To borrow from a well-known political line… it’s the wealth gap stupid.
As we noted in our article Civil Unrest, Uprising, or Revolution: Harbinger of Our Dystopian Destiny?, racial inequality only represents the proverbial tip of the iceberg. It’s the highly-visible face of a much broader and deeper systemic problem—and one that frequently serves as a trigger for unrest.
However, that unrest is likely to spread much further this time due to the deterioration of the underlying societal issue know as the wealth gap.
The economic inequality in America has been growing at record pace, and that inequality impacts the majority of Americans—not just the low-income folks or a particular race. Its talons are now sinking into the flesh of more and more of the middle class—folks who work hard and have believed in the American dream.
In this article, we are going to explore that growing divide—including some of the major drivers, as well as why it matters and what we can or can’t and should or shouldn’t do about it.
This is not an ideological analysis. Rather, it is an unbiased, top-down look at the true problem.
Furthermore, I fully acknowledge that it is a long read—but it is one well worth your time. Please don’t be intimidated by the length—you need to read, understand, and share this information and message.
If we are going to “fix” America—come together to strengthen our nation and restore hope and opportunity for all, then we must understand what the real problem is.
If we continue to allow ourselves to be played and manipulated by the elites that attempt to ignore or excuse away the cancerous ailment that plagues us, we do so at our own peril. We are living in a 250-year experiment… but experiments can go wrong if not properly managed and cared for!
Washington understood that better than anyone, and he warned us from the start about the risks and the potential for disaster and failure if we let our collective guard down!
The Wealth Gap: Economic Inequality & Why It Matters
As I’ve noted before, the ancient Greek biographer Plutarch wisely noted that “An imbalance between rich and poor is the oldest and most fatal ailment of all republics.”
There are a lot of reasons why societies and civilizations have collapsed throughout all of human history. However, there is one common thread (or theme) that weaves its insidious path through nearly all collapses—a development of gross economic inequality.
In a groundbreaking study by Motesharrei, Rivas and Kalnay (2014), the researches sought to develop a novel 4-variable model (a human population dynamics model) for the interaction of humans and nature—one predicated on predicting long-term behavior of different types of societies rather than short-term forecasting.
What they found was highly illuminating: over-exploitation of either Labor or Nature results in a societal collapse. In other words, “Economic Stratification… can independently lead to collapse, in agreement with the historical record.”
Likewise, the authors posit that “Collapse can be avoided, and population can reach a steady state at maximum carrying capacity if the rate of depletion of nature is reduced to a sustainable level and if resources are distributed equitably.”
Thus, all societies (or civilizations) face a binomial outcome—a proverbial unavoidable fork in the road. They represent an open system with but two ultimate potential outcomes: a steady state or a collapse.
You must ask yourself whether America appears to be moving towards a lasting steady state? If not, then we are inevitably headed for collapse.
The authors eloquently hit on the crux of the matter:
“It is common to portray human history as a relentless and inevitable trend toward greater levels of social complexity, political organization, and economic specialization, with the development of more complex and capable technologies supporting ever-growing population, all sustained by the mobilization of ever-increasing quantities of material, energy, and information. Yet this is not inevitable. In fact, cases where this seemingly near-universal, long-term trend has been severely disrupted by a precipitous collapse – often lasting centuries – have been quite common.”
Regarding this mutually exclusive, binomial outcome that all societies face (including our own), they reveal a number of important findings:
Collapse Is Actually Hard to Avoid
First, reaching a sustainable equilibrium in society is actually quite difficult. Like any system (or machine), it requires careful and proactive management and preventative maintenance.
Collapse is the rule rather than the exception.
The authors posit that “Collapse is difficult to avoid, which helps to explain why economic stratification is one of the elements recurrently found in past collapsed societies.”
Pending Collapse Is Difficult to Recognize–Especially by the Elites
Second, collapses are difficult to recognize on the part of the ruling or wealthy class. Economic stratification (aka wealth gap), inherently means that the elite are the last to be impacted. In other words, they don’t “feel” the crisis until it is too late. As such, it is difficult for them to recognize the immanent danger.
