The wealth inequality meme may finally be going viral… Let’s hope it makes a difference

I’m sure that most of you have seen it already, as it’s been all over the web today, but, just in case you haven’t, I’d highly recommend that you take a few minutes and watch this short animated video on the subject of wealth disparity in America.

I suspect that our readers on the far right will reject it offhand as the work of agitators looking to instigate “class warfare,” and our friends on the far left will find fault with the way in which Socialism is summarily written off as a non-viable alternative to our current system, but I think this is exactly the kind of straightforward, fact-driven, middle-of-the-road, non-partisan piece that we need more of. Now, if we could just find a way to incorporate an adorable squeaking frog doing the Harlem Shake, we’d be all set.

Here, for those of you who would like to dig deeper, are the references behind the video:

Mother Jones
Dan Ariely
Think Progress

And, if you’re interested, our previous conversations on wealth inequality can be found here.

[Tonight’s post is brought to you by the Romney for Detroit campaign.]

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  1. EOS
    Posted March 5, 2013 at 6:17 am | Permalink

    Straightforward, fact-driven, middle of the road piece? You’ve got to be kidding. The distribution of wealth is not the function of government, nor is it equitable for the majority to take from those who have more.

    Socialism is a non-viable alternative that creates dependency and reduces all opportunity for personal wealth. Except once it is widespread, the 99% will no longer have the option of protest or advocacy for change. We’ll all be standing in lines, hoping for a sliver of the ever diminishing pie.

  2. EOS
    Posted March 5, 2013 at 6:22 am | Permalink

    How come you have readers on the far right but friends on the far left? Why can’t we be friends?

  3. Brainless
    Posted March 5, 2013 at 7:54 am | Permalink

    EOS, the distribution of wealth TO the richest few has been an extremely large part of our government for 30 years now. They have gamed the system, spent future revenue and we now all feel the results. You label as “redistribution of wealth” the simple concept that we should all benefit from living in this very rich country we have all had a hand in creating and defending. Instead, fools like you are no longer able to see the difference between religious and political propaganda to the point where you think Jesus has a viable opinion about proper levels of defence spending and deficits. You’ve been snowed, man.

  4. anon
    Posted March 5, 2013 at 8:37 am | Permalink

    this meme went viral in 1848.

  5. Edward
    Posted March 5, 2013 at 9:09 am | Permalink

    This is an issue of national security. Countries with this kind of wealth disparity are prone to upheaval and civil war. This should not be taken lightly.

  6. anonymous
    Posted March 5, 2013 at 9:18 am | Permalink

    The sadist in me would love to see Romney brought to Detroit to serve as our Emergency Manager.

  7. Edward
    Posted March 5, 2013 at 9:21 am | Permalink

    Backing up my earlier point, this is from Forbes:

    Social and political problems must arise sooner or later from this predicament. As Galbraith writes, (WE study inequality) “because it enables us to understand the economic world in which we live, in ways that were not accessible to us before. One of the most important of those ways is precisely the neglected linkage between inequality and instability, between finance and society, and between economic and social differences and the risks of financial crisis.”

    Galbraith’s not the only one who feels that way.

    Here’s the free market apostle Alan Greenspan in 2007 admitting that “you cannot have a market capitalist system if there is a significant mood in the population that its rewards are unjustly distributed.” Notice please the notion “unjustly distributed” from one of the policymakers who made it so.

    And here’s one of the giant jurists of our history, Justice Louis Brandeis, who warned many many decades ago that “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”

    So, ask yourselves whether the growing tendency for inequality of wealth could lead to unrest and less innocent political action than Occupy Wall Street. I know some academics who believe social unrest in three to five years is a very real possibility. Harvard economist Ken Rogoff, for example, has been predicting that as the federal budget is reduced, and there are reduced payments for Medicare and Medicaid as well as Social Security, there is bound to be social unrest from the pinched “have-nots.”

  8. Meta
    Posted March 5, 2013 at 9:34 am | Permalink

    Another article that may be of interest. This comes from Nouriel Roubini, professor of economics at New York University’s Stern School of Business.

    The rise in inequality and the related weak growth of working and middle class incomes has many and complex causes; equally, it is also problematic for many reasons, even if one ignores the issue of the “fairness” of inequality.

    First, the increase in private and public leverage and the related asset and credit bubbles are partly consequences of inequality: The mediocre growth in incomes of the past few decades (driven by the factors increasing inequality discussed above) created a gap between incomes and spending aspirations (“keeping up with the Joneses”). In Anglo-Saxon countries (not just the U.S. and UK, but also others that followed the Anglo-Saxon economic model such as Iceland, Ireland, Spain and Australia in recent years), the response was a democratization of credit—via financial liberalization—that allowed struggling households to borrow to make up the difference between spending and income, leading to a rise in private debt. In the social welfare state economies of continental Europe, the gap was filled by the provision of public services (free education, health care, etc.), although not fully paid for with taxes, thus leading to the rise of public deficits and debt.

    In both cases, such growing private and public debts eventually became unsustainable, leading to financial crisis. So, while originally there was a surge of private debt in the laissez-faire Anglo-Saxon economies and of public debt in the continental European social welfare state economies, both ended up with massive—and at times unsustainable—levels of public debt. When the private debt bubbles burst as asset prices collapsed, public deficits and debts surged even in the Anglo-Saxon economies as private losses were socialized, automatic stabilizers kicked in and counter-cyclical fiscal policies were implemented to prevent the Great Recession of 2007-09 turning into the Great Depression 2.0.

