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May. 2007Edition 93

This is where we hope to keep you thinking.  The site does not focus on diversionary minutia.  You get enough of that  incessant spin coming from mainstream media.

 

The Changing Shape of Income Distribution

Middle Class Squeeze

According to the Department of Housing and Urban Development (HUD), "affordable housing" should cost less than 30% of a family's income, either in rent or a monthly mortgage. A recent article in THE ECONOMIST observed that for many Americans, finding houses in the affordable range is becoming a challenge. There may be a link between the housing problem and other social ills, since families paying more than 30% of their income are considered cost burdened and often have to cut back on necessities such as food, clothing, transportation, and health care.

	San Francisco	Boston	Washington	San Diego	Chicago	Dallas
Apartment Rent*	1,362	942	840	805	762	749
Income needed to pay rent**	54,480	37,680	33,600	32,200	30,480	29,960
Janitors' median income	20,800	20,987	15,787	16,536	18,824	14,810
Nurses' median income	39,603	39,541	32,280	31,990	31,990	38,938
Teachers' median income	38,293	38,584	32,781	38,584	36,733	34,861

* Monthly rent for modest two-bedroom
**Assuming 30% of income is spent on housing
Source: Joint Centre for Housing Studies, as reported by THE ECONOMIST.

From 1979 to 1997, the after-tax income of the top 1% of families rose 157%, while the gain for families near the middle was only 10%. And within the top one percent, most of the gains went to the top 1/100th of a percent.

Some researchers believe that changes in the labor market and household composition have been the source of increased income inequality. Wage distribution has become considerably more unequal with workers at the top experiencing real wage gains and those at the bottom real wage losses. At the same time, long-run changes in society's living arrangements have taken place also tending to exacerbate household income differences. For example, divorces, marital separations, and the increasing age at first marriage have led to a shift away from married-couple households to single-parent families and nonfamily households. Find out more about Executive Excess.

Another source of changing economic equality may be the rising costs of health care. Learn about changes in health care.

The third major factor in changing income distribution is the job market. Read about Working in America. However, any conclusions about global inequality depend on what statistics analysts choose to look at. As economist Paul Krugman sees it, the broad middle class society we have gotten used to may have just been a temporary aberration of the 1950's and 60's.

Resources

Economic Policy Institute
The Economic Policy Institute is a nonprofit, nonpartisan think tank that seeks to broaden the public debate about strategies to achieve a prosperous and fair economy. The EPI web site includes such web features as analyses of key government data; a weekly presentation of downloadable charts and short analyses; issue guides providing data, charts, fact sheets, and links to relevant publications; opinion pieces and speeches; and tables on historical labor market, earnings, and income data.

Center for Budget and Policy Priorities
A nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs, with an emphasis on those affecting low- and moderate-income people. The Center web site includes reports in the following areas of research: federal budget priorities, federal tax policies, federal welfare policies, state welfare and TANF issues, health policies, state fiscal policies, food assistance, low-income housing, social security, poverty and income trends, and earned income tax credit policies.

Sources: Organisation for Economic Cooperation and Development; United States Census Bureau; The Economist; Department of Housing and Urban Development.

Transcript: Bill Moyers Interviews Kevin Phillips

BILL MOYERS: With me now is a man who has been tracking the political and economic history of American wealth for a long time. Kevin Phillips and I were both young men in Washington in the 60s. We were on different sides but had a mutual interest in politics that reached workaday people. He was the chief political strategist for Richard Nixon's victory in 1968 and wrote the bombshell book on the emerging republican majority. Ten years ago his best-selling book on the politics of rich and poor influenced the 1992 elections. In his new book, WEALTH AND DEMOCRACY, he is writing about how big money and political power are the invisible hand in the hidden story of the American experience. Good to see you again.

Good to see you again.

KEVIN PHILLIPS: Nice to be here.

BILL MOYERS: You keep referring in "Wealth and Democracy" to a plutocracy. What do you mean by that?

KEVIN PHILLIPS: Well, the plutocracy ... and I think we have one now and we didn't, 12 years ago when I wrote THE POLITICS OF RICH AND POOR is when money has ceased just entertaining itself with leveraged buyouts and all the stuff they did in the '80s, and really takes over politics, and takes it over on both sides when money not only talks, money screams. When you start developing philosophies in which giving a check is a First Amendment right. That's incredible. But what you've got is that this is what money has done. It's produced the fusion of money and government. And that is plutocracy.

BILL MOYERS: But hasn't money always held politics hostage?

KEVIN PHILLIPS: Well, it's usually been very influential. And sometimes it really hasn't been too influential,

But what we've seen in the '80s and '90s is that it's taken control of both parties, pretty much taken control of the culture, and controls the whole dynamics of politics. And that is ...

BILL MOYERS: But the si- ...

