Tuesday, October 8, 2013

THINK TANKS SEE ECONOMIC DISASTER FOR WORKERS AS PROGRESS





Harry Targ

“…more than 1 in 5 children live in poverty and 47 percent are low-income (more than all neighbor states, including Kentucky); more than 1 million Hoosiers over the age of 18 are in poverty and 2.24 million are low-income; more than 70% of Hoosier jobs are in occupations that pay less than 200% of the Federal Poverty Guidelines – that’s less than $39,060 for the same family of three referenced in their report (a single parent with two children); we have a larger share of jobs in occupations that pay at or below poverty wages jobs ($19,530 for a family of three) and jobs that pay at or below minimum wage than all neighbor states, including Kentucky; and wages have declined for lower- and middle-income Hoosiers over the past decade, while worker productivity has soared.” (Derek Thomas, “Cato Study Disingenuously Presents Molehills as Mountains,” Indiana Institute for Working Families, August 23, 2013).

Mitch Daniels, two-term Governor of the state of Indiana (2004-2012) and current President of Purdue University has been making presentations before conservative think tanks, business groups, and national television audiences. Often groups hosting Daniels are trumpeting Indiana as a model of inexpensive, efficient, and sophisticated government.

For example, Daniels, who promised he would not be “political” when he assumed the presidency of Purdue University, spoke before the Center of the American Experiment, Monday, October 7, 2013. The Center proclaims it wishes to shift political discourse in a conservative direction: right-to-work legislation, lower taxes, and “traditional American values.” And Daniels was invited to speak presumably because the Center believes Indiana is “leading the way when it comes to taxing less, spending less, but doing government better.” (Hayleigh Colombo,” Politics Hover as Daniels in Minn.” Journal and Courier, October 8, 2013).

Politicians and conservative think tank spokespersons especially have been misrepresenting the history of economic performance in the United States. Huffington Post reporter, Mark Gongloff reviewed a recent study of income inequality in the United States by economists Facundo Alvaredo, Anthony B. Atkinson, Thomas Piketty, and Emmanuel Saez. The top one percent of income earners doubled their share of income since the 1970s to 20 percent.  Growing income inequality in the United States since 1960 is significantly greater than all developed countries. U.S. income inequality is bested only by Chile, Mexico, and Turkey among all nations. 

Gongloff attributes growing income inequality in the United States to long years of reduced taxes for the rich and financial deregulation. “The same politicians that have busily been slashing taxes on the wealthy have also been loosening fetters on banking, allowing the financial sector to swell to bloated size and mop up ever-more income while contributing ever-less back to the economy.” (Mark Gongloff, “The U.S. Has the Worst Income Inequality in the Developed World, Thanks to Wall Street: A Study” Huffington Post, August 15, 2013).

Indiana is one example of a state in which local economic trends mirror the accumulation of wealth on one side and poverty on the other. In fact, Indiana has been one of the worst states in terms of providing for its population. Almost 16 percent of the state’s population lives in poverty, including over 22 percent of its children, 17 percent of women, 33 percent of African Americans, 29 percent of Latinos, and 25 percent of Native Americans. One third of Indiana residents are low income and for a decade have experienced a decline in median household income. Even with a recent slight decline in the rate of poverty, the number of low income Hoosiers has risen since 2011. (Indiana Institute for Working Families, 9/19/13; cited in “Slight Decrease in Poverty Offset by Increase in Low-Income Hoosiers,” Lafayette Independent, October, 2013).

In an illuminating series on “The Unequal State of America: a Reuters Series,” by Deborah Nelson and Himanshu Ojha, December 18, 2012, www.reuters.com/subjects/income-inequality) the authors report on state-by-state trends in the U.S. economy from 1989 through 2010. Among their findings are the following:

*Inequality has increased in 49 of 50 states, including Indiana.
*The poverty rate increased in 43 states, most sharply in Nevada and Indiana.
*In all 50 states, the richest 20 percent of households made the greatest economic gains of any quintile.

As to tax policy over the last several years, the rich were the main beneficiaries. Nelson and Ojha cite a Tax Policy Center finding “…that two-thirds of the tax savings would go to the top quintile of households and 1 percent to the lowest quintiles in 2012. In dollar savings, that’s $371,000 for the top 0.1 percent of households in 2012, $958 for the middle and $66 for the poor.”

So we must remember that when politicians (whether they are currently in office or using other visible institutional positions such as Purdue University President Mitch Daniels) warn of the need to “cut entitlements” to reduce “unbridled spending,” and advocate tax cuts, deregulation, and down-sizing government, they ignore the impacts such policies have had on the majority of the population of the country. Think tanks such as the Center of the American Experiment are advocating policies that enhance the wealth and income of the superrich at the expense of the vast majorities.

(Part of this essay appeared in Harry Targ, “The Painful Truth: Capitalism is a Zero-Sum Game,” Diary of a Heartland Radical, September 29, 2013, www.heartlandradical.blogspot. com).