A couple of days ago I wrote a post on the disapperance of the American middle class and the stark and growing gap between rich and poor in that country. I was a bit wary because it was one article.
Today I’ve found this column, written by respected New York Times columnist Bob Herbet about the dangerous levels of economic insecurity within the US.
The study tracks the percentage of Americans suffering household income losses of 25 percent or more, and shows that families are suffering steeper income declines than in previous decades.
The evidence is there:
The pain coursing through American families is all too real and no one seems to know what to do about it. A rigorous new analysis for the Rockefeller Foundation shows that Americans are more economically insecure now than they have been in a quarter of a century, and the trend lines suggest that things will only get worse.
Rampant joblessness and skyrocketing medical costs are among the biggest factors tearing at the very fabric of American economic life so painstakingly put together in the early post-World War II decades.
What’s more frightening is that:
Policy makers seem bewildered by the terrible economic state of ordinary working Americans, including those once considered solidly in the middle class. Despite warnings back in 2008 that we were on the verge of another great depression, the big financial institutions and corporate America seem to be doing just fine now. But average Americans are hurting with no end to the pain in sight.
More than 14 million people are out of work and many more are either underemployed or so discouraged they’ve just stopped looking. Big corporations, sitting on fat profits even as the economy continues to struggle, have made it clear that they are not interested in putting a lot more people back to work any time soon.
Policy makers have dropped the ball completely in terms of dealing with this devastating long-term trend of ever-increasing economic insecurity for American families. Long-term solutions that have to do with extensive job creation and a strengthening of the safety net are required. But that doesn’t seem to be on anyone’s agenda.
America is a disaster:
- Their two party system is a joke and has been almost completely corrupted by corporates
- Their current account deficit is $800,000,000,000 a year
- The government books are so bad the country is technically insolvent, with a $1,700,000,000,000 deficit this year and over $52,000,000,000,000 of total unfunded liabilities due to Medicare, Medicaid and Social Security
- Personal finances aren’t far behind in the disaster stakes
- The last few White House’s seemed to use the constitution as toilet paper and they barely follow a clause of the greatest political document ever written anymore
- Their cities are by far the worst designed in the world, especially considering future oil availability
- The only thing currently saving them is the fact governments have to keep large reserves of US dollars for oil purchases (as one wag put it, the US makes dollars while the rest of the world makes things dollars can buy)
Jefferson, Washington, Lincoln, Roosevelt… Those graves are turning… The US as the world’s superpower time is numbered, maybe in the next century they’ll be back, trimmer and re-calibrated…
Hard to blame the current administraion when they are dealing with problems of such enormity that have been building for 30+ years…
Those poor people
JMH I note you talked a lot about the US govt as a source of problems (and I agree with many of your points), but only touched very briefly on the problematic role and influence of asset wealthy investors, the burgeoning non-productive financial sector and multinational corporations in causing the current state of crisis.
@JMH: You can also factor in the military-industrial complex, as forewarned by WW2 hero President Eisenhower in the 1950s.
Faith, fast food and firearms – the three “F’s” that make up the bread and circuses that keep the American people quiescent.
Here is the problem you have. The rich cannot help but get richer. If I had $1000 and could invest it then in 12 months my net worth would be say $1,050 – an increase of $50 in my wealth. However if I had $1,000,000 invested then in 12 months my wealth would be $1,050,000 – an increase of $50,000. No I may reinvest my surplus funds and grow it even more the following year.
You socialists try and deny this fact of life – but it is petty and self defeating.
the much better idea is to grow the whole economy so those with no money have the equal opportunity to grow and become more wealthy. That is the basis of national party policy – whereas your lot talk about “sociial Justice” and “the many – not the few”
I call it the politics of envy.
According to respected economist Professor Robert Wade, writing in the NY Times, the top 1 percent of households received 9 percent of US disposable income in 1980, yet by 2007 the top 1 percent received 23 percent of US disposable income. Meanwhile, the average income of the bottom 90 percent actually fell. What happened in 1980? Reagan, trickle down, tax cuts, deregulation and small government, that’s what. And the old snake oil salemen are still amongst us. You have to admit, they have been overwhelmingly successful at vastly enriching themselves.
THEN why do the rich need the extra NAT help of tax cuts which favour them, the advantaging of investment vehicles which favour them, and GST and energy tax increases affecting the costs of basic goods which hit those on lower incomes the hardest.
The poorest want to know where they can find the $150 next week to do a grocery shop for their kids.