KEVIN PHILLIPS: ... a plutocracy in a way that we haven't had before, since the gilded age.

BILL MOYERS

But the signers of the Declaration were representatives of America's first and wealthiest families.

KEVIN PHILLIPS: Well, they were, but, you know, a funny thing about that, because they were simultaneously people who were furious with the British. Furious with the British for taxing them, for not letting them make their pig iron into hammer and spades, for not paying the right amount of money for tobacco.

And if you read what they had to say, it sounds like the American version 100 years earlier of what the people out in the plains said about the bankers in New York and the railroad owners in Minneapolis. So they were fighters in a way. And Thomas Jefferson pretty much stuck with that. You had a divergence within the founding fathers of those who became, in the American context, pretty conservative, and those who like Jefferson maintained their anger they had against the British economic elites in the United States.

BILL MOYERS: But where is that anger today? Because the ... the two men who spoke most consistently with what you're saying in WEALTH AND DEMOCRACY in 2000, John McCain and Willi... Bill Bradley, Senator Bradley, both got defeated in their primaries. And they were the ones who were registering the discontent of which you are ... are writing about. What happened? The peop... that the majority of people don't share your convictions and mine?

KEVIN PHILLIPS: Well, I'm not certain whether they do or they don't. But the ... the key thing in the year 2000 was that if you look at all the psychological profiles of the United States, of the electorate during that period, even though the Nasdaq had started to crash they still thought things were pretty good. The real dive didn't come until after the election when you had the miserable elections stalemate and the sagging economy.


So that basically, you never get one of these reactions against big money until you've had this speculative implosion. And normally I think if we were seeing any kind of debate in Washington, and the Democrats have all kinds of things they could say about the Bush dynasty and Enron, for example, it's mind blowing, but they don't.

BILL MOYERS: Why?

KEVIN PHILLIPS: I think partly because they're so interested in raising money that they can't see their soul in the mirror.

BILL MOYERS: What has happened to the word equality? When you and I were young men in politics it was a common reference in our political discourse. Lyndon Johnson, Richard Nixon, a lot of others too, but you don't hear it in the political lexicon anymore.

KEVIN PHILLIPS: You hear it in twisted ways. There is a view in some conservative circles that it doesn't matter much what concentrations of wealth you have or disparities of income. It's equality of consumption. It's the right to have Nike shoes, to listen to a boom box, to take a plane ride. And ...

BILL MOYERS: Nothing wrong with that.

KEVIN PHILLIPS: Well, no, but on the other hand, that didn't solve problems in a depression when you had the right to watch a plane fly over Kansas. Or turn on the radio. So you've got these different ledgers that are kept. And people that try to say "consumption is the yardstick" usually have it in mind that democracy is not ... that income differentials are not, they stand for a different philosophy.

BILL MOYERS: Didn't the word "equality" disappear because the people who believe in inequality won the elections?

KEVIN PHILLIPS: Well, there's a certain truth to that. And going back to the time when we were both in politics on different sides of the aisle, the ... one of the great weaknesses, in my opinion, in liberal politics, was to start talking about social equality in a way that had never really occurred in the United States. People came to this country as immigrants and they ... they suffered all kinds of hardships and "no Irish need apply" and everything you could name. Nobody ever tried to draw blueprints for bussing the Irish around Boston ...

BILL MOYERS: Mm-hm.

KEVIN PHILLIPS: ... or things like that. And there was a sense that equality in the social sense could be obtained through government, that became powerful in the '60s. And in my opinion, that was the beginning of the tending of the idea of equality in the sense of ... of economics. Now, conservatives will still say all that matters is equality of opportunity.

BILL MOYERS: The market will produce the equality.

KEVIN PHILLIPS: Yes, exactly.

BILL MOYERS: You ... you know that I was quite taken with your book "The Politics of Rich and Poor," what, a decade ago?

KEVIN PHILLIPS: 1990.

BILL MOYERS: 1990. In it you told of how the wealthy had made great gains in their power. They had ... are you writing the same thing now? Has it changed quantitatively and qualitatively?

KEVIN PHILLIPS: I think there are two stages, the 18- ... the 1980s were the first stage in the sense that Ronald Reagan wanted people to have a chance to get rich. He liked entrepreneurs, he liked people who owned 14 department stores or two movie studios. It wasn't for the big old steel companies or anything, but he liked money. And he and Don Regan, the Treasury secretary, created a political culture in which fashion became in, making money became in, paper entrepreneurialism was the key, all the leveraged buyouts. And that was a whole culture of... people got a lot of money at the top.

But what you got then in the 1990s was, in my opinion, stage two. And this was the technology mania, and the rise of the securities markets, taking technology and making this incredible bubble out of it. And a new crowd of people got rich. Plenty of the old people, but a whole lot of new people. New people who tended to have a more liberal politics in many cases, to name Internet companies, things like Yahoo! and AskJeeves, and what have you.

