Category: Abandonment of Middle Class

Reform of Capitalism Isn’t Socialism

The Daily Escape:

Graffiti in Greece by Lotek

The NYT reported that Rep. Tom Emmer (R-MN), chairman of the National Republican Congressional Committee, said: (brackets by Wrongo)

“Socialism is the greatest vulnerability by far that the House Democrats have…He added that he had also instructed his team to spotlight “all the [Dems] extreme wild ideas on a daily basis, on an hourly basis if it’s available.”

As we said yesterday, most Democrats are not socialists. They are for reform of capitalism. The problem is that our economic system is broken; it does not meet the needs of the vast majority of our people.

Capitalism has metastasized into a financialized cancer. Its growth-at-any-cost, profit-over-purpose ideology has wreaked havoc with the lives of millions of people. From Forbes:

“One example: For more than 400 years, 12.5 million Africans were kidnapped, enslaved and sold to build wealth and power largely for white men in the US, Europe and South America. The first enslaved Africans were shipped directly to the Americas in 1518, one year after Martin Luther nailed his 95 Theses to the door of Castle Church. The centrality and largely unconstrained profit motive in capitalism has been with us since the beginning.”

Today, corporations track our every movement. Algorithms manipulate us to buy things, or to vote certain ways. We’ve put outsized power into the hands of corporations. We have to ask: What do we need from capitalism in the 21st Century? Is it more of the same, or something different?

Capitalist Reform is about re-imagining the purpose of business and redefining its success. The doctrine of shareholder primacy must be the first to go. It needs to be recognized as a form of oppression of human nature since it doesn’t value our humanity.

According to a 2019 Politico/Morning Consult survey, 76% of registered voters want the wealthiest Americans to pay more. Politico also notes that a recent poll from Fox News shows that 70% of Americans supporting increased taxes for those earning more than $10 million, and 54% of Republicans also supported it. People are contemplating not just piecemeal tax increases, but a wholesale reversal of the Reagan-era shift in tax policy. The Economist reported that in 2016, more than half of young Americans no longer support capitalism.

There is an urgent need to push back against the widening economic inequality in the US. Taxing the rich is an easy answer, because so few of us are rich.

But, step one should be increasing corporate income taxes. Corporations’ share of total taxes paid has decreased to about 9% of total US tax revenue in 2017, from about 33% in 1952. How many stories like Amazon’s failure to pay anything in taxes on $11 billion in profits should it take to begin the task of closing corporate tax loopholes and increasing corporate income taxes?

Step two is to break up corporate concentrations. Wrongo addressed this here. The primary issue with corporate concentration is that it drives up prices. The fewer sellers, the fewer choices consumers have for goods and services, and thus, there is little pressure for big competitors to hold prices down.

Step three is to help workers. The share of profits that goes to workers must increase. This shouldn’t punish capitalists. Higher wages for workers means more business for American companies.

We were founded on republicanism as a public virtue: The Constitution implies that a citizen is duty-bound to abandon self-interest when it conflicted with the General Welfare. Capitalism has usurped republicanism by insisting that abrogation of self-interest violates the doctrine of “survival of the fittest,” and it’s also an attack on individual liberty.

We need to revive the understanding of public virtue. So, some form of “mixed economy” is in our future. It’s obvious to all except right wing ideologues that socialized medical insurance is in our future. But it is doubtful that a majority want to socialize production and distribution of America’s products and companies.

The task for Congress and the next president is to figure out what activities and/or economic sectors are best guided by tax and economic policy, and which are best left to “market forces”.

We’re a country where vast wealth is rewarded with tax cuts, loopholes, and endless ways to ensure that corporate dollars earn even more dollars. While average people are bankrupted because of a health crisis, and we value semi-skilled labor at $7.25 an hour.

Today’s capitalism is anti-democratic. General welfare and public virtue derive from a desire to improve the human condition. That needs to be the goal of political action to reform capitalism, and it needs to be hammered home again and again.

