Since 1985, banker bonuses have soared 890%, seven times the rise in the federal minimum wage, according to the Institute for Policy Studies, a left-wing think tank in Washington, D.C., which they proclaim has “contributed to racial and gender inequality” in America.
As MarketWatch’s Quentin Fottrell reports, the average Wall Street bonus rose 1% to $138,210 last year, but fell 15% the year before, more than twice the median U.S. household annual income of $55,775. Bonuses in the New York securities industry were 1.6 times the combined annual earnings of all the nation’s 1 million-plus minimum wage workers in 2016.
The report, “Off the Deep End: The Wall Street Bonus Pool and Low-Wage Workers,” estimated that the 2016 bonus pool held enough dollars to lift all of the country’s 3.1 million restaurant servers and bartenders on a $15 per hour minimum wage, or 1.7 million home health and personal care aides, or all 3.2 million fast food preparation and serving workers. (The national minimum wage has risen only 116% over the last three decades, from $3.35 an hour to $7.25.)
We leave it to Nobel-prize-winning economist Angus Deaton to unravel this…the fact this economy isn’t what we’ve been told. In reality, it’s largely a rent-seeking based system, in which a meaningful percentage of the people who earn the most money are not only not adding value to society, they’re in fact parasites feeding off the general public. Market Watch reports:
Income inequality is not killing capitalism in the United States, but rent-seekers like the banking and the health-care sectors just might, said Nobel-winning economist Angus Deaton on Monday.
If an entrepreneur invents something on the order of another Facebook, Deaton said he has no problem with that person becoming wealthy.
“What is not OK is for rent-seekers to get rich,” Deaton said in a luncheon speech to the National Association for Business Economics.
Rent seekers lobby and persuade governments to give them special favors.
Bankers during the financial crisis, and much of the health-care system, are two prime examples, Deaton said.
Rent-seeking not only does not generate new product, it actually slows down economic growth, Deaton said.
“All that talent is devoted to stealing things, instead of making things,” he said.
Another prime example of rent-seeking is that the Medicaid is funding opioid prescriptions for low-income workers, Deaton said. The results are workers who are becoming addicted and overdosing while profits are going to the Sacker family which owns Purdue Pharma that makes OxyContin.
Raising taxes on the wealthy is not a good way to combat rent-seeking because it taxes the legitimate profits of entrepreneurs along with rent-seekers.
“The key is to somehow find a way of tackling rent-seeking, crony capitalism, and corruption legal and illegal and build fairer, more equal society without compromising innovation or entrepreneurship,” he said.
As Michael Hudson explained so eloquently recently that bankers have become the top exploiters of the economy. Today, families entering the labor force are going to have to spend all their life working off the debt they need to take on in order to get an education to get a job, as well the debt they need to buy a car to drive to the job, and the mortgage debt for the house they need to live in to avoid rents going up and up. They have to spend all their life merely to pay their creditors, not to live better with more goods and services. Unlike serfdom, today’s workers can live wherever they want. But wherever they live, they have to produce value not only for their employers but also for the bankers. These bankers (and bondholders) are the main exploiters today. So finance capitalism is overwhelming industrial capitalism. Instead of industrial capitalism evolving into socialism as was expected, it is retrogressing back to neo-serfdom and neo-feudalism. This is mainly because of the inability to bring debt within the industrial capitalist system to evolve into a socialist economy. That is what neoliberalism is sponsoring by financialization and privatization.