If you look at the list of new money in the Forbes 400 say in 199... 1998 or 1999, when the Internet crowd was coming in big time, we've got an awful lot of Democrats. And the Democratic Party has in its own way started to be a party of a different type of wealth. The Republicans have the smoke stacks and the polluters and the ranchers and the oil companies, and the Democrats have a lot of the communications media, a lot of biotechnology, a lot of the coming stuff ...

So what we've got are two sets of people in Washington who basically because of the whole demand of financing campaigns go to people with money. They go to different sets of money and you've sort of got what you had in politics before the Civil War: the Democratic Party, that basically was in with a southern plantation aristocracy, and Republicans who are in with the merging industry. Nobody was for the little guy.

BILL MOYERS: What's the ordinary Joe and Jane to do? I mean, the guys running these cameras working here, whom you've met, they can't write big checks to either political party or political candidates, and yet it's a struggle not to leave people despairing today when they read an analysis such as "Wealth and Democracy." What are the average folks to do?

KEVIN PHILLIPS: Well, one thing I think they have to do is they really have to say on certain issues, which are not strictly party issues, we've just got to mobilize on the issues, whether it's campaign finance or other things like that. But secondarily they've got to work to make the party system make a difference. You can't have two parties that represent different flavors of great wealth and expect not to see all these weaknesses continue to grow.

BILL MOYERS: But you've already said that both parties spend all their time raising money. And they don't listen to the people running the cameras. They listen to the people writing the checks.

KEVIN PHILLIPS: Yeah, well, some of the time they do, because you keep reading about votes in Congress periodically, where these outrageous proposals, be they tax or trade or other things, they only make it through by one, two, three votes. People are standing there twisting arms of Presidents, giving them six post offices and three favors.

Now, if there wasn't some responsiveness to public opinion and a sense that things have gone too far, that wouldn't happen. So the trick is to mobilize somehow or other institutions in this political culture that will take those issues on which Congress ... some of them would like to be made to vote against their contributors. And, you know, I'm ... I'm not sure how to do it. I think ...

BILL MOYERS: It took a rich man, Ross Perot, to make it happen in any significant manifestation ... eight years ago, ten years ago.

KEVIN PHILLIPS: But see, part of the thing in ... in the United States, is that the minority of rich people are usually on the side of trying to make America work like America. You had in the last election, in the three people who were running sort of as populist, John McCain, millionaire, son and grandson of four-star admirals, Bill Bradley, multi-millionaire, former basketball player, even Ralph Nader's got three or four million dollars worth of investments. So all kinds of people go against what should be their interest financially because of what they think is the right thing to do. That's really something to build on.

BILL MOYERS: What's been the biggest change? You ... I was in Washington in the '60s, you came right after, helped elect Richard Nixon, we were both in our 30's then, very young 30's, what's been the biggest change in Washington since we were young men there?

KEVIN PHILLIPS: I think the entrenchment of money in ways you can't even begin to count. It used to be that when a new wave politically came to Washington they swept it out. And that was certainly true with Lincoln, it was certainly true with FDR. It couldn't happen even in the '60s, in my opinion. There's no way to sweep now. The whole structure was just a pyramid of ... of economic influence mongering.

BILL MOYERS: Do you think the new McCain Feingold ban on soft money will have any positive impact on this?

KEVIN PHILLIPS: Oh, it'll have some positive impact, but in many ways, it's gonna be another version of the lawyers and accountants full employment act.

BILL MOYERS: So what do we do?

KEVIN PHILLIPS: Keep fighting. I think there are signs that it's turning now. To me one of the most important milestones will be if people, and I include the media here, have the courage to document and put on the front page what they won't really touch now, which is ...

BILL MOYERS: Which is?

KEVIN PHILLIPS: All the examples of the Bush family's role in the rise of Enron. Here, we're running around, we're blaming these accountants, these tricksters that were in Enron, but George W. and George H.W., his father, were very much involved in the whole rise of Enron's influence and power in this country. But you ... you don't see that. People in the press have a lot of trouble touching these issues right where the rubber hits the road.

BILL MOYERS: Well, when you've got anchors making eight, nine, ten million dollars a year, when you've got a handful of huge media corporations owning over half of the outlets in this country, do you expect much populism from those people?

KEVIN PHILLIPS: No. And that's the fundamental problem. How do you get dynasties to talk about other dynasties? I think it's a real difficulty. Unfortunately, that means that some of us have to start talking about stuff we'd rather not do all the time because if you don't make a lot of friends by doing it ... it's tough, but a dynasty is a dynasty is a dynasty and these problems are there, and this incredible amount of money is ... is just staring this country's historical role in the face

BILL MOYERS: How do you explain that the pro-wealth policies of the right, the conservatives, have endured so much support among working Americans and low income Americans?