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Monday Wake Up Call – Green New Deal Edition

The Daily Escape:

Double Rainbow, Kauai, Hawaii – 2018 photo by Charlene Renslow

There has been plenty of talk about the introduction of a Green New Deal (GND) as an answer for what ails America. Here is the text of HR 109. Everyone should take a few minutes and read it.

The power of the GND is that it addresses the power imbalance between established political and business interests in the US and the rest of us. The GND injects compassion into our democracy. Justice for workers is compassion. Care of the environment for future generations is compassion. A more equitable distribution of wealth is compassion.

From Ed Walker:

“The Green New Deal is an overarching statement of political goals for the Democratic Party, something the party has not had for decades. It lays out a vision of a future inspired by the best the party has to offer, Franklin Roosevelt’s Four Freedoms, which he laid out in January 1941 as the US stared at the unfolding crisis in Europe…..It is a combination of Roosevelt’s unfinished goals and the massive work done by liberals to expand the reach of the Constitution to previously disfavored groups. It offers hope and possibility as we confront the crisis of environmental disaster.”

Most people think the GND is about fixing the environment. That’s true, but there is a larger theme running through it, the reform of capitalism.

Capitalism is at the core of our country’s growth and place in the world. It has created wealth for all. In accordance with its tenets, a few of us are fabulously rich, while the majority of us are not. It also imposes economic costs on the 99% while sucking up most benefits for those at the very top. As Ed Walker says:

“You don’t see the rich living next door to petroleum processing plants or airports or gravel pits or trash dumps. You don’t see their kids suffering from asthma caused by factory pollution or heavy truck traffic or worse. You don’t see them unable to pay medical bills or take their kids for needed medical attention. That’s for the little people.”

The GND’s most important virtue is that it doesn’t assume that the entire burden of the disruption caused by economic growth (if the GND becomes law), should be borne only by the 99%. It insures corporations will not grab vast profits, or control adaptation to the new economy for their sole benefit.

For example, when the price of natural gas dropped, capitalists stopped using coal, and coal miners lost their jobs, their insurance, their homes and their futures. Under the GND, when natural gas is phased out in favor of alternative sources, displaced workers will have a job and health care, because the GND offers a job guarantee and universal access to health care.

The knee-jerk reaction from Republicans (and many Democrats) is that the GND is socialism, and it’s impossible to implement in a free society. It is true that HR 109 is designed to rebalance the power about who decides the future of the nation. It explicitly favors the interests of the vast majority. It explicitly limits the power of corporations to dictate what response will be made to the threat of climate change.

This isn’t socialism, it’s an overdue reform of capitalism. Our companies, in particular the large global firms, can no longer be trusted to do the right thing when it comes to the welfare of Americans. For the past 70 years, people accepted that they would do well if American companies did well.

Globalism has made a lie of that ideology. Corporations must pay taxes. Corporations must be responsible for bearing the economic costs for all of us that come from their decisions.

Capitalism reform is a serious challenge not just to corporations and the rich. It is a serious challenge to our current political parties. Democrats claim to be the party of the people. The GND will force them to prove it.

The GOP represents the interests of corporations and the rich against the interests of working people. The GND makes this clear. It offers voters a contrast with the Republican/MAGA vision for this nation.

Both parties claim to want the best for the country’s future. Thinking about the GND forces them to come up with positive programs, or to do nothing in the face of mounting inequality, and a zero-sum political economy. Some have compared a GND transition to the abolition of slavery. Slavery was immensely profitable, and the benefits went to relatively few. And those few held all the political power in the South. It led to war.

Meanwhile, the media focuses on the horse race of ideas, and the cost. Can the Green New Deal pass? How could we ever pay for it?

Democrats and Republicans opposed to the GND must explain why even more neoliberal capitalism will accomplish what voters say they want. Republicans will continue to argue that the GND will turn us into Venezuela or worse.

