Henry Blodget lays out the history of the U.S. economy and taxation over the past half-decade or so in a set of really compelling graphs.
The first part is about taxation — who pays, how much, and how it all stacks up against spending.
The second part is about the economy as a whole — especially as it relates to debt, but also taking into account the effects of wage stagnation.
Several points are kind of startling if you’re used to the givens of our political discourse. So, for example, the federal government is actually smaller than it used to be, as a percentage of employed adults in the U.S. You don’t hear much about that. (To be clear: it’s about the same size in actual numbers, but thanks to population growth, it now serves more Americans with the same number of employees, and those employees make up a smaller percentage of the population.)
But the main point — the overwhelming point — that Blodget’s numbers make is that it’s not your imagination — more and more of the wealth is going to fewer and fewer people. Incomes for the ultra-rich have skyrocketed, and corporate profits are higher than they’ve ever been, but the wages of the vast majority (the middle class, the working class) have actually dropped slightly. Long-term, that’s completely unsustainable.
The good thing is the Blodget really understands the problem. He suggests that “Companies need to start sharing more of their revenue with their employees. Wages as a percent of the economy simply have to go up.” He adds that we should “persuade corporations to invest more of their profits in their employees — by hiring more and paying more.”
Unfortunately, Blodget’s prescription for getting big corporations to pony up better wages is kind of vague. He’s wildly optimistic about the power of persuasion and moral duty: “Yes, this means corporate profit margins will drop. But they can drop a long, long way and still be ‘above average.’ And this is our country we’re talking about. If corporations really are people, it’s time for them to start acting like people–and sharing their wealth.” But he’s also pretty adamant that this should not be done through taxation: “To fix this country, we have to increase the incomes of the lower-middle class and middle class–not by taking away income from the top half, but by getting more income to the bottom half.”
To sum up — corporations should return less to shareholders, and perhaps pay their CEOs less, and pay their workers a lot more. I agree, but how do you get that without massive government intervention? (I’m not persuaded that we can count on the civic virtue of corporate officers alone.) I mean, what’s more “socialist” and scary, ultimately — slightly higher taxes on the rich, or a massive hike in the minimum wage and direct regulation of executive pay? Yet we can’t even make the former a reality, despite overwhelming and consistent popular support for it. So what hope is there for a government-enforced wage hike or profit-sharing scheme or any other remedy that would reduce the insane income inequality in this country?
Sorry. I don’t mean to be gloomy. But it’s not clear to me how this is going to change.