Between 1989 and 2010, the top 1 percent of the population went from holding 30.1 percent of the wealth to 34.5 percent, while the bottom 50 percent went from having 3 percent of the wealth to having just 1.1 percent. That’s right: In 2010, 50 percent of Americans had 1.1 percent of the total net worth (PDF), according to the Congressional Research Service. The share of wealth held by the next 40 percent of people, up to the 90th percentile, had also dropped, from 29.9 percent to 24.3 percent. Put another way (and it’s stunning however you look at it), 10 percent of people have 74.5 percent of the wealth.
The median and mean household net worth dropped considerably between 2007 and 2010, but even as both dropped, inequality increased, with the median—the amount of wealth that half of people have more than and half of people have less than—dropping by 38.8 percent, while the mean—the amount you get when you add up all the wealth and divide it by the number of people—lost just 14.4 percent. That means that the amount everyone would have if wealth were distributed equally went from being 4.6 times the amount the person actually in the middle has to being 6.5 times that number.So: Prior to the financial crisis and the recession, there was massive inequality in America. Following the financial crisis and the recession, there is a Grand Canyon of inequality in America. For good reason, we talk a lot about how much of the wealth the top 1 percent have. We talk less about how little the bottom 50 percent have, but think about what it means that 50 percent of people have just over 1 percent of the money. Forget all the definitions you’ve heard of who is in the underclass. We’re on track to have “underclass” and “majority” be synonyms. And the Republicans have got a guy running for president who wants to speed the process.
No question that the Republican candidate wants to speed the process. The same thing applies to the Democratic candidate though.
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from the transcript:
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington.
Most central banks around the world preach fiscal discipline. Inflation is their biggest concern. And even when they do enter into some stimulus policies, the final objective is still the issue of lowering debt. Well, one central bank in the world apparently has a growth agenda, and that’s in Argentina.
Now joining us to talk about this is John Weeks. John just was in Argentina not very long ago. He’s a professor emeritus at the University of London School of Oriental and African Studies. He’s the author of the book Capital, Exploitation and Economic Crisis. He runs JWeeks.org. And he now joins us again from London. Thanks, John.
JOHN WEEKS, PROFESSOR EMERITUS, UNIV. OF LONDON: Thank you.
JAY: So what did you make of what the central bank’s doing in Argentina?
WEEKS: It’s tremendously important, because in the 1990s Argentina was the epitome of a neoliberal monetary policy. It had something called a currency board, and that currency board involves taking the foreign exchange you hold, which is, in the case of Argentina, dollars, and that your domestic money supply is rigidly tied to the amount of dollars you hold. Of course, the amount of dollars you hold is a result of your imports and exports, the balance between the two, and so in effect you have no independent monetary policy. And it tended to be quite deflationary, that is, it tended to cause not only very low inflation, but actually negative rates, and also very slow growth.
At the end of the 1990s, the disaster that that policy had inherent in it was realized, and in 2001 and 2002 Argentina could no longer maintain that policy, because what it meant, basically, is that if you began to lose dollars because you were—Argentina was running a trade deficit, it meant you had to contract the economy, because you had to take your domestic currency out of circulation, more and more of your domestic currency out of circulation. And that led initially to a severe recession in the economy. When that could no longer be maintained and they temporarily went off the currency board, you had hyperinflation for a year.
Okay. The current government of Cristina Fernández has repudiated that policy. They have introduced a new central bank law (they had actually been practicing it, but they formalized it in this last March, just two months ago) which completely ends the currency board regime and replaces it with a central bank that facilitates a growth-oriented policy of the government. And it also is concerned about inflation, but inflation no longer becomes a constraint, the tail that wags the whole dog.
Paul Jay says until police and their political masters are held responsible under the criminal code, it can all happen again:
from the transcript:
It’s been two years since the Toronto G-20, two years since more than 1,000 people were arrested, hundreds of them brutally clubbed and violently assaulted by police. There’s been a series of reports looking into the police activities. First the Ontario Ombudsman issued a report. Then there was a civilian report looking into the activities of the RCMP, then the Ontario Independent Police Review Director, and now the Independent Civilian Review into matters relating to the G-20 summit—that’s the report issued by the civilian oversight board responsible for the Toronto Police.
