"The Government Comes Up With the Money"

I'm half-heartedly watching the State of the Union address right now. What a cynic I've become.

My younger self would be shocked and saddened to learn how I've come to view these annual addresses as little more than a game of charades. The President (not just Obama, but his predecessors, too) reads a carefully and expensively constructed script designed either to elicit self-congratulatory applause from the echo chamber side of the hall, or to lob political harpoons into the other.

But in the end, it's nothing more than a game of words. And the real issues that desperately need addressing get ignored, glossed over, or showered with pablum and over-promises that will never materialize.

A few minutes ago, the President just announced his new executive order to raise the minimum wage by nearly 40% for those employed by federal contractors.

Now, I'm not going to make this article about the rightness or wrongness of such a move. And I'm very sympathetic to those earning the current minimum wage amount of $7.24/hour. In a world where the basics of living like food, health care, housing, energy, and education have skyrocketed in cost (due in no small part to the intervention of central planners), yet real wages have actually regressed, how the heck does one get by on the minimum wage?

But I will share the thought that enters my mind whenever I hear a politician make such a magnanimous and grandiose claim: How is this going to be paid for?

I think I'm shocking no one when I emphasize that our political leaders act as if money is magically produced whenever the need is great enough. Weak economy? Print money to bring interest rates down. Banks unstable? Print more money to buy their bad assets from them. Can't balance the budget? Run the country at a deficit (as they don't matter anyway, right?).

But I'll share a recent personal experience with the government that still managed to shock me. And I think it captures well the magical thinking at the heart of our national dysfunction.

A relative of mine is in her senior years now without any savings to lean on. (By the way, that puts her in the company of 22% of US seniors over 65. In fact, a shocking 4 out of 5 of all U.S. working households have retirement savings totaling less than one year's worth of income so it looks like there will be many more in her situation soon)

There's no way to sugar-coat her financial condition. She's in a tough situation with limited options. But we're doing what we can to support her.

Which led my ears to perk up when a friend suggested there may be a relatively easy way to boost her monthly Social Security payment. It turns out that, despite being divorced for over 40 years from her former husband, she can claim a portion of his Social Security benefits. If you were married for over 10 years, the government allows this.

Okay, I thought. Good for her. But what about her ex-husband? I doubt he's going to be happy seeing a drop in his Social Security check, and even less happy learning that it's because the government decided to give the difference to someone he divorced four decades ago.

But here's the thing that bowled me over: His doesn't drop.

The government makes it clear that if a divorced spouse is awarded any claim to your Social Security benefits, the benefits you receive remain untouched. From the SSA.gov website:

Note: The amount of benefits your divorced spouse gets has no effect on the amount of benefits you or your current spouse may receive.

As the one investigating this opportunity, I spent a day on the phone with the Social Security Administration, and, sure enough, that's the way it works.

I couldn't help asking the nice folks at the SSA: Who funds this? Where does this extra money come from?

In theory, the Social Security trust fund is a kitty paid into by workers as they earn income during their lifetime. (In practice, we know the kitty is empty, having been raided by politicians for decades). In this case, the ex-husband worked for a certain number of years and had a certain amount of his income directed into Social Security to finance the payments he would later receive in retirement. Payments that he now is, in fact, receiving.

So, if the government later decides that his ex-spouse should also get a check based on his years of employment, but no extra hours were worked to fund that second check, how does that math work?

Well, as probably comes as no surprise, math doesn't factor into the answer I received. "It's just how the system is set up" I was told. "The government comes up with the money."

And that to me succinctly sums up why we deserve the economic predicament we find ourselves in: too many of our leaders and too much of the populace look at the government as a perpetual font of money. The curiosity to ask the questions: Is this sustainable? Is this wise? isn't there. Either because we're too lazy or too fearful to learn the answers.

For the record, I did prod further into how such a payment system could remain solvent. But it was clear to me that, not only was this a strange question to the folks I was asking it of, but it was something they had never even thought about before. It didn't take very long before they conceded that it probably doesn't make sense, but folks who qualify for the extra money would be crazy not to take it.

