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Tuesday, 28 January 2014 08:24

Real State of the Union: Income Redistribution to Wealthy Continued Upward at Accelerating Pace in 2013

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areich56According to Robert Reich, in a blog entry earlier this month, 2013 was a banner year for the wealthy, as the trickle up of income and asseets continued to gallup along. Reich calls 2013 "the year of the great income redistribution [upward]":

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.

The stock market ended 2013 at an all-time high — giving stockholders their biggest annual gain in almost two decades. Most Americans didn’t share in those gains, however, because most people haven’t been able to save enough to invest in the stock market. More than two-thirds of Americans live from paycheck to paycheck.

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.

Have you hit the jackpot in the last year as income and assets continue a decades-long redistribution to the top? Not me. For 90% of America, we are hitting the bills, not a Las Vegas mega-payoff.

But how is this happening that the lie of "trickle down" promulgated by Reagan is really the reality of not a "trickle up," but rather a "gusher up" of redistribution to the wealthy.

Reich, as BuzzFlash at Truthout has explained many a time, reiterates the basic dynamic that has trapped the worker in stagnant or lower wages and unemployment:

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.

So once again, one of the largest factors that the wealthy are becoming exponentially wealthier at the expense of 90 percent (including the infamous 99 percent) is the decreasing cost of labor.  The working person is getting paid less for producing more (productivity has been steadily climbing over the past few decades) -- and the increased profits are not going back into job creation at a comparable rate of wealth increase for the economically privileged.

What we are seeing is a massive consolidation of wealth in the US and globally that tips the scale of power from democracy to a national and global oligarchy.  This is evident in, for one example, the Trans-Pacific Partnership where global corporations are reportedly acquiring power (as they have been in past trade treaties) that supercede sovereignty and the will of the majority of the world's people. 

If we hear the promise to increase "economic opportunity" one more time from the GOP or the White House, we might as well give up. The problems relating to "economic opportunity" are structural issues within the current economic system that drive wages and opportunity down; economic opportunity will be largely a myth -- except for a few lucky financial gamblers and hi-tech start ups -- unless income redistribution to the wealthy starts to be shameful, and income redistribution to the workers of America starts to be an honorable and a fair national public policy.

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(Photo: Wikipedia)