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Not Everyone Is Hurting – The Rich Get Richer As The Income Inequality Gap Explodes

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Not everyone in America is hurting during this economic downturn. In fact, the wealthiest Americans are doing just fine. At a time when millions of Americans are losing their jobs and their homes, the folks at the top end of the income scale are actually seeing their incomes go up. In 2009, the number of millionaires in the United States rose 16 percent to 7.8 million at a time when tens of millions of other Americans were experiencing gut-wrenching economic despair. The truth is that the statistics and the data do not lie. Wealth and income are increasingly becoming concentrated in the hands of the wealthiest Americans. So just what in the world is going on?

Well, the reality is that the game is rigged to take wealth away from middle class and working class Americans and to give it to the elite. There is a reason why they push credit cards on you so hard. That $6000 balance that you keep carrying will end up costing you over $30,000 to pay off if you are not careful. We were told that owning a home was “the American Dream” and yet predatory mortgages have destroyed the financial lives of millions of Americans. The majority of Americans now live “month to month” and barely save any money at all. In fact, Americans are programmed to be slaves of the system. We are taught that we need to go get a job (“just over broke”) and work ourselves silly all day, and then at night we are taught to collapse in front of the television where we are bombarded with messages telling us to be good consumers and to go out and get into even more debt so that we will have to endlessly work to pay it off.

Today more wealth is in the hands of the wealthiest Americans than at any other time in modern U.S. history. An analysis of income-tax data by the Congressional Budget Office a couple of years ago found that the top 1% of households own nearly twice as much of the corporate wealth in the United States as they did just 15 years ago. While the average income for the poorest Americans has barely grown over the past several decades, the incomes of the wealthiest Americans have absolutely exploded as the following chart demonstrates….

So why is this happening? Well, automation and “offshoring” are typically offered as two key reasons. Millions of hard working American manufacturing workers have been replaced by robots and by outsourcing, and this has enabled many very wealthy Americans to get even more wealthy. But these reasons alone do not explain the increasing disparities.

The truth is that over the past couple of decades, the “rules of the game” have been tilted even more in favor of the rich. Centralization and globalization have been two keys trend which have contributed to this. For example, in the old days you could make a good living by opening up a store in your local town if you worked really, really hard. But today you will be crushed by Wal-Mart and other “big box” stores.

So where do all the big profits that Wal-Mart and the other “big box” stores make go?

They get shipped out of your community to a bunch of rich fat cats.

But apologists for the current system will cry that Wal-Mart and the other “big box” stores create jobs.

Well, yeah, if you like to work for minimum wage.

Have you tried to support a family on minimum wage?

It’s basically impossible.

The entire economy is becoming completely dominated by giant global corporations. These giant corporations are more than happy to put American consumers into debt by selling them substandard junk manufactured in China, India and Mexico.

And it is a great time to be wealthy – especially if you are at the very top. For example, New York state Comptroller Thomas DiNapoli recently announced that Wall Street bonuses for 2009 were up 17 percent when compared with 2008. In fact, incomes for the top 1% of wage earners in the U.S. are shooting into the stratosphere as you can see from the following chart….

Unfortunately, all of this globalization, centralization and greed is fundamentally changing society. The gap between the rich and the poor is growing at an exponential rate. Is it a good thing for a society to have this kind of income inequality?….

Even the current economic collapse is hitting the poor much harder than the rich. Take a moment to examine the chart below. The ten percent of Americans that have the lowest household incomes have an unemployment rate of over 30 percent, while the ten percent of Americans that have the highest household incomes have an unemployment rate of just about 3 percent….

And if the wealthy do get into trouble what happens? Well, they get government bailouts of course.

The U.S. government is more than happy to rush in with billions (and even trillions) of dollars at the drop of a hat when their friends on Wall Street are in trouble.

But if you get into trouble do you think the U.S. government is going to bail you out?

