The Reality Sinks In

A poll commissioned by Bloomberg finds that the reality is beginning to sink in for Americans:

The widening gap between rich and poor is eroding faith in the American dream.

By almost two to one — 64 percent to 33 percent — Americans say the U.S. no longer offers everyone an equal chance to get ahead, according to a Bloomberg National Poll. And some say the government isn’t doing much to help.

“There’s a lot of policies that make it easier for the rich to get richer and the poor to go nowhere,” says Ryan Sekac, 26, a mechanical engineer in Westerly, Rhode Island.

and the poorer you are the more desperate you’re likely to feel:

The lack of faith is especially pronounced among those making less than $50,000 a year: By a 73 percent to 24 percent margin, they say the economy is unfair. Even 60 percent of those whose annual income is $100,000 or more bemoan the absence of a fair deal while 39 percent say everyone has an equal shot to advance.

There is a bit of what I presume is unintended humor in the article:

Before taking into account government policies, U.S. inequality isn’t much different than countries such as Denmark and Sweden, she says.

Other than that, Mrs. Lincoln, how did you enjoy the play?

If there’s one, single thing this blog is about, it’s that policies have consequences, many of them unforeseen. Even if the consequences of a policy are unforeseen or unintended those consequences can be very damaging. I believe that we are now suffering the consequences of four decades or more of bad policies which work synergistically to boost the incomes of the top 10% of income earners, boosting the incomes of the top .1% of income earners most of all, while holding back the incomes of the rest of us. That Americans are only now realizing this just proves the truth of the remark attributed to Lincoln: you can fool some of the people all of the time, all of the people some of the time, but you can’t fool all of the people all of the time.

It’s not just one policy. That would be bad enough. It’s practically all of our policies and, especially, our domestic policies. Our trade policy has reduced the job growth in jobs that can be performed by average people. Our immigration policy has increased our population by at least 10% over what it otherwise might be and most of those new Americans are unskilled or semi-skilled. That has tended to put downwards pressure on the wages of ordinary people. The Internet (a creature of defense spending) has put similar pressure on the incomes of workers in the next tier up. Americans with college educations are no longer in competition for jobs with other Americans with college educations; they’re in competition for jobs with a world full of people with college educations, many of whom earn pennies on the dollar by comparison with wages here.

Agricultural policy intended to help poor farmers has largely gone to the richest farmers. Tax breaks, also called “tax expenditures” go overwhelmingly to the highest income earners. Intellectual property law makes it possible for the owners of patents, copyrights, etc. to live off rents and increases the prices of many goods in the United States but goes unenforced in most of the rest of the world, meaning that Americans are paying much, much more for the same goods than the Chinese, the Indians, and so on. Healthcare policy has resulted in physicians’ and other providers’ incomes rising at a multiple of the non-healthcare rate of inflation. In 1970 physicians earned approximately the median income. Now they earn a multiple of that.

Our policies with respect to the financial sector has resulted in the number of banks shrinking from 13,000 in 1960 to just a couple of thousand today. The bankers in the megabanks have grown very, very rich.

All of these things are the consequences of policy. They might have been unintended but they’re the consequences of policy just the same. None of this has happened all at once. It’s happened a percentage point or two at a time.

The most obvious way of correcting the present situation is change the policies. Sadly, there’s no way this situation can be remedied in the foreseeable future within the confines of the present political system: there’s a bipartisan consensus protecting each of these policies and the two major parties work very hard at preventing anyone who doesn’t subscribe to that consensus from joining the club. It doesn’t matter whether you elect the Republican candidate or the Democratic candidate. They both subscribe to the same consensus of views on bad policies.

There are only a handful of ways this situation can play out and none of the most likely are very pretty.

11 comments… add one

  • ...

    “There’s a lot of policies that make it easier for the rich to get richer and the poor to go nowhere,” says Ryan Sekac, 26, a mechanical engineer in Westerly, Rhode Island.

    See, if this guy would just get a good education in one of the STEM fields then he wouldn’t think this way. *snort*

  • ...

    Americans with college educations are no longer in competition for jobs with other Americans with college educations; they’re in competition for jobs with a world full of people with college educations, many of whom earn pennies on the dollar by comparison with wages here.

    Even worse, the Mark Zuckerbergs of the world are working very hard to import more of those college educated foreigners HERE, to add to the downward pressures on wages. Much of our current pop culture (in which I include everything from gangsta rap to the New York Times and magazines like The Atlantic) contributes to that in ways obvious and gross. The idea that you can only make a good life for yourself if you move to NYC or LA or the San Francisco Bay area of Boston or Chicago has a pernicious effect too. (That last sentence seems random only because the details of my biography aren’t common knowledge, luckily for all of us.)

