American nightmare: Rich & poor, middle-class no more
The US economy is generating breathtaking wealth for an elite minority of the population at the expense of millions of people now tumbling through the gaping cracks of the system. So why do we continue to watch the painful spectacle year after year?
America’s once-glorified middle-class is on its way to being relegated to the history books; an artifact of a bygone era when good-paying jobs, complimented by robust union representation and a supportive government gave millions of American families a sense of security and even prosperity.
Do a Google search on “American Dream” and cynicism and skepticism abounds: Many of the auto-fills that pop up involve angst-filled words like “death,”“a lie” and “leaving America,” according to Market Watch, citing Google Trends data by brokerage firm Convergex. Meanwhile, 69 percent of Americans say the obstacles to realizing the elusive dream are “more severe today than ever”.
Yes, the street is awakening, and I don't mean Wall Street.
The raw economic data shows why middle-class America has been in a grand funk for decades: According to Pew Research Center, 49 percent of US income went to upper-income households in 2014, up from 29 percent in 1970. The share that trickled to middle-income families was 43 percent in 2014, down from a respectable 62 percent in 1970.
The data reveals a disturbing trend that points not only to income inequality, but to the end of America as an egalitarian country, where everybody is guaranteed a fair shot at the "pursuit of happiness."
Increasingly, however, the country is cracking up between two warring camps: the super-rich and the super-poor. In 2015, 20 percent of American adults were in the lowest-income group, up from 16 percent in 1971. On the sunnier side of the railroad tracks, 9 percent are in the highest-income category, more than double the 4 percent share in 1971.
So what exactly is prompting this steady erosion of the US middle-class, the proverbial canary in the coalmine as far as the US economy – and its social cohesiveness – is concerned?
Here is a list of the top obstacles Americans say are blocking the path to reaching the dream:
Decline in work ethic 22%
Decline in values/morals 20%
Personal debt 20%
Rules favoring the wealthy 19%
Lack of economic opportunity 18%
Economic inequality 17%
Big government 17%
Decline of the middle class 17%
Cost of healthcare 15%
Government spending 14%
Source: 7th Annual American Values Survey
Unfortunately, any discussion involving numbers with an endless string of zeros has a tendency to numb readers into a state of despair and complacency, like deer trapped in the headlights of an approaching tractor trailer. In any case, here is a short description of what is ailing America and Americans, complete with endless zeros.
With all the feverish excitement of the release of Sport’s Illustrated Swimsuit Issue, Capitalism’s much-anticipated equivalent - something like ‘paycheck porn preview’ – has hit the newsstands and the figures are simply mind-boggling.
The report, however, wasn’t put out in breathless fashion by Forbes, Fortune or Financial Times, but by Oxfam, the poverty watchdog. And just in time for the World Economic Forum in Davos, where the financial elite sip champagne between trips to the ski slopes and seminars, feigning concern about the plight of the world’s 99 percent huddled at the bottom of Money Mountain.
Oxfam laid it all out on the table in the first paragraph: “An Economy for the 1% shows that the wealth of the poorest half of the world's population - that's 3.6 billion people - has fallen by a trillion dollars since 2010. This 41 per cent drop has occurred despite the global population increasing by around 400 million people during that period. Meanwhile the wealth of the richest 62 has increased by more than half a trillion dollars to $1.76tr.
Meanwhile, the total worth of the world’s 1,826 billionaires stands at $7.05 trillion, up from $6.4 trillion last year
I think if I were one of those 1,862 billionaires those numbers would give me some serious pause. Think about it: In just six years, the wealth of the bottom 3.6 billion people dropped by $1 trillion – despite their numbers increasing by 400 million (!). These are the kind of economic trends that invariably breed social disturbances, if not outright revolution, as at least one billionaire recently had the foresight to understand.
Last year, Nick Hanauer, a billionaire venture capitalist, issued a warning in Politico magazine where he argued, much to the dismay of his rich peers who always prefer a bit more subtlety, the “pitchforks are going to come for us” unless there was some sort of major change in the global economy.
“If we don't do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn't eventually come out.”
Hanauer’s warning notwithstanding, it seems things are business as usual in the land of the free and indebted. Despite all the sweaty hand-wringing following the 2008 Great Recession, when the world sleepwalked to the very edge of the economic abyss, the “too big to fail banks” are bigger and badder than ever, while executive bonuses continue amidst a flagging economy.
According to another report by Oxfam, “The assets held by the five largest banks in 2007 – $4.6 trillion – increased by more than 150 percent over the past 8 years. These five banks went from holding 35 percent of industry assets in 2007 to 44 percent today.
And here comes the real kicker: As these esteemed financial institutions accumulate ever more money, the "vast majority of Americans have been stuck with the same median wage since 1999.” David Cay Johnston, referencing the 2014 wage report by the Social Security Administration (SSA), demonstrates that “pre-tax incomes for 90 percent of taxpayers were the same in real terms in 2013 as they were in 1966.”
So where has all the wealth of America gone? When exactly did the American Dream morph into a fantastic Nightmare? According to Gabriel Zucman, in his newly released book, “The Hidden Wealth of Nations,” about $7.6 trillion dollars is being hoarded away in offshore tax havens like Luxembourg, Grand Cayman and Ireland, where rich individuals and corporations are waiting for a “tax holiday” to haul the booty home on their pirate ships.
Zucman demonstrated a bit of rebellious zeal not traditionally found in the halls of academia: “If a significant fraction of rich people can evade taxes and if the rest of the population feels taxes are not fairly enforced… then the willingness to pay taxes will disappear.”
This message harks back to our revolutionary forefathers who inspired the American Revolution against their British overlords when they declared “no taxation without representation.”
From the workplace to the halls of political power, Americans are certainly lacking representation, which is at the root of their present plight and the reason for the tragic demise of the once-proud American middle-class.
Without a healthy and robust middle-class, America will not only revert to third-world-country status, it will be ripe for a serious social convulsion the likes of which we have never seen.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.