Skip to content

Could Income Inequality Become a Permanent Feature of the US?

Could Income Inequality Become a Permanent Feature of the US?

February 24, 2011 SVadmin Comments 0 Comment

Jeff Pelline reprinted (from Mother Jones) some interesting charts on income inequality over on his blog this morning. I was in the process of commenting there and had typed several paragraphs when I hit the wrong key and lost my whole effort. So, I’ve reworked my comments here:

Most of us, on the rare occasions when we think about it at all, consider income inequality to be a regrettable but probably unavoidable feature of an economic system which is fundamentally just and sound.

But there’s growing understanding among mainstream economists of the direct and terrible connection between inequality and economic meltdowns, the regular recurring boom and bust cycles like the one we are still trying to recover from now.

The mechanism is easy to understand: money (what should be demand) accumulates instead in the coffers of the rich (the hoarding class) and does not “trickle down.” If it did trickle down to the non-rich/non-hoarding classes, who have no choice but to spend it (on rent, mortgage, gas, food, etc, etc), it would then become demand, the engine for a healthy economy.

When inequality becomes extreme, the demand engine stalls. This is what happened on the eve of the Great Depression, and again on the eve of our current Great Recession.

Since the late 1970s — and particularly since the early 1980s when Reagan accelerated the war on the middle class and the war on unions by firing the air traffic controllers — worker real wages (adjusted for inflation) have stayed flat, and have not maintained their historic parity with growing productivity.

To make up for the decreasing demand from the now more impoverished middle class, some other demand mechanism had to be found. The other mechanism was easy credit, fueled by low interest rates engineered by Greenspan and his cronies at the Federal Reserve.

Americans began to use the still considerable equity in their homes as sources of borrowing. It appeared to be a “virtuous cycle” of growing values and growing debt. Americans used their homes like ATMs.

When the bubble burst — as all bubbles inevitably burst — in the late 1920s, the economy limped along for some years until jobs policies put in place by FDR (the “traitor to his class“) and his administration began to ameliorate the suffering somewhat. A setback occurred in 1939 when FDR, bowing to pressure from conservatives, attempted to balance the budget by reducing spending (sound familiar?). The real recovery finally took place as a result of the ultimate jobs program, World War II.

The point, though, is that, thanks to FDR, the political will existed at the federal level to address the root problem in some fashion.

I’m afraid that we face a much more dire situation today, with the potential for an Even Greater Depression.

Consider: Obama is no FDR, and shows little inclination to emulate him. He continues to rely for economic advice on the same cast of characters from the financial sector who created the current meltdown.

Instead of a Pecora Commission and a massive shaming and rebuke of Wall Street, we have historic profits and bonuses in the financial sector, combined with a continuing war on unions and on the increasingly-impoverished and rapidly-disappearing middle class.

At a time when the culprits should be facing jail terms, they continue to rule the roost.

The only way out of the current crisis is to “bail out” the working class with policies at the federal level, in order to restart the economy’s demand engine.

We need to raise taxes on the rich, the primary method for preventing hoarding. This is not as simple-minded as it sounds. See “Weird Tax Myths.”

Unfortunately, though, the deficit hawk mentality prevails in Washington today.

The only sign of hope anywhere in our country is in the massive public reaction, starting in Wisconsin, to the latest assault on unions.

Either the union movement will recover some of its historic strength in the current conflict, or it may die once and for all.

If it dies, God help us all.

We’ll be living in a world of permanent income inequality.

Print Friendly, PDF & Email

Blog, Economics, Politics
Income_Inequality

Post navigation

PREVIOUS
Cui Bono? (Who Benefits from Gov. Walker’s New Bill?)
NEXT
Help! We’re getting colder and colder!

Join Our Mailing List

Leave a Reply Cancel reply

Your email address will not be published.

