Examining The Roots of Economic Inequality

Economic Inequality occupies such a prominent place in today's political-economic discussions that even the high-powered elites (at least some of them, like the Bank of International Settlements) have actually warned of its metastasis. This suggests the problem is at once global but still far more pernicious in some nations, such as the USA.

The general measure is the Gini coefficient and for the U.S. it has dramatically increased the past 25 years and is now nearly 0.40. This is nearly on a par with the Philippines and Mexico. Not only that but inequality is increasing.

There are two ways to look at what's happening: 1) simplistic or 2) systemic. In the simplistic narrative inequality is simple because it's just reduced to income inequality. People-workers are naturally unequal in means, salary, perks etc. because they occupy different stations in life, have different training, aptitudes, education, background etc. so some will "get to the top" and have it all or most of it with humongous incomes, while others will flounder as flunkies in bottom feeder jobs like burger flippers or maybe street cleaners.

Following from this, the elites will always be able to buy more and bigger, whether cars, homes, TVs, home theaters or even vacations. By this narrative, it's the fault of the "flunkies" for accepting what are supposed to be starter jobs and keeping them instead of moving on to bigger and better things, preferably by getting more training, education etc. (No mention here at all of the fact that 95% of all wealth is inherited, as first exposed by Michael Parenti in his book 'The Dirty Truth')

As a corollary to this, the poor  - those in poverty and needing welfare or food stamps - are also to blame for not pulling themselves up and making more of their lives by getting higher paid jobs as opposed to say "settling" for a $7.50 an hour fast food McJob.

Of course, this is all a balderdash right wing fairy tale that may console the Right winger's conscience but barely touches on reality.

Thus, to really get at what's going on one needs to use a systemic approach and analysis. In doing so we learn a number of brutal truths:

1) The Job profile in the U.S. now is like a steep pyramid with only a few "great" jobs at the top, mainly techies (Google, Microsoft etc.) but the bulk are mediocre or poorly paid. Also, with few benefits. Look at the typical WalMart worker. The latter doesn't go for food stamps or Medicaid because he is endemically "poor" but rather is too poorly paid. Since his company won't provide him the health benefits he needs, of course he must go on Medicaid.

2) The pyramid took this form since the 1990s, and especially after NAFTA, when millions of manufacturing and production jobs were sent out of the country and plants - as well as steel mills and auto factories (paying truly living wages of $35/hr or more) were shut down.

3) While many econ gurus made predictions that computer -software and other better paying jobs would come to the fore this didn't materialize. Instead companies (e.g. Dell)  "outsourced" their tech help software expertise to India. (Indian schools now train their s/w students not only in the various online help techniques but also how to imitate American accents).

4) Thus, the fact of the matter is the elite jobs never came back and hence upward mobility - once a cornerstone of the U.S. work force- went into abeyance and is perhaps now extinguished permanently according to some authors (See Juliette Schorr, 'The End Of Work') .  The WSJ in one article back in August actually predicted that by 2020 fully 44 percent of the workforce would be in retail- and receiving a truly 'royal' average wage of about $9.50 an hour. When the Wall Street Journal recognizes such a huge proportion of retail jobs you know upward movement is a thing of the past.

All of which shows that claiming income disparity is at the root of economic inequality is true in one big sense, but misplaced if  massive U.S. job outsourcing via globalization is not factored into the equation - and acknowledging this interjects a systemic defect.

5) American workers have gang-busted with productivity gains since the early 1970s, but have virtually nothing to show for it. Wage increases have only marginally increased (last month to barely 2.2 percent)  and meanwhile benefits have been pared back. Worse, productivity is now almost uniformly measured not the way it once was - by how much a worker did per hour - but instead how many workers can be CUT so that those remaining can still do the work of the earlier total.

The other systemic side of economic inequality has to do with how many advantages the wealthiest have which average workers do not. For example, they have enough disposable extra income that they can afford to be in the stock market and sustain heavy losses - say in a correction or downturn - without having to eat cat food. The ordinary worker with his or her 401k of only $100,000 can't afford that luxury.