But the rest of us now have a vision for a better future.

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Saturday Soother – Amazon Bails on NYC Edition

The Daily Escape:

Marijuana Museum, Amsterdam, Netherlands – 2017 photo by Wrongo

When Alexandria Ocasio-Cortez and Michael Bloomberg agree on something, it’s worth taking seriously, and neither wanted the Amazon deal with NYC. And this week, Amazon scuttled its plans to build its HQ2 in Long Island City, (LIC) Queens, New York City, citing opposition by “state and local politicians.”

Amazon’s abrupt announcement to withdraw from the deal came after it was roughed up at two City Council meetings along with enduring the indignity of having to contend with anti-gentrification protestors and union leaders.

There were two big problems that Amazon faced in LIC. First, they were getting a huge tax subsidy, about $2.8 billion. The tax subsidy looked even worse when we learned this week that Amazon nearly doubled its profits to $11.2 billion in 2018 from $5.6 billion the previous year and, once again, didn’t pay a single cent of federal income taxes.

It didn’t help that the state and city announced the massive subsidies when both are also contending with large budget deficits. NYC Mayor Bill de Blasio, citing a shortfall of $1 billion in revenues, told city agencies to cut their budgets by $750 million by April. And these cuts would have to be recurring.

This helped build outrage about the nearly $3-billion corporate welfare program for Amazon.

The second problem was gentrification in the LIC neighborhood. Immediately after the announcement, real estate prices zoomed, precisely when Manhattan prices were falling. The NY real estate industry was to be one of the primary beneficiaries of the HQ2 project, but local residents would be driven out of their neighborhoods.

Amazon has a poor track record in Seattle. They had fiercely opposed a local tax on large companies to fund housing for the homeless, and got it reversed one month after it had taken effect. Microsoft, after the tax law was scuppered, pledged $500 million to fund affordable housing for the low and middle income in the Puget Sound area, and encouraged other companies to make similar efforts.

Amazon didn’t join with Microsoft.

All is not lost. Amazon says it will still be expanding employment in NYC. And LIC has been a hot real estate/development market for several years, long before Bezos started playing his urban version of the Hunger Games. If the commercial construction in LIC over the past five years was happening in a second-tier US city, it would be equivalent to an entirely new business district.

A third problem was Amazon’s sense of entitlement. They expected zero push back, and their New York City campaign was inept. Amazon seems to have thought that since it had the governor and mayor in its pocket, all it had to do was show up for photo ops. The NYT points out Amazon didn’t even hire a native to grease the wheels:

“…the company did not hire a single New Yorker as an employee to represent it in discussions with local groups. Its main representatives traveled between Washington and Manhattan, and only one had moved into an apartment to work with community members and foster support.”

Amazon’s leaving was celebrated by Rep. Alexandria Ocasio-Cortez (D-NY), who represents the district. She complained about the “creeping overreach of one of the world’s biggest corporations“, and maybe that was the final straw for Bezos.

So props to AOC, and to the local politicians for standing up to this example of corporate welfare.

It’s possible that Jeff Bezos’s sudden change of heart was that he couldn’t stomach the idea of not being able to push around NYC the way he bullied Seattle into dropping its homeless tax. In NYC, he’d have to curry favor, feign interest in the concerns of locals, and make occasional contributions to the city.

Bezos may have felt all that was too high a price. But we should assume Amazon penciled out the deal, and didn’t like the result. For Amazon, it may have been a prudent business decision, artfully dressed up as a response to the political opposition the incentive package was facing.

Maybe, it’s no longer business as usual in America. AOC and other young people may not have money, but that doesn’t mean they can’t use power.

These corporate tax subsidy deals never add up for the cities that make them. Maybe people in other cities will learn from this NYC moment, and fight against the selling of our cities and towns to the uber-wealthy.

