OBAMA-CLINTONOMICS: ARE THE RICH SUFFERING NOW TOO?Incomes declining or stagnant for the vast majority in “rich” countries

OBAMA-CLINTONOMICS:

"In the cautious bureaucratic jargon of the 

McKinsey researchers, “more than purely 

economic” carries a freight load of meaning: 

it signifies the recognition by this business 

think tank that the deterioration of working-class living standards has revolutionary implications."

"Throughout this process the ruling class has 

pushed “structural reform” as their banner. 

Structural reform means, in plain English, taking 

away the retirement, benefits, wages, and health 

care that working people rely on to survive. "

Incomes declining or stagnant for the vast majority in “rich” countries

Incomes declining or stagnant for the vast majority in “rich” countries

By Gabriel Black 
16 July 2016

A significant majority of the population in 25 of the world’s most advanced countries experienced declining or stagnating incomes between 2005 and 2014, according to a McKinsey Global Institute report released this month.

An estimated 540 million to 580 million people, 65 to 70 

percent of the population of those countries, had real 

incomes that were flat or fell during this period. These 

countries, whose total population is 800 million, account for 

half of the world’s economic output.

Never before in the post-World War II period has such a 

large section of workers in the advanced capitalist countries 

faced such a decline or stagnation in income. In contrast, 

during the period between 1993 and 2005, the study 

estimates that only 2 percent of the population in the same 

countries experienced similar conditions.

The authors of the study are clearly concerned about the political impact of this unprecedented change, particularly on the new generation of the working class. Hence the study’s title: “Poorer than their Parents: Flat or Falling Incomes in Advanced Economies.”

The study points out that the sharp decline in wage and salary income was only partly offset by government transfer payments, with the result that some 20 percent of the population in the countries studied saw an actual decline in real income during the decade ending in 2014. The mechanisms varied from country to country, from the Swedish welfare state spending to the extended unemployment benefits and food stamps provided in the United States, although these have largely expired.

The study warns that declining economic growth makes the continuation of such transfer payments increasingly problematic: “Over time, declining earning power for large swaths of the population could limit demand growth in economies and increase the need for social spending and transfer payments, even as tax receipts from workers with stagnating incomes limit capacity to fund such programs. The impact could be more than purely economic, however, if the disconnect between GDP growth and income growth persists.”

In the cautious bureaucratic jargon of the 

McKinsey researchers, “more than purely 

economic” carries a freight load of meaning: 

it signifies the recognition by this business 
think tank that the deterioration of working-class living standards has revolutionary implications.

The McKinsey study examines dramatic changes in the social standing of broad swathes of the population which undergird the growing social crisis worldwide. The reports’ authors make warnings for their policy-maker and business-leader readership. They write, “Without a return to much stronger GDP growth in advanced economies—and potentially even if GDP growth were to accelerate—the trend will likely persist, as a result of deep shifts in demographics and labor markets.” They conclude that “not advancing” could have “corrosive social and economic consequences.”

The report warns that this sharp reversal for the vast majority of the population will only deepen if current economic trends continue. Should the rate of economic growth fail to increase, McKinsey predicts that 70 to 80 percent of the population in the same countries, the bottom 7 to 8 deciles of income earners, will be worse off or the same as they are now in a decade. Even if economic growth returns to its rate prior to 2008, up to 40 percent of the population in advanced countries will be worse off or the same in 2025.

The researchers at McKinsey based their findings on a detailed study of six countries: the United States, Sweden, the UK, France, Italy, and the Netherlands, then projected the results over 25 countries. In contrast to researchers such as Thomas Piketty, who have focused on income inequality, the authors tracked the earnings of income brackets over time. For example, they traced if the bottom five percent of earners had a lower or higher average income between 2005 and 2014. Using this data they then projected it onto 19 countries at similar levels of economic development.

In four of the six countries that formed the basis of the study, 70 percent or more of the population had lost income or remained stagnant. In Italy, wracked by economic crisis, 97 percent of the country lost income. In the United States, 81 percent lost income or stayed the same.

