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Are You Mad Yet?

Unemployment

Unemployment.

Unemployment all-time high.

Unemployment all-time high.

Unemployment much deeper and much longer.

Unemployment much deeper and much longer.

Corporate profits just hit another all-time high.

Corporate profits just hit another all-time high.

Image: St. Louis Fed


Corporate profits as a percent of the economy are near a record all-time high. With the exception of a brief happy period in 2007 (just before the crash), profits are higher than they've been since the 1950s. And they are VASTLY higher than they've been for most of the intervening half-century.

Corporate profits as a percent of the economy are near a record all-time high. With the exception of a brief happy period in 2007 (just before the crash), profits are higher than they've been since the 1950s.

Image: St. Louis Fed


CEO pay is now 350X the average worker's, up from 50X from 1960-1985.

CEO pay is now 350X the average worker's, up from 50X from 1960-1985.

Image: G. William Domhoff, UC Santa Cruz


CEO pay has skyrocketed 300% since 1990. Corporate profits have doubled. Average "production worker" pay has increased 4%. The minimum wage has dropped. (All numbers adjusted for inflation).

CEO pay has skyrocketed 300% since 1990. Corporate profits have doubled. Average production worker pay has increased 4%. The minimum wage has dropped.

Image: G. William Domhoff, UC Santa Cruz


After adjusting for inflation, average hourly earnings haven't increased in 50 years.

After adjusting for inflation, average hourly earnings haven't increased in 50 years.

In short... while CEOs and shareholders have been cashing in, wages as a percent of the economy have dropped to an all-time low.

In short... while CEOs and shareholders have been cashing in, wages as a percent of the economy have dropped to an all-time low.

Image: St. Louis Fed


In other words, in the struggle between "labor" and "capital," capital has basically won.


Of course, life is great if you're in the top 1% of American wage earners. You're hauling in a bigger percentage of the country's total pre-tax income than you have at any time since the late 1920s. Your share of the national income, in fact, is almost 2X the long-term average!

Of course, life is great if you're in the top 1% of American wage earners. You're hauling in a bigger percentage of the country's total pre-tax income than you have at any time since the late 1920s. Your share of the national income, in fact, is almost 2X the long-term average!

Image: David Ruccio


And the top 0.1% in America are doing way better than the top 0.1% in other first-world countries.

And the top 0.1% in America are doing way better than the top 0.1% in other first-world countries.

Image: David Ruccio


In fact, income inequality has gotten so extreme here that the US now ranks 93rd in the world in "income equality." China's ahead of us. So is India. So is Iran.

In fact, income inequality has gotten so extreme here that the US now ranks 93rd in the world in "income equality." China's ahead of us. So is India. So is Iran.

Image: G. William Domhoff, UC Santa Cruz


And, by the way, few people would have a problem with inequality if the American Dream were still fully intact—if it were easy to work your way into that top 1%. But, unfortunately, social mobility in this country is also near an all-time low.

And, by the way, few people would have a problem with inequality if the American Dream were still fully intact—if it were easy to work your way into that top 1%. But, unfortunately, social mobility in this country is also near an all-time low.

So what does all this mean in terms of net worth? Well, for starters, it means that the top 1% of Americans own 42% of the financial wealth in this country. The top 5%, meanwhile, own nearly 70%.

So what does all this mean in terms of net worth?  Well, for starters, it means that the top 1% of Americans own 42% of the financial wealth in this country. The top 5%, meanwhile, own nearly 70%.

Image:G. William Domhoff, UC Santa Cruz


That's about 60% of the net worth of the country held by the top 5% (left chart).

That's about 60% of the net worth of the country held by the top 5% (left chart).

Image: G. William Domhoff, UC Santa Cruz


And remember that huge debt problem we have—with hundreds of millions of Americans indebted up to their eyeballs? Well, the top 1% doesn't have that problem. They only own 5% of the country's debt.

And remember that huge debt problem we have—with hundreds of millions of Americans indebted up to their eyeballs? Well, the top 1% doesn't have that problem. They only own 5% of the country's debt.

Image: G. William Domhoff, UC Santa Cruz


And then there are taxes... It's a great time to make a boatload of money in America, because taxes on the nation's highest-earners are close to the lowest they've ever been.

And then there are taxes...  It's a great time to make a boatload of money in America, because taxes on the nation's highest-earners are close to the lowest they've ever been.

