The moneybags

By David Brooks

From the Mexican newspaper La Jornada

More than anyone else, the rich are enjoying the economic recovery after the worst crisis since the Great Depression. In other words, the same people who caused the crisis will benefit the most from the rescue of the destruction they generated.

The richest of the rich are the happiest. About 15,000 families, those with average incomes of $23.8 million, saw their revenue grow 21.5 percent in 2010 ($4.2 million more). They represent the wealthiest 0.01 percent, and accumulated over a third (37 percent) of the increase of income in that year of economic recovery.

The members of the famous 1 percent identified by the movement Occupy Wall Street collected 93 percent of the additional income created in the country in 2010 over 2009, a total of $228 billion. The 1-percenters, who earn at least $352,000 in annual revenue and a million-plus average, enjoyed an increase in income of 11.6 percent ($106,000 additional).

The remaining 99 percent were left with only 7 percent of the additional income generated by the recovery in 2010, or $80 per person.

These calculations, from an investigation by French economists Thomas Piketty and Emmanuel Saez, who studied the official federal tax data and summarized it in an article by The New York Times’ Steven Rattner, only confirm what we all sense every day: this country today is for, of, and by the rich.

The economy grew 3 percent in the last quarter of 2011, the government reported last week, compared with 1.8 percent in the third quarter of 2011. But, as suggested by the trends of 2010 – the latest year with complete figures – almost all the additional revenues generated remain concentrated on the wealthiest 1 percent.

Robert Reich, former U.S. Secretary of Labor, teacher and public intellectual, says that the recent economic recovery has increasingly benefited the wealthiest. The top 1 percent earned 45 percent of the economic growth under President Bill Clinton in the 1990s, and 65 percent during the administration of his successor, George W. Bush. Now, under Barack Obama, the top 1-percenters get 93 percent of the increase in the generation of national wealth.

Reich notes that almost no one below the richest 10 percent saw an improvement in income. In fact, most of the remaining 90-percenters are poorer. The average adjusted income was $29,840 per year in 2010, $127 less than in 2009 and almost $5,000 less than in 2000. At the same time, the benefits provided by employers are also declining; fewer workers have health insurance and retirement plans provided by their companies.

And, because the rich are the largest investors, the stock market rose by half a billion in the fourth quarter of 2011 alone, while the 90-percenters almost always have their homes as the largest of its assets but the value of their properties has plummeted more than a third since 2006.

Worse yet, not only have the revenue increases been concentrated, but also there has been a massive transfer from the bottom up. Andrew Hacker reported in The New York Review of Books that, according to his calculations based on the official census, ever since 1985 the 60 percent of the “lower” population has lost $4 billion, most of which has shifted up to the richer 5 percent. It is no coincidence that America is now perhaps the world’s most unequal "advanced" country.

Nevertheless, the Republicans in Congress and the presidential candidates favor making the imbalance between the 1- and 99-percenters even more marked by making proposals to further reduce the taxes on the wealthy and increasingly reduce the public health services, education and employment for the majority. Meanwhile, the Obama administration boasts daily of the great success of its economic policies, as evidenced by the recovery, but does not mention that they benefit the wealthy almost exclusively.

All this in the midst of an election cycle where the economy is the issue that will determine just about everything. Thus, the big debate is between the economic policies that benefit the wealthy under Obama and the Republican policies that say the rich should benefit even more.

The electoral battle, of course, is funded by the wealthy. Election spending by independent groups has increased over 108 percent so far this cycle, compared with the levels in 2008. Everyone expects that the investment of the rich in this election will be the largest ever (recently some wealthy donors pledged to invest $100 million to defeat Obama).

Through new entities known as Super PAC, the rich can donate unlimited amounts to favor one party or candidate, provided that the entity does not "coordinate" its efforts with an election campaign. In 2011, the Super PACs raised $62 million; half of this total came from just 22 donors.

The policies that have transformed the economy and society in this country in favor of the richest now apply to politics. "Over the past decades, the concentrated power of money has subverted the professions, destroyed the small investors, destroyed the regulatory state, corrupted legislators en masse and repeatedly squeezed the economy. It has now come after our democracy,” writes Thomas Frank in Harper’s, detailing how the rich select presidential candidates in this country now.

It is increasingly difficult to describe this country as a “democracy,” unless the rich are the “demos” while everyone else only have the option to purchase lottery tickets for a chance to join the 1 percent and be allowed to participate in determining the fate of their country. Democracy is apparently not free.