"[M]oney does not sit in average American pockets. The global economic recession," Ad Age relates, has thrown "a spotlight on the yawning divide between the richest Americans and everyone else." ...



The "incomes of most American workers have remained more or less static since the 1970s," while "the income of the rich (and the very rich) has grown exponentially."



The top 10 percent of American households, the trade journal adds, now account for nearly half of all consumer spending, and a disproportionate share of that spending comes from the top 10’s upper reaches.

“Simply put,” sums up Ad Age’s David Hirschman, “a small plutocracy of wealthy elites drives a larger and larger share of total consumer spending and has outsize purchasing influence-- particularly in categories such as technology, financial services, travel, automotive, apparel, and personal care.”



America as a whole, the new Ad Age study pauses to note, hasn’t quite caught up with the reality of this steep inequality. Americans still “like to believe in an egalitarian ideal of affluence” where “everyone has an equal shot” at “amassing a great fortune through dint of hard work and ingenuity.”



In actual life, the new Ad Age study points out, “the odds of someone’s worth amounting to $1 million dollars” have shrunk to “1 in 22.”



The new Ad Age white paper makes no value judgments about any of this. The ad industry’s only vested interest: following the money, because that money determines who consumes.



“As the very rich become even richer,” as Ad Age observes, “they amass greater purchasing power, creating an increasingly concentrated market for luxury goods and services as well as consumer goods overall."



In the future, if current trends continue, no one else but the rich will essentially matter-- to Madison Avenue.



“More than ever before,” the new Ad Age paper bluntly sums up, “the wealthiest households will be the households with significant disposable income to spend.”

Evidence of how the rich prosper while everyone else struggles with inflation, public spending cuts and static wages arrives almost daily. The Institute for Fiscal Studies reports that last year incomes among the top 1% grew at the fastest rate in a decade.



According to the Sunday Times Rich List, the top 1,000 are £60.2bn better off this year than in 2010, bringing their collective wealth close to the record pre-recession levels.



Now comes a report this week from the High Pay Commission, set up by the Labour pressure group Compass. It reveals that FTSE 100 chief executives are on average paid £4.2m annually, or 145 times the median wage-- and on current trends will be paid £8m, or 214 times the median, by 2020. In the financial sector, even the CEO can seem modestly rewarded: this year, the top-paid banker at Barclays will get £14m, nearly four times the chief executive's earnings and 1,128 times more than the lowest-paid employee receives.



Meanwhile, once inflation is taken into account, most people's incomes are set to fall, after 15 years of virtual stagnation. Between 1996-7 and 2007-8, the earnings of someone in the middle of the income distribution rose (1997 prices) from £16,000 to £17,100-- barely £100, or less than 0.7% a year. Even the increase for those quite near the top of the income scale, better off than 90% of their fellow citizens, was unspectacular. Their inflation-discounted pay crept up from £36,700 to £41,500, or less than £450 (1.2%) a year. The top 0.1% scooped the jackpot. They got a £19,000 pay rise every year, taking their incomes to £538,600, a gain of 67% over 11 years. The commission gives no figures for the top 0.01%, but we can be confident they did even better and dramatically so.



That is the most important point about what has happened to incomes in Britain and America during the neoliberal era: the very rich are soaring ahead, leaving behind not only manual workers-- now a diminishing minority-- but also the middle-class masses, including doctors, teachers, academics, solicitors, architects, Whitehall civil servants and, indeed, many CEOs who don't run FTSE 100 companies, to say nothing of the marketing, purchasing, personnel, sales and production executives below them.



...[W]hy can't leftwing parties harness middle-class anger against the super-rich? Surveys show a substantial majority of the electorate agree that differences in income are too large and that ordinary people don't get a fair share. Only one in eight disagree. Why is this so difficult to translate into a political programme that could command mass support?



One reason why the working classes so often disappointed the left was that, having little daily contact with the rich and little knowledge of how they lived, they simply didn't think about inequality much, or regard the wealthy as direct competitors for resources. As the sociologist Garry Runciman observed: "Envy is a difficult emotion to sustain across a broad social distance." Nearly 50 years ago he found manual workers were less likely than non-manual workers to think other people were "noticeably better off." Even now most Britons underestimate the rewards of bankers and executives. Top pay has reached such levels that, rather like interstellar distances, what the figures mean is hard to grasp.



