How the Upper Class Got Filthy Rich

The rich have always gotten richer. It's a fact of American life. It is a truism of the Capitalist system. Since the beginning of civilized society, those who have money have always had an easier time making more and more of it, while the average plebeian struggles from paycheck to paycheck, just hoping to earn enough sheckles to keep a roof above his head and food on his table.

But recently, over the past twenty-five years especially, the wealth disparity between rich and poor has grown very large, bigger even than that giant rotten pumpkin which sits atop Rush Limbaugh's shoulders. Here are a few facts that should surprise those of you who continue to work harder and harder just to receive less and less. First, let's take a look at how a very small percentage of folks have been able to take control of most of the wealth in this world.

In its annual list of the world's richest people, Forbes Magazine reported in 2007 that there are now 946 Billionaires in the world. That was up from just 868 members of the nine zero club in 2006. How many were there in 1990? How about 165. In 1980? There were only 35. Even adjusting for inflation, that increase is truly off the charts.

The average worth of these 946 super-wealthy folks is 3.6 billion, and their combined wealth is approximately $3.5 trillion.

That's right, the richest 900 people have a net worth that is nearly double the annual national budget of the United States of America, a country of 310 million people. Moreover, their combined wealth exceeds the GDP of 60% of the world's nations. Even the most staunch supporter of Capitalism would have to consider that a lot of money in the hands of so few people.

As said before, the rich have always gotten richer, but lately, especially over the past 25 years, the wealthy have gotten much much wealthier at an alarming rate. Which would be fine if the rest of the people who have worked hard and contributed to that newly created money were given an equal chance to share in the wealth. But they aren't. As this article will demonstrate, those at the top have spent the past quarter-century "rigging the game" to ensure that 95% of the new wealth created goes upwards to the very rich and the rest of the crumbs that fall from the baron's dinner tables must be split up by the rest of the slobs.

Here are more facts that, hopefully, will mobilize the middle and working classes to start fighting for what is rightfully theirs:

1. A minimum wage employee who works 40 hours a week makes $10,506 a year before taxes. It would take that employee approximately 7,000 years to make as much money as Oracle CEO Lawrence Ellison makes in just one year. Now Larry works his ass off and he has built an amazing company. He deserves a lot. A lot. But is there any reason that Larry needs to earn 7,000 times as much money as the guy who sweeps the floors at Oracle's headquarters? 7,000 times as much. If he earned only 1,000 times a much, Ellison would still be ridiculously wealth and at the same time, hundreds (or even thousands) of low-paid Oracle employees could rise above the poverty line.

2. 10 Former ENRON directors agreed to pay shareholders a $13 million settlement. Sounds good, right? It's not. That $13 million is just 10% of what those same admittedly crooked executives made by dumping Enron stock while lying to the average shareholders about the company's collapsing financial health.

3. CEO pay among military contractors has tripled since 2002. For David Brooks, the CEO of bulletproof vest maker DHB, it's risen 13,233%. Who says war doesn't pay?

4. Only the wealthiest 20% of Americans spend more on entertainment than on health care.

5. 20% of Americans spend 1/4 of their income on residential energy costs. No, we don't need alternatives to oil and natural gas, Noooooooo!!!

So how did things get so bad over the past 25 years? Why are average Americans working more hours for less real pay? Even worse, why does it now take two parents to earn less than one parent earned just thirty years ago?

For example, in 1950, only 11% of families with chidren under 6 were two income families. By 1990, that number had grown to 53%. By 2005, it was at 73%. And yet, with two parents working, the overall quality of life (and real incomes) for working Americans has dropped, in a time when billionaires are growing like a twelve-year old Yao Ming.

Why have the number of billionaires exploded while the majority of the "rest of us" are working 125% more hours than our parents and still getting less return for our efforts. What is going on?

The basic reason is that high ranking executives (with the assistance of a series of Conservative Republican administrations) have taken numerous measures over the past 25 years to line their own coffers at the expense of their employees and those of the United States Treasury. They have done this in at least five ways:

1. Tax cuts for the ultra-wealthy.

2. Refusal to Increase the minimum wage.

3. Outsourcing of good-paying jobs to India, China and Southeast Asia.

4. Unprecedented Increases in Executive Pay.

5. Encouraging Illegal Immigration and Employing Low Wage Illegals.

Here is something that will make you laugh. When he ran for President in 1980, Ronald Reagan claimed that if the nation cut taxes (i.e cut income) while simultaneously increasing spending (especially military spending), we could pull the country out of the ongoing recession without falling into debt.

Do yourself a favor. Over the next four years, spend twice as much money as you earn. See if there is any type of magical synergistic effect that somehow results in a balanced budget. It's a hell of a lot more likely that you'll lose your home, car, credit cards and get chucked into a debtor's prison.

But that is exactly what the Reagan Administration did during the 1980s. The idea came from a then-33 year old economist named David Stockman, who claims that if you gave more money to the rich (whom he called the most productive people), they would spend it so wisely as to expand the overall economy, and eventually, the money given to these rich folks would trickle down to the masses. Reagan called it "trickle down economics." His opponent, the first George Bush, called it VooDoo Economics.

Reagan got elected and slashed taxes, mostly skewing his cuts in favor of the ultra wealthy individuals and corporations who had financed his campaign. To pay for these tax cuts and unprecedented spending on building weapons (many of which were given to Saddam Hussein in 1982 and then to Iran in 1986), Reagan became the first president to intentionally run annual budget deficits.

During his eight years, the rich got richer. When your tax rates drop by 40%, that tends to happen. Annual budget deficits, however, increased from $73 billion in 1980 to just over $300 billion when Reagan left the Presidency in 1989. The National Debt also rose dramatically: from just under $800 billion to more than $3 trillion during the Reagan years.