No, the truth is that millions upon millions of Americans are losing their jobs and their homes and the U.S. government seems perfectly fine with that.

We live in a society where individual Americans find themselves with a rapidly diminishing share of the power. Instead, power is concentrated in the hands of massive international corporations and elite power brokers who are more than happy to use globalization to crush anyone who gets in their way.

After all, how can a hard working American compete with someone willing to do the same job for $1.25 an hour in another country?

We have allowed the U.S. economy to become globalized, and so now those who are dependent on a job will increasingly find themselves competing for wages in a global marketplace.

Can someone in China or India do your job?

You better hope not, because there are people there who would be more than happy to do it for a fraction of what you make.

As labor continues to become seen as a globalized commodity, the power and earning ability of the average American worker will continue to decline. The gap between the rich and the poor will continue to expand. The giant international corporations and the elite power brokers of the world will continue to win and the rest of us will continue to lose.

Meanwhile, the vast middle class that once made the United States the envy of the world will continue to rapidly disappear. But instead of doing something to fix the problems, one big group of Americans want to cheer on the wealthy as they plunder the rest of us and another big group of Americans just wants to give everyone a handout.

Wouldn’t it be great if someone actually decided to fix the great economic machine that produced the biggest middle class in the history of the world? Unfortunately, that is not likely to happen. The truth is that the U.S. economy is basically impossible to fix at this point – but that is the subject for another article.

Austin Coins

  • Omer Ismail

    United States of America is technically a bankrupt country. It had defacto declared bankruptcy in August 1971 when President Nixon “closed the gold window”. Secondly, according to 31 USC 3101(b), the maximum debt authorized by the US Congress was $8,184,000,000,000. The United States exceeded the debt limit set by Congress without any legal authority. So the worm had entered the apple long ago. Presently the Federal Government Debt reached + $12 trillion in December 2009, while America’s Total Debt Report $ 57 Trillion – and soaring.

    Please recall the time when, the Americans cut a deal with the Saudis, resulting in OPEC assigning all its sales in US dollars. After that, every nation buying oil had to use US$’s, i.e. they exchanged their goods and services for dollars, which USA had printed. Thus, USA bought oil free by printing US$’s. It was the ultimate free lunch at the expense of the world. This deceit was unravelled in 2000, when Saddam began selling Iraq’s oil for Euro, nullifying the cozy arrangement between US and OPEC. Saddam had to be overthrown. Imagine how much worst it will be for the USA to buy oil in another currency instead of US$’s.

    Further in June of 2009 meetings held in Yekaterinburg, Russia, between Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation of Shanghai Cooperation Organization. The United States, asked to attend, but was denied admittance. The gathering was considered by many economists as, “the most important meeting of the 21st century so far. ”

    These countries were in principle adopting the first formal and schematic steps to replace the dollar as the world’s reserve currency. If in time they succeed, the dollar in all likelihood will undergo a spectacular and dramatic fall in its value.

    The fallout of the 2008 Financial Crisis will be in multiple quantifiers – but this translates in some ghastly transformations for American life-style and mentality of “shop till you drop.” Namely the monetary value of imports, including oil, will skyrocket, interest rates will mount and jobs will haemorrhage at a rate that will make the 10 percent figure look like boom times. State and federal services will undergo cut downs or close all together. With fall of the American dollar, the USA will look something like Zimbabwe of today.

    America’s annual debt servicing requirement is equivalent to 41% of the GDP of the year 2008. The forecasts however indicated that things will be worser:

     In year 2010, it would rise to 62% of its annual GDP.
     In year 2018, it would rise to 82% of its annual GDP.

    The official American defence budget for fiscal year 2008 was $623 billion, even before ex-penses for nuclear research were added. The economists and strategists are well aware of the fact that the collapse of the US$ also means the collapse America’s military domination. The present military spending is unsustainable without the vicious cycle of heavy borrowing.