Now, it’s time to let go of Amazon, AOC, and Trump’s National Emergency. It’s time to get some Saturday Soothing.

Start by brewing up a vente cup of Roasting Rabbi Coffee, where the company slogan is: “Releasing the Holy Spark in Each Bean!” Try their Breakfast Blend.

Now settle into your most comfy chair and listen to Valentina Lisitsa play Liszt’s Hungarian Rhapsody No. 2, recorded live in May, 2010 in Leiden, Holland:

Those who read the Wrongologist in email can view the video here.

 

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The Power of Messaging

The Daily Escape:

Buttermere Lake, Cumbria, England – photo by Matt Owen-Hughes

On Monday in El Paso TX, Trump attacked Democrats, calling them:

“The party of socialism, late-term abortion, open borders and crime…To pave the way for socialism, Democrats are calling for massive tax hikes and the complete elimination of private health care…They’re coming for your money and they’re coming for your freedom.”

Trump’s focus on “socialism” is based on the few liberal Democratic presidential candidates who have called for Medicare-for-all, or environmental proposals intended to lower carbon emissions.

He brought up the “Green New Deal”, saying it would virtually eliminate air travel and that it sounds “like a high school term paper that got a low mark.”

This is just the latest stage in the war waged by the right against the ideals and programs of the New Deal. Kim Phillips Fein, reviewing the new book “Winter War: Hoover, Roosevelt, and the First Clash Over the New Deal” by Eric Rauchway, writes: (brackets by Wrongo)

Throughout the [1932] campaign, Hoover had attacked what he considered a “social philosophy very different from the traditional philosophies of the American people,” warning that these “so-called new deals” would “destroy the very foundations” of American society. As Hoover later put it, the promise of a “New Deal” was both socialistic and fascistic; it would lead the country on a “march to Moscow.”

2020 will be all about messaging. Once again, just like 88 years ago, Republicans will run on socialism. Trump will add the threats posed by open borders and abortion to the right-wing stew.

The question is what will be the 20+ Democrats who are running for president be talking about? Michael Tomasky in The Daily Beast suggests: (emphasis by Wrongo)

I am saying, though, that Democrats should stop pretending they can unite the country. They can’t. No one can. What they can do, what they must do, is assemble a coalition of working- and middle-class voters of all races around a set of economic principles that will say clearly to those voters that things are going to be very different when they’re in the White House…

There is a power to fashioning a new political coalition around the concept of economic justice. We live in a time when politicians of both parties have followed a consistent strategy: massage the economic numbers and the media, keep the rich and powerful happy, and make sure you stay on the “fiscally conservative” side of the line.

Now, a few Democrats are pushing the party elders to re-consider economic justice as FDR did in the1930s. These Democrats intuit that most Americans are trying to reconcile the life they were told they would have with today’s reality. The gulf between what they were told, and what actually happened is wide. And it looks as if it will only get wider.

Many Americans feel that they can’t pay their bills anymore, and they are afraid. Their jobs aren’t stable, they can’t look forward to retirement. About 20% say they have more credit card debt than savings. The lives they thought they’d live are upside down, and they’re not sure they can do anything about it. Quite a few followed their preachers and a few charlatan Republicans, and can’t understand why things are so scary and bad for them.

America is divided, but maybe not in the way you are thinking. It’s the left behinds and millennials who are worried about their future. And it’s both of them against the politicians, corporations and the oligarchs. As David Crosby sang:

“There’s something happening here, what it is ain’t exactly clear”

In 2020, we’ll be fighting for not just the soul of our country, but the meaning of American life: Should the one with the most toys win?

What is more important, universal health care, or outlawing abortion? Better roads and bridges, or keeping out immigrants? A better environment, or lower taxes?

Ocasio-Sanchez’s Green New Deal (GND) can easily be dismissed, but what really is the difference between how the Green New Deal might be financed, and how the Federal Reserve spent nearly $4 Trillion on its Quantitative Easing (QE) schemes?