In the end, my family member did qualify. But not for very much. (There were uncommon exceptions that ended up reducing her claim)

And while I understand why she feels the need to take the money, I'm conflicted about my role in the affair. Because it's this very behavior of treating the government like a free money ATM (or a benevolent uncle with a bottomless wallet use whatever analogy you like) that's ruining us.

Which makes it all the harder to hear of 40% hikes in the minimum wage, or health coverage for all through the "Affordable" Care Act, or extension of the expired unemployment benefits for those who have been out of work for over 99 weeks, without asking: How are we possibly going to afford this? 

~ Adam Taggart

This is a companion discussion topic for the original entry at https://peakprosperity.com/the-government-comes-up-with-the-money/

I know there is no money for any of this, so why pick on the folks in extreme poverty.  At least the money they get is going back into the economy, maybe even some of it in a very local way.  I don't mean to pick on you Adam, maybe I am just feeling exhausted by all this too.  One of the things that I feel like gets forgotten is that for retirees and the spouses that supported them, Social Security isn't exactly an entitlement program, they put a good deal of money into it.  Why shouldn't she get some money for the time and life force she spent supporting him while he paid into social security, and I don't really see any point in penalizing him.  I suppose it may offend some people that we don't penalize people for divorcing.  Yes, paying federal contract employees enough so that they may not have to receive food stamps, does add to the deficit, but as we know it is all going to fall apart soon enough so how bout letting the poor have a last little bit of food and shelter while there is still money there.  I guess I feel like we should just save our outrage for the financial elites who get a rather amazing amount of welfare.

How are we possibly going to afford this? 
No sweat. The Machine will provide.

Your relative's wages were probably screwed right down to where she had no excess reserves to invest in anything. Henry Ford had the nous to give his workers enough to be able to purchase his products. It seems that Henry was the last of the Thinkers.

If the Machine chooses to print money and give it to the Bankers- why be coy about feeding a little old lady? Dig in. The more she gets, the less the bankers can stuff into their constipated vaults.


Once again, thinking emotionally and not rationally, we will continue on our course to destruction.  Empathy, fairness, entitlement (legitimate), and all other considerations will by BRUTALLY thrown out the door if we don't make incremental changes to our behaviors.  I understand and agree with your concern for the people who find themselves without other options to survival, but if we keeping stacking more people in this wagon, we are going to kill the horse, and then we will all walk.  At that point, no one will give a crap about fairness, or pain, or the "Elites" - things will devolve into a brutal march for survival and all those who were vulnerable under this highly ordered and generous system will fail.Our government in all its endeavors is blowing money like the prodigal son.  All levels of society are exploiting the "system" in unique ways.  This is a classic Nash Equilibrium - no one benefits from changing their strategy unless we all do.  Human nature will ensure that never happens.  And so it goes. . .
Inevitable means inevitable,

Don't worry, Adam.  We will soon be administered a lesson via a 2X4 to the side of the head which will knock this attitude right out of us.  After the coming Big Reset, everyone from little old ladies to Lloyd Blankfein and Jamon Dimon will never again assume, "The government will come up with the money." That will be so much healthier for everybody, but getting there is going to be painful and nasty.

Adam, I totally understand what you're getting at in this.  I think that part of the problem - and the solution - is that, in general, people are really ignorant in regard to economics, both micro and especially macro.
Recently, in regard to home health services under Medicaid, I heard someone say "you might as well do it, they'll pay for it", with "they" being that Godlike fountain from which floweth all money and other goodies(i e the government).

I used to teach policy at the local university and I saw the attitude you're describing continuously, at least in one subset of the students.  I remember discussing SS and the other federal programs in the context of the "budget" (Oh my goodness, what's that??), and asking the seemingly odd question "and how will we keep paying for all of this - especially with so many baby boomers retiring?".  One young lady said "print more money". I encouraged her to pursue a degree in political science and then go into  politics (Ha).  The thought came so easily; she seemed like a natural.

