One in four Americans is employed to guard the wealth
|February 19, 2010||Posted by Joel S. Hirschhorn under Progress Report, The Progress Report|
One in four Americans is employed to guard the wealth
What’s It Going to Take to Share the Surplus?
More money keeps flowing up to the elite who pay more people to protect money flowing that upward way, even as productive jobs disappear. We trim, blend, and append four 2010 articles from: (1) BoingBoing, Feb 5, on wealth guards by Cory Doctorow; (2) contributor Joel S. Hirschhorn on unemployment; (3) contributor Polly Cleveland of Columbia U on federal debt; and (4) AlterNet, Feb 17, on wealth concentration by David DeGraw.
by C. Doctorow, by J. Hirschhorn, by P. Cleveland, and by D. DeGraw
- One in four Americans is employed to guard the wealth of the rich
Santa Fe Institute economist Samuel Bowles says one in four Americans is employed in “guard labor” that could otherwise be used to increase prosperity.
The greater the inequalities in a society, the more guard labor it requires, Bowles finds. This holds true among US states, with relatively unequal states like New Mexico employing a greater share of guard labor than relatively egalitarian states like Wisconsin.
A person born into this workforce has little chance of rising beyond it.
JJS: Or even rising at all it seems.
- The Real American Unemployment
Analyzing the unemployment national average in the last quarter of 2009 by household income reveals:
$150,000 or more, 3.2%
$100,000 to 149,999, 8%
$75,000 to $99,999, 5%
$60,000 to $75,000, 6.4%
$50,000 to $59,000, 7.8%
$40,000 to $49,000, 9%
$30,000 to $39,999, 12.2%
$20,000 to $29,999, 19.7%
$12,500 to $20,000, 19.1%
$12,499 or less, 30.8%
Ten times greater unemployment in the lowest class than in the highest class!
How can jobs be created for the lower economic classes?
JJS: Just asking that question is the biggest part of the problem. It presumes that the only way ordinary people can ever get any money is by working. It overlooks societys surplus — all the money we spend on the nature (and privileges) we use — which is trillions of dollars each year. Rather than share that commonwealth, most critics propose we redirect federal spending.
- Federal Debt: Good vs. Bad
The more debt the US sells, the more debt investors buy. Taking the safer path, they avoid riskier but productive private investment in small to medium business — precisely the investments that create the most jobs and products and services per dollar invested. The passive investments crowd out the productive ones.
Growing debt worsens inequality. Who owns most debt? banks, mutual funds, large corporations, wealthy individuals, and foreign governments. Public debt both cuts productive investment and tips distribution of wealth towards large passive entities.
As a percentage of GDP, inequality loosely parallels debt: at its lowest in the mid 1970s, rising steeply during the Reagan-Bush I era, leveling off during the Clinton era, and rising again during the Bush II era. When President Clinton paid down the debt, we enjoyed a brief economic boom that increased jobs and wages, especially at the lower end of the scale.
Consequently the stimulus — funded by growing the debt — may do more harm than good. Only where stimulus spending helps maintain vital services — health and education — can the benefits outweigh the economic drain of deficits. The pop Keynesian argument for the stimulus disregards both the smaller bang from the stimulus buck, and the damage from swelling the debt.
JJS: Investing in health and education is one argument. Saying that the funds must be tax dollars is a separate argument. If we let the politicians do it, the bureaucratic overhead and insider favors could cost more than simply disbursing a dividend to the citizenry and let them choose the doctors and teachers who suit them best. Otherwise, when you demand your favorite subsidy, you legitimize subsidies in general. Then everybody scrambles for the public pie, and insiders with clout get by far the lions share.
- The Richest 1% Have Captured America’s Wealth
While the bailout of Wall Street is hopefully a one-time event, it has swollen and could double our national debt, now at a record $12.3 trillion. The interest Americans pay on it is $500 billion every year.
In 2009, just over $1 trillion tax dollars were spent on the military. Yet 25% of military spending goes unaccounted for every year, not to mention the billions spent on overcharging and outright fraud. It’s safe to say that at least $350 billion was needlessly wasted.
Basic necessities — taxes, shelter, food, fuel, and medical bills — claim 92% of our income.
How much Americans pay for housing has risen to 34% of income.
In 2000, American families paid 7% of income on food and fuel. We now pay 20%.
On average, US citizens pay a record high 8% of their income on medical care, twice as much as other countries.
Plus interest rates on credit cards, prices for cable, internet, phone, bank fees, etc. rise nonstop.
Students graduate with record levels of debt from student loans. Meanwhile the unemployment rate among recent college graduates has risen higher than the national average.
“There are two ways to conquer and enslave a nation. One is by sword. The other is by debt.” — John Adams
Three years ago when workers lost on average 25% off their 401k, the wealth of the 400 richest Americans increased by $30 billion to $1.57 trillion, more than the combined net worth of 50% of the US population: 400 people have more wealth than 155 million peopled.
The economic top one percent of the population now owns over 70% of all financial assets, an all time record.
JJS: To bring down the cost of living, you cant spend taxes on social programs. To close the income gap, you cant make up jobs. What you can use is geonomics — recover and share the value of land and resources and privileges like limited liability, the essential feature of the corporate charter.
Use that revenue to pay citizens a dividend, as Tom Paine suggested. That flow of spending is our commonwealth and we should each be getting a share of it annually, just as Alaskans get a dividend check based on the value of Alaskan oil.
And quit taxing earnings. Then companies could afford to hire more workers (even though jobs are not an end in themselves) and savers would be more willing to invest in new enterprises. By shifting taxes off wages, onto rents, we could just about kiss the job fetish and the spending fetish goodbye.
Jeffery J. Smith runs the Forum on Geonomics.
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