United States of Bananas

http://www.nytimes.com/2010/11/07/op...stof.html?_r=1

Our Banana Republic
By NICHOLAS D. KRISTOF
Published: November 6, 2010
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In my reporting, I regularly travel to banana republics notorious for their inequality. In some of these plutocracies, the richest 1 percent of the population gobbles up 20 percent of the national pie.

Damon Winter/The New York Times
Nicholas D. Kristof
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Times Topic: Income Inequality
But guess what? You no longer need to travel to distant and dangerous countries to observe such rapacious inequality. We now have it right here at home — and in the aftermath of Tuesday’s election, it may get worse.

The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976. As Timothy Noah of Slate noted in an excellent series on inequality, the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana.

C.E.O.’s of the largest American companies earned an average of 42 times as much as the average worker in 1980, but 531 times as much in 2001. Perhaps the most astounding statistic is this: From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent.

That’s the backdrop for one of the first big postelection fights in Washington — how far to extend the Bush tax cuts to the most affluent 2 percent of Americans. Both parties agree on extending tax cuts on the first $250,000 of incomes, even for billionaires. Republicans would also cut taxes above that.

The richest 0.1 percent of taxpayers would get a tax cut of $61,000 from President Obama. They would get $370,000 from Republicans, according to the nonpartisan Tax Policy Center. And that provides only a modest economic stimulus, because the rich are less likely to spend their tax savings.

At a time of 9.6 percent unemployment, wouldn’t it make more sense to finance a jobs program? For example, the money could be used to avoid laying off teachers and undermining American schools.

Likewise, an obvious priority in the worst economic downturn in 70 years should be to extend unemployment insurance benefits, some of which will be curtailed soon unless Congress renews them. Or there’s the Trade Adjustment Assistance program, which helps train and support workers who have lost their jobs because of foreign trade. It will no longer apply to service workers after Jan. 1, unless Congress intervenes.

So we face a choice. Is our economic priority the jobless, or is it zillionaires?

And if Republicans are worried about long-term budget deficits, a reasonable concern, why are they insistent on two steps that nonpartisan economists say would worsen the deficits by more than $800 billion over a decade — cutting taxes for the most opulent, and repealing health care reform? What other programs would they cut to make up the lost $800 billion in revenue?

In weighing these issues, let’s remember that backdrop of America’s rising inequality.

In the past, many of us acquiesced in discomfiting levels of inequality because we perceived a tradeoff between equity and economic growth. But there’s evidence that the levels of inequality we’ve now reached may actually suppress growth. A drop of inequality lubricates economic growth, but too much may gum it up.

Robert H. Frank of Cornell University, Adam Seth Levine of Vanderbilt University, and Oege Dijk of the European University Institute recently wrote a fascinating paper suggesting that inequality leads to more financial distress. They looked at census data for the 50 states and the 100 most populous counties in America, and found that places where inequality increased the most also endured the greatest surges in bankruptcies.

Here’s their explanation: When inequality rises, the richest rake in their winnings and buy even bigger mansions and fancier cars. Those a notch below then try to catch up, and end up depleting their savings or taking on more debt, making a financial crisis more likely.

Another consequence the scholars found: Rising inequality also led to more divorces, presumably a byproduct of the strains of financial distress. Maybe I’m overly sentimental or romantic, but that pierces me. It’s a reminder that inequality isn’t just an economic issue but also a question of human dignity and happiness.

Mounting evidence suggests that losing a job or a home can rock our identity and savage our self-esteem. Forced moves wrench families from their schools and support networks.

In short, inequality leaves people on the lower rungs feeling like hamsters on a wheel spinning ever faster, without hope or escape.

Economic polarization also shatters our sense of national union and common purpose, fostering political polarization as well.

So in this postelection landscape, let’s not aggravate income gaps that already would make a Latin American caudillo proud. To me, we’ve reached a banana republic point where our inequality has become both economically unhealthy and morally repugnant.

