MARK KARLIN, BUZZFLASH AT TRUTHOUT
David Cay Johnston, Pulitzer Prize winner and former New York Times reporter on economic issues, analyzes a recent study of wealth among five nations among those with the richest economies and concludes: "In short, what the paper shows is this: Inequality is a product of government policy."
Johnston, author of many books – including "Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich--and Cheat Everybody Else" – writes that the study by renowned economists reconfirms assertions frequently made on BuzzFlash and Truthout:
The authors note that for more than five decades starting in 1928, at the end of the Roaring 20s bubble that produced the Great Depression, top American incomes were a much smaller share of all incomes. Those at the top began gathering a rapidly growing share of national income when the first Reagan tax cuts took effect.
In 1981 the top 1 percent had 10 percent of all reported income, but by 1999 they were at 20 percent. That share has risen and fallen with the economy since, but the 12-year average shows the top 1 percent enjoying a fifth of all income since 2000.
For those at the top, a great deal of economic gain is not reported as income. Among the economic gains not treated as taxable income is the rising value of stocks and other assets.
Most alarmingly, as BuzzFlash has noted in its ongoing analysis of the tale of two economies (one soaring with wealth as the stock market breaks new records; the other in a quagmire of lost manufacturing jobs and stagnant wages), Johnston says that the study "has shown that in the two years of recovery for which we have data, 2009 to 2011, 121 percent of the income gains went to the top 1 percent. That means the 99 percent saw its share of the national income pie sliced more thinly."
Johnston further notes:
These gains were so highly concentrated that 40 percent of all the increased income in our nation of 314 million went to fewer than 16,000 households.
On the rise of CEO and other executive pay, while that of most workers is flat to falling, the authors find that “tax cuts may have led managerial energies to be diverted to increasing their remuneration at the expense of enterprise growth and employment.”
In plain English, that means some executives are lining their own pockets at the expense of the enterprises they run. In a country where they can keep most of their increased pay because of tax rate cuts, executives have an incentive to focus on their wealth, while if tax rates were at pre-Reagan levels, pushing for much higher pay results in much less personal after-tax gain.
This is a revealing debunking of the corporate media, Chamber of Commerce, Koch Brothers, and DC meme that the economy as a whole is in a crisis. In reality, those in the plutocracy who are most vocal about imposing "austerity" on the working class and poor are enjoying lavish gains in income to the detriment of the rest of the nation – particularly those who work on a time clock or can't find a job because CEOs are sitting on corporate profits: redistributing them into higher salaries and dividends rather than reinvesting the profits in growing the US economy.
Although the advocates of more wealth for the top one percent tenaciously argue against wealth redistribution, Johnston points out that this latest study finds that their increasing dominance of US income is due to deliberate government policies that indeed redistribute wealth upwards.
The battle cry of the gilded elite is "austerity" because government policy results in their continued accumulation of income and assets even as the rest of the American citizens have to experience economic cutbacks – those who can least afford them.
Johnston's analysis of this latest study reconfirms that the "conventional wisdom" of the dangers of the national debt cramping the income and asset consolidation of the rich is false; they are currently experiencing a windfall from a Wall Street investment environment that is largely divorced from the economic welfare of the nation as a whole.
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