The U.S. middle class accounted for the lowest share of wealth among developed countries

The middle class may be the foundation upon which the United States was built, but a number of recent studies suggest the working class is being left in the dust.

A study from the Pew Research Center in December showed that middle-class Americans are no longer in the majority. Whereas in 1971 middle class Americans totaled 80 million, and lower- and upper-income classes combined equated to 51.6 million, the 2015 data looks far different. As of last year, 120.8 million adults were in the middle class ßß but this figure now takes a back seat to the 121.3 million combined lower- and upper-income households. Aggregate wealth for middle-class households is also shrinking according to Pew’s research, from 62% of all wealth in 1970 to just 43% as of 2014.

A number of other publications also concurred with the idea that the middle-class is in decline, including publications from Brookings, Fortune, and The New York Times.

However, one report released last year highlighted a middle class statistics so shocking that you’ll probably do a double-take.

One chart every middle class American needs to see
The 2015 Credit Suisse Global Wealth Report is now in its sixth year of examining and analyzing wealth across the world in order to get a better understanding of wealth creation, consumption, saving, and asset allocation. Every year Credit Suisse picks a specific wealth topic to focus on, and in 2015 it was the middle class.

Having the largest GDP of any other country, it’s not surprising to find that the middle class in the U.S. also has the highest total wealth in U.S. dollars at $16.85 trillion. The next-closest are Japan, China, and the U.K. at $9.72 trillion, $7.34 trillion, and $6.19 trillion, respectively.

Now here’s where things get interesting…

Credit Suisse also looked at what percentage of wealth the middle-class comprised within a country. Of the 21 countries individually examined, here were the results:

middle class share of wealth

No, your eyes aren’t deceiving you. As a percentage of total country wealth, the U.S. middle class accounted for the lowest share of wealth among developed countries, such as Germany and France, as well as emerging markets like China, India, and Brazil.

Why middle class wealth is withering away
Why do U.S. households have so little net wealth relative to the total wealth of the country as a whole? It looks to be a number of factors at play.

First, the housing bubble from late last decade really sapped the net worth out of middle-class households. Although home prices have recovered from their lows, some areas have recovered slower than others. The housing price collapse is still fresh in many Americans’ minds, and many fear overreaching on home prices even in today’s growing economy.

Secondly, access to credit is arguably easier in the U.S. than in many other regions of the world. During the housing boom in the mid-2000s, this was a great way for middle-class families to grow their wealth. However, the housing bubble, combined with high debt levels, have chipped away at middle-class household wealth.

A third issue? Stagnant wage growth. According to data from the U.S. Census Bureau, median household income has actually dropped by roughly $5,000 since 1999 to a median of $51,017 as of 2012. Pew Research pointed out that in spite of nominal wage growth of 727% between 1964 and 2014, in constant 2014 dollars (meaning when taking inflation into account) real wage growth has totaled just 7.8% over 50 years. College tuition, medical care, and even fuel costs have risen at a faster pace, thus diminishing the buying power of the middle class.

Fourth, there’s quite an income gap between the richest Americans and the middle class in the United States. According to CNN, the U.S. has 42% of the world’s millionaires, and basically half (49%) of all people with $50 million or more in assets. These super rich Americans certainly skew the results.

Finally, near record-low lending rates aren’t helping. The middle class, which was hammered by the stock market decline during the Great Recession, has few avenues of safety to turn to with CD and money market rates losing to an already reduced inflation rate.

 

 

Hillary has no burning desire to reverse runaway inequality

By Les Leopold

No one can deny that economic inequality is accelerating. In 1980, the average top 100 CEOs earned $45 for every dollar earned by an average worker. Today, the gap is an astounding $844 to 1.

But there is significant controversy about the impact of runaway inequality on American society and what should be done about it.

Economic Inequality and Equal Opportunity

One narrative argues that inequality per se is not an essential problem as long as we have equality opportunity so that everyone has a fair chance at accumulating these riches. People of all incomes, genders, and color should be able to line up together at the starting line. Each individual should be able to fully develop his or her god-given talents. No form of discrimination should be tolerated during this run for the gold.

Within this narrative, economic inequality and its connection to Wall Street are important issues but not paramount. There are others that are equally, if not more important,– like racial discrimination, unequal wages for women, and discrimination against gays, lesbians and transgender people.

