Economist Paul Krugman, and the economist he discusses in an important interview, Thomas Piketty, paid attention in math class, and the other classes, too. That's why they understand this stuff and I am still trying to suss out why no matter how many hours I stay on the job and how much I save, it is never enough.
In case you're reading this on your 15 minute break at Target, I'll try to summarize the interview.
The American Dream (Patrimonial Capitalism)
The myth of the American Dream is the dominating factor in keeping people complacent in the United States. You know it -- work hard, and your life will improve. Well, maybe not your life, but your kids', or at least your grandkids'. If that doesn't work, it is the fault of immigrants, or the darn Chinese, or those welfare freeloaders. Ask Donald Trump how it all works in his economy.
The thing that makes the myth so powerful is that the tiny percent that is true sounds better than the 99 percent which is a lie.
As long as near-constant economic growth could be assured, enough pieces would fall to the the lower and middle classes to make the Dream seem real. It helped that most media would promote the heck out of every exception, whether it was the shoeshine boy in the late 19th century who went to college, or the plucky guys who invented some new tech in their garage and became billionaires. See, you can do it too, just like if we run hard enough, everyone can be in the Olympics. It's just a matter of wanting it, right?
The Undeniable Reality of the Now
The bulk of the industrial jobs are gone and never coming back; ask Detroit, or the people in Youngstown and Weirton. People have been talked out of most union jobs, convinced somehow that organizing was not in their own interest, and now they somehow find themselves accepting whatever minimum of a wage they can get. Food stamps and other need-based programs are finding more and more middle class users, as suburban people who once donated to charities are now lining up out front of them. Health care paid for by our own taxes is a give away to lazy people. This is the stuff Bernie Sanders talks about in his economy.
Drilling Down Into Our Lives
In case you have a few more minutes on your break, or if you've been laid off since starting this article, here are some things happening out there. You can read more about all of this in Thomas Piketty's book, Capital in the Twentieth Century.
-- Our income inequality rate is higher than it ever has been in our own history, is growing, and is higher than in countries in Western Europe and Canada.
-- The inequality is driven by two complementary forces. By owning more and more of everything (capital) rich people have a mechanism to keep getting richer, because the rate of return on investment is a higher percentage than the rate of economic growth. This is expressed in Piketty's now-famous equation R > G. Wealth grows at six-to-seven percent a year, more than three times faster than the size of the economy.
-- Wages are largely stagnant, or sinking, driven by factors in control of the wealthy, such as automation that eliminates human jobs and the not-adjusted-for-inflation minimum wage more and more Americans now depend on.
-- All of this is exacerbated by America's lower tax rate on capital gains (how the rich make their money) versus wages (how the 99 percent make their money.)
-- Because rich people pass on their wealth to their relatives, the children of rich people are born rich and unless they get really into fast lives and expensive toys, will inevitably get richer. They can't help it. The gap between the rich and the poor must grow.
-- Social reforms, such as increased education opportunities and low-cost health care, are incapable without tax changes significantly affecting income equality. The only people who can change society are those who profit from it not changing. That's the big reveal on why we are in so much trouble.