The big difference is who profits. QE was welfare for the banks. For the GND, society at large would benefit.

You will get to decide, and plenty of people are already fighting for your attention.

Some are worth listening to. What will you choose to do?

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It’s Time to Raise Taxes

The Daily Escape:

Autumn in Hunza Altit Valley Pakistan – 2017 photo by Nasr Rahman. This shows that beauty can exist in very difficult places.

In 1785, Thomas Jefferson called for a geometric progression in taxes on assets of property holders as a way of lessening inequality. People with more assets would pay much higher taxes. Today, we’re still in search of policies that will do the trick. From The Fiscal Times:

Democratic Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez have sparked intense debate this month by proposing higher taxes on the rich, with Warren calling for a wealth tax and Ocasio-Cortez proposing a 70% top marginal tax rate.

But, Senate Republicans are moving in the opposite direction. Three GOP senators reintroduced legislation to permanently repeal the federal estate tax. The 2017 GOP tax overhaul has already reduced the number of estates subject to the tax by roughly doubling the value of assets that can be excluded from the tax. For 2019, this tax will only be paid by 1,700 families, but that’s all too much for Republicans.

Axios just reported on what Americans think about taxes:

Polling has found tax increases on the wealthy to be popular. A survey earlier this month by The Hill and HarrisX found that 59% of registered voters, including 45% of Republicans, support increasing the top income tax bracket to 70%. A Fox News poll released last week found that 70% of voters favor tax increases on families making over $10 million a year and 65% favor tax hikes on incomes over $1 million annually. Paying taxes is a complicated and controversial issue. What is not controversial is the need for people to take advantage of tax services that can help ensure they pay the right tax and thus appease the ever-lurking IRS. Going to http://daveburton.nyc/tax-services-nyc/ will provide more detail on this.

Those numbers suggest that a complete repeal of the estate tax might be about as popular as the polar vortex.

This shows how vast the gulf is between Republicans and Democrats on taxes. A poll by Axios, along with SurveyMonkey, ironically presented at Davos, showed that 70% of Americans think the economic system is skewed toward the wealthy and the government should do more to fix it. It further showed respondents are ready to vote for a 2020 candidate who agrees.

  • 58% of people surveyed say that “unfairness in the economic system that favors the wealthy” is a bigger problem than “over-regulation of the free market that interferes with growth and prosperity”
  • Among 18-24 year-olds, that gap is a chasm: 76% to 21%
  • Among those 65 and older, it’s a very narrow 51% to 46%
  • 89% of Democrats agree
  • 68% of independents agree
  • But 77% of Republicans say over-regulation of the free market is a bigger problem than economic unfairness
  • A huge majority of Democrats (90%) said they would be excited to vote for a candidate who promises to reform the economic system, with 71% of independents saying the same.

(SurveyMonkey’s online poll was conducted January 16 through 18, 2019 among a national sample of 2,277 adults.)

After WWII, America had very high marginal tax rates, and one result was corporate income was reinvested in the company, rather than given to top management or shareholders. Why give 70% of every dollar to the government?

Back then corporations, in exchange for limited liability, assumed they had fiduciary duties to the public and to their employees as well as shareholders. But the Right got behind the doctrine that a corporation’s only duty was to their shareholders. CEO’s became significant shareholders through stock options.

Then, Reagan and Bush lowered taxes on corporate and personal income, and dividends.

Our basic political issue in America has become: “Does the economy exist to serve the nation, or does the nation exist to serve the economy?”

Our affirmative vote must be for the economy to serve the nation. Over the past 40 years, we have reduced taxes for high earners and corporations. We’ve added loopholes that subsidize corporations, but our need for infrastructure spending hasn’t declined, and our military spending has grown dramatically.

Over the past forty years, the share of income taxes paid by corporations has declined. It is now only 9% of US government tax revenues. It was about 24% in 1960.

