Inequality Week, 8/4/18

I have previously written of the perils of Uber, a company I work for, and how they are pushing cab drivers out of business (and even to suicide in six cases this year), while driving down wages across the industry.  Turns out they have allies in the civil rights movement, including Rev. Al Sharpton and the NAACP.   They are opposing efforts by the NY City Council to freeze the number of Uber permits and regulate the industry so drivers can actually make a living.  Seems that Uber drivers are more likely to pick up minority passengers than cabs because they have no choice – you don’t know the race of the rider when you accept a fare.  Rev. Sharpton remarked, “Some yellow cabs won’t even go to uptown or to parts of Brooklyn.  If you’re downtown they won’t stop.”  City Council Speaker Corey Johnson said, “We’re not saying Uber is bad (but) the industry needs to be regulated.”  Amen!   We know Uber will fight this tooth and nail and probably prevail, as they did in a similar attempt in 2015. Make them pay living wages with their billions in profits!

Paul Krugman, in his July 31 op ed, Trump’s Supreme Betrayal, writes that, in addition to big tax cuts for the rich and repeated attempts to strangle the ACA, Trump’s greatest “betrayal” of the American people may be appointing a raft of pro business, anti labor federal judges who will aid and abet rising economic inequality for decades to come. Supreme Court nominee Brett Kavanaugh falls squarely into this mold.  He found Sea World not liable for the death of a staffer by a killer whale on the grounds that “she accepted the risks” of the job when she signed up!  He has declared the Consumer Financial Protection Board unconstitutional and repeatedly upheld the rights of business to suppress labor organizing.  Krugman says this is the opposite of the “phony populism” Trump ran on in favor of pro-business elitism and increased inequality.  Don’t be fooled by attempts to distract with “culture war” issues like abortion and gay rights.  To cite Leonard’s Law, “in the end, it all comes down to money.”  Democrats must seek, “by all means necessary” (Malcolm X) to delay the vote until after the mid-term elections, just as that mendacious prick Mitch McConnell did to Judge Garland in Obama’s last year.  Stand and fight!

Last Friday Apple declared that it had become the first $1 trillion dollar company, eclipsing the gross GDP of all but 16 of the world’s countries!  It is part of the fearsome five tech companies-with Amazon, Google, Facebook and Microsoft – that delivered half the gains to the S&P 500 last year.  Other industries, such as finance, airlines, cable and wireless services are similarly concentrated.   In 1975, 109 companies delivered half the corporate profits; today that’s down to 30.  Economists generally agree that this has led to the rising inequality and declining labor share of income we’ve witnessed in recent decades.  Fewer companies equal reduced competition and unionization and rising political control of the rich over public policy.  These organizations wield monopsony power (more on this in a later post) in the economy, controlling the price of inputs (especially labor) and suppressing wages across the board.  We are in a New Gilded Age and need to check the power of the plutocracy before they enslave us all.

My main column, to follow, will focus on a back door attempt by Treasury Secretary Steve Mnuchin to cut capital gains taxes by regulatory fiat, bypassing the legitimate role of Congress in the process. As if the recent $1.5 trillion, deficit financed tax cut weren’t enough, Republicans are always seeking new ways to funnel ever more dollars into ever few hands in the fraudulent belief it will “trickle down” to the masses eventually.  This must be nipped in the bud.  READ!

 

 

 

 

A New Day, A New Way

To my handful of loyal readers – thank you!  I have grown dissatisfied with WordPress, in particular it’s limited reach and the fact that many people who I invite to follow swear they never received my emails, while others have and do.  I am exploring other formats that can be accessed and spread more widely, and will include you in that effort when I do.

I like the format Nicholas Kristoff, one of my favorite op ed writers, uses in the NY Times.  He begins with a summary of recent relevant news and then appends his biweekly column to it.  I plan to do that, once a week (since I’m not paid), in two parts.  Look for the weekly summary soon, titled “Inequality Week,” followed by the column, still “Inequality Kills.”

Thanks for following and, as always, feel free to leave likes or comments, so I know someone is paying attention.  A writer writes to be read; otherwise, it’s just intellectual masturbation.

 

 

Let My People Eat – And Live!

Rejoice!  According to a recent report by the President’s Council of Economic Advisers, the War on Poverty is “largely over and a success” – we finally won?!  Yes indeed.  The White House Report, co written by the conservative Heritage Foundation, Expanding Work Requirements in Non Cash Welfare Programs , claims that if you combine government assistance with personal earnings, very few Americans fall below the official poverty line – which most experts agree is a wholly inadequate and outdated measure.

