Has America become an oligarchy?

[Skybird]

story

Why still putting it as a question? Telling this for years myself.

(...)

At least since the beginning of the millennium, it has no longer been a simple matter of two societal extremes drifting further apart. Instead, the development is also accelerating. In the years of economic growth between 2002 and 2007, 65 percent of the income gains went to the top 1 percent of taxpayers. Likewise, although the productivity of the US economy has increased considerably since the beginning of the millennium, most Americans haven't benefited from it, with average annual incomes falling by more than 10 percent, to $49,909 (Euros 35,184).

Even for a country that loves extremes, this is a new and unprecedented development. Indeed, as Hacker and Pierson see it, the United States has developed into a "winner-take-all economy."


The political scientists analyzed statistics and studies concerning income development and other economic data from the last decades. They conclude that: "A generation ago, the United States was a recognizable, if somewhat more unequal, member of the cluster of affluent democracies known as mixed economies, where fast growth was widely shared. No more. Since around 1980, we have drifted away from that mixed-economy cluster, and traveled a considerable distance toward another: the capitalist oligarchies, like Brazil, Mexico, and Russia, with their much greater concentration of economic bounty."

This 1 percent of American society now controls more than half of the country's stocks and securities. And while the middle class is once again grappling with a lost decade that failed to bring increases in income, the high earners in the financial industry have raked in sometimes breathtaking sums. For example, the average income for securities traders has steadily climbed to $360,000 a year.

Still, that's nothing compared to the trend in executives' salaries. In 1980, American CEOs earned 42 times more than the average employee. Today, that figure has skyrocketed to more than 300 times. Last year, 25 of the country's highest-paid CEOs earned more than their companies paid in taxes.

(...)

Cornell Univesity economist Robert Frank analyzes this development in his recently published book "The Darwin Economy." In it, he concludes that financial realities are best described not by Adam Smith's economic models but, rather, by Charles Darwin's thoughts on competition.

Frank writes that, with its often extreme deregulation, today's financial and economic system makes it impossible for individuals' self-serving behavior to ultimately contribute to the prosperity of society as a whole, as Smith had envisioned it. Instead, it leads to an economy in which only the fittest survive -- and the general public is left behind.

The question is: How long can the US withstand this internal tension?

Differences between rich and poor are tolerated as long as the rags-to-riches story of the dishwasher-turned-millionaire remains theoretically possible. But studies show that increasing inequality and political control concentrated in the hands of the wealthy elite have drastically reduced economic mobility and that the US has long since fallen far behind Europe on this issue. Indeed, only 4 percent of less-well-off Americans ever successfully make the leap into the upper-middle class.

(...)

[tater]

Well, you've been telling yourself wrong for years then.

It's wrong on a few levels.

One, wealth is not zero-sum. The rich do not get richer on the backs of the poor or less fortunate. Wealth increases globally. The poor get slightly richer, the rich get much richer.I wonder if net worth for the richest includes leveraged assets, too... (who skews them higher for "theoretical" wealth—regardless, it's all on paper and is on the backs of no one, it's wealth conjured out of thin air).

Two, and this is critical, IMHO, "wealth" is very hard to measure in a way that is meaningful for comparing people's lives, particularly compared across time. The poor are farther now from the rich than they would be from the rich in 1920? Guess what, the poor are richer in many ways than the richest people in 1920 looked at in other ways.

Let's take the lower middle class, not dirt poor, homeless types. In the US they live in large homes compared to the earlier history of the US. They have cars (how do you monetize the ability to drive instead of walk comparing wealth over time?). They have television. They likely have instant communications everywhere they are (cell phones). They more and more carry more computing power in their pockets than the entire darpanet combined 30-40 years ago (even a freebie smart phone). They have better healthcare (US rates of death per incidence for potentially deadly diseases is as good as it gets, and that includes all the un/under-insured in the stats). Heck, even violence is at the lowest rate in history (worldwide). We can fight a war for a decade and lose less in 10 years than a week in ww2.

