In this month’s issue of Dollars and Sense, the editors publish an analysis of the aftermath of the crash of 2008 and the ongoing effects on our economy:
Inequality, Power, and Ideology: AnUpdate
Arthur MacEwan, one of the founders of Dollars & Sense and our “Ask Dr. Dollar” columnist, wrote an article for our March/April 2009 issue explaining the origins of the financial crisis that was rocking the U.S. and global economies at the time, and that has shaped the subsequent economic recovery. The article has been included in successive editions of several of the textbooks we publish. Arthur recently wrote the following update of his original article as an Afterword to be included in the forthcoming 18th edition of Current Economic Issues. —Eds.
The article “Inequality, Power, and Ideology” was written in early 2009, as the U.S. economy was in the midst of the Great Recession. I argued that the severity of the recession was brought about by a nexus involving three factors:
- A growing concentration of political and social power in the hands of the wealthy;
- The ascendance of a perverse leave-it-to-the-market ideology which was an instrument of that power; and
- Rising economic inequality, which both resulted from and enhanced that power.
Now, in late 2014, there is reason to hope that the perverse ideology, market fundamentalism, has been somewhat weakened. However, income inequality and the concentration power in the hands of the wealthy seem to be firmly in place. Perhaps the most shocking fact about income inequality is the following: Between 2009 and 2012, as the economy grew slowly out of the recession, 116% of the income increase went to the highest income 10% of the population. Yes, that’s right, the income of the top 10% increased more than the income increase for the whole society, which means of course that the income of the rest of society, 90%, declined in this period. This decline shows up in the drop of the inflation-adjusted median household income, down 4.4% between 2009 and 2012, part of a larger picture of a 8.9% decline between just before the recession, 2007, and 2013. (We don’t yet have the figure for 2014 as of this writing.) So, yes, income distribution continues to get more unequal, after the Great Recession as before the Great Recession.
As to the concentration of power, legal developments (the Supreme Court’s decisions in the Citizens United and McCutcheon cases, in particular) have allowed virtually unlimited and often hidden expenditures in elections by wealthy individuals and corporations—as if their expenditures had not already been too large. And recent elections have underscored the importance of these outlays. Then there is the continuing power of financial institutions. While the 2010 Dodd-Frank bill provided some sections that might have curtailed that power, pressure from the financial sector has delayed or weakened the implementation of many of those sections. Indeed, regulators have recently allowed banks to move precisely in the opposite direction from some Dodd-Frank provisions—e.g., allowing mortgages to be issued with low levels of down payment.
To continue reading click: Dollars and Sense: Inequality, Power and Ideology: An Update