The disparity between the fortunes of the super-rich and the struggles of the vast majority has become so stark and so wide that the corporate-controlled media and the corporate-controlled political parties cannot avoid discussing it. Obama and the Democrats are even seeking to raise the issue of economic inequality against their Republican opponents, albeit half-heartedly and without any serious policy proposals.
The Obama “campaign” against inequality is entirely cynical and insincere, because the five-year record of this administration is summed up in the figures presented above. The 10,000-point rise in the Dow Jones average is not an accident, or merely the result of blind market forces. It is the result of policies deliberately engaged in, by the Democrats and Republicans, by Bush and Obama, to bail out the banks and speculators and make the working class pay for the crisis of American capitalism.
Inequality infects every aspect of economic and political life. It plays no small part in the relentless drive for war, which has become a permanent feature of the political ideology of the ruling class.
Aware of the deep social divisions at home, the corporate and financial elite seek to direct tensions outward — now in the form of a conflict with Russia over Ukraine that threatens to devolve into civil war, threatening a military clash between nuclear-armed states.
And inequality is at the root of the collapse of democratic rights in the United States. While coverage has largely been dropped by the corporate media, each week brings new revelations of massive police-state spying programs from NSA whistle-blower Edward Snowden. It is the broad mass of working people who are the main target of these programs.
You don't have to be an economist to know which way the wind blows.
All you need is a memory and some perspective.
This week marks five years since the New York Stock Exchange hit its low point at the bottom of the financial crash that erupted with the collapse of Lehman Brothers investment bank. On March 6, 2009, Dow Jones Industrial Average hit its post-collapse low of 6,443. Three days later, on March 9, 2009, the S&P 500 hit its post-collapse low of 676.
Yesterday, at the close of stock trading for the week, the Dow Jones average closed at 16,452, up a colossal 10,000 points over five years, or 154 percent. The S&P 500 stood at 1,878, rising even faster than the Dow, gaining 170 percent over five years.
These are only the most striking of a barrage of numbers reported in recent weeks, demonstrating that for the US financial aristocracy, the Crash of 2008 has been used to engineer a historic redistribution of wealth.
The wealth of the parasites who own the bulk of stocks, bonds, hedge fund shares and other financial instruments has never been greater, and is growing at a record pace. The wealthiest 1 percent of the US population raked in 95 percent of all income gains between 2009 and 2012.
As reported by the WSWS earlier this week, the world’s billionaires saw their combined wealth soar more than $1 trillion last year alone.
As for the banks, beneficiaries of trillions in cash, loans and loan guarantees from the US Treasury and the Federal Reserve, both stock prices and incomes have returned to stratospheric levels.
For the American working class — that is, the overwhelming majority of the population, all those who presently work for wages, or are unemployed and seeking work, or are retired and living on pensions and Social Security derived from their past wages — the situation is far different.
The median US household income has actually fallen by 6 percent since March 2009, to $52,297, after adjusting for inflation.
The median family — the family living at the 50th percentile — is thus worse off today than five years ago, at the trough of the financial crash.
The unemployment rate has recovered only slightly, and only because so many millions of workers have dropped out of the labor force and are no longer registered as seeking work.
The actual rate of unemployment, if “discouraged” and part-timeworkers were included, would stand at well over 15 percent, a near-Depression level.
The cost of living has risen steadily over the past five years, even as workers’ real wages have stagnated. The price of a gallon of gas has risen by more than 50 percent, from $2.40 in 2009 to well over $3.60 in most parts of the country today.
The employee share of health insurance premiums for family coverage has nearly doubled over the last decade, from $2,412 in 2003 to $4,565 last year. As for food prices, anyone who shops in a supermarket is aware of the ever-rising cost of milk, meat, fresh fruit and vegetables, and other essentials.
Working people have to take on more and more debt just to keep up with their daily expenses. Household debt rose $241 billion in the fourth quarter of 2013, reaching $11.52 trillion. One-third of all households were unable to save a dime last year.
