By Gaius Publius, a professional writer living on the West Coast of the United States and contributing editor at AmericaBlog. Follow him on Twitter @Gaius_Publius and Facebook. Originally published at PR Watch
America’s income inequality has grown so wide that the current “recovery” is driven primarily by the upper fifth of income earners, as revealed by the latest consumer spending data. Right now, more than 60% of all consumer spending is done by just the top 20% of income earners. And retailers are noticing.
This is the America that’s in recovery. Who is part of that 20% with most of the spending money? First, obviously, are the bigs (the Kochs, the Edelsteins, the Rubins and Dimons, the hedge fund kings and queens). The next level down includes their top retainers (those who are paid — or campaign-financed — to serve their financial interests … people like, well …). And finally, there’s the broad class of well-paid and needed professionals, those who get the real trickle-down, who earn real money when the economy is good. Doctors, lawyers, high-tech pros, engineers, sales types, the people at the airport on a weekday. Everyone with a needed skill who keeps the machine running and whose job can’t be outsourced.
Inflation-adjusted incomes below that point have collapsed, or gone flat with barely a hint of recovery. We’ll show this data in two ways below. Read on.
Consumer Spending Data Shows Where the Money Is
Much of this is revealed in a study of consumer spending as described in a recent New York Times article.
First, the money quote, then more from the article. The quote:
[T]he current recovery has been driven almost entirely by the upper crust [the top 5% of earners], according to [the study’s authors] Mr. Fazzari and Mr. Cynamon. Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.
More broadly, about 90 percent of the overall increase in inflation-adjusted consumption between 2009 and 2012 was generated by the top 20 percent of households in terms of income, according to the study, which was sponsored by the Institute for New Economic Thinking, a research group in New York.
The study mentioned above is fascinating but technical. Reading the write-up in the Times will get you well started. It puts numbers to an otherwise amorphous entity, “rising income inequality.”
Most Consumption Occurs At the Top
The section just quoted covered change in consumption. There’s also information about the amount of consumption itself, divided among the various moneyed and un-moneyed classes. Take a look at this chart, which shows share of personal consumption expenditures by income group. Notice in particular the three 2012 bottom lines:
From the top part of the graph, we find that the top 5% of income accounts for almost 40% of consumption. That’s stunning in itself. From the middle part, we see the top 20% of income now accounts for more than 60% of consumption. And from the bottom, the other 80% of the nation by income — all of the rest of us — account for less than 40% of consumption. And again, as the graphs show, the trend is widening.
The vast “shrinking middle”
All of this means that the buying power of our vast middle class is shrinking, and with it the wealth of the companies that depend on it. The article is filled with examples of higher-end products and retailers doing well, just like the very low end (like Dollar Tree) which serves the near-destitute. Meanwhile retailers in the middle are seeing a ton of trouble — dwindling sales, store closings and plummeting stock prices. A taste from the article:
Investors have taken notice of the shrinking middle. Shares of Sears and J. C. Penney have fallen more than 50 percent since the end of 2009, even as upper-end stores like Nordstrom and bargain-basement chains like Dollar Tree and Family Dollar Stores have more than doubled in value over the same period.
The same trend is true for restaurants, where middle class brands — think Olive Garden and the like — are hurting. At Olive Garden (average bill of about $16 per diner), revenue is falling. At Capital Grille (average bill of about $70 per diner), revenue is up.
The Nation’s Median Income Is Still Under Water
Another way to see our widening income inequality is by looking at the following chart, published by Doug Short at his excellent analytic site. Short compares “nominal” growth in the nation’s median income — “nominal” means using the raw, non-inflation-adjusted numbers for each month and year — to the inflation-adjusted, or “real,” income numbers. The period covered is January 1990 through December 2013.
Keep in mind, this data represents the exact middle — the 50% mark in household income — a proxy for the very middle of the middle class. People above the 50% line are doing better than this. People below the 50% mark are doing worse. Here’s the chart (click to enlarge):
While the red line (unadjusted income) shows nominal improvement, the inflation-adjusted numbers are terrible. The median income, the exact middle, fell to nearly –10% after the 2008 crash, then “recovered” to only –7.5%. The middle income earner has lost a lot of buying power since the 2008 recession, and she’s still very much under water. No recovery there. No wonder Sears is closing its flagship Chicago store, while Nordstrom’s business is booming.
I wonder — how far above the 50% line do you have to be, for your blue line to have climbed back simply to zero? Short doesn’t say, but I suspect it’s close to the top-20% mark.
Short’s comment on this information:
[This] chart is my preferred way to show the nominal and real household income — the percent change over time. Essentially I have taken the monthly series for both the nominal and real household incomes and divided them by their respective values at the beginning of 2000. …
The stunning reality illustrated here is that the real median household income series spent most of the first nine years of the 21st century struggling slightly below its purchasing power at the turn of the century. Real incomes (the blue line) hit an interim peak at a fractional 0.7% in early 2008, far below the nominal illusionary peak (as in money illusion) of 27.2% six months later and now at 27.8%, just fractionally off its new high of 28.7% set in September. In contrast, the real recovery from the trough has been depressingly slight.
Tales of the carved-out middle, and two ways to see it.
Economic Growth Could Be Flat At Best For Years
Mr. Fazzari, at some point in the Times article, says: “It’s going to be hard to maintain strong economic growth with such a large proportion of the population falling behind.” True on its face. If no further shocks occur, if the wealth and income divide widens no further, and if the median earner continues to recover a meager 2.5% of earning power every two and a half years, then in about eight years — 2022 — that person will be at the break-even point relative to 2008, or 1990. She will have made it back to “zero” after the crash. In other words, no income improvement in 32 years, a whole working lifetime.