Also, the wealthy can make use of  computer flash trading to cash in shares before the ordinary Joe can reach for his smart phone. The rich also know how to use fractional trading to benefit as well as get tax write-offs the ordinary bloke can only dream of and can use trusts to protect his estate that the ordinary Joes and Janes can't.

From a systemic viewpoint then we see the plight of the U.S. worker can be laid at several forces which are causing available jobs of any quality to plummet: 1) globalization, including the oncoming TPP trade deal, and 2) automation - which is enabling companies to jettison even more workers and thereby save on salaries and benefits. These factors,  in tandem with the wealthy stacking  market transactions in their favor, means it will always be a rigged game. Worse, the wealthy will make extra money off the backs of the workers via the stock and mutual fund losses of the latter.

The solution to the problem then must be systemic but not as the 'simplistic' folks portray it. First, the market and stock market in particular must be held to account for the little guy. No more flash trades or fractional share buying, selling. No more carry trade. Plus each transaction carries a tax hit, no more unlimited exchanges.

At the same time,  the  rich alone can't be taxed to sustain an economically equitable society. Everyone of middle means must be taxed more highly but also understand they will get it back in higher benefits (like the Europeans do), including: lower health care costs, lower drug costs, and lower thresholds for Medicaid and even food stamps. Also, low cost or free child care to enable parents to work or even have the chance to get better jobs (if such become available0.

In Europe, citizens accept much higher taxation but this is balanced by much more government support they can depend on, whether for pensions, healthcare or childcare. In the U.S. model, Americans are taught to be rabid individualists and "go it alone" without any support,  but if they stumble (say by getting a fatal cancer or being in a bad accident), too bad. However, if they hit life's lottery - yeah, they will live like kings, or at least Trump.

Trouble is 99 percent will not make life's lottery, so will end up scrabbling for a life line at some point. (Which is also why you see so many hard working Americans throwing their money at lottery tickets the only chance they have- in their mind.)

Donald Trump in all his economic bloviations, has gotten one thing correct - and it is driving the anti-tax fanatics of the GOP nuts: higher taxes have to be paid, especially by the super rich. But if economic inequality is ever to be conquered and real productivity returned - higher taxes must be borne by everyone of decent means - which is also why the Bush middle class tax cuts were one of the worst things ever for this country. Especially as they were implemented when Bushie boy was starting $ 4 trillion wars. Sadly, the Dems contributed to that malaise by voting for them in the first place then extending them past their sunset date (which even the Bushies knew was needed to prevent a deficit blowout.)

Now all those war debt coppers got to be paid back, and the rich alone - rich as they are - can't do it. The burden falls on us all. But it's surely a cautionary point against starting any future conflicts we can't pay for and which will only increase inequality!

The truth for my bible -believing friends is that the "parable of talents" would end up a poor joke in today's rigged financial world. I don't believe Yeshua, if he was alive now, would even be daft enough to propose it. He'd know in advance, given he's God, whoever received a talent to invest would lose it - in about the time taken to be fleeced in a flash trade.

See also:

http://www.salon.com/2014/01/08/dear_middle_class_welcome_to_poverty_partner/

http://www.salon.com/2015/09/09/robert_reich_americas_economy_is_immoral_partner/

What's A "Real Job"? Ans: It's A Phony Question!

Today, Labor Day we celebrate the American worker who - let us make no mistake - has become increasingly downtrodden as the Neoliberal idiom has ascended to the extent neither political party even mentions the working class anymore. You'd think everyone was "middle class"  - but that definition (thanks to the free market zealots) is becoming more eroded by the year.

Thanks to the Neoliberal Imperium governing this country - since I don't know- Kennedy was killed 50 yrs. ago and they could replace the Bretton Woods agreement with 'in your face globalization', every American worker is now competing with over a billion Indians, Chinese and others - all eager to work for less. That means more Americans working for less and toiling longer hours merely to keep heads above water. Fail to keep up and there are at least ten others waiting to grab your job. Meanwhile, service workers don't even have enough to pay rent and put bread on the table (e.g. http://brane-space.blogspot.com/2013/08/yes-give-those-fast-food-workers-living.html

and are rightfully protesting their menial, minimal wages which necessitate government dependency via food stamps, or getting Medicaid.