Together, the six countries saw an average five percent decline in the share of their national GDP that went to wage workers (in Britain, the decline was sharpest, at 13 percent). The report highlights that the workers’ share of GDP declined despite growing labor productivity, which has traditionally led to income gains.

The lowest decile of income earners in several countries experienced the sharpest decline in their living standards. In France, the bottom decile of earners lost 20 percent of its income during this period. Italy had about the same rate. In Sweden, despite faring better than the other countries more generally, the lowest decile of the country made 15 percent less than they did in 2005.

In France, Italy and the United States, the researchers had more detailed data that allowed them to track the difference in income changes for different generations. They concluded that in these three countries “less-educated workers, and especially younger ones, have been most affected.” The recession and “weak recovery in some of the countries have led to persistently high levels of youth unemployment, preventing young people across advanced economies from launching careers.”

In the United States, the only section of 

the population that did not lose or 

stagnate in income level was the upper-

middle class, the 80th to 95th 

percentile of the population, which 

made significant gains. (The figure for 

the top 5 percent showed a drop, but 

this is likely a statistical anomaly, tied 

to decisions to hold onto stock 

portfolios rather than sell them, which

would be necessary to record the 

whopping capital gains delivered by the

soaring stock market).

The McKinsey report is one of a series of recent studies depicting record inequality and stagnating or deteriorating living standards for the broad mass of society. It reflects the deep blows the ruling class has struck against workers, of all backgrounds and nationalities, in the past eight years.

In the aftermath of the 2008 global financial crisis global economic growth slowed considerably. The International Monetary Fund and other leading global financial bodies warned that the world had entered into a period of unprecedented stagnation in which traditional forms of macro-economic stimulus, namely cheap credit and quantitative easing, were no longer effective. The leading capitalist countries continue to provide some of the lowest interest rates in history to the major banks and corporations. Far from improving conditions for working people, or returning the economy to pre-crisis conditions of investment and growth, the cheap-interest rate regime has led to a new gigantic bubble which dwarfs 2008. When this bursts, corporations will not just be at risk but governments too, who have taken on considerable debts to keep the system afloat.

Throughout this process the ruling class has pushed 

“structural reform” as their banner. Structural 

reform means, in plain English, taking away the 

retirement, benefits, wages, and health care that 

working people rely on to survive. Many companies, such as the American auto manufacturers, have been able to wrestle billions in new profits from this. However, the attacks have not gone far enough to restore these companies, and the banks they answer to, to pre-2008 growth. They also have the contradictory effect of destroying the consumer demand necessary for expansion, exacerbating the economy’s reliance on credit and further inhibiting production growth.

IS BARACK OBAMA AMERICA'S WORST 

PRESIDENT?

America’s Worst President?

I nominate Barack Obama, the anti-Lincoln.

Myron Magnet

July 10, 2016 

Public safety

Politics and law

After Thursday’s terrorist slaughter of policemen in Dallas, it’s fair to say that Barack Obama might well be the worst president in U.S. history. Here’s why.

The keynote of America’s domestic politics for the last 60 or 70 years—from sometime between the Supreme Court’s 1954 Brown v Board of Education school desegregation decision and the 1964 Civil Rights Act—has been the nation’s effort to undo the heinous wrongs that slavery and Jim Crow perpetrated on black Americans ever since the first slave was brought here in the 1640s. I am old enough to have had friends who were Freedom Riders, white college kids who went to Mississippi to register black citizens to vote. One I’ll never forget returned with tales of old people, whom legal chicanery had blocked from voting all their lives, marveling in almost Biblical language that such a miracle could be occurring in their own lifetimes, in their own towns. I remember how Sherriff Bull Connor turned the fire hoses and German Shepherds on those civil rights protesters, black and white, in Birmingham, Alabama, in 1963, and how that same year governor George Wallace stood at the door of the University of Alabama to prevent the enrollment of two black students, proclaiming himself Jefferson Davis’s spiritual heir and vowing “segregation forever!” But what I most remember is skinny Deputy Attorney General Nicholas Katzenbach walking heroically down that hostile Alabama street—alone, but followed by federal marshals—to force Wallace to stand aside and let the two students enter. It was as heart stopping as Gary Cooper walking toward the showdown on Main Street in High Noon.

