Posts Tagged ‘workers’

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If there ever was an argument in support of Medicare for All it’s this: despite spending more on health care than any other country, the United States has seen increasing mortality and falling life expectancy for people ages 25 to 64, who should be in the prime of their lives.

A new report published in the Journal of the American Medical Association paints a bleak picture: overall life expectancy in the United States, which had increased for most of the past 60 years, has actually fallen for three consecutive years. But this is not just a recent trend. U.S. life expectancy began to lose pace with other countries in the 1980s, and, by 1998, had declined to a level below the average life expectancy among Organisation for Economic Cooperation and Development countries. While life expectancy in these countries has continued to increase, American life expectancy stopped increasing in 2010 and has been actually decreasing since 2014.*

The recent decrease in U.S. life expectancy was largely related to increases in all-cause mortality among young and middle-aged adults, as against other groups (infants, children, and the elderly) for whom mortality rates have declined. For individuals aged 25 to 64 years all-cause mortality rates were in decline in 2000, reached a nadir in 2010, and increased thereafter.

But the roots of the crisis in U.S. life expectancy go back further in time. Midlife mortality rates for a variety of specific causes (e.g., drug overdoses and hypertensive diseases) began increasing earlier. But they weren’t reflected in all-cause mortality trends because they were offset by large, simultaneous reductions in mortality from ischemic heart disease, cancer, HIV infection, motor vehicle injuries, and other leading causes of death. However, increases in cause-specific mortality rates before 2010 slowed the rate at which all-cause mortality decreased (and life expectancy increased) and eventually culminated in a reversal. The end result was that all-cause mortality increased after 2010 (and life expectancy decreased after 2014).

The authors of the report make it clear that deficiencies in the healthcare system explain increased mortality from at least some conditions.

Although the US health care system excels on certain measures, countries with higher life expectancy outperform the United States in providing universal access to health care, removing costs as a barrier to care, care coordination, and amenable mortality.

Radically transforming the way healthcare is financed, such as is proposed in the U.S. Medicare for All Act of 2017 Health Insurance Program, would go a long way to reversing the decline in life expectancy in the United States. It would eliminate the financial barriers to decent healthcare, providing everyone with access to hospitalization, primary and preventative services, prescription drugs, and other services (such as oral health, audiology, and vision services), and so on. 

But, we have to admit, universal health insurance is not by itself going to solve the problem in the United States. One reason, of course, is that one cause of the decrease in life expectancy is the surge in drug overdose deaths that began in the 1990s, which came out of the private, profit-seeking U.S. healthcare industry itself.**

The increasing mortality and falling life expectancy among young and middle-aged Americans were exacerbated by other dimensions of U.S. capitalism. We know, for example, that, since the late 1970s, income inequality widened, surpassing levels in other countries, concurrent with the deepening U.S. health crisis. Moreover, those most vulnerable to the new economy (e.g., adults with limited education and younger men) experienced the largest increases in death rates as did those who worked in areas suffering economic dislocation, such as rural U.S. areas and the industrial Midwest. While the authors admit that the causal links have not been firmly established, they do observe that “Socioeconomic pressures and unstable employment could explain some of the observed increases in mortality spanning multiple causes of death.”

It’s not just a matter of absolute income or net worth. According to the report, the causes of economic despair may be more “nuanced,” stemming from “perceptions and frustrated expectations” within the American working-class. Whatever hope was tied in with the American Dream has been undermined as economic inequality reached obscene levels and intergenerational mobility declined.

Moreover, these potential causes are probably not independent and may, together and in complex ways, shape mortality patterns.

major contributors like smoking, drug abuse, and obesogenic diets are shaped by environmental conditions, psychological distress, and socioeconomic status. The same economic pressures that force patients to forego medical care can also induce stress and unhealthy coping behaviors and can fracture communities.

Americans are faced, then, with an enormous problem: an economic system that, especially in recent decades, has caused mortality to rise and life expectancy to fall among young and middle-age workers; a private healthcare system that has both been inadequate to the task of caring for these people and in, the case of certain classes of pharmaceutical drugs, made the problem worse; and a system of health insurance that has left millions of people without access to healthcare.

Medicare for All represents a real solution to one dimension of the problem. But not to the other two. Unless and until the U.S. economic system (including the way healthcare is provided) is radically transformed, Americans will continue to die much too young.

 

*According to the report, Life expectancy began to advance more slowly in the 1980s and plateaued in 2011. U.S. life expectancy peaked in 2014 and subsequently decreased significantly for 3 consecutive years, reaching 78.6 years in 2017.

**It started with the introduction of OxyContin in 1996; was followed by increased heroin use, often by patients who had become addicted to prescription opioids; and then was subsequently aggravated by the emergence of potent synthetic opioids, which triggered a large post-2013 increase in overdose deaths.

