05/02/2023 1

W7 Readings: Belonging to a Class

Peter L. Hoag, Ph.D.Human Development Department

CSU East Bay2016 Spring Update

05/02/2023 2

Content Introduction Class The Gap U.S. Income U.S. Expenses References

05/02/2023 3

IntroductionAs a follow-up on first two weeks PowerPoints, and especially the W3 PowerPoint on “Race”, this “Class” PowerPoint provides some facts about the growing schism between today’s rich and poor classes in the U.S., and the negative impact this growing schism is having on the quality of life for America’s once prosperous middle class.

05/02/2023 4

Class: The Numbers (1929 or 1981?)In the attempt to remain apolitical during this most important, presidential election year, I’ve contained “nothing but the facts” on the negative impact that this growing gap between rich and poor is having on the quality of life for the American middle class.

05/02/2023 5

Class: U.S. History (1/4)As most clearly documented by Nomi Prins in her recent, All the Presidents’ Banks (2014), this post-1980s deterioration of the middle class, is not a new phenomena. It is a repeat of what has been the norm for most of our nation’s past 300 year history.

Naomi Prins is a former Goldman Sachs executive and recent, author of several ground breaking books on the tight relationship that exists between current and past presidents and the banking industry.

05/02/2023 6

Class: The New Trans National Class

William I Robinson: UCSB Profile

The Trans National Class (TNC): In his recent and most important Global Capitalism and the Crisis of Humanity, international journalist and UC Santa Barbara Sociologist, Dr. William I. Robinson, provides a unique and provocative way of understanding the rise of a new, 21st century transnational capitalist class (TNC), as well as insights into the challenges that must be taken to rescue our planet and its inhabitants from today’s globalized, “toxic capitalism” (adapted from Amazon review by Bill Fletcher, Amazon).

William Robinson (2015) complements Prins’ historical study of America’s class structure by illustrating the degree to which a “transnational capitalist class” and not nation-states now control most of today’s international economy.

05/02/2023 7

Class: World Income DistributionThis chart compares the relative distribution of wealth among classes in each region as well as among all regions of the world. Whereas the bottom X-axis represents population deciles ranging from left to right from lowest to highest income classes for that region (each decile has the same number of people in it); the Y-axis represents each region’s share of the world’s total wealth.

Class Patterns: Whereas the upper income classes of Europe and the U.S. possess particularly large shares of their own and the world’s total wealth, the middle to upper middle income populations of Latin America, Asia and China possess the larger shares of their own and the world’s total wealth. It is the lower income brackets of Africa, and again India and Asia that posses the larger shares of their own and the world’s total wealth. The lower and lower-middle income classes of America alone possesses a significantly smaller share of it’s own country’s and the world’s total wealth.

Super-low incomes for America’s lower class desciles

05/02/2023 8

The Gap: U.S. Wealth Deciles Several factors have contributed to today’s widening “gap” between rich and poor, including: (1) the replacement of jobs with more efficient high tech production systems; (2) the loss of jobs from the increased hiring of off-shore labor under free-trade agreements, (3) the loss of workers’ bargaining powers due to the forced loss of American union memberships; and most importantly (4) the U.S. court’s deregulation of big business and its support for unlimited campaign funding under the protection of the 2009 Citizen’s United “corporate personhood” decision.

05/02/2023 9

Class: U.S. Wealth DistributionThe bar chart on the left provides a clear breakdown of today’s wealth gap between rich and poor. This chart breaks down the 2011 distribution of U.S. wealth by the percent of the population who own that wealth. In this chart, the top 5% of the U.S. population owns most, i.e., 72%, of the total wealth of this country. The household income of this top 5% begins at only $186,000 per year but quickly escalates, as revealed in the bottom video to well over $62.2M per year for the top 0.001% of the population.

Click on this and think “reality”…!

05/02/2023 10

Class: U.S. Wealth Distribution

This chart breaks out in finer detail the amount of wealth that is owned by only the top 1.0%, 0.1%, .01% and .001% of the nation’s population. Whereas the previous chart showed that the top 1% of the country’s households own nearly half the wealth of the U.S. (43% in 2011), only 001% of the U.S. population (1,311 super wealthy households) own most (80%) of this top 1% wealth of this country!

Check it out on the Web: Top .001% share

05/02/2023 11

The Gap: U.S. GINI RankingSo how does this U.S. wealth “gap” compare

with most other nations in the world? According to the most recent 2000 Gini Index, a sample of

some of the world’s major nations shows that

the U.S. not only has a relatively high 0.38

wealth gap; but a wealth gap that is higher than

many other lesser developed nations, let

most other, more developed European

and Asian nations. This U.S. index, moreover,

increased between 1980 and the year 2000.