    The effects of these policies only tell the elites one thing: Things can only improve if we keep doing even MORE of the things that got us here. More immigration. More coddling of big business. More money devoted to the healthcare sector. More consolidation and more government propping of the financial sector. It’s much like the neo-Keynsians, whose prescription for everything is more government deficit spending, and if it doesn’t work that’s because you didn’t spend enough borrowed money.

  • You’ve just pointed out one of the Great Realities of Life: successful people are highly predisposed to keep doing the things that originally brought them success.

  • ...

    One more thing: When the story came out about the banks shrinking to record low numbers, I saw some liberal economist complaining that we still have way too many banks. Really, we only need a few, according to him. He didn’t mean branches, either, just the number of different banks, period. I only wish I had bookmarked whatever I read so I could remember the name. Yeah, there would be no risk of systemic failure in a USA with only four banking organizations, none whatsoever.

  • ...

    You’ve just pointed out one of the Great Realities of Life: successful people are highly predisposed to keep doing the things that originally brought them success.

    I’m becoming rather enamored of the French solution to this problem.

  • That point of view has a venerable pedigree. Theodore Vail, the president of AT&T at the turn of the last century, thought there should be one bank, one telephone company, one steel company, one auto company, etc. and the captains of industry should confer regularly to work the affairs of the country out among themselves.

  • I’m reminded of G. K. Chesterton’s remark: it is awful to contemplate how few politicians are hanged.

  • ...

    Steve Sailer has written about that era, and how industry leaders would get together to divvy things up amongst themselves, because competition was un-American. It also reminds me of a movie with Leslie Howard, Bette Davis and Humphrey Bogart. It’s set in a desert dinner during the Depression. Behind the counter is a signs that says “Tipping is un-American”, or something to that effect. It’s called “The Petrified Forrest” and it’s on TCM fairly often.

  • The Petrified Forest is based on the play of the same name by Robert E. Sherwood. Most of the original Broadway cast was used in making the movie. Leslie Howard insisted that Bogart, the Broadway Duke Mantee, be brought to Hollywood to reprise his role.

    It’s a great play and a great, great movie. Should be required viewing.

  • Red Barchetta

    Vail was an idiot.

    As far as Realities of Life, I’m not so sure. The only constant in my life has been change and adaptation. It forms my worldview. Those who won’t change become dinosaurs. They argue for protection. They are largely big business, and the unproductive, plus the rock stars who just don’t care about anything but image. Those who will change prosper. They are largely small businessmen and women. But it takes work, and balls. They tend not to vote Obama, who promises champagne toasts to every leach in town. Just leave a check in the “gratitude bag.”

    I’d be nowhere if I kept doing the same as years ago. Absolutely nowhere.

  • jan

    So far people seem to be speaking from a macro POV — it’s the banks, domestic trade, immigration policies, the Internet, physician salaries etc. However, when I talk with the ‘little’ people, the obstacles holding them back flow less from big domestic policies than from the myriad of rules and regs blooming at all levels of government — local, state and federal.

    Controls, tightening up options, choices, freedom of expression and innovation, too frequently kills entrepreneurial initiative before it even leaves the stages of interest/desire, where it then can become implemented into something having real business and job growth possibilities. After all, big business used to be derived from the seeds of small enterprise. But, big government is creating an ugly, oppressive draught, usurping time, funds, energy at the get go of most ventures, where fees and petty paperwork abound just in acquiring proper licenses, permits etc.

    Just in the last couple days I’ve spoken to a friend wanting to relocate his restaurant to a less expensive inland area. However, his search is limited to a site already having the facilities needed. It’s not the cost of outfitting a new site that concerns him, as much as the year plus wait for permits that he would be unable to weather. An owner of a Mexican restaurant, who opened his establishment earlier in the year, experienced first-hand the bureaucratic hassles required of him before the city finally granted his final. Afterwards, he said he never would have even considered the project had he known, ahead of time, the hellish entanglements and added costs such a venture ultimately produced. Another young unemployed teacher, with a talent for woodworking, is making an income under the radar, doing small custom orders for people. He probably would be interested in opening up a small shop, if it were not for how convoluted and complicated the process has become to do so.

    IMO, the added complexities and costs of our new HC law will serve to discourage even more people from spreading their wings, willing to take on the ever-increasing risks of owning their own business. This is especially applicable to the small private practices of family physicians around the country. Consequently, the trends this country seems to be promoting is “big over small.” To survive you have to be big — big hospitals, banks, property owners, corporations, business, and so on. The little guy simply has no sway anymore, and is seemingly at the mercy of government’s will, which is capable of squeezing smaller, enterprising individuals/businesses out of existence just on the whim of creating a new law.

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