But with that said, as with your relative's SS, I sure enjoyed having hospice in last year - 100% paid by medicare - when my dad was dying.  It was a HUGE amount of services, costing who knows? 

For me, it's a moral delimma - "get it while you can", verses "oh shit, I seem to find myself in the middle of the money hole at the center of the problem". 

Well, apart from your situation which doesn't really apply, here's a tip for you buddy:  "they paid in" seems to work pretty well in terms of glossing over any guilt or other concerns :slight_smile:

Ha, thanks for the reminder.

My head is spinning because what you've written seems to be a very plausible outcome. 

Need money? : JUST PRINT IT!

In James Dines's KWN interview below, he mentioned the possibilities of 3D printing and how, in the future,  we can simply micro manufacture organs & other vital tid-bits leading to longer life spans.  In fact, he called something akin to generation of immortals. 

Need body parts? : JUST 3D PRINT IT!


So, I think the future bodes a whole lotta printing, which ever way you look at it. oh yeah, & 70 is the new 30.


I agree with this reasoning. If you are giving many to banks for free, then there is no justification on earth to not giving to people in need for minimal surviving.Stay human!


The Text that Changed the World

Being a political dissident in an age of surveillance. Your cell phone (and street camera mounted facial recognition software?) give the government, against whom you are protesting, your identity and location. And they don't like what you are doing.  They send you a text message to let you know that they know who you are…


On Tuesday the Ukrainian government sent the following text message to thousands of protesters in the streets of Kiev: “Dear subscriber, you are registered as a participant in a mass disturbance.” This short text belied a far more radical message. For the first time, a government was able to identify individual protesters and privately communicate to them that it knew who they were and where they were located.
Ken PollingerAwareness Centers Nyack, New York ~ The Catskills, New York ~ Lagunas, Costa Rica www.AwarenessCenters.com ~ info@AwarenessCenters.com  
Comments by Ken:
Here is my construct again for your review. Following this, you will find some observations by me concerning the US Census Bureau's culture of presenting income statistics--quite DECEPTIVE if you ask me.
Then I came across three other attempts to do what I am trying to do. Please check these out.  I then make some comments about their attempts. Concerning the Income-Wealth Class Structure
 Inspecting the US Census Income data, we find the following:
1. The chart starts with the lowest income range at the top (Under $2,500)
     and proceeds all the way to the LAST category at the bottom ($100,000 or more).
     Is this deceptive?  Why not present the ranges with the more income at the TOP and descend to the bottom one. I believe this would be a truer picture of the income structure; otherwise, one needs to INVERT the info to see the picture that is worth a thousand words (or ranges).
2. From the lowest range to the next to last range ($97,500 to $99,999), all the brackets have a range of $2,500).  BUT THEN, we have the last income range of $100,000 or more!!!!!  How incredible!! How deceptive!!
    Why are there not many more income ranges, all the way to highest incomes where data is available, for example, Forbes 400 or highest Hedge Fund Manager: Ray Dalio with 3 BILLION?  Is this done ON PURPOSE by the Census Bureau??
3.  Also, where is the income information of the very rich who can purchase TAX-FREE municipal bonds (frequently free of Fed, state, and city taxes)? For example, their wealth makes more income without any work whatsoever, thus money making money.  For example, if Ray invested just 1 BILLION of his "earnings" (income),  he could generate 60 million of additional income, TAX-FREE.  Not bad, for not working.  
If you have never seen the US Census Bureau Income data, please CLICK HERE.  
Academic Class Models


Household income is one of the most commonly used measures of income and, therefore, also one of the most prominent indicators of social class. Household income and education do not, however, always reflect perceived class status correctly. Sociologist Dennis Gilbert acknowledges that "... the class structure... does not exactly match the distribution of household income" with "the mismatch [being] greatest in the middle..." (Gilbert, 1998: 92) As social classes commonly overlap, it is not possible to define exact class boundaries.

