Is the American dream dead?
A Harvard professor says the gap between the rich and poor is growing and it's becoming harder to climb out of poverty.
He gives two reasons the country has changed. First, the U.S. has become more unequal over the years. But even more disturbing, he writes, is the decline in social mobility.
These trends stab at the heart of one of the tenets of the Republican Party: the idea that anyone can be a success and climb out of poverty. In America's past, that was certainly possible. But has that changed?
Here's how Ferguson makes his case:
- In the U.S., the wealthiest 1% of people own 35% of the total net worth of the country and 42% of the financial wealth. Only Switzerland has the same level of economic inequality, out of all developed economies.
- The Federal Reserve's monetary policy has only made the rich richer. Not much of an economic recovery.
- About 42% of American men born into poverty stay there as adults, higher than the 30% in Britain and the 28% in Finland.
- An American has a 1-in-13 chance of going from poverty to the top fifth of the income ladder. "Indeed, the amazing thing about the most recent research on social mobility is that the United Kingdom -- which used to have the most rigid class structure in the developed world -- now risks losing that title to the United States," Ferguson writes.
- Welfare creates a poverty trap in which a single mom in Pennsylvania, for example, is better off in a part-time job paying $29,000 -- and receiving $28,000 in various benefits -- than in a full-time job that pays $69,000 and requires tax payments of nearly $12,000.
- American high schools are a joke. About 75% of Americans ages 17 to 24 aren't qualified to join the military because they are physically unfit, have criminal records or aren't educated enough, Ferguson writes. About 40% of students at four-year colleges take remedial classes because their high school education was so poor.
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Why do so many people believe the present day paradigm that:
1) Inflation and high debt are good things?
2) Spending is what drives the economy, not saving?
3) Weak currency is good and strong currency is bad because exports are important?
ALL OF THESE IDEAS ARE UPSIDE-DOWN! The widespread belief that these ideas are right are the consequence of our being governed by LIES! Both parties have been doing this to us for years.
Inflation is what makes the super-rich more rich at the expense of everyone else. Prof Niall Ferguson and writer Kim Peterson see the symptoms, but they don't recognize the root cause. In Ferguson's case, this is disappointing since he is a professor.
The Fed needs to stop inflating the dollar. When the currency is stronger, life is easier for regular people. The premise that mild deflation is harmful to the economy is a DIRTY LIE that serves the purpose of protecting the super-rich. When the cost of business keeps going up, employees are either laid off or paid less. During mild deflation, it becomes easier to start a new business. Moreover, advantage of economy of scale that the big dogs enjoy when overhead is high is diminished when overhead is low. In the theoretical case of zero overhead, the mom-and-pop store is on equal footing with Wal Mart. Deflation forces the big dogs to face many smaller competitors. If they don't pay their employees enough or if they try to gouge the public, the smaller competitors step in.
Having less government debt is also important because in order for a business to succeed without political favor, it needs access to capital in the traditional manner. This means having people save and having the bank loan out their savings to the entrepreneur. When the government borrows most of the available credit funds, entrepreneurs cannot get capital.
Meanwhile, the super-rich bankers borrow from the Federal Reserve Bank at 0% and fatten up on everything from surging stock prices to Treasury bond interest to surging home prices. Did you know that hedge funds have been buying up many of the older homes in order to resell them quickly at a profit? Clearly, the so-called economic recovery is just having the super-rich get richer at our expense.
In order for politically UNFAVORED businesses to obtain capital, INTEREST RATES must be balanced -- high enough to attract savers, but still low enough for borrowers. The fact that the U.S. government cannot withstand high interest because the National Debt is almost $17 trillion causes the Federal Reserve Bank to try to keep interest rates down.
Thus, the politically unfavored do not get their much-needed capital. Inflation keeps going up, but the government uses the Consumer Price Index to LIE TO US that there IS NO INFLATION, while claiming that prosperity is back.
Meanwhile, people like you and me continue to struggle with no hope of the situation getting any better. Government officials are too busy patting themselves on the back over how they've already fixed the economy!
Since the start of our nation government has gotten more and more involved with the everyday lives of American's. Today many American's rely on the government to provide them a home, food, cell phone, and well...everything it takes to live in America. We have less and less American's paying into the system and more and more American's taking out. All this was done by our government with the intent on making the average American's lives better. Well it hasn't worked... We now have 11 million American's receiving SS Disability because it's easier to play computer games and watch TV at home then it is to getting a job.
