Dear America,
Let me first concede that I am not an economist. The course I took in college taught me about Samuelson's "guns or butter" model of our economy, but that is hardly a plenary education in the discipline. That being given, I always thought that economics was more a matter of mass psychology than scientific rigor. Still, even in economics, which was always regarded as a social science by those who determine such things, two plus two equals four...always. That's why I find the current dabbling in interest rate regulation so frustrating. Our problem isn't that there aren't enough dollars around, or that they are chasing too few goods. The problem isn't the number of available dollars in any sector. It's who owns them. Let me explain myself.
The economic top 1% of our people own something between 32% and 40% of the nation's wealth. Don't take my word for it...please. These numbers are widely available to anyone who wants to see them on the internet, and it doesn't matter what URL you choose. The figures will always be the same. In fact, the top 1% gained $6.5 trillion in 2021 alone, and $12 trillion during the pandemic--notably, during which most of us suffered financially--according to the Federal Reserve. Just so I'm clear, what troubles me isn't the total amount of wealth concentrated in so few hands; it's the continuing accretion of that wealth even during the worst of times for the rest of us. Put more directly, there have always been rich people who got that way in one way or another, or should I say by hook or by crook (the names Bezos and Trump, respectively, coming to mind). I don't envy the lifestyles of the rich and famous, but I resent the fact that they live off the rest of us, and make us serve them and their interests in the bargain. Thus, I think the FED is focusing on the wrong thing. We in the bottom 99%, especially those of us who perform the labor that keeps the country running as opposed to those who got their money from mom and dad...the bottom 80%, I mean...need protection from the economic predation of those at the top economically. The problem isn't us spending too much, causing inflation. The problem is the people at the top--what I refer to as the "executive class"--take too much and prevent those who do the work from being paid for it fairly because the executives get more than their fair share.
I remember hearing Robert Reich, Bill Clinton's Secretary of Labor and a member of a couple of other administrations as well, showing a graph showing that the average CEO's salary went from something around 10 times that of the average worker in the 1970's to several hundred times that of the average worker today. That's the problem. While Bezos oversees the construction of his 400 foot yacht, the guy who delivers your package from Amazon at 10 pm on Sunday night gets twenty bucks an hour. When the CEO of GM goes out to dinner, he thinks nothing of paying a hundred dollars a plate while the person who brings the plates gets minimum wage, plus what ever tip the big spender deigns to leave, appropriate or not. But let me be clear. I think that all of us bottom 80% should be making more while the top 1% make far less. However, I also think that all of us should be giving more to the people who do the work we don't want to do and paying for their services and the goods they make it possible for us to enjoy. Put concisely, we need a leveling of our economy so that the distribution of wealth more accurately reflects the demand for the work that each of us does. If you want your toilet cleaned because you don't want to get your hands dirty, respect the person who will get his or her hands dirty for you and pay that person not only what you can get away with, but what it's worth to you that you don't have to do it, or put another way, how much you'd pay to avoid doing it yourself. Pay the fry cook at McDonald's to do what you can't...or won't...do for yourself, not just what you can get away with.
The Biden administration and the Democrats have taken a small step in that direction with the new corporate tax minimum payment requirement. But we need to do something so that the shareholders of a corporation, and ultimately its patrons, can control executive compensation, and you'd have to read the corporate by-laws of the Fortune 500 to see how those who own the most, though far from the majority of shares get to control boards of directors, and thus executive pay. And there are plenty more ways in which money is the power to make more money, but it shouldn't be. As they say, there ought to be a law...or in this case, a bunch of them.
Your friend,
Mike