There are a lot of ifs in the sentence above. To start with, of course the wealth and income divide will widen. After all, that’s the goal of the “1% Project” in its entirety — to make it widen. Now consider an added thought. Picture that widening wealth gap, then imagine the state of the economy when the generation that owns nothing but a small 401k and no pension goes into retirement, and shortly after that, into poverty. That generation is in its 50s and 60s now, waiting in the wings.
The poverty rolls will swell, while the top 20% — and only they — go shopping. I often ask myself: At this point, do the rich really need the rest of us? If by “us” you mean middle-class Americans, the answer is likely, “No, not any more.”
(This is an expanded version of an essay that originally appeared at Americablog.com.)
When I was in university, I had a friend who lived in a duplex. His paternal grandmother lived in their quarters and the maternal grandparents lived upstairs. The retirees had puny pensions but they all lived more lavish lifestyles than in their working years. They paid some rent and the duplex was paid off in less than 10 years. And there were always babysitters for when the parents went on luxury trips.
Individualism in North America is a thorn on our side. I am expecting necessity will force many families into such arrangements over the next couple of decades. And when this happens, there will be an awful lot of empty houses.
That’s okay, Mr. Moneta, because the government will rescue the PE firms that invested in those soon-to-be-emptied houses.
The system thrives on stress and misery in the midst of abundance. Even in a trickle-down economy Americans could live convivial lives if they live in tighter and more loving communities. It is, quite literally, love that is missing from our lives or more accurately what Confucius calle jen.and the Buddhists call compassion. If you have ever been around communities that feature that at least some of the time you will know that money and consumer goods are not a requirement. Many Americans, particularly in the oligarch class, reject conviviality as a positive goal for society. Instead we talk about “growth” and jobs–f##k jobs! We aren’t here to build fortunes for the rich a-holes!
We possess both the technological means and the understanding of social and neuro-science to know how people can organize themselves to live satisfying lives. We can train people to change their habits, to deprogram from the conditioning of the oligarchs who want us to be separate islands, to not join together in communities (other than fear-based religions). We can live in genteel poverty if we weren’t required to spend money through various means. By mandating that education be paid for in RE taxes people desperately try to live in houses that they cannot afford to live in the “right” neighborhood and even if they can’t pull that off they have to avoid living in poor neighborhoods where if they are the wrong ethnic group their children will be bullied and your safety will always be a concern.
At one time, in America, you could live a boho lifestyle, work sporadically, enjoy life, hang out with friends, because the basics of life were inexpensive–Elizabeth Warren did a paper on this proving that the fundamental costs of life are far more expensive today than in the 70s. Today everyone not in the top 20% or so is struggling and worried about the future, particularly the young. We need to get off the treadmill, realize our public institutions (government at all levels, corporations, the media, religion) are deeply and hopelessly corrupt and start to come together with other people to help them understand that being constantly stressed is no way to live and there are alternatives but they require cooperation, sharing, and caring for others.
How can you make statements like these and not be called a Communist? I don’t mean that in a negative way. After reading the Peloponnesian War I realized the advantage to a society having similar views, but when I tried to explain these to others it didn’t take long for someone to point out that those are “Communist” views.
Extendor, you should begin to realize that people who wish to dismiss you and put you down will call you names rather than engaging your argument. No surprise there: you learned that in grade school. Only it is difficult to keep facing voting age adults who resort to these sort of close-minded rhetorical attacks.
Just keep thinking for yourself and damn the critics.
The Archdruid touched heavily on that that this very week. Anticommunism is a key component of the fascist identity.
Rogerian psychotherapy may sometimes a useful tool for getting past that duckspeak and laying bare the religious (and therefore potentialy irrational) sand on which their judgments rest, after which point you can mercilessly and cruelly mock their supposed belief in reason and humiliate them incisively for their lolrationality and retarded emotional development.
In passing, I once read a tale of I forget which of the Caesars using “civilians” as a contemptuous epithet to strengthen the esprit de corps of a dissolving military force. We need one of these. An epithet that strikes right at the tender undercarriage of the neoliberal self-image, I mean, not a Caesar.
Glad to see Elizabeth Warren’s paper cited. We need to keep pointing out that the problems of the middle class are caused by stagnant wages and skyrocketing costs for basics like housing, education, and medical care. Most of us are not extravagant high-livers frantically piling up debt in pursuit of the latest fashions (which even here I’ve seen some people argue).
You made me tear up a little, Banger. I agree but am finding it hard to ‘disengage’ as my young adult children are struggling to launch in this dreadful economy….the younger 2 are on board with your way of thinking….the older 2 have overpriced educations they (and I) are struggling to pay for and I fear they will be paying for many years. Debt slavery….just what the 1% ordered.
Upton Sinclair thought so too, as did every other 20th century idealist/socialist. and or commie (not necessarily a pejorative).
It’s easy to prescribe the ends, not so easy to get anyone to agree on the means of attaining those wonderful ends.
A major first step would be to soak the rich–tax reform, that is. But, but..as has been documented ad nauseum on NC, the rich own the legislators (okay, Elizabeth Warren is a major exception), the supremes, the enforcers, etc. I don’t see it happening. Alas.
Absolutely nothing can come from electoral politics at this time other than more of the same. No, we have to create alternative power centers and this requires changing our approach–to be less selfish and more compassionate and form alternative institutions that sustain our visions not the vision of the culture of narcissism.
rur42 writes: “I don’t see it happening. Alas.”
