Wishing my readers a Merry Christmas and a loving and joyous holiday season.
Wishing my readers a Merry Christmas and a loving and joyous holiday season.
Earlier this month, economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman, leading experts on global inequality, released a groundbreaking study on the growth of income inequality in the United States between 1946 and 2016.
While the economists’ earlier studies made substantial advances in documenting inequality in the United States, the most unequal developed country in the world, this is the first survey claiming to “capture 100 percent of national income,” including the impact of taxation, social programs such as Medicare and Medicaid, and income from capital gains.
The result is a fuller picture of social inequality in the United States than any previous attempts. The conclusions are staggering, revealing that over the course of the past four decades there has occurred one of the most rapid upward redistributions of income in modern history.
The economists found that the pre-tax share of national income received by the bottom half of the US population has been cut nearly in half since 1980, from 20 percent to 12 percent, while the income share of the top one percent has nearly doubled, from 12 percent to 20 percent. “The two groups have basically switched their income shares,” the authors note, “with 8 points of national income transferred from the bottom 50 percent to the top 1 percent.”
The study documents a sharp change between 1946-1980 and 1980 to the present. In the first period, the pre-tax incomes of the bottom 50 percent of earners more than doubled, growing by 102 percent, while the incomes of the top 1 percent increased by only 47 percent and the top 0.001 percent by 57 percent.
Since 1980, however, the incomes of the bottom 50 percent of earners have stagnated at about $16,000 a year (in current dollars), while the incomes of the top 1 percent have grown by 205 percent, and the top 0.001 percent by 636 percent.
After accounting for the impact of various tax credits and social programs, the economists found that the incomes of the bottom half of income earners increased by 21 percent since the 1980s. They note, however, that none of this increase has gone into disposable income. Rather, it is almost entirely the result of increased health care payouts from Medicare, which has simply been absorbed by the pharmaceutical giants and insurance companies engaged in price-gouging for vital health care services.
The principal factor in the surge in income inequality, particularly since 2000, has been the growth in “capital income,” that is, the stock market. The inflation of stock market bubbles has been the primary form through which the ruling class and its political representatives have engineered a massive transfer of wealth.
The figures contained in the report by Piketty, Saez and Zucman reflect historical transformations in the structure of American capitalism and class relations in the United States. The colossal growth of social inequality is bound up with the decay of American capitalism and decline in its world economic position.
Historians have often remarked that during its early days, the United States was the most socially egalitarian region of the Western world. The growth of monopolization and finance capital in the latter part of the 19th century transformed America into a land of “robber barons” at one pole and workers and immigrants whose living conditions were exposed in such works as Jacob Riis’ How the Other Half Lives, published in 1890, and Upton Sinclair’s The Jungle of 1906.
But along with these processes came the growth of the workers’ movement, which, largely through the efforts of socialists, fought to organize the American working class across its myriad ethnic, religious and regional divisions. The Russian Revolution of 1917 gave new impetus to these struggles, including the militant labor actions of the 1930s that led to the formation of the industrial unions.
The American ruling class, alarmed by the prospect that American workers would follow the example set by the Bolsheviks, and having at its disposal the economic might of the world’s largest and most advanced industrial economy, set out on a program of social reform exemplified by President Franklin D. Roosevelt’s New Deal, which introduced Social Security and curbed the worst abuses of Wall Street.
The United States emerged from the Second World War as the dominant global power, commanding more than 50 percent of world economic output. By the late 1960s, however, the economic domination of American capitalism began to decline, as the economies of Europe and Asia were rebuilt. A series of economic and political crises culminated in the combination of economic stagnation and inflation of the 1970s.
The US ruling class responded by embarking on a policy of class war, deindustrialization and financialization. With President Jimmy Carter’s appointment of Paul Volcker to head the Federal Reserve in 1979, the US central bank threw the United States into a manufactured recession. After coming to power in 1981, Ronald Reagan launched a full-scale social counterrevolution, initiated by the breaking of the PATCO air traffic controllers’ strike and firing and blacklisting of the strikers. Similar policies were pursued by the ruling classes throughout the world.
The trade unions played a vital role in facilitating this offensive, isolating and betraying every attempt at resistance by the working class throughout the 1980s and incorporating themselves into the structure of corporate management and the state. By the end of the decade, the unions had transformed themselves, for all practical purposes, into arms of the companies and the government. The bureaucratic elites that dominated them devoted all their efforts to suppressing and sabotaging working class struggle.