I also remember how civil rights zeal turned into zealotry. We made the integration of our schools, and then the closing of the black-white achievement gap, our principal educational goal for half a century, with the unintended consequence that we neglected actual education and turned urban schools into machines for perpetuating black failure. Judge-ordained busing in Boston, completely contrary to the terms of the Civil Rights Act, made the schools more segregated than ever. A judge-ordained Kansas City school-funding-equalization order, forcing local taxpayers to shell out $2 billion  over  a decade, including building a bizarrely unnecessary Olympic swimming pool, produced no educational gains whatsoever and proved to anyone with eyes to see that money was not the key to racial equality in education.

Then, the colleges turned to affirmative action in admissions, the ed schools taught their students not how to teach or what facts they needed to transmit but only “social-justice” ideology, and deans of diversity began to outnumber actual teachers on college campuses. The professors themselves brought the stupendous achievements of Western culture under the suspicion of creating nothing but racial inequality (and later an unimaginably broad smorgasbord of inequity). They replaced Plato with Ta-Nehisi Coates.

Believing that welfare payments constituted well-deserved reparations for 300 years of slavery and oppression, we New Yorkers created a come-and-get-it dole that ended up with one in eight of our neighbors on the welfare rolls—paid for by the rest of us and resulting in a multi-generational underclass. We entertained the foolish notion that black crime was a manly revolt against oppression—that black criminals were only protesting against the closure of all avenues of honest advancement for their race, as well as against the daily humiliation heaped on African-Americans.

The resulting depolicing of black neighborhoods and unwillingness of courts to punish black criminals drove crime to Hobbesian levels and turned minority neighborhoods into killing fields, where mothers put their kids to bed in the bathtub, trying to keep them safe from stray bullets. They would never send them out for a bottle of milk or take them into the street to learn to ride a bike. In those days, my upright, churchgoing cleaning lady had to pay the gang who controlled her block $20 of hard-earned money to allow Macy’s deliverymen to go past them to bring her the comfortable bed she had labored so long to earn. She lived, in other words, in something like the Middle Ages, when bands of ruffians ruled the land and extorted tribute from the peasants.

Thomas Jefferson had prophesied that God would punish America for black slavery, but he could never have foreseen how squalid that punishment would be.

As the Civil War, which cost 620,000 American lives, drew to a close, Abraham Lincoln gave his Second Inaugural Address, six weeks before one of the world’s perennial multitude of fanatics, this one opposed to votes for black citizens, blew the great president’s brains out. Lincoln had spoken in his address about the immense cost the country was paying for the sin of slavery. In the final accounting, he said, it might turn out that “all the wealth piled by the bondsman’s two hundred and fifty years of unrequited toil shall be sunk, and . . . every drop of blood drawn with the lash shall be paid by another drawn with the sword.” But as he looked toward the end of the war fought to end these wrongs, he urged reconciliation. He urged forgiveness. “With malice toward none, with charity for all,” he prayed, “let us . . . bind up the nation's wounds.”

Well, we tried. Despite the evil men who derailed Reconstruction, America took up again Lincoln’s charge “to finish the work we are in.” My whole life coincided with that effort. And for all the resistance and unintended negative consequences, the nation had come very close to succeeding by 2008, when Barack Obama, a black man, was elected president of the United States. A friend had called from London shortly before and asked incredulously, “Surely, America would never elect a black man as president?” “Of course it would,” I said. And when it happened, the resounding shout of joy that went up from the buildings of my ultra-left-wing Manhattan neighborhood was something I had never heard before. My wife and daughter wept. And though no admirer of Obama’s politics, I too felt awe at the historical momentousness of it all.

