by: Senjay Sangohee
The American economy today is a house of cards, wherein each added layer of cards at the top increases the pressure on the lower tiers and threatens the stability of the entire structure. The higher the edifice goes, in fact, the more likely it becomes that the whole thing will come crumbling down at some point.
The reason for this is not the expansion of our economy itself but the inequality, exploitation, corruption, and injustice that are accompanying this expansion at every step. The economy may be growing, but it is doing so at the expense of its foundation -- the working class Americans who make all economic activity possible.
Here are the hard facts:
- Unemployment in the United States, at 7.3 percent, is declining but only because people are giving up and leaving the work force completely.
- Income inequality in our nation is the worst it has been since the 1920s and almostdouble that of other developed nations.
- The average income of those in the top 1 percent is $717,000 compared to $51,000 for everyone else.
- The same top 1 percent also owns 42 percent of America's wealth, with the next 4 percent claiming another 30 percent.
- The financial crisis of 2008 wiped out 39 percent of the wealth in the United States, but the top 1 percent have reaped 95 percent of all income gains since that time.
- The average CEO of an S&P 500 company makes 204 times the income of rank-and-file employee and this ratio has increased by 20 percent since 2009.
- Two-thirds of minimum-wage earners in America live below the poverty line.
- Major companies like Walmart refuse to pay a living wage to most employees, make it impossible for workers to unionize, and deny them benefits by labeling full time workers as contractors (even as healthcare costs rise).
- Our Treasury loses $150 billion in revenues every year because of offshore tax shelters and $200 billion because of other loopholes that disproportionately benefit the wealthy, which then necessitates cutting public services and welfare.
- Social Security and Medicare, which low-income Americans and seniors rely on heavily for financial support, are projected to run out of money by 2033 and 2026 respectively, which will trigger a sharp reduction in benefits for both programs.
Put all this together and it is clear that while those at the top of our society are getting richer everyday, those at the bottom are actually getting poorer, both in relative and absolute terms, due to a severely lopsided allocation of gains and resources.
The culture of gaming the system for personal gain, which lies behind this, is bound to be destructive since for someone to win, someone must lose. The perfect example of this was the subprime mortgage debacle, in which banks, ratings agencies, and debt packagers created a massive asset bubble in the housing market by lending to unsound borrowers and then packaging and selling those dubious loans on to others, all of which was wildly profitable for them but caused suffering for everyone else when the bubble burst...
So is Wall Street or in a broader sense Corporate America to blame for our current scenario?