There is perhaps one thing more disappointing that the silence of the non-election for the House of Representatives, New York State Senate, and New York State Assembly, which I wrote about the prior post. It is the noise over the battle for the U.S. Senate and election campaign for New York State’s Governor. As I’ve noted, two groups of people have been getting richer: the executives who sit on each other’s boards and vote each other a rising share of private sector income, and retired public employees whose unions have cut political deals for retroactive pension increases. Everyone else is getting poorer. There is, in other words, the executive/financial class, the political/union class, and the serfs. Basically powerful and entitled people have seized control of our public and private institutions, and have taken more and more while leaving everyone else with less and less and the common future significantly diminished.
In this context, you’d think the 2014 election would be about doing something for screwed younger generations and the 90 percent of Americans on the wrong end of the deal. But that isn’t what you hear. With relatively few serfs expected to vote in this election, and virtually none represented by lobbyists, providing campaign contributions, or running for office themselves, this has been an election about the anger of the entitled. In a stunning burst or entitlement, and in the face of everyone else being forced to deal with having less, New York’s public employee unions and top business executives are outraged – at New York Governor Cuomo and President Obama – that they aren’t getting even more.
Let’s start with New York’s public employee unions. Aside from low population states that get huge revenues from taxes on mineral extraction, New York has the highest state and local tax burden as a share of its residents’ income in the United States, a burden that has risen substantially in the past decade.
This money goes, among other things, to the state’s sky high public school spending.
Already high, the state’s school spending soared as people were forced to pay, in higher taxes or diminished services, for all the retroactive pension increases the unions received from 1995 to 2008. The same pattern – soaring pension and other retirement costs, affected all other public services. Meanwhile the pay and benefits of most private sector workers were squeezed down, even as they were forced to pay more for less in the public sector.
In Upstate New York, the average total compensation per private sector worker was just $35,382 in 2012, down 5.5% from 2001 after adjustment for inflation. The average state and local government workers earned $80,773 in wages and benefits in 2012, up 15.1% since 2001. In Downstate New York the average total compensation for private sector workers (excluding the overpaid financial sector), including top executives and the highest paid workers in sectors outside finance, was $74,306, 1.2% lower than in 2001. The average for state and local government workers in Downstate New York was $100,352, 14.3% higher.
Given these realities, one might have expected a democratic political system to respond to the increasingly bad deal most people are getting. Instead, it is the representatives of public employees (well, actually, retired and soon to retire public employees) that seem to be angry and are making the most noise about it. In reality that’s what the Zephyr Teachout campaign was all about. Do her backers really believer that New York has unmet needs because New Yorkers don’t pay enough in taxes?
Criticism Governor Cuomo: “His economic policies certainly favor the wealthiest New Yorkers over regular New Yorkers,” said Ron Deutsch, executive director of the labor-backed New Yorkers for Fiscal Fairness. “Ultimately, he’s a trickle-down, supply-side subscriber, basically. I think he really does believe that you have to cut taxes for the job creators. He buys into and promotes many of these Republican tax policies.”
Actually, a “millionaire’s tax” was imposed as an emergency measure during the Great Recession, before Cuomo took office, on top of what was already the highest state and local tax burden in the country. It was set to expire. “Tax the rich!” it was demanded. And the higher tax rate was kept for the wealthy, regardless of what Deutsch is paid to say. But Cuomo also got at limit passed on the extent to which regressive property taxes could be increased. They won’t say so, because they don’t like the dots connected between what they take and what others pay, but for the public employee unions that is the real source of anger.
Bottom line. Because the political/union class keeps getting richer and richer relative to everyone else, one of two things has to happen. Everyone else has to pay a higher and higher share of their income in taxes to pay for the same number of public relatively richer public employees. Or they can only afford to fund fewer and fewer of them. Since the cost of the retired keeps going one way – up — due to retroactive pension increases, the reduction in people funded is only among active public employees. And since the property tax cap that is what has happened.
That means less in dues revenues for the unions if they don’t collect from the retirees (by rights they should, and should not collect for the newly hired workers they screwed). And because the productivity of active public sector workers isn’t going up much, this means the serfs are getting less in services. The angry political/union class wants more, and wants to deflect the blame for the service cuts it has imposed. In reality what it deserves, but has not gotten, is a public shaming campaign. (Though Cuomo may be angry enough at the teacher’s union to start one after the election).