I understand the sentiment, but converting sentiment into action is the next step that has to happen. The level of rancor and hostility towards the US economic and tax systems are far beyond anything I’ve witnessed during my 60+ years, and I was around in the late 60’s when it seemed all hell was about to break loose. We talk these economic issues to death, but spend little effort trying to organize for change. Reading story after story about the great economic divide in the US, by seemingly hundreds of pundits on dozens of different websites, may be part of the helplessness some of us feel. How many times in the past few years have we read op eds or articles such as this: http://www.counterpunch.org/2014/02/07/the-american-dream-is-dead/
Picking a few of the most egregious tax loopholes would be a start, with diverse news sources and pundits repeating them, synthesizing them, and restating them over and over until more people become informed. Challenging political leaders to consider and debate them during election cycles is another way to get them in front of mainstream media and in front of the part of the public that follows elections but doesn’t follow economics or tax issues all that closely.
I believe the link below was posted on NC in the past day or two. The author does a good job of summarizing some of the tax loopholes that are worth rallying around. The post has 1,800 FB “likes, so it’s getting some circulation. The proposals wouldn’t necessarily be my first choices (I’d prefer a 90% capital gains tax on all real estate sales other than a personal residence, for example, and a business gross receipts tax on the largest business enterprises in lieu of the current profits tax), but the ones offered are a good start.
As documented, we have too much “wage inflation” at the top.
Inverse the FICA tax. Everyone under 103k doesn’t pay a cent. Everyone over does.
FICA the rich!
I will give you props for such an insightful comment. The nature of society itself will change in America soon; not because some activists or politicians make it change but because those who don’t change will disappear.
The elderly living lavish and carefree lifestyles because they “retired” was a temporary aberration from the historical perspective anyway. Like in the past, so in the future, those who don’t contribute to their community, young and old, have no reason to exist, nor will they.
You’re wrong – the elderly success going forward is about politics not what they produce.
Romney’s defeat was a major turning point – if he had been elected – SS, Medicare, Medicaid, Obamacare would have been eliminated or on a trajectory to be dramatically reduced and the PPT would have been in place today
with 10,000 a day boomers experiencing SS and Medicare and how well done it is by 2012- 2016 there will be 14.4 million and possibly more given early 62 enrollment
the republicans even with the bible based Koch propaganda cant overcome that fact – Romney was a major screw up – his wife said it was their turn – you have no idea how that was planned and he screwed it up
now even in the south – SS will trump phony religion and guns mime increasingly – couple that with Syria and phony Sarin gas attack engineered by Saudi Prince Bandar – 90% said no we don’t buy it – and now PPT deferred – debt limit repubs don’t want to touch –
small steps for man – huge move for mankind – if it can be sustained
Hillary never saw a war she didn’t like – will the progressives get that
Sorry, but our perceptions of reality are diametrically opposed. You are stuck in a world politics and ideology, while I am talking about basic reality: the world can not support the middle-class life style people in the Western industrialized world aspire to. Therefore it will not be support. This not a matter of Hillary or Romney. This is a matter of if you aren’t sourcing your food locally and sustainably then you’re probably going to starve to death in the not too distant future regardless of what your particular ideology happens to be. Though I think as a matter of course people will naturally transition to a sustainable lifestyle as the fruits of the industrial economy and the “green revolution” become more and more difficult to obtain–as we have been seeing for the past five years now. For those of us paying attention anyway.
As I mentioned, the alternative is disappearing. You would do well to abandon the false right/left dichotomy while it’s still relatively painless to do so. A good way to start if you are older is to take up sustainable organic gardening and volunteering to watch kids. Since money is draining out of the system at an accelerating rate, those should be things most elderly will be doing at any rate (as opposed to say, sitting alone and slowly starving to death–but hey people are weird and many are choosing to go that route); but now that I’ve pointed it out, those who still out there enjoying cruises and golfing away their final years will realize that what they are doing is not only wrong, but also unsustainable, and change for the better.
While you are tending your organic garden , the plutocrats will be scheming and conniving to find a politicly feasible way , based on
Agenda 21 , to remove you from your property ; it’s already begun .
Vegetable growing is no substitute for genuine wealth redistribution.
I don’t know…maybe…I think of individuality as a virtue, and I think autonomy is both necessary and healthful in developing one’s individuality.
Selfishness and atomization, on the other hand, are bad for business. Communal solidarity should not seem so consciously lefty and conceptual as it does whenever I type it. It’s part of our most basic framework as a species. Any other reality is a hallucination.
There’s a difference between individuality and individualism. Individuality is what makes you you. Individualism is when you only care about you.
This, per the Googles: “It has also been used to denote “The quality of being an individual; individuality” related to possessing “An individual characteristic; a quirk.”
I think you can’t have individuality without at least some individualism. But that doesn’t mean you automatically devolved into some full-tilt Randian psychopath.
I refuse to split hairs.
A large percentage of Americans automatically associate individuality and individualism with capitalism. And anything that take an inch away of those 2 attributes instantly = communism.
For a large percentage of Americans there are no shades of gray. Their hatred of communism is so incredibly visceral that one could only conclude that it is the result of a form of national brainwashing induced by decades of propaganda. Where is the individuality or individualism in mass brain washing?
Related–I saw a Yahoo article actually advocating raising the minimum wage to a princely $10 an hour. Depressingly, almost all the comments I saw were highly critical, along the lines of “the lazy scroungers should improve themselves so they could make more, or stop being so greedy, if you can’t afford it, dont buy it!” or “it’s not fair they should get more money for nothing, this will cost the rest of us in the middle class!”. Not a word about unrealized productivity gains being funneled to the top, or declining purchasing power. The depressing thing, almost all the posters were middle class; from what I could tell, mostly lower middle class. Yeah, go back to college so you can become a hedge fund manager, you lazy scroungers–that’s the ticket.
“That generation is in its 50s and 60s now, waiting in the wings.”
