THE ECONOMICS OF REVOLUTION
By David DeGraw
This is an adapted excerpt from my new book, The
Economics of Revolution.
Excerpt of the first section from David’s book, The
Economics of Revolution, with adaptions of Part 1 here,
and Part 2 here:
PART I
PEAK INEQUALITY: THE
.01% AND THE IMPOVERISHMENT OF SOCIETY
The
Ultra-Rich .01%
II: The Systematic Impoverishment of Society
III: Economic Slavery
IV: Hidden Wealth & Shadow Banking
V: The Aristocracy & The Death of Liberty
II: The Systematic Impoverishment of Society
III: Economic Slavery
IV: Hidden Wealth & Shadow Banking
V: The Aristocracy & The Death of Liberty
Declaration of Independence
“When in the course of human events, it become necessary
for one people to dissolve the political bands which have connected them with
another… a decent respect to the
opinions of mankind requires that they should declare the causes which impel them to the separation.”
An extensive analysis of economic conditions and government
policy reveals that the need for significant systemic change is now a mathematical
fact. Corruption, greed and economic inequality have reached a peak tipping
point. Due to the consolidation of wealth, the majority of the population
cannot generate enough income to keep up with the cost of living. In the
present economy, under current government policy, 70% of the population is now
sentenced to an impoverished existence.
LET’S TAKE AN IN-DEPTH LOOK AT THE EVIDENCE.
HERE ONLY POINT I and II of the 1st Part
OPEN http://daviddegraw.org/peak-inequality-the-01-and-the-impoverishment-of-society/ to read the rest. OR: The Economics
of Revolution, with adaptions of Part 1 here,
and Part 2 here
“There is no such a thing as the liberty or
effective power of an individual,Groups or class, except in relation to the
liberties, the effective powers,Of other individuals, groups or classes”
John Dewey: Liberty and Social Control.
To see how corrupt the United States government has become,
just follow the money. According to the most recent Federal
Reserve Flow of Funds report, US households currently have an all-time
high $82 trillion in overall wealth. If that wealth were spread out
evenly, every US household would now have $712k. However, as of the end
of 2013, the median household only had $56k in wealth. From 2007 – 2013,
overall wealth increased 26%, while the median household lost a shocking 43% of their wealth. If median wealth continues to
decline at this rate, over 50% of US households will be bankrupt within the
next decade.
The fact that the majority of households are losing so much
wealth in a time of record-breaking overall wealth demonstrates how
systemically corrupt the economy has become. To begin to grasp the scale
of corruption, let’s analyze how much wealth has been consolidated within the economic
top 1% of the population.
SEE GRAPH in the web above
The latest comprehensive look at wealth
distribution data reveals that the “ultra-rich” economic top 0.01% of US
households now has an all-time high 11.1% of overall wealth. The next tier, the
99.9% – 99.99% has 10.4%, and the top 99% – 99.9% has 18.3%. In total,
the top 1% now has an all-time high 39.8% of wealth.
When we correlate wealth distribution percentages with the
$82 trillion in overall wealth reported by the Federal Reserve, it reveals that
the top .01% has a stunning $9.1 trillion in wealth. In total, the top 1% has a
mind-blowing $32.6 trillion.
To begin to comprehend wealth of this magnitude, one
trillion is equal to 1000 billion. $32.6 trillion written out is
$32,600,000,000,000.00.
Having that much wealth consolidated within a mere 1% of the
population, while a record number of people toil in poverty and debt, is a crime
against humanity. For example, it would only cost 0.5% of the 1%’s
wealth to eliminate poverty nationwide. Also consider that
at least 40% of the 1%’s accounted for wealth is sitting idle.
That’s an astonishing $13 trillion in wealth hoarded away, unused.
