"The rich weren't just getting richer; they were becoming financial foreigners, creating their own country within a country, their own society within a society, and their economy within an economy. They were creating Richistan." -- From Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich, by Robert Frank
Robert Frank publishes the Wealth Report, a daily blog that focuses on the lives of the wealthy in this nation -- particularly within their cultural and economic spheres. In a recent article he asks a very meaningful and appropriate question: Do the rich need the rest of America? This made me start thinking, I mean really focusing on what he meant by that. In a 1963 speech, President John F. Kennedy said "a rising tide lifts all boats" to counter criticism about a dam project he was dedicating when opponents suggested it was a pork barrel project. The essence of the statement was, and still is, that economic growth, which raises the GDP of the entire economy, will also raise the incomes of all of the individuals within the economy. But Frank contends that last year was a true watershed, or turning point, for this nation. In his own words, "...last year, the U.S. economy experienced a surprising decoupling." The elite...the rich...corporate America decided it no longer needed you and me.
With sovereign boundaries no longer a hindrance to global expansion and the flow of capital unhindered within most of the industrialized world, the rich and elite take advantage of cheap overseas labor and set-up factories outside the United States that produce products for emerging markets around the world. Under today's rules of globalization, when our government lavishes generous tax cuts upon the wealthy, these investors don't plow their tax savings into factories and other capital infrastructure in our country -- to benefit our workers -- but instead build plants and manufacturing operations in third-world nations in order to take advantage of below subsistence labor rates. Unlike in bygone years, these tax reductions don't -- repeat, do not, get recycled and benefit American workers through job creation. With China and India both on the verge of developing huge appetites for consumables due to their increasingly larger middle-class and urban working-class populations, it seems the currently largest consumer market in the country, the United States, is being scrutinized and leveraged for whatever it has left to offer.
Essentially, the only manufacturing we have left in this country revolves around the making of weapons-of-destruction, which in order to be profitable and marketable (to be "consumable") requires the ongoing creation of wars and conflicts. War is profitable, make no mistake about it. No, not for us, the taxpayer bearing the burden of paying for them, but certainly for the banking cartel and other multinational corporations that thrive the most during these periods. This is one reason the rich get richer, and you and I get poorer.
It seems even the military edge is no longer a trump card for economic expansion. During the last sixty years, in return for receiving a disproportionate amount of the gains from economic growth in our capitalist system, the rich paid a disproportionate percentage of the taxes needed for public goods and a safety net for the majority. Needing both consumers to buy their goods, and people to serve in the armed forces, that unsaid contract created a somewhat "symbiotic relationship" between the elite and the masses. But things have rapidly changed. Not only is the consumer market not as profitable, or needed, but the outsourcing of military-might -- the privatization of the military -- is becoming more of a potential threat. The rich, no longer bound by natural or financial borders, have segregated themselves from the rest of America in ways I've never considered.
As Michael Lind writes in a article from Salon, maybe we're entering an era where Americans will emigrate to other shores in order to find a better life. Maybe it's our turn to be the undesired immigrant. To read more about this, click here.