What is not appreciated to the extent it should be, is the sheer size of this generation. There are 78 million “boomers”–ONE QUARTER of the US population.
Rightly or wrongly, as this generation has moved through its life stages, like a “pig in a python,” the culture and economy have necessarily evolved to reflect the needs, preferences and purchasing power of this group.
Like it or not, boomers at all levels built this economy, such as it is. The “growth” was not automatic, their participation produced it. And, creative accounting notwithstanding, their withdrawal will destroy it. Particularly since their children and grandchildren are being prevented from picking up the mantle.
Not only that, but the natural resources available per capita to baby boomers during their lives was much greater, and cheaper to use, than those available to the young today. And the resource scarcity will only intensify. People who don’t transition to a creative and regenerative lifestyle now (who haven’t already) will be up a polluted shit-creek with a broken industrial paddle.
Luckily this is an automatic and largely self-correcting process though. Those who continue to cling to the old paradigm of unsustainable market economics will fail, freeing the rest of us to build something sensible and enduring. We can only hope that they’ll fall sooner rather than later to minimize the damage they’re doing to the environment in the process of their inevitable failure.
You would think being a few years younger than the boomers would be a good thing. You should move into an economy optimized for people your age. My experience is it doesn’t work that way, you move into an economy ruined for people your age. Either boomers are impressively forward-looking, always optimizing the economy perfectly for people the age they’re going to be, or the backlash is fast, because of resource depletion or political reaction.
The information on who is doing the consuming is fascinating. We already have Moneta’s ‘solution’ in the UK, through a bedroom tax and kids staying with parents forever. In London a working graduate couple get a room in a shared house for £800 a month.
Weber had it years ago that charismatic leadership, either religious or force, remunerated followers with free gifts or booty. He located this form of payment outside the range of routinised economic provision and such could only become permanent and stable sources of income through a profound change in their character. They’e done that then Max.
Amazingly, we have no idea whether we need the rich at all, whether of the kind getting personal shopping in ‘Pretty Woman’ or using the GUM shops of the USSR.
Hans Gerth wrote ‘The Nazi Party; It’s Leadership and Composition’ in 1940 (American Journal of Sociology) – http://www.jstor.org/discover/10.2307/2770263?uid=3738032&uid=2&uid=4&sid=21103453727967
This is surely what we have allowed the rich to become. The middle class was supposed to be the bastion of democracy. Its removal is sinister. It’s less that the rich don’t need us and more that we need to realise we must disestablish them.
Frankly, I’m not even sure it’s a lasting solution. It has worked for the contrarians but will it work when a large percentage of the population goes that route?
One thing is sure, when a phenomenon is too fast, we always end up with a bubble and its ensuing dislocations. So if many quickly opt for that strategy, chances are our problems will not get solved…
Just like one poster above mentioned bailouts for PE funds…
The rich don’t need the bottom 90% in the western world. In their minds, they can get what they need from the other 6 billion in emerging markets. That’s why they like “free markets” and globalization.
The trillion dollar question is whether or not the 90% can prove them wrong.
How do we disestablish them? It appears we are in a catch 22.
“Tell me my boy, what seest thou there?”
“A fool, tangled in a religious snare!”
– William Blake
By not buying into their cultural assumptions. We don’t have to be stressed, we don’t have to believe that our worth is based on wealth, we don’t have to live isolated lives in front of screens but connect with people and listen deeply with the heart. That will build what we lack, a sense of community–real community not the fake stuff we think of as community. By sharing resources, sharing strategy and tactics about dealing with the shark infested economic waters we swim in we will build something that will be a place for others to go who are fed up with the radical materialistic world view encouraged by the oligarchs in their interests.
We claim to have “progressed” in our civilization yet people are more stressed than ever, 47% of Americans live with chronic pain and a similar amount suffer from one or another psychic disturbance. Why do we choose to live these lives? Because we believe we ought to have our little things, our little or big house, our “private” property and our little hoard of money and so on. This is madness. I’ve seen people live on practically nothing and be happy–why is that? Because their life has meaning beyond the acquisition of private property.
I think you are giving people too little credit. Most of them don’t want very much- just a little security, a roof over their heads and a chance for their children. Unfortunately, the price of getting and holding these things has been made individualism, because we have allowed grifters and psychopaths to take charge of business and government. The Viet Nam war was ended by thousands of people assembled in the streets for nearly ten years. That’s what we need.
Unfortunately, the Vietnam War was not ended by protesters in the streets. I was there, I remember. The war went on an on.
I agree with Squeaky. The Vietnam war was won for Vietnam with Viet Cong bodies and blood, not by protesting boomers.
There was plenty of technological capacity to produce a greater VC body count but the protesting boomers broke the political will in DC .
The evidence that Richard Nixon was influenced by the people in the street is nil. Kent State didn’t stop the bombing of Cambodia and years of protests didn’t stop the Christmas Bombing. Nixon got out after the 72 election for financial and strategic reasons, mostly because of inflation and his China gambit, not because of protesters–that’s a pious fiction.
The fact that there was a DRAFT, and the sons of upper and upper middle class families were wounded & killed helped stop the war. There was “no problem” when casualties were limited to uneducated, lower class “cannon fodder,” but once those Ivies started getting killed, their congress critters heard about it.
I agree that we need more community and less materialism but if we sell out, they will end up owning all property, energy and means of production.
Not if we own it collectively. Communities can organize to form corporate entities who can buy property and resources in the marketplace. In this way we begin to overcome the competitive advantage corporate entities enjoy. We have all the tools we need what we lack is courage because most people on the left have a sentimental attachment to collective principles not an actual dedication to those principles. When push comes to shove progressives cling to their private intersect as much as alleged Christians call themselves the followers of Jesus and ignore everything he ever taught.