Once you truly understand how much $32.6 trillion is, and
realize how just a fraction of that wealth could dramatically evolve society
for the benefit of all, the argument for significant systemic change is
solid. However, as scandalous as these statistics are, they do not factor in
trillions of dollars more in unaccounted for offshore wealth,
which makes the overall situation sound significantly better than it actually
is and hides the true depth of the crisis from popular consciousness. (We
will analyze hidden wealth in section
4.)
Looking toward the future, current trends reveal that the
rate in which inequality is growing is increasing rapidly. Overall wealth
increased by $1.5 trillion in the first quarter of 2014. If wealth keeps
increasing at the current rate, there will be an increase of $6 trillion in
2014. How will this wealth be distributed? If you look at income gains
since 2009, 95% of them have gone to the top 1%.
WE ARE THE 99.99%
There are now many people within the top 1% who are much
closer in wealth to the middle class than they are the ultra-rich. Greed has
grown so extreme that even within the top 1% inequality is soaring. The top 1%
of the 1%, the .01%, now has 28% of the 1%’s wealth. When you factor in
hidden wealth, they have an estimated 33% of the 1%’s wealth. An
individual must have over $100 million in wealth to be in the .01%.
In 1980, the richest .01% was already consolidating wealth
at a systemically unhealthy rate. Since then, they have more than
quadrupled their share of overall wealth. Meanwhile, households who fall
between the top 10% and the top 0.1% have actually been losing their share of
overall wealth.
As the ultra-rich .01% amasses unprecedented wealth, they
are forcing the overwhelming majority of the population into extreme economic
insecurity and ever-increasing debt.
“The war
against working people should be understood to be a real war.
Specifically
in the US, which happens to have a highly-conscious
business
class. They have long seen themselves as fighting a bitter
class-war,
except they don’t want anybody else to
know about it”
Noam Chomsky: “Propaganda and control of the American mind”
If you are struggling to get by and running up debt to make
ends meet, it is not your fault. It is the intentional outcome of government
policy and economic central planning. In the present economy, it is impossible
for 70% of the working age population to earn enough income to afford basic
necessities, without taking on ever-increasing levels of debt, which
they will never be able to pay back because there are not enough jobs
that generate the necessary income to keep up with the cost of living.
For every 3.4 working age people, there is only one that can
generate an income high enough to cover the cost of living without taking on
debt. In total, only 20% of the overall population currently generates
enough income to sustain the cost of living. As a result, poverty and
declining living standards are much more prevalent throughout US society than
the government and corporate media report. Let’s take a look at the
reality behind mainstream propaganda…
THE US GOVERNMENT &
STATISTICAL FRAUD
The government engages in outright statistical fraud
on the most often cited economic indicators, from the unemployment rate to
poverty and inflation rates. Even the use of the Gross Domestic Product
measurement as an indicator for overall economic health is incredibly
deceptive.
The mainstream media not only incessantly repeats these
bogus measurements, they drastically underreport the growing epidemic of
poverty. According to a study by Fairness and Accuracy in Reporting, “on
average, someone affected by poverty appeared on any nightly news show only
once every 20 days…. An average of just 2.7 seconds per 22-minute nightly news
program was devoted to segments where poverty was mentioned.”
On the rare occasion when poverty is actually mentioned, the
government’s Census Bureau poverty rate of 15% may be cited. When it comes to
the overall employment situation, you will hear the Bureau of Labor Statistics’
unemployment rate, which is presently hovering around 6%. While these
statistics are alarming, they drastically undercount the severity of the
present crisis. Those two statistics are pure propaganda and mask the
economic suffering of over 222 million US citizens.
Before analyzing the employment situation, let’s look at how
the government calculates the poverty rate. The methodology behind the
federal poverty rate was designed in 1963. It is incredibly outdated and
significantly undercounts how much it costs to live in today’s economy.
It uses the extremely flawed Consumer Price Index (CPI) inflation rate to
establish the poverty threshold. Many vital economic statistics that the
government reports are based on this fraudulent inflation rate.
