Stop being a compliant consumer.
Face the ugly truth. Don�t get fooled by the stock market. Accept the need for
the mistreated middle class to become the revolutionary class. The British
military establishment�s most prestigious think tank sees what too few
over-consuming Americans are willing to anticipate. Unjustified and mounting
economic inequality is planting the seeds for global economic conflict.
Here is what the new report from
the UK Defense Ministry�s Development, Concepts and Doctrine Centre warned
might happen by 2035. �The middle classes could become a revolutionary class.
The growing gap between themselves and a small number of highly visible super-rich
individuals might fuel disillusion with meritocracy, while the growing urban
under-classes are likely to pose an increasing threat . . . Faced by these twin
challenges, the world�s middle-classes might unite, using access to knowledge,
resources and skills to shape transnational processes in their own class
Consider the wisdom of economist
John Maynard Keynes: The rich are tolerable only so long as their gains appear
to bear some relation to roughly what they have contributed to society. Think
of it as proportional and justified economic success. This can be tolerated by
poor and middle class people if they believe the economic system is fair and
properly rewards those who work harder or have better capabilities. But truly
obscene economic rewards angers people. When most prosperity and wealth is
unfairly channeled to relatively few Upper Class people, it is only a matter of
time until fuming, resentful people in the Lower Class decide enough is enough
and revolt. Perhaps violently, if the political system remains controlled by
the Upper Class.
A ton of data demonstrate how
crazy our economic system has become where a relatively few receive
astronomical gains that no rational person could see as justified. One study
tracked down home ownership data for 488 CEOs in the S&P 500 Index set of
companies. The typical home of the CEOs has 12 rooms, sits on 5.37 acres, and
carries a $3.1 million price-tag. Companies big enough to rate S&P 500
status hiked their median CEO pay by 23.78 percent in 2006 to $14.8 million. In
comparison, U.S. worker weekly wages rose just 3.5 percent in 2006.
Despite what you hear about the
sagging housing market and the many people facing foreclosure, business at the
top end of the U.S. housing market is booming. Sales of homes in the $5
million-and-up price range rose 11 percent last year, reports the Dallas-based
Institute for Luxury Home Marketing. Ten residential properties sold for over
$28 million in 2006. The most expensive, in New Jersey, sold for $58 million; it
went to Richard Kurtz, the CEO of Advanced Photonix, a telecom supplier. In the
�ultra-luxury market� a set of suites in New York�s fabled Plaza Hotel was
converted last year into one-bedroom condos that start at $6.9 million.
From another study we learn that
pay for American college presidents over the past decade has jumped seven times
faster than pay for college faculty. In 1996, only one college president took
home over $500,000. In 2006, 112 college presidents hit that mark. Meanwhile,
after inflation, compensation for college professors increased just 5 percent
since 1996. And college students have faced rapidly mounting tuition far higher
than inflation rates.
CEOs are getting away with
economic murder. Bob Nardelli, the CEO who departed Home Depot early this year,
had an exit package worth $210 million. IBM CEO Sam Palmisano took home $18.8
million in 2006 and will receive $34.9 million in deferred pay and $33.1
million in retirement benefits when he leaves IBM. Even more extreme is the
case of Occidental Petroleum CEO Ray Irani. The interest income alone on the
$124 million that ended the year in Irani�s deferred-pay account totaled
$679,396. The Los Angeles Times estimated Irani�s total payoff for
2006 at $460 million. Leslie Blodgett, the top exec at cosmetics giant Bare
Escentuals, collected $118.9 million in 2006, with most of that coming from the
$117.7 million she cleared cashing out stock options. She received 4 million
additional stock options before 2006 ended.
Economists Emmanuel Saez of the
University of California at Berkeley and Thomas Piketty of the Paris School of
Economics found that the richest 10 percent of the U.S. population received 44
percent of the pretax income in 2005. This was the highest since the 1920s and
1930s (average: 44 percent) and much higher than from 1945 to 1980 (average: 32
percent). With more than 140 million U.S. workers, that top 10 percent equals
14 million workers. The bottom half of that top 10 percent had incomes of about
$110,000. That may not seem all that high, except that the overwhelming
majority of Americans can never expect such income. And remember that many of
these top 10 percent Americans are married to or living with equally highly
When it comes to obscene economic
inequality, however, you must focus on the huge gains received by the richest 1
percent -- some 1.4 million people. Their share of pretax income has gradually
climbed from 8 percent in 1980 to 17 percent in 2005. Their average income was
$371,000. Who is in the top sliver of richness? Economists Steven Kaplan and
Joshua Rauh of the University of Chicago estimate that there were about 18,000
lawyers, 15,000 corporate executives, 33,000 investment bankers (including
hedge fund managers, venture capitalists and private-equity investors) and
2,000 athletes who made roughly $500,000 or more in 2004.
Do those at the top pay their fair
share of taxes? Middle class Americans, after nearly 30 years of tax-cutting,
are now paying about the same share of their incomes in federal taxes that they
paid before Ronald Reagan entered politics. In contrast, America�s richest have
seen the share of their incomes that goes to federal taxes cut by over half.
That�s what happens in a failed democracy in which the rich control the
What the future holds for the
victimized middle class will not only depend on the uncontrolled greed of the
wealthy Upper Class and its control of the political system. It will also be
linked to the coming tsunami of global warming impacts on climate, sea level,
water supplies, crops and disease. There will be devastating impacts on
hundreds of millions and perhaps billions of people worldwide. Lower Class
people will be sacrificed -- left to suffer the consequences. The rich will
retreat to their walled, protected and well-stocked havens.
Add to this scenario the
inevitable collapse of the entire economic system. At some point it will not be
controllable as it is now by those in banking and finance, who are able to
manipulate it to sustain economic injustice. Eventually the inherent
fundamental absurdities of the global economic system will prove unsustainable.
The wealthy Upper Class will have siphoned off most of the world�s wealth and
hoarded resources to maintain a luxurious lifestyle.
What the future holds: Lower Class
economic slaves fighting to survive in a medieval, ugly and bleak world that so
many science fiction stories have portrayed. In that hell, their best option
will be to rise up and revolt against the rich and powerful Upper Class. With
such a prospect, global class war on a sick planet, prevention is a priority.
For us, that requires paying much more attention now to economic inequality,
economic injustice, economic apartheid and the many attacks on the middle
class. If not, we get Economic Armageddon along with environmental disaster.Joel
S. Hirschhorn�s new book is �Delusional
Democracy -- Fixing the Republic Without Overthrowing the
Government.� He can be reached through www.delusionaldemocracy.com.