Blood Will Boil

Winner-Take-All Politics : How Washington Made the Rich Richer—And Turned Its Back on the MIddle Class, by Jacob S. Hacker & Paul Pierson, © 2010, reads almost like a murder mystery. Appalling, shocking, fast paced, well researched and documented, it looks deeply into the currents running through today’s politics and connects them to their antecedents that started over 30 years ago. It demonstrates with piles of evidence the fierce about face U.S. policy has taken. It spells out how those changes turned the tables on the majority of U.S. citizens. It tells the story that sets the stage for the Occupy Wall Street movement. But what the movement has lost in translation through the news media, this book sets down clearly and decisively.

The statistics cited are alarming. For instance, in 1974 the top 1% took in 8% of the earned income, by 2007 its take more than doubled to over 18%. Add in passive income from investments and that figure goes from 9% in ’74, to almost, and this is hard to swallow, twenty-four percent. Nearly a quarter of all US income is flowing into the hands of only 1 out of every 100 citizens. The only time in US history this concentration of income has been this high was 1928. That was a long time before I was born, but I seem to recall learning something about the Crash of ’29 and a Great Depression that followed it.

In 1965 the average CEO got paid 24 times the average American worker. That’s a significant multiple. In 2007 the average CEO to worker multiple exploded to 300x. Putting those numbers in today’s dollars, average income is roughly $50k a year, times 24 equals 1.2 million. Fast forward to 2007, $50k times 300 equals fifteen million dollars ($15,000,000.00). That’s a 12.5 fold increase, whereas the average American worker today, adjusted for inflation, is actually earning less since the turn of the century. Yes, less, middle America is losing ground.

The shift in income is only a fraction of the story. Not only are the wealthy getting a larger share of the pie, they are paying less than ever in taxes. Tax rates on the top 1% have fallen by about a third. For the people in the top 0.1%, tax rates have fallen to less than half what they were paying in 1970. The richest 1 in 10,000 have seen an even greater drop in their tax rate. Capital gain and dividend rates have fallen from 35% to a paltry 15%.

I, just like you, don’t like paying taxes. I, just like you, expect certain public services, such as police protection, fire protection, roads, public education, to mention a few. That takes taxes dollars. There are some public services (a.k.a. social services) we need to cough up the money for.  I, just like you, don’t like the redistribution of wealth, but if employers aren’t going to play fair by paying reasonable, livable wages, then they’re going to have to pay taxes to provide welfare, healthcare, and subsidized housing and food for the employees they exploit.

The book’s authors rightly point out that part of this shift in income is a result of a preoccupation with individualism and celebrity. The spotlight is shined on the CEO, the MVP, the star of the show, leaving in the dark all the other people on the support team, without whom, that CEO or MVP is simply a lone wanker. Leadership sets the tone, but nothing happens without the stage crew and all the behind the scenes workers. That star center on the basketball court can’t score a single point without help from the rest of the team. That quarterback can’t make a pass without the linebackers saving his butt from being trampled. That CEO can’t keep an appointment without his assistant, and his decisions go nowhere without countless others down the line who actually do the work to make it happen. Is it reasonable or fair that one person out of a thousand gets to take the lion’s share when it’s the other nine-hundred-ninety-nine who are doing the lion’s share of the work? Are physicians worth more than teachers? Is it better to be stupid and healthy, or smart and sick?

Misplaced attribution is just a fraction of the story. Our political system is sorely out of whack. Republicans and Democrats are no longer representing us, you and me. They are no longer sitting at the table sanely and soundly discussing the issues that effect the greater population. They are no longer jointly trying to find amicable solutions. Instead, they are digging in their heals, entrenched in stubborn inflexibility, and unwilling to look squarely at who, what, when, where, and why the imbalances have gotten so far skewed towards the very, very few. They appear unconcerned with anyone but themselves and the 1% that feed their greed.

The book takes you on a tour of how money makes the rules, and how more and more money keeps tipping the rules more and more in favor of the have-more-and-more. It takes you through the horror house of bank deregulation, and of K Street high stakes bribery (euphemistically called lobbying). It talks about the dismantling of the very regulations put into effect during the Great Depression that were geared at preventing the abuses which allowed the boom & bust of the 1920s. And those reversals, not surprisingly, have allowed the latest banking meltdown in 2008 to put not just Wall Street in a tailspin, but the entire world economy doing doughnuts. And we’re still spinning, and we’re still doing next to nothing to fix it.

Your blood boiling yet?

For a good introduction to the subject, listen to the TTBOOK podcast, then pick up Hacker and Pierson’s Winner-Take-All-Politcs to read the full story. TTBOOK : [The Decline of the Middle Class]