CLICK IMAGE BELOW FOR MORE INFORMATION

DONATE TO THE FOOD BANK OF NEVADA COUNTY

(CLICK IMAGE)

DONATE TO NEVADA COUNTY RELIEF FUND (click image below)

Subscribe to Sierra Voices Journal

Jack Kornfield: A Steady Heart in Time of Corona Virus (Part I)

Erika Lewis, Shaye Cohn, Craig Flory – Got A Mind To Ramble

“Everlasting Arms”

Tara Brach: A Steady Heart in Time of Corona Virus (Part II)

Recent Posts

  • In Ukraine, Diplomacy Has Been Ruled Out
  • Why Am I Obsessed With Ukraine?
  • Is “Ukraine Losing Badly” ?
  • Bill Clinton Makes a Pathetic Attempt to Retroactively Justify His Decision to Expand NATO
  • The Ukraine War Seen “from 30,000 feet”

Recent Comments

  • Putin in Media Myth and Reality: Which is Which? on Ukraine War: A Bonanza for the Arms Industry
  • SVadmin on Countdown to World War III?
  • Pratima Basu on Scenes From Our Weekend at Lake Tahoe
  • IN PRAISE OF WARRIORS, NOT WAR on Celebrated to Death: Memorial Day Is Killing Us
  • SVadmin on How Suzanne Simard changed our relationship to trees

Archives

  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • November 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • July 2018
  • June 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • March 2017
  • February 2017
  • January 2017
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • December 2015
  • June 2015
  • May 2015
  • April 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • January 2014
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • September 2009
  • August 2009

Categories

  • Afghanistan
  • Aging
  • American Empire
  • Anti-Depressant
  • Arms Sales
  • Articles
  • Atlas Obscura
  • Authoritarianism
  • Black Lives
  • Black Lives Matter
  • Blog
  • Buddhism
  • Budget
  • Buskers
  • Capitalism
  • Carbon Offsets
  • Cartoon
  • China
  • Climate Change
  • Compassion
  • Constitution
  • Corona Virus
  • Corruption
  • Cosmology
  • Coup
  • COVID-19
  • Democracy
  • Depression
  • Disenfranchisement
  • Drought
  • Economics
  • Education
  • Election Fraud
  • Empire
  • Environment
  • Extinction
  • Farming
  • Fascism
  • Filibuster
  • Fire!
  • Food Insecurity
  • Foreign Policy
  • Forest Ecology
  • Forest Management
  • Fracking
  • Gardening
  • Gender
  • GOP
  • Great Movies
  • Groundwater
  • Halloween
  • Health Care
  • High Country News
  • History
  • Humor
  • Hunger
  • Idaho-Maryland Mine
  • Ignorance
  • Immigration
  • Indigenous Peoples' Day
  • Insects
  • Israel
  • Labor
  • Lobbying
  • Local
  • Lunar Influence
  • Marijuana
  • Masks
  • Medical Care
  • Men
  • Men's Issues
  • Mental Health
  • Middle Class
  • Military Industrial Complex
  • Mining
  • MMT
  • Modern Monetary Theory
  • Moral Obligations
  • Music
  • Native Americans
  • NATO
  • Neoliberalism
  • New Cold War
  • Nuclear War
  • Nutrition
  • Oligarchy
  • Palestine
  • Pandemic
  • Parenting
  • Peace
  • Pharmaceuticals
  • Physics
  • Poetry
  • Police
  • Politics
  • Populism
  • Press
  • Race
  • Religion
  • Republican Derangement
  • Reviews
  • Revolution
  • Right-wing terrorism
  • Rights of Nature
  • Rise Gold
  • Rivers
  • Romance
  • Russia
  • Russiagate
  • Science
  • Slavery
  • Sleep
  • Smoke Inhalation
  • Student Debt
  • Summer
  • Technology
  • The Hartmann Report
  • Trump Virus
  • Tuba Skinny
  • Tyranny
  • Ukraine
  • Uncategorized
  • Unipolar vs. Multipolar
  • Vaccine Refusal
  • Vaccine Safety
  • Voting
  • War
  • War on Government
  • Water
  • Watersheds
  • Wells
  • Wildfires
  • Winter
  • Women's Issues
  • Work
  • Yemen

Meta

  • Log in
  • Entries feed
  • Comments feed
  • WordPress.org
© 2022   All Rights Reserved.