The richest want to go up from their V8 Merc to a V12 AMG.
I call it the politics of greed.
Also the politics of the wannabe’s who do the foot soldiering for those who play the politics of greed…its obvious who they are too.
Tom S: “Faith, fast food and firearms – the three “F’s” that make up the bread and circuses that keep the American people quiescent.”
And sadly it could be closer to home than we think.
At this rate, one will have to hail from Remuera or Ilam to get ahead in life.
@Loota, there are two types of asset wealthy investors in the US, the good and the bad – same as here – where we have the good (Stephen Tindall, Alan Hubbard, Sam Morgan) and the bad (Eric Watson, Mark Hotchin), it is a case of, in NZ, the overwhelming majority is in the good caterogy, while in the US it is a more of a toss up…
I think the pertinent fact to remember is a “good” investor must invest in economically productive things – economic growth and productivity increases or they won’t see a return, in America they chased short term gains that were overtly risky (sub-prime) and then got really silly by packaging these risky investments and then making insurance bets (derivatives) on them rather than investing in economically productive equities, it was a joke and people that invested in it got their just returns and we should never have bailed them out…
US investor Warren Buffet called derivatives a $100 trillion dollar threat to our economy and he came out relatively unscathed because he had few derivative type investments, I also think we need to acknowledge that many people gave money freely to these crooks with their eyes open, this story sums up the whole sorry saga well methinks:
http://www.time.com/time/magazine/article/0,9171,1999417,00.html
Speaking of Warren Buffett…
“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”
And he said that out of embarrassment, not pride.
No Loota it’s politics of envy. Why is it so many of you believe that people with assets exist purely to be taxed (or ‘redistribution’)? Furthermore, you seem to believe that the so-called rich (in other words, anyone who has been putting money away regularly for his or her retirement) will not only not mind this happening, but will be in some way grateful to have their guilt at being “rich” gouged out and by being kicked in this way.
Most people these days who invest, and yes that includes kiwisavers and people from ALL walks of life, use money they have earned that has ALREADY been taxed. They have often put money into investment funds or bought shares and therefore invested to help another enterprise grow. (Is there enough investment in SMEs and other enterprises here, could be another debate?).
There is no need to have that debate Simon the answer is an overwhelming – NO..! Everyone invests in property here because they think it is safe (the last two years have proven that wrong) and in many cases they are acquiring a liability not an asset or at best a very poor returning investment…
@ Monty:
Yes, that happens under the capitalist legalised theft system. You will note that the person who “invested” the money did no work and didn’t actually create any wealth but got richer anyway. The people who actually do the work under that system get poorer every year. You happened to point out where that money was going – to people who don’t work.
@Simon: the unfortunate fact is, for every Sam Morgan and Alan Hubbard there are several Fay Richwhites and Mark Hotchins.
So, if I work and save part of my earnings, invest in a bank account/investment vehicle, increase my wealth by compound interest or good fund performance that allows me to fund my retirement, buy a nice car, holiday overseas, go see my parents in the UK, live in a nice neighbourhood, that in some way makes be inherently morally wrong?
Anyway, as a generally question, because having moved here 3 years back, what has happened to the unions over here? Why are they so quiet? Why aren’t more people from all political sides members?
I’ll give you an example of my in-laws here in Chch. Both worked hard, had a family and took retirement about 10 years ago. With the payout from the company pension fund and selling a home, they are quite comfortable with the cash invested, mainly in cash deposits (wise given their age) but also other more balanced funds. They get compound interest, growth on the investments, yet they do not work, BUT take an income and grow their worth even by not working and not creating any wealth, except for themselves.
Rich who are the deserved
Poor who deserved to be so.
Old and shallow arguments that suit some depending on where you stand and how you work. Some will always be greedy and argue to defend their lot.
A sample of the rotten fabric.
http://www.bloomberg.com/news/2010-05-18/conspiracy-of-banks-rigging-state-finance-converged-with-mortgage-meltdown.html
Slightly dates and has got worse under Bush
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
The shapers of the public mind
http://www.natall.com/who-rules-america/
There is heaps of stuff around.
The tiny group who have fleeced the US have expanded globally and absorb wealth and control as they go.
NZ has not been left out of this expansion and the effect of such it to control our policies towards their end. They have been here for a long time.
Ruthless Rotten and without any moral responsibility to the inequity resulting from their dogma.
Our PM is a Banker.
