Bottom Line Stuff
Our country has one of the highest economic inequality ratios among the developed nations. The United Nations and the CIA World Factbook regularly keep track of the Gini coefficient, used to measure wealth distribution in a given country. A very high coefficient is considered counter-productive to a healthy economy. We've heard, read about, experienced today's high unemployment, low wages, harder to find job benefits. Due to this situation, our middle class is under the strongest economic threat in several decades. How did all this come to be?
We've all heard statements such as "private enterprise is always better than government in handling so-called government enterprises" (from roads and post offices to schools and health care); the "government should have as few rules as possible in regulating the behavior of private enterprise " (from bankers and Wall Street traders to drug companies and mining corporations). We worry, even when we have a good job. We know that corporate down-sizing and outsourcing are facts of life and expect little to no protection against job loss. We hear "raising taxes will destroy the economy; better to cut expenses even if it hurts the middle class, the elderly, and the poor."
Go back three decades to the early 1980s and before. At the end of the 70s, median household income was $ 17,710 and the median price of a new house was $ 62,900 ( three or four times yearly income). The average cost of a car then was $ 7,200 or about five months pay. Gas was $ 1.19 per gallon. On the job front, attitudes were very different - workers were assured of health care and other benefits; layoffs were rare and needed strong legal justification. Minimum wage levels were regularly updated for cost of living. That amount was $ 3.10 per hour in 1980 and would be worth $ 8.46 in today's dollars. Current minimum wage, since 2009, is only $ 7.25 per hour. Before 2009 it was $ 5.15 per hour.
Today, if we look at 1980 income and major expenses in 2011 dollars, we see that median household income has increased by $ 1,100 but costs of a new house and a new car adds roughly $ 55,000 to our debt load vs 1980 mortgages. On top of that are health care costs which add another $ 7,000 per year to an average working family's out of pocket expenses. Even with current employer covered health care, forty one percent usually comes from employee premium and co-pay deductions. In 2011, over 17 percent of our fellow citizens had no health care coverage. Low wage workers are in a much tighter wage/ expense squeeze than they would have been in 1980. They are most likely not to have health care coverage and to be in need of food pantry /soup kitchen services in ever increasing numbers.
Certainly, technology has greatly improved since 1980 and has been part of an ever accelerating global intellectual revolution since the 1800s. Contrary to political claims that our economic policies since 1980 have greatly increased our economic well-being, we might beg to differ? What are the political differences between the two eras? Each country develops a set of economic policies based on their analysis of what helps create a healthy economy. In the United States, from the 1930s to the 1970s, the operating idea was to distribute wealth as much as possible - a healthy economy needs money at the bottom as well as at the top.
This was done through legislation protecting workers rights (living wages, benefits, job security, working conditions). Unionism was encouraged to help balance power between big business and their workers. Progressive taxation was used to ensure the government enough funds to meet their economic goals. Programs such as social security, medicare, medicaid, unemployment insurance, workman's compensation were established. Government invested tax money into public works, transportation infrastructure, public education, research and development projects.
The internet was one project developed with the help of several federal agencies and government funding. Low cost primary health care was available at community health clinics, relatively widespread especially in urban areas. Banks and other financial enterprises were regulated to protect investors and small depositors. Corporations were obliged to respect workers rights.
The 1980s brought a different economic mindset. More important than making sure wealth percolated through the system, was the idea of ever increasing economic growth. It no longer mattered how much wealth went to any group as long as the gross domestic product (GDP) kept increasing and this would float all economic boats. Critics called it "trickle-down" economics. Business, especially big business became enshrined as the most viable creator of jobs. Government created jobs (17 percent of 2007 employment) are considered of lesser value. The best role for government is to stay out of the way - in other words remove regulations on business enterprises which eventually included the removal of protections for workers rights, for consumers and for the environment.
Not only are corporations considered people, they are viewed as the most important people. Not coincidentally, corporations - especially in the financial sector, are the biggest source of lobbying and campaign financing for most political candidates. What do we do about this deck stacked against the 99 percent? Vote intelligently in 2012!