The following thoughts were inspired by two articles in the NY Times this week: "Which Millionaire Are You Voting For?" and "The Self Destruction of the 1 Percent".
In the first article, "Which Millionaire Are You Voting For?", the author discusses the decreasing representation of the working class in politics and its influence on the government's policies. In "The Self Destruction of the 1 Percent", the author discusses how in Venice, an elite class grew out of favorable economic policies that created an open environment for social mobility, and then closed the pathway to social mobility to those who might come after them, effectively choking off social mobility and becoming extractive rather than inclusive. The oligarchs began to extract as much money as they could from the lower classes to enrich themselves. Ultimately, this was a failing strategy that caused Venice to decline as a global political and economic power.
The confluence of these two articles struck me deeply. In the United States, right now, about 94% of households (which tends to be 2 incomes) have an income of less than $174,000, which is the annual salary for senators and members of the House of Representatives, on their own. Just being elected to Congress automatically puts a congressman/woman in the top 6% of wage earners in the US. As the author of "Which Millionaire Are You Voting For?" points out, the fiscal policies adopted by Congress tend to reflect what's best for those individuals in the top 5-6%, rather than the other 95% of the country. (statistics from payscale.com) In fact, his essential argument is that for a country to be "for the people", it must also be made up "of the people". The reality is that many of our elected officials today don't really represent average Americans in their economic make-up.
Meanwhile, there has been an increasing gap between the richest 1% of the country and the other 99%. Check out this graph from Mother Jones:
So, it seems to me that there is a pretty strong case to be made for a growing "elite class" of Americans who are extracting resources from the rest of the country rather than working to create a society with high potential mobility and open doors for advancement rather than a closed society in which the "elite class" builds its wealth on the backs of the rest of society.
As a society, we're becoming dangerously unbalanced economically, and if we don't find a way to sort things out and create a society that is more open and has better social mobility and room for people to move up, we're going to lose economic and political clout around the world. This is what happened in Venice and in many other ancient civilizations.
In the first article, "Which Millionaire Are You Voting For?", the author discusses the decreasing representation of the working class in politics and its influence on the government's policies. In "The Self Destruction of the 1 Percent", the author discusses how in Venice, an elite class grew out of favorable economic policies that created an open environment for social mobility, and then closed the pathway to social mobility to those who might come after them, effectively choking off social mobility and becoming extractive rather than inclusive. The oligarchs began to extract as much money as they could from the lower classes to enrich themselves. Ultimately, this was a failing strategy that caused Venice to decline as a global political and economic power.
The confluence of these two articles struck me deeply. In the United States, right now, about 94% of households (which tends to be 2 incomes) have an income of less than $174,000, which is the annual salary for senators and members of the House of Representatives, on their own. Just being elected to Congress automatically puts a congressman/woman in the top 6% of wage earners in the US. As the author of "Which Millionaire Are You Voting For?" points out, the fiscal policies adopted by Congress tend to reflect what's best for those individuals in the top 5-6%, rather than the other 95% of the country. (statistics from payscale.com) In fact, his essential argument is that for a country to be "for the people", it must also be made up "of the people". The reality is that many of our elected officials today don't really represent average Americans in their economic make-up.
Meanwhile, there has been an increasing gap between the richest 1% of the country and the other 99%. Check out this graph from Mother Jones:
So, in the last 30 years, overall wages have remained relatively flat, while productivity has increased by 80%! That's nearly double the productivity! Increased productivity typically comes from people working harder, which means that we have people working harder but making almost no more money for their extra work. Increased productivity usually leads to increased profits. One might expect to see those increasing profits from the increased productivity going to overall wages... Meanwhile, in the same 30 years, the income of the top 1% of wage earners has increased 240%. Hmm... I wonder where all that profit went?
Check out this info-graphic from ritholtz.com:
As a society, we're becoming dangerously unbalanced economically, and if we don't find a way to sort things out and create a society that is more open and has better social mobility and room for people to move up, we're going to lose economic and political clout around the world. This is what happened in Venice and in many other ancient civilizations.
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