Income Inequality Economics 101

Perhaps the two greatest sociopolitical myths of our time, those holding that America was moving first towards a post-industrialist and then towards a post-racist society, require a proper epitaph which may be written electorally this coming November. In retrospect, it turns out we are going nowhere with either.

On a positive note, manufacturing is coming back although a shadow of what it was and needs to be for a more complete economic recovery. Mrs. Merkel, while dead wrong on austerity policies as a way to help anyone but elites who thrive on passive income and want their loans paid back while working overtime to deprive paycheck serfs of any means or justification to do so, was right that her nation has emerged relatively unscathed to date from the 2008 financial sector-induced recession because “Germany is a country that still makes things.” It seems that in our national urge to invent complex social formulas to justify extreme positions that serve narrow interest groups, we have moved into a “post-shame” society where excessive getting justifies unconscionable gutting and the responsible pipers are not compelled to face public perp-walks or personal bank account claw-backs for the siren songs that have ensnared us all.

The nation confronts a much darker context regarding prevailing latent racism: travel anywhere in the continental U.S. and mention the President’s policies to conservative voters of any economic class, both one and ninety-nine percenters, to receive an earful of carefully constructed code words and rote-learned talking point phrases that cure any illusion of an America capable of and willing to look beyond color. Instead of insanely optimistic reaching for an American Dream full of unbridled promise for anyone from anywhere through self-reliance and hard work, new political code words such as “you lie” and “job creators” (a follow-on to the fully discredited “trickle down” bait and switch template) pollute our moral civic landscape. In particular, the term “job creators” has morphed into racist and elitist overtones when it should be cloaked in the tried and true tenets of humility and service.

Through this distorted and perverted prism, the alternative to “job creators” becomes “job recipients” similar to the 1990s’ racially targeted welfare queen epithet. For those standing in unemployment lines who haven’t yet cast off their lifeline to hope, a job whether private or public is still a job and its relative goodness is defined by the work that gets done, the remuneration received, and the level of human decency infused into working conditions. Job creators without job recipients are like country club masters of the universe procuring and cooking their own food, setting the table, clearing the plates, and washing the dishes to then set up the next day’s repeating operations over and over again only because all the other workers have been deported. Alabama’s agricultural economy debacle is a case in point. It’s like Sisyphus without the rock and the hill, with finally nowhere to go and nothing to do except self-proclaim and then perish from collective memory. In the America we revere, it is both an honor and privilege to serve and to be served but those we most admire have learned that serving, like giving back, far outshines being served on any given day.

Even if contemporary racial ideological ugliness eventually is trumped by emerging voter demographics as America soon becomes a majority minority country, there is no status quo free pass to lower employment without altering the national dialogue to face difficult structural truths. Our endless, historically self-reliant immigrant waves and dynamically evolving culture marked by commonly shared experiences and sacrifices proclaim a people that know how to better themselves by dint of example. In this context, the artificially generated private-versus-public sector confrontation myth fools nobody in fly-over, poor urban and abandoned suburb America whose citizens desperately need the public services under attack once polemic half-truths are stripped from both sides of the debate. In pure dollars and cents reality, any country organically counts on both its private and public sectors working in full concert if it is to compete with both hands free to create in a ferociously cyber-active global soft power marketplace that seeks out any comparative advantages for massive investment decisions like opportunity derivative traders on economic development steroids.

This is minimally possible in today’s America where economic class warfare is the new existential order of being and blatant hypocrisy regarding cause and its effects abounds throughout the land. While the nation debates whether we are and should be a country of vulture, venture or virtuous capitalism fostering private, public, or citizen-sector equity, the answers we elect will determine the quality of our individual freedom. But freedom it turns out does not fit into any absolute definition. Experience proves we need to respect, pursue, converge and integrate multiple freedoms from multiple angles to become a truly free people.

In the New York Times breaking series last March on Apple products being fabricated in China by Foxconn, the company that won universal approbation for more personnel suicides due to concentration camp-like working conditions, the pitiful excuse offered by Apple executives for their initial selection of that company in that country was that they couldn’t find a similar capability in America. Beyond the obvious human and worker rights failures their choice highlights, this is yet another damning indictment of Apple and other similar U.S.-based corporate leaders for not measuring up to the historic examples of American companies that traditionally gave back to America instead of just using domestic markets and intellectual profit infrastructure to seek profits elsewhere. Previously in our history, dramatically more visionary and patriotic executives put steel and knowledge into neighborhood ground to transform America’s infrastructure from coast to coast as a matter of principle.

Together with courageous unions who stood up and forced industrial era revenues back into the working class at the cost of lives and health so that while breaking their backs, heads could be held high and families provided for, this civic equation composed the industrial revolution that galvanized the global economy while giving American workers a shot at a decent middle class life. Such “local, living economies” created during the previous century by predecessor industrial and labor leaders showed us the steel in their own hometown backbones to seed the capabilities they perceived and needed from scratch against incredible odds without any Davos-inspired globalization policy end-runs and throughout two world wars and a great depression. Now, we sweat global product launches but outsource the domestic civic apps while monetizing personal stock options even when the companies we lead fail and our people are thrown out in the infertile streets because all the factories that could have been renewed and reborn were boarded up and shipped off to somewhere else.

