Congratulations on that nice pay raise you got last year, a 7% hike — wow! Seven percent might not sound all that big, but after 40 years of stagnant wages, even a small uptick can help cover some of your old credit card bills or get an upgrade on your 10-year-old pickup. Oh, wait … You say you didn’t get 7%? Oops, my mistake. It was the CEOs of corporate giants who reported to the Associated Press that they enjoyed a median jump of 7% last year. And as their paychecks were already king-size, that uptick amounted to an extra $800,000 in their take-home, for a median yearly income of $12 million each. Bear in mind that “median” means half of the corporate bosses grabbed more than 7%. For example, David Zaslav, honcho of the Discovery television network, had a 207% boost in pay, raising his total take in 2018 to $130 million. These lavish payouts to top-floor bosses — combined with a miserliness toward rank-and-file employees who actually produce the corporate wealth — is creating an untenable income disparity in corporate America, stretching inequality in our Land of Egalitarianism to the snapping point. The pay gap between aloof CEOs and typical employees nearly doubled last year at a range of corporate giants, from PayPal to CVS Pharmacy, and it tripled at Discovery. AP’s recent survey of 340 major corporations found that compensation inequality is now so extreme that a middle-wage employee would have to work 158 years to make as much as his or her chief executive was given last year alone. This separation is widening at warp speed, propelled by the boundless greed and narcissism of so-called leaders like Zaslav. To amass as much pay as he pocketed in 2018, a typical Discovery employee would have to work 989 years.
When you hear corporate chieftains and such corporate cheerleaders as Donald Trump gloat that our economy is “booming,” ask yourself: A boom for whom? We have a president who mistakes price for value. Thus, to measure America’s economic health is simple for him: Just check the price of corporate stocks and any fool can see that he’s the best president ever at running the economy. After all, since he’s been in office, Wall Street has been whizzing! Unfortunately, though, it’s whizzing on you and me. Wall Street is an inequality machine. It encourages top executives to jack up their own wealth by artificially inflating their corporation’s stock prices. Then it rewards executives who offshore jobs, cut wages, monopolize markets, bust unions, gouge consumers and dodge taxes. Far from reining in Wall Street’s destructive plutocratic power, Trump has juiced it up with new tax advantages for big investors and the removal of rules to restrain banker scams.
Meanwhile, the guy who pretended in his campaign to be a champion for America’s workers has been a one-man working-class wrecking crew, systematically destroying employee rights and protections against the abuses of corporate bosses. On everything from overtime pay and minimum wage to workplace safety and the right to form a union, Trump & Company has sided with corporate interests over working stiffs, essentially saying to workers: “You’re on your own. Adios, chumps.” So, the economic “boom” that he so vaingloriously talks about is actually the sound of the middle class crashing. That thunderous boom-boom-boom represents millions of Americans who’re living paycheck to paycheck, who have little to no savings and inadequate health coverage, who can’t afford the rip-off drug prices Big Pharma is being allowed to charge, who’re sinking in debt. And all they’re getting from Trump are his vapid political rallies, shouting “MAGA” — “Make America Great Again.” Inequality doesn’t just happen; it’s caused by the deliberate actions of power elites. Far from reducing inequality, Trump has intentionally escalated the corporate war on working-class Americans. Under his regime, nearly half of all new income today is going to the wealthiest 1%.
Next Wednesday, Donald Trump will award the Presidential Medal of Freedom to the arch-conservative economist Art Laffer. Sadly, Laffer’s career has been heavy on punditry, light in academic rigor, and absolutely destructive for the average American and the long-term health and sustainability of our economy. A number of economists have already dismissed Laffer’s signature supply-side economics theory as pure nonsense. For his dubious role as the “godfather” of Reaganomics, Slate dubbed him World’s Worst Economist. He’s been called a key part of the “Intellectual Rot of the Republican Party”. Esquire suggested that Laffer’s turn as the architect of disastrous Brownback tax experiment in Kansas should hang “like a dead possum” around his neck for the rest of his days. So why exactly is Trump awarding such a man with the nation’s highest civilian honor? Maybe it’s because he recently wrote a book, Trumponomics, praising the president’s economic agenda. Most likely, it’s because Laffer’s theory just so happens to serve as the basis for every terrible tax cut that Trump and the Republican party have passed for decades.
The Laffer curve has done immense damage to the US economy in the 40 years since its inception. It also ignores a fundamental reality: tax cuts for the rich don’t work. Each and every time state or federal governments have tested Laffer’s trickle-down theory, deficits balloon, rich folks hoard their wealth at the top, and average Americans suffer. The greatest periods of growth in our country, such as the 1950s and 1990s, have coincided with decisions to raise taxes on wealthy individuals and corporations. If we want to return to those periods of prosperity, instead of letting inequality continue to rise unchecked, we must demand our elected leaders acknowledge that trickle-down economic policies don’t work. Modern-day Republicans seem to be hell-bent on perpetually ignoring basic economics in order to cut taxes for their rich friends, but that doesn’t mean the rest of us have to acquiesce. Laffer is a man whose sole Medal of Freedom-worthy achievement appears to be uniting staunchly conservative and ardently progressive economists against him. It’s high time that we leave “Laffernomics”, and all the failed experiments it has inspired, to the footnotes of history books.