One would surmise that very soon many people will be in the streets advocating real change in the financial underpinnings of the U.S.
One would also surmise that the billionaires/millionaires who have made out like bandits from this charade of economic recovery are already prepared for this possibility.
March 6, 2014
Posted by Nick J
California is in its third year of a severe drought. Some scientists believe this will be the driest year in the last five hundred. Among other measures for dealing with the water shortage, the state has announced it will not provide subsidized irrigation water from dams this year.
The large-scale capitalist agriculture model touted by Norman Borlaug devotees (like Reason magazine’s Ron Bailey) is based on so-called “Green Revolution” seeds. These selectively bred seeds — “high yield varieties” — produce considerably higher output than traditional varieties, but also require much higher inputs of irrigation water and chemical fertilizer to produce those outputs.
For this reason, corporate agribusiness critic Frances Moore Lappe prefers to call them “high response varieties.” They are far less hardy than traditional varieties — particularly those developed over the centuries by native populations to suit local conditions in the Third World — in the face of drought and other marginal environmental conditions.
As such, they are suitable primarily for large-scale, export-oriented cash crop operations — the sort which are carried on mainly on land stolen from former peasant cultivators and enclosed into giant plantations by local landed oligarchies in collusion with transnational agribusiness corporations. They require large-scale inputs of subsidized water — the kind which tends to be directed disproportionately to large agribusiness operations on such land.
Meanwhile, state-subsidized and -protected fracking operations require billions of gallons of water, depleting aquifers in some of the most drought-stricken areas like California and Texas. And to top everything off, government subsidies to fossil fuel production and long-distance transportation (like the cross-country shipping of subsidized agribusiness produce from California) encourage the generation of the greenhouse gases that contribute to the drought.
The same principle is at work behind a wide spectrum of resource-input crises. Market prices, when free from subsidies and other distortions, are a sort of feedback system that tells those consuming an input the real cost of providing it. Artificially lowering the price sends distorted signals to the consumer — much like holding a candle under your household thermostat and winding up freezing.
Corporate capitalism is built on subsidized inputs, and profitable in large part because of them. It achieved growth in the 20th century through the extensive addition of subsidized inputs, like subsidized fossil fuels and large tracts of cheap land previously preempted (stolen) by the state, rather than the intensive approach of using existing inputs more efficiently.
A basic law of economics is that when you subsidize an input, people tend to use more of it. And businesses will tend to substitute that artificially cheap input for other inputs. The distorted price system gives an artificial advantage to firms most heavily dependent on that input. For example, subsidies to long-distance shipping infrastructure tend to benefit the firms with the largest market areas and the largest-scale production facilities shipping their output the furthest distance.
It makes them artificially competitive against smaller, more localized — and more efficient — forms of production. It creates artificial economies of scale at levels where they would otherwise have leveled off, leading to an economy of artificially large firms serving centralized markets.
At the same time, such responses to the availability of inputs at less than the cost of providing them means demand for them outstrips the government’s ability to provide them. The state exhausts its fiscal resources trying to keep up with demand, and when it reaches fiscal exhaustion, businesses most heavily reliant on the subsidized inputs hit the wall of resource depletion and spiking input prices.
So we see subsidies to superhighways and airports generating further demand for them, and the building of new local freeway systems to “relieve congestion” generating even more congestion, leading to a situation where the state is fiscally exhausted, demand outstrips supply, and the need for maintenance of existing highways and bridges is four times the revenue appropriated to fix them. And we see giant, inefficient agribusiness operations that are heavily dependent on water, using up the water till there’s no more.
The end result is that this model of state-subsidized capitalism has built-in crisis tendencies which will destroy it. That means a radical relocalization of manufacturing and agriculture, and a radical shortening of supply and distribution chains, and small producers that make efficient use of resources. The current model of corporate capitalism, allied with the state, far from being a natural or inevitable state of affairs, is a historical epoch with a beginning and an end.
It’s digging its own grave.
- Kevin Carson at Center for a Stateless Society under Creative Commons