Therefore, it’s time to require able bodied recipients to work at least 20 hours per week or lose their benefits.  After all, it’s for their own good, to “increase self sufficiency” and reduce “dependence on government,” while saving precious taxpayer dollars to boot.  The CEA says less than 50% of this population currently meet this standard and it’s time for those slackers to step up or go hungry.  After all, didn’t John Smith tell the Virginia colonists, following St. Paul, the “those that don’t work won’t eat?”

Needless to say, most liberal groups vociferously disagree with the methodology, conclusions and basic sanity of the report.  The Kaiser Family Foundation  finds that 62% of SNAP (formerly Food Stamps) recipients work full or part time, while the Center for Budget and Policy Priorities says over 75% of beneficiaries are working within a year.  Nearly all agree that the vast majority of program participants are children, elderly and disabled, while other “able bodied” adults may be in poor health, caring for children or older relatives, students or working in low paid jobs with irregular work schedules. They also point out enforcing these requirements would call for a significant increase of new bureaucrats to monitor the program, offsetting much of the projected savings.

Paul Krugman’s recent column, “The GOP’s War on the Poor”, points out the manifest hypocrisy of the proposal.  He notes that in 2014 House Speaker Paul Ryan declared the War on Poverty had failed, so it was time to reduce benefits that weren’t helping lift people out of poverty.  It seems the whole point is to cut benefits, regardless of their effectiveness and level of need.  This is driven more by ideology, politics and a desire to punish the “takers” than any professed desire to help low income people achieve “self sufficiency.”

David Leonhardt, in the New York Times on July 11, noted  that the minimum annual family income of the top 1% of earners recently hit $607,000, a new record.  Meanwhile, the recent Republican tax cut has resulted in a deficit financed $111 billion yearly windfall for the wealthy, who will reap 60% of the benefits.  Since the entire SNAP budget amounts to $68 billion annually, only a small fraction of which goes to the “able bodied” poor, saving money is hardly the top GOP priority.  Rather, punishing the poor and redistributing wealth to the rich remains their lodestar, as it has been since St. Ronald Reagan took office in 1981.

It turns out work requirements are already part of the SNAP program, inserted in the “welfare reform” law of 1996.  The Obama Administration, in 2009, allowed certain high unemployment states to expand eligibility during the Great Recession, from 130% of the official poverty line ($27,000 for a family of 3) to 160% ($33,000).  The Republican proposal would return eligibility to 130% and increase the mandatory work age to 59, from 49 currently.  As in 1996 unemployment hovers around 4%, labor is scarce (though wages have barely budged) and we need to drag more low income people, kicking and screaming, into the workforce.

I worked as an employment adviser in a welfare to work agency in Philadelphia from 1998 – 2001.  I always said my job was “to turn the welfare poor into the working poor.”  We placed recipients in low wage jobs they could have gotten on their own and supervised them for 3 – 6 months.  The primary beneficiaries, as usual, were employees like myself, who earned a decent salary with health benefits and a 401 K.  The workers remained poor, but at least they had Medicaid, food stamps and a child care subsidy.  Do they still?

Cash welfare is now nearly dead.  The level of benefits (around $400 per month for a family of three) hasn’t changed since I started in 1998 (!), while housing, health and child care costs have soared.  Now they’re coming after non cash benefits, lest anyone other than the top 1% ever get any advantage they don’t “deserve.”

Kathy Fisher, policy director of the Greater Philadelphia Coalition Against Hunger, estimates 92,000 Pennsylvanians, including 45,000 Philadelphia residents, would lose benefits under the new rules.  The Center for Budget and Policy Priorities extends that figure nationally to over 2 million Americans.  Recently a federal judge struck down Kentucky’s effort to impose work requirements on Medicaid recipients on the sensible grounds that it doesn’t advance the program’s core mission – to extend health care to the poor.  Sounds reasonable, no?

Food and health care are not luxury goods to be reserved as a reward for the “deserving.”  They are core aspects of the basic right to life Republicans rhetorically champion.  These are enshrined in the 1948 UN Declaration of Human Rights and over a century of Catholic Social Teaching.  How about, instead of forcing the poor into low wage work, we ensured that anyone willing and able to work could find a full time job at a living wage, with health care?  Then they wouldn’t rely on government and our miserly charity to survive in the first place.  Let my people eat – and live!

