You probably know this already, but it's a good summary of our economic situation. Trump is claiming people are better off economically, but it's not true for anyone but the top.
As President Donald Trump and corporate media outlets on Friday enthusiastically touted new GDP figures showing that the US economy grew by 4.1 percent in the second quarter of 2018, many economists and progressive commentators were quick to counter theglowing headlinesby pointing out that corporations and the rich are feasting on most of the growth whileworkers see their wages fall.
"What the president won't talk about is that there is slow—and even negative—growth in real wages adjusted for inflation. So if GDP is rising, but wages [are] falling, the money is going to the top," Timothy McBride, a health economist at Washington University in St. Louis,notedin response to Trump's celebratory speech on the White House lawn on Friday.
As Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities,observedin an analysis of the Commerce Department's new numbers for theWashington Post, "in our era of high economic inequality, GDP should definitely not be taken as a signal of broad well-being. For that, we have to look at not just how 'the economy' is doing, but how all the people in the economy are doing."
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"Any administration would tout a strong GDP report like today's, but if it's not reaching workers' paychecks, which it isn't, then cease the applause and get to work on policy to reconnect growth to much more broadly-share prosperity," he said.
News this week that the Republican Party is quickly moving ahead with their "tax cuts 2.0" plan—which would double-down on tax cuts for the rich and corporations—seems to suggest that Trump and the GOP are wholly uninterested in working to ensure that economic growth is distributed equitably.
"The new line from Republicans in Congress is that Americans are 'better off' because of last year's tax cut, so we have to extend it," Morris Pearl, a former managing director at Blackrock and chair of Patriotic Millionaires, said in a statement. "Well, some Americans are better off—people like me who are wealthy enough to not need work—but most Americans are still struggling."
While GDP growth may not be a good measure of workers' well-being, it is a good indication that the wealthiest Americans are seeing their incomes climb, given that most of America's economic growth in recent years—particularly after the 2008 Wall Street crash—has been hoarded by the top one percent.
In ananalysisof recent economic trends on Thursday,New York Timescolumnist Thomas Edsall highlighted the "continued failure of wages to advance, despite job growth, while corporate profits shoot up to record levels."
Edsall then pointed to a striking chart, which shows that the share of profits going to labor has declined sharply since the early 2000s:
Far from reversing this trend and boosting the incomes of workers—as Trumpclaimedin front of the White House on Friday—the GOP's $1.5 trillion tax cut package has so far produced overall wage decline.
"While wages have risen by 12.9 percent overall since 2006, wages adjusted for inflation (so-called 'real wages') have actually fallen by 9.3 percent,"notesVox's Emily Stewart. "And between the first and second quarters of 2018 — after the tax cuts were enacted—real wages fell by 1.8 percent."
He had no idea what he was doing, but he started a trade war anyway, all while declaring that it wasn't a trade war.
Guess what? It's a trade war.
And given where things are made nowadays, the ONLY country that CAN'T win a trade war is the United States. It's not the 1950s, folks. We don't make stuff, we buy stuff. And American business has no one to blame but themselves. They've been sending manufacturing overseas for 40 years. They didn't want to pay American workers a living wage. They didn't want to give benefits to American workers. They didn't want to pay American taxes. They didn't want to do their duty to the American Republic. They didn't want to make things in the United States, but they sure loved calling themselves Americans, benefiting from all the things America provides, and trading on America's name. This is the result. Right here. When you don't make anything, you've got nothing to win a trade war WITH.
What's that?
We make money?
Yeah. About that. For a while our wealth could prop up this imbalance. But here's the problem, all that money, decades worth, OUR money, spun up the economies in the rest of the world. Asia is booming. They're a huge market. And manufacturing economies like China are NO LONGER dependent on our money -- and when we drive them away from the US, they easily shift elsewhere, and then THEIR brands become household names in those economies and not ours.
Hell, we don't even make ideas anymore. We outsourced that too.
We hired people overseas to come up with new ideas, to flesh out the concepts, to write the code, to do the tech support.