    Second, corporate firms in advanced economies are now cutting jobs because they say that there is uncertainty, excess capacity and not enough final demand. But cutting jobs reduces labor income, increases inequality and reduces final demand. Thus, what is individually rational (firms need to survive and thrive, be profitable and achieve Wall Street’s or the City’s earnings targets), is destructive in the macro aggregate as a firm’s labor costs are an individual’s labor income and demand. So, we get a Catch 22 situation in which free markets don’t create enough final demand as firms shed jobs as there is not enough demand, while those actions further reduce labor income and demand. The sharp worsening in the distribution of income that comes from this labor-cost slashing (note that the share of labor income in GDP is sharply down and falling in the U.S.)—from labor to capital, from wages to profits, from poor to rich, from households to corporate firms—then reduces aggregate demand as the marginal propensity to spend (save) of households/workers/the poor is higher (lower) than of firms/capital owners/the rich.

    In a previous era, Henry Ford was willing to increase the wages of his own workers as he realized that higher spending, including spending to purchase the cars that he produced, was dependent on higher wages. But Ford Motor Company was large enough in the early part of the 20th century to internalize the effect that its own wage policy would have on the overall economy. In the U.S. instead, the belief that markets always work if unfettered by regulation has now led to a destructive decrease in jobs as the past few recessions have been followed by job-loss recoveries, then job-less recoveries and then weak job-creating recoveries. Even labor markets don’t work properly if countries don’t invest enough in the skills and human capital of their labor force. In this regard, the labor market policies of some continental European economies—such as Germany—have proven better at maintaining and restoring job growth. In Germany, during the recent financial crisis, we saw labor-hoarding—unlike the massive unfettered labor shedding by U.S. corporations—as working hours were reduced, but a massive outright slashing of jobs was avoided; as a result, labor income did not fall as much, workers skills were not damaged as much by a long spell of unemployment and, once the economic recovery started in earnest, the unemployment rate decreased rapidly in Germany, while it has been stagnating at high chronic levels in the U.S.

    So, Karl Marx was partly right in arguing that globalization, unfettered financial capitalism and the redistribution of income and wealth from labor to capital could lead capitalism to self-destruct (even if many of his views were wrong and his view that socialism would be a better system has proven totally mistaken). As he argued, unregulated capitalism could lead to a regular excess of capacity and production, to under-consumption and to repeated and destructive financial crises, fueled by booms and busts of asset prices and credit bubbles.

    Moving Back to a Balance Between the Market and the State

    These excesses of laissez-faire capitalism were clear even before the Great Depression as workers began to organize to ensure their wages and benefits increased with productivity growth. And enlightened “bourgeois” classes in liberal democracies in Europe realized that, to avoid socialist revolutions, workers’ rights needed to be protected, wage and labor conditions improved and a welfare state created to redistribute wealth and to provide the financing of public goods—education, health care, a social safety net—for the working masses. That push toward a modern welfare state accelerated after the Great Depression when the state took on the role of macro-stabilization, the development of more advanced welfare state institutions such as social safety nets and the provision of opportunity to all via public education, health care, old-age pensions and progressive income and wealth taxation. Thus, the rise of the social welfare state was a response of market-oriented liberal democracies to the threat of popular revolutions, socialism and communism as the frequency and severity of economic and financial crises increased. Three decades of relative social and economic stability then ensued from the 1940s until the early 1970s during which period inequality sharply fell, median incomes grew rapidly and the working and middle classes experienced a sharp rise in their living standards.

    While classical economists—from Malthus to Ricardo and Marx—believed (based on hundreds of years of economic history) that the working classes would always be stuck at close to subsistence wages as an unlimited supply of labor would prevent real wages from rising above such a level, real wages and economic conditions sharply improved in the second half of the 19th century as the technological innovations of the Industrial Revolution led to an increase in productivity growth that was shared by both labor and capital. Indeed, the major intellectual revolution of thinkers such as Marshall—compared with classical economists—was that wages could grow over time alongside the increase in labor productivity growth, driven by technological innovation and the rise in the capital-to-labor ratio, spurred by investment in physical capital. The massive rise in incomes of many societies in the past 150 years that has vastly improved the living conditions of a large fraction of humanity has been driven by market-oriented economic regimes and the progressive application of technological progress—whether embodied or disembodied in new capital—to the production of goods and services, thus leading to a huge increase in the productivity of labor.

    But that relationship between rising productivity and increasing working and middle class incomes was never mechanical: It required workers to obtain the opportunity and skills—via education, training, proper health care—to increase their own productivity and thus partake of the increase in income deriving from the productivity growth that new technologies provided. It also required the existence of a welfare state that provided such public goods as well as a social safety net and old-age income security. All those government policies were key to preventing an increase in inequality that in laissez-faire markets is often the result of the excessive concentration of economic, financial and political power within small elites.

    While purely redistributive policies that redistribute income from capital to labor and from rich to poor do not work if the economic pie is small and not growing quickly enough, proper taxation policies (effectively progressive) to fund the provision of public goods that increase the skills, productivity and economic opportunities of lower-income and lower-skill individuals in turn allow the economic pie to grow faster so that its benefits are shared by both labor and capital. The ability of workers to organize themselves into unions and thus demand better wages, benefits and working conditions also helped to sustain the share of labor income in GDP and prevent a sharper rise in inequality.