Runaway Inequality as the key Issue

The alternative narrative argues that runaway inequality is ruining our way of life — that as the super-rich increase their wealth, the rest of us suffer. It argues that Wall Street and top CEOs are strip-mining our economy by extracting more and more wealth from corporations, consumers, students and communities. Incomes for the wealthy are skyrocketed as real wages for the average workers stagnate.

As the rich grow richer and corporations grow more powerful, they move their money off-shore. The tax burden is shifted to the rest of us as state and local governments lurch from one fiscal crisis to the next. As a result the richest country in the history of the world, can’t remove lead from its drinking water or provide healthcare for all, or move a quarter of its children above the poverty line.

Equal opportunity is not enough. Resources must be redistributed to eradicate poverty, which disproportionately impacts people of color. Runaway inequality must be reversed.

Why did Hillary take $11,000,000 in speaking fees during 2013-14?

Because she believes there’s nothing fundamentally wrong with the process of runaway inequality.

Hillary Clinton believes in a world where each child should have the same opportunity as she did to make it to the top of the economic pyramid. There’s nothing fundamentally wrong with earning $225,000 per speech. She can take money from any hedge fund or corporation because she believes her fundamental values won’t be swayed at all. She will call for slightly tighter regulations and marginally higher taxes on the wealthy.

In this, she is being truthful to her worldview. She does not oppose the accumulation of great wealth. She does not believe that her wealthy friends are harming society. On the contrary they are good people who are funding good causes like the Clinton Foundation. All together these wealthy liberal elites — now including the wealthy Clintons — are striving to remove barriers to equal opportunity. She calls it the “Breaking Every Barrier Agenda.

Hillary has no burning desire to reverse runaway inequality by fundamentally re-ordering the economic system that is building the fortunes of her family and peers. For Hillary it’s all about values and equal opportunity, not just money.

Why Bernie is different

For the Sanders campaign, equal opportunity is not good enough. It is not enough to run a fairer race for riches when the entire process of runaway inequality is harmful to working people and the poor. It does not matter whether the super-rich are nice people or have good values or donate to good causes.

It is not good enough for there to be more women and people of color in the top 1 percent. The billionaire class has far too much money, and that money is needed to fund free higher education, universal health care and the rebuilding of our infrastructure.

Therefore, taking money from the super-rich for political campaigns is out of the question for anyone who wants to reverse runaway inequality. There are no big speaking fees for Bernie or damaging transcripts yet to be released. Instead, he must draw a clean line drawn between the billionaire class and the rest of us — between the economic predators and the prey.

For Bernie runaway inequality is not a single issue. It is the core issue that shapes our entire society. People are poor not because they don’t have the skills to move up the economic ladder. They are poor because the billionaire class uses all its economic muscle to financially strip-mine the economy by reducing wages and benefits and shipping jobs abroad. It’s not about equal opportunity. It’s about power and money.

The Class Divide

As the primary results pour in, we are likely to see this split emerge among voters. Those who are benefiting from runaway inequality — the economic winners — will go heavily for Clinton. This group goes far beyond the billionaire class. It also includes local real estate developers and builders, upwardly mobile politicians and staff, prosperous lobbyists and well-paid non-profit executive directors, liberal bankers and hedge fund managers, and well-paid pundits and economists. They are all doing well. Yes, they want to help the poor and the middle class but not by upsetting the hierarchy that so rewards them. These are Hillary’s people

Bernie is likely to do well with working people, the poor and the young — those who are far removed from the race to the top. It could be that this divide crumbles when it come to people of color. Is there a significant class divide among Black and Hispanic voters? Do lower income voters of color trend more toward Bernie? If so, the movement to reverse runaway inequality is likely to grow increasingly powerful.

Will it grow large enough to dethrone Hillary? Not yet. The neoliberal establishment is powerfully entrenched. But the bigger question is how to challenge it after November. It will take a mass movement — a sustainable political revolution — to reverse runaway inequality.

(Please like the Runaway Inequality page on Facebook.)

Les Leopold, the director of the Labor Institute in New York is working with unions, worker centers and community organization to build a national economics educational campaign. His latest book, Runaway Inequality: An Activist’s Guide to Economic Justice (Oct 2015), is a text for that effort. All proceeds go to support this educational campaign.

February’s Best Reads: Money, Business, and Economics

The month’s best stories from around the web.

