Saturday, September 25, 2010

Are we having enough "trickle down" yet?

The Koch brothers got richer by $11B in 2009 with the help of tax paying Americans. Now they think we should worry about "our" debt (that's the message they instill on angry Americans through their Teaparty promotion) while they happily burden our children to continue giving them the tax breaks that add a cherry on top of their huge slice of the pie. 
$11B is about as much as all the income from the inhabitants of a city the size of Detroit MI, San Jose, CA, or Jacksonville, FL. The dimension of these mega fortunes is hardly comprehensible, but there is no point in demonizing the individuals, as distasteful as some of their political activities may be in some cases. What is important is to identify this trend towards inequality, as R. Reich has done in his article, and understand what caused it and where it leads. 
Just like previous times we reached such peak inequality (1916, 1929), the 2008 Economic Collapse was the outcome of fiscal policies that bred greed among the economic aristocracy (those who don't need to work and operate in an environment of excess where fortunes are nurtured through the manipulation of financial assets). These people are focused in growing their money by playing the complex monopoly game that is our economy. A large part of that game is played by government in the laws that it enacts and how it enforces them... or not. Everything from ideology, lobbying, even corruption, is part of that game. Ideology moves the masses that are required to corrupt the democratic institutional machinery. Lobbying is required to motivate the government mechanisms in their favor. And when everything else fails there is always the power of naked bribery, not an exception of in our "Nation of laws". 
The myth that these are the job creators we should shower with praise is nonsense. Entrepreneurs are moved by a work ethic that is meaningless when you grow into "permanent" wealth. Job creators are driven by the pursuit of growing wealth through creativity, and would not be discouraged by high taxes on hoarding (reinvestment gets higher deductions with higher marginal rates). Instead our system of low tax islands for the super rich promotes a form of predatory financial feudalism that sucks the oxygen out of real job creating entrepreneurial creativity.
I think that the Right, which is engaged in sustaining the privileges of the plutocracy (by definition of its own nature) needs to be challenged ideologically. We must debase its influence with the large majority of angry Teapartiers, who have bought into ideological myths that cloud their collective (poor) judgment. The results from the last 30 years of "trickle down economics" are a reality now, much different from the picture that was painted by the benevolent smiling Reagan of the 1980's. 
It is clear that in the post war boom the fruits of economic growth were evenly distributed. If you were rich and doubled your fortune in a decade, you could see a poorer neighbor doubling his meager earnings in the same period. The proportions (presumably justified by merit) were maintained (statistically speaking, not literally). But since 1980 the average family had to first double the number of their paid-work hours (by switching to two income-earners) and then reduce their savings capacity or increase their debt to keep up with their deserved American Dream, while the privileged elite grew into a permanent state of self-propelled excess. Most happy talking American dreamers remained blind to the emerging imbalances hoping for the rewards that could not be justified by Reason but would be sustained by Faith (hence the proliferation of Affluence Evangelists, a new branch if Christianism uniquely lacking in self-awareness).Those who did not buy into the mass marketed consumerist lifestyle became social outcasts as a result of their peculiar financially responsible proclivities, but they were few.
No point being judgmental. The numbers tell the story and wrote the history. The middle class went broke, as a result of the unsustainable misplacement of wealth distribution. The machine that depended on the production-consumption cycle broke down. Those who produced could not consume at the rate that their productivity created wealth. Those who accumulated wealth did not need to consume and simply hoarded, not by evil purpose but because their needs were different from the average person. The machine kept going on credit that filled the gap while it consumed all the fat remnants from better times, until it was rescued at the edge of collapsed (temporarily, it seems).
When an economy produces the inequality we have moved towards for 30 years it becomes like any number of examples, from Haiti to Brazil. The latter one is moving towards higher equality through "socialist" programs that help feeding and educating the poor to be productive and aspire to socio-economic improvement. Haiti of course is an example that you can keep going in the direction of feudalism beyond any believable limits, in spite of a historic beginning as inspiring as our own. 
Brazil was a basket case for generations. The self deprecating joke among Brazilians who blamed their fate on their own nature was that God had created this wonderful country with unimaginable riches and perfect climate, safe from cataclysmic threats like earthquakes and hurricanes, but to compensate he created the Brazilian people. It appears that an illiterate teenager turned self-educated union leader did not buy into that myth. Under 8 years of Lula's leadership this country had an amazing turn around with growth that touched all levels of society. Equality puts the dream within reach of all and that has economic repercussions.
Over the last 30 years of right wing inspired economic policies we have gone backwards. The dream has turned into a nightmare for highly indebted college graduates who can't find a decent paying job, while self-righteous CNBC guests spout their wisdom that Americans simply have to get used to lower incomes so they can be globally competitive. No awareness of the uncompetitive growth of CEO's compensation (triple GDP growth between 1981 and 2006) which is extraneous to their economic models. Clearly, financial whizz kids (not necessarily smarter than anybody with access to the opportunities that put them in the right place at the right time) find themselves highly deserving of multi-million dollar bonuses from their dogged devotion to financial predatory lives. The market determines it (doesn't it?).
Well, the belief in the market is highly self-serving in most cases. When you account for externalities (socialized costs that we all pay for like pollution that is not reflected in the price of fuel), market power (like monopolies or plutocratic advantages), social goods (that are paid for unequally and benefit all in unrelated unevenness), it is very often opaque what direction the market really points to. Clearly the freewheeling free market dementia of the Bush era did not produce any better results than the last time it was tried (in the Coolidge/Hoover era). But the same forces that propelled it then are back in charge and need to be discredited once again. There is plenty of evidence for those who want to see. But apparently many are more reluctant to see that evidence than willing to abandon false prophecies and the self-aggrandizing mythology of reactionary propaganda.

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