BROTHER, CAN YOU SPARE ME A DIME

Remember the "Good Ol' Days" in the 1950's that everyone wants to go back to. (Whether you were alive during those times or not.) Back when everyone worked hard and made a good living. There were jobs for everyone and life was good!

Fast forward to the next century. Everyone seems to have one question regarding the economy lately...are we heading towards another Great Depression? People are scared and they should be. I am way too young to remember the Depression but I do remember that until the day she died at 80, my grandmother lived in fear of another one. So today, while watching the seemingly ever falling Dow numbers, I stumbled across an article that quoted a variety of figures from Paul Krugman, a noted economics professor & writer. And they were very troublesome. Not because they show the same type of slide that we experienced in the 30's (after all back then 1 out of every 4 Americans were out of work). But they do seem to indicate one set of numbers that correlate to the time BEFORE the Depression started. Those numbers revolve around the distribution of wealth in America.

In 1928, one year before the crash that started the Depression, 1% of the population owned 40% of the nation's wealth. Once FDR's new deal started, you saw between the years of 1930 and 1947 that the working class wage rose an average of 67% while the income of the wealthiest 1% dropped 17%. (I would feel bad for the top 1% but they still made more money than everyone else by far.) This was the birth of the middle class and it was a direct result of unionization of manufacturing jobs and the New Deal.

Between 1947 and 1973 the inequality of income lessened even more. With working class wages rising 81% and the income of the top 1% rising 38%. (Note: These numbers reflect "real wages" adjusted for inflation.)

Then came the 70's! More bad times that were shared between both the richest and the middle class. Between 1974 and 1980, a combination of higher oil prices, too much influence of unions and a generally bad world economy meant that the working class lost 3% in real wages while the wealthiest 1% lost 4% of income. Proving that too much of a good thing, be it unionization or tax breaks are not necessarily a good thing. You never want the pendulum to swing too far to either the right or the left.

Enter the savior Ronald Reagan! His tax revamps once again helped the wealthiest 1% to earn a larger percentage piece of the pie. Under Reagan & Bush tax plans, the real wage for the working class fell by 1%, but the income for the wealthiest 1% increased by 135%! This difference is a direct result of "trickle down economics" and the tax policies that "trickle down" represents.

The inequity slowed slightly during the first years of a Clinton presidency and then skyrocketed again once the Republicans gained control of Congress. By 2006, under President Bush and a Republican controlled Congress the top 1% of the wealthiest Americans controlled 34% of America's wealth! The wealthiest 5% of Americans now control over two-thirds of America's wealth as well as 88% of the nation's business interests & almost 80% of America's stock wealth (After today's market close, you are allowed to chuckle a little if you like the thought that they now own four fifths of "not much"). (But don't chuckle too much since your retirement is tied into this mess as well.) This is where you are allowed to notice the similarities to 1928.

Now the argument of the top 1% is that they spur the economy on with thier purchasing power. But it doesn't seem to work well that way. If a really wealthy man spends ten million on a new yacht...it helps the yachting industry. If a million working class Americans spend $10 each on food...it helps thousands of restaurants and grocery stores across the country. It takes less time to spread through the economy to help society as a whole. When the distribution of wealth varies so much between the working class and the wealthy, the economy gets top heavy...and falls! Only certain very limited sections of society patronized by the rich make a living.

Now don't get me wrong. There is nothing wrong with making lots of money and becoming wealthy. That's the American Dream. But there are limits. The average CEO of a Fortune 100 company makes on average 17.6 million dollars per year. That's approximately $8,461.00/hour! That means that the average Fortune 100 CEO goes to work on Jan. 2nd and by the time he knocks off for lunch he has earned more on his first day of work by lunchtime than the minimum wage employee will earn all year. Now it may be that his expertise is worth that much to the company...though one would think that if they were THAT good at their jobs, we wouldn't be bailing them out now!

We need to look at CEO pay. We need to restore tax equality to our nation. We need to stop rewarding companies with tax breaks who outsource jobs overseas! Otherwise the question will not be...is another Depression coming? The new question on everyone's lips will be "Brother can you spare me a dime? and "Which way to the nearest soup kitchen"?