Sunday, December 11, 2016

America's Vanishing Dream

If you're under 30, it doesn't matter whether you were born into a rich family or a poor family, the odds are that you won't earn more than your parents did.
A new study shows that, for American youth, the future is one of lowered expectations.

It is the first study to offer hard evidence of a trend that dominated the presidential election and helped fuel the election of Donald Trump: The American dream is more elusive than ever.

Incomes are stagnating for people of all stripes, not just the poor. In fact, researchers found that upper middle-class Americans saw their chances of earning more than their parents decline the most of any group born from 1940 to 1980.

...the decline in mobility has persisted, unrelenting, through the 1960s, 1970s and 1980s.

“This isn’t just a Depression effect; this is something that transcends that,” said David Grusky, a sociologist at Stanford who co-wrote the paper.

Part of the reason for the stagnation is that the country’s economy isn’t expanding as fast as it once was. U.S. gross domestic product often grew at more than 5% in the postwar years, and hit 7.3% in 1984. Growth hasn’t reached 5% annually since then; it was 2.6% last year.

Slower national growth, clearly, means there’s less new wealth to divide among the people who live and work here. 

The biggest problem is, you guessed it, "manufactured" inequality.

What’s really driving the problem is income inequality, the study found. In the past, new income was spread more evenly across the economic ladder than it is today, when a disproportionate share of the country’s gains are going to the very richest Americans.

Inflation-adjusted wages have only inched up for most workers since the 1980s. But the country’s highest earners have seen their pay balloon by 35%, according to a 2015 report by President Obama's Council of Economic Advisers.

On average, about 80% of people in their early 30s would earn more than their parents today if income growth were distributed as evenly as it was in 1940. Making growth more equal would help middle-class people the most. But it would also deeply affect wealthy Americans.

People whose parents are among the top earners in this country would see their likelihood of making that much money increase by more 30 percentage points, if growth were more balanced.

Let's get back to the "manufactured" inequality reference. If inequality is the engine driving our children's stunted future we need to understand not only what inequality is but where it comes from.

Here's a hint. This society-wrecking inequality is coming from those very same people we keep electing to our Parliament and our legislatures. Once again, I urge you to read Joseph Stiglitz' "The Price of Inequality." Learn what a malignant force this is and how it's self-inflicted, a legislated outcome. You'll learn that very little inequality is either merit- or market-based.  It results, directly and indirectly, from government policy - tax exemptions and deferrals; grants, subsidies and even the transfer of government property, resources, to narrow interests at well below market values if not entirely free. Through these myriad channels wealth "trickles up" to those who are able to control the paths through which they receive remuneration. In this way, wealth has been sucked out of the working classes, blue and white collar, to the rentier class.

Here's an example. Canadian governments acknowledge subsidies to the fossil energy industry of between just three to four billion dollars annually. The International Monetary Fund however puts the value of those subsidies, direct and indirect, at more than 34-billion dollars a year.  It notes that,  globally, energy industry subsidies in 2015 totalled a staggering 5.3 trillion US dollars representing no less than 6.5 per cent of global GDP. That's just the subsidies lavished on the energy giants, the most profitable industry on Earth. There's only one entity that can flow that mountain of money to that bloated industry - governments.

If the fossil energy giants have that tight a grip on the world's political caste, what do you think our chances are of decarbonizing our economies and our societies to fight climate change? You guessed it.

This is like getting kicked in the teeth, over and over again. So why do we tolerate it from our political apparatus and the people we elect to look after our best interests? One reason is that we just don't think about it. Out of sight, out of mind. It's not on their agenda because it's not on ours. When it comes to us, the voting public, the only things they're especially concerned about is the things they know we won't tolerate.

Or else we can sit back muttering and just let our predicament worsen. They're not coming to the rescue, not unless you force their hand.


Owen Gray said...

Stiglitz correctly analyzed the problem long ago, Mound. But the powers that be refuse to listen listen to him. It's not in their self interest to do so.

Anonymous said...

Spreading out the dividends will only increase the demands put upon our planet; more autos, more TV,s etc.
The American/Canadian dream is out of control,unrealistic and debt/credit fed.
Whilst I do see signs of poverty here in BC especially first nations and the mentally ill or drug dependent ; the majority of thirty and thirty plus crowd live a life that is only substandard by their own over consuming , must have , habits.
Yes the friggen Carbon Barons get away with murder and then some but don't equate inequality as that between those that rob us ( and the environment) those that purchase BMW autos over ninety six months and houses that are above their pays cale even though they do it because it's the only way they can 'see' to save for the future.
When I pass schools in Nanaimo I cannot believe the number of autos in the parking lots.
Many are high end ( Dover Bay) others are gas guzzling jacked up behemoths deleted of all emissions controls and geared for power!
The owners are sixteen 16 year old kids with a hundred dollar a month cell phone bills.
Look to the future when these spoiled brats ( we spoiled them) tell their children..
We went to school; up hill both ways! with our Porsche Cayenne in four wheel drive.
The gas milage beat the shit out of my allowance.

The fact is we all have to take a hit; the oligarchs more so.

Much of our problems is that we equate standard of living with stuff; too much stuff.
Should we not concentrate upon a standard of living that relates to quality of life?


The Mound of Sound said...

I disagree, but only in part, TrailBlazer. The income-distribution driven inequality is a stand alone issue even if it is related to excess consumption. In a society in which political power is so connected to economic clout, income distribution is critical. Not for nothing were the 50s through the 70s the golden years of the middle class. Income, properly distributed, enabled the rise of a vibrant, robust and broad-based middle class that spanned from the reaches of organized labour to the highest professions. That middle class also ensured genuine political stability for it spurned extremism, especially the radical right of today. Gutting that middle class and transferring that considerable wealth into the pockets of the few has had a transformative impact on our once liberal democracy. It has facilitated the rise of an oligarchic, corporatist state in which the public will is more narrowly given voice.

The Mound of Sound said...

What I should add, TB, is the distributive aspect is akin to opening economic arteries that have been choked off by the forces of inequality. The consumptive aspect is a function of regulating economic flow - consumption. If you want to curtail consumption, as we must, you'll cause untold hardship and potential unrest if you don't first attend to the distributive function.

rumleyfips said...

Back in the seventies, Hunter S Thomson wrote ' the rich are getting restless and I'm getting scared '.

Hugh said...

Headline today:

"Lockheed Martin shares drop after Trump says F-35 program too expensive"