Every subsequent administration, Democratic and Republican alike, has pursued policies that promote social inequality, including successive rounds of financial deregulation, repeated tax cuts for corporations and top income earners, the slashing of social programs, and the elimination of workplace protections.
After the 2008 financial crisis, the Obama administration accelerated these processes. The White House continued and expanded the bank bailouts initiated under the Bush administration and helped funnel trillions of dollars to Wall Street through the Federal Reserve’s “quantitative easing” programs, while working, as in the 2009 auto restructuring, to slash wages.
Under the incoming administration of President-elect Trump, the offensive against the working class will sharply intensify. The election of Trump represents something new. He has staffed his cabinet with billionaires, far-right, pro-business ideologues, and generals—all of them dedicated to the impoverishment of the working class and the ever more violent suppression of popular opposition.
But Trump does not emerge from nowhere. He is not some aberration. Rather, he is the noxious culmination of the decay of American capitalism, growth of unprecedented levels of social inequality and collapse of American democracy.
These same processes have created the objective foundations for socialist revolution. In the mid-1990s, when the Workers League in the US and the sections of the International Committee of the Fourth International in the rest of the world began to transform themselves from leagues into parties, adopting the name Socialist Equality Party, we recognized the immense revolutionary significance of “the widening gap between a small percentage of the population that enjoys unprecedented wealth and the broad mass of the working population that lives in varying degrees of economic uncertainty and distress.”
The past two decades have confirmed this prognosis. The fight against social inequality requires the building of a new political leadership, embodied in the SEP, to organize and unify the struggles of the working class on the basis of a revolutionary program. The capitalist profit system must be replaced with a society based on equality, international planning and democratic control of production—that is, socialism.
A study released last week by a team of economists from Stanford, Harvard and the University of California at Berkeley found that the odds of American children growing up to earn more than their parents declined precipitously from 1970 to the present. Whereas in 1970, 92 percent of 30-year-olds earned more than their parents did at a similar age, that number fell to 51 percent by 2014.
The figures for males were even worse. As of 2014, only 41 percent of 30-year-old men earned more than their fathers at a similar age. The researchers also found that the decline in the ability of children to earn more than their parents was greatest in the Midwest, where decades of deindustrialization have had their most devastating social impact.
The economists concluded that even rapid economic growth would do little to reverse the downward trend because of the immense and ongoing growth of social inequality.
The authors of the study described their findings as a harsh verdict on the strength of what they called “the American dream.” In fact, their own findings add to a mass of social indices demonstrating that the much-vaunted but largely mythical “American dream” has turned into a nightmare. To the extent that this term, promoted to encourage illusions in American capitalism, ever corresponded to social reality, it was largely in connection with the belief that each young generation would enjoy a better standard of living than the one that preceded it.
Just last week, the federal Centers for Disease Control and Prevention (CDC) reported that overall life expectancy in the US declined for the first time in more than two decades in 2015. The fall reflected rising death rates for a variety of diseases, an increase in unintentional injuries, accelerating suicide rates and an increase in infant mortality.
Earlier this year, a group of Harvard researchers reported that there was a 15-year life expectancy gap between men in the richest one percent of the population and those in the bottom one percent. Another reflection of the social crisis is the CDC’s finding that deaths from heroin overdoses surpassed gun homicides in 2015, while total annual deaths from all opioid overdoses quadrupled between 1999 and 2015.
The study on pay noted that the sharpest drop in the percentage of young adults earning more than their parents occurred from 1970 to about 1992—from 92 percent to 58 percent. The percentage stabilized for about a decade and began to fall again beginning in 2002.
There is a direct correlation between this downward trajectory in living standards and the decay of American capitalism. The 1970s was the decade when the unraveling of the post-World War II economic boom and the erosion of the dominance of American industry found open expression in the collapse of the Bretton Woods monetary system in 1971 and the growing share of global markets, including the US market, captured by rivals such as Germany and Japan.
At the end of the decade, the American ruling class initiated a major shift in its class policy, terminating the postwar period of relative class compromise and launching a class-war offensive aimed at breaking the militant resistance of the working class and reversing its previous social gains. A wave of plant closures and mass layoffs that began under the Democratic Carter administration was intensified under Reagan, who used the growth of unemployment along with union busting and wage cutting, made possible by the betrayals and collusion of the unions, to drive down working-class living standards.
