Anna Bernasek writes in the New York Times that the typical American household is worth a third less than it did ten years ago.
The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially. …
…For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier.
“The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001,†said Fabian T. Pfeffer, the University of Michigan professor who is lead author of the Russell Sage Foundation study.
Hm, who became President in 2001? Wait, it’ll come to me.
Meanwhile, the Dumbest Man on the Internet links to this article under the Headline “OBAMANOMICS IN ACTION: Typical US Household Worth One-Third Less Than Under Bush.” And he wasn’t the only rightie who commented without bothering to read the article. The Derp: It burns.
It doesn’t surprise me that this particular decline began in 2001. I remember looking at the incoming Bush Administration and fearing the nation was doomed. And I also remember the headlines were full of bad news about the economy before September 11. The financial crisis of 2008 (who was President then, do you remember?) accelerated the decline, of course.
Via Digby, see What caused the wealth gap?
David Atkins presents the Four Responses to Record Inequality. In brief:
- “There is a broad recognition within the progressive left that the wheels are increasingly coming off the train that propelled the 20th century economic model.”
- “Those in the neoliberal/center-left camp do believe that modern inequality is a problem, but that this too shall pass and we can trudge along as usual after a recovery. . . . This is delusional thinking, but extremely commonplace—particularly among wealthier liberals.”
- “Then you have the center-right. They take rational market theory as an article of faith, believing with religious fervor that if the labor and capital markets are allowed to act unimpeded, then both labor and capital will find a comfortable, fair and balanced price. No amount of evidence can convince them that both human life and dignity are priced incredibly cheap on the open market, or that that late 19th century was not, in fact, the model of a moral or economically functional society.”
- “Finally, there is the far right. These are the True Believers: the ones who not only buy into the center-right line, but also the raw Objectivism of Ayn Rand and Fox News … In this view, the only inequality that matters to them is redistributive taxation to ‘others’ in society.”
As much as we may crab about the far right, it’s really the centrists, left and right, that are in the way of addressing this crisis. They’re the ones who dominate news media and who have the real power in Washington. Progressives have little power or voice.
IMO, the decline (the rotting from within) began much earlier than 2001. 2001 just saw the pop of the first asset bubble (internet/tech), followed by a pop of another asset bubble (housing) in 2008. Each pop destroys wealth.
Robert Reich does a good job in this short video giving more background, tracing the decline back to 1980. Elsewhere, he’s written (and I wish I could find it), how, going even deeper into the rot, over the last two generations, Americans have:
1) gone from households where one person could support the entire household, to the point where both husband and wife must work
2) gone from households that were basically free and clear, to the point where the household itself (the house) is mortgaged to pay living expenses.
This progression is both more elaborate and more succinct than I’ve presented here, and I regret not being able to find Reich’s article that explains it.
While it’s idiotic to blame Obama for this, blaming Dumbya is almost as dumb, since the forces creating this situation were in place long before he arrived on the stage. Of course, he and his party did nothing but encourage them.
Atkins’ frame is quite obviously off, as his description of the “center-left” clearly describe (what’s left of) the center-right, while it’s pretty clear that the center-left is, in fact, focused on the effects of income inequality and ways to mitigate them.
He’s looking at the Clintons and the old neoliberal crowd, as well as our current POTUS. Whether you call them center-right or center-left is subjective. I think they are distinctive from what he’s calling the center-right, which (unlike the Clintons and Obama) still believes in the magic of “free markets” but (unlike the teabaggers) are not ready to secede from the realities of the 21st century economic world altogether.
“1) gone from households where one person could support the entire household, to the point where both husband and wife must work
2) gone from households that were basically free and clear, to the point where the household itself (the house) is mortgaged to pay living expenses.”
These don’t seem all that structural to me. On 1), maintaining that postwar model of single-provider middle class households would be pretty much impossible without continuing to wholly exclude women from the workforce. And 2) seems like more of a consumer choice to leverage assets for more consumption, as I can’t think of anyone I know who’s taken out a second mortgage to pay “living expenses.”
And, of course, anyone who deviates from your personal acquaintances couldn’t possibly exist.
After FDR and Truman, and WWII, helped fix our economic Great Depression mess, Ike wasn’t part of the problem.
The moment the next Republican President, that lying and corrupt sociopathic sack of shit, Richard Nixon, took his hand off the Bible, the uber-rich started plotting moving money from the poor and middle-class, up to themselves.
And then, Reagan and Bush I gave them a boost.
And W, was like a PED for the uber-rich.
And give them credit.
They’ve been great at it!
Tragic…
The right will never honestly believe rational market theory. They fail immediately when they allow capital to join together in corporations while refusing labor the legitimacy of unions. In their world what is sauce for the goose is forbidden for the gander.
As of late there’s talk of a failure of elites – which I think we can easily agree is a major problem. There are people with a lot of power, money, and even training who are vastly out of touch with the world they supposedly run.
But this helps develop a theory I’ve been kicking around. Right now we’ve got (even after all the economic ups and downs), a non-elite class of people who are well off enough they don’t acknowledge how bad things have gotten. They are not elite – but are just as clueless as some of the elites are, without some of the added moral issues elites seem to face. Well off enough to be out of touch.
So our roadblock isn’t the powerful but tiny minority. It’s a larger group of us who aren’t lending power and money and voice to solving things because they don’t acknowledge how bad it is yet. The question is how we engage them.
“He’s looking at the Clintons and the old neoliberal crowd, as well as our current POTUS. Whether you call them center-right or center-left is subjective.”
Right, and given that this segment of the Democratic Party has identified inequality as a problem and proposed/advocated solutions to remedy its effects, the way he describes them is clearly wrong, and more appropriately applies to the segment of the center-right that will at least admit that inequality is a problem.
Brien — I assume you didn’t read Atkins’s entire article, because you aren’t making sense if you did. I’ll give you a chance to actually read it and adjust your comments accordingly before I snark back at you.
“And, of course, anyone who deviates from your personal acquaintances couldn’t possibly exist.”
Well I didn’t say they couldn’t, but this doesn’t fit in to the general lefty critique either, which is that consumer culture is so out of control that people leverage their security to finance things like unnecessary home improvements, fancy cars, dream vacations, etc., not so much pay their utility bills.
Oh, I see, you’re either from 1997 or another planet. I assure you that these days the standard lefty critique is that the middle class is suffering from a declining standard of living and many are just a couple of paychecks away from disaster. Do keep up.
People would use their credit cards to make ends meet at the end of the month and the. Periodically refi their house to pay off those credit cards, using the equity in their house to do so. That happened all the time, all the time. And as we’ve had stagnant wages for thirty-five years we’ve had skyrocketing health care that individuals were increasingly expected to pay for either out-of-pocket or as larger contributions to their employer. They also lost many of the pensions that were common for 401Ks that the employee was responsible for. Sure, at first, employers did the matching contribution thing but after awhile they would drop that and leave it totally up to the employee.
While I think we need much higher taxes on the wealthy and corporations, what we really need is much stronger worker protection and union laws. We need single-payer to keep the costs of healthcare under control and we need an amped up social security system under which people could actually retire with it.
“It doesn’t surprise me that this particular decline began in 2001”
The policies were set in place long before 2001, to me the biggest contributor to this loss of wealth is the loss of good paying low-medium skill jobs. Administrations and congresses from both parties dating back to Reagan have pushed for these policies, and now the jobs are gone forever.
Another fact to be considered.
http://money.msn.com/business-news/article.aspx?feed=AP&date=20140729&id=17812199