Too Damn Big Fails Us

Last week a federal court approved the $85.4 billion merger of AT&T and Time Warner over the objection of the US Justice Department which, in President Trump’s words, opposed the deal “because it’s too much concentration of power in the hands of too few.”  (New York Times, 6/13/18).  District Court Justice Richard Leon dismissed the government’s case out of hand, arguing they failed to prove the consolidation would result in reduced choices or increased prices for consumers; he also warned that an appeal would be fruitless and recommended against it.  Immediately following the decision Comcast launched a $65 billion challenge to take over 21st Century Fox, topping Disney’s previous offer.  Analysts believe a wave of consolidations will surely follow, further entrenching power and profit at the top of the corporate pyramid.

Judge Leon’s consumer benefit theory of antitrust, originally hatched by conservative  scholar and failed Supreme Court nominee Robert Bork, is legally and morally suspect.  First, it’s hard to know what the effects on choice and price to the consumer will be before the deal is consummated, and probably not for many years to come.  Is anyone happy with their cable bill?  Second, many economists believe that corporate consolidation, excess profits and power are a key cause of stagnant wage growth and rising economic inequality in recent decades, as well as loss of political power of ordinary voters v. highly funded special interests.  Hence, even if consumer choices remain plentiful and prices reasonable (a big IF), workers are hurt by their loss of bargaining power and voters by their reduced influence at the ballot box.  This should be cause for concern among all of us.

A recent article in The Economist (no liberal rag) entitled “Profits Too High: America Needs a Giant Dose of Competition confirms these facts.  It reports American Airlines, nearly bankrupt a decade ago, earned $24 billion in profits last year – the same as Google! – following consolidation of the airline industry into four major players.  A similar pattern exists in other major industries.  US companies have engaged in $trillions of mergers over the past decade, with many more expected to follow, as they sit on over $800 billion in idle cash before the recent tax cut bonanza.

The article concludes that US company profits are too high, that most firms “are more adept at siphoning off cash than creating wealth, and that this deepens inequality by dampening wages and raising consumer prices above a competitive level.  Concentrated economic power also stifles innovation and retards the growth and formation of small businesses.  According to David Leonhardt of the New York Times (6/18/18) large companies now employ the majority of US workers, reversing historical trends.  As a result, over 2/3 of Americans, across the political spectrum, believe the economy is “rigged” (remember that word?) in favor of huge corporations and against them.  Similar or greater numbers doubtless exist for the U.S. political system, hence the dueling populisms and strange outcome of the 2016 election.

Americans are feeling an increasing sense of powerlessness and insecurity over their personal lives, which produces anxiety, anger and the search for a strongman to restore order and a lost, largely mythical “golden age.”  We have been through this before, in the Populist, Progressive and New Deal periods.  We have been able to increase democracy and dampen inequality through a combination of political and economic reforms that are still within our grasp, should we resolutely reach for them.  Higher progressive taxes, especially on huge individual fortunes and concentrated industries, jobs and training programs and income supports for lower paid workers are the obvious place to start.

Needless to say, it won’t be easy or quick.  The sheer bigness of business and their stranglehold on our politics (corporate spending on lobbying has doubled over the past decade, but only represents a tiny fraction of their profits) complicates but doesn’t negate the task.   Remember it took a century after the Civil War for African Americans, who helped win it, to gain legal equality.  Hopefully it won’t take as long for a just, sane, equitable, human economy to emerge from the ashes of late 20th and 21st century plutocratic capitalism.  With faith, determination, solidarity and persistence, perhaps we too shall overcome our current predicament.

 

 

 

How Inequality Harms Societies

I highly recommend this Ted Talk by Richard Wilkinson, “How Inequality Harms Societies.”  It’s based on his 2011 book with Kate Pickett, The Spirit Level: Why Greater Equality Makes Societies Stronger (love that title!).  Wilkinson and Pickett public health experts and specialists in epidemiology.  They analyzed reams of statistics from the UN, World Bank and national databases on over 50 categories of physical and mental health and social well being.  The overall message is more equal developed societies (Japan, Denmark, Sweden, Netherlands) have higher life expectancy, less social problems and greater child well being than less equal societies (UK, Portugal, Singapore and USA).  Look for how the USA is the negative outlier in almost every example!

