Economy grows, incomes shrink … Americans continue to lose money while corporate profits soar … The first data on 2013 incomes show continuing bad news for Americans, my analysis of a new Internal Revenue Service report shows. … This is the latest sign of a disturbing trend. An ever-shrinking share of national income flows to individuals while corporate profits expand. – Al Jazeera
Dominant Social Theme: Inequality continues.
Free-Market Analysis: The US economy is making a comeback but not for individuals. This article in Al Jazeera, a quasi-mainstream publication, provides us with these insights.
The article is written by David Cay Johnston, an award-winning investigative reporter who recently produced an anthology, Divided: The Perils of Our Growing Inequality. The article supports the "inequality" meme that we have analyzed and reported on this year.
The purpose behind the inequality meme, from what we can tell, is to further polarize Western societies, especially the United States, by reporting on statistics that exacerbate class envy. The endgame is increased chaos that, in an extreme form, includes violence between classes and even the overthrow of governments. It's happened in the past.
Why Mr. Johnston is supporting this meme is a mystery to us. Probably he believes corporations are to blame for the economic distortions he intends to expose. But corporations are merely the mechanism, whereas the system itself is what needs a significant reconfiguration.
So long as government policy favors the richest among us, shields bankers from criminal and personal civil liability and removes regulatory controls on corporations, the trend line that began 34 years ago is likely to continue even with upswings in the economy.
The massive and growing taxpayer subsidies to the wealthiest Americans and corporations, which I have documented for years in my books and columns, are also a factor in declining average incomes. Average income reported on tax returns in 2013 was $61,668, down from $63,297 in 2012.
Total income reported by America's almost 145 million taxpayers was $9.11 trillion, down seven-tenths of 1 percent from 2012 when measured in 2013 dollars. Average income fell by an even larger figure, 2.6 percent, because the number of taxpayers increased because of population growth.
Average income reported on tax returns in 2013 was $61,668, down from $63,297 in 2012 — a difference of $1,629 — my analysis of the latest IRS Statistics of Income report shows.
The article concludes that "the American economy is getting bigger, but average incomes are shrinking." And the final line contains this warning: "If that trend continues, it will eventually spell economic, social and political trouble for the country."
The problem with this conclusion – and with the article really – is that no explanation is provided for why corporations are gaining profits while consumers are losing revenue.
Of course, anyone who studies the strange arrangements of modern finance can surely figure out that it is monopoly central bank money printing that is creating the increased polarization. Corporations add to it surely – via the assumption of corporate personhood that allows multinationals to reach massive proportions. But the fulcrum of inequality is the monetary system itself.
Because they have a state-derived monopoly on money printing, central banks usually overprint, causing first great booms and then even greater busts. Entrepreneurs and the middle class generally are caught up in the implosions.
Bankruptcies and other kinds of financial disasters are inflicted on these hapless groups. When the cycle begins again, the money printing is funneled through commercial banks and then to multinational corporations. These corporations invest in the stock market, which tends to go up as the cycle begins again.
As asset bubbles form, wealthy investors inevitably take profits and stock markets expand. By the time the individual investor begins to participate the boom is almost over and much of the money the average investor places in the market may be lost because he is arriving late to the party.
What we have observed during this business cycle is that the amount of currency pouring into economies around the world is truly massive. Much of it has not actually been committed to the market but is still sitting on the "sidelines."
Also, as we have pointed out previously, there are calls for concerted central bank stimulation via a neo-Plaza Accord. This would add yet more fuel to the monetary fire and make the Wall Street Party we've analyzed a truly international affair.
Whether this takes place – whether the "party" continues through 2015 and beyond – is not really foreseeable. And yet, given the level of monetary stimulation it is certainly possible. Meanwhile, this article fans the proverbial flames of class envy and uses seemingly legitimate statistical analysis to do so.
We think such statistical analysis is covering up a larger truth. Greedy corporations are but a symptom of larger difficulties. The growing inequality is caused by the monetary system itself.