Recently in St. Louis, one of our two presidential candidates declared that, “Our freedom, what it means to be an American, has been defined and sustained by the liberating power of the free enterprise system.’’ Today, not so much for the 8.2 percent currently unemployed, the foreclosed eleven million and counting, and the structurally under-employed who have found traditional labor mobility destroyed by federal government bureaucrats and publicly bailed-out financial institutions who would rather hold on to ill-gotten gains than engage in useful home mortgage principal reduction so that workers could more easily sell or rent their home, move to where the jobs are and still afford to rent or buy a new home on site. Today, not so much for the post-graduation traumatically-indebted millennials who dare to pursue secondary education believing in the rising generation myth that a diploma means more meaningful work. Not so much for our wonderful sons and daughters stationed overseas in the name of defending liberty and the American way of life who, it turns out, are deciding to take their own lives faster than our enemies can and even if they manage to return home safe and sound can’t find a job worthy of their sacrifice. Other related misery sub-groups include the small retail and working class investors who got “unliked” by Facebook’s IPO market manipulation machinations even after being victimized by the 2008 disenfranchisement tsunami when the U.S. financial sector imploded in the faces of America’s decomposing “lost middle class generation.”

We are witness to extreme income inequality killing the equal opportunity social compact which then causes America to hoist itself by its own petard and die on the oligarchy vine. Thanks to the Roberts Supreme Court’s purely partisan ruling on Citizens United, statewide and national elections can now be bought anonymously. Thanks to the bipartisan abolishment of Glass Steagal during the 1990s Clinton Administrations aided and abetted by “greed is good” congressional leaders on both sides of the aisle, financial institutions aggregate past failures into tomorrow’s “too big to fail” conglomerates so that unchecked risk taking can count on being underwritten by the public treasury as part of balance sheet calculations. Repeating financial crimes against civic society get settled for pennies on the dollar without admission of any guilt. In this scenario, the scorpion always bites the frog carrying it across the river knowing both will die but unable to withstand and overcome the inherent evils of its own nature. Either we reform capitalism or it will reform us and what is happening on all fronts is that unreformed capitalism is winning for the elites who manipulate it.

Income inequality economics 101 creates a looking glass economy where nothing is worth what it should be. Elitist welfare constitutes entrenched, invisible, automatically renewing subsidies defined by special tax breaks to buy a high-priced mortgage or vacation residence with U.S. treasury backing, a private jet, pleasure or sailboat tax write-off, borrowing from the Federal Reserve discount window and then selling more expensively to those who can’t, sole source government contracts, special dispensations to park enormous amounts of pre-tax income overseas, and unprosecuted insider trading profits. Choosing austerity over stimulus means those who owe get to owe more and for longer in their lifetimes while those who are owed get paid off upfront illustrating how far our skewed unequal public policy thinking has evolved. Tomorrow’s American dream consists of indebted Millennial graduates whose foreclosed and fired parents are servicing the boomer generation elites in a political environment that shouts to curtail or cancel benefits and support nets for anyone except those who don’t need them. In this context, the fundamentals of the common economy are perverse.

Income inequality economics 101 means increasing shareholder value at the expense of stakeholders to perpetuate a status quo at high risk if disenfranchised losers just stop participating in the no-win formula and simply occupy without resisting to stop all societal trains in their respective tracks. White collar welfare is on the rise while working collar welfare is under successful attack by white collar welfare recipients. Surviving in a country of ever-widening income and wealth accumulation inequality where profits from public accounts are increasingly privatized through distorted political equations and while losses at the expense of the general public good are increasingly socialized means the ninety-nine percent get to tithe upwards without any upside.

Yesterday’s basic economics 101 axiom, a large piece of something small is always less than a small piece of something big, doesn’t seem to apply any more to special interest-mandated domestic economic policies. Otherwise, how to explain contemporary conventional political thinking that demanding austerity or providing additional tax cuts on behalf of the economic elite will prove more of a salutary benefit to the nation’s comprehensive economy than infusing the ninety-nine percent with more short-term disposable income?

Socially and politically, the country’s suffering class is becoming more independent; in this year’s national elections America’s fastest growing constituency is the undecided, gut-clenching populist vote still up for grabs with most paycheck-to-paycheck voters looking for any “reason to believe.” Working class Americans cling to relative versions of the American dream but consider it an abstract anachronism that has lost its equal opportunity juice in a system rigged by highly organized special interests doing the dirty deed over and over again in the peoples’ name but over their disenfranchised bodies. Ideologues work overtime to starve public sector job creation that drives up the national unemployment rate in the name of reducing public debt to help out generations of yet unborn Americans at the expense of those currently trying to survive who have become involuntary local ghetto residents.

Too many of our leaders chest-thump American exceptionalism while proving disastrously unexceptional except in the pursuit of their own narrow economic, social, or political self-interests. Returning value for shareholders through outrageous profits at the expense of leaving stakeholders to fend for themselves creates psychic scars that heal badly if at all. Remember the gifted grade school English teachers who wrote by example and taught their students to “show, not tell”? That old school approach is missing from the ideologically black and white, zero-sum national political campaigns raising millions of out-of-town dollars, often anonymously, to pummel and pound the beaten-up American body politic into malleable shapes of someone else’s design and choosing. Even the global soft power race between American democracy and Chinese autocracy is coming down to which home-grown political culture will produce more locked-in oligarchies fastest? One race collectively we could actually win.