You have to make sure the collectivity can actually own the land. Corporate controlled government can force the 90% into a rentier society and/or shantytowns… it sure looks like that is what is happening when you look at PE buying up the foreclosures.
My question is how are the 90% going to stop that train?
Rejecting materialism is a good first step. But you make it seem like a goal, in a “work will set you free” kinda way.
I agree it is the first step, the goal is building a convivial society where enjoyment trumps status and wealth.
“All men are created equal.” That’s the law of Nature and Nature’s God, according to Thomas Jefferson.
A corollary is that being equal, all people must do their own work to survive. Those who have others work for them to create their wealth, sin against Nature and Nature’s God. An economy that tolerates people whose toil for their daily bread is mostly done by others, is a sin of a community – a cultural peccatum. Capitalism is a sin and investors, who do no or very little work themselves in the production of their wealth, are sinners. Criminalize the lazy ruling elites!
An economy that tolerates people whose toil for their daily bread is mostly done by others, is a sin of a community – a cultural peccatum.
That is a pretty good description of division of labor.
Criminalize the lazy ruling elites! How do we do that?
Lets start with small steps. The plutocrats love their stuff. Yachts, private jets, mansions, luxury cars. There is one thing they love even more though. Getting that stuff with “before tax” income. In other words, this opulence is a tax write off.
Here is an example of what I am referring to. BASF owns Fighting Island, an island in the Detroit River on the Canadian side and on that island is an opulent lodge used by BASF executives and their guests. Pheasants are raised on this island for BASF executives and their guests to shoot during hunting season. Creative accounting eh!
When are the skunks going to show up at the garden party?
It’s not a description of the division of labor, which is a feature of every human community. It’s a description of the exploitation of labor by capital (or force).
You are seriously quoting a slave owner saying “All men are created equal”? No wonder we can’t get people to recognize the reality of their situation…
An absentee slave owner.
and a rapist as well
We really don’t have to live this way–waiting around for “the economy” to “recover” in order to make a dollar to pay for our requirements. But we want to live stress-filled lives in the pursuit of status because we are brainwashed to do that. The alternative? Social and neuro-science has shown without any doubt or question that we are deeply social beings. Status-seeking is a sick and perverse way to live. Connecting with others and nature itself is our path out of this mess.
The answer is blowin’ in the wind, my friend. From coast to coast the mid-level 20 to 35yr old workers are burn-out from carrying the workload of what once was five jobs. They are heading toward the exit doors saying screw this lifestyle it ain’t worth it. There’s a brewing storm that will take the self-exalted economic gods by a force they never imagined. I know. My daily interactions are with many 25 to 35yrs olds on the verge of walking away from the slave masters. One clue to the impending storm- who won the grammy for best song was Royals by Lorde,
“But everybody’s like Cristal, Maybach, diamonds on your timepiece.
Jet planes, islands, tigers on a gold leash –
We don’t care, we aren’t caught up in your love affair”
Older folks feel the same way.
The key is “on the verge”.
Everyone I know has been “on the verge” for years now.
But survival in this system takes a paycheck unless you are rich or can throw off the brainwashing of our western society and live communally.
The answer my friend is blowin in the wind. There’s change a coming among the 25 to 35yr mid-level workers who feel this way as well; burnt-out from doing the job of 5 employees. They live in reality and aren’t buying the faux pas Kardashians american dream. Instead, they’re saying screw the corporate slave masters and heading toward the exit doors. The self-exalted economic gods are oblivious to this generation’s change in attitudes about working for a lifestyle of materialism. Many feel they’ll never own a house, have children or just maybe one or most of the trappings that they saw trapped their parents in a cycle of revolving debt. They’re headed toward a minimalist lifestyle with the addendum of regaining ownership of their lives and time….
” But everybody is like Cristal, Maybach, diamonds on your timepiece.
Jet planes, islands, tigers on a gold leash.
We don’t care, we aren’t caught up in your love affair”
I’ve been listening to that young pop star lately myself (I’m 35 incidentally.) Find her lyrics & music fascinating. I think like any decent song or art, there’s some ambiguity going on there… Is she rejecting it? At the same time she says “We aren’t caught up in your love affair” she seems very melancholy, and sort of fascinated by the glamour of luxury and wealth, inasmuch as she’s listing off all those status items… and giving them glamour by singing about them. Certainly (as someone mentioned to me) probably a lot of the people hearing it miss the “rejection,” and just hear the invocation of status symbols.
Good point, IMHO, those who think 16yr old New Zealander Ella Yelich-O’Connor is glamorizing the royals are those living in that love affair. Her performance, dress and avant garde style represents the upcoming generation’s lifestyle revolution. Another indicator are the 30 somethings Joshua Fields Millburn and Ryan Nicodemus new blog “The Minimalists.” They’re either on the cutting edge or there’s a definitive lifestyle revolution in our midst.
All I know is the top tier have brought this onto themselves. I think we’re finally headed toward a egalitarian Nordic-lifestyle.
The ruling plutocrats are not going to let the sheeple wander off the plantation no matter what path they may be on . The NSA exists to help capture any such movement . The struggle is the historicly periodic one of establishing a new Master/Slave paradigm that necessarily involves a power struggle .
None of this is surprising. The post WWII middle class prosperity was created by high paying manufacturing jobs in business and bureaucatic expansion by government. Business began exporting those jobs as soon as technology made that possible, but for roughly twenty years credit fueled real estate transactions and higher education took up much of the slack. Consumer credit allowed those with shrinking real incomes to keep spending, but only up to a point. Since 2008, the game has been up. Few middle class investors have participated in the renewed stock bubble. Either they sold at the bottom or refused to climb back in, or both. If they retained any money they have been savaged by Bernanke’s ZIRP. Business has recorded profits by shrinking head counts and limiting job growth to those which fail to provide a living wage.
