History of the American Dream

So far we’ve learned that Wall Street caused the Great Depression (1929), when government pushed business it caused a recession (1937), during the recession hourly wages increased, and in war government spending is up (11.7% of the population was in the military) but unemployment is down. My February 1 blog - 2012 South Carolina Debate - outlines the history of the stock market and when hedge funds came into play (1983).

In 1950 the ratio of the average executive's paycheck to the average worker's paycheck was about 30:1. Paul Krugman, an economist at MIT and columnist for the New York Times cited the average CEO pay as 36:1 in 1976. (When I became a first-level supervisor in the 1970s, I had 31 direct employees and was making less than those at the top of their pay scale; I don’t know what the top executive’s made.) In the 1980s the ratio was 40:1. The second surge of the Great Wealth Transfer (the first was in the late 1800’s to 1929) began here; once again we had deregulation and corporatization of our government (government policy to cut taxes for the wealthiest individuals, those who made the most money from exploiting the resources and advantages that America gave them; giving little back in return). Latchkey kids became the norm as both parents needed to hold jobs to make ends meet. Cheap fast-food restaurants became the soup kitchens of America. According to Kevin Murphy of the University of Southern California, the ratio was 191:1 in 1993. In Doug Henwood’s ‘After the New Economy’ (2003), he exposed that the richest 10% of Americans possess over all the wealth in America and the bottom 50% has almost none of the wealth, but they do have substantial debt. Krugman in 2002 reported that in the 29 year period between 1970 and 1999, the average annual salary in America rose 10% whereas, during the same period, according to Fortune magazine, the average real annual compensation of the top CEOs in America rose more than 1,000 times the pay of ordinary American workers and according to a 2001 Congressional Budget Office study between 1979 and 1997, the after-tax incomes of the top 1% of American families rose 157%. In 2000 the ratios of the average executive’s pay to the worker’s pay was about 300:1 and in 2005 it was 369:1. In 2006 it was 821:1 (Drum Major Institute Injustice Index). According to a 2006 study by the Center for American Progress, Americans were spending 126.4% of their pay to cover the cost of living. In that same year, investment bank UBS declared that corporations were enjoying the “golden era of profitability” with corporate profits climbing to the highest amount since the 1960’s. Despite double digit increases in productivity levels, the American worker’s pay had increased less that 2%. Profit from productivity gains went straight into the pockets of the corporate executives. According to Executive Excess 2007 the August report by the Institute for Policy Studies and United for a Fair Economy said the 20 highest-paid fund managers made an average of $657.5 million in 2006--22,255 times the average $29,500 annual US salary. Others pointed out that the average wage of Americans adjusting for inflation is lower than it was in the 1970s. The minimum wage, adjusting for inflation, is lower than it was in the 1950s. From the latter part of 2010 until the end of 2011 per the Bureau of Labor Statistics price increases outpaced wage increases at which time the growth rate of prices and earnings began to converge.

We heard that 163,000 jobs were added in July (total under Obama about 4.5 million) and unemployment rose to 8.3% because people who had stopped looking for work were again looking; the DOW went up 217 points saying it was better than expected and it’s reported that no president has won re-election with unemployment above 8% since the Great Depression. This was brought up on the August 5 This Week with George Stephanopoulos program as well as the Tax Policy Center report saying “Our major conclusion is that any revenue-neutral individual income tax change that incorporates the features that Governor Romney has proposed would provide large cuts to high-income households and increase the tax burden on middle and/or lower income taxpayers.” Republican Reince Priebus (RP) tried to say the report was written by a former employee of Obama’s and George pointed out that one of the authors worked for Bush and Mitt Romney himself has cited this tax institute as a credible source. To cover his tracks, RP gave a lot of rhetoric as to what was not taken into consideration in the report in regard to budget reductions (he left out education, Social Security, Medicare, Medicaid, regulatory agencies and more). When the August 3 Bureau of Labor Statistics report came out Romney said there were 23 million people looking for work; funny the report said 12.8 million (too bad this wasn’t brought up). As far as RP’s comment - I think this President has a problem with the American dream. When I grew up…my parents didn’t point at that house and say look at these lousy people in their beautiful house, look at this guy in his new corvette; my Dad …turned around and said look pal if you work hard and go to school…we hope you live in …(a house) 2 times bigger than that house. That’s the American dream and this idea that - we’re spending all of our time just killing people because they’re living the American dream and made something out of nothing and made money - is just crazy talk, I think not. American liberty is not about allowing the rich to continue their strangulation of the hardworking American and the taking away of their American dream. Wages went up during the 1937 recession; this is not the case today. If you want to get out of this mess we need to have the sense of the 1940s Americans and re-elect Obama so he can do what FDR and Clinton (1993 – 2001) did to bring the country back.