According to Leonard Beeghley[citation needed] a household income of roughly $95,000 would be typical of a dual-earner middle class household while $60,000 would be typical of a dual-earner working class household and $18,000 typical for an impoverished household. William Thompson and Joseph Hickey[citation needed] see common incomes for the upper class as those exceeding $500,000 with upper middle class incomes ranging from the high 5-figures to most commonly in excess of $100,000. They claim the lower middle class ranges from $35,000 to $75,000; $16,000 to $30,000 for the working class and less than $2,000 for the lower class.

Academic Class Models
Dennis Gilbert, 2002 William Thompson & Joseph Hickey, 2005 Leonard Beeghley, 2004
Class Typical characteristics Class Typical characteristics Class Typical characteristics
Capitalist class (1%) Top-level executives, high-rung politicians, heirs. Ivy League education common. Upper class (1%) Top-level executives, celebrities, heirs; income of $500,000+ common. Ivy league education common. The super-rich (0.9%) Multi-millionaires whose incomes commonly exceed $350,000; includes celebrities and powerful executives/politicians. Ivy League education common.
Upper middle class[1](15%) Highly-educated (often with graduate degrees), most commonly salaried, professionals and middle management with large work autonomy. Upper middle class[1](15%) Highly-educated (often with graduate degrees) professionals & managers with household incomes varying from the high 5-figure range to commonly above $100,000. The Rich (5%) Households with net worth of $1 million or more; largely in the form of home equity. Generally have college degrees.
Middle class (plurality/ majority?; ca. 46%) College-educated workers with considerably higher-than-average incomes and compensation; a man making $57,000 and a woman making $40,000 may be typical.
Lower middle class (30%) Semi-professionals and craftsmen with a roughly average standard of living. Most have some college education and are white-collar. Lower middle class (32%) Semi-professionals and craftsmen with some work autonomy; household incomes commonly range from $35,000 to $75,000. Typically, some college education.
Working class (30%) Clerical and most blue-collar workers whose work is highly routinized. Standard of living varies depending on number of income earners, but is commonly just adequate. High school education.
Working class (32%) Clerical, pink- and blue-collar workers with often low job security; common household incomes range from $16,000 to $30,000. High school education. Working class (ca. 40% - 45%) Blue-collar workers and those whose jobs are highly routinized with low economic security; a man making $40,000 and a woman making $26,000 may be typical. High school education.
Working poor (13%) Service, low-rung clerical and some blue-collar workers. High economic insecurity and risk of poverty. Some high school education.
Lower class (ca. 14% - 20%) Those who occupy poorly-paid positions or rely on government transfers. Some high school education.
Underclass (12%) Those with limited or no participation in the labor force. Reliant on government transfers. Some high school education. The poor (ca. 12%) Those living below the poverty line with limited to no participation in the labor force; a household income of $18,000 may be typical. Some high school education.
References: Gilbert, D. (2002) The American Class Structure: In An Age of Growing Inequality. Belmont, CA: Wadsworth; Thompson, W. & Hickey, J. (2005). Society in Focus. Boston, MA: Pearson, Allyn & Bacon; Beeghley, L. (2004). The Structure of Social Stratification in the United States. Boston, MA: Pearson, Allyn & Bacon.
1 The upper middle class may also be referred to as "Professional class" Ehrenreich, B. (1989). The Inner Life of the Middle Class. NY, NY: Harper-Colins.
Comments about the THREE researchers by Ken:
As a sociologist, the traditional manner of studying social stratification is the 3 major
classes: Upper, Middle, and Lower, with each having three subdivisions.  The differentiation between all NINE classes is quite difficult to determine and is somewhat subjective, although each researcher should provide some rationale for his/her divisions/categories.
Thus, Gilbert, Thompson and Hickey, as well as Beeghley ALL have the middle class being VERY large: the great middle class society, as preached by many in the mainstream.  They average about 45-47% while I present only 25%.  Who is right here??  One must look at the income statistics to determine where one stands.
Thus, my image of our society is PREDOMINATELY LOWER class, not Middle class, contrary to what people WANT to believe.
Gilbert presents NO ranges of concrete income!!  Quite vague, of course.
Thompson and Hickey make no distinctions between $500,000 and above--I do!!
In fact FIVE divisions!!   . . .and above: how high, praytell?  I go up to BILLIONS in income!! Also, they present some vague general suggestions as descriptions.
I, on the other hand, offer photos, names, and sources.
Beeghley has the superrich at $350,000.  Is he kidding?  Rich=net worth of a million.
NO WAY!!  For example,  Jamie Dimon's COMPENSATION (fancy word for income)
in 2011 was $23.1 MILLION; Lloyd Blankfein's was $21 MILLION; while John Stumpf's was
$19.3 MILLION  (JP Morgan, Goldman Sachs, Wells Fargo, respectively)
Much more could be said here but this just shows why very few KNOW what's really going on in terms of income and especially wealth.
And speaking about this Paul Krugman, NYTimes, "The Populist Imperative," the following:
". . .most Americans don't realize just how unequally wealth really is distributed."
THIS IS WHY I AM WORKING ON MY INCOME-WEALTH CLASS STRUCTURE--to enlighten people about what the hell is going on!!!!!!!
If you have any interest in all this, I'd love to hear from you.