It didn't happen all at once, but little by little, we empowered those nations.
And within a few decades, we become a backwater, left behind.
This has happened before, you know. There are plenty of historical examples. And we now find ourselves at the mercy of the very Third World countries we hold in contempt.
Here's the really ironic part: Conservatives are terrified of "communism," where government control the means of production ... meanwhile, the result of four decades of outsourcing and offshoring in the pursuit of ever higher profit has effectively moved production completely outside of American control altogether.
It's a trade war. And we're losing. Because we've got nothing to trade that our adversaries can't get elsewhere for less or make for themselves.
We did that.
Trump is a product of the very modern business mindset that created this situation, that values profit above all and ONLY profit.
So long as he gets rich, so long as the rich get richer, the rest of the country can burn.
It's not like they've made a secret of this.
His bluster and clumsy ill-conceived trade war blew up in his face, so he then blamed Americans like Harley-Davidson for not toughing out HIS blunder. He literally expected that others bear the cost, to the tune of billions, for his mistakes -- and if you've been paying attention, this should be no surprise. This IS the mindset of American business. Pollute the rivers, somebody else will clean it up. Poison the population, somebody else will clean it up. Destroy the economy via bad investments, junk bonds, mortgage scams, ponzi schemes? Somebody else will clean it up. And that somebody else is ALWAYS you and me. And that's EXACTLY what Trump expects here. He screwed up, that's okay, WE will have to bail him out. Companies like Harley-Davidson will have to bail him out. You lose your job, your home, your retirement, your savings, your healthcare, that's just the price you pay so rich people like Ivanka Trump can make her shitty handbags for cheap. You lost your life savings because you got scammed by Trump University? Caveat Emptor, sucker.
Then he blamed everybody else.
Because that too is the modern American businessman, never, ever, ever, take responsibility for your own mistakes. Somebody else will clean it up.
So, NOW, he's taking $12 BILLION of YOUR money to bribe his victims. He's going to pay off American farmers with YOUR money for his mistake just like he paid off those porn stars.
Trump is running America EXACTLY as he said he would.
Yes he is.
That's the ONE thing he told the truth about.
He's running America exactly as he runs his business. He never has to pay for his mistakes.
HE profits. YOU get screwed.
He makes the mess, you get to clean it up.
And I don't know why this would be surprise to anybody.
I warned you son of bitches. I did.
A lot of us warned you this, exactly this, would happen.
If you elect a businessman, you are going to get the business. And you're gonna get it good and hard.
It takes maybe five minutes to find whatever-it-is on Snopes, and maybe another ten (if you're trying to be conscientious and not just rejecting unwelcome theories out of hand) to satisfy yourself that it really is a piece of baseless nonsense. [1]
And then what do you do?
If you just move on, no one else benefits from the research you've done, and other readers of the thread might think the point actually has some validity. (Although probably not. People who do this once have probably done it dozens of times, and their friends have caught on by now.) But if you respond, then the Trumpist comes back with three more ridiculous claims — the sources you've relied on are all part of the Deep State conspiracy, the Sandy Hook parents arereally crisis actors, and you've ignored the implications ofPizzaGatecompletely — and now you're in a full-blown argument that has nothing to do with Trump at all. In fact, it has nothing to do with anything, because the whole discussion has veered off into CrazyLand.
And that was the point, wasn't it? The person you're arguing with actually doesn't care aboutAndrew McCabe's wife's run for the legislatureor Lisa Page's text messages or how Vince Foster died or whatever else you're now talking about. Once there was a discussion about something indefensible Trump was doing, and now there's a discussion about bullshit. Mission accomplished!
This tactic is sometimes calledWhataboutism, but that's actually a more general term. The Whataboutist is also trying to divert your attention from an uncomfortable present issue onto some tangentially related issue, but there's a difference: The Whataboutist's new topic might actually be related and might actually be an issue.
