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Tag Archives: wealth distribution

Plutocrats and Pitchforks

The word ‘revolution’ has throughout history been synonymous with the cry for equality and social change. The French Revolution of 1789, the Russian Revolution of 1917, the Cuban Revolution of 1959 to name a few, all began because the divide between the haves and the have nots became intolerable. In the examples above, social inequality was at historically high levels and getting worse by the day. Something had to happen and it did, much of it violent and bloody.

Revolutions were generally born of peasant unrest, dissatisfaction, a sense of betrayal by once revered heroes who were seduced by their own power and their accumulation of vast wealth. When that peasant dissatisfaction reached a tipping point, revolution became the only recourse.

Today the wealthiest 1% in our society enjoy a lifestyle that much of the 99% could not even imagine. Furthermore, the gap continues to widen such that the line between middle and lower class workers is now blurred, while the gap between middle and upper income levels grows wider and easier to see.

While any high functioning capitalist economy will always have inequality to some degree, the divide as it exists today is so geared toward greater wealth for the fewer that the middle class is in danger of disappearing altogether. The message for all those living in their gated compounds and ivory towers is, it cannot last.

Statistics are not needed to reinforce these claims. They simply confirm what the 99% already know. But, for the record, in 1980 in the USA, the top 1% controlled about 8% of the national income while the bottom 50% shared about 18%. Today, the top 1% share 20% of the national income while the bottom 50% share just 12%.

In Australia, similar comparisons are difficult to find but in measuring wealth by quintiles, the ABS found that in 2011 the top 20% of households owned 62% of the wealth while the bottom 20% held less than 1%. In fact the top 20% held more wealth than the rest combined. The conclusion was that wealth inequality was rising fast.

Free market capitalism in its present form is no longer a recipe for a sustained, prosperous, happy, healthy society. Today, capitalism is synonymous with inequality, unfairness and discrimination. With today’s capitalism we are drifting toward feudalism.

trickle down Inequality has grown so dramatically over the past thirty years that our once great egalitarian Australia of the 1960s and ’70s has all but disappeared. And to quote Joseph Stiglitz, “one of the major culprits has been trickle-down economics—the idea that the government can just step back and if the rich get richer and use their talents and resources to create jobs, everyone will benefit. It just doesn’t work; the historical data now proves that.”

If ever world leaders had an opportunity to revolutionise capitalism it was in the aftermath of the Global Financial Crisis (GFC). Just six years on from that incredible opportunity, we can see they have failed and have done so, spectacularly.

Bank bailouts without conditions will be a dark legacy for Barack Obama in an otherwise reasonable presidency and now the opportunity has all but passed. The US stock market has not just recovered but surpassed pre 2008 lows. The rich are richer and the poor are poorer in far greater numbers than before. For the 1%, the plutocrats, it’s business as usual.

The Reagan trickle-down effect is back with a vengeance and is now the hallmark of the present Australian government despite a plethora of information, data, and recent history to demonstrate its failure. They still expect business to lead a national recovery with investment in goods and services. What they don’t get, is that an underutilised workforce cannot afford it. Business knows this. That is why they will not commit.

The government cannot see that a vibrant, active, well-educated workforce is an essential component of a strong, robust economy; a component that creates demand that results in stronger growth, stronger investment and stronger taxes.

Blinded by the advice from bankers, investment houses and those whose fortunes are derived from manipulating stock markets and overvaluing mortgage stocks, Tony Abbott and Joe Hockey are no more than a mouthpiece for the 1%; the plutocrats. They are victims of their own self-serving ideology. While they are in power nothing will change, no improvement for the 99% will ever eventuate.

nick Any realistic observer can see that this trend is unsustainable and its future unpredictable. While the plutocrats continue to build their wealth, billionaire Nick Hanauer thinks they might inherit pitchforks.

While the 1% enjoy their wealth, blind to the signs of desperation around them, a single act of defiance by someone desperate and destitute enough could mobilise thousands in support and roll across the country like a tidal wave. The 1% could be caught like the frog in the saucepan unaware the water has reached boiling point. But by then, it will be too late.

I don’t think anyone in government, least of all Scott Morrison, anticipated riots leading to murder and self-immolation when he embarked upon his ruthless policy of deprivation detention on Manus Island. That crept up without warning. And now, I don’t think either he or his party foresee all the possible outcomes if they embark upon a policy of reducing welfare at a time of fiscal contraction.

He may not even care but he could well be responsible for creating a new underclass that has no respect for law and order. He could well extend existing poverty further into the realm of the middle class, bringing welfare agencies to their knees trying to cope. This is where that one defiant act could likely emerge.

pitchforks History is littered with such circumstances and the consequences of doing nothing. The 1% won’t see it coming, but governments should. And they should do something to stop it, or they too will feel the pitchforks. They can plead ignorance but that won’t save them.

They can say their hands were tied but their complicity will be all too obvious. The plutocrats will never change voluntarily. The government is running out of time to do it for them.