February’s picks offer everything from sad-desk lunches to the disparities in how businesses dole out perks, to apartment evictions in minority communities. These are stories that take a look at how work culture and the state of the economy affect political leanings, and stories that question what’s wrong with the current welfare system. Basically: They all are too good to miss.

It’s Time for Welfare Reform Again

Annie Lowrey | New York Magazine

So here is my humble suggestion for the Clinton and Sanders campaigns: If you really want to help low-income families, bring back welfare. Make it easier to get and easier to keep. Rename it, rework it, and destigmatize it. Use it as a vital, instrumental tool to help all very low-income families with children, not just a last resort for some. Make reform about helping kids and ending extreme poverty rather than punishing parents.

* * *

The Faces of American Power, Nearly as White as the Oscar Nominees

Haeyoun Park, Josh Keller, and Josh Williams |  The New York Times

We reviewed 503 of the most powerful people in American culture, government, education and business, and found that just 44 are minorities. Any list of the powerful is subjective, but the people here have an outsize influence on the nation’s rules and culture.

After some years of progress, the diversity of the corporate elite has stalled in recent years, said Richard Zweigenhaft, a professor at Guilford College who studies executive diversity. “Once that barrier is broken, there may be a little less pressure to keep appointing people from that previous excluded category,” he said.

* * *

It Takes 890 Days to Become a Barber in Nevada

Andy Koenig | Politico

To understand just how out of control occupational licensing is, first consider the relatively reasonable example of emergency medical technicians. The Institute for Justice, a nonprofit public-interest law firm, estimated in 2012 that the average EMT license costs $85 and requires 33 days of education and training.

Now compare that to other professions where the stakes aren’t so high — barbers, for instance. Alabama is the only state that doesn’t license them. On average, a would-be hair trimmer must spend more than a year in training and fork over $130. This may not seem like much, but it may be a serious barrier for a low-income job seeker who cannot afford to quit one job to train for another profession, often at his or her own expense and without a paycheck. In Nevada, the education and training requirement for barbers is 890 days — about two-and-a-half years.

Cosmetologists must be licensed in all 50 states, and the average cost is $142, plus more than a year of education and training, and two exams. Commercial carpenters and cabinet makers, licensed in 29 states and the District of Columbia, fare even worse. They’re looking at about $300 and roughly 450 days in school.

The list goes on — and gets increasingly more ridiculous.

* * *

The NYPD Is Kicking People Out of Their Homes, Even If They Haven’t Committed a Crime

Sarah Ryley | Pro Publica and New York Daily News

Jameelah El-Shabazz and Shakoor sat in cells on Rikers Island for the next week awaiting the results of police lab tests. Finally, the results confirmed what she had told the officers all along: the wooden tray and the 45 paper cups of powder were drug-free. Jameelah El-Shabazz and Shakoor were released from Rikers and fully exonerated.

But El-Shabazz’s battle with New York’s legal system was only beginning. That September, another of her sons called to say the police were back, this time with a lawyer and a court order to seal the Bronx apartment. Her entire family had to leave — immediately.

El-Shabazz was facing a nuisance abatement action, a little-known type of lawsuit that gives the city the power to shut down places it claims are being used for illegal purposes. The case against her was based on the same drug allegations that had been dismissed in May. Incredibly, the filing, signed by a New York Police Department attorney, stated: “recovered during the execution of the search warrant were forty-five (45) paper cups of cocaine.”

* * *

Why Sexism at the Office Makes Women Love Hillary Clinton

Jill Filipovic | The New York Times

The mothers-versus-daughters narrative, long an election-year trope, is particularly pronounced now, and tinged with stereotypes on both sides. The idealistic but ungrateful naïfs who think sexism is a thing of the past and believe, as Mr. Sanders recently said, that “people should not be voting for candidates based on their gender” are seemingly battling the pantsuited old scolds prattling on about feminism.

Instead, the reality may be another kind of simple numbers game: More time in a sexist world, and particularly in the workplace, radicalizes women.

Radicalism isn’t expressed only by supporting a socialist; it can also take the shape of women, increasingly disillusioned by a biased culture, throwing their weight behind someone who shares both their political views and their experiences.

* * *

The Oil Kingdom

Stacey Vanek Smith and Robert Smith | Planet Money

For years, Saudi Arabia has been living off one resource and one resource only: oil. They have free healthcare, free education, and 6,000 princes. They’ve never charged taxes. They’re a major ally of the U.S., and our most stable partner in an extremely troubled part of the world. But that stability, like everything else in Saudi Arabia, rests on oil money.