So if you're talking about Trump's abuse of women and a Whataboutist brings up Bill Clinton, that's probably also a bad-faith attempt to change the subject — it's hard to see why Clinton stories that have been around since the 1990s are more topical than the long series of Trump stories that started coming out after theAccess Hollywood tapeappeared and may not be done yet — but at least it's real: There actually was a Monica Lewinsky scandal, even if it has nothing to do with anything today. [2] Similarly, if you're complaining about how the Trump tax cut blows up the deficit and someone tries to change the subject to the even-larger deficits of Obama's first couple of years, that's not just a true fact that a thoughtful person might actually wonder about, there's even something important to understand about it. (Deficits intended to pull the economy out of a deep recession can be economically responsible. Deficits intended to keep an expansion going past its sell-by date never are.)
But when the topic you get derailed onto has no basis in reality, that trick deserves its own term, and I recently ran across one:Bullshifting. [3]
Bullshifting is a conversational judo move that uses your own outrage against you. Precisely because the suggested topic is so stupid and such a complete waste of your time, it's hard not to respond. The Bullshifter is mimicking exactly the behavior you have probably fantasized about attacking. He or she is like a bird that pretends to be wounded todraw a predator away from its nest. "I'm so gullible," s/he seems to be announcing. "I'm such a mindless drone for Alex Jones. I repeat every ridiculous thing Sean Hannity says. Come humiliate me in front of everybody."
But the predator never catches the bird with the fake-broken wing, and you never successfully humiliate the Bullshifter either. Because Bullshifters argue in bad faith, they can make up whatever facts are necessary to wriggle out of any refutation you come up with. (In a good-faith argument, you can eventually reach mutual agreement on some kind of ground truth that future deductions can build on: Water is wet; granite is heavy. But bad-faith arguments are bottomless.) All that happens is that you get drawn farther and farther away from your original valid point. [4]
So what is the proper response to Bullshifting? When the culprits are people that the rest of your social media universe will recognize as wingnuts without your help, you should just ignore them, as hard as that is. If you feel that you must engage, I recommend that you label the comment rather than respond to it: "Nice attempt to bullshift. But my original point stands: [restate]."
If they respond by raging at you, repeat the loop: Can you ignore? If you can, do. If not, call bullshift and restate.
The first few times you do this, you may need to educate your social-media friends by posting a link to this article or some other explanation of the concept. If you're lucky, the Bullshifter will leave a nasty comment here rather than on your Facebook wall. You will have successful shifted the shifter.
No need to thank me. It's a public service of The Weekly Sift.
[1] This is an example ofBrandolini's Law: "The amount of energy needed to refute bullshit is an order of magnitude bigger than to produce it."
[2] When Hillary was running for president, Whataboutists could make some triple-bank-shot argument about why Bill's misdeeds were relevant. But now that both of the Clintons are private citizens and likely to remain so, there's really no reason to ever discuss Monica again.
[3] I would credit the coiner if I could determine who it is. If you google it, you'll find thatbullshiftalso has several other meanings — that's why I'm having trouble tracking down the origin of this usage — but they're sufficiently different to avoid confusion.
This meaning ofbullshiftingderives from the technical meaning ofbullshitting, as described in 1986 by Princeton philosopher Harry Frankfurt in his seminal paper "On Bullshit" (which was later expanded into a book).
When an honest man speaks, he says only what he believes to be true; and for the liar, it is correspondingly indispensable that he considers his statements to be false. For the bullshitter, however, all these bets are off: he is neither on the side of the true nor on the side of the false. His eye is not on the facts at all, as the eyes of the honest man and of the liar are, except insofar as they may be pertinent to his interest in getting away with what he says. He does not care whether the things he says describe reality correctly. He just picks them out, or makes them up, to suit his purpose.
So when a used car salesman tells you how conscientiously a car's former owner maintained it, he is probably bullshitting rather than lying. Quite likely he has no idea what the truth of the matter is and doesn't care. He just wants to sell you the car.
[Canadian Prime Minister] Trudeau came to see me. He's a good guy, Justin. He said, "No, no, we have no trade deficit with you, we have none. Donald, please." Nice guy, good-looking guy, comes in — "Donald, we have no trade deficit." He's very proud because everybody else, you know, we're getting killed. … So, he's proud. I said, "Wrong, Justin, you do." I didn't even know. … I had no idea. I just said, "You're wrong."
