Five ways massive inequality paralyzes society

The answer may be an international financial transaction tax:

1. A Broken System of Compensation: The Combined Salaries of 350,000 Pre-School Teachers is Less Than That of Five Hedge Fund Managers

Pre-school teaching may be our nation’s most important job. Numerous studies show that with pre-school, all children achieve more and earn more through adulthood, with the most disadvantaged benefiting the most.

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2. Diminishing Support for Society: The 1% Made More from their Investments in 2013 than the Entire Cost of Social Security, Medicare, Medicaid, and the Safety Net

America’s wealth grew by almost $9 trillion in 2013. The richest 1% own 34 percent of the wealth (Table 6 here or Table 2 here), or about $3 trillion of the 2013 gain.

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3. Capital’s Long-Term Dominance of Labor: Since 1900, a Dollar of Labor has Grown to $127, a Dollar of Stocks to $1,247

There’s a good reason why the super-rich are cleaning up in the stock market. Thomas Piketty explains that, barring war or depression, the return on capital far outpaces economic growth, causing average workers without a stock portfolio to drop further and further behind. A look at stock market growth over 114 years (Page 60) confirms that a dollar of capital is now worth ten times more than a dollar of labor value.

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4. The Walmartization of America: A Few Super-Rich at the Top, then Everyone Else

Just like at Walmart, a few big moneymakers are ruling over a great majority of increasingly low-income workers. Low-wage jobs ($7.69 to $13.83 per hour) made up 1/5 of the jobs lost to the recession, but accounted for nearly 3/5 of the jobs regained during the recovery. And it’s getting worse. Nine out of ten of the fastest-growing occupations are considered low-wage, generally not requiring a college degree.

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5. Toward Third-World Status: Our Shrinking Middle Class Gets a Smaller Cut of National Wealth than Anywhere except China and India

From a global perspective, we’re becoming the type of country that we used to dismiss as “third-world.” Among developed and fast-rising nations only the middle classes of China and India get a smaller cut of their country’s wealth than in the United States. Both of them are rapidly catching up to us.

HT Karin Riley Porter Attorney at Law