We’ve financed the tax cuts for high earners and corporations with ever growing budget deficits. The golden age for these policies must end now.

We need to go back to the days of socially responsible capitalism, not the predatory capitalism we have today. High marginal income tax rates will help. In addition, taxing dividends at the same as ordinary income is a good idea.

Let’s raise the capital gains tax above its current 20% rate.

Let’s find a Constitutional way to tax wealth as Elizabeth Warren suggests. Add a very small transaction tax on sales of stock on all public markets.

It’s time to move past the politics of “What can America do about inequality without corporations and rich people actually giving anything up?”

This isn’t an anti-corporate, anti-wealth assault, it is a necessary corrective to bad tax policy from the 1970s to today.

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Monday Wake Up Call – January 28, 2019

The Daily Escape:

Bell Island, Franz Josef Land with Eira Lodge in foreground. The lodge is a remnant of Benjamin Leigh-Smith’s expedition in 1880 – 2017 photo by Ilya Timin, CC BY-SA 4.0.

The largest gathering of billionaires in the world took place last week at the World Economic Forum’s annual conference in Davos. Vanity Fair reports that they:

“…consume $55 Caesar salads and shark canapĂ©s, rub shoulders with Matt Damon, and attend parties that involve “endless streams of the finest champagne, vodka, and Russian caviar, dancing Cossacks, and beautiful Russian models…”

Bloomberg added: (emphasis by Wrongo)

“UBS and PwC Billionaires Insights reports show that global billionaire wealth has grown from $3.4 trillion in 2009 to $8.9 trillion in 2017…The fortunes of a dozen 2009 Davos attendees have soared by a combined $175 billion, even as median US household wealth has stagnated…”

And there was this report from Davos in the NYT by Kevin Roose: (emphasis by Wrongo)

“They’ll never admit it in public, but many of your bosses want machines to replace you as soon as possible. I know this because, for the past week, I’ve been mingling with corporate executives at the World Economic Forum’s annual meeting in Davos. And I’ve noticed that their answers to questions about automation depend very much on who is listening.”

Roose goes on to say: (emphasis by Wrongo)

“In public, many executives wring their hands over the negative consequences that artificial intelligence and automation could have for workers. They…talk about the need to provide a safety net for people who lose their jobs as a result of automation.

But in private settings, including meetings with the leaders of the many consulting and technology firms…these executives tell a different story: They are racing to automate their own work forces to stay ahead of the competition, with little regard for the impact on workers.”

Roose quotes Mohit Joshi, president of Infosys, an Indian technology and consulting firm: (emphasis and brackets by Wrongo)

“Earlier they [large businesses] had incremental, 5 to 10% goals in reducing their work force. Now they’re saying, ‘Why can’t we do it with 1% percent of the people we have?’”

And American executives have come up with new buzzwords and euphemisms to disguise their intent. Workers aren’t being replaced by machines, they’re being “released” from onerous, repetitive tasks.

Companies aren’t laying off workers, they’re “undergoing digital transformation.” They’re being “reskilled”.

A 2017 survey by Deloitte found that 53% of companies had already started to use machines to perform tasks previously done by humans. That figure is expected to climb to 72% by next year. As an example, Terry Gou, the chairman of Foxconn, the Taiwanese electronics manufacturer, who makes iPhones, has said his company plans to replace 80% of its workers with robots in the next five to 10 years.

And Wisconsin just gave Foxconn $4.5 Billion to build a plant and employ 13, 000 workers. Can Wisconsin’s soon-to-be laid-off workers be “re-skilled”, and find employment?

A January 2019 report by the very same World Economic Forum estimates that the 1.37 million workers who are projected to be displaced fully out of their roles in the next decade according to the US BLS, may be reskilled to new viable (similar skill set) and desirable (higher wages) jobs:

“The report shows that, in the US alone, with an overall investment of US$4.7 billion, the private sector could reskill 25% of all workers in disrupted jobs with a positive cost-benefit balance. This means that, even without taking into account any further qualitative factors or the significant indirect societal benefits of reskilling, for 25% of at-risk employees, it would be in the financial interest of a company to take on their reskilling.”