This ruling-class offensive has continued ever since, under Democratic no less than Republican administrations. The pace of decline in working-class living standards slowed somewhat in the 1990s, with Clinton presiding over a transient upward trend in economic growth based on the removal of virtually all restraints on financial speculation and parasitism. The resulting dot.com bubble imploded in 2000, fueling a new wave of mass layoffs and wage cutting under both the Bush and Obama administrations. This offensive was stepped up in response to the Wall Street crash of 2008.
It is this social catastrophe, rooted in the decline of American capitalism, that underlies the political crisis of both big-business parties in the 2016 election and the victory of Trump—the personification of the economic, political and moral decay of the American ruling class.
The election was dominated by the growth of popular anger and disgust with both parties and the political and economic status quo. The broad popular support, particularly among young people and workers, for the Democratic primary campaign of Bernie Sanders, who presented himself as a “socialist” opponent of the “billionaire class” and social inequality, reflected the initial stages of a movement of the working class to the left. Sanders worked to channel this opposition behind the Democratic Party, culminating in his endorsement of and campaign for Hillary Clinton.
Clinton’s campaign, the most right-wing in modern Democratic Party history, focused on scandalmongering against Trump and warmongering against Russia. She was broadly backed by Wall Street and the CIA and ran as the continuator of Obama’s supposed economic “recovery.” She utilized racial and gender politics to portray “white working class” support for Trump as motivated by racism and sexism and distract attention from the ongoing growth of social inequality and impoverishment of broad layers of working people.
In an election where the two candidates vied for the distinction of being the most despised presidential contenders in US history, and the biggest bloc of voters were those who saw no reason to vote, Trump was given a free path by the Democrats and Sanders to exploit the economic grievances of workers and middle-class people whose living standards had been devastated by the policies of both parties.
Both the Obama administration and the Clinton election campaign were the outcome of nearly five decades, beginning at the end of the 1960s, during which the Democratic Party has repudiated any connection to policies of social reform and moved ever more sharply to the right.
It will not take long for workers, including those who voted for Trump, to realize that they have been taken for a ride and face in his administration the most ferocious enemy of the working class. His cabinet of billionaire reactionaries and warmongering generals already makes clear that his will be the most right-wing, anti-working class government in US history.
Trump’s policies of social counterrevolution and war will do nothing to resolve the underlying crisis of American and world capitalism. They will only exacerbate the social crisis. The working class will face immense shocks in the coming months. It will move into struggle against a government that is preparing an unprecedented level of state repression in defense of the corporate-financial elite.
The interests and needs of the working class can find no expression within the existing political system. The defense of democratic and social rights must assume the conscious form of a socialist political movement of the working class against the capitalist system.
Street art in Chile
by artist UnKolorDistinto.
Photo by UnKolorDistinto.
In an email addressed to members of the progressive group, Democracy for America, former Secretary of Labor Robert Reich explains why Bernie Sanders needs their help.
Progressives are justifiably outraged at what appears to be a power play by the Democratic establishment. Over just the past couple of hours, more than 50,000 DFA members have signed on to stand with Bernie Sanders against it.
Every moment that the Sanders campaign is blocked from using its own voter file data hurts his campaign deeply. We need to build momentum NOW: Will you share Democracy for America’s petition telling the DNC to restore Bernie’s access to the voter file on Facebook now?
It seems like the DNC is doing all it can to blunt the momentum of Bernie’s campaign — just 24 hours after it received major endorsements from DFA and the Communication Workers of America.
First, the DNC refused to schedule an appropriate number of debates — and hid the ones they did schedule by setting them up near holidays or on weekend nights.
Now, in a huge overreaction to a situation involving a security glitch by a data vendor, the DNC has completely removed the Sanders campaign’s access to its very own voter file data — and they won’t say when or if they will give it back.
Not having access to this data for the upcoming primary process in 2016 would seriously cripple the Sanders campaign. This is unacceptable.
The Democratic Party establishment may not want Bernie in the race, but it cannot and must not drown out the voices of the people. Help us send a clear message to the DNC by sharing DFA’s petition on Facebook now.
Former Secretary of Labor
* On Monday, December 21st, the author of this post, Brian Hanley, will be releasing the world’s first animated rap video about Bernie Sanders. Please subscribe to his blog at the top of this page and stay tuned!