But the price of oil has plummeted, and Saudi Arabia is scrambling to adapt. So what happens now?

* * *

It’s Time to Kill the $100 Bill

Lawrence H. Summers | Washington Post

Illicit activities are facilitated when a million dollars weighs 2.2 pounds as with the 500 euro note rather than more than 50 pounds as would be the case if the $20 bill was the high denomination note. And he is equally correct in arguing that technology is obviating whatever need there may ever have been for high denomination notes in legal commerce.

* * *

The World’s Favorite New Tax Haven Is the United States

Jesse Drucker | Bloomberg

After years of lambasting other countries for helping rich Americans hide their money offshore, the U.S. is emerging as a leading tax and secrecy haven for rich foreigners. By resisting new global disclosure standards, the U.S. is creating a hot new market, becoming the go-to place to stash foreign wealth. Everyone from London lawyers to Swiss trust companies is getting in on the act, helping the world’s rich move accounts from places like the Bahamas and the British Virgin Islands to Nevada, Wyoming, and South Dakota.

* * *

The End of the Line

The Economist

Seldom has any country been so transformed by one industry as the Philippines has by call centres. The first “businessprocess outsourcing” jobs appeared in the 1990s: the term covers tasks from answering phones to processing invoices and animating TV shows, mostly for rich-world firms and governments. This loosely defined industry now employs some 1.2m people and accounts for about 8% of the Philippines’ GDP. The country is especially strong in call centres: it has already overtaken India, even though India has about 12 times as many people.

Yet the Philippines is also, probably, the end of the line. New technologies are poised to abolish many call-centre jobs and transform others. At best, jobs will be created more slowly in the Philippines and India; at worst they will vanish. And it is likely that nowhere else will be able to talk its way out of poverty as they have done. There might never be another Manila.

* * *

Failure to Lunch

Malia Wollan and Brian Finke | The New York Times

 

 

Raising the federal minimum wage to $12 by 2020 would lift wages for more than 35 million workers nationwide and generate about $17 billion annually in savings to government assistance programs.

By David Cooper, TalkPoverty.org

Note to conservatives: Want to know the best way to find savings in government assistance programs? Here’s a hint – it’s not by cutting nutrition assistance to working people who are struggling.

It’s by paying them fairly for their labor.

A new report from the Economic Policy Institute indicates that raising the federal minimum wage to $12 by 2020 would lift wages for more than 35 million workers nationwide and generate about $17 billion annually in savings to government assistance programs.

This report shouldn’t come as a surprise. In contrast to the stereotypes and lies about people with low incomes, the reality is that a majority of public assistance recipients either have a job or have an immediate family member who is working. In fact, 41.2 million working Americans – or 30 percent of the workforce – receive means-tested public assistance. Nearly half of them work full-time.

Not surprisingly, workers who receive public assistance are concentrated in jobs that pay low hourly wages, like the retail, food services, and leisure and hospitality industries. A majority (53 percent) of workers earning $12.16 per hour or less – or the bottom 30 percent of wage earners – rely on public assistance. As wages go down, the percentage of workers relying on public assistance gets higher: 60 percent of workers earning less than $7.42 – only slightly higher than the $7.25 federal minimum wage – receive some form of means-tested public assistance. Overall, 70 percent of the benefits in programs meant to aid non-elderly low-income households – programs like food stamps, Medicaid, and the Earned Income Tax Credits – go to working families.

The fact is that the people we expect to work are working (if they can find employment), but they are not being paid enough to make ends meet. While big corporations are achieving extraordinary profits and executive compensation continues to rise, often these same corporations and CEOs are paying such low wages that workers must rely on public assistance.

That means taxpayers are effectively subsidizing wealthy companies to cover the gap between what workers earn on the job and what they need to support themselves and their families. If we want low-income families to have a decent life and the opportunity to thrive, we need strong government assistance programs, but we also need to take a close look at what workers are being paid and how we expect businesses to treat them.

There are many things we can do to stop subsidizing wealthy corporations for paying lousy wages. One obvious solution is to raise the minimum wage. Congress hasn’t lifted it since 2009 – today it’s worth 24 percent less than in 1968, adjusted for inflation. The average minimum wage worker is more educated and more productive than in 1968, but she is paid less for her labor.