Big Business vs. Big Government, Capitalism vs. Socialism
Conservatives tend to favor free-market forces calling the shots & letting corporations make decisions at their own discretion. Liberals want government to play a larger role in orchestrating the economic system. We should be leery of both big business & big government as they seem to be putting self-interests over the best interests of workers & the people. So with the increasing animosity coming from the working middle class towards big business & government, it’s holding them more accountable & ratcheting up the pressure on our private & public leadership to make the rewards of economic growth far more equitable.
When conservatives decry as socialism the many big-money proposals from Dem presidential candidates, it’s really not socialism so much as the progressive reaction (& sometimes overreaction) to Americans struggling financially & the escalating income inequality. The far-right is very distrusting of government, figuring nothing good can come from whom they perceive to be elite establishment deep-state bureaucrats, only there to steal our tax dollars & line their own pockets. As usual, such caricatures are only partially true & greatly exaggerated, but it does seem strange the GOP generally opposes big government while at the same time are trusting & even cower to big business. Are large corporations really more trustworthy & less oppressive than big government? The giant multinationals know no borders & are not held accountable to the people, having to answer mostly to shareholders.
So in theory, the American people should rely on government to create & oversee an economic model where they can get their fair share of the wealth being created. A big obstacle has been the rise of our crony-capitalist system, where the powers-that-be in the corporate world have gained undue influence over political leadership, so they’ve come to work in cahoots to mostly enrich themselves. And more than ever, the American people & working class have lacked a strong voice in how our system should function as it’s increasingly rigged against them. Knowing they’re getting the short end of the stick, many frustrated voters turned to Trump in 2016 to shake up the system. With that not working out too well, they may go to the opposite extreme in 2020 with progressive liberals, who really aren’t socialists in the tradition sense but do have leanings in that direction. That’s why I’ve repeatedly warned, we may only have a limited window of opportunity to fix capitalism for the working class, otherwise they’re about to opt for something drastically different.
Below we’ve pulled a few insightful articles off the recent newsfeeds providing valuable thoughts on this topic, since having a clear understanding to what’s happening is essential in developing cogent ideas & taking the proper steps to start tackling the daunting challenges. In this uneven, lopsided, disparate modern capitalistic system, the struggling working middle class are just looking for a fair shake to support their families, so they’re open to a complete overhaul of the current system where economic prosperity can be spread more evenly throughout society.
Here is a long article with very interesting perspectives & facts, which clicking on the link thebulwark.com/the-case-for-
The Gilded Age defies nostalgia. From roughly 1870 into the early 20th century, America spawned ostentatious opulence, income inequality, class immobility, grinding poverty, and the corporate monopolization of legal, economic, and political power. By 1890, the top 1 percent of the U.S. population owned 51 percent of all wealth. The top 10 percent owned 86 percent. The lower 44 percent owned just 1.2 percent of total wealth. Burgeoning bribery and corruption intensified partisanship and polarization. Societal comity sickened. This pathology spawned the progressive era symbolized by Theodore Roosevelt; two decades of reforms which helped relieve poverty; improved health, education, and working conditions; constrained corporate power; dismantled monopolies; and established the income tax. Yet it also protected capitalism from a more extreme reaction—because it persuaded ordinary Americans that democracy still worked. Today, it takes little imagination to see a new Gilded Age emerging. In 2018, Pulitzer Prize-winning business writer Steven Pearlstein wrote Can American Capitalism Survive, accompanied by a telling subtitle: “Why Greed Is Not Good, Opportunity Is Not Equal, And Fairness Won’t Make Us Poor.” Four decades ago, this balance began shifting. Faced with increasing global competition and a flattening stock market, CEOs began practicing a “shareholder capitalism” which prioritized investor returns. This often required using government to help achieve a radical transformation in how capitalism worked. This gave rise to a new corporate agenda rooted in spurring deregulation, reducing taxes, fighting unionization, slashing benefits, vitiating antitrust enforcement, pursuing corporate consolidation, transferring the workforce overseas or into nonunion jobs, and incentivizing CEOs for maximizing shareholder value—if necessary, by suppressing wages or firing workers.
