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Posts Tagged ‘income inequality’

where_does_all_the_money_go___pavel_constantin

As President-elect Donald Trump takes office today, January 20, 2017. the Pew Research Center reports “the public has starkly different expectations about which groups in society will gain influence – and those that will lose influence – under his administration.

Nearly two-thirds of Americans (64%) say wealthy people will gain influence in Washington when Trump takes office. Just 8% say they will lose influence, while 27% expect the wealthy will not be affected.”

I agree with the 27 percent who say the wealthy will not be affected. The reason is simple. The rich already control both major political parties, and through them, the rich control the federal government, virtually all state governments, and most big city governments, as well as a lot of local governments.

The wealthy are not going to improve upon that score a whole lot under Trump. Control of the legislative process has been the primary means by which the 1 percent has methodically increased its share of wealth and income of the United States year after year for the last thirty-five years.

That’s why the 64 percent who say wealthy people will gain influence are wrong inasmuch as wealthy people have so much power they can’t possibly gain anymore.

The difference is that those rich folks who use the Democratic Party as a vehicle to control the mechanisms of government and to profit via those mechanisms, have lost influence. Think Warren Buffett, George Soros, Bill Gates and other Democratic Party billionaires. Their rivals who control the Republican Party will gain influence at their expense.

Those Republican billionaires include Sheldon Adelson, Donald Trump, Charles and David Koch, hedge fund managerz Paul Singer and Robert Mercer, and a lot of other Wall Street investors.

Together, the billionaire Democrats and billionaire Republicans form a kind of good old boy network with some rivalries among them. They also control the media in such a way as to ensure we don’t see this, although it’s pretty obvious.

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classwarfare

A new report by Oxfam.org shows eight people as much wealth as the bottom 50 percent of humanity, which is 3.6 billion people. Oxfam is an organizations that monitors income and wealth inequality throughout the world. Warren Buffett and Bill Gates are two of those eight richest people.

The folks at Oxfam have figured out why income and wealth inequality continue to grow. They write,

“The gap between rich and poor is far greater than had previously been estimated, with big business and the super-rich fueling the inequality crisis by dodging taxes, driving down wages, and using their power to influence politics.” They’re really saying political power inequality has caused income and wealth inequality.

This is the golden rule in action; he who has the gold makes the rules. In harsher terms, the rich have used their money to corrupt government at all levels and rig the economic game against everybody else. The game has been rigged in favor of the rich and powerful, and in particular, Wall Street. The big banks have held millions of homes off the market in the US in order to drive prices up, and they’ve been quite successful at it. Meanwhile, the US justice department has turned a blind eye to this conspiracy in restraint of trade, even though it is the US Census Bureau that first reported this.

Oxfam suggest five actions they believe can reduce income and wealth inequality, but in reality, these five are not enough. The five are;

  1. Stop offshore tax dodging which costs the US and developing countries more than $100 billion each year.
  2. Raise the minimum wage so that working families can make a living wage.
  3. Fight discrimination of all kinds and ensure equal pay for equal work.
  4. Build and invest in a social safety net for everyone.
  5. Ensure every person has access to affordable, high quality healthcare and education.                 Click here for the full Oxfam report.

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Finland is several heads above the United States in public education. They used to be about the same in terms of student testing. Then in the early 1970s, the Finns decided to undergo a massive reconstruction of their educational system. They took off, leaving the US in the dust.

Finland has the highest test scores in the Western world. How’d they do that?

Finland’s students have the western world’s shortest school days and shortest school years. That’s to give kids time to be kids. They’re in school no more than 20 hours a week, and that includes lunch. They’re also among the least tested students in the world. Finland provides a vast social safety net for all families.  Finnish students get almost three times as much recess as US students. All of this is because Finland has a student centered education system. The success of students is the most important thing in the Finnish system.

In the United States, increasing the corporate profits of the publishing industry is the most important thing the US educational system is supposed to do. So most everything in the US K-12 educational system is geared toward testing.

Corporate profits are had with every test a child takes. This is precisely why US students are the most tested in the world, and by a wide margin. However, it gets worse than that. Standards are continuously raised, even if most of the students, or a significant segment of them, fail the current standards. That’s because the higher the standards, the more students fail and need to retake the tests, over and over again, until they pass the tests, or they move up in grade. Every test students are forced to take provides the testing industry with greater profits. But when a sufficient number of students begin to pass the tests, the standards are raised, or the tests are changed, to make them more difficult to pass.