I would not be surprised to see a return to the personal service economy of 1900. The top 10-15% of income earners will have household servants: maids, chefs, baby sitters, drivers. Who knows, all those golf crazy executives and athletes may even have personal golf pros doubling as gardeners. The nobs dig divots out of the lawns and the pro-gardners replace them and reseed the turf.
Perhaps the executive wives will even have personal hairdressers, or even gigolos.
“The top 10-15% of income earners will have household servants: maids, chefs, baby sitters, drivers. Who knows, all those golf crazy executives and athletes may even have personal golf pros doubling as gardeners.”
Are you serious? That’s already happened but it isn’t Americans doing those jobs.
Not at the extent it was in the 1800s. I dont know of many millionaires who have 10 live in servants, like was common in the 1800s. Or 10 house servants period, live in or not.
The last people they will hire are Americans.
For numerous reasons you can probably guess.
Not when Americans get desperate enough…
But right now youre correct. But for how long will you be?
Most of the work that was performed by 19th century servants is now handled by machines: washing machines, clothes dryers, refrigerators, gas or electric stoves and ovens, microwave ovens, air conditioners, automobiles. The servants would wash clothes by hand, dry them on a line, manually put ice into the icebox, load wood, coal, or charcoal into the stove, etc. Lawn mowing is much easier today than it was in the 19th century.
So a plutocrat doesn’t need 10 or more live-in servants to have an extremely extravagant lifestyle. 2 to 4 servants will be able to provide enormous luxury.
They can also “sub-contact” it out. Do you know how much it costs to have a person on the payroll?
In that respect, they are the job creators. It’s a complete “donation” of their money. When they hire someone for a business, they are hiring that person for a return ON TOP of what they are paying them.
Also, within the sphere of tax dodges, how many of the oligarchs have those people working for them on paper? They may only have 2-4 that they pay for “at home”, but also have armies that are paid by their “philanthropy”, as well as from profit making industries. Golden parachutes from high enough in wall st usually get a small staff included.
Hi Bob, what you say is quite true. However, there aren’t enough ultra-rich plutocrats to make a dent in unemployment by hiring personal servants and subcontracting for service work. Millions of people will still be under employed or unemployed.
“That’s already happened but it isn’t Americans doing those jobs.”
Just wait a few years.
‘The post WWII middle class prosperity was created by high paying manufacturing jobs in business and bureaucratic expansion by government.’
Its ‘bureaucratic expansion’ included a Defense Department which never demobilized from WW II, keeping its foreign bases, foreign legions and bloated weapons spending. After starving domestic investment by sinking 5% of GDP into ‘defense’ for 70 years, it’s surprising that the U.S. has any middle class at all.
So kids can’t get jobs or afford an apartment? Let them enlist in the ‘global force for good.’ As products of public education, they’ll never notice the dripping irony.
They’ll probably employ robots instead.
Technology is not the culprit, though. Nor is international trade.
Inequality is a function of domestic public policy.
This is exactly the result that trickle down economics is supposed to provide; enrich the rich so that their spending could trickle down to the rest of us. So now we will find out the results of the grand experiment that is trickle down.
They did use the word trickle and not flow….
The correct word is “trick” as in Trick Down eCONomics. Many of us still haven’t realized that we were ECONNED.
ECONNED. Hey, that would be a clever title for a book! :-)
but the next phase of trickle down that never happened – is going to expand to those at the top 20%
there are many people who are owners of real estate and a variety of types of businesses who consider themselves well of – but the underlying cash flow of the consumers is eroding faster and faster so the value of the real estate and the business is going down – Malls are the simplest to understand and witness as the internet coopts the sales – the sq ft are worth less and therefore the tax base for real estate taxes and sales taxes which will have to be shifted to residential to maintain services at the municipal level and go down in value as well as those costs are absorbed – viscous circle
the real solid money will not be domestic based cash flow and a major % of top 20% will shrink and fall off dramatically in another five years
We’re already seeing it with DB pensions getting cut.
but a small 401k and no pension goes into retirement, and shortly after that, into poverty. That generation is in its 50s and 60s now, waiting in the wings…..
That generation are the boomers born in the last quarter of the years 1946-1964. Many never saw the prosperity of the older boomers. Under Nixon a good percentage of these teens were introduced to austerity thanks to Vietnam war costs in the 70’s along with gas shortages, high utility bills and education going up. Most importantly we’re taken off the gold standard and inflation follows us like a skunk at a garden party. Next, we got Carter, Reagan and Bush I -more war and Unions are caught in the corporate snipers crosshairs. Utilities, taxes and mortgage rates skyrocket into the stratosphere. Home prices zoom; my neighbor purchased his house for 30 grand with a low interest rate; 10yrs later I’m paying 110 grand at 9.75% with the new fangeled points and extra closing costs addendum. What came next after baby?, -Well what should have been our retirement savings nest egg; we’re sold a lying bill of goods and pay for the kids college guaranteeing a good future. We all put into the pot, the kids take out loans too and -yes I’m not done -parent plus loans at 7-9% under Clinton while he finishes dismantling the SEC and Glass Steagall and Bush II takes up Clinton’s mantle.
Here comes the next shoe to drop -Bush’s 2008 Depression and mass firings of the youngest boomers in their 40’s to mid 50’s. We are robbed of our future earning years to finally saving with the kids graduating; instead they come home. The boomers are DOA with no job or low level replacement job, 12-23yrs too young to collect social security and medicare. Many have mortgages refinanced once too often to pay for kids college. Real estate taxes keep rising despite the fact homes prices are half of what they were in 2008, and the neighborhood has ‘for rent’ signs.
