By Mark Blessington
The most common way to follow the money in today's economy and track winners and losers is with the Gini Index. It measures the degree of income disparity, where higher numbers represent wider gaps from rich to poor. As shown in the chart below, Gini has been on a steady rise since 1967. This rise has largely persisted through Republican and Democratic administrations.
To bring the picture into sharp relief, I take a different tact. Now I calculate change in Gini for each administration, and sort them with the best administration on the far left (Johnson) and the worst administration on the far right (Reagan).
Income disparity increased most during the Reagan administration. Clearly, Reaganomics and its embrace of trickle-down economics did the most to push wealthy interests forward at the expense of everyone else. From an income equality perspective, Reagan was the worst thing to happen in nearly 50 years of politics. This phenomenon is already well studied by numerous writers. The surprise from this analysis, though, is the fact that the Clinton and Obama administrations together equaled the damage caused by Reagan!
Clinton's appointments are telling. For Chairman of the Federal Reserve he reappointed Reagan's man: Alan Greenspan. For the Treasury he appointed Lloyd Bentsen (who pushed for NAFTA), Robert Rubin (of Citigroup infamy), and Larry Summers (who supported Gramm-Leach-Bliley). The capstone of Clinton's economic harm was to repeal Glass-Steagall by signing the Gramm-Leach-Bliley Act. Many view these pivotal events as essential ingredients for the Great Recession.
Regardless of any rationale one can conjure in support of the Clinton administration's key economic decisions, the record is clear: income disparity increased significantly during his two terms as president. Indeed, the damage was greater than what was done by Nixon, George W. Bush, Gerald Ford, and George H.W. Bush combined!
The biggest surprise of all is with the Obama administration: it has the second worst record in nearly 50 years. How could this be? At the start of his first term he had 58% of Congress and won nearly 53% of the popular vote.
One of Obama's first acts, over a month before he was sworn in, was to formalize his intention to nominate Timothy Geithner for the Treasury. Geithner had a long-established track record as a financial conservative. Indeed, it was anticipated that John McCain would have appointed him if elected President. Then later in 2009 Obama nominated George W. Bush's Fed nominee, Ben Bernanke, for a second term.
These two acts alone spoke volumes: there would be no major economic change initiated by the Obama administration. Worse, the march of income inequality actually accelerated. When Wall Street executives claimed their institutions were too big to fail, Obama implicitly agreed. When they bitterly complained about caps on their pay, Obama relented. When they resisted tough Dodd-Frank legislation, he capitulated.
American trust in government is near all-time lows. From where most people sit, they think their votes don't matter. Even when they sent a Democrat with strong support to the Oval Office, all they got in return were pro-wealth appointees, pro-wealth legislation and pro-wealth results.
I call this the Era of Compromise Democrats. From an economic perspective, the last Democrat to really fight for the people was Franklin D. Roosevelt. He was even brave enough to stand up to the Supreme Court. While President Obama immediately spoke out against Citizens United in 2010, he did nothing to directly oppose it. While many think the Court far exceeded its purview, Obama merely threw a few small stones. That was not what FDR would have done.
There may be a growing realization among US voters that nothing short of revolution can repair the damage from a half-century of greed-dominated government. Hillary Clinton has purposefully positioned herself as another Compromise Democrat. The Republican candidates are stumbling over themselves as they curry favor with the wealthy and pit poor Americans against one another.
Out in left field is Bernie Sanders, shouting and waving his hands, reassuring Americans he'll catch the ball if it is hit to him. While democratic socialism sounds a bit "Soviet," Bernie has a growing number of people wondering: Does he have the once-in-a-century chutzpah needed to steer our economic ship from the looming rocks of despair and anarchy?
What do you think? Join the debate. Tell us what you think in the comments section below.
Mark Blessington is a sales and marketing consultant and has worked with many of the world's largest corporations. He has written four books, ranging from Deep Economics to Sales Forecasting.
FIXCapitalism.com is dedicated to "saving capitalism from itself." Visit us at www.fixcapitalism.com to join the debate. Follow us on Twitter and Facebook. Sign up for our newsletter to get more insights.
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