    America’s balance-of-payment deficits for the trade have been in negative and red, because America imports more and exports less. The most injurious but durable balance-of-payment deficit for the past 50 years has been military spending by the Pentagon spending.

    This spending for the for the most part that
    has been responsible for the persistent balance-of-payments deficit.

    To provide for the continuing war economy America has been inundating the world with dollars. People and governments, who receive these dollars, convert them to local currency through their central banks. The central banks in those countries then have a second problem at hand. If the central bank does not expend the money in the United States then the exchange rates for their currencies vis-a vis against the dollar falls. In the process the local exporters become penalised, because it pushes down their currencies and increases their costs to produce the goods. This has permitted and appropriated America to:

     Print money without control,
     Freedom to buy limitless imports,
     Invest in foreign companies, and
     Provide funding for the military expenditure and expansion.

    The foregoing mechanicism also makes certain that foreign countries like China will keep buying the US treasury bonds.

    However this cycle seems like coming to an end. With USA paying for its oil in foreign currencies, and the dollar no more a reserve currency – it will not have the luxury to flood central banks, no one will need to buy American T- bills, and the house of cards will fall.

    It is not whimsical press mongering that people like Elizabeth Warren talk of, “America Without a Middle Class” because the consequential fallout from de-dollarization of the world will interpret into increase the cost of daily living, ranging from food prices to gasoline and medical care, will become unmanageable for all but a few as the dollar plummets. States will witness evaporation of pension funds. The government will be liquidate and privatise infrastructure and that means roads, transportation to companies. There will be progressive private ownerships of utilities, it may be regulated by the government but will not be subsidized. Real estate commercial and private will depreciate to abysmally low level, and Americans will have to accept monolithic losses. Foreclosures will be epidemic. Borrowing cheap capital, as per vogue, from banks and lending houses will be hard. Empty stores and boarded-up houses will be a common sight. There will be long lines at soup kitchens and superfluity of homeless – present Japan is a good example.

    Financial crisis in USA had many causes. It had its origins in the imbalance in saving and consumption, in the widely misunderstood and use of financial instruments, in short-sightedness and inordinate leverage at financial institutions. But it was also the product of basic failures in financial supervision and regulation. And above all every American thought it was his right to live above and beyond his/her means. The world owed them the living, luxury and the style.

    American framework for financial regulation is riddled with gaps, weaknesses and jurisdictional overlaps, and suffers from an outdated conception of financial risk. Needless to say the financial crisis has been a life changing event. Before this the Americans had the sole expertise of becoming wealthy by creating low interest-fuelled financial bubbles.

    The total liabilities of the United States government, including future social security and medicare payments that the U.S. government is already committed to pay out, now exceed 65 trillion dollars, which is more than the entire GDP of the whole world.

    All of these financial problems come at a time when the U.S. national debt is experiencing exponential growth. The U.S. national debt is now over 12 trillion dollars and it is rising at a rate of about 3.8 billion dollars per day. The unfunded liability of the U.S. government today totals over 107 trillion dollars.

    Greenspans, Geithners , Summers, Volkers, and other financial whiz kids can dream of anything. The world has moved on. It is going to be a sad story, kind of a story that people sit on the ground and tell of great hopes crushed and great states lost forever.

  • Spencer

    For the most part I’ve liked your articles, they’ve generally been informed, insightful and intelligent. Unfortunately this article screams of entitlement mentality, excuses and general sour grapes about wealthy people….it’s unfortunate if you’re going to turn your blog into a sounding board for that.

    You blame Walmart, but in the end who cares even if they provide jobs…they provide a service that Americans want. It is the American people who want to consume more then they generate, who want to save an extra 4 cents per orange they buy, and ultimately who don’t have control over their finances. Credit card companies may be vultures, but their clients are ultimately to blame for spending money they don’t have. There’s a reason that such companies thrive in America, and that reason is Americans. Americans are to blame for the TV shows they watch, the games they play, the commercials they see, and ultimately for consuming the product afterward. I may really hate EZhome and moneymart because I think they are bottom feeders, but the reason they exist is because they provide a service that apparently a portion of poor people want. That service, is that they get to feel rich for a day, and really poor the next. The lack of control over that feeling is like a cocaine addict, who also doesn’t get my sympathy.