There's been a lot of discussion in the media aboutwhen to label a false Trump statement as a "lie"rather than to use "demonstrable falsehood" or some other euphemism, none of which seem quite right. The problem is that the most precise characterization of the majority of Trump's false statements — as well as his true statements and almost every assertion that comes out of his mouth — is "bullshit", a word that most mainstream publications would rather not use.
[4] Unsurprisingly, the champion Bullshifter is Trump himself. In Helsinki, when he was asked whether he believed American intelligence services (headed by people he appointed himself) or Vladimir Putin,Trump first had to veer offinto the "mystery" of the missing DNC server. (As The Daily Beast's Kevin Poulsen explains, "Trump's 'Missing DNC Server' is Neither Missing Nor a Server".) Anybody who tries to cover his answer conscientiously first has to wade through the bullshit, which was why Trump spread it in the first place.
This one is a bit long, but it is about our attitude toward what Russia is doing to the US. We need to get this.
A sample: " The Mueller indictments have pulled back the curtain on enough of the details that we should see how much we still don't know—but need to. They show the extent to which Russia has learned to "hack" our systems using these hybrid/asymmetric means with an emerging and polished cyber capability at its core. They are, in short, working us. Using our social media and free press to manipulate opinion; using willing collaborators to act on their behalf; using a degraded trust in government institutions and the free press to sow further confusion and distrust. They are winning using covert, deceptive means, and it's all completely out in the open, while remaining totally invisible. "
Make no mistake: Hacking the 2016 election was an act of war. It's time we responded accordingly.
On December 7, 1941, the Imperial Japanese Navy launched a surprise conventional attack against the U.S. Pacific Fleet moored at Pearl Harbor. The Japanese operation was part of a larger strategy: cripple the United States — in capability, naval manpower and mentality — so that we would be prevented from interfering as Japan continued military operations throughout Southeast Asia. Almost 3,500 Americans were killed or wounded; eight U.S. battleships were damaged and four were sunk; and more than 300 aircraft were damaged or destroyed. To this day, the wreckage of the USS Arizona is a monument to loss of life and totality of destruction. The attack happened without a declaration of war and without explicit warning, and President Franklin D. Roosevelt responded the next day.
On September 11, 2001, the Islamist terrorist group Al Qaeda conducted four coordinated unconventional attacks against our nation. Its leader, Osama bin Laden, chose targets linked to the U.S. government and American economic power as part of his larger strategy: bring "holy war" to the American homeland for what bin Laden alleged were aggressions against Muslims in the Middle East. Nearly 3,000 people were killed and more than 6,000 injured in attacks that caused at least $10 billion in damages. The memorials in Manhattan, at the Pentagon, and in Shanksville, Pennsylvania, remind us of the loss and of the hollowness we felt watching the Twin Towers fall. The attack happened without a declaration of war and without explicit warning, and President George W. Bush responded the next day.
Many think of Pearl Harbor and September 11th in terms of the overwhelming devastation the attacks caused rather than the critical transformation they sparked. Yet both attacks were earth-shaking events that forced a forward leap in our strategic thinking about the defense of the American homeland and the projection of American power. As the smoke still rose over the wreckage of our fleet, and as the dust settled over Manhattan and the Pentagon, we went to war. We acted because Japan and Al Qaeda had underestimated us. We went to war knowing we must fight back, but uncertain how we would win. We acted because we had renewed political will, a newfound clarity toward an enemy and its objectives, and because we understood the cost of failing to rise to the challenge. We were tested in ways we never expected, and the cost was unthinkably high, but we acted because we had to.