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Capitalism isn’t democracy

tax

Photo: signgenerators.com

Capitalism is an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations.

Democracy is government by the people; a form of government in which the supreme power is vested in the people and exercised directly by them or by their elected agents under a free electoral system.

In our current political climate, these systems have become incompatible. When governments put the interest of private corporations first they can no longer adequately protect the rights of ordinary citizens or the interests of future generations and the environment.

Political institutions function in a world in which power is linked to property. Economic power can affect democracy, but the masses cannot infiltrate the bastions of capitalism. The wealthy have been able to buy power and distort democracy to suit their agenda where the interests of the few have overwhelmed the interests of the many.

The Right would have us believe that “small” government is best and that only privatization, deregulation, and tax cuts can save us. In a capitalist democracy, the state is a dispenser of many valuable prizes. Whoever amasses the most political power wins the most valuable prizes. The rewards include property rights, friendly regulators, subsidies, tax breaks, and free or cheap use of the commons. The notion that the state promotes “the common good” is sadly naive.

Profit-maximizing corporations dominate our economy. The only obvious counterweight is government, yet government is dominated by these same corporations. Corporations are decimating their old adversary, unions, and have turned the media into their mouthpiece.

Unlike many other countries, we have very few restrictions on paid political advertising and donations to political parties and lobby groups. As politicians have increasingly turned to advertising, image consultants, and spin doctors (like the odious Mark Textor), and begun forming policy on the basis of polls, the influence of donors and message control has grown.

Where are the politicians who have the courage to stand up to these corporations and the obscenely rich individuals whose wealth has been growing at an exponential rate while so much of humanity languishes in poverty? Where are the elected representatives who will make decisions for the common good and the future?

Unless corporations can be convinced to be driven by something other than profit, which is highly unlikely, we must have government regulation to protect us and to provide the services and safety net that will lift the well-being of all Australians. And we must have someone who has the chutzpah to demand a fair go.

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Help, I’m sinking

Image by abc.net.au

Image by abc.net.au

In a press conference today, Joe Hockey repeated his catchphrase yet again:

“Lift the tide and all boats will rise”

Well I’m sorry Mr Hockey but the figures don’t back you up on that theory.

In August last year, the Australian Bureau of Statistics released the statistics on Household Wealth and Wealth Distribution, Australia, 2011–12.

The ABS reported that:

“While the mean (average) household net worth of all households in Australia in 2011-12 was $728,000, the median (i.e. the mid-point when all households are ranked in ascending order of net worth) was substantially lower at $434,000 … This difference reflects the asymmetric distribution of wealth between households, where a relatively small number of households had high net worth and a relatively large number of households had low net worth.”

Some rather disturbing statistics:

  • Between 1980 and 2008, 22 per cent of all growth in Australia’s household income went to the richest 1 per cent.
  • The richest 10 per cent of Australians have gained almost 50 per cent of the growth in income over the past three decades.
  • The top 25 per cent had 60.8 per cent of total net worth in 2011-12.
  • The number of Australian millionaires increased by 38,000 to 1.123 million people.
  • From 2003-04 to 2011-12, the top 25% enjoyed a 28.3 per cent growth in their net worth while the bottom 25 per cent had an overall rise in net worth of 2.5 per cent
  • The net worth of the households at the top of the 80th percentile was 11.6 times higher than the net worth of the households at the top of the 20th percentile

Despite years of unprecedented growth and wealth creation, poverty in Australia remains a persistent problem with an estimated 2,265,000 people or 12.8% of all people living below the internationally accepted poverty line used to measure financial hardship in wealthy countries.

The Newstart Allowance has not been increased in real terms since 1994 so households relying on it have been falling further behind community living standards and into poverty. There are over 600,000 children living in families below the poverty line. About half of those children are in sole parent families, and one quarter of people in sole parent families are living below the poverty line.

Joe’s idea of “trickle down” economics has been tried in America, championed by Ronald Reagan. So how did that work?

In 1976, the top 1 per cent of Americans held 19.9 per cent of total wealth in the US. In 2007, they held 34.6 per cent and by 2010 they held 35.4 per cent. In other words, the top 1 per cent have increased their share of total wealth. In 1983, the bottom 80 per cent had 18.7 per cent of total net worth. By 2010, that share had fallen to 11.1 per cent.

Once again we see that while the rich get richer the poor get poorer, and every policy direction this government is taking is designed to increase that gap, despite income inequity having been identified as one of the greatest economic crises facing the world today.

This suggests that some refocusing of the debate is required away from those at the very top of the income distribution towards those at the very bottom. The Australian Social Inclusion Board estimates (using a variety of indicators) that 5 per cent (around 640,000 people) of Australians aged between 18 and 64 have multiple disadvantages. A greater focus on understanding and tackling multiple and entrenched disadvantage is critical in terms of improving overall wellbeing in Australia

It appears to me that that the rising tide of bullshit is designed to trickle down by pissing on the poor.

 610 total views