Yardsticks Don’t Build Tall Buildings
Since the end of the Great Recession, 95 percent of all income gains have gone to the wealthiest one percent. And, though the economy is growing, the average income of 99 percent of Americans, once adjusted for inflation, has actually fallen. Something isn’t working.
That something is this: though the economy isn’t and shouldn’t be a zero-sum game, it is being played like one.
Money is just a useful fiction. It is an invented measure of wealth, like yards or seconds. Money, when you get right down to it, doesn’t create value any more than a clock creates time.
The emperor has no clothes. There are certain times in our history when people have looked around and realized this — the Great Depression or the 2007–08 financial crisis — but, for the most part, the fiction works. Money allows us to create markets — efficient ways of organizing labor and capital— and the real economy grows.
“The poor aren’t poor because the rich are rich,” argues Robert Samuelson, an economic writer for the Washington Post.
“The two conditions are generally unrelated. Mostly, the rich got rich by running profitable small businesses (car dealerships, builders), creating big enterprises (Google, Microsoft), being at the top of lucrative occupations (bankers, lawyers, doctors, actors, athletes), managing major companies or inheriting fortunes. By contrast, the very poor often face circumstances that make their lives desperate.”
And he’s right. That’s the way it should work. Money is just a measure of value. If you’re lacking money, create value and the money will appear. Wealth shouldn’t be a finite resource.
But, creating value takes two things: labor and capital. These are the factors of production. Labor is, of course, hard work. Capital is raw material — if you’re a mechanic, that means wrenches, jacks, and motor oil — if you’re a writer, that means pens, paper, and ink.
These factors of production have become commodities. That’s not necessarily a bad thing. Ideally, money should facilitate the flow of labor and capital to those who need it to create value. But, it doesn’t.
The wealthiest one percent have become nothing but glorified hoarders and they have a lock on the vast majority of resources in this country and around the world. In the words of Rev. Thomas Nulty, a Roman Catholic Bishop during the Irish Potato Famine, “They sell the use of God’s gifts like so many articles of private property, and as if they were purely the result of their own toil and labor.”
One person, even provided unlimited resources, can only create so much value. When so much wealth is concentrated in the hands of a few, the rest are denied the resources to create value of their own and the economy stagnates.
Ultimately, an economy is built on trust, and we have become a country that trusts nothing. We don’t trust government. We don’t trust business. We don’t trust unions. We don’t trust the police. We’ve lost faith in political parties. We’ve even lost faith in churches, which used to be the bedrock of many communities.
This loss of faith and erosion of trust is not without reason; all of these institutions have failed us in one way or another. What’s worse, and what may ultimately be our ruin: we have lost faith in each other. Instead of working together to solve common problems, we demonize those who disagree with us.
We have come unmoored as a society, and that has economic consequences, as well as political and social ones. Our loss of social capital parallels our loss of physical capital.
We are weak and divided and the corporations and ultra wealthy are running the show.
Watch Fox News or The Blaze for five minutes and you’re bound to see an advertisement encouraging folks to take their money out of the market economy and hoard wealth in the form of physical gold.
During World War II, hoarding was seen as unpatriotic. Now, it’s encouraged.
But, it can’t last. Almost three-quarters of the American economy is driven by consumer spending. If those consumers are too poor to spend, the economy suffers.
America has become the Wal-Mart economy. Wal-Mart is the largest private employer in the United States. The average Wal-Mart employee makes just $8.81 an hour. A third are forced to work less than 28 hours a week and do not qualify for health care or other benefits.
If a corporation like Wal-Mart refuses to pay a living wage, then our choice is either to let those people starve or for the government to make up the difference. One of those choices is evil. The other is fiscally irresponsible and amounts to nothing less than redistribution of wealth from the poor to the rich.
Wal-Mart made a gross profit of $130 billion last year, the vast majority of which did not go to workers, but to shareholders, who did nothing to create any value in the company. Wal-Mart employs over two million people — two million people too poor to shop anywhere else and who collect over $6 billion in public assistance — food stamps — every year. Much of that $6 billion they hand right back toWal-Mart, which undercuts competitors’ prices with artificially cheap labor and cheap foreign goods.
Each Wal-Mart supercenter costs the American taxpayer more than $1 million a year in public assistance, while the wealth of the Walton family alone exceeds that of the bottom 40 percent of Americans.
In any sane world, this would be seen as the racket it is. And, yet, the entire economy is moving to this model of corporate welfare and artificially cheapened labor. It is, essentially, an economic model in which the rich feed off the working classes like parasites — the precise opposite of how it is often portrayed in conservative media.
But, to paraphrase my mother, you can only get so much blood from a turnip.
If the economy were truly booming, everyone would benefit. The poor would benefit from a larger slice of the pie. And the rich would benefit from a smaller slice of a rapidly growing pie. That’s how our economy is supposed to work. It’s not supposed to be a zero-sum game.
The American dream used to be a useful fiction. Now it’s just a fiction. America used to be a nation of makers and inventors. We’ve become a nation of hoarders and thieves. We used to build the tallest buildings in the world. Now we just have the most yard sticks.