    Never before has there been such a time where you can become wealthy from scratch, consider good old Google, facebook, Microsoft, etc… I know the founders of RIM spent years eating the cheapest food they could to save their nickels to continue trying to make their dream a reality. They sacrificed hard and long, struggled to feed themselves and their family for a hope for a better future. Today they live that future, and they provide a semi-safe investment for those less risk tolerant to share in the success of their dream. My cousin has an advertising business, in the first few years there would be weeks where he had no food…he could have went out and gotten a job like everyone else but he held onto his vision. I esteem him highly and hold no ill will that he brings in a very healthy income now.

    IMO, how dare people complain about such people…those complaining usually have never sacrificed as much. Personally I have a job, I work for people who had such a vision because I never had one myself. These are the people who drive our country forward….I work very hard and do a really good job. I can’t compete with my Indian counterpart on basis of salary, but you better believe I destroy him in quality – and doing so I continue to encourage domestic hiring.

    Henry Ford built an amazing company, became one of the wealthiest people in the world and is accredited by many for creating the modern middle class. It was innovation, brand and vision that made the company great – coupled with hard work. Unfortunately America has moved toward entitlement mentality, we are owed everything and we owe nothing back. This doesn’t scale, and it is the fault of Americans . My landlord massively over consumes, has no regard for waste and has no idea about his finances…IMHO he deserves to stay poor. It’s not my duty as a taxpayer to make the government force him to wiseup.

  • Keith

    I’m LMAO! They are greedily gathering more “worthless” paper. I mean really, the entire globe is suffering. When do they realize it’s not going to allow them to “live forever”? Have you ever seen a “U-haul” truck in a hearse procession? You can’t take it with you. Besides, time is coming and there’s more poor people than rich by, oh I’d say a few million or so to ONE!

  • What happened to love thy neighbor? I always heard “money is to feed the living and bury the dead”, I guess this only stands true if you are not the very rich. I now believe that the rich would step over dead bodies that had starved to death and justify it some way. What a bunch of horrible people to look up to.

  • i’m all for taking these so called rags to riches millionaires and billioiniares money and land away from (dont, worry, id leave em ONE mansion, they dont need the other 13, like nicolas cage, or john mccain, as just 2 examples)them, by force if neccessary. the ‘henry fords’ of the world DIDNT do it alone! neither did robber barons like warren buffet.

  • oh btw, henry ford was NOTORIOUS scumbag. and the waltons? they made their billions from slave labor, here and overseas.anti-union, min wage paying slave labor scum.

  • John Thomas

    I’m all for taking everything away from John Halder. I’ll be the one to choose what he keeps and what he doesn’t. You know, I’ll leave him whatever I feel he “Needs”. Keith will give me a hand, won’t’cha buddy? I’ll give you part of his stuff if you do.

  • Spencer

    Hi John,
    First I should say that if you agree with anyone taking the wealth from the rich, then you should equally feel that it’s ok that they take everything from your savings – because that is what you are suggesting. The protection they receive to keep their wealth gives you certainty that the savings you put aside is safe as well. The moment that freedom is denied from them, it will one day be denied from you. Warren Buffet has made a lot of money for a lot of people, and has donated more then you can imagine. He is a modern day hero like John Rockefeller and Andrew Carnegie.

    The Waltons didn’t make their billions from slave labour, they made them by being more effecient then K-Mart, Sears and the likes. They specialized in commodities. Americans liked commodities and thus here we are….you can’t blame them for giving America what they wanted within the rules and guidelines that were set before them.

    As for what they pay: If their pay were not adequate then no one would need to work for them. They closed a store in Quebec that decided to unionize. Those people didn’t get jobs, Walmart didn’t get a store, the locals didn’t get “BIG SAVINGS!!”

