|Gains Of Very Top Earners Dwarf All Others
In 1929, before the Great Depression, Marriner Eccles described a lack of "effective demand" by saying: "The United States economy is like a poker game where the chips have become concentrated in fewer and fewer hands, and where the other fellows can stay in the game only by borrowing. When their credit runs out the game will stop. The game stopped when players ran out of chips". Eccles later became FDR's man at the Fed and today the building in which the Federal Reserve resides carries his name, Eccles was appointed chairman (called “governor” before 1935) of the Federal Reserve Board on November 15, 1934. The important thing to take away from his statement that is still relevant today is that inequality is toxic.
|CEO Compensation Has Grown Extreme
The reason for this rise in profits extends far beyond such things as advances in technology but to outsourcing, offshoring and even the cost of real estate and rents in different regions of the country. The historically low-interest rates of today that many people tout as our salvation also fuel inequality and mask many hidden costs that potentially will come back to haunt the economy. Adjusted for real-world inflation many households have seen their net incomes and wealth decline in the past decade. Despite the endless media propaganda about “growth” and “recovery,” it is self-evident to anyone who bothers to look closely that the "economic Pie" is shrinking and that the rich and powerful are increasing grabbing a larger slice. It should be noted these low-interest rates are not shared equally among society. Those with bad credit, low income or few connections pay much higher rates than those advertised, this again drives inequality.
|Inequality, Injustice, Exploitation, Corruption
Inequality breeds resentment and anger which are large components of polarization and are often used as weapons in class warfare. A good example of this is how former President Obama often energized his supporters by referring to "millionaires and billionaires" implying a similarity that often does not exist. By creating the image that anyone with money is in a class apart it becomes easier to demonize them as exploiters and the cause of the problems and burdens faced by so many people today. The fear of slipping further down the economic ladder also fans the fears held by so many Americans plagued by an uncertain future in a fast-changing world.