Note also how all data strongly correlates with degrees of in/equality in these nations, and NONE with simple GDP per capita or economic growth.  The USA, despite our riches, scores extremely low on ALL measures of well being, including social trust, mental illness and addiction, violence, incarceration, high school drop outs and social mobility.  Despite our reputation as the “land of opportunity,” the ability to move from one class to another is far higher in Western Europe than the USA.  Indeed, Wilkinson states, “If you want to live the American Dream, move to Denmark!”  Touche!

In conclusion, there are two paths to a more equal future.  First, the Japanese model, which begins with low inequality and less need for higher taxes and redistribution.  Second, the Swedish model, which starts with higher inequality and corrects it with higher progressive taxes and more redistribution.  The USA seems to fall into the second camp – higher progressive taxes, anyone?

 

The Kerner Commission Report Turns 50

Just finished re-reading an op ed, “The Unmet Promise of Equality,” in the New York Times on March 1.  It’s co-author is Fred Harris, the last surviving member of the Kerner Commission, tasked by President Johnson with examining the roots and suggesting reforms for the 1967 urban riots that afflicted Detroit, Newark and over 100 other cities.  Published on March 1, 1968, it began with the ominous warning, “Our nation is moving toward two societies, one black, one white -separate and unequal (moving toward?  What were the previous 300+ years of slavery and segregation about?).   LBJ, beleaguered by the Vietnam War, battered by domestic unrest and soon to abandon his reelection effort, largely ignored and shelved the report.  Yet it sold over two million copies, sparked some national debate and is fondly remembered by liberal historians and pundits.

The Commission concluded that “White society is deeply implicated in the ghetto,” which it created and maintained and called for “massive and sustained” investments in jobs and education to reduce poverty, inequality and prevent future riots.   Fifty years later, the authors find:

Re-segregation: The percentage of students in highly segregated (90% minority) schools declined by approximately 50% from 1968-88, then reverted to the mean following the ending of court mandated integration orders.  Today’s schools are as segregated or worse today than they were in 1968.   The biggest offenders are the Democratic states, led by New York (65% of black students in highly segregated schools), followed by Illinois (61%), Maryland (53%) and New Jersey (50%).  The most segregated region in the country is the Northeast (51%), followed by Mid West (43%), South and West (34% each).  So, it seems, in liberal “Blue” states, “Black Lives Matter,” so long as they don’t live and attend school in white neighborhoods!

Shocking Inequality: Since 1968, the number of Americans living in extreme poverty (less than 50% of the official poverty line) has increased substantially,  while the overall poverty rate remains basically unchanged.  The rich have grown much richer – the top 1% get 52% of all new income and controls over 80% of national wealth – a huge increase since 1968.  Black median household income is 60% of whites, but whites own 10 times more wealth.  CEO pay has exploded, from 24 times the average worker in 1968 to nearly 300 times today.

Mass Incarceration: Around 200,000 people were behind bars in federal, state and local facilities in 1968; today the number is 1.4 million, the highest incarceration rate in the world.  African Americans are jailed at a rate 7 times higher than whites, especially for drug offenses, though blacks and whites use and sell drugs at roughly the same rate.  The article states “Mass incarceration has become a new kind of housing policy for the poor” (and mentally ill).  Given the lack of affordable housing and subsidies for the poor (fewer than 1/5 of those eligible receive assistance) this is an understandable, though shockingly expensive and inefficient, alternative.

Do What Works: Harris and Curtis say we have learned much about what works and doesn’t in fighting poverty and inequality over the past 50 years, and could reach the Kerner Commission’s goals if only we had the political will (world’s rarest commodity) to  embrace its guiding ethos of “Everyone does better when everyone does better” (i.e. the common good) rather than the neoliberal creed, “You’re on your own” (individual selfishness).   A litany of liberal policy remedies follow: universal, single payer health coverage; significantly raising the minimum wage and EITC; strengthening labor unions and job training; actively pursuing racial integration (unclear how); fully funding public schools; housing subsidies for all eligible; enforce fair housing laws; community based policing and alternative sentencing for non violent crimes, among others.

A wonderful menu of New Deal/Great Society programs and, as a liberal Democrat, I endorse them all!  Yet we live in a country that inexplicably elected Donald Trump president, with a Republican majority in the House, Senate and two thirds of state legislatures.  None of this will fly in the current political climate, which I don’t expect to change radically in the foreseeable future (though one never knows).  We need an anti-poverty, pro equality plan that can appeal to large numbers across the political spectrum.  Does anyone have the slightest clue what that would look like?