    The rise of the middle class and the increasing living standards of the working class was thus not a mechanical result of economic growth, but the active outcome of many economic policies—such as universal publicly provided education financed by progressive taxation, to give just one example—that increased the skills, knowledge and human capital and the economic opportunities even of individuals born in disadvantaged economic circumstances. Social mobility in any society was never the result of market forces, but the outcome of progressive economic, fiscal, taxation and other social policies.

    Some of the lessons about the need for prudential regulation of the financial system, limiting the excesses of unregulated laissez-faire markets and the inequality effects of unfettered competition were lost in the cycle of deregulation that accelerated in the Reagan-Thatcher era of unfettered market capitalism—the Anglo-Saxon model. The drive to massive deregulation was also fed by the extremes of the “social welfare model” (like that prevailing in continental Europe), the deficits of which were illustrated in fiscal crises, excesses of regulation and a lack of economic dynamism, leading first to “euro-sclerosis” and then to the current eurozone crises. But now, that laissez-faire Anglo-Saxon model has also miserably failed, as the current economic and financial crisis has shown.

    Thus, to enable market-oriented economies to operate in more stable and balanced ways, we need to return to the right balance between markets and the provision of public goods. That means moving away from both the Anglo-Saxon model of unregulated laissez-faire capitalism and voodoo economics and the continental European model of deficit-driven welfare states. Even an alternative “Asian growth” model—if there really is one—has not prevented a rise in inequality in China, India and many other parts of the continent. EMs—from Asia to Latin America—need to further develop some of the key institutions of a modern social welfare state to prevent socio-political instability and to promote the growth of consumption-based economies.

    For example, China will not become a consumer society until wages start to grow more quickly than productivity to reverse the opposite trend of the past few decades and until other policies are implemented to shift income from capital/corporates/state-owned enterprises to labor/households. In Latin America, a continent cursed for decades by political instability driven by massive inequality (repeated cycles of authoritarian regimes followed by radical populist regimes and back to dictatorships), this vicious cycle was broken when, in the last two decades, market-oriented reforms were combined with economic policies—introduced both by moderate center-left and center-right governments—aimed at reducing inequality and providing economic opportunities to the working class.


    In conclusion, any economic model that doesn’t properly address inequality by providing public goods and economic opportunity to all will eventually face a crisis of legitimacy. Many academic research studies, including a recent IMF study, show that widening inequality leads to lower economic growth. So, even aside from the issue of “fairness,” inequality is also bad on traditional economic “efficiency” criteria. And the recent frequency and severity and consequences of economic and financial crises, themselves partly caused by rising inequality and income insecurity, is damaging and risks a backlash against globalization and market-oriented reforms. Thus, a third way that balances the role of markets and states in the economy needs to be found. Otherwise, the protests of 2011 will become more severe and cause disruptive social and political instability that eventually harms long-term economic growth and welfare by leading to a backlash against globalization and against market-oriented economies in advanced economies and EMs alike.

    Read more:

  9. John Galt
    Posted March 5, 2013 at 9:50 am | Permalink

    As the world’s greatest CEO, Jesus Christ, once said, “The wealth will trickle down to those attractive young people willing to sell their bodies for cash.”

  10. alan2102
    Posted March 5, 2013 at 10:12 am | Permalink

    EOS: “How come you have readers on the far right but friends on the far left?”

    Mark has friends on the far left? NAME ONE. Mark is a center-right DP-apologist hack who seems to be unaware of how wildly-far to the right the entire national conversation has become during his lifetime. A moderate right-winger like him, or (say) Obama, is now considered “left”!

    EOS: “Socialism is a non-viable alternative that creates dependency and reduces all opportunity for personal wealth. Except once it is widespread, the 99% will no longer have the option of protest or advocacy for change. We’ll all be standing in lines, hoping for a sliver of the ever diminishing pie.”

    Precisely the opposite of the truth — par for the course, here in the right-dominated corporation-brainwashed U.S. of A.

    Socialism was and is highly viable — for the 99%. Though, it is true, the benefits come at the cost of “opportunity” (for further theft and looting of society) by the already-rich. That is a big cost, indeed.

    In case you had not noticed, half of us are ALREADY “standing in lines, hoping for a sliver of the ever diminishing pie” — a pie that has already been largely devoured by the elites and money powers. THIS is your wonderful “free market capitalism” (note the contradiction in terms), in action. THIS is the result, and it will get much worse. It is a FAILED SYSTEM, and in coming decades it will be impossible for even the likes of you to deny it.

    Here’s a link for you, though I doubt that it will do much good. You will realize that we live in a failed system only when the collapse becomes much more acute. And even then, you’ll likely explain it all away using canned Faux-News “analysis” — blaming the “liberals”, or the decline in church attendance, or some such rubbish. But here goes, anyway. Try it! You might learn something:
    Do Publicly Owned, Planned Economies Work?
    Posted in Communism, Public Ownership and Planning, Socialism, Soviet Union, USSR by what’s left on December 21, 2012
    Compared to capitalism, the USSR’s publicly owned, planned economy worked remarkably well.
    By Stephen Gowans
    The Soviet Union was a concrete example of what a publicly owned, planned economy could produce: full employment, guaranteed pensions, paid maternity leave, limits on working hours, free healthcare and education (including higher education), subsidized vacations, inexpensive housing, low-cost childcare, subsidized public transportation, and rough income equality…….. [continues at link]

  11. John Galt Jr.
    Posted March 5, 2013 at 10:16 am | Permalink

    You make it sound like the deck is stacked against the non-wealthy, like we’re slashing education budgets while protecting multi billion dollar giveaways for corporate jets and the like. If you really loved America you’d pay more attention to American Idol, and stories of our brave men fighting against godless Arabs.

