“The idea that people make the same or less today than they made 40 years ago is a stunning historical fact.” — Author Jeff Madrick
NPR: As income gap balloons, is it holding back growth?
“This inequality is destabilizing and undermines the ability of the economy to grow sustainably and efficiently,” [Fed governor Sarah Bloom Raskin] said. Income inequality, she continued, is “anathema to the social progress that is part and parcel of such growth.”
The income gap in the United States has ballooned: It’s wider than any time since 1928, in the days before the stock market crash triggered the Great Depression.
[...] “In the 1970s, there was an assault on government oversight and regulation,” Madrick tells Raz. “And eventually, the financial community stopped playing by the rules. There was an economic theory that kept justifying what they were doing. And the American public was not fully aware of what was going on.”
The traditional argument for deregulation states that those policies make America richer, and that a rising tide lifts all boats.
But Madrick says that for the typical American worker, the wage tide has gone out since 1969.
“The typical male worker makes less today, discounted for inflation, than the typical median worker made in 1969,” says Madrick. “The idea that people make the same or less today than they made 40 years ago is a stunning historical fact.”
[...] “[Bank failures] peak up in crisis years. They peak in the 1920s,” [David Moss, a professor of economics at Harvard Business School] tells Raz. “But then most striking, after 1933, when we saw the introduction of federal banking and financial regulation, these banking crises disappear almost completely. And then it continues very, very low until the 1980s, then they pick back up again.”
Moss found it striking that banking failures go down after financial regulation and start rising after the introduction of deregulation.
Then, one of Moss’ colleagues showed him a chart of income inequality over the same period. Moss took that curve and plotted it on the same page as his bank failure curve.
“And lo and behold, it was a striking, striking connection,” Moss says.
As bank failures went up in the 1920s, so did income inequality. As inequality came down in the 1930s, bank failures stayed down. They stayed down together until the advent of deregulation in the 1980s.
For Moss, this coincidence raises more questions than it provides answers. He isn’t sure what exactly the correlation between income inequality and financial failure means.
So there’s an historical correlation that financial regulation might be one of the best things that could happen for creating economic growth and closing the income gap? Maybe that’s because government regulation and oversight actually keeps financial institutions more honest and accountable than fictional concepts, such as some “invisible hand” guiding everything or Reagan’s “trickle down” fallacy. Maybe it also helps ensure that individuals in financial institutions won’t gamble away everyone else’s money on things like sub-prime mortgage loans while they walk away with their own fortunes intact.
And I’m not even bringing up the 10.5 years of tax breaks for the job creators wealthy here, or that the wealthy compounded their fortunes during a time of economic loss for everyone else. They work harder than us, right?
It’s almost TOO SIMPLE. That must be why the Tea Party base sides with millionaires like the Koch brothers to protest “big” government and regulation and expiring Bush’s tax cuts for the rich. Because they’re morans.
Despite the 24/7/365 opposition from the GOP / Tea Party, Obama has accomplished A LOT so far. Rachel Maddow details all of it (transcript below the video):
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Transcript from Democratic Underground:
MADDOW: He signed a bill that gave amnesty to undocumented immigrants. He grew the size of the federal government and the budget, added a whole new cabinet level agency and added tens of thousands of government workers to the federal payroll.
He tripled the deficit. He bailed out and expanded social security with a big fat tax increase. He raised corporate taxes by hundreds of billions of dollars. He raised taxes on gasoline.
He, in fact, signed into law the largest tax increase in history. He supported federal handgun controls. He called for a world without nuclear weapons. He was Ronald Reagan.
As a conservative saint, as the right-wing rock star, as king of the Republican prom in perpetuity, as a transformative figure for people who call themselves conservative, the facts of Ronald Reagan`s legislative record are awkward.
Ronald Reagan`s record has in it a lot of things that would get him kicked out of today`s Republican Party, which is not to say that President Reagan was a secret liberal. He was not. What he was, was complex, but accomplished in his own way.
With the passage of financial regulation in Washington today, President Obama took to the very un-momentous setting of “Twitters,” as he called it yesterday, to say this, quote, “Last night`s House Senate agreement on Wall Street reform represents the toughest financial reform since the Great Depression.”
It turns out that a lot of things that have happened in the less than two years of this administration are the biggest or first or most important in generations. On the occasion of the Wall Street reform announcement today, Taegan Goddard at “CQ Politics” wrote, “Not since FDR has a president done so much to transform this country.”
Even before today’s historic Wall Street reform agreement, President Obama, of course, did what politicians have been trying to do for more than 60 years. He passed health reform, which, for the first time, establishes government responsibility for the health care of American citizens.
Consider also the stimulus bill. It didn`t just throw a lasso around our entire economy and yank it back from the brink. It also pumped about $100 billion into the crumbling embarrassment of our national infrastructure and transportation system.
It was the largest investment in infrastructure since Ike. For solving our country`s energy problems, something Obama has compared to man walking on the moon, it contained about $60 billion in spending and tax incentives for renewable and clean energy, also a historic investment.
It also included an unheralded but giant investment in science and tech, amping up the budgets at NASA, the National Science Foundation, and an experimental energy research agency that was created under President George W. Bush, but never funded until now.
President Obama also expanded state kids` health insurance to cover another four million kids. He signed the Lily Ledbetter Fair Pay Act amending the 1964 civil rights act for equal pay for equal work.
He signed a nuclear arms deal with Russia that would reduce both countries` arsenals by a third. He created a new global nonproliferation initiative to keep nuclear materials out of the hands of terrorists.
He set forth an international way forward on that radical left-wing proposition of Ronald Reagan, a world without nuclear weapons. Then there are the legislative and policy achievements that don`t just build on previously-set precedents, but set new ones.
The Hate Crimes Prevention Act, also known as the Matthew Shepard Act. It had languished in Congress for years. The Food and Drug Administration permitted for the first time to regulate tobacco.
Better late than never, he dismantled the scandal-plagued Minerals Management Service, broke it into three parts so that the folks who collect money from oil leases aren`t the same ones regulating the industry. And now, it will actually investigate the industry that it was busy schtupping and doing drugs with during the last administration.
Obama fired two wartime commanding generals in little over a year. He overhauled the astonishing stupidity of the student loan system in which banks were being subsidized to give loans that were guaranteed by the government anyway, a license to print money.
That was ended and the savings put toward actual aid to students. He canceled a weapons program that was bloated, unnecessary and totally irrelevant to either of our current wars, the F-22. Why even mention the cancellation of a single weapons system? Because that never happens. Weapons systems never get canceled. The F-22 did, which is itself a miracle.
In each of these achievements and in the list of things he has yet to do – “Don`t Ask, Don`t Tell,” closing Guantanamo – in each of these things, there is room for liberal disappointment. I sing a bittersweet lullaby to the lost public option when I go to sleep at night.
But presidential legacies are complex. Not even the Reagan administration’s legacy is pure as the conservative-driven snow. But Taegan Goddard at “CQ Politics” was right today about nothing this big happening since FDR.
The list of legislative accomplishments of this president in half a term even before energy reform which he`s probably going to get to is, to quote the vice president, “a big freaking deal.” Love this administration or hate it, this president is getting a lot done.
The last time any president did this much in office, booze was illegal. If you believe in policy, if you believe in government that addresses problems, cheers to that. Good night.
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