These dislocations were accelerated by macro-economic changes which gutted industrial and clerical work, rewarded automation, confined growth to technologically-skilled workers, and introduced the “gig economy.” Employment grew quickest in low-wage jobs. Mass employers such as Walmart paid non–supervisory workers a fraction of what General Motors had paid 50 years earlier—because they could. Inevitably, corporate size became an economic and political problem. As private power swelled, so did economic concentration—in finance, the media, airlines, telecommunications, information platforms, and so on. Concurrently, corporations became “people” with the right to spend unlimited money to influence public policy – and therefore to insulate themselves from the consequences of democracy by aggressive lobbying and massive political spending. For many observers, this ratified the dictum of Louis Brandeis: “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” Pearlstein spells out why. Nearly $7 billion went into influencing the results of the 2016 federal elections. The 100 largest donors in America contributed more than the 2 million smallest donors; a small network of billionaires organized by the Koch brothers can spend $900 million on a single election cycle. Corporations and industry associations expend another $3 billion a year on lobbying. Corporate and financial institutions have installed a phalanx of politicians who do their bidding. Many Republicans in Congress are committed to protecting corporate interests and forwarding their agenda; increasingly, many Democratic candidates elevate liberalism on social issues over concern with concentrated power in corporate America, Wall Street and Silicon Valley. This corporate and shareholder dominance, Pearlstein argues, feeds a general lowering of moral and ethical norms. Businesses too often show little concern for broader societal problems, such as climate change, healthcare, immigration, infrastructure, and education. This deterioration was exemplified by the financial crisis of 2008, when greed metastasized into a real estate bubble driven by financial manipulation and predatory lending. In short, Pearlstein argues, capitalism as currently practiced erodes the basic trust and cohesion a healthy commonweal requires. Without that, civil society becomes uncivil; our politics “polarized, partisan and paranoid.” This results in the dysfunctional governance exemplified first by the Tea party and later by the election of Donald Trump.
As corporate interests have gained more power and influence, they have presided over the diminution of the antitrust laws which once prevented private enterprises from becoming so large that they slip beyond control. In addition to stifling competition, limiting innovation, retarding new businesses, and concentrating corporate power over important marketplaces, large corporations began dictating the terms of existence for ordinary people—which often included further depressing wages and benefits. Particularly notable are the big technology companies which have consolidated economic power instead of dispersing it. Take Facebook, that monopoly of the mind which enabled Russia to spread disinformation and exploit our social divisions; swallowed competitors and suppressed competition; leveraged its political power to forestall effective investigation and regulation; and traded our personal data in exchange for revenue or user data from others – privacy be damned. In turn, small businesses are dramatically shrinking in numbers and market share. Moreover, starting a business has become much harder. Since 1980, the Atlantic reports, the number of new firms launched annually has declined by nearly two-thirds. Another reason that the fruits of economic growth have become so narrowly shared is the political subjugation of labor. The New Deal sought to balance the power of workers and their employers. But over the last four decades the share of private sector workers who belong to unions has fallen to a level lower than it was before America legalized the right to organize and strike in 1935.
But shareholder capitalism has its own internal pathology. The emphasis on shareholder value drives corporate buybacks intended to decrease the supply of publicly available shares, driving up price. This corporate obsession with satiating shareholders breeds a myopic focus on short-term quarterly results, stinting research and development, incentivizing splashy acquisitions, and reducing employees to disposable items of expense while inviting CEOs to gorge themselves on stock options. Inevitably, shareholder capitalism drives one of our most corrosive economic ills—income inequality. Between 1953 and 1965, the inflation-adjusted income of the median family rose by 54 percent; between 2001 and 2016 it rose but 4 percent. In contrast, the last five decades the top 1 percent of Americans have nearly doubled their share of national income. America’s top 10 percent now average more than nine times as much income as the bottom 90 percent; the top 1 percent average 39 times as much; the top 0.1 percent a stunning 188 times. The favorable tax rates for investment income further exacerbates the gap: 20 percent for long-term capital gains, as opposed to 37 percent for ordinary income in the upper brackets. As Pearlstein notes, this concentration of income equals that of the Roaring ’20s—the precursor to the Great Depression. The tax cuts of 2017 further turbocharged economic inequities through an act of fiscal profligacy which ballooned our deficit for the benefit of corporations and the wealthy—justified, yet again, by resuscitating the discredited notion that under-taxing “wealth creators” stimulated the economy while paying for itself. The bill distributed more than 80 percent of its individual benefits to the top 1 percent of households; the bulk of the $150 billion rebated to corporations in 2018 funded shareholder dividends and stock buy-backs—which amounted to little more than a gift to the 10 percent of Americans who own 84 percent of all stocks.
This lopsided largesse was possible only through creating a $1.5 trillion deficit over the next 10 years, generating a brief economic sugar high, which is already dissipating. Cumulatively, this 40-year stretch has over-corrected for the economic problems of the 1970s and helped stifle social mobility and create an increasingly impermeable class system. Increasingly, as Matthew Stewart documented in the Atlantic, the accident of birth plays an outsized role in determining economic success. The poisoned fruits of fusing corporate and political power include those which darkened so much of the 20th century—oligarchy, fascism, authoritarianism, and blood-and-soil nationalism. And it risks squandering the immense good that capitalism can provide when it is functioning at its best by spawning mass disenchantment. Already millennials express an increasing openness to socialism—which should be a sobering verdict on capitalism as they’ve experienced it. That’s the fate progressive capitalism would spare us. If history teaches us anything, it’s this: In the end, no society does better—politically, economically, or spiritually—when most of its people do worse.