  12. alan2102
    Posted March 5, 2013 at 10:32 am | Permalink

    Oh, what the hell? Here’s a few core paragraphs from the Gowans article. This is a response not so much to EOS, who is probably beyond hope, but to the right-winger who made the leading video — and could not get through it without a couple of idiotic and gratuitous swipes at “socialism” (about which he apparently knows nothing that he did not pick up from the WSJ or other CIA propaganda).

    [attempting an html “blockquote” here…]

    On Christmas Day, 1991, the day the USSR officially ended, Gorbachev said, “We live in a new world. The Cold War is finished. The arms race and the mad militarization of states, which deformed our economy, society and values, have been stopped. The threat of world war has been lifted” (Roberts, 1999). This made Gorbachev wildly popular in the West. Russians were less enthusiastic. Contained within Gorbachev’s words was the truth about why the world’s first conscious attempt to build an alternative to capitalism had been brought to a close. It was not because the Soviet economic system had proved unworkable. On the contrary, it had worked better than capitalism. The real reason for the USSR’s demise was that its leadership capitulated to an American foe, which, from the end of World War II, and with growing vigour during the Reagan years, sought to arms race to death the Soviet economy. This was an economy that worked for the bottom 99 percent, and therefore, if allowed to thrive, would have discredited the privately owned, market-regulated economies that the top one percent favoured and benefited from. It was this model of free enterprise and market regulation which made vast wealth, security and comfort the prerogatives of captains of industry and titans of finance, and unemployment, poverty, hunger, economic insecurity, and indignity—the necessary conditions of the top one percent’s riches—the lot of everyone else.

    The 21 years since the defeat of the USSR have not been kind. Stalin, under whose tutelage the world’s first publicly owned, planned economy was built, once issued a prophetic warning: “What would happen if capitalism succeeded in smashing the Republic of Soviets? There would set in an era of the blackest reaction in all the capitalist and colonial countries. The working class and the oppressed peoples would be seized by the throat, the positions of international communism would be lost” (Stalin, 1954). And just as Stalin had accurately prophesied 10 years before Operation Barbarossa, the Nazi invasion of the USSR, that his country had only 10 years to prepare for an attack, so too did he accurately foresee the consequences of the Soviet Union’s falling to the forces of capitalism. An era of the blackest reaction has, indeed, set in. Washington now has more latitude to use its muscular military to pursue its reactionary agenda around the world. Public ownership and planning hang on in Cuba and North Korea, but the United States and its allies use sanctions, diplomatic isolation and military harassment to sabotage the economies of the hold-outs (as they did the Soviet economy), so that the consequences can be falsely hung on what are alleged to be the deficiencies of public ownership and planning. They are in reality the consequences of a methodical program of low-level warfare. Encouraged to believe that the Soviet economic system had failed, many people, including both communist supporters and detractors of the Soviet Union, concluded that a system of public ownership and planning is inherently flawed. Communists abandoned communist parties for social democratic ones, or abandoned radical politics altogether. Social democrats shifted right, eschewing reform, and embracing neo-liberalism. In addition, Western governments, no longer needing to blunt the appeal of public ownership and planning, abandoned the public policy goal of full employment and declared robust public services to be no longer affordable (Kotz, 2001). At the same time, privatization in the former Soviet Union and formerly communist countries of Eastern Europe expanded the global supply of wage-labour, with predictable consequences for wage levels worldwide. The Soviet Union’s defeat has ushered in a heyday for capital. For the rest of us, our throats, as Stalin warned, have been seized.

    The world’s largest capitalist economies have been in crisis since 2008. Some are trapped in an austerity death-spiral, some in the grips of recession, most growing slowly at best. Austerity—in reality the gutting of public services—is the prescribed pseudo-remedy. There is no end in sight. In some parts of Europe, official unemployment reaches well into the double-digits, youth unemployment higher still. In Greece, a country of 11 million, there are only 3.7 million employed (Walker and Kakaounaki, 2012). Moreover, the crisis can in no way be traced to an outside power systematically working to bring about capitalism’s demise, as the United States and its allies systematically worked to bring about the end of public ownership and planning in the USSR. Yet, free to develop without the encumbrance of an organized effort to sabotage it, capitalism is not working. Few point this out. By contrast, the Soviet model of public ownership and planning—which, from its inception was the target of a concerted effort to undermine it—never once, except during the extraordinary years of World War II, stumbled into recession, nor failed to provide full employment. Yet it is understood, including by some former supporters of the Soviet Union, to have been unworkable. Contrary to a widely held misconception, the experience of the Soviet Union did not demonstrate that an inherent weakness existed within its publicly owned, planned economy that doomed it to failure. It demonstrated, instead, the very opposite—that public ownership and planning could do what capitalism could not do: produce unremitting economic growth, full employment, an extensive array of free and nearly free public services, and a fairly egalitarian distribution of income. Moreover, it could do so year after year and continued to do so until the Soviet leadership pulled the plug. It also demonstrated that the top one percent would defend private ownership by using military, economic, and ideological means to crush a system that worked against them but worked splendidly for the bottom 99 percent (an effort that carries on today against Cuba and North Korea.)

    The defeat of the Soviet Union has, indeed, ushered in a period of dark reaction. The way out remains, as ever, public ownership and planning—which the Soviet experience from 1928 to 1989 demonstrates works remarkably well—and struggle against those who would discredit, degrade or destroy it.

