Growing Chasm 1/30/20

Thoughts by Richard Bleil

There is a disparity in our society. The stock market keeps growing, yet more people are working for less money. This indicates that the value of our country is indeed increasing, but the money isn’t making it to the citizens who are making it happen.

The economy today reminds me of what was happening under W. The thing to keep in mind is that you will hear different things based on if the people reporting are currently in power or not. The W administration kept reporting the “good news”, which then was the productivity index. The productivity index kept increasing, which is, indeed, good news for the owners of companies. It meant that people were working harder, but it didn’t address how many people were working which was actually in decline. During this time employment decreased for the entire first term and didn’t start increasing until his second, but, of course, they didn’t report this. They reported productivity which was up because fewer people were trying to pick up the slack so they didn’t lose their jobs as well.

Today, it seems as though there is a lot of good news. The Dow Jones is higher than it has ever been, and employment is toying with zero, lower than it has been in a very long time. This looks beautiful, but whatever you do, don’t scratch the surface of that image. For example, wages have remained relatively stagnant, and certainly have not kept up with inflation. The good news is that people aren’t making less money, but they can do less with it, so is this really good news? The truth is that if wages don’t keep up with inflation, the only way people can get by is to lower their standard of living. And that’s not good.

We have a growing number of indications of the dichotomy of our society. The problem with this is that these differences feed on themselves. During the Reagan administration, student loans were privatized, making, for the first time, higher education a business rather than an investment. Since then, the cost of education has been skyrocketing, far outpacing inflation, and as I’ve said, inflation has been outpacing income. Today we are in a situation where the cost benefits of a higher education are being questioned, that is, it’s no longer clear that the increased pay from having an education will pay for the cost of that degree. As a result, people are beginning to forego formal education.

Now, think about this. With fewer people going to education there are a couple of effects that we can expect. First, the average educational level of the nation can be expected to decline, which I think most people would agree is a bad thing (save perhaps the politicians who frequently do not want a populace that can read and think for themselves). Second, as education costs increase, fewer people will go. This means that tuition will increase to make up for the financial shortfall, forcing even more people out. Eventually, education level will mirror income levels. Only the very wealthy will be able to afford an education, and therefore the highest paying jobs requiring higher education will go to the wealthy with the education.

As the divide grows, we can expect socioeconomic breakdown. When there is not enough money for the citizens to sustain a reasonable lifestyle, something will give. With luck it will be peaceful, because we are near that point now. There is no place left in America where the minimum wage can pay for rent, and whether we like it or not, the Affordable Care Act (ACA) is being repealed as we speak. It started with the Obama administration when Republican states sued to be “exempt” from the law eroding, early on, the support designed to pay for it. Piece by piece, support has been further eroded such as allowing people to avoid the fees by simply stating on their tax forms that they could not afford the insurance. Now, the constitutionality of the law is being examined and will likely be the death knell for the entire law. We are already facing the situation where people cannot afford their medicine (including THIS author). With the collapse of the ACA, medical care will again be for the very wealthy.

When there is not sufficient money to support society, something will rise to take its place. America as a debtor nation is taking in less money because of tax breaks for the wealthy and corporations and already we’ve seen our international credit rating slip. But having a reasonable financial system seems to be human nature, dating back to about 9,000 BC when cattle were used for bartering. Even in prisons where money is not allowed, cigarettes are often traded as forms of cash. When people can no longer survive on the money they make in wages, what will the new form of currency be?

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