In the 1950s, Dwight Eisenhower gave a speech on the economy where he said, “A rising tide raises all ships.” When he said that it was true. Back then when the economy grew all segments of population felt a positive result. Now, I wonder what the former president would say about the modern American economy in which each time the tide rises, the yachts go up and those with the dingy’s begin bailing furiously to keep from being sunk.
We hear a lot about the top one percent and the bottom 99 percent. The cut-off line is around $400,000 to get into the top one percent, but the average income of that group is $717,000. On average their worth is $8.4 million which is 70 times more than the average person whose household income is around $51,000.
The division becomes even larger when you start looking at the top one percent of the top one percent. That person makes on average $27 million a year. They control 43 percent of the nation’s wealth. That is the greatest disparity since the Great Depression.
In a lot of ways the numbers make no economic sense. Worker productivity since 1979 has increased 80 percent. If the wages of workers had grown at the same rate of the economy since the 1970s most people would be making $92,000 a year.
So, where is the money going? You might look at the top of the Wall Street players. Last year corporate executive bonuses (not including salaries) were running 62 times higher than average worker salaries. Between 2007 and 2009 Wall Street Profits rose 720 percent while unemployment doubled and home equity values fell 35 percent.
Simply put the trickle down economics have worked for Wall Street and the very rich, but it has not done much for working people. Now one in seven working Americans are making so little money, they have to rely on food stamps. The wealthy can only spend so much for homes, cars, food and everything else. They bank and invest the rest which is good for them but not for the rest of the economy. That is why even though Wall Street is having a banner year the rest of the economy is struggling. Working people who would normally spend the money on goods and services instead are still tightening their belts. In an economy like ours that is 70 percent based on consumer spending there is a threat that the economy could once again grind to a halt.
Talking about these realities has become a touchy subject with America’s uber-rich. During a recent interview, wealthy venture capitalist Tom Perkins called the one percent versus the 99 percent debate “anti-rich radicalism.” He also said, “We are beginning to engage in class warfare.”
Perkins should come to realize that the class warfare is over. The rich guys won.
If you don’t believe it just remember how America’s taxpayers put up the money to bail out the wealthy and their banks when they melted down the economy in 2007, while regular people lost their jobs and homes.
Working America is just looking for an economic Marshall Plan to help them rebuild their lives. If that doesn’t happen we’ll continue to head toward the world of the Great Gatsby where “the rich get richer and the poor get children.”