Money is not real. It is supposed to represent that which is real.
If one note represents one widget and then somebody prints ten notes to represent the same widget, there is still only one widget. (Inflation)

But if The Machine makes 10 widgets then the value of each widget becomes less than 1 note.

For example, I am looking at Swiss timepieces that used to sell for $1000, they are now going for $160. Why? The Machine can make them far cheaper than any Swiss watchmaker and we have an oversupply problem. The price has plummeted in spite of the printing press. Why do you think that the sellers of watches loath both Deflation and Competition?

Deflation, not only because the debt obligations vaporized but because the machine out-paced the rate at which money could be flooded into the hands of the consumers. It does not help that someone at the top has got religion about money and thinks that it is real. There is this mad scramble for the unreal at The Top that is preventing the trickle-down from becoming a deluge.

I will stick to my guns. What we are watching is the destruction of the very idea of money.

This is Future Shock. Those born before 1980 cannot get their heads around the idea that humans are falling out of the Economy. The process is accelerating. Working for a living and saving "money" is just so last century. Why save that which has no value?

Overpopulation? No biggie. The Ape/Pig hybrid was never too fertile to begin with anyway. Just a little bit of this and a little bit of that and, voila, shemen.

The biggie is carbon in the atmosphere. That is where the 2x4 comes in.

1. Census Bureau 2010  (last 3 years drastically LOWERs the Middle and Lower Class numbers.
2. As for the UPPER Class numbers, here are some sources:
   a. Forbes: The Richest People in America (100 of them)
           range: 4.6 BILLION- 72 BILLION (Gates)
   b. Forbes: The 40 Highest-Earnings Hedge Fund Managers and Traders
           range: 90,000-2.2 BILLION
   c. Forbes: Top College Presidents
           range: 1.6 million-3.3 million (salaries ONLY)
   d. 50 Wealthiest POLITICIANS in USA
           range: 6.0-294 MILLION)(Rep. Michael McCaul, TX; Rep.Darrell Issa, CA)
   e. Forbes: The 10 Richest People in Medicine
           range: 1,12 BILLION-7.3 BILLION
   f. Forbes: The Top 10 Wealthiest Lawyers in the US
           range: 12 million-26.1 BILLION
  g. Federal Reserve Presidents
          range: 150,000-21.5 million
Now, I need to tease out all these folks with their monies and see where they fit into my Combination Income-Wealth Chart.
NOTE: I must admit that I have NOT seen anyone do what I am attempting--that is, gather much data and try to present the BIGGER picture of INEQUALITY in the USA.  This seems to be a topic of discussion these days centered around food stamps, unemployment checks, medicaid, pre-kindergarden, etc., BUT NOT THE REALLY BIGGER PICTURE.  I will have quite a few critical observations about the Census Bureau's chart, as well as the the title of my project.
Top Ten Wealthiest:
Rank Name Net Worth Age Residence Source

