Sorry to deliver the news, but it’s time to worry about the next crash.
The combination of stagnant wages with most economic gains going to the top is once again endangering the economy.
Most Americans are still living in the shadow of the Great Recession that started in December 2007 and officially ended in June 2009. More have jobs, to be sure. But they haven’t seen any rise in their wages, adjusted for inflation.
Many are worse off due to the escalating costs of housing, healthcare, and education. And the value of whatever assets they own is less than in 2007.Which suggests we’re careening toward the same sort of crash we had then, and possibly as bad as 1929.
Clear away the financial rubble from those two former crashes and you’d see they both followed upon widening imbalances between the capacity of most people to buy, and what they as workers could produce. Each of these imbalances finally tipped the economy over.
The same imbalance has been growing again. The richest 1 percent of Americans now takes home about 20 percent of total income, and owns over 40 percent of the nation’s wealth.
These are close to the peaks of 1928 and 2007.
The underlying problem isn’t that Americans have been living beyond their means. It’s that their means haven’t been keeping up with the growing economy. Most gains have gone to the top.
But the rich only spend a small fraction of what they earn. The economy depends on the spending of middle and working class families.
By the first quarter of this year, household debt was at an all-time high of $13.2 trillion. Almost 80 percent of Americans are now living paycheck to paycheck.
It was similar in the years leading up to the crash of 2007. Between 1983 and 2007, household debt soared while most economic gains went to the top. If the majority of households had taken home a larger share, they wouldn’t have needed to go so deeply into debt.
Similarly, between 1913 and 1928, the ratio of personal debt to the total national economy nearly doubled. After the 1929 crash, the government invented new ways to boost wages – Social Security, unemployment insurance, overtime pay, a minimum wage, the requirement that employers bargain with labor unions, and, finally, a full-employment program called World War II.
After the 2007 crash, the government bailed out the banks and pumped enough money into the economy to contain the slide. But apart from the Affordable Care Act, nothing was done to address the underlying problem of stagnant wages.
Trump and his Republican enablers are now reversing regulations put in place to stop Wall Street’s excessively risky lending.
But Trump’s real contributions to the next crash are his sabotage of the Affordable Care Act, rollback of overtime pay, burdens on labor organizing, tax reductions for corporations and the wealthy but not for most workers, cuts in programs for the poor, and proposed cuts in Medicare and Medicaid – all of which put more stress on the paychecks of most Americans.
Ten years after the start of the Great Recession, it’s important to understand that the real root of the collapse wasn’t a banking crisis. It was the growing imbalance between consumer spending and total output – brought on by stagnant wages and widening inequality.
September 15 will mark the tenth anniversary
of the collapse of Lehman Brothers and near
meltdown of Wall Street, followed by the Great Recession.
Since hitting bottom in 2009, the economy has grown steadily, the stock market has soared, and corporate profits have ballooned.
But most Americans are still living in the shadow
of the Great Recession. More have jobs, to be sure. But they haven’t seen any rise
in their wages, adjusted for inflation.
Many are worse off due to the escalating costs of
housing, healthcare, and education. And the value of whatever assets
they own is less than in 2007.
Last year, about 40 percent of American families
struggled to meet at least one basic need – food, health care, housing or
utilities, according to an Urban Institute survey.
All of which suggests we’re
careening toward the same sort of crash we had in 2008, and possibly as bad as 1929.
Clear away the financial rubble from
those two former crashes and you’d see they both followed upon widening imbalances between the capacity of most people to buy, and what they as workers could
produce. Each of these imbalances finally tipped the economy over.
The same imbalance has
been growing again. The richest 1 percent of Americans now takes home about 20 percent of total income, and owns over 40 percent of the nation’s wealth.
These are close to the peaks of 1928 and 2007.
The U.S. economy crashes
when it becomes too top heavy because the economy depends on consumer spending
to keep it going, yet the rich don’t spend nearly as much of their income as
the middle class and the poor.
For a time, the middle
class and poor can keep the economy going nonetheless by borrowing. But, as in 1929 and 2008, debt bubbles eventually burst.
We’re getting dangerously
close. By the first
quarter of this year, household debt was at an all-time high of $13.2 trillion.
