For many of us on the ground, this feels a bit like the people in the ivory towers finally beginning to figure out the obvious thing that’s troubling the ant-like creatures they see far below.
This “duh” moment is an Associated Press survey published today based on interviews with a group of three dozen economists who for the most part agree that, in the words of the AP story the “growing gap between the richest Americans and everyone else isn’t bad just for individuals. It’s hurting the U.S. economy.”
“A key source of the economists’ concern: Higher pay and outsize stock market gains are flowing mainly to affluent Americans,” the story continues. “Yet these households spend less of their money than do low- and middle-income consumers who make up most of the population but whose pay is barely rising.”
Many of these economists are Wall Street stalwarts, and from their perch they see what is happening to the companies whose bread and butter is the Main Street economy. Take for example Walmart, which last month released an earnings report that disappointed investors, citing “a challenging sales and operating environment.” Yahoo News quoted Howard Davidowitz, “one of the top retail minds in the country,” as saying, “Walmart is a terrific operator… They didn’t suddenly become stupid. The economy is in collapse. That’s what’s going on.”
If “collapse” is too strong a word, it’s certainly true that the working-class economy is continuing to fall behind as economic wealth flows from the bottom to the top. Economists Emmanuel Saez and Thomas Piketty this fall fleshed out the details: More than half of the nation’s total income in 2012 went to the top 10 percent, they found, and one-fifth of it went to the top 1 percent. All told, the top 1 percent have taken 92 percent of the income gains in the economy since the end of the recession in 2009.
Yes, the stock market is booming – this afternoon the Dow Jones Industrial Average soared more than 200 points in the wake of the Federal Reserve’s latest announcement on how much stimulus it would provide to the economy – but, as the AP article noted, the top 10 percent of Americans hold 80 percent of stock market wealth. A Dow Jones average over 16,000 doesn’t mean much if you don’t have stock and the people who do have stock are parking their profits in tax havens or in Wall Street stock schemes rather than investing the money in jobs.
No wonder Michael Niemira, chief economist at the International Council of Shopping Centers, is lamenting in the AP story the fact that the nation’s wealth is not more evenly distributed. “The broader the improvement, the more likely it will be sustained,” he is quoted as saying. Duh!
It’s worth noting that this is hardly the first time a group of economists has called attention to the danger of our income inequality. The Institute for America’s Future’s “Jobs, Not Austerity” statement was signed by more than 300 economists, experts and thought leaders. That statement condemns the government austerity policies that have become the default policies in Washington, thanks to conservative obstruction, and calls for a set of policies that will accelerate growth, create jobs, and lift working-class wages. “There is no theory of economics that explains how we can deflate our way to recovery. Businesses are not basing investment decisions on how much Congress cuts the debt in 2023. As Great Britain, Ireland, Spain and Greece have shown, inflicting austerity on a weak economy leads to deeper recession, rising unemployment and increasing misery.”