Gini Definition The Gini Index is a measure of the income distribution of a country’s residences where a value of “0” would represent an equal distribution among all members of the residents; and a value of 1 would represent maximal inequality among the residents.

05/02/2023 12

The Gap: U.S. GINI HistoryThis Gap between rich and poor U.S. citizens has not always been as high as it has since our post-1980’s recession. For a period of three prosperous decades (between the end of WWII and the beginning of the 1980s recession) a much lower, U.S. GINI index was in keeping with most of our European peers.

05/02/2023 13

The Gap: Two Depressions?The current, post-1980’s “recession” is not yet being referred to as our second “Great Depression”. But, in terms of the widening gap between rich and poor, today’s top 10% of the U.S. population now own slightly more than the rest of our population than they did during the height of the “Great Depression” of 1929.

NOTE: The Y-axis indicates the percent of this nation’s income that is earned by the top 10% of the nation’s income earners.

05/02/2023 14

The Gap: US Class Wealth SourcesDifferences in the sources of wealth among the top one percenters in this country and the rest of the population are dramatic. While the ownership of businesses and corporate stocks and bonds represent the largest sources of wealth among the one percenters; rental properties and trust accounts represent the largest sources of wealth among the rest of the population.

05/02/2023 15

Income: US CEO Wages and UnionsThis rather simple but most telling chart illustrates the inverse relationship that has occurred over the last century between U.S. union memberships and the share of corporate profits kept by management as opposed to company workers.

05/02/2023 16

Income: International CEO & Worker WagesThese recent 2014 numbers illustrate the exceptionally high ratio of CEO to worker salaries in the U.S. (i.e., a 475 ratio) compared to most other nations in the world, and especially in European nations where management to worker salary ratios range from 12-15 times.

05/02/2023 17

Income: U.S. Employment &. GDPDespite the negative impact that our post 911 wars and 2008 recession have had on our rising cost of living and falling employment figures, our nation’s GDP (its income including that of its.001 percenters) has since sored to an all time high while the job market has lost 5 million jobs.

05/02/2023 18

Income: U.S. Corporate & Personal TaxesAlthough individual and corporate tax rates saw a similar rise during the first decade of the progressive’s New Deal Program (from 10% in 1934 to over 45% in 1944); these individual and corporate tax rates have since been inversely related with individual rates remaining at 40% to just under 50%, and corporate rates falling from just under 40% to their present 13.4%.

05/02/2023 19

Most of our federal revenue comes from individual income and payroll taxes, and not from corporate taxes, the latter of which have decreased from a high of 20% of the GDP in the 1950’s to their more recent 8% in the year 2010.

a

Income: All U.S. Fed. Income Sources

LegendFederal Excise Taxes: Taxes embedded in the cost of good, e.g., gasoline sales taxes.

Payroll Taxes: Taxes paid by an employer or deducted from an employees paycheck to cover an employee’s social security, health care, workers compensations benefits, etc.

Corporate Income Taxes: These taxes vary from 15% to 34% but after tax loop-holes and subsidies, the “effective” rates range from 0.3% to 15% (see the next slide).

Individual Income Taxes: Individual income taxes, which cover nearly half or our national income, range from today’s 15% to 39% and 2% to 95% in the 1940s.

05/02/2023 20

LEGEND Effective Tax Rate: Percent total industry earnings. Tax Subsidies: Amount of government welfare,

which amounted to $92 billion in 2013, or 15% of the 2012 federal budget compared to $59 billion, or 3% of the budget for all public welfare programs.

Income: U.S Corporate & Personal Taxes“On paper at least, the federal tax law requires corporations to pay 35 percent of their profits in federal income taxes. In fact, some of the 288 corporations in this study did pay close to the 35 percent official tax rate. But the vast majority paid considerably less. And some paid nothing at all. Over the five years covered by this study, the average effective tax rate (that is, the percentage of U.S. pretax profits paid in federal corporate income taxes) for all 288 companies was only 19.4 percent.” - CTJ Site

05/02/2023 21

This final chart shows a striking, inverse relationship in the growth of corporate profits since the 1970’s and the drop in corporate income tax receipts -- as a percent of those corporate profits during this same period of time.

Income: U.S. Corporate Taxes & Income

Link: US Corporate Taxes

05/02/2023 22

U.S. military costs as a percent of our total federal budget have remained at a fairly constant 16% since WWII. However, the amount of dollars we spend on our military is close to being equal to the amount of dollars being spent by the next half dozen military powers in the world.

