Weekly Audit: Wall Street Destroyed $8 for Every $1 Earned

by: The Media Consortium

Tue Jan 25, 2011 at 11:29


by Lindsay Beyerstein, Media Consortium blogger

Tonight, President Barack Obama will deliver his State of the Union address. A major theme of the speech will be jobs and the economy. Let's hope the president spares a few minutes for Wall Street reforms that might prevent a repeat of the economic collapse that we're slowly starting to recover from.

 
The Media Consortium :: Weekly Audit: Wall Street Destroyed $8 for Every $1 Earned

As Kai Wright points out in ColorLines, the State of the Union is the unofficial kickoff of the 2012 election season:

The still churning foreclosures and mounding debt in black and  brown neighborhoods don't suggest a stabilized economy anywhere except  Wall Street, but let's set that familiar fight to the side for now. The  point is that whether we're talking about creating jobs or seating  district court judges, the time for making policy is gone. Starting  tomorrow night, it's all talk until we vote next.

Amy Dean of Working In These Times shares Wright's skepticism. With the Republicans in control of the House and the Democrats hanging on to the Senate, we're looking at a legislative stalemate until the next election. Dean argues that activists should use this lull in the action to refocus their organizing at the grassroots level.

Wall Street destroyed $8 for every $1 it earned

In AlterNet, Les Leopold asks  why bankers are earning such huge bonuses while the financial system is in disarray. According to standard   economic theory, your compensation reflects the value of your work. Yet,   according to Leopold's back-of-the-envelope calculations, the  financial  sector has destroyed $8 worth of wealth for every dollar it  earned over  the last 5 years. His estimate includes the  wealth-destroying impact of  the subprime mortgage crisis and other epic  Wall Street blunders.

The  free market might not be as generous with bankers as the current  system  of government bailouts. If financial firms were allowed to  fail,  Leopold notes, bankers who drove their own firms out of business   wouldn't get paid. However, under the current "too big to fail" rules   bad decisions lead to taxpayer rescues, not unemployment. So, the bonus   checks keep rolling in.

Social Security switcheroo

James Ridgeway of Mother Jones predicts that Obama is gearing up to cut Social Security:

Having "retooled'' his Presidency for a more open accommodation of the  center right, Obama will soon be overseeing the battle to launch a  dismantling of the Social Security system. [...] Without entirely destroying the popular program, he will support cuts  that go beyond anything that should rightly happen during a Democratic  administration.

Ironically, Ridgeway notes, our current Democratic president is to the right of many of yesterdays conservative Republicans. The legendary arch conservative Sen. Robert A. Taft (R-OH) was a staunch defender of Social Security. Republican President Dwight Eisenhower spearheaded the largest expansion of Social Security in the largest expansion of benefits in the history of the program.

Michelle Obama and Wal-Mart

Michelle Obama has enlisted the world's largest corporation (and largest grocer) in her Let's Move! campaign against childhood obesity. George Warner of Campus Progress takes a closer look at the skewed economics behind the "Nutrition Charter" signed by Wal-Mart last week. Amongst other things, Wal-Mart pledged to cut added sugar in its products by 10% by 2015; make healthy food more affordable; and develop a "nutrition seal" to alert shoppers to ostensibly healthier foods.

Yet, Warner notes that Wal-Mart is contributing to ill-health by employing a massive workforce at less than a living wage. Even if Wal-Mart follows through on its relatively modest pledges to promote healthy eating, it continues to put its own workforce at risk of ill health simply by paying them poverty-level wages. Studies show that for every job a new Wal-Mart store creates, it destroys three existing jobs, which paid an average of 18% more.

Poverty is one of the strongest predictors of obesity and poor diet.

Beck vs. Piven, Round 2

Last week, the Audit covered a bizarre right wing trend of demonizing 78-year-old CUNY political science prof Frances Fox Piven for an article she wrote in 1966. Glenn Beck and other leading lights of the right claim that Piven's 45-year-old article is being used right now by liberal elites in their sinister plot to violently overthrow capitalism.

Piven is receiving death threats by email; and death threats are popping up on Glenn Beck's website, including: "Snap her little chicken neck. This pinko filth needs a long dirt nap."; "Somebody tell Frances I have 5,000 rounds ready.", and "We should blow up Piven's office and home."

In actuality, Piven's article argued that everyone who was eligible for welfare should sign up for benefits in order to expose the structural flaws in the system. Say what you will about the plan, it was non-violent. It involved a lot of paperwork. Far from overthrowing the federal government, Piven sought to usher in a federal guaranteed federal income as an alternative to the patchwork of state and local welfare agencies doling out benefits.

Matthew Rothschild reports in the Progressive that the Center for Constitutional Rights has sent a letter to Roger Ailes of Fox News asking him to reign in the anti-Piven demagoguery.

This post features links to the best independent, progressive reporting about the economy by members  of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.


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