I invite you to comment on this column on my blog, On the Ground. Please also join me on Facebook, watch my YouTube videos and follow me on Twitter.

Only a limited mentality thinks the pie is a fixed size, and when someone does well, someone else doesn't.

Lots of articles around on how the VRWC has buggered and still buggering America, and if is completely beyond the reach of the law (massive, pervasive, multi-year mortgage lender fraud and no one's in jail, nor even prosecuted). aka Too Big Too Wealthy To Jail

America's Two Economies, and Why One Is Recovering and the Other Isn't

Next time you hear an economist or denizen of Wall Street talk about how the "American economy" is doing these days, watch your wallet.

There are two American economies. One is on the mend. The other is still coming apart.

The one that's mending is America's Big Money economy. It's comprised of Wall Street traders, big investors, and top professionals and corporate executives.

The Big Money economy is doing well these days. That's partly thanks to Ben Bernanke, whose Fed is keeping interest rates near zero by printing money as fast as it dare. It's essentially free money to America's Big Money economy.

Free money can almost always be put to uses that create more of it. Big corporations are buying back their shares of stock, thereby boosting corporate earnings. They're merging and acquiring other companies.

And they're going abroad in search of customers.

Thanks to fast-growing China, India, and Brazil, giant American corporations are racking up sales. They're selling Asian and Latin American consumers everything from cars and cell phones to fancy Internet software and iPads. Forty percent of the S&P 500 biggest corporations are now doing more than 60 percent of their business abroad. And America's biggest investors are also going abroad to get a nice return on their money.

So don't worry about America's Big Money economy. According to a Wall Street Journal survey released Thursday, overall compensation in financial services will rise 5 percent this year, and employees in some businesses like asset management will get increases of 15 percent.

The Dow Jones Industrial Average is back to where it was before the Lehman bankruptcy filing triggered the financial collapse. And profits at America's largest corporations are heading upward.

But there's another American economy, and it's not on the mend. Call it the Average Worker economy.

Last Friday's jobs report showed 159,000 new private-sector jobs in October. That's better than previous months. But 125,000 net new jobs are needed just to keep up with the growth of the American labor force. So another way of expressing what happened to jobs in October is to say 24,000 were added over what we need just to stay even.

Yet the American economy has lost 15 million jobs since the start of the Great Recession. And if you add in the growth of the labor force -- including everyone too discouraged to look for a job -- we're down about 22 million.

Or to put it another way, we're still getting nowhere on jobs.

One out of eight breadwinners is still out of work. Most families in the Average Worker economy rely on two breadwinners. So if one out of eight isn't working, chances are high that family incomes are down compared to what they were three years ago.

And that means the bills aren't getting paid.

According to a recent Washington Post poll, more than half of all Americans -- 53 percent -- are worried about making their mortgage payments. This is many more than were worried two years ago, when the Great Recession hit bottom. Then, 37 percent expressed worry.

Delinquency rates on home loans are rising. Distressed sales are up as a percent of total sales.

Most people in the Average Worker economy own few shares of stock, if any. Their equity is in their homes. But with all the delinquencies and distressed sales, the housing market has a glut of homes for sale. As a result, home prices are still dropping. So the net worth of most Americans is still dropping.

And even though interest rates are falling, most people in the Average Worker economy can't refinance their homes. They can't get home equity loans. Banks don't want to lend to the Average Worker economy because people in it are considered bad credit risks. They still owe lots of money, their family incomes are down, and their net worth has fallen.

And according to the Reuters/University of Michigan survey of American consumers, expectations about personal finances are at an all time low.

Inhabitants of the Big Money economy are celebrating Republican wins last week. They figure financial regulations will be rolled back, environmental regulations will be canned, the Bush tax cut will be extended to the top 1 percent, and it will be harder for workers to form unions.

Inhabitants of the Average Worker economy aren't so sure. The economy has been so bad they're angry at politicians. They showed their anger at the ballot box. They took it out on incumbents.

But if nothing changes in the Average Worker economy, there will be hell to pay.

