SALON

Thursday, Jan 24, 2013 10:31 PM UTC

5 steps to cheating the middle class worker

The rich are driving us ever closer to the status of most wealth-unequal country in the world

By

Topics: AlterNet, Labor, U.S. Economy, Finance, Conservatism, Inequality,

5 steps to cheating the middle class worker (Credit: baur via Shutterstock)
This article originally appeared on AlterNet.

It’s so artfully done, and so diabolical, that one can picture secret seminars in subterranean Wall Street meeting rooms, guiding young business recruits in the proven process of taking an extra share of wealth from the middle class. Their presentation might unfold as follows:

AlterNet
1. Boost productivity while keeping worker wages flat.

The trend is unmistakable, and startling: productivity has continued unabated while wages have simply stopped growing. Improved technologies have reduced the need for workers while globalization has introduced the corporate world to cheap labor. In effect, the workers who built a productive America over a half-century stopped getting paid for their efforts.

Paul Krugman suggests that a “sharp increase in monopoly power” is another reason for the disparity. As John D. Rockefeller said, “Competition is a sin.” That certainly is the rule of thumb in banking and agriculture and health insurance and cell phones. Yet despite the fact that low-wage jobs are increasingly defining the American labor market, apologists for our meager minimum wage claim an increase will worsen unemployment. So it remains at $7.25. A minimum wage linked to productivity would be $21.00 per hour.

2. Build up a financial industry that has no maximum wage.

This is where the money is. In 2007, before the financial crisis, a Harvard survey revealed that almost half of the school’s seniors aspired to careers in finance. The industry’s share of corporate profits grew from 16% in 1980 to an astonishing 45% in 2002.

And there’s no limit to the earning potential. Hedge fund manager John Paulson conspired with Goldman Sachs in 2007 to bundle sure-to-fail subprime mortgages in attractive packages, with just enough time for Paulson to collect other people’s money to bet against his personally designed financial instruments. He made $3.7 billion, enough to pay the salaries of 100,000 new teachers.

3. Keep accumulating wealth created by the financial industry.

Experienced schemers have undoubtedly observed that over the past 100 years the stock market has grown three times faster than the GDP. The richest quintile of Americans owns93% of such non-home wealth.

In the last 25 years, only the richest 5% of Americans have increased their share of non-home wealth, by the impressive rate of almost 20 percent.

In just one year, the richest 20 Americans earned more from their investments than the entireU.S. education budget.

4. Tax yourself as little as possible.

The easiest and least productive way to make money – holding on to investments – is also taxed at the lowest rate. In addition to the capital gains benefit, tax ploys like carried interest, performance-related pay, stock options, and deferred compensation allow hedge fund managers and CEOs to pay less than low-income Americans, and possibly evennothing at all.

The richest 400 taxpayers doubled their income in just seven years while cutting their tax rates nearly in half. U.S. corporations can match that, doubling their profits and cutting their taxes by more than half in under ten years. The 1.3 million individuals in the richest 1% cut their federal tax burden from 34% to 23% in just 25 years.

5. Lend out your excess money to people who can no longer afford a middle-class lifestyle.

As stated by Thom Hartmann, “The ‘Takers’ own vast wealth, and loan it out at interest to everybody from students to governments..” Overall, Americans are burdened with over $11 trillion in consumer debt, including mortgages, student loans, and credit card liabilities.

Wealth has largely disappeared for the middle- and lower-income classes. More than $7 trillion has been lost in the decline of home prices since 2006. Young college graduates have an average of $27,200 in student loans, and the 21-35 age group has lost 68% of its median net worth since 1984, leaving each of them about $4,000. Median net worth for single black and Hispanic women is a little over $100.

So we’re hanging on by the frazzled thread of debt that indentures us to the rich and makes it harder and harder to fight back against the theft of our middle-class wealth. As we struggle to support ourselves, the super-rich remain on the take, driving us ever closer to the status of most wealth-unequal country in the world.

More Paul Bucheit.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • A missing poster hangs on a tree outside the Cleveland home of Amanda Berry Wednesday. Berry and two other women, Michelle Knight and Gina DeJesus, made a daring escape this week after being held captive for more than a decade.
    Credit: AP/Tony Dejak

  • Elvis Rafael Rodriguez and Emir Yasser Yeje offer their best impression of  Eric B. & Rakim. On Thursday, New York prosecutors identified the pair as members of an international gang that robbed $45 million in a matter of hours by hacking into a database of prepaid debit cards and draining ATM machines around the world.
    Credit: AP

  • New Jersey Gov. Chris Christie walks to a podium during the groundbreaking ceremony for the Technology Enhanced Accelerated Learning Center at Essex County Newark Tech in Newark, N.J., Tuesday. Christie made less flattering headlines this week after undergoing a secret stomach surgery to curb his weight.
    Credit: AP/Julio Cortez

  • Workers stand outside the Tung Hai Sweater Ltd. factory in Dhaka, Bangladesh, Thursday after a fire broke out in its 11-story building. Eight people were killed in the blaze.
    Credit: AP/Ismail Ferdous

  • Workers rescue a woman trapped for 17 days in the rubble of a garment factory building in Saver, Bangladesh, Friday. The building's collapse was the worst industrial disaster in the country's history, killing more than 1,000 people.
    Credit: AP

  • Former South Carolina Gov. Mark Sanford gives his victory speech Tuesday in Mt. Pleasant, S.C., after winning back his old congressional seat in the state's first district.
    Credit: AP/Rainier Ehrhardt

  • Jodi Arias reacts in Maricopa Country Superior Court Wednesday after being found guilty of first-degree murder in the gruesome killing of her one-time boyfriend, Travis Alexander. Arias has subsequently said she wants the death penalty, claiming she'd "prefer to die sooner than later."
    Credit: AP/The Arizona Republic/Rob Schumacher

  • Ariel Castro stands for his mug shot Thursday at the Cuyahoga County Corrections Center, where he is being held on $8 million bail. The former bus driver is accused of imprisoning three young women and beating them repeatedly over a period of 10 years.
    Credit: AP/Cuyahoga County

  • Charles Ramsey addresses the media Monday after helping rescue three women held captive in Cleveland for more than a decade. Ramsey's hero portraiture has been complicated by revelations of his own domestic violence record.
    Credit: AP/The Plain Dealer/Scott Shaw

  • Michael B. Donley, Secretary of the Air Force, testifies during a Senate Appropriations Defense Subcommittee hearing on Capitol Hill Wednesday. The military branch was rocked this week after its chief sexual assault prevention officer was charged with sexual battery.
    Credit: AP/Carolyn Kaster

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 14 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

Salon is proud to feature content from AlterNet, an award-winning news magazine and online community that creates original journalism and amplifies the best of hundreds of other independent media sources.

follow salon

Most Read

Popular on Reddit

links from salon.com

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations