Wednesday, July 14, 2021

Of Two Minds - The $50 Trillion Plundered from Workers by America's Aristocracy Is Trickling Back

As I often note here, when you push the pendulum to an extreme of wealth and income inequality, it will swing to the opposite extreme minus a tiny bit of friction.

The depth of America's indoctrination can be measured by the unquestioned assumption that Capital should earn 15% every year, rain or shine, while workers are fated to lose ground every year, rain or shine. And if wages should ever start ticking upward even slightly, then the Billionaires' Apologists are unleashed to shout that higher wages means higher inflation, which will kill the economic "recovery."

Said another way: if wages stagnate so workers lose ground every year as inflation in essentials rises, that's the way it should be. If wages rise so workers can keep up with inflation, then that will trigger an inflationary death spiral.

That this indoctrination is so widely accepted reveals the success of America's Aristocracy in reshaping the narrative to make their plundering appear to be "inevitable." But the siphoning of $50 trillion from workers to the Aristocracy, and the Nobility's control of political power was anything but inevitable: it was engineered by policies that enriched billionaires, the top 0.01% Aristocracy, and the top 10% who own 90% of America's productive capital.

This wholesale transfer of wealth and income from workers to Capital was documented by a RAND Corporation reportTrends in Income From 1975 to 2018Time magazine summarized the findings: The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90% -- And That's Made the U.S. Less Secure.

There are some who blame the current plight of working Americans on structural changes in the underlying economy--on automation, and especially on globalization. According to this popular narrative, the lower wages of the past 40 years were the unfortunate but necessary price of keeping American businesses competitive in an increasingly cutthroat global market. But in fact, the $50 trillion transfer of wealth the RAND report documents has occurred entirely within the American economy, not between it and its trading partners. No, this upward redistribution of income, wealth, and power wasn't inevitable; it was a choice--a direct result of the trickle-down policies we chose to implement since 1975.

The net result of this four-decade siphoning of wealth/income from workers was recently documented by a Foreign Affairs article: Monopoly Versus Democracy:

Ten percent of Americans now control 97 percent of all capital income in the country. Nearly half of the new income generated since the global financial crisis of 2008 has gone to the wealthiest one percent of U.S. citizens. The richest three Americans collectively have more wealth than the poorest 160 million Americans.

In other words, the bottom 90% have very little stake in the status quo: they receive essentially zero income from America's stupendous $121 trillion hoard of private wealth and have essentially zero political influence, as documented in Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens.

Now the worm has finally turned, and workers are refusing to accept the Neofeudal dominance of the Aristocracy, not by open revolts that the State can violently crush but by indirect means. Fed-up Boomers are retiring, fed-up Gen-Xers are cutting their hours, refusing to go back to the office, starting their own enterprises and Millennials are assembling multiple income streams, building micro-houses, and leveraging shortages of workers for higher wages.

The techno-fantasy that's Corporate America's fondest dream is automation of all labor: get rid of all human workers and just manage the robots with loving care. But the reality is robots have limits, as I explain in my book Will You Be Richer or Poorer?--limits imposed by physics and finance.

And so, weeping inconsolably, Corporate America continues exploiting its workforce with the usual threats: you're powerless because we can automate your job or offshore it to Lower Slobovia.

Contrast this with the real world: a young man of my acquaintance recently took a job at a Corporate America Big Box outlet. His wage was $12/hour, and all the power was of course in the hands of Corporate America: he had no power over his schedule, or anything else.

In the script of the past four decades, Corporate America (while crushing small business and buying the best government money can buy) could keep the serfs slaving away for stagnating wages, all in service of maximizing corporate insiders' stock options, buybacks and soaring profits.

This individual was tipped off to a much better opportunity, and when he gave notice to the Big Box manager, the manager corralled him for two hours, first offering a $3/hour raise (25%) and then badgering him to stay on as a serf on the Big Box plantation. He refused.

This is the pure distillation of Corporate America and the Aristocracy: if they'd offered this hard-working individual the 25% raise after he proved his worth, then maybe he wouldn't have been so motivated to seek better opportunities elsewhere.

At long last, some the $50 trillion plundered from workers is trickling back to the people who actually create the income and wealth. As a thought experiment, consider an economy in which farmers and workers reaped 15% gains annually like clockwork, and Corporate America's insiders, financiers and speculators, and Wall Street's parasites all lost 15% of their wealth and income every year like clockwork.

In other words, imagine the $50 trillion flowing back to those who generated it from those who looted it.

As I often note here, when you push the pendulum to an extreme of wealth and income inequality, it will swing to the opposite extreme minus a tiny bit of friction. The serfs are quietly slipping away, and the Aristocracy, blinded by hubris and greed, believes nothing will ever change because, well, their wealth and power is deserved. What they really deserve will manifest in the next four years as the chairs at the banquet of consequences are shuffled.

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