Even raising the wages of the bottom 30 percent of workers by just $1 per hour would result in $5.2 billion in public assistance savings each year. And the $17 billion in annual savings realized by raising the minimum wage to $12 by 2020 could be used to strengthen anti-poverty programs – such as expanding the Earned Income Tax Credit (EITC) to childless adults, or improving access to childcare and preschoolfor children from low- and moderate-income families, or make long-overdue investments in infrastructure.

A fundamental part of the American dream is that if you work hard, you should be able to get ahead. When we let the minimum wage and other labor standards erode to the point where hard work is no longer enough to provide families a decent life, we don’t live up to the promise of that dream.

Subsidizing those who are responsible for non-livable wages only adds insult to injury.

 

We Can Pay for Social Programs by Eliminating Corporate Welfare, and More

In today’s On the News segment: We can easily pay for social programs by eliminating the big government handouts to Wall Street, Big Oil, defense contractors and other corporate welfare recipients; white workers have almost five times as much wealth in retirement accounts as Black workers; a new bill in New York state would control what items poor people are allowed to put in their grocery carts; and more.

See more news and opinion from Thom Hartmann at Truthout here.

TRANSCRIPT:

Thom Hartmann here – on the best of the rest of Economic and Labor News…

You need to know this. Using our tax dollars to pay for the things our country needs is not giving away “free stuff.” But, that’s the line we keep hearing in response to our push to expand social programs. When we talk about things like free college, expanding Social Security or expanding Medicare to cover all Americans, the typical Republican reply is that we simply can’t afford such big ideas. But, those same people never bat an eyelash when we spend astronomical amounts on war, tax cuts or corporate welfare. According to recent article over atUSUnCut.com, expanding health care, investing in new public works programs, offering free college at public universities and enacting paid family leave would cost our nation an estimated one-and-a-half trillion dollars. But, we could easily pay for such programs by eliminating the big government handouts to Wall Street, Big Oil, defense contractors and other corporate welfare recipients. And, that doesn’t even consider how much the progressive proposals mentioned earlier will stimulate our economy by putting more money in the pockets of Americans who will go out and spend. Ever since the Reagan presidency, we’ve been told that government is the problem and that slashing taxes is the solution. Then, the rich and the powerful rigged the system to make sure that government is still large enough to hand out corporate welfare and that taxes are only cut for those at the top. The fact of the matter is that “We, The People” are the government, and we get to decide how to spend our tax dollars. We can either have a government that supports the billionaires, or we can have a government that works for average Americans. The only “free stuff” we can’t afford is the pile of conservative talking points designed to make us believe that we shouldn’t want a government that works for us.

There are many ways that African Americans are still disadvantaged in our country, but few of them are as glaring as the disparity we see in retirement savings. According to a recent report from the Economic Policy Institute, white workers have almost five times as much wealth in retirement accounts as Black workers. And, that disparity has grown substantially since 1980. That’s when many Americans lost the protection of an employer-based defined-benefit retirement plan in exchange for a self-funded, risky 401(k). Thanks to hiring discrimination and other wage disparities, in 1989, white families already averaged about $35,000 more in retirement savings than Black families. With the switch to 401(k) retirement accounts, that difference had grown to almost $100,000 by 2013. And, the percentage of African Americans who even get the chance to contribute to a retirement account is actually declining. In 1983, 52 percent of Black Americans had an employer-based pension plan, but by 2014, only 47 percent of Black workers have a retirement plan of any kind at work. No American should be forced into poverty just to retire, and it’s time close the racial gap in retirement plans.

While Republicans were caucusing in Nevada, the workers at Donald Trump’s Las Vegas casino were celebrating their own win over the billionaire. According to the ThinkProgress blog, just days before that caucus, the National Labor Relations Board (NLRB) sided with workers and overruled management’s objections to a union vote at that casino. One of the housekeepers at Trump’s casino said, “He says he wants to make America great… Well, he should start here in his own house, his own business.” She added, “He always brags about how he has millions and millions and millions of dollars, but he pays his workers less than most in Las Vegas.” That’s why workers at his casino decided to unionize, and why that vote was upheld by the NLRB. Hopefully, that’s the first of many Trump losses yet to come.

