stephanie jones

Occupy Wall Street Continues – Some Comments on Economic Inequality

In democracy, economics and economies, politics, social class, social policy on October 15, 2011 at 4:40 pm

Occupy Wall Street (now with its own wikipedia entry that is pretty informative) continues and catches fire across the country and the globe. Working people are sick of being trampled on – and privileged people with a conscience are sick of seeing the most economically and socially vulnerable get squashed under unethical policies and practices.

 

The average CEO in America makes about 200 times more than the average workers in their companies.

Some say, “they’ve earned it – they’ve worked hard.”

I say those people must never have worked low-wage jobs and have no idea how “hard” workers work – many much harder than the often isolated, pampered, and (even if stressed out) incredibly privileged highly-paid CEOs.

It wasn’t always like this – in the 1970s, for example, the “gap” in pay between workers and CEOs was much smaller, and guess what? The rate of what economists and others call “social mobility” – that is, the rate at which real people were able to move into more secure and stable economic lives – was much much greater then than it is today in 2011.

In fact, the U.S. has almost zero social mobility today. That means that (most likely) the social class of a child’s parents will also be the social class of the child as an adult. No upward movement is expected.

While CEO salaries are higher than ever and have skyrocketed in the past 30 years to unimaginable rates, real wages for workers have stagnated and even fallen. That means the average male wage worker in the 1970′s is essentially making less money today than he made back in the good ol’ days. (My mom tells me this all the time – that she lived a much higher quality of life because of her wages in the 70s than she can today. She’s a working-class gal who worked in many different working-class jobs my entire life. She is a living economic barometer and is making less today than she did in the 70s).

How did this happen?

A simplified answer might go something like this:

1. “Trickle Down Economics” (Reagan, Thatcher, etc.) came into play. That is, keep as much money as possible in the pockets of the wealthy and they will support the economy through their spending and create more jobs – it will “trickle down” to the poor suckers at the bottom. These economic decisions essentially created Class Warfare in the 70s (apparently some folks weren’t so happy about the “social mobility” happening with more equitable treatment and pay that resulted from the Civil Rights movement). It was Class Warfare – get the money back into the hands of the nation’s richest and let them decide what to do with the economy and the fate of the common folks. The nation’s wealthiest 1% were fighting against everyone one else – and they won.

2. The emphasis on stock prices on Wall Street exploded. Fewer companies offered “pension plans” and more companies offered middle-class folks the “wonderful opportunity” to take some of the money that would have gone into a pension plan and make their “own investment decisions in the stock market.” Brilliant, right? Now the top 1% wouldn’t be the only Americans concerned about stock market prices, but millions of middle-class folks (who don’t usually know enough about the stock market to be making these kinds of decisions, and who don’t usually have enough money to be playing such high-stakes gambling games with what they do have) will want higher stock prices too.

3. Higher stock prices mean higher profits for corporations which means lower costs which means fewer and lower paid workers. (And higher salaries for CEOs who prove they can make this happen).

4. And, higher stock prices mean higher profits for corporations which means locating more and more unexplored “markets” which means for-profit corporations moving aggressively into foreign markets and often crush local small businesses that are more sustainable, treat their workers better, and care more about the local community.

5. And, higher stock prices mean an eventual “saturation” of all possible markets where there is no more possible “growth” outside so the profits have to be buttressed by inside cuts. Again, fewer and lower wage jobs (and higher salaries for CEOs who prove they can do this).

6. So then average joes (on the losing end of Class Warfare) find themselves stressing out over their stock investments just as they lose their own jobs because corporations are doing what they can do increase their profits.

7. NAFTA and other free trade agreements have exacerbated the process listed above.

8. Working wages are then at best stagnant, at worst lower or non-existent.

9. The top 1% not only increases their salaries exponentially, but benefits exponentially from increased stock prices in their companies and in companies they invest their personal retirement in.

10. When repeated over and over again – you see where this has landed us and where it might go from here if something isn’t done.

11. During this whole time (70s until now) this increase in expecting individuals to take care of themselves (re: moving from collective pensions to individual investment options with 401k, etc.) and a focus on “autonomy” and “privatization,” has also decimated policies and practices put in place for the common good: state welfare for low income families, public education that can support social mobility, foodstamp programs, and many other programs that serve as safety nets for the most vulnerable. If the mantra in the Civil Rights Movement was one of collectivity and “we are in this together,” the mantra today is, “everyone for him or herself.” And it only benefits the top 1% of our country.

 

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