In 2016, our country was targeted by an attack that had different operational objectives and a different overarching strategy, but its aim was every bit as much to devastate the American homeland as Pearl Harbor or 9/11. The destruction may not send pillars of smoke into the sky or come with an 11-digit price tag, and there's no body count or casualty statistics—but the damage done has ravaged our institutions and shaken our belief in our immovability. But two years on, we still haven't put any boats or men in the proverbial water. We still have not yet acted—just today, President Donald Trump, a beneficiary of this attack, exonerated the man who ordered it: Russian strongman Vladimir Putin.
Piece by piece, name by name, one operational detail after the next, special counsel Robert Mueller's investigation has documented that the Russian attack on the American homeland and the American people was every inch as organized, expansive, penetrating and daring as that Japanese run on our fleet or bin Laden's plan to use civilian airliners as weapons. The Kremlin targeted no remote outpost or iconic landmark, but rather aimed at the very heart of what we are as a nation. The attacks target our processes of government, our democratic institutions and our trust in our values. The further this assault on our independence recedes into the past, the additional suggestions by anyone that it didn't happen, the more deeply entrenched the adversary becomes in our terrain.
***
Russia's cyber warfare capabilities are just one element of an arsenal of hybrid, asymmetric means the Kremlin has focused on expanding since its cyberattacks against Estonia in 2007 and its invasion of Georgia in 2008. In 2013, the Russian chief of the general staff General Valery Gerasimov outlined this concept of warfare, emphasizing that "the role of nonmilitary means of achieving political and strategic goals has grown, and, in many cases, they have exceeded the power of force of weapons in their effectiveness." Putin polished what they had learned in earlier operations and put these on full display a year later, as Russia seized and then annexed Crimea, and then launched an invasion of eastern Ukraine fronted by local proxies backed by the Russian military.
While it has become quite popular to debate whether or not what is referred to as "the Gerasimov Doctrine" was intended to be military or security doctrine or not, the way of war Gerasimov discussed is, in fact, how the Russians now fight. Testifying before the House Armed Services Committee in March 2018, General Mike Scaparrotti, head of U.S. European Command, was asked about Gerasimov, andhe respondedsuccinctly and with candor: "Russia has a doctrine that … sees these activities below the level of conflict as part of the full spectrum, with the intent that if they can undermine a target country using these means ... never having to use military force, that's their objective."
Gerasimov has sinceupdatedhis thinking on the uses of hybrid warfare to erode the will of the enemy, saying that "spiritual resources—the nation's cohesion and desire to confront the aggressor at all cost," were one of the most important determiners of victory or defeat in these new shadow wars. Confusing the enemy has always been a doctrinal tenet of Russian war-fighting, so this new approach just replaces the old "Maskirovka" (deception) as a primary objective. The more you read about how Russia has tested and adapted these tactics in its near-abroad, the harder it is to deny that the Kremlin's attack on America is no outlier but rather one more entry in an ongoing, evolving playbook that is yielding more success than anyone wants to admit.
So where are the air-raid sirens and the calls to arms from those who vow to protect and defend our Constitution against all enemies, foreign and domestic? Last week, as Deputy Attorney General Rod Rosenstein released Mueller's latest indictment of the 12 Russian intelligence officers, Director of National Intelligence Dan Coats wasalso testifyingon Capitol Hill. "The warning lights are blinking red," he said. The risk of a "crippling cyberattack on our critical infrastructure" by a foreign adversary was increasing, he added. Coats named Russia as the most aggressive threat, saying: "The digital infrastructure that serves this country is literally under attack."
Not in 2016. Now. It's happening all over again.
***
The Mueller indictments have pulled back the curtain on enough of the details that we should see how much we still don't know—but need to. They show the extent to which Russia has learned to "hack" our systems using these hybrid/asymmetric means with an emerging and polished cyber capability at its core. They are, in short, working us. Using our social media and free press to manipulate opinion; using willing collaborators to act on their behalf; using a degraded trust in government institutions and the free press to sow further confusion and distrust. They are winning using covert, deceptive means, and it's all completely out in the open, while remaining totally invisible.
