A. Excerpts from paper postulating the primary cause of the Great Depression was a disparity in wealth.
The Great Depression was the worst economic slump ever in U.S. history, and one which spread to virtually all of the industrialized world. The depression began in late 1929 and lasted for about a decade. Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920’s, and the extensive stock market speculation that took place during the latter part that same decade.
A major reason for this large and growing gap between the rich and the working-class people was the increased manufacturing output throughout this period. From 1923-1929 the average output per worker increased 32% in manufacturing. During that same period of time average wages for manufacturing jobs increased only 8%. Thus wages increased at a rate one fourth as fast as productivity increased. As production costs fell quickly, wages rose slowly, and prices remained constant, the bulk benefit of the increased productivity went into corporate profits. In fact, from 1923-1929 corporate profits rose 62% and dividends rose 65%.
The federal government also contributed to the growing gap between the rich and middle-class. Calvin Coolidge’s administration (and the conservative-controlled government) favored business, and as a result the wealthy who invested in these businesses. An example of legislation to this purpose is the Revenue Act of 1926, signed by President Coolidge on February 26, 1926, which reduced federal income and inheritance taxes dramatically.
The large and growing disparity of wealth between the well-to-do and the middle-income citizens made the U.S. economy unstable. For an economy to function properly, total demand must equal total supply. In an economy with such disparate distribution of income it is not assured that demand will always equal supply. Essentially what happened in the 1920’s was that there was an oversupply of goods. It was not that the surplus products of industrialized society were not wanted, but rather that those whose needs were not satiated could not afford more, whereas the wealthy were satiated by spending only a small portion of their income.
One obvious solution to the problem of the vast majority of the population not having enough money to satisfy all their needs was to let those who wanted goods buy products on credit. The concept of buying now and paying later caught on quickly.
B. Excerpts from a paper describing how tax policy favors the rich
The issue here is simple. There is no economic rationale for having a lower tax rate on the compensation of fund managers than on people who do other types of work. It is incredibly inefficient to have a tax code that applies different tax rates for different occupations, for example taxing school teachers at a lower rate than firefighters. In effect, a differential tax rate amounts to workers in the high tax rate occupation subsidizing workers in the low tax rate occupation.
This is exactly what we have done as a result of the fund manager tax break, except that it creates a situation in which both teachers and firefighters, along with workers in every other occupation, are subsidizing fund managers, some of the very highest paid workers in the country. And just to be clear, this is real money. Under current law, most fund managers are paying tax at just a 15 percent rate. By contrast, if they were subject to the same tax schedule as teachers and firefighters, they would be taxed at a 35 percent tax rate.
Given the incredible salaries of fund managers, this 20 percentage point tax subsidy can be real money. Many fund managers earn over $100 million a year, which translates into a tax subsidy of more than $20 million. The most highly paid fund managers earn over $1 billion a year, which will get them more than $200 million in tax subsidies. This is enough to provide health care insurance for more than 60,000 kids.
C. Excerpts from a paper decrying the exporting of jobs
The offshoring of high-tech and professional jobs is just the latest aspect of globalization policies that have been developing for several decades. Multi-national corporations, with the assistance of international monetary institutions and governments around the world, have been pursuing profits at the expense of decent wages. They do this by promoting a “free trade” agenda that directly pits workers in low-wage countries against workers in other countries, in a global race to the bottom. The net result is an unprecedented increase in wealth for the world’s financial elites.
These global trends have been manifested in the United States. The gap between the rich and poor is greater today than it’s been in 50 years. In 1960, the gap in terms of wealth between the top 20% and the bottom 20% was 30 fold. Now it is more than 75 fold.
This increasing disparity of wealth has been achieved through unprecedented tax benefits to the wealthy, stock market manipulations, embezzlement and fraud, and of course, the systematic driving down of the price of labor through globalization and offshoring.