KEVIN PHILLIPS: Well, all I can say is if I were a Democratic senator, I would go on and make a speech that might remind Democrats of stuff they haven't heard in a long time. You get professors who are dedicated liberals and they go on and they make these speeches and nobody pays any attention. You have to basically go in there and do a number. You have to go in there and just stand there and describe who supports somebody, who is paid for and who has done this, that and the other.

If the Democrats wanted to take all these issues out and run 'em up the flagpole, there is still plenty of people ready to salute. That's why we have some of these close votes. But you've got to be willing to do it. And I understand why a lot of them don't want to do it. But, you know, who's gonna do it? Ralph Nader couldn't do it. His friends dropped him when he talked about all of this.

BILL MOYERS: Are you going to join the Democratic Party?

KEVIN PHILLIPS: No, I don't think the Democrats have done anything that I should say, warrants... but I'm certainly and independent more than a Republican at this point. John McCain is the one lifeline and one of his aides left because he didn't seem to want to carry the flag and that's a big question mark.

BILL MOYERS: Thank you very much, Kevin Phillips.

KEVIN PHILLIPS: Thank you.

BILL MOYERS: Thank you for WEALTH AND DEMOCRACY.

KEVIN PHILLIPS: Thanks.
 

Working in America Overview: State of the Unions

Unions were briefly at the top of the American news last month due to the strike by the 10,500 dock workers of the International Longshore and Warehouse Union strike at 29 West Coast ports. As losses, and pressures, mounted President Bush became the first president in a quarter-century to invoke the Taft-Hartley Act of 1947. The act allows a president to ask a federal court to stop a strike or lockout that imperils the nation’s health and safety. Progress is being made in mediation talks. The "cooling off" period mandated by Taft-Hartley is in effect until December 27.

There's little doubt that union membership is falling. However, unions still remain a powerful force in American life, and in American politics. But, as the figures below illustrate, whether or not there is a union in your life depends very much on where you live and what you do for work. Salespeople, like those featured in "Off the Clock," have the lowest rate of unionization in the nation.

State of the Unions

Percentage of wage and salary workers who are union members, 2001:		13.5%
Percentage of wage and salary workers who were union members, 1983:		20.1%
Unionization rates for government workers, 2001:		37.4%
Unionization rate of private sector employees, 2001:		9%
Unionization rate among protective services workers (police, fire fighters):		43.1%
Unionization rate among transportation and public utilities workers:		23.5%
Unionization rate among construction workers:		18.4%
Unionization rate among professional workers (including teachers):		19.1%
Unionization rate among manufacturing workers:		14.6%
Unionization rate among sales workers:		3.5%

Working and Not Working Worldwide

United States unemployment rate, October, 2002:		5.7%
Canadian unemployment rate, October, 2002:		7.6%
Australian unemployment rate, October, 2002:		6.2%
French unemployment rate, October, 2002:		8.8%
German unemployment rate, October, 2002:		8.3%
Italian unemployment rate, October, 2002:		9%
Japanese unemployment rate, October, 2002:		5.4%
Dutch unemployment rate, October, 2002:		2.7%
Spanish unemployment rate, October, 2002:		10.6%
United Kingdom unemployment rate, October, 2002:		5.1%

Sources: THE NEW YORK TIMES; National Labor Relations Board; Bureau of Labor Statistics; OECD Statistics; Japanese Labor Statistics

Wal-Mart Resources:

Good Works
Good Works is Wal-Mart's foundation for charitable giving. The foundation focuses its efforts on community education and scholarships; family health and welfare needs; economic and workforce development programs; environmental issues; volunteerism; and community-based non-profit organizations. The Good Works Web site allows users to view Wal-Mart's various charitable contributions under four broad categories: community, education, children, and the environment.

How Wal-Mart is Remaking our World
Activist and writer Jim Hightower describes Wal-Mart's huge corporate operations that span the globe. Hightower argues Wal-Mart's ability to continuously grow in profitability while providing low prices is due to their use of Chinese labor and alleged labor abuses. This allows Wal-Mart to undercut and eventually put out of business local independent stores.

Wal-Mart
The official corporate Web site, Wal-Mart.com provides an extensive list of Wal-Mart products with the option to purchase online. Customers can also track the status of purchases online, find a store near them, and sign up for the Wal-Mart wire, which e-mails customers information on upcoming sales and values at Wal-Mart stores.

Wal-Mart Watch
Wal-Mart Watch documents Wal-Mart's alleged corporate abuses with news reports and articles, information sheets, and the "Wal of Shame," an archive of Wal-Mart's misdeeds categorized under five headings: worker mistreatment; discrimination; harassment; endangering consumers and employees; and poor treatment of employees. The Web site also includes some short documentaries.

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