Wealth vs. Purchasing Power

In 1928, on the eve of the Great Depression, 23% of this nation’s wealth was in the hands of the richest 1% of our population.  It took 16 years to strengthen the middle class and to rise from the depths of the Depression.

In 2004, the richest 1% owned 34% of all wealth and the top 10% of this population owned 71% of this country’s wealth. 

What occurred next?  Come on!  You know the answer.

Yes, the Great Recession. 

In Wisconsin, blame has come from the right, accusing the middle class of not saving or investing more of their increasingly smaller piece of the pie. The middle class’s houses are too big, their cars too new, and accusations fell from this 10% that the middle class lacked fiscal discipline. 

How else might a middle class family live, want their children to live, and improve on how their parents lived without accumulating debts? 

In Wisconsin, blame has reached middle class public workers in the form of “budget crises”. They are to blame for debt because their benefits and pensions are unsustainable. 

In a recent CNN Poll, cutting the pensions and benefits of government workers is a popular option to balance budgets “but most Americans overestimate how much that costs the government. On average, Americans think the federal government spent 10 percent of its 2010 budget on pensions and retiree benefits; the OMB figures indicate the real number is about 3.5 percent.”  (Source: cnn.com)

Despite these polling results, the governor of Wisconsin has attempted (at the public worker’s expense) to redistribute wealth from the middle class to the upper class. The governor has proposed and may very well execute the attempted redistribution of moneys from public pensions and benefits to the wealthiest citizens in the state via tax breaks.

As the governor attempts to draw more finances from the middle class to the richest 10% of this state, consider that General Electric has not paid taxes on their profits during this Great Recession. In 2010, GE made $14.2 billion worldwide and $5 billion within the domestic United States – all tax free. 

Locally, there are two General Electric service centers. There are three in Ohio, a state which owns a projected $6 deficit.

The money continues to filter up.

Now, I understand the counter argument: GE needs these tax breaks to hire more people. These people will work and pay taxes. These tax dollar pay of the state debt.

Well, with the purchasing power in this state declining by trillions with the enactment of Walker’s plan, how many GE products will be bought? How many will need service?

A lesson from the Great Depression is that companies will not supply goods which will not in turn be purchased.

The lesson from the Great Depression is that when money disproportionately spirals up, the economy will come tumbling down.