The rioting and looting we’ve experienced the last few weeks is a symptom of pent up rage against a machine that has turned us into cogs and for blacks and other people of color, disposable cogs who if they are in the wrong place at the wrong time, they die. Let’s look at the real looting of America.
The Looting Of America:
Not By Rioters, By Bankers
Roxanne always scours the Sunday NY Times magazine and Review section. This week she alerted me to some really extraordinary reporting, including most every article in the Review Section under the organizing theme of: The Economy We Need. I highly recommend it, as clearly from the charts we present below, the economy we have is simply not working for 90% of Americans.
On July 2, another NYT piece “The Neoliberal Looting of America,” could have served as the intro to the Sunday Review section, as it lays out neatly just how exactly we live in an economic reality captured by the charts below. It is part of an ongoing series from the NYTs on the change we need. Read on.
As inequality, unemployment and evictions climb, the Dow Jones surges right alongside them — one line compounding suffering, the other compounding returns for investors.
One reason is that an ideological coup quietly transformed our society over the last 50 years, raising the fortunes of the financial economy — and its agents like private equity firms — at the expense of the real economy experienced by most Americans.New York Times: “Neoliberal Looting of America”
Below, we present two charts that graphically depict just how bad things have gotten for those not blessed to be in the top 10 or 20% of income earners in America. First, the stock market. As you can see the Dow Jones has soared over the last 50 years, far outpacing other economic indicators. Yet, this is an indicator relevant to only a small number of Americans.
According to a June 2020 Gallup poll, 55% of those adults sampled indicated they owned stock. However, according to a NYTs November 2018 report, this is a most misleading statistic, as fully 84% of all stock is owned by the top 10% wealthiest Americans. As usual, that doesn’t leave much for the rest of us.
You get the point. But thanks to Retake volunteer, Jeff Silesky, we have a much more vivid picture of the struggles of working Americans and why so many work two jobs to keep their heads above water. The chart below makes it quite clear that most Americans, perhaps 80% of Americans, live one health emergency or lost job from being reduced to poverty. And that reality lives in the backs of too many people’s minds every day.
To compare the economic insecurity of the average worker over time, Jeff used four highly credible sources (US Census Bureau, The Center on Budget and Policy Priorities, The Bureau of Labor Statistics, and The Pew Research Center). He compared data from 1970 and 2018-2020 using inflation adjusted growth in average income for all Americans and then I added analysis for the lowest 20% of income earners. The chart compares growth income over 50 years with the growth in the average costs of healthcare, college, and housing.
The first column reflects that percent increase of the median income for the 20% lowest earning Americans and the second column reflects the growth in median income for all Americans household from 1970 to 2018. The average median income for the bottom 20% of American wage households was $20,000 in 2018 dollars, i.e. adjusted for inflation. In 2018, that total had increased only to $28,700 or 44%.
But look at the table above for the inflation adjusted costs of healthcare, college and housing. Americans may have increased their earning power by 44-50% but the costs of these essential items have increased astronomically with healthcare costs rising over 500%, public college rising almost 340% and housing rising well over 600%.
With so many costs increasing so dramatically, while incomes are largely stagnant, one would expect personal wealth and economic security to be impossible to achieve. And this is precisely what Jeff Silesky found. From Jeff:
The Wealth Gap from 1983-2016
1983 Median Family Wealth Upper 20% $344,100, Middle 60% $102,200 Lower 20% $12,300.
2001 Median Family Wealth Upper 20% $636,000, Middle 60% $144,600, Lower 20% $20,600
2016 Median Family Wealth Upper 20% $848,400, Middle 60% $115,200, Lower 20% $11,300
The wealth gap between classes has grown much wider this century. Upper income families were the only class able to build on their wealth between 2001 & 2016 adding 33%. Median income families saw their net worth sink by 20% while lower income families experienced a 45% LOSS.“Jeff Silesky
For communities of color, the 2008 recession, another manifestation of the looting of America, utterly gutted the wealth of black and Hispanic families.
How did this happen? From “The Neoliberal Looting of America;”
Neoliberalism leapt from economics departments into American politics in the 1960s, where it fused with conservative anti-communist ideas and then quickly spread throughout universities, law schools, legislatures and courts. By the 1980s, neoliberalism was triumphant in policy, leading to tax cuts, deregulation and privatization of public functions including schools, pensions and infrastructure. The governing logic held that corporations could do just about everything better than the government could. The result, as President Ronald Reagan said, was to unleash “the magic of the marketplace.”New York Times: “Neoliberal Looting of America”
The Times piece does an excellent job of debunking the underlying principles of the Neoliberal looting that has transpired. For example, the NYT’s take on deregulation and a free market economy:
An examination of the recent history of private equity disproves the neoliberal myth that profit incentives produce the best outcomes for society. The passage of time has debunked another such myth: that deregulating industries would generate more vibrant competition and benefit consumers. Unregulated market competition actually led to market consolidation instead. Would-be monopolies squeezed competitors, accrued political power, lobbied for even more deregulation and ultimately drove out any rivals, leading inexorably to entrenched political power. Instead of a thriving market of small-firm competition, free market ideology led to a few big winners dominating the rest.New York Times: “Neoliberal Looting of America”
In the absence of competition, prices rose without restraint, easily outpacing any meager gains in income that may be achieved.
Take the banking sector. For most of American history, banks were considered a public privilege with duties to promote the “best interest of the community.” If a bank wanted to merge or grow or offer new services, the regulators often denied the request either because a community could lose a bank branch or because the new product was too risky. During the neoliberal revolution of the 1980s and ’90s, Congress and bank regulators loosened the rules, allowing a handful of megabanks to swallow up thousands of small banks.
Today, five banks control nearly half of all bank assets. Fees paid by low-income Americans have increased, services have been curtailed and many low-income communities have lost their only bank. When federally subsidized banks left low-income communities, vulture-like fringe lenders — payday, title, tax-refund lenders — filled the void. As it turns out, private equity firms are invested in some of the largest payday lenders in the country.New York Times: “Neoliberal Looting of America”
The Times points to at least one of the ways that we can address the structural flaws to our economy and it points to strategies of municipalization of public services, something for which Retake has long advocated. It is worth noting that such progressive strategies were once the fodder of The Nation and other far left journals. The NYTs is no such beast, having been a defender of capitalism and the free market for decades. But here:
We can start fixing the big flaws propagated over the last half century by taxing the largest fortunes, breaking up large banks and imposing market rules that prohibit the predatory behaviors of private equity firms.
Public markets can take over the places that private markets have failed to adequately serve. Federal or state agencies can provide essential services like banking, health care, internet access, transportation and housing at cost through a public option. Historically, road maintenance, mail delivery, police and other services are not left to the market, but provided directly by the government. Private markets can still compete, but basic services are guaranteed to everyone.”
What’s more, the NYTs Review section from last Sunday, July 5, was full of articles that proposed far bolder policies, including articles on:
- “Banks Should Face History and Cancel Black Debt Now:” a piece that outlines a strong argument for reparations for African Americans with the banking industry footing the bill, as more than any industry, banks have exploited blacks from the days of slavery, through Jim Crow and redlining.
- “The Jobs We Need”
- “How to Tax the Rich and Their Heirs More Fairly”
- “Health Insurance Is Broken”
- “Rethinking of the Rescuing of Ailing Companies”
There were over a half dozen other articles pointing to a range of changes in economic policy that have long been the source of derision by the media, protecting their corporate benefactors.
The Times They May Be A Changin’, but we need to keep our collective feet pressing the pedal to the floor. This is a window of sanity and we must take full advantage of it. Stay tuned.
Paul & Roxanne