A new study from Oxfam published just ahead of this year’s World Economic Forum meeting in Davos, reported that just one percent of the world’s population controls nearly half of the planet’s wealth and 70 percent of the world’s people live in countries where income inequality has been growing in the last 30 years. In the US, the gap between rich and poor has grown faster than in any other developed country. The top one percent has captured 95 percent of all growth since the putative “recovery” of 2009. This is the “new normal.” Is it sustainable?
Barbara Garson is the author of a series of books describing American working lives at historically important turning points. If this is one of those turning points, it’s one in which the one percent have won:
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“That the so-called recovery that everyone is bragging about is this,” Garson told GRITtv in a recent interview. “We’ve recovered, we’ve taken your full-time job away and given you a part-time job, and we’ve given the difference to our stockholders.”
The trouble is, this cockeyed situation is not stable, and even the capitalists, maybe especially the capitalists, should be worried.
“There are capitalist solutions, like redistribution, but they’re not doing it. That may be why we have a socialist solution this time,” she concludes. “If seventeen percent of the houses are vacant, we’ll just move into them.”
Garson’s new book is Down the Up Escalator: How the 99% Live. You can watch our conversation at GRITtv.org.
Laura Flanders: So, Barbara, would you call this one of those historically important turning points?
Barbara Garson: Yes, well, we’ve been moving down. Well, that is to say, the wealth gap has been growing since about the seventies in this country, and in the world, too. We’re kind of the leaders in that and brought that model around the world. But the ruling class doesn’t seem to care anymore. They used to be Keynesian; they used to say, uh-oh! wait a minute. If we have fifty percent of the wealth, they can’t buy back what’s produced, we’d better rebalance it and keep going for a while. They seem to have forgotten that.
In a way we’re in a dangerous situation. [The elite] seem to be taking the same attitude on the economy that they’re taking on the environment.
But look at the statistics that they’re looking at. At Davos, people would have heard about growth and GDP going up, about productivity going up, about the stock market having the best record in years. So by their indices, nothing is wrong.
Even they know that a lot of that is in [loaned] money. A lot of their growth is in the same type of derivatives that they were investing in before. They are lending money to people who cannot pay back. They know (I think some of them know), that when you come out of he recession with even greater inequality than when you went into it, they know that they have to keep making the same kind of loans that they made before. Namely, lending money to people to buy houses they cannot afford. Lending money to students to go to college, and the students will never earn enough to pay the money back. That’s dangerous in the long run.
And you think they know this at some level?
I don’t know what each individual knows, but they all used to be the Keynesians. I used to be the socialist, and say, but it isn’t nice. I know you can keep going that way with reoccurring crises, but it isn’t nice. Now I’m the one that’s reminding them that it’s also impossible unless they do the usual Keynesian redistribution, which they used to do every few decades. Now they are just taking more, and more and more.
Let’s talk about the people you followed in your book, Down the Up Escalator, and why you decided to follow these folks in the first place. In your last book, you were following a dollar bill around the world. This time you decided to follow a group of people. Let’s start with the “Pink Slip Club.”
Well, when the recession hit, the publisher wanted a quickie on the recession. So I started interviewing people who lost their jobs, but I gave him a little more than he wanted, which is to say what I discovered is that these people have been going down economically for a long time. They had nothing to fall back on.
[The Pink Slip Club] was a group of friends who met in their church. They were people who earned about fifty thousand dollars a year as a graphics artist, as an insurnace adjuster, those kind of jobs. They lived in Manhattan and they could just make it on their fifty thousand dollars. They thought it would be over very quickly.
They thought the recession would be over quickly.
Yes, they thought the recession would be over quickly and they would find new jobs. They had all found jobs when they first started working – they found jobs quickly [but this time] it just dragged on and on and on.
What finally happened is that two are now working, two aren’t. But this is characteristic of what’s going on since the seventies: The person who had a full-time job as a graphics person in a textbook company now works catch-as-catch-can for those same kinds of companies. In fact, he works through a contractor, so he has no benefits; he’s making a little less an hour; he has no benefits; he has no guarantee of any work; he works when he can. I said to him, did you ever get a job from your old company … And he said no, somebody who still works there in the management told him that they’re sending the work abroad now. They’re not doing it through contractors in New York City. He will never have that kind of job again, nor will new people coming into that industry.
So you’ve got long-term unemployed, then you have people whose jobs have completely transformed.
Some people thought that the downturn that they personally suffered was temporary. I met a woman who had been the top salesperson for a very fancy Fifth Avenue clothing store – the kind that when you go in, you spend thousands of dollars at a time, and she would dress certain women every year. She was their highest grossing saleswoman. Very often, she had a commission. During the recession, they started laying people off. They started giving them shorter hours and then their commission disappeared. She thought it would come back afterwards and then she noticed that they were actually hiring new people during this recession and the new people were coming on with no commissions, and they were young people making $11 an hour. Her position was reduced to that, too. The store did have somewhat of a downturn, but all the time it was planning on what it was going to do afterwards.
I talked to a stockbroker who said, “Oh, I am very glad to hear about that company, because a lot of good developments like that come on during a recession.” That company did lose business, but I mentioned to you the person before who worked for a textbook company? Their business went up continuously, and they also used the recession as an opportunity to make all their permanent people temporary – and that is the new norm.
Let’s talk about the numbers. The numbers I just read from the Oxfam report, do you think this is the new normal in terms of gap between rich and poor?
Unless we do something about it, yes, that’s the direction it’s moving in.