For decades we’ve heard Republicans complain about so-called “Big Government,” but the conservatives in New York state must have more friendly views about Big Brother. That’s the only way to explain a new bill in that state, which would control what items poor people are allowed to put in their grocery carts. According to the memo attached to that legislation, state Senators Patty Ritchie and Michael Nozzolio disagree with current food stamp rules that “allow the purchase of junk food and luxury items like high-end steak and lobster.” But, that doesn’t explain why the senators would bar food stamp recipients from purchasing bottled water, ice or vegetable seeds for planting at home. The real reason for legislation like this is to demonize poor people and make life harder for anyone who dares to ask for a little help. If New York Republicans really care about making people eat healthier, they could help make healthy food affordable and accessible to everyone. And, they can help put an end to the junk food subsidies that make our nation so unhealthy.

And finally… No one should have to choose between going to work sick or paying their bills, but far too many Americans don’t get the paid sick leave they need to take the time off. Thankfully, after several food borne illness issues at their restaurants, Chipotle workers will now be able to stay home with pay when they’re not well. At a recent company-wide meeting of Chipotle workers, the company announced that all employees will be required to take five days off after all their symptoms are gone and they will even be paid for that time. Although some investors may complain about the cost of the program, it will certainly mean fewer illness outbreaks and less bad press for the popular restaurant chain. When workers can’t afford to take time off when they’re sick, they often have no choice but to come in and share their illness with co-workers and customers alike. You don’t have to be an expert to understand that it’s a bad idea for a sick person to handle your food, so we should all celebrate any restaurant that makes it possible for workers to stay home and get healthy.

And that’s the way it is – for the week of February 29, 2016 – I’m Thom Hartmann – on the Economic and Labor News.

This article was first published on Truthout and any reprint or reproduction on any other website must acknowledge Truthout as the original site of publication.

THOM HARTMANN

Thom Hartmann is a New York Times bestselling Project Censored Award winning author and host of a nationally syndicated progressive radio talk show. You can learn more about Thom Hartmann at his website and find out what stations broadcast his radio program. He also now has a daily independent television program, The Big Picture, syndicated by FreeSpeech TV, RT TV, and 2oo community TV stations.  You can also listen or watch Thom over the internet.

An Open Letter to the Republican Establishment

Robert ReichChancellor’s Professor of Public Policy, University of California at Berkeley; author, ‘Saving Capitalism: For the Many, Not the Few”

You are the captains of American industry, the titans of Wall Street, and the billionaires who for decades have been the backbone of the Republican Party.

You’ve invested your millions in the GOP in order to get lower taxes, wider tax loopholes, bigger subsidies, more generous bailouts, less regulation, lengthier patents and copyrights and stronger market power allowing you to raise prices, weaker unions and bigger trade deals allowing you outsource abroad to reduce wages, easier bankruptcy for you but harder bankruptcy for homeowners and student debtors, and judges who will let you to engage in insider trading and who won’t prosecute you for white-collar crimes.

All of which have made you enormously wealthy. Congratulations.

But I have some disturbing news for you. You’re paying a big price — and about to pay far more.

First, as you may have noticed, most of your companies aren’t growing nearly as fast as they did before the Great Recession. Your sales are sputtering, and your stock prices are fragile.

That’s because you forgot that your workers are also consumers. As you’ve pushed wages downward, you’ve also squeezed your customers so tight they can hardly afford to buy what you have to sell.

Consumer spending comprises 70 percent of the American economy. But the typical family is earning less today than it did in 2000, in terms of real purchasing power.

Most of the economic gains have gone to you and others like you who spend only a small fraction of what they rake in. That spells trouble for the economy — and for you.

You’ve tried to lift your share prices artificially by borrowing money at low interest rates and using it to buy back your shares of stock. But this party trick works only so long. Besides, interest rates are starting to rise.

Second, you’ve instructed your Republican lackeys to reduce your and your corporation’s taxes so much over the last three decades — while expanding subsidies and bailouts going your way — that the government is running out of money.

That means many of the things you and your businesses rely on government to do — build and maintain highways, bridges, tunnels, and other physical infrastructure; produce high-quality basic research; and provide a continuous supply of well-educated young people — are no longer being done as well as they should. If present trends continue, all will worsen in years to come.

Finally, by squeezing wages and rigging the economic game in your favor, you have invited an unprecedented political backlash — against trade, immigration, globalization, and even against the establishment itself.

The pent-up angers and frustrations of millions of Americans who are working harder than ever yet getting nowhere, and who feel more economically insecure than ever, have finally erupted. American politics has become a cesspool of vitriol.

