Vail Valley Voices: Top 1 percent pretty much owns us
I have been traveling recently and watching a bit of TV in hotel rooms. I noticed, as Arun Gupta recently wrote, that “Despite the financial industry’s self-induced catastrophe in 2008, most corporate media reporting still assumes that ‘What’s good for Wall Street is good for America.’ ” Federal Reserve Chairman Ben Bernanke has said this recession is “very likely over.” The S&P 500 index, from its low point in March 2009, has rocketed upward by nearly 60 percent in barely six months. Wall Street banks are reporting record profits less than a year after taxpayers threw them a trillion-dollar lifeline.” Given the America of today, where 1 percent of the adult population controls more wealth than 90 percent of the rest of us, perhaps the media’s “What’s good for Wall Street” mantra is understandable. “America” — economically speaking — has a population of only about 10 million adults. The rest of us have become almost economically irrelevant. According to Robert Frank, writing for the Wall Street Journal’s Wealth Report, “It’s well known that the rich have an outsized influence on the economy. The nation’s top 1 percent of households own more than half the nation’s stocks, according to the Federal Reserve. They also control more than $16 trillion in wealth — more than the bottom 90 percent.” Frank wrote, “There is no average consumer” in today’s America. “Only the rich and everyone else.” “In 2005, the richest 20 percent may have been responsible for 60 percent of total spending. Once we understand this so-called plutonomy, we can solve some of the recent mysteries of the American economy,” he wrote. “For instance, some economists have been puzzled about why wild swings in oil prices have had only muted effects on consumer spending. Since the rich don’t care about higher oil prices, and they dominate consumer and other spending, higher oil prices simply don’t matter as much to total consumer spending,” since the spending capability of the rest of us doesn’t amount to all that much when compared to the spending by the ultra rich. It’s the same with health care. The rich can afford whatever health-care costs and the fact that everyone else can’t doesn’t matter to them at all. It’s why a “jobless recovery” exists, since the rich don’t work, they invest. All the rest of us have to do is show up to vote for the 1 percent’s pre-vetted and funded candidates every couple of years, since the rich prefer to allow we, the everybody else, to pretend we all still live in a democracy, that we’re all still “equals.” If the irrelevant 90 percent ever figure out how unequal the system really is, the top 1 percent is in trouble and they know it. The problem they have is that, once you accumulate wealth at the levels they have, it is very hard to keep up the charade. The taxpayers’ bailout of the “investing class,” through the 60 percent rise in the NASDAQ, appears to be working to end the recession, as Bernanke says. Working, if one is a member of the tiny elite class that controls the vast majority of the nation’s wealth. The Wall Street Journal’s own look at the stocks of companies that pander to the top 1 percent — such as the auction house Sotheby’s, fashion houses Bulgari, Burberry and Hermes, hotelier Four Seasons, private-banker Julius Baer and jeweler Tiffany’s — found that they have risen an average of 17 percent over the past year, outperforming the MSCI World Index. The rich invest in themselves and the folks they do business with. They don’t drive Chevrolets, nor do they trade GMC stock unless they were short-selling it as it collapsed. Gupta pointed out that for the average household, the 99 percent of the population falling into the “everyone else” class, “the reality is grim. The number of unemployed and underemployed is nearly 17 percent of the U.S. workforce, or around 25 million people” and it is still rising, with over 500,000 new unemployment claims every week. “Residential mortgage foreclosure filings have exceeded 300,000 a month for six months in a row, starting in March 2009. Tent cities are sprouting across the country. Personal incomes continue to shrink, and it’s projected that medical bankruptcies, people who file for personal bankruptcy because of medical bills, will reach 900,000 cases this year.” He said there is “no economic sector that appears capable of pulling the overall economy out of its deep funk. Manufacturing has virtually disappeared in this country. Most service sector jobs pay dismally. The tech sector and creative industries can’t employ tens of millions. Hopes of green jobs have vanished with a foundering renewable energy industry still incentivized through tax credits nobody needs today instead of feed in tariffs based on energy production, a system which works well from Gainesville, Florida (the only place in the USA using it), to Germany, France and the rest of the world (sort of like single-payer public-funded health care). And there are no more paper bubbles that can be pulled out of the Federal Reserves’ bag of tricks (other than the ongoing run up in stocks), at least any that trickle down to Main Street.” Can anyone look at the facts and disagree? Sadly, unless “we the everybody else taxpayers” continue to fund the equity bubble on Wall Street bailing out the investment class, our little 401k will get a double-dip equity recession once government bailout funds dry up or their presence has allowed actual insider funds to cash out before the eventual end of the bailout. If the last year’s bailouts prove anything, it is that virtually nothing related to money ever runs downhill. Gupta observed: “This decline is not a re-run of the 1930s. After all, it has been the extreme right that has been organizing around this downturn, not the left or labor as in the Roosevelt years.” There are no reforms in progress that will curb the abuses of the system that have caused and continue to exacerbate the present recession. The outcome of this downturn will be entirely different than the 1930s depression.Feeling optimistic when there’s no real basis for it is probably not the best way to prepare for a pending reality that will be much more difficult for the 99 percent of the American people who are not part of the “investing class.” Regardless of whether we are on the right, the left, or anywhere else politically, the real problems we face are largely caused by the simple fact that the top 1 percent of families have more wealth than the bottom 90 percent combined and that the consequences of their misguided gambling have not really affected them at all. They have become “sovereign individuals,” as predicted in 1995 by Lord William Rees-Mogg in his book of the same name. The left and right, atheists, believers, pro-life and pro-choice lines that divide the lower 90 percent of us today mean absolutely nothing except that they keep us divided and conquered as we bicker among ourselves, oblivious that we’ve become economically irrelevant to those with real wealth and power who control our destinies. Both left and right must “put aside childish things,” wake up and start paying attention. Preparation for our futures in this new world order requires a clear awareness of present reality to seize what opportunity presents itself. This awareness will not be gained by watching television or wishful thinking.Bill Sepmeier lives off the grid on Sweetwater Creek.