    What Soviet public ownership and planning did for ordinary citizens of the USSR

    The benefits of the Soviet economic system were found in the elimination of the ills of capitalism—an end to unemployment, inflation, depressions and recessions, and extremes of wealth and poverty; an end to exploitation, which is to say, the practice of living off the labour of others; and the provision of a wide array of free and virtually free public services.

    Among the most important accomplishments of the Soviet economy was the abolition of unemployment. Not only did the Soviet Union provide jobs for all, work was considered a social obligation, of such importance that it was enshrined in the constitution. The 1936 constitution stipulated that “citizens of the USSR have the right to work, that is, are guaranteed the right to employment and payment for their work in accordance with quantity and quality.” On the other hand, making a living through means other than work was prohibited. Hence, deriving an income from rent, profits, speculation or the black market – social parasitism – was illegal (Szymanski, 1984). Finding a job was easy, because labour was typically in short supply. Consequently, employees had a high degree of bargaining power on the job, with obvious benefits in job security, and management paying close attention to employee satisfaction (Kotz, 2003).

    Article 41 of the 1977 constitution capped the workweek at 41 hours. Workers on night shift worked seven hours but received full (eight-hour) shift pay. Workers employed at dangerous jobs (e.g., mining) or where sustained alertness was critical (e.g. physicians) worked six or seven-hour shifts, but received fulltime pay. Overtime work was prohibited except under special circumstances (Szymanski, 1984).

    From the 1960s, employees received an average of one month of vacation (Keeran and Kenny, 2004; Szymanski, 1984) which could be taken at subsidized resorts (Kotz, 2003).

    All Soviet citizens were provided a retirement income, men at the age of 60, and women at the age of 55 (Lerouge, 2010). The right to a pension (as well as disability benefits) was guaranteed by the Soviet constitution (Article 43, 1977), rather than being revocable and subject to the momentary whims of politicians, as is the case in capitalist countries.
    That US citizens had to pay for their healthcare was considered extremely barbaric in the Soviet Union, and Soviet citizens “often questioned US tourists quite incredulously on this point.”

    That US citizens had to pay for their healthcare was considered extremely barbaric in the Soviet Union, and Soviet citizens “often questioned US tourists quite incredulously on this point.”

    Women were granted maternity leave from their jobs with full pay as early as 1936 and this, too, along with many other benefits, was guaranteed in the Soviet constitution (Article 122, 1936). At the same time, the 1936 constitution made provision for a wide network of maternity homes, nurseries and kindergartens, while the revised 1977 constitution obligated the state to help “the family by providing and developing a broad system of childcare…by paying grants on the birth of a child, by providing children’s allowances and benefits for large families” (Article 53). The Soviet Union was the first country to develop public childcare (Szymanski, 1984).

    Women in the USSR were accorded equal rights with men in all spheres of economic, state, cultural, social and political life (Article 122, 1936), including the equal right with men to employment, rest and leisure, social insurance and education. Among its many firsts, the USSR was the first country to legalize abortions, which were available at no cost (Sherman, 1969). It was also the first country to bring women into top government positions. An intense campaign was undertaken in Soviet Central Asia to liberate women from the misogynist oppression of conservative Islam. This produced a radical transformation of the condition of women’s lives in these areas (Szymanski, 1984).

    The right to housing was guaranteed under a 1977 constitutional provision (Article 44). Urban housing space, however, was cramped, about half of what it was per capita in Austria and West Germany. The reasons were inadequate building in Tsarist times, the massive destruction of housing during World War II, and Soviet emphasis on heavy industry. Prior to the October Revolution, inadequate urban housing was built for ordinary people. After the revolution, new housing was built, but the housing stock remained insufficient. Housing draws heavily on capital, which the government needed urgently for the construction of industry. In addition, Nazi invaders destroyed one-third to one-half of Soviet dwellings during the Second World War (Sherman, 1969).

    City-dwellers typically lived in apartment buildings owned by the enterprise in which they worked or by the local government. Rents were dirt cheap by law, about two to three percent of the family budget, while utilities were four to five percent (Szymanski, 1984; Keeran and Kenny, 2004). This differed sharply with the United States, where rents consumed a significant share of the average family budget (Szymanski, 1984), and still do.

    Food staples and other necessities were subsidized, while luxury items were sold well above their costs.

    Public transportation was efficient, extensive, and practically free. Subway fare was about eight cents in the 1970s, unchanged from the 1930s (Szymanski, 1984). Nothing comparable has ever existed in capitalist countries. This is because efficient, affordable and extensive public transportation would severely limit the profit-making opportunities of automobile manufacturers, petroleum companies, and civil engineering firms. In order to safeguard their profits, these firms use their wealth, connections and influence to stymie development of extensive, efficient and inexpensive public alternatives to private transportation. Governments, which need to keep private industry happy so that it continues to provide jobs, are constrained to play along. The only way to alter this is to bring capital under public control, in order to use it to meet public policy goals set out in a consciously constructed plan.

    The Soviet Union placed greater stress on healthcare than their capitalist competitors did. No other country had more physicians per capita or more hospital beds per capita than the USSR. In 1977, the Soviet Union had 35 doctors and 212 hospital beds per 10,000 compared to 18 doctors and 63 hospital beds in the United States (Szymanski, 1984). Most important, healthcare was free. That US citizens had to pay for their healthcare was considered extremely barbaric in the Soviet Union, and Soviet citizens “often questioned US tourists quite incredulously on this point” (Sherman, 1969).

    Education through university was also free, and stipends were available for post-secondary students, adequate to pay for textbooks, room and board, and other expenses (Sherman, 1969; Szymanski, 1984).

