Since the Clinton administration I have repeatedly warned about the triumph of Wall Street and the defeat of Main Street, the destruction of the Middle Class and the dismemberment of the poor; acts of economic terrorism that undermine the very foundations of our democracy - for no democracy can long stand when the ratio of executive to workers pay is 344-1 (source, 15th annual Labor Day study issued by United for a Fair Economy).
Five days before last November's election I predicted Barack Obama would be elected president -- and it wouldn't be close. He was and it wasn't. He came to the presidency on a rising tide of hope. For many Americans, but especially those of a certain generation, he brought an excitement unknown since John F. Kennedy. For young Americans, voting for the first time, he awoke a critical interest in the affairs of state.
Fair-minded Americans knew following eight-years of George W. Bush Senator Obama would face some of the most intractable problems to ever confront a new president. From a shattered economy and a demoralized work force, from wars in Iraq and Afghanistan, from 50 million Americans without health care and failing schools, in these unprecedented circumstances, only those stunted in soul and shriveled in spirit would deny Mr. Obama their best wishes, prayers and support.
Having greatly desired Mr. Obama and Mr. Biden's victory over Mr. McCain and Ms. Palin, believing the very fate of our republic was at risk, I have no desire to unjustly criticize the president -- especially given the daunting challenges he faces.
Moreover, amid all these consuming difficulties, President Obama has demonstrated a rare intelligence and grace, a spirit of forgiveness and acceptance toward his political opponents that is simply striking (whether, in a Machiavellian world, it's working is another matter).
Historians tell us it's difficult to judge a president in eight years, much less eight months. That's a given, but there is one area where it is possible to make a preliminary judgment; indeed, where it is imperative that judgment be made -- Mr. Obama's glaring failure to break decisively with the economic policies of his predecessors.
Those failed policies, arising from misguided faith in free markets, a faith attributable largely to Milton Friedman and his disciple, Ronald Reagan, and thereafter embraced by Presidents Bush 41 and 43, and shamefully by Bill Clinton and his allies at the Democratic Leadership Council (DLC), led directly last fall to the near catastrophe collapse of the world's financial markets.
There is wicked irony that those who championed "free markets," who prostrated themselves before the God of Capitalism, who proclaimed a new gospel that "greed is good," who prevailed upon a gullible public that Wall Street was infallible, while decrying Government interventionism as oppressive, that in the end, when the world stood on the abyss of financial ruin, the causation for which they bore direct responsibility, that in that moment of ultimate peril, they should turn to government as the means of their salvation -- and find it in a $1.7 trillion bailout! (To invoke "hypocrisy" in such a context only exposes the inadequacy of words to damn.)
At the outset of his presidency, when he named Timothy Geithner as secretary of the Treasury and Larry Summers as his director of National Economic Policy, there was fear Mr. Obama would not take the drastic steps necessary to change market dynamics to reflect a new world of economic reality. That fear was well founded, for both Mr. Geithner and Mr. Summers, during Mr. Clinton's presidency, were at the very center of the policies that would evolve into the world's gravest economic threat since the Great Depression.
There is nothing in either Mr. Geithner's or Mr. Summer's portfolios that would lead one to believe they understand the collapse of Main Street or the crumbling of Middle Class America. They are creatures of Wall Street, which is to say that they believe in its ability to make whole the economic ills of our society. In that belief they are mistaken -- and by that by belief this nation's future is now in danger, in ways not even approximated by the Great Depression. (Mr. Summers is famous for his two bottles of catsup theory of economics, which says that two bottles of catsup cost twice as much as one. Really? Wow.)
But I worry no less about Ben Bernanke as head of the Federal Reserve. Yes, he's an improvement over Alan Greenspan, the follower of that terrible woman, Ayn Rand -- how could he not be better than Mr. Greenspan? -- but despite his impressive academic background at Princeton, he appears too dazzled by Wall Street to prove an effective counter; that he too, not unlike others, is victimized by a belief that in immense wealth are found individuals of superior intelligence and knowledge. But the test isn't their intelligence or wisdom, it is their moral centers -- and at their moral centers they have revealed a corruption so vast that even Christian charity is constrained to forgive.