Their hardships provide fertile soil for the  necrophilous personalities (see previous blog) who have attempted to introduce yet another device for separation and rancor in our society. That is, trying to split people up according to who has held, or holds "real jobs" or does "real work" and those that (in their whacko perceptions) have not.  Because their base instincts are socially exclusive, not inclusive, their regressive minds can't see this is a phony issue, spreading a false dichotomy and that ALL jobs are real if done to the best of a worker's ability: that applies to whether one is a teacher, a university prof, a steel worker, a coal miner, a waitress, a fireman or fast food worker. And believe me, all jobs are real to the people that do them.

The necrotic personality isn't satisfied, however, and wants his audience to believe that only a certain subset of jobs are "real", mainly manual. But this is foolishness, especially since when he makes such claims it's doubtful his "universe of jobs actually held" is adequate to even compare one against another in his own experience. Hence, he's talking (or writing) bollocks.

Over some thirty years I've held a variety of  jobs at different times, from manual to totally brain-powered. For example, I have: worked  over a summer as a janitor at a college (to help pay for college expenses upcoming), and this entailed cleaning out messy dorm rooms, community bath rooms after the final term - including hefting 40 gallon trash cans and emptying them. So yeah, I know WTF manual work is like.  I have also worked (2 yrs.) at an oil company, mainly because I needed a break between sophomore and junior years at university. It was interesting and entailed splicing together geological sections, then placing fiduciary markers on them, timing lines, in order to show the depth and location of salt domes - where oil is likely to be found.

It is said that "Peace Corps is the toughest job you will ever love" and I found that to be true. Liberated from worry over the draft for an illegal war (by being classified 1Y by my draft board) I chose to go into Peace Corps after graduating from the University of South Florida with my astronomy degree.

My job, at a school 19 miles from where I lived (which was the most economical situation I could find on a $125 a month stipend) entailed waking up at  5: 30 a.m. each day to have breakfast, shower than be out by 6:30 to catch a bus into Bridgetown, then walk 1.5 miles to another bus stand - where I caught a bus to the school I taught, getting there by 8:30.  I then taught 7 classes, in General Science, Biology and Chemistry - with 35 kids each- including setting up the labs for each. By the end of my first term I was appointed Head of Science Dept.

In that position, and for the next 3 1/2 years I was in charge of ordering all lab equipment for the school, for all lab-based subjects (in other words Biology, Gen. Science and Chemistry), monitoring teacher performance and guiding new teachers, as well as teaching my own 35 classes a week, including marking hundreds of homework papers as well as lab reports (in three subjects) each week. Now, any fool who thinks that's "not a real job" can try it, and let me see if he manages to stay out of an asylum - especially teaching kids from comprehensive schools who are not to be confused with any kid from Harrison College, Eaton, or any U.S. private school.

Each day after my duties, I'd catch what's called a "pickup" - a truck with the rear fitted with wooden row seats on either side, for the 19 mile trip back to Bridgetown, then usually walk the 2.7 miles back to my abode. Once reaching there, do my marking and lesson plans for the next day, turn in by 9 p.m. and start again. (Peace Corps did not permit any Volunteer to own a motor vehicle).

In addition to my Peace Corps teaching assignment, I helped found the Barbados Philosophical Society, and wrote a weekly column for The Barbados Advocate, called 'Discovering the Stars'.

After Peace Corps, yes I taught in Barbados - both at secondary and tertiary level, which also entailed Head of Science positions, designing new courses and the like. At the University of the West Indies, I pursued solar research from a post-graduate grant given by the government of Barbados and wrote a number of academic papers on my findings.  E.g. http://adsabs.harvard.edu/full/1983JRASC..77..203S

After several more academic positions, including at the University of Alaska and Harrison College, Barbados, I also worked for a radiotherapy software corporation as a technical writer and FDA specialist, mostly preparing large documents (called "510ks") that described the specifics of operation for a number of radiotherapy devices.  Among these were stereotactic radiosurgery software, e.g. to treat brain tumors, for which one had to ensure the 3D virtual coordinates X,Y,Z (say of a patient's) head  fit accurately to the actual 3D head. Even a 1 mm deviation would produce inaccurate targets and deliver radiation to the wrong sites. Preparing a proper 510k therefore had real life consequences!