Unfortunately our governments desire to take care of people in "need" has created a lot of people that "need" to be taken care of.
There was a time that people helped people because it was the right thing to do. There was a time when people saw a need and worked in the community to provide for the need. There was a time when family helped family and generations lived together to help provide for each other. There was a time when if a person had a problem they solved it themselves or asked for help from family and friends. There was a time when people had respect for each other. There was a time when religion was an important part of our lives. There was a time when it was okay to believe in God and let everyone know it. There was a time when religious organizations were free to help those in need and provide services to all without interference. There was a time when neighbor helped neighbor and new each other’s names. There was a time when black and white people came together in their communities for the good of all. There was a time when black and white children played and sang together.
Now people help people just for there own self-esteem and public image. Now when people see a need they wait for someone else to fix it or run to the government. Now we regard family as a burden and would consider living together a hardship, so we run to the government. Now if we have a problem we run to government and expect them so make it all better. Now it’s everyone for themselves and everything you do is wrong and the government can do it better. Now religion is something to be hidden, only whispered about and we run to the government to protect us from another’s beliefs. Now if a religious organization tries to help they have to give up their own customs and identity so no one they are helping gets offended, and the people run to the government to complain if they see a symbol. Now we try to be as far away from our neighbor as possible, and we don’t even know our neighbors name as we expect them to give up there rights and we run to the government to force our neighbor to do what we want so we are not offended. Now blacks and whites do not trust each other and the government does nothing but make exceptions, excuses, and points out all our differences instead of our common rights.
Ferguson made two points that say a lot about why someone born into poverty stays poor.
1. Welfare creates a permanent underclass.
In many cases it's simply more profitable to stay on welfare than to get a real job. In addition to restricting welfare to those who cannot work, we need to go after the fathers of children whose mothers are receiving welfare. With DNA testing, it shouldn't be all that hard to identify who fathered these children and make them pay their share.
2. Education in many poor areas is a joke.
It's nearly impossible to break out of poverty without attaining a decent education or job skills. This is probably the toughest nut to crack, because so many parents (usually single moms) in these areas don't have the skills to pass on to their children, so the cycle continues from one generation to the next.
There are no easy fixes. Our politicians need to address this issue openly and honestly, without retreating to the usual Republican and Democratic talking points. We all know what doesn't work, so it's time to try another approach.
MAYBE FERGUSON UNDERSTANDS AFTER ALL
I overlooked the one bulleted statement where Ferguson criticizes the monetary policy of the Fed.
Unfortunately, I cannot edit or even delete my original message. However, I stand behind the main content, which is that mild deflation, far less government spending and balanced interest rates would make life better for ordinary Americans.
We also need to go back to producing goods that regular people want. Lower overhead cost from deflation would help make this possible.
The dollar should be A LOT MORE VALUABLE than it is, right now.
There was a continent to plunder before WWII. That continent provided the essence of the "American Dream" until the end of WWII.
The denouement of that war, in which the U.S. stood astride a crippled world of smoking ruins, provided the "American Dream" that most folks are thinking of. This war's advantage and abundance (especially for us, 1945-1950) gave birth to an increasingly leveraged consumer society that reached its inflection point - its tipping point, if you will - during (and as a result of) Reagan's second administration.
The trend since that time has been ineluctably downward. And with the continent all plundered, and that WWII seed corn all eaten, the trend line for the ride will continue negatively.
American high schools are a joke. About 75% of Americans age 17-24 aren't qualified to join the military because they are physically unfit, or have criminal records, or aren't educated enough, Ferguson writes.
Then why aren't there any Army recruiters in rich, white neighborhoods? LOL!
The Government has always dictated prices and supply via instructions from their Corporate Masters. Free Markets will never work as long as there is a Corporate Master and a Government Puppet. Fact is, we have already reached the point of no Return. The already wealthy have robbed us in plain sight yet the vast majority don't have the stones to do anything about it. Yet.
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[BRIEFING.COM] The time is drawing near for the FOMC to release its latest policy directive. It will be done at the top of the hour; and the major indices are mixed at the bottom of the hour.
Market participants are expecting the policy directive to read very similarly to the last directive. Any new nuggets of information, therefore, that suggest the Fed is angling to prepare the market for the fed funds rate to go up sooner rather than later would be a source of ... More
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