Attacking the Republicans for their indifference to inequality is like shooting fish in a barrel. There is no shortage of examples showing how little the GOP cares about the working class or about fairness. But even more disturbing than the indifference is the reason behind it.
Both income inequality and wealth concentration in America have reached dizzying proportions. The average income for someone in the top 1 percent is currently $717,000, compared to $51,000 for the rest of the population. The same top 1 percent also control 43 percent of the entire wealth of the nation.
Not since the 1920s has the gap been this wide or accelerated this fast -- the income of top-earners tripled over the last three decades while rising by only 40 percent for the middle class. In fact, the only period in the last century when inequality actually dipped was in the 1950s; after that, it rose steadily through the next two decades and then began to skyrocket in the 1980s.
Of course, the Republicans would like us to believe that their objections to raising the minimum wage or restricting executive pay, their efforts to blast holes in social safety nets like Social Security and Medicare, and their machinations to gut public services that average Americans rely on to survive, are all part of a grand economic vision based on 'pure' free market principles and democracy, but that is complete nonsense. That is not really why the GOP is fine with inequality.
The real reason has to do with the one thing that the Republican party's wealthy financial backers, and so by extension the party itself, do care about -- and that is more money.
There are only two ways for consumers to buy things: wages or credit. When wages go down or prices go up, people have to reach for credit to maintain or improve their standard of living. In our economy, wages have gone up in nominal terms but not always kept up with inflation, leading to a decline in the real value of those wages, or in other words, their purchasing power. At the same time, at least until 2008, consumer credit was easily obtainable and so people borrowed to plug the gap, and then some more.
It worked fine as long as they could keep rolling over the debt, but then came the financial crisis, and it all fell apart.
So now here we are in a time when jobs are scarce, wages are stagnant, the cost of living is high, consumers are still struggling with their past debt, but suddenly, new credit is hard to come by. At such a time, working class Americans, who are the most financially vulnerable to begin with, find themselves between a rock and a hard place: either work themselves to death, default on their bills, or take on even more debt. And here's the real kicker: Since financial institutions have tightened lending, that means borrowers have to pay astronomical rates to secure that debt!
But then that is precisely what Republicans want: more income inequality and a conspicuous lifestyle gap that will force people to take on expensive new debt and spend money on new products. U.S. household debt, which currently stands at $11.4 trillion, is expected to rise even more, which then drives immense profitability for lenders and manufacturers, generates even more wealth for the top 1 percent, and keeps the dark money flowing for the GOP.
It's a policy that has kept the Republicans in gravy for half a century now, and their latest efforts to tie Social Security to Chained CPI, a flawed measure that they know will lower benefits for the poorest Americans, is just part of this obscene larger picture. It is yet another way to push consumers into the arms of expensive leverage that they will then have to work the rest of their lives to pay down, and thus to put permanent chains around them.
This is not capitalism. This is morally bankrupt profiteering and economic slavery on the part of businesses and aiding and abetting on the part of the Republicans. Shame on them all.SANJAY SANGHOEE has worked at leading investment banks as well as at a multi-billion dollar hedge fund. He has an MBA from Columbia Business School and is the author of the financial thriller "Merger" (available below) which Chicago Tribune called "Timely, Gripping, and Original". Please follow him on Twitter and Facebook (Candid Politics & Business Blogs).