Archive for January 23rd, 2013

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The graph below shows how income distribution has changed quite a bit since 1979. Notice that the most massive income redistribution from the 99 to the 1 percent occurred after President Bill “Wall Street” Clinton signed NAFTA into law. Clinton wasn’t dumb. He knew the treaty was an income redistribution scam.

Right now negotiators from 11 nations, along with 600 corporate lobbyists, are negotiating the Trans Pacific Partnership in secrecy. This is the largest free trade pact of all time. The implications are massive; the utter destruction of the American middle class, since the 1 percent will have more power via the treaty to suck the middle class dryer. That is Obama’s agenda. But we’re really talking about the top 0.1 percent, the high millionaires and the billionaires that have destroyed democracy in the United States and replaced it with a plutocracy.

Think about this. After Obama signs the still being negotiated Trans Pacific Partnership into law, the line in the graph that shows how much of the national income the 1 percent receive will shoot up way higher, while the 90 percent go down, down, down. And the 91-99 percent will follow. It’s beginning to look like banana republic time for the US middle class. It doesn’t need to be that way. Fight back. Labor unions are. Don’t let corporate drones like Wall Street Congressman Earl Blumenauer vote for the treaty.

By the way, some ridiculous discussion over the last year or so is that the growth of income inequality in favor of “the 1 percent had been reversed in the recent downturn and, therefore, policymakers need not focus on the overall increase in income inequality since the late 1970s.” A new report from the Economic Policy Institute (EPI) shows that income of the top 1 percent have rebounded strongly since 2010. However, I show in The Rigged Game that this argument is stupid because it has never been the case. It’s true that the wealth of the 1 percent declines during recessions, and with it the income that derives from those assets, but the decline reflects temporary dips in the values of corporate stocks and bonds and other assets due to recessions. These dips are always temporary, if they occur. By the way, income is money coming in, wealth are assets such as stocks, bonds, gold, house, cars, etc…..

Regardless, below are some of EPI’s findings for the current downturn.

1. Those at the top are seeing their wages rebound quite strongly in the recovery. Following a 15.6 percent decline from 2007 to 2009, real annual wages of the top 1.0 percent of earners grew 8.2 percent from 2009 to 2011.

2. The real annual wages of the bottom 90 percent have continued to decline in the recovery, eroding by 1.2 percent between 2009 and 2011.

3. Wage inequality grew substantially over 1979–2007, lessened in the 2007–2009 downturn, and began expanding again in the 2009–2011 recovery. Trends over the next few years will determine whether wage inequality returns to or exceeds the heights reached in 2007 or 2000—or simply remains far higher than at any time in the 1980s and 1990s.

4. Given the strong stock market recovery and wage growth at the top, the top 1.0 percent’s overall incomes (which include wages, capital gains, and other returns on financial assets) probably grew strongly in 2011, thereby increasing income inequality.

In other words, Obama’s policies have not reversed the redistribution of income from the 99 to the 1 percent. In fact, Obama’s policies continue to accelerate the redistribution process. That’s why the 90 percent have seen wages drop 1.2 percent from 2009-2011. That money has been redistributed to the 1 percent, more or less, by such simple methods as shifting more jobs overseas, reducing employee compensation, and privatizing more government jobs. The difference between the old wages and the new, lower, wages is redistributed to the 1 percent via higher corporate earnings, dividends and share prices.

Click the link below for the complete study.

The Report From the Economic Policy Institute

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