I ask you –What Recovery? Many boomers never won the economic good times prize and The punchline- many believed they were in the middle class- another fallacy we were sold.
Yet here in Canada, the older boomers have been more modest and the younger ones have been feasting on housing. And accountant I know with over 300 clients in an affluent community told me that a large percentage of his clients over 50 have been tacking on an extra 200-300K in mortgage debt instead of paying off their houses.
That’s what people do in bubbles — leverage up. Chart of Canadian vs. U.S. house price indexes:
No one could ever convince these affluent debtors that house prices go down as well as up.
I know. People LOVE to point out that I’ve been wrong for 10 years while their HELOCs creep up and savings/investment accounts stay empty.
And their luxury 60K kitchen is now 10 years old.
When TPTB are stressed, the easy ‘answer’ is to dismiss, distract, and distort. MSM then transimits this as ‘fact’.
The notion of ‘Recovery’ has been used as a sort of place holder and a promise: that the American dream is still viable, that things will return to ‘normal’, etc.. Even the way the elites have taken up the ‘inequality’ challenge pays lip service to such promises.
With ‘inequailty’ they have added a fourth ‘D’: dissuade. The message seems sooooo reassuring: “we recognize that inequality is a problem.” No need to worry – our two-faced politicians are on the case(!), offering ‘solutions’ to placate the
loserspoor unfortunates whose failures embarrass the best government money can buy.
The best way to fight inequality is to get to the root of the problem: money in politics, and a tax code that contains giveaways like ‘carried interest’. But you won’t hear about THAT from anyone associated with, or aspiring to be, a member of TPTB.
This post dovetails with yesterday’s post; “Focus on TBTF Banks Misses How Even More Powerful Private Equity Kingpins Are Moving More into Unregulated Parts of Banking”.
If the top 0.1%’s wealth increase comes primarily from taking the wealth of the middle classes (trickle up economics) through various “creative financial engineering” arrangements and outright fraud then it’s a zero sum game. There is only the bigs looting everyone else. The bigs’ wealth increases, their retainers’ wealth increases, everyone elses’ wealth decreases. National economic growth stays flat.
Thanks for your observation, flora.
IMO the current debt-based monetary system is fundamentally flawed in a variety of ways. One of the more self evident flaws is that the long-term social and economic interests of society, and the Fed and government itself, are not aligned with the economic interests of those who own and control the large financial intermediaries including their stockholders, bondholders and senior managers.
Based upon what we have seen over the past 5-plus years, it has become crystal clear the Fed and federal government have explicitly or implicitly agreed to underwrite those with economic interests in perpetuating Big Finance, including underwriting and control fraud losses, credit and derivatives losses due to poor risk management by the financial intermediaries, and losses due to their mismanagement of market risks. I suspect this has been done in part to assure there are buyers of U.S. government debt. With Fed purchases of USG debt under QE, it is now self evident that it is not necessary that the Treasury have independent third-party buyers for its debt.
As a society we need to elevate this issue in the public discourse and decide if continuing to accept this state of affairs is both desirable and acceptable. If it is not, then it is necessary to determine what to do about it.
I can see no overriding reason why we need an independent central bank to create money as the Treasury is perfectly capable of doing this itself. If there are related concerns about concentration of ownership and control of Markets and Media, then those too can be bundled up and concurrently addressed.
If I am missing something here, I am all ears.
Totally on your page, Chauncey — and flora, too. Excellent comments.
David Simon on Our Rigged Political System
February 14, 2014
David Simon, journalist and creator of the TV series The Wire and Treme, returns to talk with Bill Moyers about the triumph of capital over democracy.
“If I could concentrate and focus on one thing … and start to walk the nightmare back, it would be campaign finance reform” Simon says.
Simon warns that if we don’t fix our broken election system — by getting big money out of elections and ending gerrymandering — we will have reached “the end game for democracy.”
“The stench of corruption hangs over American politics like smog over Shanghai.” -Bill Moyers
Great link. Thanks.
It was over with Buckley v. Valeo (“Money equals speech”) in 1976. Citizens United only made evident the corruption that had been building for decades. Glad everybody’s got that now. But overturning Citizens United would simply return us to the perfect, unsullied state of democracy we enjoyed on January 20, 2010.
So we have to go back much farther: to Buckley v. Valeo and then all the way back to the birth of corporate personhood, in Santa Clara v. Southern Pacific Railroad in 1886. In this case, the 14th Amendment, which had granted due process and equal protection to formerly enslaved African Americans, was perverted to extend these rights, clearly intended for human beings, to corporate “persons.”
ah you fall into the trap
santa clara v souther pacific DID NOT even touch the issue of corporate rights…but in the manner that has existed in this democracy of ours for quite some time, the person in charge of “reporting” the supreme courts findings had control over the “headline”…that person was a certain former president of the Newburgh and New York Railway Company who decided ON HIS OWN to help his friends in high places. There is nothing in the decision that suggests anything about the 14th amendment nor corporate existence.
But to the victors go the history books…
One of the reason I have never wanted to go to law school is from some of the insane rulings that John Marshall pushed through, starting with Fletcher v Peck, where an entire legislature, having been bribed was removed from office and the citizenry, having placed new parties in office based on the revelations of the phony contracts, were denied the right for redress by a Supreme Court that suggested a bribed contract was an enforceable contract.
And in Dartmouth College v Woodward, where the court argued that contracts given by the now removed regent, King George and his predecessors, were to be enforced.
Into the 1930’s the Supreme Court ruled that Child Labor could NOT be outlawed.