Simon said:
Demand for higher and higher returns, not from yourself or your in-laws directly, but from the fund managers who run the vehicles you have invested in, cause the issues where corporates seeking to maximise margins do things to damage the countries they are headquartered in and the environments that they operate in.
Not to mention the fact that if you are asset rich in this system you are much better off than those who are working for the asset rich, since the pressure on corporates to earn tends to exert downwards pay and conditions pressure on ordinary workers.
Or cause their jobs to be offshored altogether.
It is morally wrong if you support a system which lets you do these things yet makes it impossible for your working class neighbour on $14/hr in the next street along to move up in the world so that they too can “see their parents in the UK, live in a nice neighbourhood”.
The chance of significant change being made by a few individuals being more responsible in their ethical living is very slim indeed.
Those who just throw up their hands and join the foray loose any moral standing.
What you vote for matters.
Before a vote is cast knowledge of what you vote counts for is the basis of democracy. ( a very abused term )
Ignorance and misinformation defeats democracy.
The finance empire is based on money not work or production the latter two being what makes society able to provide.
Much of the parasitic leeching and massive accumulation on money ( which is only credit for work or goods ) has created a class of people who never work or provide but live off the others in grand style , control politicians and peoples lives generally.
This situation is deeply embedded.
History has shown that it usually ends in tears as society breaks down. to be replaced but another emerging heirachy often on similar lines given time.
No all societies hold exactly the same understanding of how the benefits of money are employed to mobilise commerce. Vigilance against greed is deal with in various ways.
Progressive taxation is a common mechanism to rectify the skimming off by finance accumulation. You can’t help but notice that progressive rates of taxation are deplored by those organisation that contribute little but handle society’s money, at great levels of profit.
No payback to society is welcomes by them yet a benefiting society would become a better place to live and do business,
In New Zealands care harsher progressive tax would also help keep money onshore to assist the economy and resident population.
As world population grows options are changing.
I have to smile when the concept of United Nations is bad mouthed. UN is no doubt a vehicle for some corrupt and often tribal perpetrators of sectarian favour. But the organisation has not yet been taken over by the money elite so change is possible and elections for positions within the UN are not yet based on massive sponsorship from corporates. i have no doubt they are working on it.
The UN has a position to guide on various situations which US manipulates to its own end unfairly, and yet does not pay its bills. The richest large nation per capita but won’t meet its commitments. Does that sound greedy and selfish in simple terms.
The rot has reached far into the psyche of the brainwashed US masses most of whom seem to swallow anything that pleases them. The media have seen to that. Our media is linked to the same US sources.
As growth is destructive to availability of resources, the planets climate, other species and ultimately mankind and life as we know it, why is growth pushed by politicians.
The business sector are not all bad of course, but some elements have promulgated the worsening situation we suffer under. Our resources are being depleted yet out inequity grows.
No matter what the industry of propaganda disseminates at the behest of powerful wealth holders, the economic system will not go on as is. Limits met across a range of mounting obstacles to which there are no ways around.
It is common sense that planned management of our future on this planet is desirable but instead we have planned management of short term profit accumulation for a small group.
If you doubt that then read the figures of wealth distribution trends in NZ and many western countries. We are not alone in this.
As a philosopher put it.
A group of rats in an enclosure will breed to the point of food shortage. Changes in the social structure sees the fattest band together and canabilise the weaker. Even if food is replenished the social structure remains damaged and killing is used still to maintain rank and feeding order.
Simon
Your point about trips to the UK – or any where really is interesting.
At present many people view global travel as a right earned by accumulating the money to pay for the ticket.
Changes ahead will alter regard to travel no doubt as fuel dramatically rises and the real cost of the consumed resources bite. Already realisation of the damage done by air travel is growing.
Sailing ships were much more benign to our biosphere.
Most of our consumption has a consequence beyond the immediate exchange of the money involved.
Would you see all the peoples of the world sharing your aspirations and intended activities.
Being fed, having shelter and community is basic survival. Family and hope for their future provides a sense of living culture.
Who gets the luxuries and how necessary are they.
I have always said this. America says they are the Land of the Free.
This is true.
They are free to live in their cars because they can no longer pay their rent because they are on minimum wage.
They are free to go without meds because they fall through the cracks of the still complicated US medical insurance system.
They are free to die in droves for their country despite most of those who give their lives are young and poor. Despite Iraq essentially being an illegal war according to the Rules of the UN.
We must protect what we have here and not move further and further towards “Pure” Capitalism and a society of Laissez Faire.