But the gap between the richest 1% or 2% and everybody else in the top 20% or 30% is now so great and growing so rapidly that, one might reasonably think, it should change the terms of political trade. The income distance may be huge but the social distance is not. Those in the top 2% and the next 28% have often been to the same schools and universities. More important, they compete for scarce resources: places in fee-charging schools, houses in the best areas, high-end personal services. The super-rich have provoked raging inflation in the prices of these goods. Many of the not-so-rich were born into the professional classes and high expectations. Now, to their surprise, they find themselves struggling. In income distribution, their interests are closer to those of the mass of the population than to people they once saw as their peers.



They are not, however, imminently likely to join a crusade for equality. This generation of the middle classes has internalised the values of individualist aspiration, as zealously propagated by Tony Blair as by Margaret Thatcher. It does not look to the application of social justice to improve its lot. It expects to rely on its own efforts to get ahead and, crucially, to maintain its position.



As psychologists will tell you, fear of loss is more powerful than the prospect of gain. The struggling middle classes look down more anxiously than they look up, particularly in recession and sluggish recovery. Polls show they dislike high income inequalities but are lukewarm about redistribution. They worry that they are unlikely to benefit and may even lose from it; and worse still, those below them will be pulled up sufficiently to threaten their status. This is exactly the mindset in the US, where individualist values are more deeply embedded. Americans accepted tax cuts for the rich with equanimity. Better to let the rich keep their money, they calculated, than to have it benefit economic and social inferiors.



As Runciman observed, "most people's lives are governed more by the resentment of narrow inequalities, the cultivation of modest ambitions and the preservation of small differentials" than by the larger picture of social justice. That applies as much to the professional as to the working classes.



But as the super-rich stretch further ahead, appropriating, with the assistance of a Conservative-led government, ever increasing proportions of national resources, Ed Miliband and Labour have the opportunity to build a new cross-class consensus for a more equal society. "The squeezed middle" may be a concept that lacks both precision and passion, but at least it shows Miliband is thinking along the right lines.

Paul Ryan never held an honest job in his life. Living on his dead father's Social Security benefits-- something he would deny people in his position today-- he managed to get through college, where he was a frat rat at Miami University (Ohio). Before being inspired by Ayn Rand and figuring out how to exist at the public trough, he worked as a "marketing consultant" for his family's construction business, the only claim he can make of ever having had an actual job. If you watchyou probably know a little something about the way marketing consultants' minds work. He isn't the only Republican Member of Congress from that dubious, manipulative field of endeavor.It can be dangerous for political elites to make the same assumptions about humans as marketers and ad men do. Ryan and his GOP cronies assumed that struggling middle class pensioners would buy his plan to ax Medicare and Medicaid if it just happened to future generations and not to them. That may make no sense to readers of this blog but it's certainly how a fan of Ayn Rand-- or any Republican-- would think. It appears to have shocked Ryan and Boehner when it blew up in their faces , the advertising industry’s top trade journal, just declared that the age of mass affluence is over and that only the rich matter now . The race is on-- inside corporate boardrooms, on Madison Avenue and Inside the Beltway-- to drag the country back to one of its most horrific and anti-democratic periods, the "roaring" twenties. Already, as Sam Pizzigati points out on his blog, in the view of's David Hirschman --This is spilling over into our politics as well, and it is at the heart of the Republican Party agenda.So what's keeping middle class Americans who are being turned into losers by corporate-owned politicians-- basically the entire GOP and a hefty chunk of the Democratic Party-- from reacting with due fury? Ironically, the tea party movement-- though manipulated and channeled by the same plutocratic powers that are the authors of their misery-- is, at its heart, just that. But, despite the tricornered hats, it's not exactly a revolutionary movement, but more a reactionary diversion.Last week Peter Wilby asked in thewhy the vanishing middle class isn't more angry. His conclusion: Anxiety keeps the super-rich safe from middle-class rage . His article is about Britain, but every statistic he cites is relevant worldwide and is far worse in the U.S.Here in the U.S. it looks like the GOP has overreached-- both in terms of Paul Ryan's ghastly and overwhelmingly unpopular budget plan and at the state level, where fascist-oriented governors in Ohio, Wisconsin, Michigan, New Jersey and Florida are destroying their own parties. If the GOP is counting on Democratic Party timidity, incompetence and conflicted allegiance to the same corporate powers that rule their own roost... well, it's probably a very good bet. Watch Steny Hoyer and Joe Biden, two career-long, fully dedicated corporate whores, give away the Democratic advantage over the next week.

Labels: economic inequality, income disparity