interrelated. According to Wikipedia, a plutocracy must
not only have Pluto, (wealth), but cracy, (power).

Now, even
members of the professional class are becoming aware of income inequality as they watch the wealthy elites move up and out of sight. Professionals are realizing that their
own perceptions of income inequality has changed. No longer are they watching as the
middle class and working class fall into the abyss, but they are experiencing their own relative fall in
comparison to the truly wealthy.

Income
inequality is now everyone’s issue: first, the working class, then middle
class and the technical class, and now the professional class. They, the CEOs, bankers and attorneys, saw themselves as servants of the elites and in return, believed
that they had the chance to join the elites if they invested well, or if they created
a big score for a member of the elite.

One important
concept that explains how the world works is the Red Queen’s Race. In the book, Alice In Wonderland, the Red Queen drags Alice “as fast as they can
go,” and they go nowhere. The term Red Queen’s Race
describes a situation where exerting all one’s efforts leads to going nowhere. Our current Red Queen’s Race is the effort
by Washington to deal with high unemployment and low GDP growth.

Congress
and the Plutocrats are dragging us about, but we are getting nowhere.

Look at
almost any policy that the “Very Serious People” push. You will see that it
creates more financial paper to sell. What we get is the continued stagconomy and the honor of paying
rent to people who do not compete directly for the things we want, and the honor of not having
to pay rent to people who DO compete directly with us. We are bought off by the
homogeneity of our material world: Everyone’s phones, cars, trucks, houses, all work
the same way and work well. It is a trade that the vast majority of Americans
are willing to make, one that is not tied to an ideology or to a single
political party.

We and the
elites now live in two different worlds, they, with banks in Geneva, hotels in
Dubai and medical care that the rest of us do not see. This is hugely expensive,
since their parallel world is not tea
with the Queen, but breakfast on Mt. Olympus. 

And first
class is no longer first class; first class is a private jet. In the 1970’s you
could see Mayors and CEOs flying the Shuttle. They don’t fly the Shuttle any more.
They don’t go to the same hospitals, theirs do not accept our insurance. This is
also why the professional class hates taxation: They are not rich enough to
hide their money; their money resides where it can be found by governments. And
thus, the government must not increase taxes.

Summary

• Income
  inequality and lack of social mobility is how our political economy was
  designed

• There
  has been a sequential exclusion of all classes but the elites from increases in
  real wealth starting in the 1970’s

• The
  public has accepted this exclusion, while elites have used it to concentrate their
  political power

The
point is that teachers, doctors or architects, who once lived next door to Plutocrats,
now see that they are falling farther and farther behind. Doctors and attorneys,
who were closest to the Plutocrats, have been superseded by the MBA’s running
the insurance delivery system who, by the way, find that they are also falling
behind.

Teachers
and architects are way back in the rear view mirror.

Things
have regressed. Health care is once again regarded as a luxury. A defined
pension is a luxury. A full-time job is a luxury. A middle-class income is a
luxury. In fact, everything north of genteel poverty has become a luxury.

The
middle class and the poor have always had aspirations, but caused no trouble
for the Plutocrats. Yet, history says that they are the people who bring out the
firing squads when betrayed.

It
takes a while to sink in: It was almost 100 years from Louis XIV until Louis
XVI took his little trip through the streets of Paris to the guillotine.