The Great Divide Just Gets Wider

timwilliams By timwilliams, 1st Apr 2014 | Follow this author | RSS Feed | Short URL
Posted in Wikinut>News>World

The income disparity gap continues to widen just because of the practices of wall Street and a political system that encourages the great divide.

The Great Divide Just Gets Wider

The enormity of the greatest income disparity gap in history continues to displace millions of Americans into a realm of reality far removed from the hopes and dreams of being able to achieve the American Dream. Whose to blame for the economic windfall for the 1% while the rest of us languish in desperation for any crumb to be handed down to us by the trickle down theorists? One would think that the U.S. stock market and those to big to fail banks all are complicit in rigging the economy in favor of an already elitist few. And they would be right. But, we can't rule out our most astute wondrous most esteemed leaders in Washington either.

We have been led to believe that government spending has crowded out private investment as the prime reason why the economy is as perilous as it is. We also are led to believe that our government is so big that it discourages private investors from competing in the marketplace. The fact of the matter is that Wall Street has been on a feeding frenzy for some time now it continues to dominate the finance sector more than any other facet of the economy. What this does is crowding out many important public investments. The deregulation of the financial sector of the past few years promoted by both Republican and Democratic administrations has virtually changed America overnight from an economy focused on sustainable growth to a free for all for the wealthy, the 1%.

Today, we are faced with a casino like market that dominates the finance sector that is actually crowding out important public investments. This deregulation of the financial sector that has brought about this change is called "financialization." The financial sector has grown to over 10% of GDP, A jump of over 6% from when Reagan was President. With the financial sector growing by leaps and bounds the problem lies with the fact that the rest of the economy has only continued so move backward. The imbalance continues to widen that gaping income disparity gap.

When we take a closer look at what financialization does it really causes too many problems. The first one is the fact that the financial industry really doesn't produce middle class wage earning jobs. It only disproportionately benefits the 1% and not the rest of the population. The second concern is the financial industry is extremely myopic when it comes to economic trends. For example: One study finds that the growth of the financial sector has decreased long-term investment in the real economy because financiers work in short-term gains and losses. Third and finally, financial "innovations" like securitization and derivatives have freed trading markets to grow unconstrained by the actual amount of stocks, bonds, and commodities in the real economy. Need we remind everyone that it was the mortgage-backed market that crashed in 2008 setting off one of the greatest financial grasp the scope of this phenomenon.

As a consequence of the rise of all this financialization is that there is less money available for government investment in the real economy. Direct federal investment is already constrained by fiscal dysfunction, so indirect investment is even more important. When the Federal Reserve tries to pump up the economy through easy money, that easy money flows disproportionately to the supercharged investment in the financial sector. The banks end up using it to backstop trading businesses, rather than lending it to productive enterprises that generate jobs in the real economy. State and local governments, already strapped by tax bases decimated by the Great Recession, have to compete with the financial industry, since investing in Wall Street is more profitable than investing in Main Street. The financial sector’s preference for the trading markets means that small businesses and households, the bulwark of state and local government tax bases, lose out in the competition for investment. As a result, critical public infrastructure investments have been ignored.

One study estimates that our infrastructure system needs over a $3.6 trillion investment just for the next over six years. In South Dakota, Alaska, and Pennsylvania, water is still transported via century-old wooden pipes. Large portions of U.S. wastewater capacity are more than half a century old. And in Detroit, some of the sewer lines date back to the mid-19th century. Government investment in research and development has plummeted, and this will not be replaced by private investment that must compete with the short-term returns from capital investment in trading. The harsh reality of all this si that public investment in the United states has hit the lowest level since 1945. When we really think about it public funding for investment like science and research actually produce huge benefits. Not to many people even realize that the Internet was a product of government research which has produced tens of trillions of dollars in economic output. Today, public spending in the U.S. is far below the international average and the rise of finance is part of the cause.