Now that all the reviews and reports are in, the question remains: have people responsible been held accountable? And can it all happen again?
But before we dig into all of that, let’s remind ourselves what the G-20 was all about. Let’s take one more look at the big picture.
The 2010 G-20 in Toronto was a declaration by the global governing elite that the economic crisis, largely triggered by banks and financial institutions, would be paid for by ordinary people everywhere. It was also a declaration that force and the violation of basic civil rights would be used against those who protest and resist bearing the consequences of a crisis they didn’t cause. The more than 1,000 arrests at the Toronto G-20 was a statement by the governments of Canada, Ontario, and Toronto that mass protest would be met by mass arrests.
As I pointed out in a previous report, the missing words in the G-20 declaration were higher taxes on the wealthy and higher wages for workers—both obvious solutions to the stated goal of fighting deficits and dealing with a serious lack of demand in the economy.
What the G-20 leaders did agree to was this: “[The] advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016″—we know that means cuts to pensions/social services and other austerity measures. We see this plan being played out across Europe and North America and other countries. The arrests at the G-20 were made in defense of this global strategy.
And now reports from the Ontario Independent Police Review Director and the Ontario Ombudsman have made it clear: the police services responsible during the G-20 violated citizens’ right to free assembly and used excessive force in doing so.
There’s no evidence that a low capital gains tax rate boosts the stock market, investment, or the economy [New]
There is no sound evidence that cutting capital gains taxes to levels far below ordinary income tax rates contributes to economic growth at all — let alone enough to outweigh the significant economic cost of doing so.
- - Federal Reserve economists concluded in 2005 that the 2003 capital gains and dividend tax cut had little effect on the stock market: European and U.S. stocks performed similarly both after the announcement of the tax cut and after the tax cut itself, as this chart shows. As the Wall Street Journal stated, the study “concludes that the tax cut … was a dud when it came to boosting the stock market.”
- - “[T]here is no evidence that links aggregate economic performance to capital gains tax rates,” according to University of Michigan tax economist Joel Slemrod.
- - There is no statistically significant correlation between the top capital gains rate and economic growth (see chart).
- - As Len Burman, Syracuse University tax professor and former director of the Urban-Brookings Tax Policy Center (TPC), has explained of this chart, “Many other things have changed at the same time as [capital] gains rates and many other factors affect economic growth. But the graph should dispel the silver bullet theory of capital gains taxes. Cutting capital gains taxes will not turbocharge the economy and raising them would not usher in a depression.”
- - There is also no statistically significant correlation between the capital gains rate and the amount of real business investment.
Check out the other 9 things you need to know too.
Do you see ‘Tax Cuts’ there? No? Me neither. How about ‘Tax Code Loopholes’? No? No. Apparently spending less on ‘Tax Cuts’ or closing tax code loopholes is not an option. Conservative hegemony at work as Paul would say.
Rebecca Ray, a Research Associate for the Center for Economic and Policy Research (CEPR), explains in her Real News interview:
Transcript at the link:
REBECCA RAY: So the remarkable thing about Ecuador’s experience with the recession is that they came out of the recession after only three quarters of declining GDP, and it only took them four additional quarters to reach their previous GDP levels. Meanwhile, their poverty, unemployment levels, these are all lower than they were before the crisis already, well below. [Unemployment's] at a record low.
What an excellent film! I wonder how did I miss it all this time. Missing describes the story of the disappearance of U.S. citizen Charles Horman in the violent aftermath of the the 1973 military coup in Chile. Horman was in Chile at the time along with his wife, Beth Horman, and his friend, Terry Simon. His father, Ed Horman, flew to Chile to join Beth in trying to find Charles. Ed was under the impression the U.S. embassy in Chile would help him.