    Income inequality in the Soviet Union was mild compared to capitalist countries. The difference between the highest income and the average wage was equivalent to the difference between the income of a physician in the United States and an average worker, about 8 to 10 times higher (Szymanski, 1984). The elite’s higher incomes afforded privileges no greater than being able to acquire a modest house and car (Kotz, 2000). By comparison, in 2010, Canada’s top-paid 100 CEOs received incomes 155 times higher than the average full-time wage. The average full-time wage was $43,000 (Canadian Centre for Policy Alternatives, 2011). An income 10 times larger would be $430,000—about what members of the capitalist elite make in a single week. A factor that mitigated the modest degree of Soviet income inequality was the access all Soviet citizens had to essential services at no, or virtually, no cost. Accordingly, the degree of material inequality was even smaller than the degree of income inequality (Szymanski, 1984).

    Soviet leaders did not live in the opulent mansions that are the commonplace residences of presidents, prime ministers and monarchs in most of the world’s capitals (Parenti, 1997). Gorbachev, for example, lived in a four-family apartment building. Leningrad’s top construction official lived in a one-bedroom apartment, while the top political official in Minsk, his wife, daughter and son-in-law inhabited a two-bedroom apartment (Kotz and Weir, 1997). Critics of the Soviet Union accused the elite of being an exploiting ruling class, but the elite’s modest incomes and humble material circumstances raise serious doubt about this assessment. If it was indeed an exploiting ruling class, it was the oddest one in human history.

  13. Meta
    Posted March 5, 2013 at 10:59 am | Permalink

    The Dow is way up today. They say it’s in spite of the sequester. I suspect, however, that it’s because of it. Smaller government means less oversight. Smaller government means less social spending. Small government means greater wealth transfer to the American aristocracy.

    The Dow hit a new record high today, topping 14,264. The previous record was 14,198.10, set in October 2007, when investors were squarely focused on the Federal Reserve. The Fed had cut rates for the first time in four years and was worried the housing implosion would hit consumers and the broader economy.

    Today, the Fed’s actions have juiced stocks and helped boost the economy, but the recovery after the 2008 financial crisis remains slow-going.

    Investors appear to have shrugged off the fight over $85 billion in forced government spending cuts. The Obama administration has started making the cuts and some federal workers are getting furlough notices.

  14. Lynne
    Posted March 5, 2013 at 11:06 am | Permalink

    The big flaw of capitalism is that it concentrates wealth over time. The big flaw with socialism is that it can be very inefficient. So far, the best answer and most workable system seems to be a blending of the two economic systems. We already know that countries who have tried this (eg Sweden and yes, the USA) have been successful with it.

    The trouble with the USA right now is that some people are doing everything they can to dismantle what bits of socialism we already have, such as education, while preventing areas of the economy, such as healthcare, from becoming newly socialized. It is frustrating for me because there really are things where the people are best served by socialism and where society is best served by making sure that everyone has their basic needs met at least. Income equality has many benefits including such luxuries as lower crime and lower stress and certainly less political upheaval.

    What I wish I could figure out though is how the 1% has convinced so many in the 99% that wealth distribution is bad if it means taking from the rich and giving to the poor but it is perfectly ok when the wealth is being redistributed in the other direction. If you watch that video, you can clearly see that is the trend.

  15. anon
    Posted March 5, 2013 at 11:13 am | Permalink

    “The trouble with the USA right now is that some people are doing everything they can to dismantle what bits of socialism we already have.”

    and yet we all sit staring at our facebook feeds, which comforts us with the knowledge that 98% of our friends are also apathetic

  16. EOS
    Posted March 5, 2013 at 11:22 am | Permalink

    Really? You think Stalin, who killed between 20 to 60 million of his own people, had a better system? The mass starvation in North Korea is a fictional account of WSJ and the CIA? Read Aleksandr Solzhenitsyn if you really want to know how high the standard of living was in USSR and how happy the Soviet citizens were with their socialist form of government.

    The current economic crisis has its roots in the Federal Reserve and Central Banks rather than any inherent failure of capitalism.

  17. Brainless
    Posted March 5, 2013 at 11:47 am | Permalink

    alan, you’re going to have a rough go of trying to defend Stalin. Seriously, the guy was a mass-murdering fuckhead. Just let it go.

    That said, you make a very good point that a centrist like Mark is now considered some sort of lefty pinko whack job. That there is the power of marketing, folks.

    I disagree wholeheartedly with anon, however, that we are a bunch of mindless drones “sit staring at our facebook feeds”. That’s horseshit. We are working folks who try to do our best at all times. We do what we’ve always done: take care of our families and vote once in a while. The system is so corrupt, however, that we voted for a centrist governor and got some crazy bastard and we voted for better schools and got three shitty leaders where one alone easily could have run the system into the ground by himself.

    I, for one, can’t fucking wait to vote for our next drain commissioner. That’s some flippin’ sweet democracy right there.

  18. alan2102
    Posted March 5, 2013 at 12:32 pm | Permalink

    EOS: “You think Stalin, who killed between 20 to 60 million of his own people, had a better system?”

