The odds are that we in
the bottom 99 percent may never see a recovery in our lifetimes. That’s
because our nation has evolved into something entirely new: a
billionaire bailout society.
We are entering a disastrous new era in which all the
economic gains go to the top 1 percent, according to data from
economists Emmanuel Saez and Thomas Piketty. They report
that, “Top 1% incomes grew by 31.4% while bottom 99% incomes grew only
by 0.4% from 2009 to 2012. Hence, the top 1% captured 95% of the income
gains in the first three years of the recovery…. In sum, top 1% incomes
are close to full recovery while bottom 99% incomes have hardly started
to recover.” (In 2012, $394,000 is the cutoff to make it into the top 1
percent.)
We see in vivid detail what the new American order looks
like. The top 1 percent live in another economic universe of high
finance that sucks the wealth from the rest of us. In their world, banks
(owned by and for the top 1%) are able to grow larger and larger so
there is no chance they will be allowed to fail, even after these same
banks took down the economy. (In 1965 they had assets equal to 17%
percent of the U.S. economy. Today it’s more than 65% percent.)
Free from any meaningful controls, financial gambling
(called proprietary trading in polite circles) is now the dominant
activity within our largest banks. In fact, in these too-big-to-fail
banks, more money goes to financial gambling than to loans for
businesses and consumers. These are not banks—they are rigged casinos
for the rich. The upside from these corrupt pursuits are kept by the top
fraction of the 1 percent, while the 99 percent hold the bag when those
phony bets crash the economy.
And who among us doesn’t think that will happen again?
Regulation is hapless as billions of dollars slosh through
the political troughs. Serious enforcement is virtually non-existent
because the enforcers fear that the entire financial system will fail
should these criminal banks be prosecuted. Every national policy from
the bailouts to “quantitative easing” has further funneled money to the
super-rich. Meanwhile, the rest of us are told to plod along until jobs
miraculously appear and our incomes finally rise. Dream on.
In sum, our new economic era is characterized by the
supremacy of financial capital which vacuums up the productive wealth of
the nation, and then uses the nation’s wealth as an insurance policy to
pay for its inevitable losses.
Entering Uncharted Territory
The billionaire bailout society is quite different than
previous gilded ages. This can be seen clearly in comparing the
aftermath of the recent Great Recession to what took place during the
Great Depression. We need to remember that after the crash of 1929,
America went on a crusade to rescue the economy by controlling Wall
Street, supporting unions, and fundamentally rebuilding our physical and
educational infrastructure. As Harvard economist Claudia Golden put it,
a Great Compression took place during which the gap between the rich
and the rest of us came down—not by destroying wealth but by making sure
working people got their fair share. In 1929, the top 1% grabbed 23
percent of the nation’s income. By the late 1960s it was below 9
percent.
During the Great Compression we had our feet planted firmly
on the neck of Wall Street. Financial gambling was held to a minimum.
Incomes were no higher on Wall Street than in the productive economy.
Finance and production more or less were in balance. But after
deregulation set in the late 1970s, the income gap began to accelerate
yet again, returning to the unconscionable levels of the late 1920s.
Copyright: AlterNet
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