Bill Gates

$72 B 58 Medina, Washington Microsoft

Warren Buffett

$58.5 B 83 Omaha, Nebraska Berkshire Hathaway

Larry Ellison

$41 B 69 Woodside, California Oracle

Charles Koch

$36 B 78 Wichita, Kansas diversified

David Koch

$36 B 73 New York, New York diversified

Christy Walton & family

$35.4 B 59 Jackson, Wyoming Wal-Mart

Jim Walton

$33.8 B 66 Bentonville, Arkansas Wal-Mart

Alice Walton

$33.5 B 64 Fort Worth, Texas Wal-Mart

S. Robson Walton

$33.3 B 70 Bentonville, Arkansas Wal-Mart

Michael Bloomberg

$31 B 71 New York, New York Bloomberg LP
   IMPORTANT NUMBERS:     Total numbers: over 400 BILLION                                                                                                           

and if we view the top 100 wealthiest: a total of 1,342 BILLION (if I am adding correctly!!!)

So, a mere 10% tax on these folks could pay for food stamps, unemployment insurance, etc.


Maybe a 25% tax could fund a LIVING WAGE for the LOWER-LOWER 44.95% (those nasty, lazy, unproductive non-seeking job suckers, at least according to the Republicans, and some Democrats)

More from the NYTimes

2 Parties Place Political Focus on Inequality

Half of Congress Members are Millionaires, Report Says

The Vicious Circle of Income Inequality

Bailout Risk, Far Beyond The Banks

One more to come today.  Sorry for hogging space, Ken

Read your SSI statement.  I don't think many people do, when I tell them what it says they are surprised. 
I wish I had kept them all through the years but the oldest one I have is from December 29, 2008.  It states that "In 2017 we will begin paying more in benefits than we collect in taxes.  Without changes, by 2041 the Social Security Trust fund will be exhausted and there will be enough money to pay only 78 cents for each dollar of scheduled benefits."

Today, January 29, 2014, my online statement states "Without changes, in 2033 the Social Security Trust Fund will be able to pay only about 77 cents for each dollar of scheduled benefits."

So in just over 5 years the picture looks much worse.  Instead of exhausting the trust find in 2041 it now is scheduled to happen 8 years earlier in 2033.  They have also removed the statement indicating when we start paying more in benefits that they collect in taxes.  And they also eliminated the language that the SSI fund will be exhausted.









You MUST see the entire listings of both parties–fascinating  And these are the folks cutting food stamps. etc.
SHAME on them!  Loved your post Adam–you've got HEART!!


Comments by Ken
I promised you periodic information about the Income-Weath Social Classes Chart.
Last time it was the 100 wealthiest.
TODAY, it is the "average worth" of US Politicians.
House Democrats

House Republicans

Senate Democrats

Senate Republicans
Lastly, Please enjoy three articles from the NYTimes;
"Having Enough, but Hungry for More, Paul Sullivan" (1/18/14) Business 
"For the Love of Money," by Sam Polk (1/19/14)  Sunday Review  (POWER,baby!!!)
"The Undeserving Rich." Paul Krugman 1/20/14  Op-Ed
Comments?  Join the conversation.
1,342 BILLION (if I am adding correctly)
You make my point for me sir.

$1.3 T is not real. It would not make a jot of difference to their breakfast table if they misplaced 99% of it.

I foresee a time when the Machine will give you a requisition slip for the quartermaster with your name on it and an expiry date. Then everyone will belong to the same social status.

It is said that the Machine's intelligence will match that of a human, briefly.