As people talk about “recovery” – we hear a lot about returning to normal. Based on your research, what does the “new normal” in the workplace look like?
We’re coming back, in that there are some more jobs, [but for corporations] a victory has been had during that recession. Those jobs are the jobs I just mentioned: the saleslady who now gets no more commissions. In fact, the company has hired more people, only giving them fewer hours. Those jobs are like the graphic designer that I just mentioned, only now he’s working through contractors and getting a part-time job, and much less pay.
[It all adds up to] more and more money [for the employer]. Those companies are making the same profit; they may be doing a little less business, but they’re making the same profit or a little more. Profit went up about twenty-five percent for American corporations from the beginning of the recession, to its official end in 2009. It’s very unusual during a recession. When we talk about profit, we talk about money that went to the investor.
We heard that ninety percent of all the gains since 2009 have gone directly to that top one percent.
The top one percent not of salary earners, but of investors. That’s money that they have to reinvest.
So [tell me again] why should they be concerned?
If productivity is up, and by the way, it went up ninety-nine percent between 1971 and the beginning of the recession in 2007 and salaries went up just four percent – that means people can’t buy back what they produce. These companies say, okay I have a good idea: Instead of paying you to buy back what you produce, I’ll lend you the money. And they lent us money to buy cars; they lent us money to buy houses that we couldn’t afford.
The other point you raise in this book as in 2009, in the years running up to 2009, so too, today, there’s still an enormous pile of money that that elite one percent doesn’t know what to do with.
Right, when we’re talking about profits increasing by twenty-five percent by the end of the recession, that means that you and I are not worried about money being such a big problem, but if profits that great are going to investors, they put it in brokerage accounts or banks and a bank cannot keep its money in the bank; a bank has to do something with it. If people can’t buy products, then they have to start investing – not in companies that are making more [stuff] – they have to start investing in the derivatives of derivatives.
They are putting money back into the stock market, but the companies aren’t actually producing more. You put money in the stock market, the stock goes up …
You ask the question, why are they doing the same thing again? They have to do something with the profits. If inequality meant, I make thirty thousand dollars a year, you make a million dollars a year, that’s not very nice. You spend a million on a yacht; I take care of your yacht. I sweep it up and I’m still worrying about my children getting into college; that’s not nice, but unfortunately, it’s stable. Capitalism could run this way, but that’s not the million dollars we’re talking about, spending millions of dollars because you earn more than me. When we say, they got more, unequally, their share went up. Their share is of money they made in interest, money they made in investments and they just put that back into brokerage funds, back into banks, and those banks and brokerage funds have to do something with it. They’re doing the same [with] derivatives that they did before.
A man who kind of invented the math for derivatives, Ed Thorp, [someone] asked him after the crash, do you think that the stock market is still safe? He said, well, if we could move the money to Mars that would be better, but we can’t move it to Mars, so we have to put it back into the stock market even though it’s a Ponzi scheme.
So let’s talk about us. You, like Studs Terkel forty years ago, went and interviewed people and came away with a portrait that wasn’t just about numbers, but was really about a reality of life that many of us in the media are kind of numb to, or maybe we’re just not aware of … There’s actually less joy in your book than there was in Studs’ and Studs’ time was hard then. What is it doing to people to be in the situation they’re in?
What’s increasing is their insecurity, and the sense that they should be doing better. People who graduate from college and think that [the problem is] them. “Why am I – graduating from college – only earning $35,000? I was an intern last year. I have all of these bills from college, and my mother thinks I’m stupid; why did I do it this way?” And maybe I’m living back at home. It’s going to take awhile before the parents realize that oh my goodness, the child made the best decision she could. She invested in herself, or she bought a house that was a fixer-upper and it’s just the dollars and cents don’t add up. You’re not being paid enough, and you’re indebted. …We’re doing a bad job of helping them realize that it’s not just them, that this is the new norm. That the so-called recovery that everyone is bragging about is this: We’ve recovered; we’ve taken your full-time job away and given you a part-time job – and we’ve given the difference to our stockholders. We’ve recovered; let’s breathe a sigh of relief.
What about the people?
What do you think it feels like? It will feel better, I hope, I think. I hope it will feel a little better when you say hey, they did it to us; this is universal; this is not just me, I didn’t choose a stupid school to go to, and a stupid major. I didn’t choose a stupid job. I didn’t fall behind on technology and that’s why I’m a part-timer …
It’s not like we’re too poor to have houses. As a matter of fact, there is a huge vacancy crisis. We don’t have to chop down trees to house everybody. Seventeen percent of housing is vacant right now. There is a place for all of us to move into if we just redistribute our ability to pay for it.
I’m a socialist. I’m frightened because I don’t see our capitalists saying, oops you better have a temporary redistribution. They learned to do that in the ’30s. In fact, they even learned to do that in the 1870s. I don’t see them doing it. We should all be frightened just as we are all frightened about the environment. There are capitalist solutions – redistribution – but they’re not doing it. That may be why we have a socialist solution this time. If 17% of the houses are vacant, we’ll just move into them.
Down the Up Escalator: How the 99% Live: I recommend it. Great stories, great read. Barbara Garson, thank you.
In conjunction with this conversation, GRITtv interviewed six New Yorkers about their work lives: “Juggling Jobs, Fighting Fear.” With work or looking for work, they all had one thing in common, they’re working too damn hard. If you’re working too damn hard – GRITtv wants to hear about it! Post your video, audio, or text at our Facebook page. We’re not ok with the “new normal.”