I present all the above to show that the breadth of my work experience allows me to comment first hand on the nature of a variety of jobs - based on those I actually held- as opposed to blowing smoke out my ass over what I think a "real job" is or isn't - when I don't have enough experience to compare! (Like certain unnamed and semi-educated blowhard necrotics!)

Back to today's workers, being ground under by the Neoliberal market that never rests. As pointed out in an article in yesterday's Denver Post ('In New Culture of Work, the Job is Always At Hand'), it is clear the modern worker is always on a short tether and can never rest even when supposedly on vacation or on off hours.

As the Post notes: "For most people work will never look like it did before smart phones and virtual offices". Why? Well, because they can be called on anytime to appear and perform this or that duty or attend some meeting! No wonder American families are coming apart at the seams. 

According to one researcher from the Families and Work Institute: "It's almost a multi-tasking way of living".  But maybe people aren't cut out for such multi-tasked living which explains why up to 46% of Americans are suffering some form of mental illness and nine million have to take Ambien each night.

The article adds:

"Employers have reduced options that allow employees to spend significant amounts of time away from full time work. For example, companies that allow sabbaticals dropped to 2 percent in 2012 from 49 percent in 2005."

Also cut down is telecommuting, which is the most rational and cost effective way to conserve our energy resources, mainly consumed by commuting back and forth - wasting time in a car (up to one hour a day for many) when one could be working at home. But.....American employers don't seem to trust their employees not to goof off, demanding  "face time" despite the fact the evidence shows telecommuters are more productive.

Oh, employers aren't total Scrooges! They will "allow longer work days so workers can take care of family or personal needs without loss of pay".

In other words, you can put in 13 hours a day - but hey, you will get to spend some time with family!Besides, the problem is having to switch attention and priorities at the drop of a hat. You go to take your kid to a soccer game in the afternoon then by 5.30 p.m. have to report back to work to check email and attend to the assigned tasks. WTF kind of life, or work is that? It's nonsense! Pay the workers properly, let them freakin' OFF by 5: 30 then they can kick back with family for the rest of the evening.  Better yet, have shorter work weeks as they do in France. 32 hours instead of 45 or 50, or 60! A six hour plus day will then allow them to attend kids' soccer games and spend other needed family time - to try to keep families together as opposed to being hostage to an over the top work culture.

But see, all of this is way too rational for American corporate employers who begrudge the very need for human workers as it is, given they have to cough up for health insurance and maybe match 401ks. They don't want to do that and as one corporate honcho put it: "In the ideal company, we have no flesh and blood workers at all, so we have sky high profits!"

One guy quoted in the article claimed his job demands were so tight he even had to "bring his pager and cell phone to the movie theater".

Yeah, well, better not let them go off once the flick starts, or many theaters (e.g. Cinemark) will march you right out. Just saying!

This, despite according to a recent Pew poll 50 percent of working dads and 56 percent of working moms said it was "very difficult to balance work and family".

Can Americans rebel? Hardly! Because the ever present specter of unemployment looms large over them and their remorseless work days. Screw up or slack off and it's to the unemployment lines they go. As the article puts it:

"The employer knows he can set any standard he wants, and often that's not great for the worker"

To put some stats on the issue, the article notes that a new report from the U.S. Census Bureau shows that between 2005 and 2011 the number of households with children under 18 that had at least one parent unemployed increased by 33 percent."

Of course, these stats and the surplus labor pool  (unemployed) that puts employers in the catbird seat, shows why we need to reduce the birth rate. Just remember every single birth represents a future new worker who will need a job but more than likely will increase the surplus labor pool - allowing employers, corporations to dictate any slave terms they want. Want it to change? Start by having fewer kids, or better, none!