Readings in Inequality. September 2019 Links

Readings in Inequality. September 2019 Links

Each Sunday Tony Wikrent posts a list of links at Real Economics and Ian Welsh. Some are political, many lead to news about runaway inequality. This post borrows a few that seem to fit together very well.

The New York Times reported that inequality is getting worse, which for poor people means more sickness and an earlier death.

Peter Turchin, at Evonomics, discusses what it is that sometimes (like in the post World War II era) decreases inequality. Namely policy changes when disenchantment with inequality reaches a boiling point.

Bloomberg takes a look at the growing disenchantment with capitalism in the US and UK, with charts.

Chris Hedges demolishes the Business Roundtable’s efforts to rebrand their rapacious capitalism, which has led to the worst inequality since the 1920s, as benevolent leadership.

Pam and Russ Martens note that Bernie Sanders said the top three US billionaires (Gates, Bezos, Buffett) have more wealth than 160 million Americans, but he was using 2017 numbers. The inequality today is much worse.

You’ll find more excellent links from Tony at  Real Economics and Ian Welsh each Sunday. 

About the Business Roundtable’s Mission Change

About the Business Roundtable’s Mission Change

The Business Roundtable was formed in 1972 with the goal of undermining New Deal-forged worker rights and corporate regulation by the federal government. The Roundtable worked to weaken antitrust regulations, undermine labor protections and stopped Ralph Nader’s attempt to create a consumer protection agency in 1977. This was a group of hundreds of the country’s top companies working to escape federal regulations, decrease taxes, and promote the better business environment. And free trade.

But last week they issued a letter that said (from the NY Times): “Breaking with decades of long-held corporate orthodoxy, the Business Roundtable issued a statement on “the purpose of a corporation,” arguing that companies should no longer advance only the interests of shareholders. Instead, the group said, they must also invest in their employees, protect the environment and deal fairly and ethically with their suppliers.”

The statement sounds like a major breakthrough, a return to the time before Runaway Inequality took off, when labor unions and workers were protected by US law and companies committed to their home towns because that’s where they lived, before free trade and internationalization led them to follow the easy dollars of cheap material and labor overseas. But is it?

Move Over, Shareholders: Top CEOs Say Companies Have Obligations to Society

If only that turns out to be true.

Elizabeth Warren Announces Her Plan to Stop the Financialization of the US Economy.

You can read her ideas and plans here.

Key quote:

Here’s the problem with the belief that helping Wall Street always helps the economy: it isn’t true. In recent decades, Wall Street has grown bigger and financial sector profits have gone from 10% to 25% of total corporate profits, but everyone else in America has lived through a generation of stagnant wages and sluggish economic growth. Even today, big banks are making record profits and handing out huge bonuses as average wages barely budge.

The truth is that Washington has it backwards. For a long time now, Wall Street’s success hasn’t helped the broader economy — it’s come at the expense of the rest of the economy. Wall Street is looting the economy and Washington is helping them do it.

Elizabeth Warren, “My Plan to Rein in Wall Street”
The High Price of Child Care

The High Price of Child Care

Child care is expensive because good child care employs a high ratio of caregivers to children. That’s good for children but a problem for working people earning on the low end (and even the middle) of the wage scale. The Economic Policy Institute took a look at child care costs and found that infant care in New York cost more than $14,000, and in 33 states and Washington DC, the cost of child care was higher than the cost to attend the state’s colleges.

Follow the link to see how much child care costs in your state.

This Vox article lets the Democratic candidates for president explain their program proposals for child care.

CEOs Make How Much More Than Their Workers?

CEOs Make How Much More Than Their Workers?

The AFL-CIO Paywatch program keeps an eye on the executive compensation figures public corporations are required to report thanks to the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010. That’s information companies didn’t want to report, and a closer look shows why.

Read it here.