Recently at a conference of the Federal Reserve in Jackson Hole, Wyoming, Mr. Bernanke said the U.S. economy is on the "cusp of recovery." He added that economic activity both there and around the world "seems to be leveling out, and the economy is likely to start growing again." Based upon his summary view Wall Street rallied - and summery was the spirit of Americans that day. (Probably not.)
Mr. Bernanke notwithstanding, the economy isn't coming back.
This economy cannot come back, until such time as jobs are found for the millions of Americans out of work -- and I do not mean jobs at Wal-Mart or McDonald's. I mean jobs adequate to the income needs of the Middle Class; jobs that include money for mortgages and health care; money for clothes and college tuitions; money periodically for vacations and maybe a new car; money sufficient for contributions to church and charities -- and jobs that give the poor among us hope for a brighter future.
Can anyone be found, anyone, inside the Obama administration or outside in the private sector, who's talking about jobs adequate to meet these needs? No one is talking about such jobs, because no one knows whether such jobs will ever again be available to the great bulk of our citizens. It is the truth they dare not speak.
But this crisis is about more than jobs, for at its core is the vast income disparity that began under Mr. Reagan and has gown exponentially since. There is no moral justification for some people making millions while others labor in economic purgatory.
Amid all of this the working class, men and women of quite courage and unsung heroism, the very foundation upon which America stands, the people who fought our wars, built our cities, educated our children, healed our sick, cared for our elderly, gave generously to people in need, that working class, saw real income decline and futures imperiled.
And while they were losing real income they witnessed the wealthy and the privileged, those driven by insatiable greed and moral turpitude, driven to buy bigger houses, faster automobiles, sleeker private jets, not one or two but three or four vacation homes, designer clothes, cosmetic surgery and personal trainers, becoming in the process, the adoring objects of too many politicians of both major parties; a political class blinded by the glitz and glamour of those who bankrolled their campaigns; politicians who stupidly embraced the folly of equating wealth with wisdom, big bank accounts with ethical and moral values, and who, amid the stupor of their adoration, made the fatal mistake of allowing unregulated markets.
If you have a shred of decency you cannot argue it is acceptable for executives to make 344 times that of the average American worker. You cannot argue it is acceptable that in 2007 50 hedge fund managers made 19,000 times more money than the rest of us. You cannot argue it is acceptable that Bear Sterns executives were paid egregious bonuses, which otherwise divided among the company's employees would have resulted in Christmas checks of $90,000. You cannot argue it is acceptable the fired chairman of failed Washington Mutual made $14 million, while his successor sells out to J.P. Morgan and receives $19 million in salary and severance pay for three weeks of work -- which Senator Bryon Dorgan of North Dakota says would take the average American worker at $50,000 a year 382 years to equal!
Which the senator, in justifiable anger went on to say on the floor of the U.S. Senate, "Unbelievable. Absolutely unbelievable. But it is a hood ornament on a carnival of greed that has existed now for some while, unabated, in which people at the top have made massive quantities of money. Then the whole thing comes crashing down because they began creating exotic securities that were supported, in some cases, by worthless mortgages, placed by bad brokers and, in some cases, bad mortgage companies; sold up the chain to hedge funds and investments banks, all of them making massive quantities of money, and then it goes belly up and everybody wonders why."
It matters not your politics or economic philosophy; whether you worship Adam Smith or John Maynard Keynes; whether you voted for Barack Obama or John McCain, the issue of income disparity threatens our democracy -- and it cannot be defended. And, if you are reading this and are a person of wealth and assume this isn't about you, it most assuredly is about you, because in the end this is about all of us - and the America we say we love.
How do we fix the problem of income disparity? How do we bridge the economic divide? Do we take from the wealthy and give to the poor? That may have worked in Sherwood Forest and the mythical world of Robin Hood, but this is the real world and that can't happen -- nor should it.
No, only a wise and vigilant government, one that understands the inherent danger of uncontrolled markets and man's insatiable greed, that commits itself to policies that strives for some form of income parity, only that form of government can effectively rescue us from the financial black hole into which we have fallen.
The president, at whose desk the buck stops, has not yet made that commitment.
Finally, in the September 21st issue of The New Yorker, James B. Stewart wrote about the battle to save America from the economic Armageddon that loomed. In was inside reporting at its best (even if one is left wondering who were his sources, if not the very people he quoted?).
