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5 The Wall Street Inequality Machine

Collins, Chuck Berrett-Koehler Publishers ePub

The priority of the money system shifted from funding real investment for building community wealth to funding financial games designed solely to enrich Wall Street without the burden of producing anything of value.
—David Korten

When we talk about the 1 percent, it is tempting to personalize it, envisioning individual millionaires and specific people in the bottom 99 percent. This is reinforced by the photographs that thousands of people have posted on websites with their “I am the 99 percent” stories.

But, as we’ve discussed, a key explanation for the lopsided distribution of wealth is how the 1 percent teams up with leaders of large transnational corporations in the United States and the rest of the world. In fact, many of the leaders of large transnational corporations are members of the predatory, rule-rigging 1 percent. This corporate 1 percent owns a gigantic percentage of the globe’s private assets and transmits it though ownership flows to shareholders, most of whom are in the top 1 percent of individuals.

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Collins, Chuck Berrett-Koehler Publishers ePub
Medium 9781609945923

3 How the 1 Percent Rigs the Rules of the Economy

Collins, Chuck Berrett-Koehler Publishers ePub

A State divided into a small number of rich and a large number of poor will always develop a government manipulated by the rich to protect the amenities represented by their property.
—Harold Laski (1893–1950)

How does the 1 percent use its power?

Within the 1 percent, there are people who use their economic and political power differently. In one respect, the 1 percent is not much different from the population at large in that only a small segment is engaged in politics and actively advocating on policy matters. Some in the 1 percent care about the 100 percent and work for a fair and sustainable economy. Others are rule fixers, focused on rigging government policies in their favor to get more wealth and power. But the majority are unengaged and happy to watch their wealth accumulate without weighing in one way or another.

The game fixers maintain a worldview that justifies using every tool at their disposal to perpetuate and expand their wealth. Most believe they are the engines of the economic train, creating enterprises and wealth that pull everyone else along. This worldview is well captured in the introduction to the 2010 Forbes 400 survey.

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9 Reversing the Inequality Death Spiral

Collins, Chuck Berrett-Koehler Publishers ePub

The form of law which I propose would be as follows: In a state which is desirous of being saved from the greatest of all plagues—not faction, but rather distraction—there should exist among the citizens neither extreme poverty nor, again, excessive wealth, for both are productive of great evil… . Now the legislator should determine what is to be the limit of poverty or of wealth.
—Plato (c. 424–348 BCE)

How can we reverse the inequality death spiral that is wrecking the world? What must we do? What actions and policies will make the biggest difference?

A century ago, people reversed the excessive inequalities of the first Gilded Age. People learned the truth about the economy, got organized, built powerful social movements, and pressed for change. It took a generation, just as it took a generation for present-day inequalities to reach extreme levels.

This time around will be very different, as the world has changed. We must not only press for policies that reduce inequality but also make a nimble transition to a new economy based on an entirely different model of economic growth.

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6 How Inequality Wrecks Everything We Care About

Collins, Chuck Berrett-Koehler Publishers ePub

The reality is that U.S. society is polarizing and its social arteries are hardening. The sumptuousness and bleakness of the respective lifestyles of rich and poor represents a scale of difference in opportunity and wealth that is almost medieval—and a standing offense to the American expectation that everyone has the opportunity for life, liberty and happiness.
—Will Hutton (b. 1951)

Inequality is wrecking the world. Not just poverty, which is destroying the lives of billions of people around the planet, but also inequality—the accelerating gap between the 99 percent and the 1 percent.

According to research in dozens of disciplines, the extreme disparities of wealth and power corrode our democratic system and public trust. They lead to a breakdown in civic cohesion and social solidarity, which in turn leads to worsened health outcomes.

Inequality undercuts social mobility and has disastrous effects on economic stability and growth. The notion of a “death spiral” may sound dramatic, but it captures the dynamic and reinforcing aspects of inequality. And these inequalities were a major contributing factor to the 1929 and 2008 economic downturns. What follows is the case against inequality.

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