When we take a closer look at Wall Street today we find elite traders have been buying access to a high speed Internet network that allows them to figure out what many other investors and brokers have just ordered. The speed in which these elite brokers have at their disposal allows them to order what you are trying to buy first and then raise the price before your order is complete. What this all means is that the insiders are now able to move much faster than you. They are able to see your order and play it against other orders. This new reality or "front running" as it is now called is completely legal. The whole process takes less than a fraction of a second. With the aid of today's computers that are capable of masterminding the whole thing that fraction of a second is enough time to walk away with millions. Insider trading is alive, well and now it seems legal. So much for Martha Stewart.

What may also come as no surprise is that our illustrious legislatures in Congress have at their disposal what is commonly called the "Mayflower Maneuver" inside information that is almost impregnable to where they can access trades making themselves richer in the process. Today's congressmen keep getting wealthier because of their access to inside information on which stocks will come out ahead.

With Wall Street and our own Congress gobbling up hordes of cash the voting public is under assault. This time by the Super-Pac Republican backers that are already in the process of manipulating ballot boxes all across the country. They have already been successful in many areas to alter the way people are able to vote. When we look back in the history of the United States there have been many changes that have come to pass to the right to cast your ballot.

Back in the 18th century it was defined that only male landowners had the right to vote. When the Civil War ended Carpetbaggers from the north came to many southern states and manipulated the politics and voter rights of the now free African Americans. It wasn't until the end of the 19th century that the Women's Suffrage movement began that brought a gradual acceptance for women to have the right to vote. By 1920 with the passage of the 19th Amendment to the United States Constitution women now were able to vote. The 19 Amendment states "The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of sex."

All that the citizens have accomplished through-out the tumultuous history of America is being undermined by these Super-Pac Republican backers. today. What we have all gained to ensure our right to vote guaranteed by the Constitution is being dismantled by a carefully orchestrated set of political posturing by the wealthiest few backers of one political party. This for the sole purpose of swaying elections in favor of that one party. The great divide continues to divide a nation.

To clarify what is actually occurring is that in the election of 2008 many African-Americans, Hispanics and low income citizens voted more democratic which put President Obama in the White House. The Republican response, seeing an opportunity to regain Republican control set out to reshape the electorate in favor of the Republicans. How they are doing is by complaining of voter fraud and thereby seeking to instill voter ID's issued to validate a person is eligible to vote. Of course obtaining an ID requires many to obtain birth records. It was just recently in Florida that driver license renewals required original birth certificates and other documents just to renew a drivers license. In so many cases too many people were unable, couldn't afford to send away for copies, or found out that the original documents were lost due to time and distance. Therefore the hardship whether financial or emotional was a burden that many people found out that they couldn't renew a drivers license they have had for years. Incidentally, when a state legislature tried to renew his drivers license after that bill was passed he had such a difficult time in doing so he sponsored a bill to overturn that original bill. It was passed just recently. Now the Republican's are again on the attack. Seeking to wither away at a strong Democratic base by targeting the poor, the African American, the Hispanic population and any other ethnic group that supports any political party other then the Republican agenda.

It is a know fact that in America today the minorities, the low income population and seniors are the ones less likely than other Americans to have government issued identification like a drivers license. In some cases older African Americas that were born in the south during the Jim Crow segregation they might not have the proper birth certificate of the kind now mandated to obtain a simple drivers license or a state issued ID card. These are just some of the roadblocks in the way that will make voting almost impossible. This when in fact voting is a constitutionally protected right. To infringe or abridge that right for no demonstrable reason has be considered a crime against democracy.

As for Hispanics this infringement on their right to vote more the 10 million eligible voters already in the United States would be denied the right to vote. Just think of the ramifications when large segments of the population now become ineligible to vote. This would change the whole landscape of politics and place elections squarely in the hands of one party. The Great divide only gets wider.


The Economy, The Right To Vote, Wall Street

Meet the author

author avatar timwilliams
I am a feature writer for The Tampa Bay Examiner and The American chronicle. Earned Ph.D in Economics

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author avatar Fern Mc Costigan
2nd Apr 2014 (#)

Excellent post and very true and sad reality

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