To give a more positive impression of overall economic
health, the government has “revised” the methodology behind the CPI rate over
20 times since 1970. The CPI currently has inflation rising at a 2%
annual rate. If inflation was calculated the way it was in 1980, the
current rate would be 10%.
When you take a deeper look into how this difference impacts vital economic
statistics, it reveals a much different picture of the US economy.
COST OF LIVING
While the government claims a 2% annual inflation rate, the
actual cost of living has been skyrocketing. Here’s the reality of the
situation…
The US now has the most expensive healthcare system in the
world. There has been a 22% increase in out-of-pocket hospital expenses over
the past year. In the first quarter of 2014, healthcare spending rose at the
fastest pace in 10 years. The cost of giving birth has tripled since 1996,
childbirth out-of-pocket expenses increased fourfold from 2004 to 2010. The cost of childcare increased by 70% from 1985 to 2011. From 1994 to May 2014, the cost of childcare
has been more than double the CPI inflation rate.
The overall cost of raising a child has risen 40% in the past
decade, not counting the cost of college. Since 1986, the cost
of college tuition has increased by 498 percent, compared to the 117% CPI inflation rate over that
timeframe. Student loan debt has increased threefold over the last decade. The amount of money students are borrowing to pay tuition
bills doubled from 2005 to 2012.
Looking at basic food costs, from 2002 to 2012, total CPI
inflation was 28%. Consider the following price increases over that
timeframe: Eggs 73%, Ground Beef 61%, Turkey 56%, White Bread 39%,
Spaghetti & Macaroni 44%, Peanut Butter 40%, Coffee 90%, Orange Juice 46%,
Apples 43%, Margarine 143%.
This dramatic rise in the basic cost of living, the amount
of money that people need to survive, which is all but ignored by the CPI in
the federal poverty threshold calculation, only reveals part of the
government’s deception on poverty. Beyond the fraudulent inflation
measurement, the Census Bureau does not adequately account for the differences
in cost of living based on geographic locations. For instance, the cost
of living in large population states like New York and California, as compared
to the costs in more rural lower population Southern and Midwestern states.
When you realistically account for real inflation and
geographically based cost of living, how much does it cost to cover basic
necessities?
The Economic Policy Institute (EPI) has the most comprehensive
look at the costs of living and how much money a family needs to cover basic
necessities based on the city they live in. The EPI accounts for the costs of
housing, food, healthcare, childcare, transportation and taxes. They
do not factor in the costs of a college education or retirement.
Based on EPI calculations, a family of four needs to
make $63,364 a year to cover basic necessities. Compare that to the
government’s Census Bureau calculation using the CPI inflation rate and
non-geographic accounting, which puts this threshold for a family of four
at a mere $23,600.
In relation to the government’s poverty rate, the Economic
Policy Institute’s numbers sound extremely high. However, they use very
modest costs. For example, they use Topeka, Kansas as their median family
budget area and calculate the cost of housing for a family of four at
only $692 a month. When you analyze geographically based costs, you can see how
expensive it is for a family to live in larger population cities:
- New York HUD Metro FMR Area: $94,676
- Los Angeles-Long Beach: $74,605
- Chicago-Naperville-Joliet: $73,055
- Philadelphia-Camden-Wilmington: $77,928
- Washington, DC: $89,643
- San Francisco: $82,639
- Phoenix: $68,742
- San Diego-Carlsbad-San Marcos: $71,673
- San Jose-Sunnyvale-Santa Clara: $77,619
To give more context, USA Today recently analyzed how much moderate costs of
living for a family of four are today. They calculated that the average family
needs to generate an annual income of $130k. Their estimate was more than
double the median EPI cost of $63k, primarily because they factored in the
costs of owning a home, one car, retirement and education.
Now, consider that the current annual median household
income is only $51k per year. While overall wealth and the cost of living
have skyrocketed, median household income has declined 8.3% since 2007 and 9%
since 1999. To further demonstrate how dramatically the cost of living
has truly risen since 2007, while median household income declined 8.3%, their
overall wealth declined 43%.
