Politics Magazine

We Need Higher Taxes, a Reversal of Citizens United, and Democracy in the Workplace

Posted on the 12 January 2012 by Andy96

Real wage growth, related to worker productivity gains, have been diverted to corporations, their boards of directors, and the rest of the ONE%, via stock dividends, for over three decades. Just look at what happened:

Increase income from productivity gains by workers went to executives instead. This is where the income gains went from worker productivity Income growth for the bottom 90 has been stagnent since 1970 The ONE% are the only citizens gaining in wealth and income.

Not only did the income and wealth of the ONE% exceed any ethical valuation, the bank accounts of corporations snowballed with the remaining stolen wages, and savings from reduction in benefits, shipping jobs overseas, and automation in the workplace. These growing profits were invested by the banks to generate even more money by loaning them back to the workers. One investment was collateralized loans. Another was millions of unsolicited credit cards to the middle class and poor. The repackaged wages buried in these loans would help appease the workers, who lacked real wage growth and weren’t inclined unionize to get real wage growth.

– Household debt as a percent of GDP –
Household debt as a percent of GDP - courtesy of David Beim
The middle class share of income dropped along with union membership

But repackaging stolen wages and other excessive profits as loans wasn’t enough for the ONE%. They decided to repackage all that loaned money as collateralized debt obligations (CDO) and sell them as a ‘safe’ investment. In addition, they created and sold Credit Default Swaps (CDS), or insurance for all these ‘safe’ asset backed securities, which included mortgage backed securities. They could even sell multiple CDSs for the same derivative. Some, who saw the end coming, even got richer with CDSs. (This was like everyone in your subdivision, buying house insurance for your home – everyone wins if your house burns down, especially if some saw the fire smoldering and bought a second or third policy before the alarm was sounded.)

This figure illustrates the extent to which commercial banks invested in asset-backed securities

“… banks invested heavily in subprime mortgage-backed securities to get a greater yield for the same [supposable] amount of risk[ as US treasuries].”
Subprime lending rapidly grew only after 1995, when MBS with subprime-loan collateral become more attractive to investors

” … subprime lending rapidly grew only after 1995,
when MBS [mortgage backed securities] with subprime-loan collateral become more attractive to investors [ONE%ers].”
Insure any asset as many times as possible, even if you don't own it.

“The CDS market was obviously becoming a casino unto itself because total issuance eventually grew to be 6 times the total value of U.S. corporate debt.”

Then the believed value of all that greedy investing collapsed. The middle class and the poor were not only robbed of real wage growth, but left with high unemployment and an empty bag of all those ‘safe’ derivatives that the ONE% had been trading back and forth and insuring against failure.

The CDO collapse and loss of billions in fees ...

“During 2006 and 2007 a combined $1 trillion of new CDOs were issued globally, generating tens of billions in underwriting fees alone.”
Greatest job loss since the Great Depression

” … the economy has recovered only 2.6 million of the 8.7 million jobs lost …”

The ONE% owes America, the middle class, and poor – BIG – for their unethical behavior and their grossly excessive greed. The tax rates and progressive tax schedule from 1975 should be reinstated, the Citizens United decision must be declared unlawful, and democracy must be extended from its place in politics to the workplace: abolish boards of directors – the “double high” ONE%ers who orchestrated this destruction of America’s once caring democracy.

End corporate greed - abolish boards of directors
We Need Higher Taxes, a Reversal of Citizens United, and Democracy in the Workplace

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