What y'all have to keep in mind is that we live in a country where the economy is more or less "run" by a banking cartel - the Federal Reserve. While the Fed's purpose is ostensibly to promote economic stability and prosperity, the way they attempt to bring it about is first, foremost, and always by creating money and funneling it to the financial sector, who gets to spend it before prices have a chance to inflate due to the new money being created. It is not a coincidence that the increasing wage gap is being driven primarily by an increase in the wealth of the financial sector.
The Fed's policies are mostly geared towards stimulating the stock market. By holding interest rates down, they incentivize investment in the stock market at the expense of the value of the dollar. The primary beneficiaries of all this are shareholders (mostly wealthy people) and corporate management (whose pay is tied to stock price). Those who are not heavily invested in the stock market (the lower and middle class) have the value of their wages devalued by inflation from all this money the Fed creates. This perpetuates the wage gap.
When all the imbalances created by these artificial stock market booms lead to busts, the financial class can count on being bailed out by the Fed and the U.S. Treasury, paid for by the middle class (mostly through the "inflation tax").
The middle class has also suffered from massive increases in the price of education and medical care after third-party payer schemes (Medicare, HMOs, Federal student loans, etc.) were instituted by the government in those areas of the market.
Seeing how the financial sector is made up entirely of large corporations, it is worth scrutinizing exactly what a corporation is. It is a government-chartered entity that is treated by the State with the rights of an individual, plus special government-granted privileges that give them many advantages in the marketplace. Government at all levels raises many barriers to entry in the marketplace, in the form of licenses, regulations, paperwork, and a complicated legal environment that prevent people from "bootstrapping up" and competing with established corporate interests.
American workers have the price of their labor artificially driven up by the cost of government regulation, which does not correspondingly add to the value of their labor. This lowers the demand for their labor, and erodes their competitive and comparative advantage in the world marketplace.
One way in which laborers can increase their bargaining power is labor unions. When they were unregulated, unions became quite powerful in the late 19th/early 20th Century. This scared the corporate interests enough that they got Congress to enact binding arbitration laws, which limit the negotiating power of unions by placing disputes between capital and labor under the authority of government arbitrators. Unions have also been harmed in more recent times by Right to Work laws, which when applied to private sector unions, limit free association and the right to contract between employers and employees by prohibiting them from mutually agreeing on terms that require employees to pay union dues as a condition of employment. This creates a huge free rider problem for unions, since employees get the benefit of union representation without having to pay for it.
Last but not least, the government-run education system in this country is geared toward creating an obedient populace who are well suited to the lower rungs of corporate hierarchy, and are smart enough to make money for their bosses but not smart enough to figure out how the political, economic, and financial systems of this country really work or who they benefit.
Some may wonder how the government has been allowed to create such an inequitable system, being that we have a representative government. The answer is the problem of diffuse costs and concentrated benefits, which plagues every representative government that has few restraints on its power, like our government has over the economic system. If a law can be written that provides a great benefit to a select few and spreads the cost over everyone, the class that benefits has a strong incentive to contribute money to the cause and lobby for it, while the average taxpayer isn't sufficiently impacted by any single law enough to devote the kind of resources it takes to defeat it. The answer of course is to limit the authority of the government over such matters. If they didn't have the power to meddle with economic system for the benefit of monied interests, the money and lobbyists would disappear from the system.
The Fed's policies are mostly geared towards stimulating the stock market. By holding interest rates down, they incentivize investment in the stock market at the expense of the value of the dollar. The primary beneficiaries of all this are shareholders (mostly wealthy people) and corporate management (whose pay is tied to stock price). Those who are not heavily invested in the stock market (the lower and middle class) have the value of their wages devalued by inflation from all this money the Fed creates. This perpetuates the wage gap.
When all the imbalances created by these artificial stock market booms lead to busts, the financial class can count on being bailed out by the Fed and the U.S. Treasury, paid for by the middle class (mostly through the "inflation tax").
The middle class has also suffered from massive increases in the price of education and medical care after third-party payer schemes (Medicare, HMOs, Federal student loans, etc.) were instituted by the government in those areas of the market.
Seeing how the financial sector is made up entirely of large corporations, it is worth scrutinizing exactly what a corporation is. It is a government-chartered entity that is treated by the State with the rights of an individual, plus special government-granted privileges that give them many advantages in the marketplace. Government at all levels raises many barriers to entry in the marketplace, in the form of licenses, regulations, paperwork, and a complicated legal environment that prevent people from "bootstrapping up" and competing with established corporate interests.
American workers have the price of their labor artificially driven up by the cost of government regulation, which does not correspondingly add to the value of their labor. This lowers the demand for their labor, and erodes their competitive and comparative advantage in the world marketplace.
One way in which laborers can increase their bargaining power is labor unions. When they were unregulated, unions became quite powerful in the late 19th/early 20th Century. This scared the corporate interests enough that they got Congress to enact binding arbitration laws, which limit the negotiating power of unions by placing disputes between capital and labor under the authority of government arbitrators. Unions have also been harmed in more recent times by Right to Work laws, which when applied to private sector unions, limit free association and the right to contract between employers and employees by prohibiting them from mutually agreeing on terms that require employees to pay union dues as a condition of employment. This creates a huge free rider problem for unions, since employees get the benefit of union representation without having to pay for it.
Last but not least, the government-run education system in this country is geared toward creating an obedient populace who are well suited to the lower rungs of corporate hierarchy, and are smart enough to make money for their bosses but not smart enough to figure out how the political, economic, and financial systems of this country really work or who they benefit.
Some may wonder how the government has been allowed to create such an inequitable system, being that we have a representative government. The answer is the problem of diffuse costs and concentrated benefits, which plagues every representative government that has few restraints on its power, like our government has over the economic system. If a law can be written that provides a great benefit to a select few and spreads the cost over everyone, the class that benefits has a strong incentive to contribute money to the cause and lobby for it, while the average taxpayer isn't sufficiently impacted by any single law enough to devote the kind of resources it takes to defeat it. The answer of course is to limit the authority of the government over such matters. If they didn't have the power to meddle with economic system for the benefit of monied interests, the money and lobbyists would disappear from the system.
