Sunday, February 12, 2012

So WHY Do So Many Need the 'Safety Net' Now?

My family back in December, 1957, near Everglades National Park. We sported 5 kids and didn't need government handouts to get by - how come?

The front page article in today's New York Times blared 'Straining the Safety Net', and proceeded to focus on middle class families in Chisago County, Minn. and how they're faring. It seems not too well, since the story relates how dozens of "federal benefits programs" provide $6,583 on average for every man, woman and child in the county.

The particular take was confined to one Ki Gulbranson, who has five kids, and owns a logo apparel shop, also deals in jewelry, and earns only about $39,000/yr. while never having earned more than $46,000/yr even including officiating soccer games on the side (44 last year). Because of this income shortfall he's depending on the earned income tax credit to provide "several thousand dollars" while at the same time signing his 3 school age kids up with another federal benefits program to eat free lunch and breakfast at "taxpayers' expense".

And what does Ki think of all that? According to the piece, he "says that too many Americans lean on taxpayers rather than live within their means."

Huh? How about practicing what you preach, Bud? Oh, and btw, that includes not giving in to the biggest luxury ticket item on record- KIDS! (Which on average require $180,000 each to raise just to college age). Ever heard of artificial birth control? Oh wait, maybe you're Catholic - in which case you ought to be getting those lardass Catholic Blackrobes and their Church to be helping you out!

Talk about cognitive dissonance! But as we knew since the time Tea Baggers came out against Obama's Affordable Care Act ('Keep your hands off my Medicare!") these people can't process two dichotomous thoughts at once without conflation. And true to form, we learn that Gulbranson "printed t-shirts for the Tea Party campaign of a neighbor in 2010".

Some folks never learn. Anyway, amidst all this caterwauling about government benefits, which now the marginal middle class of Gulbranson's ilk appear to be getting more of than even the lowest earning quintile (whose percentage of benefits fell from 56% to 39%) no one seems to be asking why things are different now from say 1957.

At that time, even a family with five kids could manage without handouts. As Exhibit A, I present my dad and mom with the five of their offspring including moi (far left) - as shown in the accompanying photo taken near Everglades National Park, in 1957. We depended on no gov't largesse, and the combined earnings of dad and mom at that time were barely $7,500 a year. We still managed to all go to Catholic School, we had free health care (compliments of the school) and also were able to go out every Friday night for a fish and chips family dining experience at a local restaurant ($5 total for "family night" - all you can eat).

How did we manage that feat, while Gulbranson can't seem to be able to even earning at least 5 times more than my parents did between them?

First, we had the benefit of VA home mortgages back then. Thus, dad (as a WWII vet of 3 yrs. and four campaigns in the Pacific) could make a purchase on our first home, with only $100 down, and 1% interest on a $20,000 loan. (Yeppers, homes cost that little way back then, in Hialeah, FLA).

Second, bank passbook earnings were around 4% so even if you were paying 1% interest on a loan, you came out ahead in the spread if you held anything in savings. Also, because of a decent savings interest rate, you didn't have to take risks in the stock market to stay ahead of the game.

As for gas, that was maybe 26 cents a gallon. If that. Food was also fairly cheap (e.g. pork chops, 22 cents a lb., hamburger 18 cents a lb), because.....hey ....this was at least 35 years before the era of rampant globalization when one had 1 billion Indians, 1 billion Chinese and many other "emerging" countries competing for your grains (wheat, corn, etc.) Oh, and no one was stupid enough to burn food crops like corn (for ethanol) back then which raised the costs because of reducing supply!

Oh, did I forget that the top marginal tax rate was at 91%? That meant that all the rich fuckers had to pay their fair share! They were not able to use their excess capital to speculate in commodities markets, as they do now, driving up the costs of wheat, silver, gold, oil and everything else! In addition, they didn't have so much excess cash left over that they could plow it into super PACs for campaign funding, especially to create noisome TV ads and pass them off as "speech" or that "money is free speech". NO one back then was dumb enough to buy into that horse manure!

Yes, there were some ways by which companies and wealthy scions (living off capital gains from their inheritances) might bring down their actual rates and payments (apart from charitable donations) but that generally meant investing in labor, plant for hiring people. It didn't mean using the money to speculate in "hedge funds", ETFs or god forbid, credit default swaps - none of which existed back then! (The Age of the Speculator and jazzed up stock markets was at least 23 years away!)

Did we five get "free meals" at school? No, we ate our individual breakfasts at home, generally either Sugar Corn Pops or frosted Flakes in a bowl of milk and we took bologna or salami sandwiches with us to school....except on Thursdays. On those days we paid 25 c each for a school lunch consisting of: two dogs, small carton of milk, an apple and Wise potato chips!

If I had to name only one reason why families like Gulbranson's aren't making it now, while ours did back then - it would be because companies have since expanded their power to the level of nation states and can no longer be held accountable to the regulations of countries that host them. See, e.g.,9171,2105976,00.html

This being the case, they can outsource as many jobs as they want, and with those jobs the capital that a country needs to pay its debts and for its benefits - rather than leveraging them. Indeed, since the massive power of nation states has been subsumed by multinationals, a new pact appears to have emerged in which companies and the wealthy are now telling our citizens:

"In the past we helped you out by paying higher taxes, but no more! The extent of our assistance now is to enable you to go into higher debt and hence leverage what you need."

In other words, we have a wholesale abandonment of the social compact. And more specifically, companies and the very wealthy now appear to believe they make wealth - create their own- on their own merits. This is of course an enormous lie, since no one - no matter how big it fancies itself, is independent of the commonweal.

For example, an oil shale corporation or paper mill will use tens of thousands of gallons of PUBLIC water daily to extract its product. Thus, their profits are obtained at the expense of a precious public resource. Similarly, large companies like Walmart whose distributors daily ply thousands of miles on our federal interstates make use of that resource and contribute to decay. Companies that make enormous use of our energy in any form do the same, reducing the amount left for the rest of us.

My point is that the accumulation of wealth is not an isolationist achievement but inextricably bound to extraction of finite public-national resources. Since these need to be paid for, or sustained (via maintenance), it is then clearly logical to expect the wealthy and corporations to contribute their fair share to the tax commons. This is not being done and explains why our infrastructure's crumbling, and inequality (as measured by the Gini coefficient) now approaches that of Mexico and the Philippines.

This explains, largely, why a vast segment of the lower American middle class now depends on government safety nets and benefits like Gulbranson and his family of 5 kids do. It also explains why my family ca. 1957 didn't, because companies at that time still had a pact with their workers not to fuck them over, so long as they worked hard. They did that, and they could expect a decent wage, benefits, even pensions and not come in one morning to see a sign that the company had moved to Guangdong Province, China, or to Bangalore, India, or Mexico. The wealthy were also prepared to foot a higher tax rate because they realized they didn't achieve that wealth by their lonesomes, but had to have extracted a percentage of common finite resources.

The nation, in other words, was more honest back then. It could look forward in genuine optimism with some justification - unlike now, when corporate nation states intend to have us all in the role of vassals working in their fiefdoms. Even as they solidify control of our governments via vast hordes of money which they have the audacity to call "speech".

If Gulbranson is going to blame anyone, he needs to take a deep breath and lay the blame on the real culprits, not those like himself who depend on assorted safety nets in order to live - and are as much victims as he is! And, should he have any time, I strongly urge he read Thomas Frank's book, What's the Matter with Kansas?

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