The Corporate Profits Boom
The increasing value workers produced since the mid-1970s that they did not receive boomed corporate profits.
The tax bill signed into law by President Trump in 2017 reduced corporations’ tax rate on their profits to 21% from 35%. But in 2020, 55 Fortune 500 corporations reduced theirs below 0%. They had almost $40.5 billion in U.S. profits but paid $0 in taxes and received $3.5 billion in tax rebates, so they had about a negative 9% average tax rate.
The CEO Compensation and Stock Market Boom
The way corporations are governed allowed CEOs to take massive compensations from the profit boom that boomed stock prices, so the wealth of people with large investments in stocks.
“But inequality doesn't matter very much because it is easy to move from the lower to upper classes in America. Right?” Wrong!
For most of our history, America was “the land of opportunity.” If you were born into a low-income family, your chances of rising to high income or wealth were greater here than anywhere else in the world. Now, your chances are lowest in the United States than in any other advanced country. If you want to live the American dream, you best go to Denmark. As the top graph shows, it is easiest to rise out of the lowest economic class in Denmark, much easier than in the United States.
The chances of children achieving the American Dream are now almost twice as high in Canada than in the U.S.
As the graph shows, income mobility has fallen sharply over the past half-century. The researchers whose data are graphed found that increasing GDP growth rates alone cannot restore income mobility to the rates experienced by children born in the 1940s. They determined the more equal distribution experienced by the 1940 birth cohort would reverse more than 70% of the decline in mobility.
Economic mobility disparities result from the differences in opportunities and living conditions inherent in an extremely economically unequal society.
Percent of 30-Year-Olds Earning More Than Their Parents at Their Age
Why Policymakers Ignore the 99%
In 2012, 95% of the candidates for congress who had the most money spent on their campaign won the election. So, on average, congresspersons mostly spend time raising money for their next election campaign. About 4 hours per day, they “dial for dollars”—make phone calls primarily to the 0.26% of contributors who give 68% of their campaign money—no surprise on whose interests our political system serves.
Some Routes to a New Enlightenment
⇒ Institute a new Fairness Doctrine and a worker-owned and managed media system.
⇒ Institute a web-based lobbying system that puts all citizens and corporations on a level playing field and makes policymaking processes transparent. Read more.