 

 

Rising Inequality, Part 3

Having reviewed the shocking extent of economic inequality in our world (8 men have as much wealth as the bottom 3.6 billion people!) and the reasons it’s a problem (unjust, inefficient, undemocratic, unhealthy etc.) it’s time to examine some possible solutions.  Caveat emptor: conservatives will be enraged by these suggestions, which basically boil down to tax, regulate and redistribute – aka “big government.”  Well, what did you expect?  Conservative “neoliberal” economic policies (cut taxes on the wealthy and corporations, maximize shareholder value and CEO pay, freeze wages and kill labor unions etc.) are largely responsible for the vast increase in inequality since the late 1970s – my entire adult life.  In a world where a few rich men and large corporations control more resources than most countries, what force except democratic government can check and restrain the power of the plutocrats?

There are many steps toward creating a more “human economy,” based on the welfare of the bottom 99% of the world’s population, especially the majority poor.  They include, in no particular order:

  • Set concrete targets & guidelines to reduce inequality so that the top 10% receives no more than 40% of national income – a level a little higher than Western Europe (37%), but lower than USA/Canada (47%) and Brazil/India (55%).  Given the high residual inequality, this is hardly “socialism.”
  • Increase taxes on the wealthiest individuals and corporations and use the revenue to fully fund health, education and social programs designed to increase opportunity for all, especially the lower 50%.
  • Close tax loopholes and offshore tax havens, where the rich currently stash over $7 trillion in ill gotten gains, depriving the poor of desperately needed tax revenue for health, welfare and income support.  This will probably require an international tax agreement and a global tax body (like the World Trade Organization) to enforce.
  • Institute or increase wealth taxes (one of my favorite ideas), including property, inheritance, capital gains and levees on great fortunes (say over $10 million).  Redistribute the revenue to underpaid workers who produced the surplus in the first place, by providing a living (not minimum) wage for all workers, especially women, who are universally underpaid.
  • Redesign business models away from shareholder maximization and CEO excess to more worker oriented forms, such as cooperatives, employee ownership, fair trade and profit sharing.
  • Cap CEO pay at 20X that of an average worker.  Prohibit dividends, bonuses, stock buyouts and other giveaways to the rich until all workers receive a living wage, arrived at through democratic deliberation and expert analysis for that region.
  • Promote and protect labor unions and other civil society groups working to increase wages, improve working conditions and increase educational and occupational opportunities for the bottom 80% of the population.

Quite a list, and it’s only partial.  Of course all these suggestions will meet with hysterical resistance from the monied and corporate elite and their shills in both political parties.  We currently have one major party (Republican) whose bedrock belief is redistribution from the middle and working classes to the top 10% – witness the current “tax reform” fiasco, 80% of which benefits the wealthy and corporations rather than the “forgotten Americans” Trump hoodwinked into voting for him.  The Democratic party seems focused on preserving existing programs and regaining power, without a coherent vision of a more just society.  The Sanders wing offers some hope, but hasn’t been able to cohere into an organized, pragmatic force with reasonable plans that don’t bankrupt the Treasury more than our current, irresponsible fiscal course.

Public opinion is on our side, if weakly.  The Oxfam survey in Post #1 indicates that 2/3 to 3/4 of people worldwide believe inequality is too high and an urgent problem that governments should directly address.   Yet very few people organize around or vote on these issues, believing (with much justification) they have little chance to be addressed in a stacked game rigged by the elites for their benefit.  In our political system an intense minority can easily thwart a lukewarm majority – witness the NRA’s stranglehold on gun legislation, despite the mass shootings that occur with shocking regularity.  The vast majority of Americans support universal background checks and eliminating the sale of military assault weapons, but do these prevail?  Nooooooo!

The key seems to be in mobilizing an active, intense minority that pushes for a more fair, just and sane economy.  This is tough because there is no single, identifiable group (like women, gays, African Americans etc.) who can claim special suffering from economic inequality, with an intense group interest in reversing it.  People will fight mightily to advance the rights and interests of themselves and their groups.  Mobilizing the masses around the “common good” is a much harder affair.

Efforts must be made, in education and organizing, to tie people’s economic plight directly to inequality and demonstrate concretely how they’d be better off under a fairer distribution.  A real social movement must emerge – with leaders and specific policy demands – to demand these changes.  It must go well beyond the adolescent rebellion of the Occupy movement, which lacked plan and purpose.  It’s a tall order and seemingly thankless task, though invaluable for the health and well being of our people and planet in the long run.  I have little to lose and nothing better to do, so I’m willing to take a shot.  Will anyone join and help me, or is there someone I should join and help?