    And where, pray tell, did those numbers come from? You need not reply to that rhetorical question. I already know, in detail. For you, they came from Faux News or the equivalent (i.e. trashy low-brow right-wing “sources”). For them, i.e. for Faux News and its equivalents, they came originally mostly from Robert Conquest, a right-wing “historian” who popularized such absurd numbers. Actually, I cannot blame it all on Conquest, as his figures were, though wildly exaggerated, more reserved than that. Then along came the far-right fascist-sympathizers and propagandists, who exaggerated the exaggerations! Hence we have truly laughable claims of SIXTY MILLION murdered — this at a time when the entire population of the USSR was under thrice that! You would think that the idiots making such claims would pause for just a moment to compare the claims with the overall demographic context, in which light they are immediately identifiable as absurd. But nooooo. Anyway, I link below a fairly detailed discussion of the issue, including important information about Conquest and Solzhenitsyn; I urge you to read it.

    “The mass starvation in North Korea is a fictional account of WSJ and the CIA?”

    I did not say that. It is not fictional. It WAS, however, very much a product of policies promulgated by just such slime. If you want a great deal of essential background on N Korea, read Gowans’ blog, linked previously.

    Here’s the link. Please read the sections on Conquest, Solzhenitsyn,
    and the Russian prison system. Actually, you might want to read the
    whole thing. Who knows? You might learn something that your
    pro-fascist right-wing media handlers would rather you not know.
    Lies concerning the history of the Soviet Union
    From Hitler to Hearst, from Conquest to Solzhenitsyn:
    the history of the millions of people who allegedly were incarcerated and died in the labour camps of the Soviet Union and as a result of starvation during Stalin’s time.

  19. alan2102
    Posted March 5, 2013 at 1:00 pm | Permalink

    brainless: most U.S. presidents are mass-murdering fuckheads. Where does that leave us? My “defense” of Stalin is less than meets the eye. I am mostly opposed to outrageous lies that are used to discredit a system that did, in fact, work for the 99%. My purpose was not to suggest that Stalin was a nice guy. Obviously he wasn’t. But then, he could not afford to be. There is this minor matter called “historical context”, which in that case included things like dealing (somehow) with legions of fanatical ideological enemies who could have, and nearly did, wreck the USSR from within, while at the same time fighting off the greatest military machine ever assembled on earth, which threw itself at the USSR with utter savagery and dedication to murder millions and lay waste… and that was BEFORE the Western powers took up the fallen cudgel of Naziism and continued to wage Barbarossa by other means, for decades after. I mean, seriously. Cut the guy some slack and stop buying-in to CIA/state-department pro-fascist, anti-communist propaganda. Don’t be a fucking patsy. Just let it go.

  20. Mr. X
    Posted March 5, 2013 at 1:34 pm | Permalink

    The guy narrating the video in question isn’t a right winger. When he talks about Socialism, and says “and we know that won’t work”, listen to the way he’s saying it. The point is, this video does a great job on not bringing in partisan Democrat/Republican politics. It just states the facts. And it’s worth noting that no one has called the facts into question. This is really happening, and we all know it. It’s like the gilded age all over again.

  21. Meta
    Posted March 5, 2013 at 2:07 pm | Permalink

    From The Atlantic:

    “This is America, Now: The Dow Hits a Record High With Household Income at a Decade Low”

    Read the article:

  22. anonymous
    Posted March 5, 2013 at 4:11 pm | Permalink

    How many of the top .1% are so-called “self-made” men, and how many of them inherited wealth? I’d love to see that chart.

  23. alan2102
    Posted March 5, 2013 at 4:44 pm | Permalink

    Mr X: “The guy narrating the video in question isn’t a right winger. When he talks about Socialism, and says “and we know that won’t work”, listen to the way he’s saying it.”

    OK. I listened again, and you are right. His inflection COULD be interpreted as irony or subtle mocking. I guess I was going more with Mark’s description — “Socialism is summarily written off as a non-viable alternative”.

  24. EOS
    Posted March 5, 2013 at 5:19 pm | Permalink


  25. Demetrius
    Posted March 5, 2013 at 6:50 pm | Permalink

    Animations such as this one do a good job of helping people better understand income inequality — which can be a complicated concept for most people to grasp because of the enormous scale(s) involved.

    What’s even scarier: Now that the U.S. Supreme Court has effectively ditched “one person=one vote” in favor of “one dollar=one vote,” it isn’t too hard to watch this video and imagine an increasing number of “landslide” victories on behalf of plutocrats.

  26. biscodo
    Posted March 5, 2013 at 7:12 pm | Permalink

    WWLD: What Would Lemmy Do?

  27. Posted March 7, 2013 at 7:54 am | Permalink

    I’m with alan2012. Although Stalin certainly did kill a lot of people, there’s no evidence to suggest the number was anywhere approaching 60 million; most credible sources put the number between 3 and 18 million, depending partly on whether you include famine victims.

    Speaking of credulous acceptance of CIA/State Dept. statements, yesterday one of my co-workers was laughing about how dumb the Venezuelans are to think that the US government gave Chavez the cancer that killed him. I mentioned the poisoning of Viktor Yushchenko (not by the US, but relevant as a modern assassination attempt against a prominent political figure) and the CIA’s numerous, and sometimes silly, attempts to kill Fidel Castro (exploding cigars, infected SCUBA suits, poison in cold cream, etc.). Not saying I think the CIA got Chavez, but it’s certainly not an absurd idea.

  28. Meta
    Posted March 7, 2013 at 3:43 pm | Permalink

    The Atlantic has a few ideas on how to address wealth disparity.

    The two easiest ways to think about reducing wealth inequality are (a) building up the bottom and (b) cutting down the top. These aren’t equally sensible approaches, they’re just the two most obvious. From the bottom, if we found ways to make poor and middle class families save more, they could invest that money in assets that got more valuable over time, and this would increase their wealth. From the top, one extreme solution beyond raising taxes would be to find ways to cap income and compensation.

