You are hereHuffington Post: Inequality Is Much Worse Than You Think

Huffington Post: Inequality Is Much Worse Than You Think


-By Les Leopold

February 7, 2013-

• In 2010, the top hedge fund manager earned as much in one HOUR as the average (median) family earned in 47 YEARS.

• The top 25 hedge fund managers in 2010 earned as much as 658,000 entry level teachers.

• In 1970 the top 100 CEOs made $40 for every dollar earned by the average worker. By 2006, the CEOs received $1,723 for every worker dollar.

As the administration and Congress argue over cuts in social programs, inequality in America grows more extreme each day. Even the great financial crash didn't derail this trend. The richest 400 Americans, for example, increased their wealth by 54 percent between 2005 and 2010, while the median middle-class family saw its wealth decline by 35 percent.

None of this is accidental.

It's not the result of mysterious global forces, or technology, or China, or structural problems concerning the skills and education of our workforce. Rather, it is the direct result of policy choices made by Democrats and Republicans alike. Together, they swallowed the Kool-Aid of unregulated market mania, and now we are paying the price.

In exploring this story for my new book, How to Make a Million Dollars an Hour: Why Hedge Funds Get Away with Siphoning Off America's Wealth, it became clear that New Deal policy makers shared a deep fear that democratic capitalism could not function unless Wall Street was tightly controlled. After all, Europe was sinking into the fascist camp while the new Soviet Union seemed invulnerable to the global depression. As a result, to put it crudely, the New Dealers quickly regulated the hell out of high finance through a myriad of programs including the formation of the S.E.C and Glass-Steagall. The goal was to turn Wall Street into a sleepy place to work, rather than an adrenalin-fueled arena of stock manipulation and fraud. At the same time income tax rates on the wealthy sky-rocketed with top marginal rates reaching over 90 percent. The results were nothing short of stupendous.

• For more than a quarter of a century there were no financial crises anywhere in the globe (except Brazil in 1964).

• The average wage in the financial sector collapsed so that its compensation was similar to the average wage of non-financial jobs.

• Inequality fell rapidly -- the top one percent accounted for more than 23 percent of all income in 1928. By the 1970s it had fallen to less than 9 percent.

These policies gave birth to middle-class America, as the average income of working families grew steadily during the WWII period. This was the new America that would out-compete world communism for the support of working people all over the world.

 

 

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