Response to Tansy_Gold (Original post)
Mon Sep 16, 2013, 10:10 PM
Demeter (80,180 posts)
3. We've Got a Billionaire Bailout Society—And the 99% May Never Recover From It In Our Lifetimes
The odds are that we in the bottom 99 percent may never see a recovery in our lifetimes. That's because our nation has evolved into something entirely new: a billionaire bailout society. We are entering a disastrous new era in which all the economic gains go to the top 1 percent, according to data from economists Emmanuel Saez and Thomas Piketty. They report that, "Top 1% incomes grew by 31.4% while bottom 99% incomes grew only by 0.4% from 2009 to 2012. Hence, the top 1% captured 95% of the income gains in the first three years of the recovery.... In sum, top 1% incomes are close to full recovery while bottom 99% incomes have hardly started to recover." (In 2012, $394,000 is the cutoff to make it into the top 1 percent.)
We see in vivid detail what the new American order looks like. The top 1 percent live in another economic universe of high finance that sucks the wealth from the rest of us. In their world, banks (owned by and for the top 1%) are able to grow larger and larger so there is no chance they will be allowed to fail, even after these same banks took down the economy. (In 1965 they had assets equal to 17% percent of the U.S. economy. Today it's more than 65% percent.) Free from any meaningful controls, financial gambling (called proprietary trading in polite circles) is now the dominant activity within our largest banks. In fact, in these too-big-to-fail banks, more money goes to financial gambling than to loans for businesses and consumers. These are not banks—they are rigged casinos for the rich. The upside from these corrupt pursuits are kept by the top fraction of the 1 percent, while the 99 percent hold the bag when those phony bets crash the economy. And who among us doesn't think that will happen again?
Regulation is hapless as billions of dollars slosh through the political troughs. Serious enforcement is virtually non-existent because the enforcers fear that the entire financial system will fail should these criminal banks be prosecuted. Every national policy from the bailouts to "quantitative easing" has further funneled money to the super-rich. Meanwhile, the rest of us are told to plod along until jobs miraculously appear and our incomes finally rise. Dream on. In sum, our new economic era is characterized by the supremacy of financial capital which vacuums up the productive wealth of the nation, and then uses the nation's wealth as an insurance policy to pay for its inevitable losses.
Entering Uncharted Territory
The billionaire bailout society is quite different than previous gilded ages. This can be seen clearly in comparing the aftermath of the recent Great Recession to what took place during the Great Depression. We need to remember that after the crash of 1929, America went on a crusade to rescue the economy by controlling Wall Street, supporting unions, and fundamentally rebuilding our physical and educational infrastructure. As Harvard economist Claudia Golden put it, a Great Compression took place during which the gap between the rich and the rest of us came down—not by destroying wealth but by making sure working people got their fair share. In 1929, the top 1% grabbed 23 percent of the nation's income. By the late 1960s it was below 9 percent. During the Great Compression we had our feet planted firmly on the neck of Wall Street. Financial gambling was held to a minimum. Incomes were no higher on Wall Street than in the productive economy. Finance and production more or less were in balance. But after deregulation set in the late 1970s, the income gap began to accelerate yet again, returning to the unconscionable levels of the late 1920s....There is no Great Compression emerging this time around. We're not heading toward greater income equality. We're not building up the middle class or supporting unionization. We're not eradicating poverty and hunger. We're not expanding educational opportunity. We're not rebuilding infrastructure. Nothing we're doing looks anything like the society we built from the New Deal through the 1960s. We're not doing any of the things that would lead to a more stable and just economy. In fact, we're doing just the opposite, which means the billionaire bailout society will become even more firmly entrenched.
How do we dismantle the billionaire bailout society?
Here are some key facts we all should know about banks and public banks:
1. There is only one public state bank in the country—the Bank of North Dakota—and it's phenomenally successful. A relic from the Populist era, the BND invests in the people of North Dakota. It doesn't play with derivatives or high-risk mortgages so it didn't get burned during the crash. It doesn't pay its executives high salaries (which are lower than what chauffeurs get on Wall Street). It just builds the state's economy and returns a profit year after year to the people of North Dakota. As a result, the state has the lowest unemployment rate in the country (even after taking into account their oil boom). And this so-called socialist bank resides in one of the most conservative states in the country.
2. Right now, we taxpayers funnel over $1 trillion of our money into Wall Street banks when we pay our state and local taxes and fees. That money does not go into vaults in city hall or the state capital. It goes to Wall Street banks which at the moment are the only ones large enough to provide all the services required...except in North Dakota. There state revenues run through the state bank which in turns supports 80 community banks. If that happened in the other 49 states, we could create more than 10 million additional domestic jobs. Remember, a state bank invests in its state. Wall Street has no allegiance to any state or country.
3. State banks are the answer to funding infrastructure projects. Right now Wall Street preys upon state and local governments that need to borrow money to build schools, roads and other critical public projects. Those loans comes with enormous fees and interest rates that often double and triple the cost of these projects. Not so with public banks, whose job it is to build up the state rather than rip it off.
What will it take to win? READ IT AT THE LINK!
Les Leopold is the director of the Labor Institute in New York. His latest book is How to Make a Million Dollars an Hour: Why Hedge Funds Get Away with Siphoning off America's Wealth (Wiley 2013).
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