Senator Sanders is articulate and from his angry letter one learns that
the rich steadily push to gain their ends. The growing inequality and
poverty is the product of their malice. Rich conspire to extend the
Bush's tax cuts and they attempt to dismantle all social programs so
they can get richer. This "orgy of greed" made him furious and he has
railed against corporate capitalism. Even Marxists were seldom so angry.
In fact, the concentration of income cannot be explained by some broad
conspiracy and class warfare theory. It is a relatively new phenomenon
related to growing influence of federal bureaucracy and financial
technocracy. It began to take hold from the 1980s when compensation and
employment in the federal sector and in the financial sector
skyrocketed. On the other hand, globalization and emigration depressed
the wages of the less skilled. The failure of public education and the
economic crisis worsened the situation further. While the income
disparity grew, the distribution of wealth hasn't changed much.
"ALARMING TRUTH"
The alarming truth is that income concentration is indeed growing. No
democracy can survive mounting inequality. The Obama tax deal doesn't
help to address this critically important problem. It instead embraces
the growth of budgetary deficit which means deterioration of standard of
living of the middle class and the poor in the long run. It is bad
economic policy and it is bad social policy. But in a short run, it will
pump another $900 billion stimulus into the economy of
borrowed-from-Chinese money just when the economy has been falling
apart.
The long-term obligations are already too big to be met through broad
tax increases -- even if we add VAT (value added tax). But government
can print money and the Fed's free-from-audit status was taken advantage
to defraud the currency and manipulate stocks. These attempts to cure
the catastrophic fiscal situation with fraudulent monetary policy led to
the extraordinary growth of Wall Street and its political influence.
IRON TRIANGLE
Today, financial houses, built around the secretary of the treasury and
the chairman of the Fed, have become an "iron triangle", i.e., interest
group, bureaucrats, and Congressional subcommittees, which not only
affect policy but also the money in congress. The U.S. Congress had
abdicated its authority over policy to the "iron triangle" which is now
directing the course of the U.S. economy.
By 2005, the financial sector grew to 20 percent of GDP (gross domestic
product) against manufacturing shrinking to 12 percent. This was
followed by extraordinary growth of Wall Street compensation packages
while the credit debt had quadrupled to about $50 trillion. In 2010, the
"iron triangle" has transformed Wall Street's gigantic debt into public
debt, while a small group of financial barons privatized the profits.
It was the largest theft in history.
Today the Fed can buy futures and pump trillions into just anything -
including state and local debt, real estate, mortgages, mines, municipal
bonds - any asset. The Fed can even bail out various states with our
money. It underlines the extent of collaboration between Washington and
the U.S. financial sector and the impotence of Congress.
The tax deal can serve the same purpose. While doing little to help the
economy, it increases concentration of income in the hands of few and
thus boosts their ability to invest more in the casino-like stock
market. And it will blow another near-$1 trillion hole in the budget,
thanks to Republicans who just won the midterm election promising
reduction of debt and fiscal responsibility.
Jarosinski lives in Waitsfield.