The movement to tie teacher pay to the success of student testing forces teachers to teach to the test. Recess has been massively cut at many public schools. Recess has been eliminated in some. US education is about massive test preparation, and much of the preparation materials comes from the US publishing industry, which increases their profits.

The last thing the people behind US educational reforms want, as well as the corrupt politicians behind them, is an educational system that prepares students to be better citizens and gives them enhanced job skills, although many educators try to do this in what spare time they have to teach this stuff.

The testing industry keeps this farce going by giving campaign contributions and other perks to US politicians, which is precisely why the US educational system typically ranks about thirtieth in the world, and never moves up, and why Finland typically rates in the top five, and is often number one in the world.

In the US, educational reform means redistributing local and state tax dollars to the rich shareholders of the testing industry. Local control of public education means the testing industry might not be able to get away with this theft throughout the US, and this is why the Feds have become more involved in K-12 public education.

In other words, financial corruption guides US government K-12 educational reform, while the needs of students guide educational reforms in Finland.

 

 

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This is the third part in a series. So now we’re getting into some debatable stuff, but here goes.

  1. Obama brought the federal budget deficit down from the  more than $1.4 trillion a year he inherited from bumbling, corrupt and incompetent George W. Bush to $587 billion in 2016.
  2. Obama presided over one of the biggest stock market bubbles in world history, and did nothing about it. The hangover from this bubble is going to last quite a long time, but many of his rich supporters got richer because of it.
  3. The president presided over one of the biggest housing bubbles in US history, and did nothing about it. This bubble redistributed trillions of dollars from working folks to Wall Street executives and billionaires that have always been his financial supporters. The big banks illegally conspired to withhold 3.4 million houses off the market (over 50 percent of all vacant houses in the USA) in order to drive up housing prices, and Obama made certain not to let his justice department do anything about this. See The Big Banks Are Manipulating the Housing Market–JohnHively.Wordpress.com
  4. Obama presided over the largest redistribution of income in US history, and did nothing about it. From 2009 to 2013 the 1 percent stole all of the US income growth, and they stole over 50 percent in 2014 and 2015.
  5. In other words, Obama presided over an economy driven by bubbles and redistributing income from the 99 to the 1 percent. Good job!
  6. Obama called rising income inequality “the defining issue of our time.” When his Wall Street financial masters objected to this subject, Obama never mentioned it again. Guess who was really in charge of the white house? Hint. The big investment banks, along with other Wall Street executives and billionaires.
  7. All of the above suggests the next recession is going to be worst than the last one, and it is on its way. We’re at or near the peak of this weak economic expansion. Once we’ve reached that peak, the only place to go is down. Some of Obama’s better known accomplishments (or notoriously known depending on your point of view) include the Affordable Care Act and getting us out of Iraq. These were included in President Obama’s Top Accomplishments, and His Worst–JohnHively.Wordpress.com. Part two included normalizing relations with Cuba. That list can be found here.

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Portland Oregon opened up a new front in the battle against income and wealth inequality. On December 7, 2016 local officials voted to slap a surtax on corporations that pay their chief executive officers more than 100 times what they pay their typical workers. The bill was sponsored by outgoing City Commissioner Steve Novick.

According to the Nation, “The Portland move will be the nation’s first tax penalty on corporations with extreme CEO-worker pay gaps. But it’s unlikely to be the last. Much like the Fight for $15, this bold reform could well spread like wildfire.

Indeed, we may look back at the Oregon vote as the dawn of a new “pay ratio politics.” Thanks to a new Securities and Exchange Commission regulation, publicly held corporations will this year have to start calculating the ratio between their CEO and median worker pay. The first of these ratios will go public in early 2018.

These federally mandated pay ratio disclosures will make it easy for states and cities to adopt Portland-style surtaxes—if they have the political will to do so.”

For Novick the bill was all about striking a blow against our nation’s skyrocketing inequality. “CEO pay is not just an eye-catching example of, but a major cause of, extreme economic inequality,” he said in a statement after the council vote. “Extreme economic inequality is—next to global warming—the biggest problem we have in our society.”

