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<div dir="ltr"><a class="moz-txt-link-freetext" href="http://www.counterpunch.org/2014/11/14/rising-inequality-and-liberal-myopia/">http://www.counterpunch.org/2014/11/14/rising-inequality-and-liberal-myopia/</a><br>
<br>
<font style="font-size: 16pt;" size="4">Forward to the Past:
Next Stop, the 19th Century!</font><br>
<font style="font-size: 20pt;" size="5"><b>Rising Inequality and
Liberal Myopia</b></font><br>
by PETE DOLACK<br>
<big><br>
If capitalism is taking us back to feudalism, we’ll have to
pass through the 19th century on our way. In terms of wealth
inequality, we’re on course to return to the century of robber
barons. Back then, the public-relations industry hadn’t
developed, so at least they were called by an honest name,
instead of "captains of industry" or "entrepreneurs" as they
are today. Although "heir" would frequently be far more
accurate than "entrepreneur."<br>
<br>
We’re not at the 19th century yet, but we have arrived at the
1920s on our trip to the past. The level of inequality of
wealth in the United States today has not been seen since the
decade that led to the Great Depression.<br>
<br>
The top 0.1 percent — that is, the uppermost tenth of the 1% —
have about as much wealth as the bottom 90 percent of United
Statesians. To put it another way, approximately 320,000
people possess as much as do more than 280 million. It takes
at least $20 million in assets to be among the top 0.1
percent, a total that is steadily rising.<br>
<br>
Emmanuel Saez, an economics professor at the University of
California, and Gabriel Zucman, a professor at the London
School of Economics, examined income-tax data to reveal these
numbers. They write that they combined that data with other
sources to reach what they believe is the most accurate
accounting of wealth distribution yet, one that shows
inequality to be wider than previously imagined. The authors
define wealth as "the current market value of all the assets
owned by households net of all their debts," including the
values of retirement plans with the exception of unfunded
defined-benefit pensions and Social Security. (The reason for
that exclusion is that those moneys do not yet exist but are
promises to be kept sometime in the future.)<br>
<br>
The authors’ paper, "Wealth Equality in the United States
since 1913: Evidence from Capitalized Income Data," reports
that, for the bottom 90 percent, there was no change in wealth
from 1986 to 2012, while the wealth of the top 0.1 percent
increased by more than five percent annually — the latter
reaped half of total wealth accumulation.<br>
<br>
The 22 percent of total wealth owned by the top 0.1 percent is
almost equal to what that cohort owned at the peak of
inequality in 1916 and 1929. Afterward, their total fell to as
low as seven percent in 1978 but has been rising ever since.
At the same time, the combined wealth of the bottom 90 percent
rose from about 20 percent in the 1920s to a peak of 35
percent in the mid-1980s, but has been declining ever since.
Although pension wealth has increased since then, Professors
Saez and Zucman report, the increase in mortgage,
consumer-credit and student debt has been greater.<br>
<br>
Nonetheless, this might still be an underestimation — the
authors write that they "still face limitations when measuring
wealth inequality" because of the ability of the wealthy to
hide assets off shore or park them in trusts and foundations.<br>
<br>
Inequality on the rise<br>
<br>
Although rising throughout the developing world, inequality is
particularly acute in the United States. Among the nearly
three dozen countries that make up the Organisation for
Economic Co-operation and Development, only three (Chile,
Mexico and Turkey) have worse inequality than does the U.S.,
measured by the gini coefficient. The standard measure of
inequality, the more unequal a country the closer it is to one
on the gini scale of zero (everybody has the same) to one (one
person has everything).<br>
<br>
Of course, were we to measure inequality on a global scale,
the results would be more revealing. Even the U.S. gini
coefficient of 0.39 in 2012 pales in comparison to the global
gini coefficient of 0.52 as calculated by the Conference Board
of Canada. To put it another way, global inequality is
comparable to the inequality within the world’s most unequal
countries, such as South Africa or Uganda.<br>
<br>
How to reverse this? Professors Saez and Zucman offer reforms
that amount to a return to Keynesianism. They advocate
"progressive wealth taxation," [page 39] such as an estate
tax; access to education; and "policies shifting bargaining
power away from shareholders and management toward workers."
Such policies would surely be better than the austerity that
has been on offer, but the authors’ wish that this can simply
be willed into existence is quite divorced from capitalist
reality.<br>
<br>
Indeed, the authors go on to lament that one factor in
stagnant incomes is that "many individuals … do not know how
to invest optimally." It is difficult to believe that these
two learned economists are unaware of the relentless chicanery
of the financial industry. How does one invest "optimally" in
a rigged casino stacked against you?<br>
<br>
The past is not the future<br>
<br>
Fond wishes for the return of Keynesianism will not bring
those days back. (And, of course, if you weren’t a white male
those days weren’t necessarily golden anyway.) The Keynesian
consensus of the mid-20th century was a product of a
particular set of circumstances that no longer exist.
Keynesianism then depended on an industrial base and market
expansion. A repeat of history isn’t possible because the
industrial base of the advanced capitalist countries has been
hollowed out, transferred to low-wage developing countries,
and there is almost no place remaining to which to expand.
Moreover, capitalists who are saved by Keynesian spending
programs amass enough power to later impose their preferred
neoliberal policies.<br>
<br>
Capitalists tolerated such policies because profits could be
maintained through expansion of markets and social peace
bought. This equilibrium, however, could only be temporary
because the new financial center of capitalism, the U.S.,
possessed a towering economic dominance following World War II
that could not last. When markets can’t be expanded at a rate
sufficiently robust to maintain or increase profit margins,
capitalists cease tolerating paying increased wages.<br>
<br>
<big><big>And, not least, the massive social movements of the
1930s, when communists, socialists and militant unions
scared capitalists into granting concessions and prompted
the Roosevelt administration to bring forth the New Deal,
were a fresh memory. But the movements then settled for
reforms, and once capitalists no longer felt pressure from
social movements and their profit rates were increasingly
squeezed, the turn to neoliberalism was the response.</big></big><br>
<br>
Nobody decreed "We shall now have neoliberalism" and nobody
can decree "We shall now have Keynesianism." Capitalist market
forces — once again, simply the aggregate interests of the
most powerful industrialists and financiers — that are the
product of relentless competitive pressures have led the world
to its present state and the massive inequality that goes with
it.<br>
<br>
Even if mass social movements build to a point where they
could force the imposition of Keynesian reforms, the reforms
would eventually be taken back just as the reforms of the 20th
century have been taken back. The massive effort to build and
sustain movements capable of pushing back significantly
against the tsunami of neoliberal austerity would be better
mobilized toward a different economic system, one based on
human need rather than private profit.<br>
<br>
Reforming what is ultimately unreformable is Sisyphean. Going
back to the mid-20th century Keynesian era, even were it
possible, would be no more than a detour on the way to the
19th century. Building a better world beats nostalgia.<br>
<br>
Pete Dolack writes the Systemic Disorder blog. He has been an
activist with several groups.</big><br>
<br>
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