Image:National Taxpayers Union


The aggregate tax rate for the top 1% is lower than for the next 9%—and not much higher than it is for pretty much everyone else.

The aggregate tax rate for the top 1% is lower than for the next 9%—and not much higher than it is for pretty much everyone else.

Image: G. William Domhoff, UC Santa Cruz


As the nation's richest people often point out, they do pay the lion's share of taxes in the country: The richest 20% pay 64% of the total taxes. (Lower bar). Of course, that's because they also make most of the money. (Top bar).

As the nation's richest people often point out, they do pay the lion's share of taxes in the country: The richest 20% pay 64% of the total taxes. (Lower bar). Of course, that's because they also make most of the money. (Top bar).

Image: G. William Domhoff, UC Santa Cruz


And now we come to the type of American corporation that gets—and deserves—a big share of the blame: The banks. Willie Sutton once explained that the reason he robbed banks was because "that's where the money is." The man knew what he was talking about.


Remember when we bailed out the banks? Yes, and remember the REASON we were told we had to bail out the banks? We had to bail out the banks, we were told, so that the banks could keep lending to American businesses. Without that lending, we were told, society would collapse...


So, did the banks keep lending? Um, no. Bank lending dropped sharply, and it has yet to recover.

So, did the banks keep lending? Um, no. Bank lending dropped sharply, and it has yet to recover.

Image: St. Louis Fed


So, what have banks been doing since 2007 if not lending money to American companies? Lending money to America's government! By buying risk-free Treasury bonds and other government-guaranteed securities.

So, what have banks been doing since 2007 if not lending money to American companies? Lending money to America's government! By buying risk-free Treasury bonds and other government-guaranteed securities.

Image: St. Louis Fed


And, remarkably, they've also been collecting interest on money they are NOT lending—the "excess reserves" they have at the Fed. Back in the financial crisis, the Fed decided to help bail out the banks by paying them interest on this money that they're not lending. And they're happily still collecting it. (It's AWESOME to be a bank.)

And, remarkably, they've also been collecting interest on money they are NOT lending—the "excess reserves" they have at the Fed. Back in the financial crisis, the Fed decided to help bail out the banks by paying them interest on this money that they're not lending. And they're happily still collecting it. (It's AWESOME to be a bank.)

Image: St. Louis Fed


Meanwhile, of course, the banks are able to borrow money FOR FREE. Because the Fed has slashed rates to basically zero. And the banks have slashed the rates they pay on deposits to basically zero. So they can have all the money they want—for nearly free!

Meanwhile, of course, the banks are able to borrow money FOR FREE. Because the Fed has slashed rates to basically zero. And the banks have slashed the rates they pay on deposits to basically zero. So they can have all the money they want—for nearly free!

Image: St. Louis Fed


When you can borrow money for nothing, and lend it back to the government risk-free for a few percentage points, you can COIN MONEY. And the banks are doing that. According to IRA, the "net interest margin" made by US banks in the first six months of this year is $211 Billion. Nice!

When you can borrow money for nothing, and lend it back to the government risk-free for a few percentage points, you can COIN MONEY. And the banks are doing that. According to IRA, the "net interest margin" made by US banks in the first six months of this year is $211 Billion. Nice!

Image: Institutional Risk Analytics


And that has helped produce $58 billion of profit in the first six months of the year.

And that has helped produce $58 billion of profit in the first six months of the year.

Image: Institutional Risk Analytics


And it has helped generate near-record financial sector profits—while the rest of the country struggles with its 9% unemployment rate.

And it has helped generate near-record financial sector profits—while the rest of the country struggles with its 9% unemployment rate.

Image: Reuters (Felix Salmon)


And these profits are getting back toward a record as a percentage of all corporate profits.

And these profits are getting back toward a record as a percentage of all corporate profits.

Image: The Big Picture


And those profits, of course, are AFTER the banks have paid their bankers. And it's still great to be a banker. The average banker in New York City made $361,330 in 2010. Not bad!

And those profits, of course, are AFTER the banks have paid their bankers. And it's still great to be a banker. The average banker in New York City made $361,330 in 2010. Not bad!

Image: New York Times, New York State Comptroller


This average Wall Street salary was 6X the average private-sector salary (which, in turn, is actually lower than the average government salary, but that's a different issue).

This average Wall Street salary was 6X the average private-sector salary (which, in turn, is actually lower than the average government salary, but that's a different issue).

Image: New York Times, New York State Comptroller


02.23.2013. 12:42

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