Here’s the description on the Wikipedia article:
Missing is a 1982 American drama film directed by Costa Gavras, and starring Jack Lemmon, Sissy Spacek, Melanie Mayron, John Shea, Charles Cioffi and Janice Rule. It is based on the true story of American journalist Charles Horman, who disappeared in the bloody aftermath of the US-backed Chilean coup of 1973 that deposed leftist President Salvador Allende.
The film was banned in Chile during Pinochet‘s dictatorship, even though neither Chile nor Pinochet are specifically mentioned by name in the film (although the Chilean cities of Viña del Mar and Santiago are).
Both the film and Thomas Hauser‘s book The Execution of Charles Horman were removed from the United States market following a lawsuit filed against Costa-Gavras and Universal Pictures‘s parent company MCA by former Ambassador Nathaniel Davis and two others for defamation of character. A lawsuit against Hauser himself was dismissed because the statute of limitations had expired. Davis and his compatriots lost their lawsuit, after which the film was re-released by Universal in 2006.
There is a fascinating interview with Peter Kornbluth, director of the National Security Archive’s Chile Documentation Project at George Washington University, in the 2nd disc. As you can imagine the State Department took issue with the film at the time. When Bill Clinton declassified some relevant documents things changed. Can you imagine Barack Obama doing such a thing? Me neither.
Krugman wipes the floor with the two pro-austerity guests:
And the segment where Krugman detailed his view of the current situation to the BBC host:
UPDATE: There was another segment with Paul Krugman and an ex finance minister of Greece. It’s at the 6 minute mark:
And here’s the entire BBC program:
A Long Beach hospital charged Jo Ann Snyder $6,707 for a CT scan of her abdomen and pelvis after colon surgery. But because she had health insurance with Blue Shield of California, her share was much less: $2,336. Then Snyder tripped across one of the little-known secrets of healthcare: If she hadn’t used her insurance, her bill would have been even lower, just $1,054. “I couldn’t believe it,” said Snyder, a 57-year-old hair salon manager. “I was really upset that I got charged so much and Blue Shield allowed that. You expect them to work harder for you and negotiate a better deal.”
Unknown to most consumers, many hospitals and physicians offer steep discounts for cash-paying patients regardless of income. But there’s a catch: Typically you can get the lowest price only if you don’t use your health insurance. That disparity in pricing is coming under fire from people like Snyder, who say it’s unfair for patients who pay hefty insurance premiums and deductibles to be penalized with higher rates for treatment. The difference in price can be stunning. Los Alamitos Medical Center, for instance, lists a CT scan of the abdomen on a state website for $4,423. Blue Shield says its negotiated rate at the hospital is about $2,400. When The Times called for a cash price, the hospital said it was $250.
“It frustrates people because there’s no correlation between what things cost and what is charged,” said Paul Keckley, executive director of the Deloitte Center for Health Solutions, a research arm of the accounting firm. “It changes the game when healthcare’s secrets aren’t so secret.” Snyder’s experience is hardly unique. In addition to Los Alamitos, The Times contacted seven other hospitals across Southern California, and nearly all had similar disparities between what a patient would pay through an insurer and the cash price offered for a common CT, or computed tomography, scan, which provides a more detailed image than an X-ray.
I rolled my eyes when I read Mrs. Snyder’s comments. Not that I disagreed with her expectations about health-care costs. But Blue Shield and the rest in the AHIP cartel don’t care about the price American’s pay. They care how to make the most money they can and if that means screwing the public that’s what will happen.
The Greek people went to the polls yesterday and the pro-austerity parties didn’t fare well. Democracy isn’t conductive to austerity. Wikipedia has the election results:
Summary of the 6 May 2012 Hellenic Parliament election result Party Leader(s) Votes % +/– Seats +/– New Democracy Antonis Samaras 1,191,989 18.85% –14.62 108 17 Coalition of the Radical Left Alexis Tsipras 1,061,158 16.78% +11.15 52 39 Panhellenic Socialist Movement Evangelos Venizelos 833.456 13.18% –30.74 41 119 Independent Greeks Panos Kammenos 670,550 10.6% New 33 33 Communist Party Aleka Papariga 536,045 8.48% +0.94 26 5 Golden Dawn Nikolaos Michaloliakos 438,910 6.97% +6.68 21 21 Democratic Left Fotis Kouvelis 386,090 6.11% New 19 19
So, the Coalition of the Radical Left gets 17% of the vote while the conservative New Democracy gets 19%, but that translates to 52 seats for the Coalition and 108 seats for the conservatives. If you keep reading the Wikipedia article, you learn that the party that gets the most votes, gets a 50 seat bonus. That’s one screwed-up electoral system. I should note that the Panhellenic Socialist Movement is socialist only in its name. It and New Democracy are the two pro-austerity parties. In the 2009 Elections they combined for 77% of the vote (44% for the Movement and 33% for the conservatives).
