How Redistribution to the Rich Has Broken the Back of America
By Paul Buchheit / truth-out.org

Conservative columnist Thomas Sowell recently declared, "The history of the 20th century is full of examples of countries that set out to redistribute wealth and ended up redistributing poverty."

Ironically for thinkers like him, the last 35 years have redistributed U.S. poverty by redistributing wealth to the rich. The middle class, once the backbone of a strong American society, has been broken, beaten down, pushed further and further toward poverty levels. Here are five well-documented ways that this has happened.

 

1. Income Redistribution Is Worse Than Usually Reported

We are told that the richest 1% doubled its share of income in the past thirty years. But from 1980 to 2006, according to both IRS and CBO figures, they nearly TRIPLED their share of income -- and that's after-tax income.

After 2006, the recession set everyone back temporarily, but in the first two years of the recovery, the richest 1% captured an incomprehensible 121% of the income gains (others saw debt rise faster than income).

 

2. Wealth Redistribution Is Even Worse Than Income Redistribution

In 1983 the poorest 47% of America owned about 2.5 percent of the nation's wealth, an average of $15,000 per family.

In 2009 the poorest 47% of America owned ZERO percent of the nation's wealth (their debt exceeded their assets).

Hard to believe it could get even worse. But because of the housing crisis and recession, the median family net worthdropped 40% between 2007 and 2010, while the richest Americans were regaining all their losses, and beginning an even steeper climb to the top.

Perhaps the biggest reason for this wealth redistribution is that the richest 10% own almost 90 percent of stocks excluding pensions. Since the recession, as the U.S. economy has "recovered," almost two-thirds of the gain was due to growth in the stock market.

 

3. The Redistribution of Productivity: Boosting Profits Rather Than Wages

From 2001 to 2011, total corporate profits more than doubled, to almost $2 trillion, while the corporate federal income tax rate was cut in half.

Incomes for 99% of Americans have declined since the recession, with the median household income dropping by 7.3 percent. Low-income jobs ($7.69 to $13.83 per hour) made up 1/5 of the jobs lost to the recession, but accounted for 3/5 of the jobs regained during the recovery.

 

4. Finance is Outrunning Society, and Taking the Money With Them

Americans once trusted the financial industry to safeguard their retirement money. But high tech has transformed high finance, at a much faster rate than the average investor can understand the changes.

Rolling Stone reports on the loss of $2.3 billion in pension money in Maine -- and the simultaneous billing of $2.1 billion by the hedge funds, private-equity funds and venture-capital funds. Another report tells of local funding crises caused by indecipherable "structured finance" deals sold by bankers with promises of big returns. In 2007 a hedge fund manager (John Paulson) made $3.7 billion by conspiring with Goldman Sachs to create packages of risky subprime mortgages, so that in anticipation of a housing crash he could use other people's money to bet against his personally designed sure-to-fail financial instruments.

The high-speed high-tech chicanery continues in the stock market, where programs can intercept 'buy' orders and in a few nanoseconds purchase the stock and then complete the 'buy' order for a few pennies more.

The bankers and hedgers and hustlers have made up new rules for making money, and our government representatives don't know what's going on, or don't care, or don't want to stop the financial games that ultimately generate campaign funds. Finance is quickly printing its own new money. In less than ten years, the world's wealth has approximately doubled, from $113 trillion to $223 trillion. Much of that is sheer speculation: the derivatives industry is worth over $1 quadrillion. But those speculative transactions get cashed in as real money.

It's a dizzying high-speed fantasyland that redistributes the real money of the middle class to the super-rich while inventing new forms of fees and bonuses along the way.

 

5. Redistribution Through Government Manipulation

There are numerous ways the very rich have cajoled and coerced and connived their Congressional partners to redistribute money in their direction. Like the lower capital gains rate. An astonishing 75 percent of dividend and capital gain subsidies go to the richest 1%. That's still not enough for hedge fund managers, who call their income "carried interest" instead of "income" to keep their tax rate at the capital gains rate. And even this small amount may not be paid. Hedge fund managers with incomes in the billions can pay ZERO income tax by deferring their profits through their companies indefinitely.

About two-thirds of nearly $1 trillion in individual "tax expenditures" (tax subsidies from special deductions, exemptions, exclusions, credits, capital gains, and loopholes) goes to the top quintile of taxpayers.

Banks have arranged to get lower interest rates, saving them $83 billion per year.

The U.S. federal government spends $100 billion a year on corporate welfare, almost half for big agriculture and the fossil fuel industry.

Another $150 billion per year goes for excessive pharmaceutical expenditures, as the drug companies have lobbied for laws to keep cheaper medications out of the hands of Americans.

 

Better to Call It Pre-Distribution

The term 'pre-distribution' better represents, according to political scientist Jacob Hacker, "the way in which the market distributes its rewards in the first place." Unregulated free-market capitalism simply makes the rich richer. Even if they have to break the backs of productive middle-class Americans to get their way.

