Waiting for the Recovery That Will Never Come
We are constantly told that the recovery is just around the corner. Liberals say we need more stimulus. Conservatives call for more austerity and cuts in regulations. But all agree that sooner or later more growth will benefit the 99 percent. Unfortunately, it's not happening and it won't happen. Here's why.
First of all, they assume that trickle-down actually works, that there is something mechanical within our heavily financialized economy that will bring renewed prosperity to the 99 percent. They look back at previous recessions and recoveries and continue to believe that slumps are followed by renewed growth and income gains for all.
But as financialization has spread throughout the economy, new mechanisms are in place that siphon off wealth into financial gains for the very few. Productive enterprises are turned into financial enterprises that are loaded up with debt and then carved and slaughtered so that wealth can be extracted for hedge funds and private equity firms. In our brave new financialized economy renewed growth turns into renewed incomes primarily for the investment class. The stock market will rise but jobs and incomes won't. The traditional capitalist slump-recovery process died more than a decade ago. Adam Smith's invisible hand no longer produces shared prosperity -- instead it picks our pockets.
Waiting for the Political Pendulum to Swing
Second, we are told how America is essentially a moderate country -- how there's a kind of invisible political pendulum that swings from the extremes back to the sensible center. When the left or the Tea Party gets too wild, the center supposedly pulls them back and common sense economics prevails. But this consoling media meme obscures the fact that our politics are moving ever more rightward. Moderate Democrats and Republicans today are to the right of Eisenhower, Nixon and even Herbert Hoover. They have already agreed to cut the very entitlements that are needed to help alleviate poverty. In fact, they have agreed it's quite OK for America to have 442 billionaires and also have 22.6% of its children living in poverty. The sensible center now sees its role as forging a "compromise" on how much to cut food stamps and other supports for the poor.
Obviously, both political parties lose little sleep worrying about economic injustices. Even most Democrats no longer have a serious game plan to eradicate poverty. That's considered to be 1960s stuff that doesn't make sense in a world where politicians have to make peace with at least some players in the billionaire class in order to survive. As for the poor, alas, they will always be with us.
America Leads the World
Not a day goes by without hearing about "American exceptionalism." We are told by our leaders and pundits that we are the best, the greatest, the mightiest and the most democratic of all nations. It is our mission in life to uphold justice and freedom around the world. But as this chart shows, when it comes to child poverty, we are just about dead last.
Why is that? Because in wealthy nations, children live in poverty if and only if that nation allows it. Our nation, the richest in history, has more than enough wealth to go from the bottom of this list to the top, right next to Finland, if only we decided to act justly.
A Simple Proposal to end Child Poverty
America has 442 billionaires with an average net worth of $4.2 billion each according to Forbes. That means collectively these 442 Americans have nearly $1.9 trillion in wealth.
During the current "recovery," these 442 billions saw their wealth rise on average by over 12 percent per year. What would have happened if those billionaires received only 6 percent a year and the other 6 percent were taxed away in order to pull all of our children out of poverty?
That would provide sufficient revenue so that each child now living in poverty would receive an extra $7,000 per year which would pull nearly all of their families above the poverty line. The 442 billionaires would not suffer. No one in their families would go hungry. No luxury goods or services would be out of reach. No cooks, maids, chauffeurs or pilots would have to be let go. The 442 billionaires would feel no pain at all -- not even an itch. As a result of this painless tax, America would eradicate childhood poverty overnight.
Dream on?
Of course, our simple proposal sounds insane in a world where austerity reigns supreme and where billionaires are immune from such redistributive proposals. But I wonder who is sane and who isn't. It seems utterly psychotic to live in a society that chooses to spread poverty to its young. It also seems psychotic to claim that cuts in food stamps are good for the poor while at the same time saying that it's quite OK for billionaires to pile up unearned, tax-sheltered income. The fact that we're putting up with all this should be driving us all insane.
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