Given the choice, would you be super rich at the turn of the 19th/20th century, or lower middle class in the US today? It's not an easy choice to make, you'd be taking a hit in terms of lifespan right off the bat (US average lifespan being low compared to the EU is entirely a function of death reporting, the US counts all infant deaths, even preemies, the EU doesn't count infants til they reach a certain age as people. A bunch of age = 0 deaths really throw off an average). You'd have no internet, etc, ad nauseum.

Bottom line is that The stats are just that for the OP. Stats. You can look at them different ways, and you need to make sure you are comparing the same things, and useful things, too. Comparing "wealth" is dubious.

[JU_88]

Originally Posted by tater

The rich do not get richer on the backs of the poor or less fortunate.

Would you care to enlighten me as how you think capitalsim works then? Specifically how maximum profit is achieved?

Two, and this is critical, IMHO, "wealth" is very hard to measure in a way that is meaningful for comparing people's lives, particularly compared across time.

Its impossible to messure it precisley down to each individual set of circumstances, buts easy enough to build an overall picture: http://www.economist.com/blogs/daily...uality-america
if you dont like the source of that chart, let me know ill see if I can post one from the source of your choosing.

Guess what, the poor are richer in many ways than the richest people in 1920 looked at in other ways.

So, if you asked me to sell you a 'fast car' and I sold you the slowest car made in 2011 with the argument that: "well, look at is this way, its still faster than the fastest car in 1920"
you would say, "thats a fair comparrison" and continue to buy it from me - would you?

Let's take the lower middle class, not dirt poor, homeless types. In the US they live in large homes compared to the earlier history of the US. They have cars (how do you monetize the ability to drive instead of walk comparing wealth over time?). They have television. They likely have instant communications everywhere they are (cell phones). They more and more carry more computing power in their pockets than the entire darpanet combined 30-40 years ago (even a freebie smart phone). They have better healthcare (US rates of death per incidence for potentially deadly diseases is as good as it gets, and that includes all the un/under-insured in the stats).

And they often afford these things how?
Their homes they pay for via a morgage that takes a life time to pay off. (if they can afford to get one foot on to the property ladder at all)
Cars & fancy flat screen televisions etc are often paid for in installments , or on credit cards and personal loans. Money they\we dont yet have, borrowing does not make you wealthier, nor do 'buy now pay later' scemes.
Freebie smart phone? wheres mine then? they are not 'free' we pay for them over a period of 12 months or more!

if everyone in America - and indeed the developed world spent within their means and did not rack up debts, you would see alot less people owning these luxury goods..... abit more like 1920
Why do banks let people borrow beyond their means so much? two reasons; 1) they make a killing out of the intreast 2) In the short term it helps pump more money back in to our econemy though consumer spending - but with potentially catatstrophic consquences, such as the ones we are seeing er....since 2008.
Just to remind you, the world is now in a debt crisis for a reason.

We can fight a war for a decade and lose less in 10 years than a week in ww2.

Yeah - because we fight vastly inferior forces who are no match for us.
In WW2 we fought an equal and in some respects 'superior' enermy. You'd be wise to remember that.

[Sailor Steve]

Originally Posted by JU_88

And they often afford these things how?

He's right. I live in a cheap apartment; it's all I can afford. It's not Mount Vernon, but compared to my counterpart from that era it's pretty fantastic. I have a sliding glass door with a view of the park next door, my own stove, refrigerator, running water, heat and air conditioning, and a real-live indoor toilet, all things even George Washington (or King George) couldn't even imagine. I also have a supermarket within an easy walk and a bus/train system that gets me where I need to go, though I do have to actually walk a couple of miles sometimes. I do get help paying for it because I'm over 60 and a veteran, but yes, my standard of living is far above that of even the wealthiest people who lived two hundred years ago.