  • Doug

    Up yours and your “entitlements”, Americans are being FORCED to make choices like this by corporate greed and gluttony, and corrupted politicians who want nothing more than to work for their constituits, (Corporations) They make laws that ALWAYS favor the corporation over the people. If congress had a set of balls, they’d tax EVERY outsourcing business at a rate of 80% of their profit, until every job came back to America. If they threaten to leave, BYEBYE, impose a 100% tarrif on their products. Watch how fast all the small businesses that were destroyed in the name of “globalization” would return, and how many decent American jobs would be created. Thank you NAFTA for creating the Third World States of America. And as for people like you, remember… You are vastly outnumbered, one day you’ll be facing the anger of people you are ticking off today, the formerly happy middle class. Lets see if your mouth is so big then!!!

  • Spencer

    Doug, I understand that you’re upset with what’s going on in America – but protectionism is not the solution to the problem, it will only cause a new wave of protectionism throughout the world, which would cause all other nations to impose massive taxes on US imports, at which point international trade would plummit and quality of products would decrease. This was the ripple effect of the Smoot-Hawley Tariff which many economists blame for causing the great depression. Doing the same now would be several factors worse then its effect then since we are more dependent on international trade then ever before.
    It would cost massive amounts more to produce most goods….for example forget about getting your new car for as cheap as 20K…most car parts are imported as well as the materials – which would mean that overnight the cost of oil/wood/minerals in America would skyrocket because those are all imported from countries you apparently want to flip the finger to.

    Economist Milton Friedman used to use a #2 Dixon-Ticonderoga pencil to illustrate the point. Its component parts—cedar, graphite, clay, rubber, brass, and yellow paint—came from a number of different countries. He said you could make such a pencil from all U.S. parts, but it would have lower quality and would cost more.

    I agree that I am outnumbered, but not in the way that you think. I am outnumbered in that I work hard and save a portion of my paycheck each month. I may not make that much, but I spend below what I make. I owe no man anything because if I lack the means to purchase something I simply don’t buy it. I have no sympathy for the masses who disobey that simple rule of thumb, and it is my humble opinion that they are the ones who are to blame for this mess. The government debt may be huge (due in most part because of wars and entitlement programs, smaller part due to recession), but it was easy to see this recession coming when the american savings rate became negative and housing price increases surpassed income increases.