Lincoln was wrong…because all you need to do if you are Karl Rove is fool enough of the people one day every once in a while as long as that day is election day. And part of that fooling is convincing people they should not “waste” a vote on some third party or unapproved and unvetted candidate.
A sophisticated form of control is to convince people to “tune out”…go climb a mountain, join an ashram, stick a needle in your harm, go watch the 759th episode of Jerry Springer or Judge Judy, go take some pills, go eat some food, see what’s on line…but never ever read the Federal Register…
Not a fan of the current incumbent or tribal “divide & conquer” politics in general. However, with respect to your second to last paragraph, couldn’t help but notice the subject’s effort now underway to try to make us forget, recast and reframe. Rhymes with collusion, but begins with the next letter in the alphabet.
Guess he’s still creating his own reality. :-)
Last sentence of this article particularly resonated: http://nymag.com/daily/intelligencer/2014/02/rove-obama-has-ruined-bushs-paradise.html
Although a day late, I want to dedicate this heart felt love song to the Jamie’s, Lloyd’s, Zell’s and of course Tom Perkins’s everywhere.
no no “Greedy Guts” you can’t do that no more…..
My god I LOVE this song, thank you so much.
You’re very welcome and thank you for the feedback.
If a GOP-Pres could cut FICA 20%, why can’t a DEM-Pres cut it 100%? Obama = enough rope for the MiddleClass to hang itself
especially since we never needed FICA taxes in the 1st place
4 generations of the poor & MiddleClass, arbitrarily over-taxed, just to hold them down
them’s bitter fightin’ words, and a shamefully vicious inequity
FICA the rich!!!
This post is far too peasimistic. For one thing, widening income inequality is making possible the revival of Downton Abbey jobs. Thiink about it. If incomes were perfectly equal none of us could afford personal servants because they would be making as much as us. With widening income inequality whole new vistas of jobs come into view, and they won’t have to be taken by Phillipino maids and Mexican gardeners; full blooded Americans will leap at the chance to take them. It’s the best of all possible worlds. It always was.
Knut: you’re my kinda guy.
It’s a good thing everything is screwed up. Because if everything was perfect, there would be no jobs.
It’s appalling how the narrowing of incomes between the end of World War II and the 1970s decimated the ranks of domestic help, leaving people of taste and refinement bereft of the accoutrements of dignified living.
Thank God Ronald Reagan started turning the tide in the 1980s. Even at that it’s taken a generation to undo the damage.
This chart actually understates the problem, because the cost of necessities (such as food, energy, rent, and health care) have been rising faster than luxuries (such as computers, consumer electronics, etc.), which means that lower and middle class are being squeezed even more.
What is daunting is the physical task at hand. How to go about that task, not so much.
For ten things give or take would radically change life as we know it.
The first is teaching appropriate history, that includes knowing what appropriate history is.inappropriate history is the history we teach now.People need to know the history of money.For since the industrial revolution began in Holland and England,money has been the tool to further their agendas.The history of money in this country, is the precursor to everything else.
There is the greatest revolution ever waiting in the wings,HR 2990 112th congress, the “NEED act”..If people understood the nature of inequality starts with who makes our money, and what they do with it…. then they can begin to think about the road upon which humanity can go.
All endeavors of nurturing the human soul, exist within this paradigm we call money. time is money. food clothing and shelter are money. our political discourse is money. Any good thing we choose to do to protect our environment,have sane renewable,sustainable energy is money, our international foreign policies are money.our healthcare is money,our education systems from the pre-schools to the last days of higher learning is money.
We are stuck in the hole we are in because of our monetary system. We have a monetary system, that is as elevated as the bogus religious systems, whose entrance is guarded by all those financial experts schooled in the “banker’s monetary system”,who are the priest-class of our current civilization.They constantly and reliably tell us, it is not them who determined our existence, it is the god of the market place.the one who determines the value of money. and therefor who gets it and who doesn’t.
I am so done with everyone who can’t even get around their own pessimism and look at a real alternative, but just wallows in self pity, and allows the rape of the world and every living thing to go on in this world owned by banker’s money.Screw that. The public monetary system, is the only way forward.The way forward to saving the planet and ourselves and everyone else.When we cast off our own yoke, we find the time to look and think. we need to address real concerns.
If the majority of everthing that is, wasn’t being wasted making short term profits for those who benefit from the banker’s monetary system, we could save some of that for our posterity. we could slow down.work less,pollute less,learn how to co-exist…with everything.
Resources are finite, imagination isn’t.
Um. Maybe it’s because Olive Garden and Sears suck.
The Olive Garden menu is bland and carb heavy. Look at the Cheesecake Factory… earnings up: http://www.nasdaq.com/article/is-cheesecake-factory-cake-poised-to-beat-earnings-estimates-analyst-blog-cm325211
Sears and JCPenny have their own problems too. You can get most of their stuff cheaper at Walmart or Amazon… Sure Sears has unique brands. Craftman tools and Kenmore can only carry them so far, and Home Depot is killing them there. Why shop at place with higher prices and less choice.
Remember the BOOM economy under bill Clinton?
It was awesome. He increased the Minimum Wage by 49%.
That released billions into consumption not extravagant salaries.
My Tsunami is same as Clinton’s. Increase the Minimum Wage by 49% again.
$15 per hour
Imagine the billions once again released into consumption. Affordable housing.
Affordable Health Care. Affordable education.
Food Stamps take a nose dive
Unemployment Compensation down.
Employment at 5% or perhaps as low as 3.9% in one month under Clinton.
Payroll Tax revenues increase.
Millions will now pay income taxes at the 28% rate.
49% will activate our stagnant economy.
Remember how many fell from the Middle Class?
Let us put them back in it.
Plenty of screaming but let the rich yell for change