We see this in both the dismissive and disinterested responses of Senate Republicans (who are more concerned with providing stimulus bailouts for big business and elites than for the needs of the “commoners”) and the embracing and defending posture of leftist politicians with regards to the riots and violent criminal behavior (who assume the very thing they are inciting will never reach or impact themselves as elites).
It remains “business as usual” for the elites until the bitter end.
The study finds that “It is important to note that… the Elites – due to their wealth – do not suffer the detrimental effects of the… collapse until much later than the Commoners. This buffer of wealth allows Elites to continue ‘business as usual’ despite the impending catastrophe. It is likely that this is an important mechanism that would help explain how historical collapses were allowed to occur by elites who appear to be oblivious to the catastrophic trajectory (most clearly apparent in the Roman and Mayan cases).”
Collapse Occurs Relatively Quickly–Without Much Warning
Finally, collapses occur quickly. They are typically characterized as relatively sudden crashes rather than long, steady declines—meaning, the trend is the friend of elites until the very end… then it turns even on them very quickly.
The full dimensions of the collapse may take time to play out; however, the turning point (or point of no return/recovery) occurs rather quickly and without much warning from the perspective of the elites.
The authors assert, “This buffer effect is further reinforced by the long, apparently sustainable trajectory prior to the beginning of the collapse. While some members of society might raise the alarm that the system is moving towards an impending collapse and therefore advocate structural changes to society in order to avoid it, Elites and their supporters, who opposed making these changes, could point to the long sustainable trajectory ‘so far’ in support of doing nothing.”
This helps to illuminate why a deep and rapidly expanding wealth gap (economic stratification) is so perilous: (1) It is a widespread and consistent harbinger of societal collapse, (2) it is difficult to avoid, and (3) it is difficult for the elites to recognize—let alone be willing to fix the problem.
Now that we understand the risk and danger, lets explore the wealth gap in America.
Wealth Gap Roots: Productivity Up… Real Wages Stagnant
Before we tackle the wealth gap itself, it is important to understand its roots. What is driving the rapidly expanding divide between the haves (the elites) and the have nots (the commoners)?
While there is a plethora of variables, I believe the greatest driver of economic (wealth) inequality in America is the wanton disregard for certain groups or classes of stakeholders by both big business and political leaders.
I am a huge proponent of an open-systems approach to things—specifically, a stakeholder perspective. This approach recognizes that systems function around a complex mix and interaction of known and unknown variables. In other words, (1) the whole is more than the sum of its parts and (2) any given part can negatively impact the function of the system as a whole.
Big business and the rules implemented by politicians at the bequest of special interests have almost exclusively focused on one group of stakeholders (viz., shareholders) to the detriment of all other classes (e.g., workers, vendors, community, and environment).
This is no better visualized than by looking at the growth in productivity and the stagnation of wages in America—representing a divergence (or decoupling) of one of the principal relationships in classical economics.
Anna Stansbury and Lawrence Summers aptly note: “Since 1973, there has been divergence between labor productivity and the typical worker’s pay in the US as productivity has continued to grow strongly and growth in average compensation has slowed substantially.”
Saul Eslake echoes this when he writes, “One of the more important challenges currently confronting both economic policymakers and political leaders across almost all ‘advanced’ economies is the unusually slow growth in both nominal and real wages, despite continued economic growth and declining unemployment.
That growing gap between productivity and wages is the root of the expanding wealth gap. Yes, there are other factors; however, it is the greatest driver in terms of the expansion of the already existing divide.
The reality is that, in terms of real wages, American workers are being paid at the same level they have been since 1973—forty-seven years ago!
Now, there are plenty of “conservative” folks who have come out of the woodwork to discredit this reality (aka, supporters of the elite who struggle to see the danger of the impending collapse). They assert that this view is flawed based on two primary arguments: (1) wages must include all compensation and (2) inflation is being greatly overestimated.
They present a picture that looks like this:
They contend that, when you factor in both total compensation and “correct” inflation (IPD), real wages have actually remained coupled to productivity—though still slightly underperforming it.
Let’s take a moment to examine and refute both of these claims.
