Wednesday, September 24, 2014

Trickle-Down Outcome: Rising wealth for the few, low-paying jobs for the many

(New Deal policymakers like Harry Hopkins (left) understood that government action was needed to address problems associated with extreme income inequality. During the 1930s, these problems included unemployment, low wages, poverty, inadequate infrastructure, and white collar crime. These same problems have revisited us today but, unfortunately, we have few New Deal-type policymakers to address them. Photo courtesy of the Library of Congress Prints and Photographs Division.)
For the past 30+ years the American public has been sold on the idea that rising wealth for the few is good for the many. This is the core philosophy behind trickle-down economics. So, we've handed out colossal tax breaks to the super-wealthy, demonized unions, and kept the minimum wage low. Unfortunately, as the rich have become richer, the rest of us have been running in place or falling behind. As journalist Dave Gilson points out, "Since 1980, the average real income of the 1 percent has shot up more than 175 percent while the bottom 90 percent's real income didn't budge."

The latest evidence that we've been duped by the Great Trickle-Down Deception comes from a research note by two economists from Morgan Stanley. The economists report that America produces a higher percentage of low-paying jobs than any  country in the Organisation for Economic Co-operation and Development (OECD). Indeed, it's not even close.

Journalist Kevin Short reports that "The OECD recommends that all its members have a 'sensible' minimum wage, increase progressive taxation and 'scale up' in-work benefits to address income inequality." Of course, we know that an increase in the minimum wage and a more progressive tax code isn't going to happen anywhere Republicans or Tea Partiers are calling the shots, e.g., the U.S. House of Representatives (and probably soon, the U.S. Senate). And we also know that, by and large, Corporate America isn't going to increase any benefits for its workers. Largely because that sort of thing gets in the way of executive bonuses and shareholder profits.

After 30+ years of the Great Trickle-Down Deception, America desperately needs a new and even stronger New Deal. Unfortunately, if millions of people keep voting for bank-approved politicians, we will continue to work at low-paying jobs while private jets fly overhead with passengers who benefit from the proliferation of poverty. As billionaire investor Warren Buffet has noted, "Through the tax code, there has been class warfare waged, and my class has won. It's been a rout."

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