The rest presumably will need to fend for themselves. They will likely rely on your taxpayer dollars to be “reskilled”, or go on government assistance.

The real question isn’t how to stem the tide of automation, it’s inevitable. The question for capitalists and our government is how the financial gains from automation and AI will be distributed, and whether the excess profits corporations reap as a result of layoffs will go in part, to workers, or solely to bigwigs and their shareholders.

Will we create a shared prosperity, or just a greater concentration of wealth?

Time to wake up America! This Fourth Industrial Revolution is underway, and estimates are that it will impact as many as 40% of American workers.

It’s time to understand that the 21st Century American corporation isn’t our friend, as constituted and rewarded. It is the enemy of our society, as they quietly work to eliminate your jobs.

We constantly reduce their taxes. We look the other way when they pollute our environment. We allow them to disproportionately finance our elections.

It’s time for a new Capitalism.

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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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The Kids Are All Right

The Daily Escape:

Autumn in Larch Valley, Banff National Park, Alberta CN – 2008 photo by Andy Simonds

For the past few days, Wrongo has been writing about both ideas and people that could help to shape a reform of American capitalism.

We’ve talked about Bernie Sanders, Richard Murphy, Alan Curtis and Alexi Yurchak, and the Yellow Vests in France. Today, let’s focus on America’s youth, at least some of them:

More than 1,000 young people and allies flooded the Capitol Hill hallways and offices of Democratic representatives to demand that elected officials listen to their youngest constituents—as well as some of the world’s top scientists—and back the bold proposal to shift the US to a zero-carbon energy system by 2050 in order to save the planet from an irreversible climate catastrophe.

The protesters were mostly members of the youth-led Sunrise Movement, 800 of whom had attended a training on lobbying members of Congress and their staffers the previous evening. They carried signs reading, “Do Your Job,” “Back the Deal,” and “No More Excuses“. Here is a picture of them in the halls of Congress:

Before you get all crazy about the (apparently) professionally-made signs, here’s a web site where you can easily make them. More from Common Dreams:

Many also wore T-shirts emblazoned with the following message: “We have a right to good jobs and a livable future,” two key components of the Green New Deal, which would create 10 million jobs in the first decade by putting Americans to work building a green energy infrastructure…

At least 143 of the demonstrators were arrested as they lobbied in 50 congressional offices. But, they had an impact. The number of Democratic lawmakers now supporting a Select Committee on a Green New Deal has now reached 31, twelve of whom signed on this week. How it came together reveals how the Congressional Progressive Caucus (CPC), will use its growing membership.

The Caucus agreed with incumbent members who were willing to have a select committee so long as actual lawmaking authority remained in existing committees.

This wasn’t all due just to the kids. Rep.-elect Alexandria Ocasio-Cortez (D-NY) has spent the past few weeks wrangling support for the Green New Deal as well. The outcome was the result of a collaboration between the CPC leaders, Ocasio-Cortez, and the Sunrise Movement.

Wrongo doesn’t know if a Green New Deal is a good idea or not, but much of the message will resonate with voters. Who will be against “good jobs and a livable future”?

And Alexandria Ocasio-Cortez is showing that she has really good political instincts.

We should be happy that these kids are speaking from their hearts. They are practicing for when they will need the strength to fight the hard political battles of their generation. But, why aren’t we seeing a million parents fighting alongside their kids?

We also should remember how undervalued kids are in America: We under fund their schools. We are providing only low-wage service economy jobs for most of them when they grow up. We hardly care whether they are covered under a health insurance plan. We take them from their parents at the border.

No wonder they are learning to act, since we, their guardians, seem unwilling to act for them.

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