Your piece makes an excellent point.  But what I always ask myself when I read something like this is this: would we be able to afford it if our pentagon budget wasn't, roughly, the rest of the world's combined?  The concepts of Social Security and Universal healthcare don't seem to me to be that unreasonable, but as long as the lion's share of national wealth is funneled into so few hands–military industrial complex, big banks–we can't really expect much for the average citizens.
Don't get me wrong, I agree with your post and I'm against the money printing, but, if not now at least in the past, we have had the money to provide a better life for our society as a whole, but it went straight to the top.  Now it's too late I guess.

Thanks for the post!

I think the most important facet of your story, Adam, is the unquestioned faith we collectively have in the central state's ability to fund every social program (as well as the Empire). The other point that needs to be made is printing the money for SSA would not be as destructive as borrowing the money, which is what we're doing now. If we simply printed $700 B a year to pay for SSA and were otherwise running no federal deficit, that is 4.3% of the $16T economy–given the many forces of deflation at work, that would be unlikely to spark runaway inflation. But we don't actually print money–we borrow it into existence and then owe interest on that debt forever. That's the real problem.
Ken, I value your attempts to organize income/wealth data.  I have tried to do the same thing and also with taxes, which are a mess because they vary locally.  The Census Bureau data is a bit skewed because they report 245M people as receiving some income, but there are only 140 M people who are employed–and only 115 M of those are full-time employed.

So perhaps we should start with employed people, and perhaps analyze full-time earnings more closely, as part-time work is not enough to qualify for middle-class incomes.

Your primary point is clear: the super-wealthy are in a world far above merely wealthy or upper-middle class, and our political class is now drawn from the wealthy class. When governance can be bought, it's no wonder the game is dominated by wealth.

When in a circus one should act and dress appropriately. I hope your being entertained, cause the main act is about ready to begin and this one isn't to be missed. Don't take everything so seriously (future shocked) it is the circus after all. After the lights turn on, please be courteous of your neighbors and quickly head for the exits, cause this show going to bring the whole tent down. Do beware of the encore clowns.

I don’t disagree with many of the points Adam made in the article, but I think it lacks perspective of the long term trends and forces that have brought us to this predicament.  That’s particularly true of inherent conflicts between the corporatocracy/gov’t.  (herein after referred to as the corporatocracy) complex and ordinary human beings that goes back a long way to the birth of the labor movement that resulted from what I consider the natural state of the corporatocracy, that of the robber barons.
The abuses by the corporatocracy were epic and legendary.  See the Jim Crow laws, The Jungle by Upton Sinclair or Grapes of Wrath by John Steinbeck.  The labor movement slowly addressed the worst of these abuses with plenty of sacrifices by the masses along the way until after WWII when quite suddenly we underwent massive industrial expansion that required lots of workers to support.  There were plenty of inflection points along the way, notably Jeckle Island, WWI, the roaring 20s, the depression and dust bowl 30s, the Social Security Act and WWII.  The “greatest generation” and their parents were born during this era and survived the various meat grinders along the way.

Cheap fossil energy and incredible technical innovations fueled the industrial revolution that gave the veterans coming home from WWII perhaps the most incredible opportunities for economic improvement ever in history.  Responding to market forces the labor movement increased rapidly in numbers and power, directly benefitting the working class and creating the largest middle class ever.

Despite the increases in wealth there was still a large underclass being left behind based largely on race, citizenship and economic dislocation.  The LBJ Great Society programs (continued by Nixon) were intended to address the discrimination and poverty of these people.   The rapidly expanding economy gave little reason to think we couldn’t afford the social safety net.  The corporatocracy was still doing just fine spending money for guns and butter.

As a young adult and early member of the Boomer generation, I remember the promise that the economy would continue to grow with decreasing work hours and improving working and living conditions for ourselves and our children.  That promise was, in short, the American dream.  The relatively unsophisticated (i.e. most of us) didn’t see a lot of reason to doubt that promise.  Of course, implicit in that dream was the notion that increased productivity would continue to ensure economic expansion and increasing opportunities for everyone.  One of the curious ironies of this period up until the present is that productivity has steadily improved throughout, but the benefits seem to go mostly to the 1%.