Almost 80
percent of Americans are now living paycheck to paycheck. In a recent Federal
Reserve survey, 40 percent of Americans said they wouldn’t be able to pay their
bills if faced with a $400 emergency.
They’ve
managed their debts because interest rates have remained low. But the days of low rates are coming to an end.
The underlying problem isn’t that Americans have been living beyond their means. It’s that their
means haven’t been keeping up with the growing economy. Most gains have gone to
the top.
It was similar
in the years leading up to the crash of 2008. Between 1983 and 2007, household
debt soared while most economic gains went to the top. Had the majority of households
taken home a larger share, they wouldn’t have needed to go so deeply into debt.
Similarly,
between 1913 and 1928, the ratio of personal debt to the total national
economy nearly doubled. As Mariner
Eccles, chairman of the Federal Reserve Board from 1934 to 1948, explained: “As
in a poker game where the chips were concentrated in fewer and fewer hands, the
other fellows could stay in the game only by borrowing.”
Eventually
there were “no more poker chips to be loaned on credit,” Eccles said, and “when
… credit ran out, the game stopped.”
After the
1929 crash, the government invented new ways to boost wages – Social Security,
unemployment insurance, overtime pay, a minimum wage, the requirement that employers
bargain with labor unions, and, finally, a full-employment program called World
War II.
After the
2008 crash, the government bailed out the banks and pumped enough money into
the economy to contain the slide. But apart from the Affordable Care Act, nothing
was done to address the underlying problem of stagnant wages.
Trump and
his Republican enablers are now reversing regulations put in place to stop
Wall Street’s excessively risky lending.
But Trump’s real contributions to
the next crash are his sabotage of the Affordable Care Act, rollback of overtime
pay, burdens on labor organizing, tax reductions for corporations and the
wealthy but not for most workers, cuts in programs for the poor, and proposed cuts in Medicare and
Medicaid – all of which put more stress on the paychecks of most
Americans.
Ten years after Lehman Brothers collapsed,
it’s important to understand that the real root of the Great Recession wasn’t a
banking crisis. It was the growing imbalance between consumer spending and
total output – brought on by stagnant wages and widening inequality.
Of course, it’s not too weird given the conversation about Rose and Kit. Britain is a class driven society. Imagine you leave school and you decide you want to be an actor. You’d probably have to move to London where rent is astronomically high. For the average person, they couldn’t afford rent in London on an acting salary so they have to get another job. They would probably end up on a zero hours contract or a low skilled job because they need time to do their acting. That means their focus is divided, they have less time to invest in acting, and eventually they’re likely to come to a point where they have to make a choice as the lifestyle isn’t sustainable. But for someone from the upper classes, they’re much more likely to have someone who will pay for their rent or provide a living allowance. That means they don’t have to get that second job, they can focus entirely on acting. They can stay in London for years until they make it big because there’s less worry. Does that make sense? A lot of career paths will require you to do unpaid internships or have a very low wage for various reasons and unless you have a family who can financially support you for as long as it takes to do it then it’s going to be much much harder for you.
There’s also a really interesting difference in terms of aspirations. So for example I was watching Frankie Boyle’s New World Order yesterday (it’s a satirical panel show, not important). A comedian who I love called Romesh Ranganathan was talking about how he used to be a teacher at an Outstanding school (that’s the best rating a school can be given by government inspectors) and gave it up to teach at a school that had just come out of special measures (that’s basically the worst rating a school can have). Anyway, he said that at his Outstanding school he ran a parents evening where they talked about applying for university, bursaries and loans etc etc. Then he tried to do the same thing at the special measures school and all the parents were incredibly hostile as they thought university was pointless and for snobs and that their child should get a job straight away. I’m not saying that those parents are wrong- I think that their concerns come out of a genuine place and are driven by our class based society- but it just shows you how different things can be. I went to private school and the one girl who wanted to go straight in to a job instead of uni was “persuaded” not to by the school staff. But in other schools there’s no expectation that most pupils will go to university. It’s all part of the same issue.
Fewer GPs are choosing to work in poorer areas but more are joining surgeries that look after wealthier populations, new official figures reveal.