The earlier indictment of the Internet Research Agency (IRA) explained the extent to which these government proxies had gone to set up false identities—using forged and stolen IDs, fraudulent bank accounts, and other fake identify documents—in order to create networks of interlinked accounts pretending to be Americans. These accounts were meant to embed within and learn to emulate the discourse of target communities, expand their following and influence, and then amplify certain tendencies. This included setting up completely fictitious local news portals, group pages and other content purveyors. They chose identities as veterans and their wives, wholesome grannies, devout evangelicals and, above all, patriots. All of this was a process begun years in advance of the 2016 elections, based on the exact same tactics of psychological control the Kremlin had tested and refined against its own population.
The IRA was a close proxy for these Kremlin activities—more than anything, a way to recruit civilians to act as hostile agents. But the actions described in the new indictment, for the Democratic National Committee hacks, were conducted by real units from within the Russian military architecture. They aren't civilians, and they aren't deniable proxies—though Putin did try just that in his news conference with Trump, calling them "alleged" intelligence officers. Even identifying them by name and rank demonstrates our potential for fighting back.
A dozen seasoned Russian military intelligence officers conducted hacking and infiltration operations against U.S. political parties and state elections infrastructure, including voter rolls and registration systems. They established false identifies, covered their trail and used cryptocurrency to hide the origin of their operations. These units created false personas that successfully masqueraded as journalists, other hackers, and other influencers, and they built out the infrastructure of a fictitious "hacktivist" group to release materials stolen from the DNC. The indictment also explains that these GRU cells were generating their own revenue to conduct these operations, both by mining bitcoin and by diverting donations from the Democratic Party via a spoofed webpage. That is true evil genius.
Proxy or official, the Russian operatives were able to create "American" personas that interacted freely with American voters, journalists, activists—and campaign officials. They also seemed to have considerable knowledge of how to target and parse American audiences. All of this was subversive and deceptive—but done right out in the open. It was targeting American society and individuals in a way that bypassed the existing system of protections, including those inherent in our own decision-making.
Why fight this way, using intelligence operations, proxies, information operations, compatriots? This asymmetric way of war exposes Russia's comparable weakness. Their preferred use of proxies has the unique benefit of lowering the accountability for their actions while raising the appetite for risk-taking. There's a lot of testing, and a lot of failure—but no one cares as long as the testing continues to generate new lines of attack. Their tactics are asymmetric and guerrilla in nature—which through history has always been how a less powerful adversary fights a more powerful force. This way of war is flexible, adaptive, cheap, decentralized, and—most important—deniable.
But we must stop denying how the Kremlin acts and what it says. As Coats testified, the U.S. intelligence community continues to see "aggressive attempts [by Russia] … intended to exacerbate social political divisions" in the U.S., including by the establishment of new accounts "masquerading as Americans."
***
Mueller's indictments have given incredible visibility into an ongoing Russian intelligence operation against the United States—the full scale of which, when exposed fully, will likely make it the most successful, and perhaps the most important, in history.
But it's been years—years!—and despite all this detail held by our intelligence community and known by many in our military and national security apparatus who study these things, nothing has changed. Members of the House and Senate have been briefed, but remain deadlocked in partisan bickering. Some in the House have spent more time investigating the investigators than they have in trying to hold Russia accountable. Trump's suggestion to accept Russian investigators into this process adds a new layer to the sideshow. When right of the boom feels like left of the boom, it's easy to miss the fact that what the Kremlin did—is doing—was, and is, an act of war.
Why would Putin take such a dangerous risk? Because it is his only potential means of survival. Everyday this invisible, seemingly impossible attack becomes a little more known and a little more visible—but this exposure absent any sense of clarity, leadership, public communication, or plan to counter it instills fear and panic as much as it elicits outrage. And it destroys trust in the institutions of government, a critical element of any democracy.
What Clausewitz called the center of gravity is no longer the physical environment of the opponent's capital city, but it could be the elements of the nation's institutions. And we won't be able to count our daily dead or counter the enemy's advances by "fielding" new battlefield equipment. But in the information age, the intelligence and leadership of our fighters—those in uniform and those in civilian clothes—becomes paramount. The old formula of resistance to an enemy is accomplished by either affecting his will to fight or his means of fighting. So far, we have neither deterred Russian behavior nor its means of attack. Today, we may even have given them additional license to believe they can continue.
