"One of the worst epithets that can be leveled at a politician these days is to call him a “redistributionist.” Yet 2013 marked one of the biggest redistributions in recent American history. It was a redistribution upward, from average working people to the owners of America.
"Even if you include the value of IRA’s, most shares of stock are owned by the very wealthy. The richest 1 percent of Americans owns 35 percent of the value of American-owned shares. The richest 10 percent owns over 80 percent. So in the bull market of 2013, America’s rich hit the jackpot.
"What does this have to do with redistribution? Some might argue the stock market is just a giant casino. Since it’s owned mostly by the wealthy, a rise in stock prices simply reflects a transfer of wealth from some of the rich (who cashed in their shares too early) to others of the rich (who bought shares early enough and held on to them long enough to reap the big gains).
"But this neglects the fact that stock prices track corporate profits. The relationship isn’t exact, and price-earnings ratios move up and down in the short term. Yet over the slightly longer term, share prices do correlate with profits. And 2013 was a banner year for profits.
"Where did those profits come from? Here’s where redistribution comes in. American corporations didn’t make most of their money from increased sales (although their foreign sales did increase). They made their big bucks mostly by reducing their costs — especially their biggest single cost: wages.
"They push wages down because most workers no longer have any bargaining power when it comes to determining pay. The continuing high rate of unemployment — including a record number of long-term jobless, and a large number who have given up looking for work altogether — has allowed employers to set the terms.
"For years, the bargaining power of American workers has also been eroding due to ever-more efficient means of outsourcing abroad, new computer software that can replace almost any routine job, and an ongoing shift of full-time to part-time and contract work. And unions have been decimated. In the 1950s, over a third of private-sector workers were members of labor unions. Now, fewer than 7 percent are unionized.
"All this helps explain why corporate profits have been increasing throughout this recovery (they grew over 18 percent in 2013 alone) while wages have been dropping. Corporate earnings now represent the largest share of the gross domestic product — and wages the smallest share of GDP — than at any time since records have been kept.
"Hence, the Great Redistribution."
"America has been redistributing upward for some time – after all, “trickle-down” economics turned out to be trickle up — but we outdid ourselves in 2013. At a time of record inequality and decreasing mobility, America conducted a Great Redistribution upward."
Really a sad loss of what it means to be American.
Article from Sept, LA TImes.
It takes grass-roots activism. Unions, for all of the mismanagement, corruption, and abuse, are the only counter to big money capitalism. People are so overworked, they don't have the energy to organize. Or they are not working, and too whipped to try.
And of course, the "entertainment" - media - industrial complex continues to spread, as in George Orwell's 1984, "Prolefeed: The steady stream of mindless entertainment produced to distract and occupy the masses. Apparently some folks took 1984 to be a blueprint to wealth and power, rather than a warning to all.
Capitalism is designed to suck money out of the middle class into the wealthy class via the use of taxation policies, squelching of labor movements, reducing access to safety nets. I didn't understand the implications of all that until I started drawing cartoons of banks, workers working and depositing money into banks, banks making loans and watching how the money flowed.
It is kind of like the old slot machine we used to have in my basement when I was a kid. There was a box of nickels in the machine that we would take out and play until all the nickels were back in the box, and we had none in our hands. Slowly, over time, the machine took in more than it gave out.
That is what happens to working class people. In the build up of the Golden Age, everybody thought things were humming just fine, except for those poor workers who put in long hours and came home with barely enough to put food on the table and a roof over head. Then the crash came and the truth was known. Our country's economic reality was that the working class, including small businesses, were hollowed out, and supply and demand could no long maintain the lie of those Golden Age years.
WWII put money back into the hands of workers and small businesses. Our country grew, even as the safety nets and labor unions grew ... until they began to fail. Again, the working class and small businesses collapsed before the economy collapsed. The collapse of capitalism is from within.
The same thing happened in the 1960s. Viet Nam didn't pull us out as WWII had done. The failures of support systems started in the 1970s.
Collapse, they did. It is like water running downhill. That is just the way capitalism works. No need to whine, or cry, or complain. Just know it is the nature of the beast and get on with life. That, to me, means, know what is happening, do what you are doing with your budget plans and your food production plans. Those who are prepared will not be as damaged as those who believe, based on faith in patriotism and religion, that recovery is happening. It is not. Just look at the stats.
Well, the good news is, there are growing numbers of those who recognize the symptoms and have remedies in place to survive, if not thrive. My goal is to thrive.
Thanks for the excellent article from the Sept, LA Times. Good information.
"Five years after the financial crisis, the mega-rich have regained all the wealth they lost during the recession, setting a new record value for combined net worth….
"The annual report showed that America's wealthiest have a combined net worth of $2.02 trillion, the highest value ever recorded by Forbes. That's up from $1.7 trillion a year ago."
~ Paul Whitefield. Forbes 400: Rich get richer while the poor get to watch and wish. September 16, 2013