Departments

Of Mice and Men and the Redistribution of Wealth
by UAW Region 8 Webmaster and LUPA Advisory Board Chair John Davis

In the final weeks of the 2008 United State National elections, the debate centered around the idea of “the redistribution of wealth”, with conservative media rattling the mantle of fear that the government was going to “take what you worked for and give it away.” They would have us believe that “big government” wants to take from the deserving rich and give to those who “don’t want to work.”

Lost within this political bait and switch, was the idea that redistribution of wealth only goes down the food chain. However, over the last eight years we have seen the redistribution of wealth pushed up the chain of income to the detriment of working class families.

In John Steinbeck’s classic novel “Of Mice and Men”, the author tells the story of two depression era men who are caught within the tides of the economic situation. George and Lennie are caught in the “redistribution of wealth” that was occuring as the wealthy took advantage of the difficult times. The men share a dream of owning their own home and participating in the American Dream. However, they are powerless to make a difference as the rich and powerful pad their pockets in the turbulence of the times.
Those in power offered the few available jobs for men like George and Lennie at the lowest possible wage, taking advantage of the times.

During that difficult time, the wealth was redistributed among the wealthy who had the means to take advantage of the times. Following the Great Depression the second largest redistribution of wealth in our countries history was noted, as World War II resulted in an expansion of the economy and job opportunities for the working class. It was during these times that unions gained numbers and the middle class was born.

According to studies by the Economic Policy Instritute, in 1979, the wealthiest 1% of wage earners made 9.4 times that of those of us in the lower 90%. That ratio had remained steady in the post war times. Furthermore, the top .1% of wage earners, made 21 times that of those in the lower 90% range. By 2008, that .1% now earns 70 times that of those in the lower 90%. In a 30 year period, the redistribution of wealth has seen an increase of 250% for those already living at the top of the food chain. Where were all the conservative talking heads and right winged politicians as this redistribution of wealth occurred? They were congratulating their trust fund friends on their “well earned wealth.”

This change didn’t occur gradually. In the mid 1990s, American industry saw a period of productivity expansion. Productivity grew 13.2% in the second half of the 1990’s with the typical family’s income grew 11.3% during the same time. The gains that were realized through productivity gains were shared from the top down. But, that economic model began to change in 2000.

From 2000 to 2005, U.S. productivity continued to improve, posting a 16.6% increase. But, the days of sharing the gains were over. During the same period, real income for the typical family fell by -2.9%. Young families (25-34) saw a reduction of 5.8% in real wages as the number of workers without employer provided health care benefits saw a 15.1% drop. The number of people living in poverty increased 17.1% from 2000-2004 while hours worked per week feel 4.3%.

So, productivity gains resulted in higher yeilds for corporations while wages were cut. This was a result of job losses due to trade deals that resulted in millions of jobs lost to foreign competition. As the job market declines, employers can surpress wages due to the higher competition for jobs. As wages reduce, the amount of disposable income hits the economy further through loss employment in the sales and service sector.

At the same time working families were seeing reductions in wages and benefits, those at the top were enjoying a regular feast of profits. The top .1% (one tenth of one percent) saw an increase of 27.5% in income in 2004 alone. In 2006, the top .1% accounted for 36% of ALL income. The income numbers are further skewed when you consider that total labor cost include those of upper level management and CEOs. From1995-2000, CEO pay accounted for 5% of corporate profits. From 2000-2003, that number grew to 10%, seriously impacting corporations ability to turn a profit which resulted in layoffs and benefit reductions for those at the bottom of the food chain.

Another contributer to the redistribution of wealthy were the Bush tax cuts. Between 2003-2004 the tax cut to the wealthiest 1% was $198 billion dollars. During the same time, local and state governments saw a decline of $200 billion of federal tax dollars.To make up the difference, sales tax was raised pretty much nation wide. Consumption tax is the most unfair of all taxes, based on the fact that poorer families pay a much higher percentage of their income in this tax. For example, a family of four living on $35,000 a year may need to spend $40,000 for basic survival. As a result this family pays sales tax on 114% of their income. A family of four making $800,000 a year, may spend $200,000 and as a result only paying sales tax on 20% of their income. These tax cuts that are shifted toward the rich and result in a tax shift from the wealthy to the working – not a tax cut as advertised.

So, after eight years of trickle economics, we have found the idea defying gravity.The trickle has turned into a flood up the downspout to those at the top of the income spectrum. Just as George and Lennie are at the mercy of the rich man who takes advantage of the situation, working families have found their wealth redistributed to the wealthy. No conservative talk show host, no corporate CEO, or no Wall Street broker cried foul as wealth has been redistributed up the ladder. So when the fortunes of mice and men are at the mercy of rats, it is the redistribution of the very fabric of America that suffers.