Thursday, July 03, 2008

McCain's economy, wondrous developments

Expect trends to continue (if Obama decides to protect the rich, not buck the 30-year-old tide, that is):
Their wages may be falling, but one thing has certainly increased as young Americans struggle to maintain a middle-class lifestyle: their debt burdens. In households headed by someone aged twenty-five to thirty-four, average debt has climbed to over $55,000, up 70 percent from the 1980s (after accounting for inflation). Indeed the average debt load for young Americans--comprised largely of housing debt and college loans--actually exceeds their annual household income, a sharp change from two decades ago.

And the safety net for young workers is in sorry shape. All told, more than one-fourth of the 45 million workers under age thirty-five do not have health insurance from any source--by far the highest rate of any age group. As for young workers with just high school degrees, two-thirds do not receive health coverage in their entry-level jobs, up from just over one-third in 1979.

Corporate America's increasing tightfistedness over pensions is also hitting young workers hard. The share of workers twenty-five to thirty-four participating in an employer-sponsored pension plan or 401(k) slid to 42 percent in 2005, down from 50 percent five years earlier.

As Anya Kamenetz points out in her book Generation Debt, the Internet Generation will enter the prime of life in a nation as gray as Florida is today, and as a result that generation will face an unprecedented burden in sustaining the Social Security system. In 1960, sixteen Americans were working for each retiree. Today there are four active workers contributing taxes to Social Security for each retiree. In 2030, there are expected to be just two-and-a-half workers per retiree. Today's young workers may well face a double squeeze--to keep Social Security solvent, Congress might increase the younger generation's payroll taxes as well as trim their Social Security benefits. Also disturbing is the fact that the folks in Washington are building mountainous budget deficits, and they're simply passing the bill to their children's and grandchildren's generations. How fair is that?

All these trends have fostered considerable pessimism. Forty percent of voters surveyed in exit polls conducted on Election Day, 2006 said that life would be worse for the next generation, while just 30 percent said it would be better. Still, it is important to remember that some things are better for the younger generation--longer life spans, lower crime rates and wondrous developments like the Internet.

A special issue of The Nation states the obvious well:
Over the past three decades, market-worshiping politicians and their corporate backers have engineered the most colossal redistribution of wealth in modern world history, a redistribution from the bottom up, from working people to a tiny global elite.[...]

A worker making $10 an hour would have to labor for more than 10,000 years to earn what one of the 400 richest Americans pocketed in 2005.

How vast has our parallel universe of the ultrarich become? The Wall Street Journal now dedicates a full-time beat reporter, Robert Frank, to cover what he calls Richistan. Richistan did not suddenly appear on the American scene. Our top-heavy era has evolved from a heavily bankrolled effort by conservatives and corporations to instill blind faith in the market as the magic elixir that can solve any problem. This three-decade war against common sense has preached that tax cuts for the rich help the poor, that labor unions keep workers from prospering, that regulations protecting consumers attack freedom. Duly inspired, our elected officials have rewritten the rules that run our economy--on taxes and trade, on wage policies and public spending--to benefit wealthy asset owners and global corporations.

To reverse this reckless course, we need to change our nation's dominant political narrative and restore faith in the critical role that government must play to protect the common good. But we can't stop there. We need to confront directly the threat posed by this inequality.[...]

The Senate couldn't even manage to eliminate a tax loophole for gazillionaire hedge-fund managers last year. And even progressive wish lists tend to call only for a return to pre-George W. Bush tax rates, a step that would undo a mere one-sixth of the rise in income inequality we have experienced since the late 1970s, according to the Brookings Institution.

Future historians, we have no doubt, will note a certain irony here. The "real problems" we Americans face owe their intensity--and often their origin--to issues of income and wealth distribution our society simply refuses to address.

For more sophisticated analysis and links, please see The Existence Machine.

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