Not everyone shared that sentiment—most notably the new president and his wife, who had sat for more than a decade in the pews of Jeremiah Wright’s Chicago church listening to the reverend firebrand pray for God to damn America for its ineradicable racism. Though the new president had sworn his oath of office on Lincoln’s Bible, anyone who thought that his election marked the fulfilment of Lincoln’s dream soon heard him and his even more race-obsessed attorney general lambaste America for a racism so deep that white citizens couldn’t even see it, bred in the bone as it was. Colleges even made up a term for this molecular-level racism: micro-aggression. It was hard not to think of Robespierre’s fanatical vow that the revolution had indeed erased monarchy and aristocracy from France, but it wouldn’t end until it had erased the very idea of them from every man’s heart as well.

Central to the nation’s Herculean effort to end the wrongs of racism was the new determination of police departments, led by New York City mayor Rudy Giuliani and his police commissioner William Bratton, to restore law and order to ghetto neighborhoods, so that civil society could come back to life there, and people wouldn’t have to pay tribute to armed thugs controlling their lives. The old policing had ignored all but the most heinous ghetto crimes. Its spirit was: If they want to kill each other uptown, fine, as long as it stays up there. But for the new policing, all victims deserved police attention, regardless of race. All neighborhoods deserved police protection, regardless of the color of their residents. And since the perpetrators of crime are overwhelmingly young minority men, they properly received a very large proportion of police scrutiny. The alternative, to repeat, was to let them kill each other.

But unlike Lincoln, America’s first black president didn’t bind up the nation’s wounds but scratched them open every time police killed a black man—rightly or sometimes wrongly, because when society arms men with guns and authority, it will inevitably attract some bullies, making a police chief responsible for policing his own men vigilantly, as the NYPD especially has striven to do, and as Plato told us was statecraft’s thorniest problem. Anytime a non-black man killed an African-American, Obama cried racism and said it could have been him or his son, if he’d had one. Every time a cop, white or black, killed a black American, Obama’s reflexive instinct was to blame the cop. About the mayhem of black-on-black murder in the nation’s ghettoes, he gave only a single speech.

When the president praises the Black Lives Matter demonstrators, as if they alone of his fellow countrymen know that platitudinous truth, he is only reinforcing black grievance, when his proper role is to convince ghetto blacks that their lives matter enough for them to take responsibility for them, to stop going around with chips on their shoulders and Glocks in their waistbands, to be fathers to the children they beget, and to set for them an example of the responsible citizenship that is theirs for the asking, thanks to the efforts of so many of their countrymen, white and black, living and dead.

True to form, Obama went into grievance-mongering mode on July 7, commenting on the killings of Alton Sterling and Philando Castile by cops in Louisiana and Minnesota. He noted that “all of us as Americans should be troubled by these shootings, because these are not isolated incidents. They’re symptomatic of a broader set of racial disparities that exist in our criminal justice system.” And he went on to detail law enforcement’s racial disparities, as if there were not even more stark and troubling racial disparities in lawbreaking. His familiar conclusion: “If you add it all up, the African American and Hispanic population, who make up only 30 percent of the general population, make up more than half of the incarcerated population. Now, these are facts. And when incidents like this occur, there’s a big chunk of our fellow citizenry that feels as if because of the color of their skin, they are not being treated the same. And that hurts.”

Later that day, a black former soldier assassinated five Dallas police officers and wounded seven more, sniping from above with a semi-automatic rifle. A sympathizer of the New Black Panther Party, which professes hatred of whites and especially Jews, the sniper, Micah X. Johnson, 25, told police who cornered and killed him that he was avenging cop killings of blacks by killing whites and especially white cops.

If you want to ignite race riots, a sure-fire way to do it is to stir up black hatred and suspicion of cops, which will in turn make cops warier of blacks and more trigger-happy, and so on, until an explosion occurs. So thanks, President Obama. You have set back American race relations by 50 years.

Myron Magnet, City Journal’s editor-at-large and its editor from 1994 through 2006, is a recipient of the National Humanities Medal. His latest book is The Founders at Home.