The standard workweek got to 40 hours and got stuck there.  In addition, wages have done no better than remain stagnant and workplace benefits are steadily declining since the 70s.  There are far fewer jobs for the relatively unskilled, meaning that even the lower level jobs require training/education that is becoming increasingly expensive and difficult for many.  I think it is undeniable that globalization, or more accurately, off-shoring, has exacerbated all of these trends.  And, of course, we are also in the age of limits.

The bottom line in all of this is the reality that there just isn’t enough work to be done to maintain full employment, no matter how you define it.  I believe that the corporatocracy has been fully conscious of these trends all along and has expanded the safety net to absorb all of those left behind and to keep them off the streets.  They remember what happened the last time the citizenry rose up en masse and disturbed their comfort during the civil rights era and Vietnam.  Government entitlements and support payments have been sufficient to keep the underclass quiet so far.  But, the underclass is growing and the middle class is shrinking.

Having seen the growth of some of those entitlements and support payments from the inside, I am convinced that subtle and not so subtle pressures from Congress and the leadership of those programs, right up to the oval office, have been to expand those benefits and incomes by the bureaucracies that administer those programs.  They have also been expanded by the judiciary, of course, but that too at least partially results from pressures from tptb.

So, today’s underclass is made up of the elderly, others who are no longer able to work because of some kind of disability, those whose skills don’t qualify them for more than unskilled work, which is decreasing in availability and remuneration anyway, and, to be sure, low level grifters who take advantage of the system.  Many of the latter supplement their gov’t payments with black market incomes.  There is little doubt in my mind that we have an economy that can no longer support all of us and tptb are just fine with that.  They keep throwing us bones and engorging themselves with financial shenanigans on a global scale.  Minimum wage laws are also a big part of the entitlement culture, and the fact is a family, whose members are increasingly taking those jobs, cannot live on $7.24/hr.  I boldly predict it will rise with the corporatocracy’s grudging approval.

It still comes down to the 1% vs. the 99% and will probably continue until some kind of black swan comes along prompting the masses to take to the streets.  When that happens we may see real change.  In the meantime all most of us can do is increase our personal resilience.   The mistake we make is blaming those who need their gov’t checks possibly supplemented by Wally World jobs.  The people in charge know exactly what is going on.


[KennethPollinger]   IMPORTANT NUMBERS:     Total numbers: over 400 BILLION 
While I do believe that the growing wealth gap is a big problem, I want to side-step that a bit and put these numbers into the context of government spending and the mindset that accompanies that (the original thrust of Adam's piece). If We The People decided to entirely expropriate every single dollar from the list above, it would not even plug a single year's budget gap for the U.S. federal government. Assuming the appropriated $400 billion was not viewed as a windfall to be spent, that is encourage more spending by holding the current budget constant and just adding this to that amount, all that would be accomplished would be a temporary reduction not elimination! of the amount of new debt being taken on.  In our names, of course. To really drive the point home, imagine if the federal government decided to apply a 100% income tax on all incomes over $250,000...that would surely fix it, no?  We'd have entirely eliminated the deficit and had plenty to spread around, right? No.   There would still be a deficit. And that deficit is only projected to get worse going forwards, and that's with an assumption of the return of rapid economic growth in the 3.5% real range. The bigger story here is one that we all are participants in and that involves the idea of living beyond your means.  That's something we are doing both economically and ecologically, and the only remedy that works is to reduce your consumption in both places. That's the first hard truth that has to be faced up to. Once that's been done, the very important next step is to decide how to do that equitably and fairly.  That's where we also need to have a hard conversation about how our current system of money just automatically grants ridiculous advantages and gains to those who already have more than they can spend.  That's the miracle of compounding for you. But I believe it's unworkable to start with the idea that if we just divided things up differently that this would all somehow work out.  It's missing the first step, which states that we're past the point of all this working out and we have to dial our expectations and consumption back. Both issues are important, and I think they are best served by keeping them linked but distinct from each other.