As Gerasimov himself noted: Fighting hybrid attacks requires an informed, prepared, mobilized population with the will to fight and to understand. Our friendscloser to the Russian borderunderstand this, as well. Gaining clarity is required. Facts, not narratives, are essential. We're now so deep in the churn, all of this will be quite challenging—for military and civilians alike. The president of the United States stood next to the foreign adversary responsible for ordering an attack on the American homeland and American people, and he dismissed the whole thing and said nothing happened. This is disarming the American public in what should be the most important fight in our history.
When Japan attacked, and when Al Qaeda attacked, they wanted to be known as the enemy of America, and they wanted it to be known that they had brought the fight to us. Revanchist Russia has a new formula: giving their domestic audience a clear enemy, but denying one to us by muddling our thinking, our judgment and our leadership.
So far, this attack has been met by relative silence at the top, by at least two consecutive presidents who have failed to find the right formula for dealing with a calculating foe like Putin. This silence propagates fear, division, unrest and diminishing trust—and it is every bit as crippling as Putin could have hoped.
Trump may think of the European Union as America's primary foe, but the Kremlin identifies the United States as its primary adversary. It is using asymmetric means to attack our society and our alliances, and to attack the citizens of the West. More details of this are being exposed daily, and our intelligence, military and national security communities are getting louder and louder in signaling their alarm. For now, our civilian leadership is shrugging this off, even acquiescing, which leaves every individual to defend themselves against the assault of information levied by a foreign attacker. This should not be the way we defend our people and our homeland.
This is our Pearl Harbor, our 9/11. In the past, we have risen to the defense of our values, our ideologies and our institutions. It's time for another fight. The ball — as Putin said — is in our court.
In his new book,The Case for a Maximum Wage, author Sam Pizzigati argues for limiting the income of the wealthy while raising the minimum wage. In fact, Pizzigati believes that narrowing the income gap is not possible without a limit on the highest incomes. In this interview, Pizzigati discusses the idea that the rich need financial boundaries.
Mark Karlin: We're all used to hearing debates about the "redistribution" of wealth. You talk in your book about wealth's "predistribution"— what do you mean by that?
Sam Pizzigati: Progressives have traditionally responded to wide gaps between rich and poor by calling for a redistribution of income and wealth — and taxes have usually been how we try to redistribute. We typically push for high tax rates on high incomes, then use the revenues these taxes raise from the wealthy to create opportunities for those without much wealth at all.
Sam Pizzigati.POLITY PRESS
Back in the middle of the 20th century, this redistributive approach helped the United States become substantially more equal. [Because of these policies,] we went from a nation where the richest tenth of the top 1 percent took home nearly 900 times what the bottom 90 percent [of] Americans were averaging, to a nation where our richest few were only making 114 times the bottom average.
This redistributive approach assumed that high taxes on high incomes would always "fix" whatever inequality our economy generated. But the rich, in real life, refuse to cooperate with the fixing. In the last third of the 20th century, they pounded back against high tax rates. They used their wealth and power to carve loopholes in the tax code and eventually won huge cuts to America's high tax rates on high incomes.
The result? We've become much more unequal as a nation. Our top 0.1 percent is once again averaging 900 times more in income than our bottom 90 percent.
What lesson should we take from all this? Redistribution alone can never be enough. We need to battle for an economy that generates less inequality in the first place. And that means working to identify the institutions and policies that funnel — that "predistribute" — excessive rewards to the already wealthy.
The wage and salary portion of our national income has been decreasing. What does this indicate about economic inequality in the United States today?
This declining labor share of national income — American workers essentially lost half a trillion dollars in paycheck income between 2000 and 2015 — reflects the power of the rich who control our corporations. These rich have no significant limits on how much they can grab.
Before 1980, big-time corporate CEOs averaged no more than two or three dozen times what their workers took home. Today's top corporate execs routinely "earn" severalhundredtimes what their workers make. They can make more in a morning than workers can make in a year.
