A couple of weekends ago, the Greenfield Fairgrounds was filled to overflowing campers and RVs for the good Sam's club jamboree. I was in awe of how many huge RVs there were and how these elderly people could afford to continue this past time in their retirement. The vehicles are expensive and what must it cost to drive those gas hogs all over the place like they do? I expressed this amazement to the person I once went and got the response, "they've worked hard all their lives to do this."
Really, is it that easy? I wasn't making the comment to criticize those individuals…I was just wondering what had happened. After all these weren't CEOs sitting outside expensive, gas guzzling vehicles…they were regular folks. I know most working people today are struggling to keep their bills paid on a week to week basis. Retirement like what I was looking at, seems highly unlikely. What has changed?
In the workshop Sylvia and I do Called Somebodies and Nobodies, we talked quite a bit about this idea we have in America, that any of us can "have it all" if we just work hard enough. This idea is called "meritocracy." That's what my friend was throwing back in my face. The idea that I could have that life too, if I just worked harder, worked smarter... But I think that message is a myth, a fairytale, an outright deception and it is important that we understand that it is not true. It masks what is really going on and helps us to become passive and self-judging when we should be active and working to change the shifting climate in our country and the world.
We are fast returning to a time in our history when the "robber barons" were the most powerful people in America. In the 1800s we had a situation where industrialization led to great wealth accumulation by a small proportion of the population. These "robber barons" use their wealth and influence to change the rules about how things would be done including monetary policy, corporate governance and trade tariffs, all to further their own interests. Being a good businessman meant eliminating competition, keeping wages low, prices high and obtaining government subsidies to help cut costs while increasing profits (any of this sounding familiar?). Large monopolies began to emerge, making it harder for small firms and farmers to compete in the marketplace. All the while these businesses using the profits they have accumulated to change the laws of the land to allow them to garner more and more profit for themselves and their companies.
This situation of extreme inequality helped to give rise to the Populist movement, the largest social movement in our country's history. The movement worked specifically on breaking up the over concentration of wealth being held by these large corporations. They did it by using media and education. The Populist movement had over 1,000 newspapers and journals. They had a network of over 35,000 lecturers who traveled the country speaking at grange halls, railroad stations, anywhere they could find people who would listen. They reached 43 states and over 2 million farm families. The Populist party pushed for the first income tax as a means of breaking up over concentration of wealth. It took them until 1916 to win that fight but they did. The party fell apart after that for a lot of reasons, infighting and racial issues created divisions but not before they changed our country's social climate.
Other movements of that time helped to change public opinion including :
* Teddy Roosevelt pushing for progressive taxation and antitrust legislation,
* the industrial labor movement came into being pushing for the right to organize,
* the CIO changed organizing from just by trade (carpenters, butchers) to expand the ranks of unionized workers
by millions so that by 1950 over 30 5% of the workforce was unionized.
* The End of Poverty movement in California had over one million members,
* To Share Our Wealth movement claimed 7 million members and 27,000 local chapters called for a cap on accumulated wealth at $8 million in 1935 which would be $96 million today.
The pressure of these movements pushed Franklin Roosevelt to advocate progressive taxation, stronger social and economic reforms beginning in 1936. These reforms included expansion of federal relief, Social Security, regulation of Stock exchange, legislation for the right to organize unions and bargain collectively, initiatives to eliminate rural poverty, massive public works projects and progressive taxation.
Moving forward into postwar America, incomes of ALL Americans grew at the same rate because the social spending that took place in the New Deal continued after the war. "Direct and indirect federal spending helped build this country's middle class."
* Returning war veterans got the G.I. Bill. This meant free higher education and mortgage subsidies.
* The Federal Housing Authority, the Veterans Administration and Farmers' Home Administration
programs helped 11million families between World War II in 1972 to buy homes and another 22 million improves their properties.
* All of these house subsidy programs provided a wealth stake for 35 million families between 1933 and 1978.
* Massive federal spending lifted 1/5 of the population of the United States into home ownership! Unfortunately these benefits came to predominately white suburban citizens.
"The post-World War II investment in middle-class wealth expansion was paid for by a system of progressive taxation. The top income tax rate coming out of the war was 91% -- and the estate tax included a provision that taxed fortunes over $50 million at a 70% rate. (Today the top income tax rate is 38.6%.) In some, many of the widely shared benefits of postwar spending meant that the progressivity of the tax system enjoyed widespread political support." (Economic Apartheid In America)
So much of the prosperity that I witnessed that day on the fairground was not due solely to those individual's hard work. It was supported and protected by social programs that were instituted in this country from the 1930s on. Most of our wealth, in our class, comes from our homes and the same is true for these campers. The biggest beneficiary of the federally funded programs that assisted people in becoming homeowners was white suburbia, where half of all housing could claim FHA or VA financing in the 1950s and 60s. And as we all know that investment in housing paid off hugely in the most recent decade.
This shift to the days of the "robber barons," to the days before all the social reforms that provided for all citizens to benefit from the prosperity of this country is painfully evident.
* In the last two decades the bottom 20% of the population has experienced a 2% decline in real income while the top 20% has experienced a 51% increase in real income. the top 5% of the population has experienced a 75% increase in real income and the top 1% of the population has experienced 106% increase in real income. Half the population in this country is either moving backwards or holding its ground by working more hours.
* In 1975 the gap between the highest and lowest paid worker in a firm was 41 to one. In 2003 it was 301 to 1.
* In 1950 35% of the workforce was unionized. In 2003 less than 12.9% are unionized. Unions enforced a "social contract" ensuring that the fruits of economic growth were shared equally. Even though unions excluded people of color and women they did help to raise the standard of living for everyone across the board.
Over the last 30 years the tax burden has shifted from
* large corporations to individual taxpayers
* wealthy owners of assets to low and middle income wage earners
* foreign corporations to domestic corporations
* foreign investors to US workers
* multinational corporations to medium-sized and small sized businesses
* Federal Government to st state and local governments
* today's taxpayer to tomorrow's taxpayer
After World War II corporations paid 28% of all federal revenue but by in 2003 it had fallen to 7.4%. 60% of the largest US corporations avoided paying any tax at all in at least one year between 1996 and 2000.
After World War II individual taxpayers paid 43% of taxes now they pay almost 90% of the tax burden!
And that is not the complete picture. As these corporations not only don't pay taxes, they are given subsidies that take tax money taken out of individual citizen's paychecks to give money to these corporations. For example, the Department of Agriculture spends nearly $637 million a year helping U.S. corporations market their products overseas. Assistance has flowed to needy corporations like McDonalds, American Legend Fur Coat Company, Dole and Sunkist Oranges to help with advertising, trade shows and the like. The amount of corporate welfare, unproductive subsidies and tax breaks that go to the wealthiest of Americans corporate corporations and individuals is tough to know exactly but one estimate is $800 billion a year compare that to the measly $193 billion spent on welfare for low income families.
So what we have now is a system where the wealthy are getting wealthier. And that money allows them to lobby, influence laws, to influence decisions on money lending, tax rates, interest rates, foreign trade, who gets elected to Congress who gets elected to the White House. And make no doubt the decisions that are being made the changes that are being made are in their favor to continue this process. You will take something like the Populist movement awakening in our country today to change this. We need strong unions. We need committed people. We need educated people who understand the reality of what is really going on in this country. We can no longer believe the story they would like us to believe, that if we work hard week to will succeed. The game is rigged. And it's time that we worked to change the rules.
Note: Most of my data came from the book, Econcomic Apartheid in America. I highly recommend it.