And they often afford these things how?
Their homes they pay for via a morgage that takes a life time to pay off. (if they can afford to get one foot on to the property ladder at all)
Cars & fancy flat screen televisions etc are often paid for in installments , or on credit cards and personal loans. Money they\we dont yet have, borrowing does not make you wealthier, nor do 'buy now pay later' scemes.
Freebie smart phone? wheres mine then? they are not 'free' we pay for them over a period of 12 months or more!

It's true, I've never owned a home. So? Yes, when I get another car it will be used, but it won't take me a year to pay if off. Do you have a problem with that? No, borrowing does not make me wealthier, but it does get me things I want. Do you have a problem with that? Do you want to alter society so everyone can buy things without debt? How? If you force employers to pay employees that kind of money they'll either have to hire fewer people or raise prices to cover it, and then the employees still can't afford them.

My phone isn't technically a "smart phone", but I paid $30 for it, not payments for a year. Also, with some plans they do indeed give you the phone for free, or for a greatly reduced price, so your is sorely misplaced.

[JU_88]

Steve, with all due respect, I think you are missing the point.
Please re-read.

This 1 percent of American society now controls more than half of the country's stocks and securities. And while the middle class is once again grappling with a lost decade that failed to bring increases in income, the high earners in the financial industry have raked in sometimes breathtaking sums. For example, the average income for securities traders has steadily climbed to $360,000 a year.

Still, that's nothing compared to the trend in executives' salaries. In 1980, American CEOs earned 42 times more than the average employee. Today, that figure has skyrocketed to more than 300 times. Last year, 25 of the country's highest-paid CEOs earned more than their companies paid in taxes.

What this is highlighting is that although the quality of life has improved for the poorer people in developed countries over the course of the 20th century.
That progression is now in a decline. The tables are turning backwards and the gap between the wealth bands is once again widening. Not a problem?
Well if the trend continues yes it is, as prices and Interests rise, borrowing becomes harder, the lower and lower middle classes can begin to lose the quality of lives they have established as easily as they got them in the first place.

If you force employers to pay employees that kind of money they'll either have to hire fewer people or raise prices to cover it, and then the employees still can't afford them.

Not if the money comes out of Net profits, Salaries and Bonuses of unneccesarily grotesque proportions, of which there are evidently many when you look at the current statistics.
You just explained to me that you dont need up market dwellings, a flashy new car and smart phone to to be happy, so by the same logic why does anyone need a $2 million bonus for example?
The amount of money in the system has increased over the decades, but the vast majority of us have not seen very much of it at all, as it gets filtered in to the pockets of the elite.

The difference between a society able to earn enough money to live well and one which has to borrow is simple.
Economic Stability (or there lack of). And this this is not just about the money either, it is also largely about control.

Am I suggesting an income rebalance in line with socialism? No, I am suggesting balancing it back as it was around the 1970s & 80s (where it was more favorable towards the average joe. So yes it is do-able because we have done it before.

Also, with some plans they do indeed give you the phone for free, or for a greatly reduced price, so your is sorely misplaced.

Ok so when you sign up to this plan, you pay the network provider a monthly fee right, for a contracted 18-36 months? Isn't that what a plan is? so heres the question, what are you paying for each month?
Do you think Network providers are merrily making a loss on these 'free' handsets they are supposedly handing out? Although it maybe appears to be 'free' the way it is presented to the customer, I can assure you that you are indeed paying them for it though your plan.

[Sailor Steve]

Originally Posted by JU_88

Steve, with all due respect, I think you are missing the point.

You made a direct statement. I addressed it. That you had other points is irrelevant to me. You were wrong on that one, at least where I'm concerned.

I do understand that things are getting worse, or at least not getting better. That said, the specifics you used to illustrate the point were incorrect, and that's what I addressed.

You just explained to me that you dont need up market dwellings, a flashy new car and smart phone to to be happy, so by the same logic why does anyone need a $2 million bonus for example?