Outrageously lush rewards like these give executives an incentive to behave outrageously, to do whatever they feel they must to hit the corporate jackpot. They'll downsize. They'll outsource. They'll cheat consumers. They'll even jeopardize lives — by unconscionably raising prices on prescription drugs people need to survive.
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So how would setting a "maximum wage" fit in with this attempt to impact our existing "predistribution of wealth"?
In the United States, major corporate enterprises have become the engines of our inequality. The decisions that execs who run these enterprises make maximize their own personal rewards and leave most everyone else getting nowhere fast.
But imagine if we capped how much top execs could grab — and linked that cap to how much workers earn. Imagine a "maximum wage" that limited a company's top execs to a modest multiple of what that company's workers are making.
With this multiple-based maximum in place, top executives would only be able to make more if their workers made more first. These top execs, in effect, would have a vested personal interest in caring about the well-being of those they employ, not just themselves.
Explain how this notion of limiting the ratio between the highest- and lowest-paid earners in a company could work in actual practice.
This pay-ratio approach is already working in actual practice, and the best example may be in Spain, where the Mondragon network of cooperative enterprises — a significant contributor to the Spanish economy — has an internal compensation policy that limits top executive pay within an individual Mondragon enterprise to no more than six times worker pay.
Now we shouldn't, of course, hold our breath waiting for corporate America to adopt a Mondragon-like standard. But we do have points of leverage over corporate pay policies, most notably the billions upon billions of our tax dollars that currently flow, year in and year out, to our biggest corporations.
These dollars come via different channels, most often through contracts to provide goods and services to government, or as tax breaks and subsidies for "economic development." If we tied these tax dollars to corporate CEO-worker pay ratios — and denied these dollars to companies that pay their execs excessively more than their workers — firms that maintain reasonably small pay gaps between executives and workers would gain a competitive advantage.
Corporations with employment practices that discriminate by race or gender currently can't get government contracts. As a society, we believe that enterprises that increase race and gender inequality should not get our tax dollars. Why should we let enterprises that increase oureconomicinequality get these tax dollars?
InThe Case for a Maximum Wage, your final chapter details examples of hopeful efforts that are moving us toward a maximum wage. What makes you optimistic?
We now have a politically plausible path to a maximum wage. This year, for the first time ever, publicly traded US corporations must disclose the ratio between their CEO and median worker pay. This disclosure mandate comes from a provision in the Dodd-Frank Wall Street Reform Act.
Corporate lobbyists fiercely opposed this provision and delayed its implementation. But now we have it, and the initial disclosures have been making headlines. One particularly striking number: Walmart's CEO last year made 1,188 times the pay of Walmart's most typical workers.
Numbers like that are getting people's attention — and building support for the next step: placing consequences on these ratios. About a half-dozen states now have bills pending that would tax companies with modest gaps between CEO and worker pay at lower rates and give these fair-pay companies preferential treatment in the bidding for government contracts.
And we already have the first victory of our emerging new era of "pay-ratio politics." In Oregon, the city of Portland is now taxing firms with CEOs making more than 100 and 250 times their median workers at a higher rate than corporations with more narrow ratios.
Apologists for our current unequal economic order like to argue that the richer our rich become, the more they "give back" in so-called philanthropy. What kind of philanthropy do the rich tend to favor?
A huge chunk of that philanthropy goes to the alma maters of the rich, the private universities that cater to America's elites. Other billions go into vanity projects — like new wings in art museums. In Los Angeles, for instance, we now have new private museums popping up all over while the city's public schools can't afford to pay music and art teachers.
Still other philanthropic dollars from the rich distort the democratic process. The think tanks the rich underwrite define the bounds of our political discourse. The "solutions" to social problems they trumpet conveniently leave our core concentration of income and wealth intact and untouched.
The super-rich, in the end, have no redeeming social value. We could survive without them. We could thrive without them. Social decency, most all Americans agree, requires a floor under income, a minimum wage. Social decency demands a ceiling, too.
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