A few days back, economist Nouriel Roubini made the offhand comment that:
Karl Marx had it right. At some point, capitalism can destroy itself. You cannot keep on shifting income from labor to capital without having an excess capacity and a lack of aggregate demand.
As has been noted before, nothing Roubini said was at all – ahem – revolutionary. In fact, there’s really no dispute that his analysis was founded on “well-proven conventional modern macroeconomics.” Much of it didn’t even go beyond Economics 101.
In an article on Project Syndicate which describes the difficulties besetting solutions reliant on fiscal policy, monetary policy, and inflationary measures, Roubini further writes:
Karl Marx, it seems, was partly right in arguing that globalization, financial intermediation run amok, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct (though his view that socialism would be better has proven wrong). Firms are cutting jobs because there is not enough final demand. But cutting jobs reduces labor income, increases inequality and reduces final demand.
Recent popular demonstrations, from the Middle East to Israel to the UK, and rising popular anger in China – and soon enough in other advanced economies and emerging markets – are all driven by the same issues and tensions: growing inequality, poverty, unemployment, and hopelessness. Even the world’s middle classes are feeling the squeeze of falling incomes and opportunities.
Of course, Roubini is playing fast and loose with the definition of “socialism.” Stalinist Russia – that is to say, the Soviet Union after Lenin’s more or less capitalist New Economic Policy was replaced – (and its numerous imitators) was an experiment in nationalized state capitalism on an underdeveloped, pseudo-feudal society.
Socialism as such was not and has never been tried. You can certainly criticize Marxist ideas (I do), but you can’t say that “socialism failed” if you don’t even pretend to follow the manual.
Disaster capitalism at work. The following article comes from Melissa Boteach at the Center for American Progress:
This week the House will debate a GOP proposal to cut $101 million from food assistance for low-income seniors and local food banks. The bill slashes $38 million (a 22 percent cut) from the Commodity Supplemental Food Program, or CSFP, which provides nutritious food packages to more than 600,000 low-income families every month (96 percent of whom are seniors). The bill also cuts $63 million from The Emergency Food Assistance Program, or TEFAP, which provides our nation’s emergency food bank network with food commodities and storage and distribution support. These cuts come at a time when food prices are rising and food banks are already struggling to serve their existing caseload.
Conservatives claim these cuts on the backs of our nation’s most vulnerable families are necessary to bring our fiscal house in order. But here’s the rub: One day’s worth of Bush tax cuts for millionaires would more than offset these cuts to seniors and food banks. Here’s the math:
What’s more, conservatives often claim that private charities will simply pick up the slack. Yet this bill cuts support to the very private charities that conservatives claim will step up to fill the gap. TEFAP funds supply about 25 percent of the food provided by local food banks, soup kitchens, churches, synagogues, mosques, and other emergency feeding institutions.
Cuts to the program would be particularly devastating as food banks face a projected 50 percent decline in USDA bonus commodities and grapple with a trend of falling charitable donations. Similarly, the CSFP is generally distributed through local public and nonprofit community organizations like food pantries and hospitals.
In short, these cuts will inflict enormous suffering on some of our nation’s most vulnerable populations while undermining the ability of private charities to meet rising need. And yet today our Treasury will lose more money in tax cuts for millionaires than it would take to avert these cuts.food banks
Melissa Boteach is the Manager for Half in Ten at American Progress.