The same public shaming may be said to be deserved by executive/financial class. Instead, as the circumstances of the vast majority of Americans, and younger generations in particular, continue to diminish, they seek someone else to blame. And they have chosen President Obama.
“Business owners give Mr Obama lower than average approval ratings. Corporate lobbyists discuss his reform of health care with contempt. A Wall Street boss accuses the government of extorting fines from banks in order to win votes. A technology chief says he is Mr Obama’s last fan in Silicon Valley. On October 8th Randall Stephenson, the head of AT&T, grumbled about a wave of damaging regulations. His audience, many of them bosses, approved.”
These are the people who are complaining?
“The puzzle is why big firms are so miffed when they are so minted. Since Mr Obama took office in early 2009, AT&T’s earnings-per-share have risen by 56% and Mr Stephenson’s annual pay by 47%. The S&P 500 index of shares is near a record high. American firms dominate rankings of the world’s most valuable companies for the first time in a decade and a half. Profits are at their highest level relative to national income since the 1960s. While the median household has seen its income stagnate, the median pay of an S&P 500 chief is up 43% since 2009.”
As I’ve noted, what we have seen over the past few years is not just a recession. It is the near collapse of an economic era. For nearly 30 years American businesses paid American workers less and less, and yet sold them more and more. That’s the difference that allowed profits to grow, inequality to grow, and executive pay to soar, especially on Wall Street. At first the difference was covered between lower average pay and higher household spending was covered by having more family members work, as mothers entered the labor force. Then by lost future income in private retirement benefits, which did not affect household spending prior to retirement. And then by soaring debt. Americans were borrowing to buy what their incomes could not pay for.
The result was a phony prosperity that eventually left most Americans, and the country broke. Now labor force participation is falling as the Baby Boomers retire, and people are struggling to pay back their debts, and American business – having bankrupted its customers – has no one left to sell to. That’s why, despite the ridiculous blame of Obamacare or “uncertainty,” American businesses aren’t investing. How could the investment pay off when sales are, at best, stagnant? The problem isn’t uncertainty, it is certainty. The debt driven economy of the past 30 years has collapsed. The question for the one percent is this: OK, so you won. So now who are you going to sell to?
This collapse would have resulted in another Great Recession, had not the federal government stepped in to stop it by having its own debts soar, further mortgaging our common future.
Ordinary people are already being sacrificed to pay back those debts, and younger generations will either face even higher taxes or lower old age benefits in the future. Yet once again the big corporations and the wealthiest have benefitted most from rising debts. As a result of all the bailouts, soaring debts, and zero interest rates, inequality is even soaring among businesses.
“Multinationals and technology giants are booming. The ten biggest companies in the S&P 500 generate 23% of its profits, up from 20% in 2007. Yet small firms have yet to regain the ground lost since the financial crisis, says Christine Kymn of the Office of Advocacy, a watchdog. Employment by firms with fewer than 100 staff is still well below the 2007 peak. The NFIB’s confidence index for small firms is still below 2006 levels. Disturbingly, since 2008 more firms are dying than being born, for the first time in at least 30 years.”
This is the future THEY made. You would think that everyone else would be outraged and out to string them up from the lampposts. This election should be about whether or not we would have been better off with another Great Depression, which would have decreased inequality by wiping out the stock and bonds of the wealthy in a bonfire of bankruptcy, than with the perma-stagnation the federal government has mortgaged our common future to engineer.
Instead those at the top want more. Or at least want everyone else to blame President Obama, and not themselves, for the fact that they have been left with less. And like Governor Cuomo, President Obama has not responded with the public shaming that the executive/financial class has deserved. Perhaps because it would call attention to the fact that, in the early days of his administration, he didn’t’ get it and thought this was just another recession, and resulting policies benefitted the rich more than the rest.
We are hearing about the demands and anger of top corporate executives and the public employee unions because they have the lobbyists, they have the shill “think tanks,” they pay for the political advertizing, they control all those political offices that the serfs are foolishly not paying attention to: the House of Representatives, the New York State Senate, and the New York State Assembly. And no one is standing up to them on behalf of everyone else because they make the campaign contributions and get people on ballots, so no politician interested in a career or political party interested in survival can afford to piss them off.
This isn’t democracy. It’s two oligarchies seeing who can rob us more. During Presidential election years, when the serfs and the young pay attention, the political/union class and executive/financial pander and pretend with propaganda that implies they are in reality on everyone else’s side. But during off year elections, when only they are on the playing field, we see the ugly reality. They don’t care, and they don’t have to.