Sunday, February 10, 2019

Inequality Is A Growing Pox Upon Our Economic System!

A More Recent Chart Hard To Find! (Click To Enlarge)
Unfortunately considering current trends we should not expect improvement in economic equality. In America, wealth inequality has soared in recent years and now stands at the worst it has been during the entire U.S. post-war period. Studies show that the U.S. middle class has been more “hollowed out” than originally thought in terms of income by manufacturing jobs and any gains made by the lower-middle class were sharply reversed after 2007. Using certain data we get the picture that racial economic-equality disparities are as bad as they were before the civil rights era. The fact is, driving a decent car doesn't make a person middle-class or economically equal, especially if they are up to their eyeballs in debt to do so. 

Economic inequality is not only a profound social and economic issue but flows into forces that affect financial-market stability. The saying "Talk Is Cheap" comes to mind when we search efforts to address the growing level of income polarization because while many people voice concern this thorny emotional problem is neither easy to solve or correct. A huge part of the problem is that those who really wield the power to bring about change, in reality, are often sheltered from the pain it causes and out of touch with what many people are forced to go through every day. Because of this, in truth, they see it as a low priority, consider other matters as always being more important or simply do not understand the nature of this beast. The fact it is so difficult to easily locate current charts, such as the one above, speaks volumes as to how this remains a back-burner issue.
  
In a piece titled; "The Morass That Swallowed the Middle Class" Matthew Shaw delves into how much of the inequality debate focuses on the gains of “the 1%,” and less attention has been paid to the economic well-being of what is broadly termed the middle class, which is all too often just lumped into the other “99%.” Of course, much of this centers around just how out of touch our "professional elite" are with the population and this spills over into the economy. By our professional elite, I refer to those who make the rules and their minions, their aids, the academics, the financial institutions, economists and the media, all of which have tied their wagon to the status quo. Conflict and corruption also enter into this picture as we often find that even those setting the rules also tend to want a bigger piece of the pie.

Controversial "To Say The Least"
The danger we as a society face, is that many voters encouraged by a bias media tend to reach for an easy answer to cure our economic ills and inequality. These are often proposed by those labeled, progressives, liberals, or simply left of center. To this point, fiery class-war populists, such as Elizabeth Warren, Bernie Sanders, and rising Democratic star Alexandria Ocasio-Cortez are making it exceedingly clear that they are socialist and promising voters a bigger piece of the economic. This is quite frightening considering the cost of these programs are unaffordable and any one of these people could, at some point, become our next president. If not one of them it will be a new media creation sporting a charismatic persona and claiming a "clear" path forward. 

The problem with socialism is that it doesn't work, all countries that have attempted to institute it have miserably failed leaving their economy's in ruins. Still, a great weakness in the democratic system is that even a motivated minority can overwhelm an unmotivated majority, and promises of generous programs have proven to be a great motivator. ABC 7 Chicago recently reported that a select number of Chicago families could start collecting a $1,000 check every month with no strings attached, according to a new proposal from a task force created by Mayor Emanuel. The pilot program proposed by the "Chicago Resilient Families Task Force", which is the latest incarnation of the "basic income and helicopter money" utopia that has gripped America's left in recent months is another example of our search for easy answers and completely ignores the already devastating financial Armageddon facing Chicago and the state of Illinois.   

While supporters of the program say by giving 1,000 struggling Chicagoan's $1,000 a month.to cover unexpected emergencies, increase their savings and improve their health. Experiments in several countries have demonstrated that basic income simply does not work to boost overall living standards or break the cycle of poverty, however, do not expect the argument to end here. Much of the misery the poor and even the 99% suffer is often self-inflicted or as a result of bad government policy gone astray. This is very evident in housing where government housing cherry-picks the best of the low-income renters providing them with very low rents and nice apartments while dumping the rest on the private sector. This drives up rental prices on everyone else. 

If the predictions of a set back in the economy unfold as many economists predict we may well see inequality surge because during such times it is the masses that suffer most during a financial collapse because they have little in the way financial reserves. History shows that a few of what we know as the .01% will take a hit but even after losing a great deal of wealth most will remain wealthy and basically unscathed while the same cannot be said of the average man or woman on the street. This is because if you view the economy as an economic battlefield, the rich and powerful carry an M16 while most of us are armed with only a stick. This translates into how the lack of investment options that many people have leaves them extremely vulnerable when an economic crisis does occur. 

Another factor still ready to upset the apple cart is the effects of robots displacing humans in the workforce. Robots are here and more are being deployed each day, soon this will prove to be a big deal. The topic of our future and culture always circles back and is directly linked to the issue of jobs vanishing as automation and an army of robots march into our workplace. Rest assured when push comes to shove those displaced from the job market will find they are only given enough to scrape by and ensure they remain docile and behave. If and when this becomes an issue conflict and violence will arise it is possible that someday they will be brought to heel by an army of robots designed to keep them under control. 

The reality that a vast majority of people face diminishing prospects is a concerning trend which was recently highlighted by the IMF in a report focused on data showing how middle-income households have continued moving down, rather than up, as income distribution in the United States has shifted since the 1970s. Part of the problem is that this trend of income inequality is also growing across the globe and no magic or silver bullet exists to address the conundrum brought about by the concentration of power and wealth. One thing is certain and those opposed to such solutions will rapidly testify that whatever actions society takes, those on the receiving end will complain that "It ain't enough."
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Footnote; This is one of several articles planned that argues, "Socialism would be great but it doesn't work." While we can embrace the idea of sharing more freely the simple fact is that many people are more willing to err on the side of receiving than giving and this makes it is incompatible with human nature. Man is often motivated by the fruit of his labor and the vision of creating something good.

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