=========

Hell to pay? Who's going to pay and who's going to extract payment? America is so fncked, and completely unfnckable.

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Originally Posted by Wild Cobra

Only a limited mentality thinks the pie is a fixed size, and when someone does well, someone else doesn't.

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You're a complete and utter fool. Inflation making the pie bigger doesn't mean shit when your share doesn't go up. THAT is the point.

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Originally Posted by MannyIsGod

You're a complete and utter fool. Inflation making the pie bigger doesn't mean shit when your share doesn't go up. THAT is the point.

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So why do you support politicians who create this record debt and borrowing?

You make zero sense. But, I'm not surprised. I'll wait to see if anyone with actual brain cells responds to this thread, WC.

they even took our spurstalk cash!

unfortunately, some people need a master.

you guys think american greed stops at just raping other countries?

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Originally Posted by Article

Life is hard! booo hooo

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Natural Law is just that the cream rises to the top. The majority will never all reach the top. There are first-generation millionaires creating their wealth out of nothing still. This is America ffs. Banana Republic sounds cute coming out of Huffington's diatribe, but is is just for book-selling shock value.

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Originally Posted by Wild Cobra

Only a limited mentality thinks the pie is a fixed size, and when someone does well, someone else doesn't.

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Only a fool doesn't understand the root causes of Bastille Day or Red October, or, quite frankly, the failure of the Mexican government going on right now. We're headed there right now. In probably 25-50 years, the super rich will be behind walls, and chaos will reign. Of course, idiots will still blame the blacks or the mexicans while the rich continue to rob us all.

The important thing about this thread is that the forum poster closest to resembling a monkey made a thread with the word 'bananas' in it.

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Originally Posted by ChuckD

Only a fool doesn't understand the root causes of Bastille Day or Red October, or, quite frankly, the failure of the Mexican government going on right now. We're headed there right now. In probably 25-50 years, the super rich will be behind walls, and chaos will reign. Of course, idiots will still blame the blacks or the mexicans while the rich continue to rob us all.

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50 years of compound interest on average returns will make you a multi-millionaire by then which will make you millions of dollars better off than most of the American population. You are right that there will inevitably be only two classes (the agenda of the left, and the effect of the right imo), but it's really not that hard to make sure you end up on the more favorable side.

As far as I am concerned, the only number that matters is your absolute standard of living. (as in how much do you own?)

And by that standard America is nowhere near a banana republic. And even if the rest of the world catches up, that won't change.

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Originally Posted by BlairForceDejuan

50 years of compound interest on average returns will make you a multi-millionaire by then which will make you millions of dollars better off than most of the American population. You are right that there will inevitably be only two classes (the agenda of the left, and the effect of the right imo), but it's really not that hard to make sure you end up on the more favorable side.

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Being a millionaire doesn't mean dick, and will probably leave you on the wrong side of the divide, or at least make you a convenient target for the mobs, while the truly rich get over. I'm a software developer, make highish 5 figures, am 48 years old, and if you dropped a million dollars, tax free, in my lap, I couldn't retire on it at my current standard middle class lifestyle. I could easily live another 30 years, and the money would run out.

Being "rich" really starts at about $10M now, and no normal non Wall Street working person will ever sock away enough for that.

Quote:

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Originally Posted by ChuckD

Only a fool doesn't understand the root causes of Bastille Day or Red October, or, quite frankly, the failure of the Mexican government going on right now. We're headed there right now. In probably 25-50 years, the super rich will be behind walls, and chaos will reign. Of course, idiots will still blame the blacks or the mexicans while the rich continue to rob us all.

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And in our nation, it's because the liberals keep wanting to take more from those who have money, instead of striving to better themselves.

The slices of pie keep being reduced for the poor. Not because of the rich, but because the poor have become underachievers by their own actions, and the complacency of letting the government take care of them.

During the last crisis we immediately freaked out and pawned our future collective asses for the sake of our financial sector's apparent inability to pay in late 2008.