Following a meeting at the height of the economic meltdown, Mr. Stewart quotes President George W. Bush, as asking Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke. "How have we come to this point where we can't let an institution fail (AIG) without affecting the whole economy?"
The Treasury secretary and the Federal Reserve chairman sought to explain to the president the market's massive failure. Then the president said:
"Someday you guys are going to need to explain to me how we end up with a system like that. I know this is not the time to test them and put them through failure, but we're not doing something right if we're stuck with these miserable choices."
You think?
George Mitrovich is a San Diego civic leader. He can be reached at gmitro35@gmail.com.
Robert Creamer: Why Growing Income Inequality Is Bad for America
The CEO of the average company in the S&P Index makes $10.5 million. That means that on the first workday of the year, he (sometimes she) has made more than the minimum wage workers in his company will make all year.
1. how can the economy really improve if we don’t create more jobs, but how can we create more jobs if the economy doesn’t improve?
2. stimulate both the buying and selling of houses
3. new home needs a new table, and more; home purchase stimulates nearly $9,000 in additional spending
For more ideas see: http://rismedia.com/2009-09-21/jumpstarting-job-creation-let-housing-lead-the-way/
This would come at the expense of the president's other priorities, including healthcare and climate change. He doesn't have the political capital to do all three in the same presidential term, and I don't think he's wrong to decide that these are a higher priority. They're what he ran on, and unlike the economic issue, there is much more consensus about what the fix will look like. In contrast, economists might agree on the problem, but there's no agreement on the solutions to that problem
Improvising is for jazz, not the world's biggest economy. You wouldn't want a surgeon who starts improvising mid operation, and you don't want a president who does the same when it comes to making revolutionary changes to the world's finance systems.
Top 1 percent Next 19 percent Bottom 80 percent
1983 42.9% 48.4% 8.7%
1989 46.9% 46.5% 6.6%
1992 45.6% 46.7% 7.7%
1995 47.2% 45.9% 7.0%
1998 47.3% 43.6% 9.1%
2001 39.7% 51.5% 8.7%
2004 42.2% 50.3% 7.5%
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
However it does not go far enough, many of the finanical problems that working men and women face is that the financial structure of this country exploits them, and they do not have a way of seeking redress for their grievences.
The structure of credit, the tricks and traps of the credit system, forever turn them into debt slaves, this has been highly lucreative for the corporations, and allowed them to feed on the public since Reagan.
Everyone knew that eventually we would reach a point where there was nothing left to take, and no reserves. Well we have reached that point now.
Unless the financial system is restructured, then there will be never be any recovery and the very corporations that turned America into a work house will go out of business themselves.
* There will be a lot more turbulence to come.
* The introduction of new forms of institution, especially in the US, that reflect the notion of ideals. The alternative is a significant backlash from those who elected Obama on the promise of change.
* A need to re-evaluate what sustainability means beyond the obvious green issues to include new forms of consumption.
Check out one of the most radical economists: http://www.accmanpro.com/2009/05/19/umair-haques-radical-economics/
Cap personal fortunes at $50 million each (equivalent to about $750 million today)
Limit annual income to one million dollars each (about $12 million today)
Limit inheritances to five million dollars each (about $60 million today)
Guarantee every family an annual income of $2,000 (or one-third the national average)
Free college education and vocational training
Old-age pensions for all persons over 60
Veterans’ benefits and healthcare
A 30 hour work week
A four week vacation for every worker
He was assassinated in 1935. FDR implemented some of his ideas. It’s time for the rest of them.
And if I ever have kids, they will get a warning that they'll get five million each (more than enough for a very nice life) and the rest will go to various charitable causes.
Lets's start paying off our war debt and getting the deficit under control.
Give everyone health care.
It's time to let it try to let the wealth "trickle up" since it has never "trickled down"
Can't break the contracts they said. They then demanded that the hard working men and women of the UAW take a 50% cut in pay with new hires starting at somewhere around $8.00 an hour.
When I hear right wingers say they want their country back I think, so do I. I want the one where we had living wage jobs.
They ship all our jobs over seas and then tell us to pull ourselves up by our boot straps.