    [1] – Energy independence is an idiotic goal by John T. Reed

  • Hi Spencer:
    I appreciate your attempted defense of what you perceive as the free market. However, I submit that your perceptions are skewed, and we have not had a free market in this country in a long, long, time. You said: “The Waltons didn’t make their billions from slave labour, they made them by being more effecient then K-Mart, Sears and the likes.” Have you been to Shenzhen? Bangalore? Dacca? Would you live in the conditions the average factory worker in Bangladesh endures? Didn’t think so… slaves on American plantations in the antebellum South had it good compared to some of those places. All of those places are run by totalitarian regimes intent on keeping their people under their thumbs. Sure their living conditions are better than they were a generation ago – and ours have gone down by a commensurate amount. “Free trade”, like you so elegantly propose, shouldn’t be a zero sum game, yet apparently, today, it is. Why is this?
    It’s because we have nothing resembling free trade in manufacturing – we have a one way street into the US – our only export of any significance are raw materials, agricultural and otherwise. China, Japan, and the other Asian “tigers” all have very stiff protectionist measures in place to keep our exports out. Why is it OK for them to erect such trade barriers but not us?
    I once lost a job to outsourcing – I was replaced by a very well qualified gentleman from India who had a PhD in my field – and made $13kUS/yr. I literally could not compete with that – it’s against the minimum wage laws here. Further, while we import hordes of Indian workers on so called H1B visa, I cannot move to India to work – their immigration restrictions are such that it’s nearly impossible.
    While Walmart may not stock their shelves with literal slaves, I can assure you that their market position is not due to anything more than the ability to game the system and gain legal privileges local businesses are denied. Most Walmart stores are built with property tax abatements and other local tax “incentives” to encourage Walmort to locate in a particular place. The net effect is that your Mom and Pop dime store pays more on their 5000 sq ft downtown storefront than the Walton’s pay on a 500,000 square foot warehouse and “super center” on the edge of town, to which the city graciously ran new roads, sewers and water lines at no cost to Walmart. This is not peculiar to Walmart – most new factories are built this way – Toyota, Honda, Subaru and other Japanese companies are perhaps the most egregious offenders here.
    That’s a modern American corporations idea of a free market – free for them to do as they place, with as little competition as they can get by with.
    Included in the latest health care fiasco currently working it’s way through Congress is a bit inserted by the National Restaurant Association, mandating the appearance of calorie counts and other fluffy nutritional info on every menu in America if there are more than 15 stores in the chain. This imposes a significant cost on their up and coming competitors, don’t you see. Raise the barriers to entry via regulation – a common tactic since the so-called “Progressive Era”.
    I applaud your spirited libertarian defense of business, I really do. I felt that way myself a few years ago – until I realized that with the exception of the very smallest of American businesses, none of them are worthy of such a defense. They are compeltely in bed with the State, so much so that it becomes practically impossible at times to tell where corporate power ends and raw State power accedes. I suggest you re-read Atlas Shrugged, and note that the real enemies of freedom were not the workers – the real enemies were “businessmen” of the corporate ilk.
    Check your premises, and,
    Be well,
    Dave H.

  • Admin

    A reader named Doug recently submitted the following comment about this article by email….

    Not very often that I write to a blog post, but I must tell you, your article, “Not everyone’s Hurting” is the truth that everyone needs to hear. You put it together much the same way as I have been posting on blogs, and have come to the same conclusions. Excellent work, it needs to go viral… I do feel that there is a solution, but the controlling powers will never let it happen.

    Here it is…

    Americans are being FORCED to make choices like this by corporate greed and gluttony, and corrupted politicians who want nothing more than to work for their constituents, (Corporations) They make laws that ALWAYS favor the corporation over the people.

    If congress had a set of balls, they’d tax EVERY outsourcing business at a rate of 80% of their profit, until every job came back to America. If they threaten to leave, BYEBYE, impose a 100% tarrif on their products. Watch how fast all the small businesses that were destroyed in the name of “globalization” would return, and how many decent American jobs would be created. Thank you NAFTA for creating the Third World States of America.

  • Mike

    Indians suck. They can’t do anything. Americans are training them. Every company they takeover dies. Apple CLOSED its R&D in India in 2006 and Apple is booming. 100% of Apple’s software is made in America – mostly with American developers. I rest my case. India, Inc. has cleaned out American companies while producing very little. That’s where all the jobs have gone. Not to India – but to oblivion.

    • Arun

      So deflect your anger to India and Indians, allowing US politicians + fat cats to beggar you. Brilliant .

  • Tatiana Covington

    Since only rich people can afford children, and since having children eats into capital, which poor people can’t afford to lose, it follows that sexual intercourse should be reserved to the wealthy, and the poor should be forbidden to have children. This simple policy solves several pressing problems at once, and guarantees that the world’s population will drop sharply by 2100.

  • I’ll be honest, I’m kinda confused. But nice blog.

  • Excellent work, it needs to go viral… I do feel that there is a solution, but the controlling powers will never let it happen.

  • Arun

    Its our fault.

    We elect the corrupt, the smooth-talking, the likeable guy who should be a film-actor. And not the simple guy who can do a honest job. From dog-catcher to president, it is the same story – you need to “look” great, “sound” great, and if you have no track record (like Obama didnt), that is not a problem.

    It is our fault
    We need to wake up, and take back the political system into common people hands, not by violence, but by becoming politically active,

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