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Special mention

The Siren Song of Progressive Politics  232237

Well that didn’t go so well. . .

Still, Elon Musk’s new Cybertruck would appear to be the perfect design for America’s contemporary dystopia. Its bullet-proof stainless steel alloy panels and transparent metal glass are tailor-made to keep its elite occupants safely guarded from attack. And even though the windows obviously need considerable improvement before production begins, and “despite ‘no advertising & no paid endorsement’,” Tesla has already received almost 150 thousand orders for the truck.

Clearly, there’s a lot of surplus available—in cash and loans—to the small group at the top of the U.S. wealth pyramid to purchase such vehicles.

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In fact, as we can see from the chart above, auto loans comprise more than 50 percent of the installment loan debt of the top 10 percent of American households (as of 2016, the last year for which data are available). Not so for those in the bottom 50 percent, for whom loans for vehicles make up a little more than a quarter of their installment loans. For them, the largest portion—almost two-thirds—goes to finance higher education.

Consider what this means for the Americans in the bottom 50 percent. According to the latest Survey of Current Finances by the Federal Reserve, 31 percent carry student loans and their average outstanding education debt is $34 thousand. (For those in the bottom 25 percent, it’s even worse: 40 percent of families have student debt, and their average is $43 thousand.) Just student debt is considerably more than the $23,250 average annual pre-tax income of those in the bottom 50 percent.

The only Tesla pickup they’ll be buying is the one with the shattered windows.

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The disparities in the United States are even starker when comparing the assets and liabilities of the bottom 50 percent and the top 1 percent in 2019. As can be seen in the chart above, families in the bottom half own only 6.1 of total assets but are liable for more than one-third of total debts, while the situation of those in the top 1 percent is almost exactly opposite: they have 29 percent of assets but only 4.7 percent of the liabilities.

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It should come as no surprise, then, that the net worth (excluding real estate assets and mortgage liabilities) of the bottom 50 percent of Americans is tiny ($1.1 trillion) compared to that of the the top 1 percent (more than $30 trillion).

The question is, why is the net worth of the bottom 50 percent of American households so low? As is obvious from the chart above, they don’t own much in the way of assets and their debt is much greater than that of those in the top 1 percent.

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That fundamental inequality in the distribution of wealth in the United States stems from one key factor: American workers’ wages have been stagnant for the past four decades. The average (median) real hourly wage for workers in the private sector is currently $14.99, virtually unchanged (rising only $0.62 or 4 percent) since 1979.*

So, on one hand, American workers simply don’t have the means to acquire many assets, since their wages are just enough for them and their families to get by. And when they do attempt to acquire more, for themselves or their children (in purchasing homes, paying for college, or just keeping with medical bills), they have to go into debt. Therefore, as I argued last week, without wealth of their own, workers and their children are forced to have the freedom to continue to sell their ability to work to employers in order to subsist.

On the other hand, stagnant wages mean that the value workers produce above what they receive in wages goes to their employers, who keep some and distribute the rest to those in the top 1 percent. They’re the ones who accumulate assets, while incurring relatively few liabilities.

That wealth disparity thus ends up playing two roles in the United States: it keeps assets out of the hands of workers (thus forcing them to continue to work to purchase the necessary commodities and to repay their debts) and it concentrates assets at the top of the wealth pyramid (thus permitting the top 1 percent to continue to lay claims on the resulting surplus, whether or not they work).

I have no doubt that taxing some of that wealth would support and expand the kinds of government programs that would help American workers. I’m thinking, for example, of financing universal health care, paying off student debts, providing adequate childcare, and so on. But it wouldn’t increase workers’ wages much less undo the nexus whereby, on a daily basis, most Americans are forced to have the freedom to sell their ability to work to a small group of employers.

One of those employers is, in fact, Tesla, which a California judge recently found is in violation of U.S. labor laws.

Imagine, then, an alternative scenario in which Tesla workers, who since 2016 have been battling to form a union (because of high injury rates and low wages), actually owned and ran the Fremont, California factory. The workers, and not Musk and the other members of the board of directors, would then decide what to do with the surplus. The workers themselves would become the board of directors (which might, in turn, decide to hire Musk as a day-to-day executive). The key is that the workers, as a group, would own the assets—not a tiny group of individuals at the top. The worker-owners would thus have acquired a new freedom: to work for themselves, not for someone else. That change in the way Tesla is organized would serve as an example of how to finally undo the obscene wealth inequality that for now decades now has characterized the United States.

It might also eliminate the need for those bulletproof windows.