Republican politicians in particular have descended into the muck of bigotry, hatefulness, and lies. They’re splitting America by race, ethnicity, and religion. The moral authority America once had in the world as a beacon of democracy and common sense is in jeopardy. And that’s not good for you, or your businesses.

Nor is the uncertainty all this is generating. A politics based on resentment can lurch in any direction at almost any time. Yet you and your companies rely on political stability and predictability.

You follow me? You’ve hoisted yourself on your own petard. All that money you invested in Republican Party in order to reap short-term gains is now reaping a whirlwind.

You would have done far better with a smaller share of an economy growing more rapidly because it possessed a strong and growing middle class.

You’d have done far better with a political system less poisoned by your money — and therefore less volatile and polarized, more capable of responding to the needs of average people, less palpably rigged in your favor.

But you were selfish and greedy, and you thought only about your short-term gains.

You forgot the values of a former generation of Republican establishment that witnessed the devastations of the Great Depression and World War II, and who helped build the great post-war American middle class.

That generation did not act mainly out of generosity or social responsibility. They understood, correctly, that broad-based prosperity would be good for them and their businesses over the long term.

So what are you going to do now? Will you help clean up this mess – by taking your money out of politics, restoring our democracy, de-rigging the system, and helping overcome widening inequality of income, wealth, and political power?

Or are you still not convinced?

 

Unlikely Critic Neel Kashkari Says Banks Still Pose ‘Nuclear’ Risk to U.S. Economy

By Deirdre Fulton / Common Dreams

U.S. Department of Treasury

A former Goldman Sachs executive—one credited as an architect of the 2008 banking bailout—said Tuesday that the country’s largest financial institutions are “still too big to fail and continue to pose a significant, ongoing risk to our economy.”

In his first speech delivered as the newly appointed president of the Minneapolis Federal Reserve, Neel Kashkari “came out swinging,” Business Insider reported.

He likened the risk posed by big banks to that of a nuclear reactor, noting: “The cost to society of letting a reactor melt down is astronomical.”

“Enough time has passed that we better understand the causes of the crisis, and yet it is still fresh in our memories,” Kashkari said at the Brookings Institution think tank in Washington, D.C. “Now is the right time for Congress to consider going further than Dodd-Frank with bold, transformational solutions to solve this problem once and for all.”

To that end, Kashkari continued, “the Federal Reserve Bank of Minneapolis is launching a major initiative to develop an actionable plan to end [too-big-to-fail, or TBTF], and we will deliver our plan to the public by the end of the year.  Ultimately Congress must decide whether such a transformational restructuring of our financial system is justified in order to mitigate the ongoing risks posed by large banks.”

Among the solutions he floated: “breaking up large banks into smaller, less connected, less important entities” and “turning large banks into public utilities by forcing them to hold so much capital that they virtually can’t fail (with regulation akin to that of a nuclear power plant).”

While Kashkari acknowledged that the 2010 Dodd-Frank financial reform law has made “significant progress” in strengthening the financial system, he said it “did not go far enough” and warned that “we won’t see the next crisis coming, and it won’t look like what we might be expecting.”

Kashkari, who was the 2014 Republican nominee for California governor, also expressed skepticism about whether regulatory tools created in the wake of the bailout “will be useful to policymakers in the…scenario of a stressed economic environment.” He said:

Given the massive externalities on Main Street of large bank failures in terms of lost jobs, lost income and lost wealth, no rational policymaker would risk restructuring large firms and forcing losses on creditors and counterparties using the new tools in a risky environment, let alone in a crisis environment like we experienced in 2008. They will be forced to bail out failing institutions—as we were. We were even forced to support large bank mergers, which helped stabilize the immediate crisis, but that we knew would make TBTF worse in the long term. The risks to the U.S. economy and the American people were simply too great not to do whatever we could to prevent a financial collapse.

As the Guardian notes, Kashkari’s comments “come as presidential candidates battle over whom has the best solution to prevent another banking crisis, and prevent a repeat of the economic collapse.”

“There are lines in your speech that I can imagine Bernie Sanders or Elizabeth Warren saying,” David Wessel, director of Brookings’ Hutchins Center on Fiscal and Monetary Policy, told Kashkari during a panel discussion after the speech.

“If I’m not willing to stand up and share my concerns, then I wouldn’t be doing my job,” Kashkari responded.