Costs: U.S. Military

05/02/2023 23

The below list represent some of the more popular journalists and academics who were mentioned in the above slides, as well as others that may be of interest if you are looking for more ‘facts’ about the status of the current U.S. as well as global economy, some of the major causes for the poor condition of our own U.S. economy, the impact that this condition is having on our life cycle, and what kind of changes in this economy might best correct these current problems. All these authors are internationally known and widely respected for their views on the US and global economies. All of them have Web sites, all of them are listed in Wikipedia, and all of their works can be reviewed on Amazon, as well as our library. Noam Chomsky Tom Hartman David Harvey Chris Hedges Naomi Klein Dalai Lama Robert Reich Richard Wolff

References to the Economics Literature

05/02/2023 24

Reference: Hedges, ChrisChris Hedges: This well known “investigative reporters” is also known for several best-selling books including War Is a Force That Gives Us Meaning (2002), Death of the Liberal Class (2010) and his most recent New York Times best seller, written with the cartoonist Joe Sacco, Days of Destruction, Days of Revolt (2012).

In his “Why is America in Decline” and in his more recent, The Death of the Liberal Class, Hedges examines the failure of the liberal class to confront the rise of the corporate state and the consequences of a liberalism that has become profoundly bankrupted. Hedges argues there are five pillars of the liberal establishment – the press, liberal religious institutions, labor unions, universities and the Democratic Party— and that each of these institutions has, over the past 20-30 years become more concerned with status and privilege than justice and progress. Through the court’s personalization of the corporation; million and now billion dollar campaign funding; and congressional lobbyists, our representatives in both parties have sold out to the constituents they once represented. In doing so, the liberal class has become irrelevant to society at large.

05/02/2023 25

Reference: Wolff, RichardRichard Wolff: Professor Wolff's major interests and publications as a professor of economics at the University of Massachusetts since 1981, and the New School in New York since 2007 include studies of US economic history, including alternative economic theories (neoclassical, Keynesian, and Marxist) as they might apply to a solution for our current economic crisis. Professor Wolff has written, co-authored, and co-edited a half dozen books and dozens of scholarly and popular journal articles. His recent analyses of current economic events appear regularly in the webzine of the Monthly Review, as do his lectures on YouTube.

List of book on Amazon

05/02/2023 26

Reference: Hartman, ThomThom Hartmann: This internationally syndicated talk show host for over 2.75 million listeners each week is simulcast on RT television in more than 40 million homes. He is also a New York Times bestselling author of 24 books, including The Last Hours of Ancient Sunlight. Talkers magazine named Hartmann #9 on their "2013 Heavy Hundred" list.

The below reviews appear on Amazon for his most recent book, The Crash of 1916 (See also the Interview of this 2014 book on RT):"Thom Hartmann provides page after page of crucial history to show how our country headed into deep decline. And he offers an action plan of reform and renewal that can avert economic and environmental collapse. A rare and readable blend of history and hope."—Jeff Cohen, author of Cable News Confidential

"Thom Hartmann explains the way critical social lessons fade over time, and how dangerous that cycle is. America is at the tail end of such a cycle today, as we stand amidst terrible inequality and on the precipice of tremendous change. And, yes, Thom offers a compelling plan of action for activists. Everyone should read this book."—Richard L. Trumka, president, AFl-CIO

05/02/2023 27

References: Chomsky, Harvey, and ReichDavid Harvey: Distinguished Professor the City University of New York is among the top twenty most cited authors in the humanities literature and is the world's most cited geographer. His books include The Limits to Capital, Social Justice and the City, and The Condition of Postmodernity, among many others.

Noam Chomsky: Solid numbers back this short history of our country’s crippling class structure by the world’s most widely translated political scientist in this country, currently a retired, linguistic professor at MIT. See his own Web site for more info. and the dozens (and dozens!) of his books on Amazon.

Robert Reich: UCB School of Public Policy professor and former US Secretary of Labor and Harvard University Professor asks, “How Unequal Can America Get?”. YouTube video discusses inequality of income, wealth and opportunity throughout the world, including the US through today’s globalized FINANCIAL system. See also his 2013 interview with Bill Boyers.

05/02/2023 28

Reference: Dalai LamaWhat is your “opinion” … backed, of course, by REFERENCES to valid and reliable facts and theories! What needs to be changed in the current economic system to make a healthy as well as prosperous lifecycle available for most members of our community, our nation and the world?

05/02/2023 Hoag: CSU HMDEV 3800, 2013 29

End: Week 5 Lecture:U.S. Class Structure