When the wealth of a few jeopardizes the security of the many…

Raspberry & Mandarin cheesecakeThe President is making his State of the union address tonight. We have been told to look forward to a speech dominated by issue of “income inequality”.   A divisive issue – most certainly, but timely and long overdue as the centerpiece of  domestic policy.

In a recent column in the New York Times (The Inequality Problem)  David Brooks  indicated that targeting the obscene wealth of the top 1% might be a moot point since the wealth at the top, though massively higher than it was in the past, is not making the rest of the world poorer.  To that assumption, the most polite thing I can think to say is “horse hockey!”

Where in the world do they think that massive amount of money came from in the first place?  We aren’t innovating any more.  We aren’t developing a manufacturing base in the US.  Far from it.  In fact a solid argument could be made that most of the wealth accrued over the last 20 by the top 1% has been made by doing almost nothing truly productive.  Venture capitalism (or vulture capitalism) mostly involves moving money around, outsourcing our manufacturing base to the lowest bidder in third world countries.  This is the rock sand upon which massive wealth has been built.  The net result has been a salary squeeze for most working people in this country that hasn’t been seen since before Teddy Roosevelt.  So how on earth can anyone claim that this has not cost the middle and working classes in our country dearly?

On January 20th, Oxfam published an ominous report that included some startling facts among them was the fact that the 85 richest people in the world had accumulated more wealth than the bottom 3.5 billion people.  Although this is a global issue, as Ezra Klein pointed out some startling facts that are specific to the United States being way behind other countries in the developed world the median wealth is roughly $45,000 and the average wealth is in the $250,000-$300,000 range.  That difference between the median and the average is very alarming because averages are skewed byte the extremes. In this case, the extremes at the top skew averages up over 600%.  We would just need to move about a few billionaires to Switzerland to make a dent in that 600% skew.

America got off track in the early 80s when venture capitalism, market speculation and banking suddenly caught fire due to deregulation and favorable tax laws.  Making something along the lines of a product, and employing people to make the product and administer the business infrastructure became soooooo 1950s.  When you make money on money without producing anything truly productive you are creating a Ponzi  scheme where only the house wins and those at the bottom are commoditized into poverty.  Bill Maher did an amazing job of slamming Mitt Romney on this very issue right before the 2012 election:

Meanwhile, as far as innovation and invention go – once commoditization has worked its way up the food chain to the point where your top scientists, engineers, mathematicians also become a commodity you have a new self-inflicted wound.  Once that happens (and it already has as was stunningly demonstrated in a ludicrous column by Thomas Friedman) the best and brightest abandon these fields and join those crowding into the already saturated fields of management, Wall Street and banking.  Look around you, that has already happened.  Walk into any laboratory in the country  and you can count the number of American nationals on one hand. So now you have an innovation deficit as your best and brightest abandon creativity, innovation and invention and exchange it for the money chase.  Young people have done the math and they are not stupid.  Commoditization has turned the long educational pipeline for these fields into a race for the bottom.  The end result is American exceptionalism and excellence sinking into the abyss.

So..with less than two hours to go before the POTUS delivers the “State of the Union” address, I hope  he will take the bull by the horns and honestly address these issues.  But I’m not holding my breath….


Tags: , , , , , , ,