If we can't redeem the pawn ticket, that's a big, big problem.

There will be hell to pay if there's a next time. Hoping (not betting) hard there isn't a next time. We somehow manage to feather it out instead of it feathering us out in relentless cascading failure.


(heroic grimace)

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Originally Posted by Wild Cobra

And in our nation, it's because the liberals keep wanting to take more from those who have money, instead of striving to better themselves.

The slices of pie keep being reduced for the poor. Not because of the rich, but because the poor have become underachievers by their own actions, and the complacency of letting the government take care of them.

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This goes WAY beyond the non-working poor anymore, WC. It's about airline pilots who's company goes under due to shit management, and in bankruptcy, they just take the entire pension fund to pay off bad debts. It's about people getting laid off because their job gets outsourced so the CEO can see an uptick of a few cents on the stock price so he can afford his new yacht. You think you're fighting this shit with Tea Party, but what you're really doing is electing the enablers of the wealthy.

TWO FUCKING DAYS AFTER THE ELECTION, I saw a GOP congresscritter calling for loosening restrictions on banking. That's what you voted for, and that's what your gullible ass is getting. They're ready to blow up the economy again while lining their pockets.

if I see all of us being swept away by a gigantic tornado, does that make me crazy?

Quote:

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Originally Posted by Wild Cobra

And in our nation, it's because the liberals keep wanting to take more from those who have money, instead of striving to better themselves.

The slices of pie keep being reduced for the poor. Not because of the rich, but because the poor have become underachievers by their own actions, and the complacency of letting the government take care of them.

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You're right. Wall Street workers deserve those billions (trillions?) of dollars in bonuses they paid to their employees after nearly bankrupting the country with insanely illegal practices.

I really wish you'd open your damn eyes. The argument of "people who are rich deserve it because they work harder" is so old it dates back to when caste systems were in place and given based on familial progression. "Well, they're royalty, so they deserve that title/station." Same fucking principle, and people like you perpetuate a system that allows wealthy individuals to extort the lower classes freely with no repercussions.

Basically, you're either clueless or you think the majority of people deserve to go hungry while others are planning to make their 3rd yacht the most opulent one yet.

1% of Americans deserve 80% of the profit! They work 12 trillion times harder than the other 99% combined!

The other 99% needs to work even harder. Daddy Warbucks wants a new luxury liner.

Quote:

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Originally Posted by Wild Cobra

Only a limited mentality thinks the pie is a fixed size, and when someone does well, someone else doesn't.

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26% is a lot bigger slice than 9% of any size pie. inflation is based on speculation and isn't really in the scope of what the data is trying to show: the wealthy elite are dramatically raping everyone else for money.

Quote:

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Originally Posted by ChuckD

This goes WAY beyond the non-working poor anymore, WC. It's about airline pilots who's company goes under due to shit management, and in bankruptcy, they just take the entire pension fund to pay off bad debts. It's about people getting laid off because their job gets outsourced so the CEO can see an uptick of a few cents on the stock price so he can afford his new yacht. You think you're fighting this shit with Tea Party, but what you're really doing is electing the enablers of the wealthy.

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And that's a different topic yet.

Quote:

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Originally Posted by Cry Havoc

You're right. Wall Street workers deserve those billions (trillions?) of dollars in bonuses they paid to their employees after nearly bankrupting the country with insanely illegal practices.

I really wish you'd open your damn eyes. The argument of "people who are rich deserve it because they work harder" is so old it dates back to when caste systems were in place and given based on familial progression. "Well, they're royalty, so they deserve that title/station." Same fucking principle, and people like you perpetuate a system that allows wealthy individuals to extort the lower classes freely with no repercussions.

Basically, you're either clueless or you think the majority of people deserve to go hungry while others are planning to make their 3rd yacht the most opulent one yet.

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People deserve what they earn. Some earn money in different ways. However, for people of lesser means, and politicians who want to secure their vote, to take from those who have achieved and redistribute... That should be illegal.