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A Tale of Two Economies

A Tale of Two Economies

April 11th, 2011 // 5:56 am @

The United States currently houses two economies, and they are drastically different. The regular people have to deal with the following realities:

  • Energy costs are still going up, and may skyrocket in the wake of nuclear problems and the impact of the Arab uprisings on oil prices.
  • The price of crude oil is up 25% since the beginning of 2011, and it is still rising.
  • Food costs are rising accordingly.
  • Unemployment remains high and may increase again.
  • The real estate bubble is not yet over, and many experts are concerned about another major dip.
  • Many state governments are facing massive shortfalls and/or bankruptcy.

In contrast, millionaires increased their wealth approximately 16% during the Great Recession, and big business has likewise upped its wealth. Ken Kurson wrote in the April 2011 issue of Esquire:

“American corporations are sitting on an unholy pile of cash. About $2 trillion. It’s an all-time record, and as a percentage of total assets, it’s the highest in more than 50 years.”

These two economies do share one thing, however: a widespread fear of the future. Kurson continued:

“I would argue that this wad of dough actually greatly exceeds even the pile-up of the late 1950s, because of the reason it exists. Past cash hoardings were strategic in nature. They funded the expansion of product lines, plant building, technological innovation, and hiring that we witnessed in the mid-’60s, for example, after President Kennedy dramatically lowered the personal income tax. This time is different. The current stockpile isn’t strategic; it’s fearful. Companies are afraid to expand because of uncertainty about costs, and a lack of lending partners.”

Kurson suggests that this choice by the corporations is probably unwise—the government may use it as an excuse to find ways to take this money and spend it. More likely, corporations will invest it abroad.

Dante Chinni and James Gimpel point out that disparity between those with increasing wealth and the rest applies to both individuals and whole communities. In the April 2011 issue of The Atlantic these authors outline the twelve types of communities in the U.S.: Monied Suburbs, Minority Urban Centers, Campus Communities, Industrial Metropolises, Immigrant Communities, Service Worker Tourist Hubs and Midsize Cities, Emptying Nest Communities, Evangelical Epicenters, Mormon Outposts, Military Bastions, Tractor Country, and Boomtowns.

Of these, only four have annual median family incomes over $50,000 a year: Monied Burbs, Campus Communities, Boomtowns and Industrial Metropolises. Interestingly, these four and Military Bastions are the only communities where median family income is higher in 2010 than it was in 1980. As most people in the middle class have seen their standard of living stagnate since 1970 and significantly decrease since 2008, the top 7% of earners have greatly increased their wealth during the major global economic downturn.

Despite all the evidence, there are still those who consider many current government proposals “socialist.” This is at best a myth. At worst, it is a threat to our freedoms because if the regular people misunderstand the problem they are sure to fall short when they try to apply solutions. Yes, one symptom of socialism is massive government spending and taxation of the middle class to pay for state programs. But socialism is, as I have mentioned a number of times, a transfer of money from the middle and upper classes to the lower class. And we have not seen this in recent American administrations—Bush, Clinton, Bush or Obama.

What we have seen, in policy after policy, is a transfer of wealth from the middle classes to the upper class. Bailout money came from the middle class and was largely deposited in upper-class and big corporate bank accounts.
Unfortunately, we are living in a strange era of Orwellian doublethink. Liberals inaccurately call this great transfer of money from the middle to the upper class “conservative” while conservatives incorrectly label it “socialism.”

Let’s cut through the name calling and just call it what it is: Using government power to transfer money and wealth from the middle classes to the upper class is aristocracy, pure and simple. Aristocratic conservatives and aristocratic liberals have greatly benefitted from this trend, and they keep the rest of the nation from doing anything about it by arguing among themselves. Conservative and liberal aristocrats point fingers at each other, accuse and call names, and tell us to send more money to one side or the other.

The rest of the people, the non-elites, foot the bill because they get caught up in the arguments promoted by the two kinds of aristocrats. We are witnessing—and this is not an overstatement—a fundamental shift from our roots as a limited federal democratic republic to an aristocracy where the Commercial Aristocrats battle the Governmental Aristocrats for ascendency and the rest of the people see their freedoms and prosperity dwindle with each passing decade. Aristocrats make up one economy (one that is flourishing at record levels in both wealth and power), while the rest of the people make up the other economy (one that is deeply struggling).

Let’s call a spade a spade. We are moving toward aristocracy, and it is time to stop following or supporting aristocrats—regardless of which party they promote. We need America’s “second” economy, the regular people, to start increasing their leadership.

***********************************

odemille 133x195 custom Egypt, Freedom, & the Cycles of HistoryOliver DeMille is a co-founder of the Center for Social Leadership, and a co-creator of Thomas Jefferson Education.

He is the co-author of the New York Times, Wall Street Journal and USA Today bestseller LeaderShift, and author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.


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Category : Aristocracy &Blog &Culture &Economics &Prosperity

6 Comments → “A Tale of Two Economies”


  1. Geneva Murphy

    5 years ago

    This is such a great article. Of course, your insight is extremely valuable to many of us. Your books & commentaries define beliefs we now embrace.

    Having recently watched Marie Antoinette, I also likened the correlation between our government and the reckless lifestyle of their time.

    Thank you so much for your continual pursuit to empower & educate us. It is greatly appreciated!


  2. Oliver DeMille

    5 years ago

    Thanks, Geneva. I appreciate your comments and hope you’ll share with others you think might be interested.


  3. Doralee Gull

    5 years ago

    I am ashamed to say that this article was a little bit of an eye opener for me. I am among those who call many of the current political policies socialist in nature. I had not realized that the extremely wealthy are continuing to increase their wealth at such an astounding rate. Working as I do, in healthcare, I am constantly aware of how tax payers are footing the bill for so many abusers of the welfare system. It kills me when I see my patients who are on medicaid with their i-phones, laptops and fancy manicures. I’d like to know where my i-phone is. Oh wait, I’m paying for your medical care, food and housing so that you can have an i-phone. I’m not really bitter, but it does become very tiresome. Probably about 50% of the patients at my hospital are on medicaid.

    You have made me see things from a different point of view. Now I see that we are bleeding money from two ruptured arteries. Some going to the undeserving poor and some to the rich. Now I can see how redistributing the wealth of the middle class also increases the wealth of the aristocrats, by decreasing the size and means of the middle class. Thanks for making me think.

  4. […] his insightful essay: “A Tale of Two Economies” Oliver DeMille […]


  5. Blake Elliott

    5 years ago

    What you say in this article is plainly true. Except on one point: while their is a massive transfer of wealth to the elite; I’ve never heard a conservative call that socialist (in my limited experience at least). Instead, they are talking about welfare programs like: food stamps, TANF, the child support program, the energy or utility assistance program just to name a few national ones, not to mention all the state, county, and city programs which pay the fainting proletariat. Their are also groups of farmers and Indians who get tons of welfare. I myself live in a very wealthy, thriving city, and even I know several people on welfare, and from church of all places! The fact is, there is Huge transfer of wealth to both sides and the shady shifting of lucre should stop!


  6. Oliver DeMille

    5 years ago

    I enjoy your comments, Blake. In response to your implicit question regarding the “socialist” label: Many conservatives called the Obama stimulus bailout “socialist.” This is what I was referring to.

    Oliver


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