On Dec. 31, 2002, the Dow Jones Industrial sat at 8,341. The Index had experienced its first three-year loss since 1939-41. The next five years saw unprecedented growth. On Oct. 9, 2007, the Dow experienced an all-time high of 14,161. During that time, approximately $149 billion were paid out in bonuses to workers in the securities industries. In 2007, the average CEO pay was $14.2 million, almost 400 times the pay of the average American worker. Research by Andrew Sum of Northeastern University's Center for Market Labor Studies found that from 2000 to 2006, 93 million American workers - all production and non-supervisory workers as defined by the government - had real earnings increases of less than half of the combined bonuses awarded by the top Wall Street firms for just one year.
Today, the Dow Jones stands at 8,078, almost 200 points less than its low in 2002. Yet last week it was reported by the New York State Comptroller's Office that employees at financial companies in New York collected an estimated $18.4 billion in bonuses for the year, the sixth-highest on record. The brokerage units of New York financial companies lost more than $35 billion in 2008, triple their losses in 2007. From 2001 to 2007, in a time of purported great economic prosperity, a time when the Dow increased over 50 percent, real wage increases for the average American grew at 2.1 percent, less than the generally-accepted inflation rate of three percent. Another study saw wages flat or declining on average for five years. From 2001 to 2006, the median wage an American worker earns every week fell by 3.2 percent, adjusted for inflation. From 2003 to 2007, we had more than four years of strong growth - yet for the first time ever, the real wages of American workers have declined. A study by the New Policy Institute showed that the average American earns exactly the same today as they did when President Bush came into office: $480 a week.
Is this some kind of sick joke? We have just witnessed the biggest single fleecing of a country since the Spanish pillaged and raided the Incan Empire, and it was done with tacit governmental approval. In a time when the U.S. states must close more than $84 billion of deficits in their new fiscal years (according to a new report by the National Conference of State Legislators), when we have over $2 trillion dollars of needed infrastructure repair, a trillion dollar war, a rising deficit, a shrinking working class and jobless rates higher than they have been in over 25 years, the top one percent of America walked away with untold billions of dollars, legally and illegally. And what does the country have to show for it? Over $1.5 trillion of American taxpayer money being given away ($700 billion for TARP and the new $900 billion Obama stimulus package).
So we are left with interesting questions regarding economic theories, social welfare and the role of government. And these are not easy questions, because the economic downturn has not solely affected liberal capitalist societies, from England to Iceland; it has affected social democracies as well, from Sweden to Switzerland. Yet the unfairness of the current situation in the U.S., privatizing profit and socializing risk, is becoming hauntingly clear. We were asked to trust the market. It ended up misappropriating billions upon billions of dollars, but not before siphoning off billions to the top one percent. We were asked put in $700 billion and ended up with $18.4 billion in corporate bonuses, losses of over two million jobs and a deepening recession. We elected a new president and yet have the same faction arguing the same proven failed tax-cutting tactic as before, in the face of economic data showing that infrastructure investment of $1 results in around $1.50 of economic growth, while $1 worth of tax cuts results in $1.02 of economic growth.
Our economy has failed the working and middle class in almost every conceivable aspect the last six years: our wages are lower, there are fewer jobs, our states have less money, our infrastructure is in worse shape, we have less savings, our homes are worth less, our schools are worse off, our colleges are more expensive and the income gap between the haves and have-nots is growing at unprecedented rates. The blatant malfeasance of government and economy reached a tipping point under Bush. The rich got fat and richer. Everyone else got pooped on. We will have no clear direction forward, and no new solutions, if we don't acknowledge and demand a different approach. As the great Kurt Vonnegut reminds us in a passage from his novel, Timequake"":
""Why throw money at problems? That is what money is for. Should the nation's wealth be redistributed? It has been and continues to be redistributed to a few people in a manner strikingly unhelpful.""
Joe Koss is a junior majoring in secondary education in social studies. Please send responses to opinion@dailycardinal.com.