The exodus, uncovered by Labour MP Frank Field, is exacerbating the existing “under-doctoring” of deprived populations – the lack of family doctors in places where poorer people live.
Experts said the widening divide between rich and poor areas in GP numbers – which is one of England’s starkest health inequalities – would force the least well-off to wait longer for an appointment, even though they are generally sicker and die earlier than the rest of the population.
“A decade ago the country was beginning to make some serious inroads into the under-doctoring of the poorest areas. What these grim figures show is that in recent years that progress has not only stalled, but actually gone into reverse,” Field told the Observer.
“The most worrying trend here is the number of GPs ceasing to serve people towards the bottom of the pile, while at the same time people in the wealthiest areas have benefited from an even better service. Vulnerable people are having to suffer in silence without being able to see a GP.
“Here’s another example of everything going in the wrong direction if our goal is to equalise health opportunities and outcomes. It is a new appalling face of inequality in modern Britain.”
There were 8,207 GPs working in areas containing the most deprived quintile of the population in England in 2008. But by last year that number had fallen to 7,696 – a drop of 511 – according to the response to a written parliamentary question Field asked recently.
But over the same decade the number of family doctors working in the most prosperous fifth of the population increased from 4,058 to 4,192 – a rise of 134, public health minister Steve Brine told Field.
Fuck keeping affluent people alive, help us instead
Working off of the labor of others, only there because of being born into capital and pre-existing familial or business relations? Yep
And people still try to defend this shit with ‘Well they MUST work REALLY HARD to earn THAT kind of money!!!’
I assure you they don’t. I assure you the people earning the least money are working the most. I don’t see CEO’s doing 60 hour weeks just to keep food on the table. They don’t do that, because they don’t have to, because they get paid so much they aren’t desperate enough to have to.
If you follow me, reblog this. It is an important piece of data. I would love to see one for the annual tax expenditure of minimum wage versus CEO’s as a proportion of their annual income.
This is the aggregation of labor. This is what it looks like. It has happened before. It will likely happen again unless it is changed.
For many poor families in America, eviction is a real and ongoing threat. Sociologist Matthew Desmond estimates that approximately 2.3 million evictions were filed in the U.S. in 2016 — a rate of four every minute.
“Eviction isn’t just a condition of poverty; it’s a cause of poverty,” Desmond says. “Eviction is a direct cause of homelessness, but it also is a cause of residential instability, school instability [and] community instability.”
Desmond won a Pulitzer Prize in 2017 for his book, Evicted: Poverty and Profit in the American City. His latest project is The Eviction Lab, a team of researchers and students at Princeton University dedicated to amassing the nation’s first-ever database of eviction. To date, the Lab had collected 83 million records from 48 states and the District of Columbia.
“We’re in the middle of a housing crisis and that means more and more people are giving more and more of their income to rent and utilities,” Desmond says. “Our hope is that we can take this problem that’s been in the dark and bring it into the light.”
In a recent podcast interview with David Axelrod, former NBA star Charles Barkley talks about how NBA legend Bill Russell persuaded Barkley to stop publicly complaining about how much income tax he paid (transcription by Steven Greenhouse).
Bill Russell called me one time… He says, “Charles Barkley.” I said, “Yes, sir, Mr. Russell.”
“You grew up in Alabama. Right?” I said, “Yes, sir.”
He says, “Did you go to public school?” I said, “Yes, sir.”
He says, “Did the cops ever come to your neighborhood?” I said, “Yes sir.”
He said, “Any of the houses ever on fire and the firemen come?” I said, “Yes, sir.”
He said, “I don’t want to see your black ass on TV complaining about your taxes anymore.” I says, “What do you mean?”
He says, “So now that you got money you don’t want to help other people out, but when you were poor, other people took care of you.” And I says, “You know what, Mr. Russell, you will never hear me complain about my taxes again.”
And it was a very interesting lesson for me, because I do think rich people should pay more taxes. I’m blessed to be one of them, and we should pay more in taxes. I learned my lesson. I never complain about taxes.
I think Bill Russell needs to make a few phone calls to Congress…
House of Brat 