Currently, the top 1 percent steal via federal legislation anywhere from 24 to 37 percent of all income produced in the USA every year, compared to just 8 percent 36 long years ago. The top 1 percent now own more wealth in the USA than the bottom 90 percent as of a few years ago, and that is sure to have grown since then.

Click here for the entire story in the Nation.

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The Federal Reserve raised its key interest rate by 0.25% on Wednesday. The corporate news media, both liberal and conservative, claimed this signified the Fed’s confidence in the improving U.S. economy. There may be some truth to this, but maybe not.

Anybody with any knowledge of US business cycles can see our current business expansion is nearly over, which makes this a poor time to raise borrowing rates. See The Coming Recession Is Going to be a Big One–Johnhively.Wordpress.com. The current expansion is 91 months old this month, which makes it the fourth longest on record. In February 2017 it will become the third longest in US history. All the variables indicate we’ll be hitting a recession sometime before or by June 2017.

Maybe Fed officials decided to deflate the stock market and housing bubbles the US economy is in the thrall of. The US economy has been powered by a series of federally created or federally condoned bubbles since the 1980s, which is radically different from the US economy of 1933-1981. The US economy will be suffering from a massive hangover when this next recession hits, which is why it will in many ways be far worse than the last recession.

Rising rates will affect millions of Americans, including home buyers, savers and investors by increasing the cost of which they borrow. In other words, trillions of dollars are going to be redistributed from the 99 percent to rich bank shareholders and bondholders. It’ll cost you more to borrow, and the difference between the old rate and the new rate goes straight into the pockets of the rich.

Income and wealth have been massively redistributed from the 99 to the 1 percent by a series of deliberate federal government actions over the last thirty-five years. This is why interest rates have been historically low over the last eight years, and had been getting progressively lower since 1981. The demand for goods and services by the 99 percent is largely dependent on the ability to borrow to a much greater extent than earlier decades.

This is also means the Fed will have to enact negative interest rates to help bolster the economy during the next recession, which is currently the case in Europe.

Change in the form of a shift of political power from the billionaires to the middle class will finally come because of this next recession as millions more people vote via their wallets and take to the streets.

Fed officials raised its target for short-term interest rates by 0.25 percentage points to a range of 0.50% and 0.75%.

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incomeq

The US government has been redistributing income from the 99 to the 1 percent for the last thirty-five years. The result of this government created income and wealth inequality has been an economy far weaker in virtually all measurements than any of the last century. That’s because the underlying economic factors have been weakened.

According to a study by the Pew Charitable Trust,

“Although income and earnings have increased over the past 30 years, they have changed little in the past decade. The typical worker had wage growth of 22 percent between 1979 and 1999 but just 2 percent from 1999 to 2009. (This is not in inflation adjusted wages, in which case, wages would’ve been stagnant or declining over the last thirty-five years).

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• The Great Recession eroded 20 years of consumption growth, pushing spending back to 1990 levels. Over the 22 years before the start of the downturn, household expenditures grew by 16 percent. But households tightened their purse strings after the start of the recession in 2007, and spending has yet to recover. As a result, the net increase in average annual household spending is just 2 percent since 1990. That’s despite twenty-six years of inflation growth.

• The majority of American households (55 percent) are savings-limited, meaning they can replace less than one month of their income through liquid savings. Low-income families are particularly unprepared for emergencies: The typical household at the bottom of the income ladder has the equivalent of less than two weeks’ worth of income in checking and savings accounts and cash at home.

• Even when pooling all of its resources—including from accounts that are potentially costly to access, such as retirement accounts and investments—the typical middle-income household can replace only about four months of lost income.

• Most families face financial strain across all balance sheet elements: income, expenditures, and wealth. In addition to being savings-limited, households face other financial challenges; just under half of families are “income-constrained,” reporting household spending greater than or equal to their income; and 8 percent are “debt-challenged,” with payments equal to 41 percent or more of their gross monthly income. Fully 70 percent of households face at least one of these problems, with many confronting two or even all three.

http://www.pewtrusts.org/~/media/assets/2015/01/fsm_balance_sheet_report.pdf

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