Maybe they don't. Maybe athletes don't need multi-million-dollar salaries either. That said, it's not up to you or me to decide that. I like to illustrate this with the story of Michael Schumaker. Back in 1995, after two World Championships Ferrari asked Schumaker to drive for them. Schumi said he would do it for $1 million per race. Ferrari didn't even hesitate. Then they didn't have to pay a dime, because Shell Oil thought it was worth that much to have their logo on Ferrari's cars, and said if Ferrari would dump Agip and go with Shell they would pay Schumi's salary. So does Schumaker really need $16 million a year? I'd say no. But he was worth it to both Ferrari and Shell, and they were the ones spending the money, not you or me.

And maybe that CEO doesn't "need" a $2 million bonus. But that is the decision of the board and the shareholders, and maybe he's worth it to the company.

The amount of money in the system has increased over the decades, but the vast majority of us have not seen very much of it at all, as it gets filtered in to the pockets of the elite.

So they get more than you, or me, and people like me are homeless from time to time. Is it wrong? Morally, yes, almost certainly. Socially? Maybe. Legally? No, but to change that would take absolute authority, a dictatorship. Maybe you know someone who could be trusted to run that. I don't. Barring some other solution, I'd rather starve than give any government that kind of power.

Am I suggesting an income rebalance in line with socialism? No, I am suggesting balancing it back as it was around the 1970s & 80s (where it was more favorable towards the average joe. So yes it is do-able because we have done it before.

Sounds good, and I posted my above before reading this one from you. But again, how to make that happen?

Ok so when you sign up to this plan, you pay the network provider a monthly fee right? Isn't that what a plan is? so heres the question, what are you paying for each month? Line rental? You know that doesn't actually cost them anything right?

Of course, but you flat-out said the only way to get a smartphone was to buy it on credit, and you were wrong.

Do you think Network providers are merrily making a loss on these 'free' handsets they are supposedly handing out? Although it maybe appears to be 'free' the way it is presented to the customer, I can assure you that you are indeed paying them for it.

I have a blackberry-capable (which I never use) and very functional phone I paid $30 for. No plan. I pay by the minute - $15 per month, and I can drop it any time I want. Unlike some, I don't talk 1000 minutes per month. I don't even talk 100 minutes per month. If you're stupidly addicted to your phone then sure, you have to pay a lot. That's not anybody's fault but your own. No phone company is taking advantage of me, and your criticism of that is, in my case at least, once again wrong.

[mookiemookie]

Originally Posted by tater

Two, and this is critical, IMHO, "wealth" is very hard to measure in a way that is meaningful for comparing people's lives, particularly compared across time.

It's absolutely irrelevant. The poor of today live better than the poor of the 1890s, and the poor of the 1890s lived better than the poor of the 1690s, and they lived better than the poor of 2000 BC. But what's that tell us? Absolutely nothing of the gap between the richest and the poorest today, which is the entire point. If a rising tide lifts all boats, then why are some boats rising faster than others? How the poor lived 100 years ago is irrelevant to the discussion.

[gimpy117]

It's been game over for the little Guy in the US for a long time. I'm still waiting for the super rich in this nation to build castles and start calling themselves lords.

[1480]

In the end, wealth is just another grading system.

[Ducimus]

Originally Posted by tater

One, wealth is not zero-sum. The rich do not get richer on the backs of the poor or less fortunate. Wealth increases globally. The poor get slightly richer, the rich get much richer.I wonder if net worth for the richest includes leveraged assets, too... (who skews them higher for "theoretical" wealth—regardless, it's all on paper and is on the backs of no one, it's wealth conjured out of thin air).

[Skybird]

Wowh, that guy has made some very informative videos. Thanks for linking it up, Ducimus!

Relevant for this thread also is this film on the distribution of income (while Ducimus' link was about the distribution of wealth):

Also liked this one, though it covers some more distant terrain:

[Blood_splat]

Originally Posted by Ducimus

Will let the bull loose.

[mookiemookie]

Originally Posted by Skybird

Has America become an oligarchy?

Yes.

[Rockstar]

I thought I was rich until someone from the government said I was living in poverty.

[August]

Well said Tater.