    If you find income-capping sort of a goofy idea, perhaps you’re not a member of our trans-oceanic readership.

    Europe in on a rampage against sky-scraping compensation packages. Months after France announced a new confiscatory top tax rate, the EU recently capped banker bonuses at twice their salary. This weekend, Switzerland voted to put historic restrictions on corporate pay. Two-thirds of a national referendum (in one of the finance capitals of the world!) voted to give shareholders the right to slash their executives’ compensation and banned “golden parachutes” for outgoing executives. The new crime for paying a CEO too much money? As much as three years in jail or six years’ salary in penalties.

    When Switzerland puts its foot down on rich bankers, you know something’s wrong.
    But that doesn’t mean the Swiss solution is right. The typical argument against capping incomes for a job is intuitive. If you found out that your company capped salaries at $80,000, you’d be a risk to leave for the thousands of jobs that pay $81,000 and higher. Giving shareholders the right to cut compensation and banning golden parachutes worth $70 million are a category different from capping wages at $100,000. But banks throughout the EU and in Switzerland are protesting the change, saying their best workers will flee to Asia or New York where they can be paid their market wage.

    Maybe they’re right. We just don’t know yet. But it’s notable that one of the richest countries in the world — with the highest GDP per capita of any country with more than 7 million people — is standing athwart this canyon of inequality saying “stop.”

    Maybe it was only a matter of time. The wealth inequality gap has been built by some factors we do control — like governments’ implicit and explicit subsidies of global finance — and some factors we don’t control, like globalization and technology making capital owners richer while they make unskilled workers replaceable. Both sides have numbers. The 1% has money. The 99% has people. Before the top-heavy returns of globalized capitalism get too out of hand, maybe we should think about some good solutions to wealth inequality before popular resentment leads to bad ones.

    Read more:

  29. Meta
    Posted March 10, 2013 at 11:57 am | Permalink

    CNN is taking notice.

    The video, which has been viewed more than 3.8 million times, draws heavily on the wealth inequality work of Michael Norton and Dan Ariely, professors at the business schools of Harvard and Duke business, respectively. The duo asked Americans how they thought wealth was distributed and found that the estimated and ideal divisions of the wealth pie bear little resemblance to reality.

    Read more:

    About the Michael Norton and Dan Ariely research:

  30. Meta
    Posted March 26, 2013 at 9:59 am | Permalink

    New research shows “Incomes of bottom 90 percent grew $59 in 40 years.”

    During that same period, average income for the top 10 percent of Americans rose by $116,071 .

    Read more:

  31. Meta
    Posted July 28, 2013 at 10:04 pm | Permalink

    Obama addressed income inequality yesterday.

    From the New York Times:

    In a week when he tried to focus attention on the struggles of the middle class, President Obama said in an interview that he was worried that years of widening income inequality and the lingering effects of the financial crisis had frayed the country’s social fabric and undermined Americans’ belief in opportunity.

    Upward mobility, Mr. Obama said in a 40-minute interview with The New York Times, “was part and parcel of who we were as Americans.”

    “And that’s what’s been eroding over the last 20, 30 years, well before the financial crisis,” he added.

    “If we don’t do anything, then growth will be slower than it should be. Unemployment will not go down as fast as it should. Income inequality will continue to rise,” he said. “That’s not a future that we should accept.”

    A few days after the acquittal in the Trayvon Martin case prompted him to speak about being a black man in America, Mr. Obama said the country’s struggle over race would not be eased until the political process in Washington began addressing the fear of many people that financial stability is unattainable.

    “Racial tensions won’t get better; they may get worse, because people will feel as if they’ve got to compete with some other group to get scraps from a shrinking pot,” Mr. Obama said. “If the economy is growing, everybody feels invested. Everybody feels as if we’re rolling in the same direction.”

    Mr. Obama, who this fall will choose a new chairman of the Federal Reserve to share economic stewardship, expressed confidence that the trends could be reversed with the right policies.

    The economy is “far stronger” than four years ago, he said, yet many people who write to him still do not feel secure about their future, even as their current situation recovers.

    “That’s what people sense,” he said. “That’s why people are anxious. That’s why people are frustrated.”

    During much of the interview, Mr. Obama was philosophical about historical and economic forces that he said were tearing at communities across the country. He noted at one point that he has in the Oval Office a framed copy of the original program from the March on Washington for Jobs and Freedom 50 years ago, when the Rev. Dr. Martin Luther King Jr. gave his “I Have a Dream” speech.

    He uses it, he said, to remind people “that was a march for jobs and justice; that there was a massive economic component to that. When you think about the coalition that brought about civil rights, it wasn’t just folks who believed in racial equality. It was people who believed in working folks having a fair shot.”

    For decades after, Mr. Obama said, in places like Galesburg people “who wanted to find a job — they could go get a job.”

    “They could go get it at the Maytag plant,” he said. “They could go get it with the railroad. It might be hard work, it might be tough work, but they could buy a house with it.”

    Without a shift in Washington to encourage growth over “damaging” austerity, he added, not only would the middle class shrink, but in turn, contentious issues like trade, climate change and immigration could become harder to address.

    Read more:

  32. bloggerroot
    Posted June 6, 2014 at 12:38 am | Permalink

    Work hard, die young, make someone a lot of money.

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  1. […] in action. The main thing is, we mustn’t stand in the way of this historically unprecedented transfer of wealth away from communal institutions and the working class… who, if they knew what was good for […]

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