A few takeaways:

In the past 10 years, CEOs have seen their compensation increased by $5,200,000 each. In those same 10 years, employees have seen their compensation increase by $7,858. That’s a ratio of 662 to 1.

After the big Trump tax cut in 2017, the top 10 companies in stock buybacks last year spent $25,200,000,000 reacquiring their own stock, driving up stock prices. Since the majority of executive compensation comes from stock grants and option, the average CEO in this group made $30,800,000. Until 1981, the SEC considered stock buybacks stock manipulation, which was not allowed.

Arthur Peck, the Gap CEO, earned 3,566 times more than the Gap’s median worker. Median is the worker who is in the middle of the distribution curve, meaning there are as many workers making less as making more. The Gap’s median worker earned $5,831 last year. Mind the wage gap.

At the other end of the spectrum, Niraj Shah, CEO of home furnishings e-commerce site Wayfair, made just two times what the company’s median worker made (which was $42,694). Seems way fair.

More Than a Trickle Up

More Than a Trickle Up

The People’s Policy Project is a think tank run by Matt Breunig, who previously worked as a lawyer for the National Labor Relations Board and as a policy analyst at the Demos Think Tank.

The 3P, as they refer to themselves, took a look at the recent Federal Reserve report that tracks the distribution of wealth in the US. You can get to the original data here.

By comparing the data from 1989, the first year they were collected, to 2018, the most recent set, and making adjustments for consumer durables (taking them out) and inflation (making all dollars equal over time), 3P shows that in the last 30 years the top one percent have increased their wealth by $21 trillion.

Over the same period the wealth of the bottom 50 percent has decreased (yes, decreased) by $900 billion.

You can read the 3P report here.

The Nitty Gritty Had This to Say About Runaway Inequality

RUNAWAY INEQUALITY—This is the most pressing issue that affects all working people and the poor. After World War II the US emerged as a super power because its economy built up a strong middle class. The system at that time saw the height of union involvement so workers could negotiate with business for improved wages and benefits. Government regulated businesses, banks and Wall Street. Corporations and the wealthy paid their fair share of taxes. Wages and productivity went up together, side by side. During those years, workers did a little better each year with raising wages and government programs began to reduce poverty.

But in the early 70’s, both political parties were sold on a new economic system. They were encouraged to do away with many regulations and cut taxes for corporations and the very rich. It doesn’t matter if you call it neoliberalism, the Better Business Model, or “Trickle Down Economics”. It has not worked for the benefit of workers in 40 years and it will never work. Money is not trickling down, it is gushing up and the inequality has become so bad that just 3 individuals at the top now have as much accumulated wealth as the entire bottom half. Shameful!

Runaway Inequality is a problem that will not correct itself without working people making some political changes while we still have a chance. The Southeastern NC Central Labor Council and the Alliance for Economic Justice is available to provide workshops or hour long presentations on this evil cancer in our economic system. Don’t be bedazzled by wedge issues. This is the most significant problem affecting all of us.

The SENC-CLC recently co-sponsored a series of presentations by Les Leopold across North Carolina. If you missed these presentations Southeastern NC Central Labor Council along with The Alliance for Economic Justice, The NC Alliance of Retired Americans and the NC NAACP are committed to making sure your group is supplied with a presentation and information on Runaway Inequality. While on his NC book tour Les Leopold met with Rev. Dr. T. Anthony Spearman, President of the NC NAACP. The NC NAACP is now a part of the outreach on Runaway Inequality and showed their commitment to this issue by  purchasing 6,000 volumes of Runaway Inequality.

         On Tuesday 11 June 19 President Harton will travel to Salisbury to deliver a presentation on “RUNAWAY INEQUALITY” to AFGE Local 1738 members.

If your local or group would like a presentation on Runaway Inequality or a workshop please contact:

Herb Harton — maguspics@aol.com — (910) 791-3643—(910) 620-1629 or George Vlasits — gvlasits@gmail.com  (910) 465-8871