To further underscore that tax cuts for the wealthy do not lead to economic health for the nation or its workers, one need only look at the Clinton years and the George W. Bush presidencies.

Remember that when Bill Clinton came into office, he raised taxes on the richest Americans from 28% to 36% (and 39% in some cases). Guess what happened? Well, the $300 billion budget deficit in 1991 turned into a $236 billion budget surplus by the end of Clinton's term.

George W. Bush, that Cowboy from Connecticut, reversed all of the advances made by Cinton the minute he took office. Little George's cuts were even more blatant and egregious than Reagan's cuts. Bush gave the lion's share of cuts to the top 1% of U.S. citizens, and sent a $300 check to the average working stiff. Years later, Bush had wiped out the Clinton surpluses and replaced them with deficits, the lastest being a $480 billion shortfall for fiscal year 2007.

So, essentially, what happened is that the very, very wealthy banded together and paid to elect a "conservative" President, who in return gave these wealthy folks all of the money that the poorer people had paid into the Treasury. So, the rich got filthy rich, the Treasury got bankrupted and the little guy, as usual, got screwed.

The minimum wage has actually dropped in terms of real numbers.

If the minimum wage had grown at the same percentage rate as CEO pay, the minimum pay would be $23.03 per hour. Instead, it is $5.15, and will rise to a whopping $5.85 on July 25, 2007.

Furthermore, the average income for a family of four (adjusting for inflation) has actually dropped since 1980.

When you don't pay your workers a fair wage and, therefore, get to keep more of the business' profits, that's what happens. Some people will respond: hey, it's the owner's business, he should be able to do what he wants! Really? Should he be able to hire illegal aliens just to keep costs down? Should he be allowed to ship entire successful industries, industries that formed the backbone of the American economy, overseas?

Shipping Jobs Overseas

During the Clinton era in the 1990s, the most promising field for American workers was computer programming. From 1990 through 1999, during the heart of the computer and internet explosion, mainframe computer programmer's incomes raised from an average of $33,111 to just over $62,000 per year. More highly skilled workers who were well-schooled in internet programming, could earn well in excess of $125,000.

By 2001, however, the average pay of mainframe programmers had dropped from $62,000 to just under $45,000. Internet programmers saw an even more precipitous drop, down from six figures to just over $60,000.

What happened? Did computers go away? No. Did the internet disappear? Well, you are reading this article on the 'net, so obviously not.

Outsourcing consultant Michael Corbett says "off-shoring," otherwise known as the trend to send American jobs to low-wage centers like India and China, is now growing by 20 percent annually.

Corbett stated "I think we're really in the middle of a very fundamental transformation of business, of work, of careers," and went on to say "I think we need to assume it's going to be very painful."

So, why is this happening if it is so painful to the average American? Well, it's happening because automakers, software manufacturers and sneaker makers can get cheap, cheap labor in Mexico, China, Russia, and southeast Asia which enables those moguls to become even richer than they were a decade ago. To wit:

• Phil Knight of sneaker manufacturer Nike, who has all of his sneaks made in Vietnam and Indonesia (average pay: 40 cents an hour), is now worth $7.4 billion.
• Over the past thirty years, Ford Motors has cut over 50,000 jobs in America and relocated them to Indonesia, Malaysia, Vietnam, Thailand and the Philippines. Ford CEO Alan Mulally was paid $39.1 million for his four months of work in 2006, while ex-auto workers look for work in the tire department of Wal-Mart.

In 1978, the highest paid Chief Executive officer in America was David Mahoney of Norton Simon. He earned $2 million.

By 1988, the top executive now earned a whopping $40 million. Interestingly, that executive, Michael Eisner of Disney, as the Chairman of the Board of the Company, essentially decided for himself just how much he would be paid.

By 2000, the top executive pay belonged to Steve Jobs of Apple, who earned a total of $381 million.

Guess where that money came from? Regular schmucks like us.

There are obviously a plethora of issues surrounding the ongoing federal debate concerning the 10 to 20 million immigrants who are in this nation illegally. But one fact is clear: the presence of illegals has held down real wages for both skilled and unskilled American workers.

Illegal immigrants work primarily in the construction, restaurant, landscaping and hospitality industries. In each of these industries, there has been an average decrease in real wages over the past quarter of a century. This is especialy true in the residential construction industry in Texas, Arizona and New Mexico, where illegals will work for as little as $5.00 per hour while skilled American carpenters, masons, roofers, and laborers used to command upwards of $20.00 to $30.00 per hour. Construction business owners, both large and small, thus have a strong incentive to hire the much cheaper illegals to save costs and ultimately increase their profit on jobs.

And the effect on American construction workers? Well, it starts with unemployment, which pays better than the wages that builders are willing to pay. After that, well, it can get worse. Why do you think there are a million black men in jail in this country? Could it have something to do with the fact that there are no decent paying jobs available to them because so many of those jobs have been taken by illegals? Many support that viewpoint.

The bottom line is this: American Capitalists have spent the past 400 years searching for one thing and only one thing: cheap labor and low taxes. When the Southern plantation owners enslaved Africans whom they did not have to pay, they became wealthy beyond anyone's dreams. When slavery was outlawed -- and these magnates had to actually pay workers -- many turned to employing children as young as six to work in their fields, factories, railroads and coal mines. That is how the Vanderbilts, the Morgans and the Rockefellers were able to build all of those 125 room mansions in Newport: on the backs of child labor.

Now, years after the advent of the child labor laws, minimum wage and hour regulations, and the unionization of most skilled trades, those seeking even greater weath have found a new source of cheap labor: illegal aliens.

One has to wonder how much longer this can go on without it causing the entire American middle and working classes to disappear entirely.