For more historical context and to further demonstrate how
corrupt the government and economic system have become; if household income had
kept pace with the overall economy since 1970, the current annual median would
be $95k, almost double what it presently is. On top of that, it was
normal to have only one wage-earner per household in 1970, as compared to two
now.
EXTREME POVERTY
If we look at the government poverty threshold for what it
truly is, an indicator of extreme poverty, then it has a little more
legitimacy. As the National Center for Children in Poverty reported on the
government’s poverty threshold, “Research shows that, on average, families need
an income of about twice that level to cover basic expenses.”
When we count the percentage of the population at double the
government’s poverty threshold as living in poverty, the poverty rate explodes
from 15% of the population to 47%. Now you can see one of the reasons why the
government falsifies the inflation rate. The government will not make
this long overdue adjustment because that would mean they have to admit
that 150 million people are currently living in poverty and
simply cannot afford the cost of basic necessities.
According to the Census Bureau, 28% of children are now born
into poverty. This marks a dramatic increase from an already
alarming 25% in 2008. In total, the Census Bureau reports that 22% of
children live in poverty. However, when we make the proper adjustments to the
methodology of the poverty rate, an even more horrifying 45% of children
live in poverty. That means there are currently 33,389,063 US children living
in households that cannot afford basic necessities.
It would take only 0.3% of the 1%’s wealth to lift every one
of these children out of poverty.
Overall, from 2000 to 2010 the Census Bureau found that the
percentage of people living in poverty-stricken neighborhoods grew from 18.1%
to 25.7%. Extrapolating out to today, we can estimate that 82 million people
presently live in extreme poverty-stricken neighborhoods.
Extreme poverty-stricken neighborhoods can become a relic of
the past with 0.5% of the 1%’s wealth.
For a deeper understanding of why poverty is growing so
rapidly while overall wealth is also growing, let’s analyze the government’s
fraudulent unemployment statistics.
UNEMPLOYMENT &
UNDEREMPLOYMENT
Other than the deceptive poverty rate, unemployment is much
worse than the 6% that the government reports. The 6% rate does not
include part-time workers who need full-time work, long-term unemployed people
who have not been able to find work for over six months, and “discouraged
workers” who do not consistently look for work. When you account for those
groups, as the Bureau of Labor Statistics (BLS) did until 1994, the real
unemployment rate is currently 23.2%.
For an example of how deceptive government unemployment
reporting is, the BLS June 2014 jobs report decreased the unemployment rate and
was portrayed in the mainstream media as a very positive result with 288k jobs
added. However, in June, 523k full-time jobs were eliminated, and
800k part-time jobs were added, providing the illusion of job growth and
a reduction in the government’s unemployment rate. Due to this trend,
there are now over 7.5 million underemployed workers who are “part-time for economic
reasons” because they have had their hours cut and/or cannot find full-time
employment. None of these people are counted in the official government
unemployment total.
Since 2007, well-paying paying jobs have become rare and
low-paying full-time, part-time and temporary jobs have replaced them.
This has also been a downside of the new healthcare law, as companies are
cutting back full-time employment so they don’t have to pay for workers’
healthcare. In total, 50% of jobs created over the past three years are “low-paying,” mostly in retail, food service or temporary
help. Low-paying jobs pay 80% or less of median wages.
The bottom line, in a nation of 318.6 million people, with a
working age population of 213 million people, there are now only 118 million
full-time jobs and 28 million part-time jobs, according to the BLS. However,
also according to the BLS, there are currently only 106.6 million
full-time workers. In other words, it is impossible for half
of the working age population to get a full-time job. On top of that, of
the current 118 million full-time jobs, 47% of them generate annual salaries
below $35k per year.
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READ the rest of PART
I here:
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RELATED DOCUMENT:
WHO RULES AMERICA? Wealth, Income, and Power by G. William Domhoff http://www2.ucsc.edu/whorulesamerica/power/wealth.html
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