 

*I’ll save you the arithmetic: that amounts to a pre-tax annual income of $29.980. That’s the monetary value of the customary standard of living of workers in the United States— which, as we can see, has remained virtually unchanged for the past 40 years.

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Special mention

232009  232024

Emmanuel Saez and Gabriel Zucman begin their new book, The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, with the moment in 2016 during the first presidential election debate between Donald Trump and Hillary Clinton when the former Secretary of State challenged the reality-show celebrity about how little he had paid in federal income taxes over the years. Trump proudly admitted it: “That makes me smart.” And Clinton, for all her carefully crafted technocratic proposals to fix the tax code, failed to effectively respond to Trump.

Jump ahead three years, and the issue of wealth inequality in America has risen to the top of the political agenda. Clinton lost the election, Trump is probably not worth what he has claimed, but the nation’s wealth is even more unequally distributed today—much worse even than the obscene inequalities in the distribution of income.

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In fact, according to the Federal Reserve’s Distributional Financial Accounts, the share of total net worth of the top 1 percent of American households (32.4 percent) now exceeds that of the so-called middle-class, households in the 50-90-percent bracket (28.7 percent).

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Moreover, we know that the lion’s share of the assets owned by the top 1 percent ($35.4 trillion) stems from business ($20.8 trillion)—as against the real estate holdings, consumer durables, pensions, and other assets that make up the bulk of the wealth owned by others, especially those in the bottom 90 percent.**

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It should come as no surprise then that major presidential candidates in the Democratic Party, especially Bernie Sanders and Elizabeth Warren, have proposed taxing the large concentrations of wealth at the top. Nor should we be astonished that billionaires have shed public tears over the proposed taxes or that the New York Times highlighted a fundamentally flawed Wharton School study showing that taxes on wealth would reduce economic growth by nearly 0.2 percent a year, over the course of a decade.**

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Just to illustrate the severe concentration at the top of the wealth pyramid in the United States, as well as the enormous benefit to the rest of society of using that wealth for other purposes, consider the following two-tier tax formula: a 10-percent tax on wealth over $50 million and 100 percent on wealth over $500 million. Utilizing the Wealth Tax Explorer devised by Emmanuel Saez and Gabriel Zucman, such a tax scheme would affect only 0.05 percentage of U.S. households (a total of 62,598 taxpayers) and yet it would generate in any given year a flow of revenues equal to total federal tax revenues in the United States! (And, yes, as a side benefit, it would also represent a wealth cap of $500 million.)

But that’s only one side of the story, which has been the sole focus of billionaires, mainstream economists, and political pundits. The other, perhaps even more important, side is the enormous gap between the wealth owned by the tiny group at the top and that of households who find themselves at the bottom.

wealth gap

Since 1990, the net wealth of the top 1 percent has soared to $35 trillion while the bottom 50 percent of Americans have been left with only $2 trillion. For those in the top 1 percent, what this means is they’ve managed to capture a large share of the surplus, which they’ve used to accumulate enormous assets (with relatively few liabilities), which in turn can be used to continue to get a cut of the surplus generated by workers in the United States and around the world (in addition to financing politicians and setting the rules of the game). And the bottom 50 percent? They get wages and salaries that allow them to continue to work but prevent them from accumulating much wealth (which consists, as we can see in the second chart above, mostly of real estate, and even then is largely offset by mortgages and other liabilities). Without wealth of their own, workers in the bottom 50 percent are thus forced to have the freedom to continue to sell their ability to work to employers in order to subsist.

So, yes, the small group of owners of American wealth might in fact be smart—because they sit on top of a system that generates enormous wealth, most of which they own, and which does not trickle down to those at the bottom, who continue to have to work for a living and aren’t even allowed to benefit from programs financed by taxes on the concentrated wealth at the top.

But all the smarts in the world can’t hide the essential injustice and unfairness of the grotesquely unequal distribution of wealth in the United States. The discussion to change the system may begin with taxes but it won’t end there. It has to be aimed at both the economic institutions that are the root cause of that inequality and the ideas that serve to justify the obscene degree of inequality in the United States and to undermine any and all attempts to reform it.

Any candidate who makes that clear will be one worth voting for.

 

*In fact, as I showed back in 2018, specifically business-related wealth is even more unequally divided than total assets. For example, in 2014, the top 1 percent owned almost two thirds of the financial or business wealth, while the bottom 90 percent had only six percent.

**The article failed to note two flaws in the analysis: (1) that wealthy Americans would invest less in order to avoid accumulating wealth that would be subject to the tax (as if all their savings were directed into growth-inducing investments as against equity shares, art, and other forms of conspicuous consumption) and (2) that all the revenue raised by a wealth tax will go toward reducing the federal debt (and not, as Sanders and Warren have proposed, to providing universal childcare, tuition-free college, and other social programs).