(Image: Jared Rodriguez / t r u t h o u t; Adapted: Azureon2, bayat)

---

Paul Buchheit is a college teacher, a writer for progressive publications, and the founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org).

3.5 ·
1
What's Next
Trending Today
This Polish Ad Will Give You The Feels, For Reals
3 min · 23,527 views today · This is an ad for Allegro, a Polish company similar to eBay, and it's heartwarmingly lovely.
Time-Lapse Satellite Images Give a Startling Snapshot of Past 30 Years on Earth
2 min · 17,906 views today · Working with satellite images from NASA and the US Geological Survey, Google has created a searchable snapshot of the past 3 decades on Earth, creating startling time-lapses of...
Ten Ways We Misunderstand Children
Jan Hunt · 14,378 views today · 1. We expect children to be able to do things before they are ready. We ask an infant to keep quiet. We ask a 2-year-old to sit still. We ask a 3-year-old to clean his room...
The Problem with Hating Our Enemies
Charles Eisenstein · 7,865 views today · He who fights too long against dragons becomes a dragon himself; and if thou gaze too long into the abyss, the abyss will gaze into thee. —Nietzsche
How to Expose Trump's Dastardly Bait-And-Switch
Robert Borosage · 5,281 views today · Trump is not an economic populist, he’s just playing one on TV.
Swanage Protectors Camp - Campaigning to Stop New Oil and Gas Exploration in Dorset, UK
7 min · 3,101 views today · The planning permission for an exploratory oil rig near Swanage ran out on 3rd December 2016. A good day all round for those campaigning against the fossil fuel industry. Hear...
The Myth of Positivity: Why Your Pain Holds a Mighty Purpose
umair haque · 2,870 views today · Of all the great myths of contemporary life, one of the most toxic is positivity. It says: there are negative and positive emotions, and only the positive ones are worth...
Why You Should Stop Apologizing for Doing All That You Can
Kelly Hayes · 2,785 views today · I’ve noticed lately that a lot of allies and accomplices I talk to about NoDAPL and other struggles will name what they are trying to contribute to the cause, and then promptly...
Have You Heard of The Great Forgetting? It Happened 10,000 Years Ago & Completely Affects Your Life
Daniel Quinn · 2,077 views today · (Excerpted from the book, The Story of B) With every audience and every individual, I have to begin by making them see that the cultural self-awareness we inherit from our...
The Lid Is off, The Truth Is Coming Out
Charles Eisenstein · 1,856 views today · It is getting harder to keep a secret these days. The collective shadow of our society, once safely relegated to the dark basement of the unmentionable, is now exposed to...
Van Jones: Only a 'Love Army' Will Conquer Trump
Tim Dickinson · 1,785 views today · Though it's important to fight Trump's policies, "it's at the values level that we need to do a reset," says Jones
Sleaford Mods on Brexit Britain
4 min · 1,779 views today · In early 2014 the Guardian hailed duo Sleaford Mods as ‘the most uncompromising British protest music made in years’. Here, we go backstage at a Sleaford Mods gig in their...
6 Toxic Relationship Habits Most People Think Are Normal
Mark Manson · 1,561 views today · There’s no class in high school on how to not be a shitty boyfriend or girlfriend. Sure, they teach us the biology of sex, the legality of marriage, and maybe read a few...
15 Easy Things You Can Do to Help When You Feel Like Shit
Maritsa Patrinos · 1,411 views today · You don’t have to tackle it all at once.
Black on Black Crime Isn't a Myth
Donyae Coles · 1,358 views today · Let’s talk about Black on Black crime. Maybe you’ve heard about it on the news, specifically likely in regards to Black people murdered by other Black people. Perhaps you’ve...
John Lennon's "Imagine," Made Into a Comic Strip
John Lennon. Art by Pablo Stanley · 1,321 views today · This is easily the best comic strip ever made.  Pabl
David Graeber: We Need a Revolution in the Way We Think about "Work"
4 min · 1,248 views today · David Graeber on the Value of Work. Does the world really need neuroadvertisers, PR researchers and branding consultants? Renowned academic and coiner of the ‘we are the 99%’...
Today I Rise: This Beautiful Short Film Is Like a Love Poem For Your Heart and Soul
4 min · 1,036 views today · "The world is missing what I am ready to give: My Wisdom, My Sweetness, My Love and My hunger for Peace." "Where are you? Where are you, little girl with broken wings but full...
A Hauntingly Beautiful Short Film About Life and Death
5 min · 956 views today · The Life of Death is a touching handdrawn animation about the day Death fell in love with Life.
Dr. Maya Angelou: Love Liberates
5 min · 898 views today · Words to live by from Dr. Maya Angelou. Love each other.
Load More
Like us on Facebook?
How Redistribution to the Rich Has Broken the Back of America