The Fallacy of the Total Compensation Argument
First, arguing that “total” compensation must be considered is disingenuous. There are two reasons I asset this.
One, if you are suddenly going to include this factor (post-1973), then you must go back and do so for the entire time series. You can’t just include it when it’s convenient—in other words, when a massive divergence surfaces and rears its ugly head.
Two, what exactly is included in total compensation? It includes the employer portion of payroll taxes and employee benefits.
Thus, they are essentially arguing that it is the growth in taxes and benefits (namely, insurance costs) that appears to close the gap.
However, this is nonsense for two reasons.
First, none of this represents real wages—meaning money in the pockets of workers (i.e., the physical fruits of their labor). They can’t spend this “other” compensation. It’s nice… but it’s fluff.
Compare this to the wealthy. They make their money via a different stream: capital gains. These gains are taxed at a much lower rate (a systemic problem) and the impact of benefits (such as health insurance) are miniscule in comparison. They generate a larger amount of fruit (real income) from their “labor”—fruit which they can spend or reinvest.
Second, this necessarily implies that inflation—at least inflation in specific areas—is much higher than reported. This negates their second argument that we are overestimating inflation as well! Furthermore, this type of inflation disproportionately impacts the middle class.
The bottom line is that real wages have remained stagnant despite the consistent rise in productivity. The bottom 90% of America do not have more real money to invest and spend on life, while the top 10% (and specifically the top 1%) have significantly more.
Other forms of compensation are irrelevant because (1) that is not spendable wealth (i.e., does not improve workers’ standard of living) and (2) it is a direct result of non-value added inflation (the value of most insurance plans has decreased despite the rise in cost).
The Fallacy of the Inflation Argument
Numbers figure and figures lie. You can “set” the inflation rate at whatever you want to prove your point. Don’t like the numbers? Simply state that inflation must be lower, and you produce a more desirable picture—one that fits within your box, aligns with your assumptions, and supports your self-interests and belief system.
(Or, as some do, argue that productivity is overestimated.)
The argument is that the CPI (consumer price index) overestimates inflation and, therefore, makes the gap look wider. I would argue that CPI is actually a quite conservative method that frequently underestimates inflation. And, we have seen that real inflation for items that matter to those in the middle class has actually risen substantially—medical costs being just one example (as we saw above).
On top of this, many argue that it measures the wrong type of inflation—consumer price inflation. They argue that what we should actually be measured is inflation in production costs. While on face value, this does appear to provide a more apples-to-apples comparison between production and wage inflation, the problem is that the value of wages is directly impacted by consumer pricing—not production costs.
What is actually happening here is quite deceptive and another example of companies fleecing the workers. Production costs have actually risen quite slowly, while consumer costs have risen more sharply. In other words, what a business sells an item for has grown faster than what it costs to make it. Thus, their profits have risen.
This profit should be split between stakeholders. However, it has not. The worker has received almost none of this record increase in profits, while the shareholders (the elites) have taken it all straight to the bank.
Again, it’s a zero-sum game from an accounting perspective. When you make the apples-to-apples comparison, which would seem to make sense at first glance, you are actually—in fact—comparing apples to oranges! This choice creates the illusion that the wages-to-productivity gap disappears.
Furthermore, the IPD includes business-to-business products, as well as imports and exports. Again, this (1) produces a lower rate of inflation and (2) includes items that are unrelated to the value of worker (consumer) wages.
Regardless of the method(s) one uses to magically erase the gap, you can’t really close the gap or whitewash the problem with mere mathematical sleights of hand. Nature doesn’t care about your math. It will always desire, seek, and move towards balance, harmony, and stability—with our help or without it (viz., via a painful collapse and rebuilding).
It is important to point out that I agree with and support a lot of the work done by the Heritage Foundation. However, this is a case of being blinded by your ideology and intentionally ignoring (or, worse, manipulating) the facts. It is motivated by a deep-rooted need to support the “elite” status-quo and ignore the mounting warning signs that the patient (our system) is on life support and in grave peril.
I completely understand the motivation to defend your belief system. Proponents of this view (including the Heritage Foundation) feel our capitalist system is under attack. However, I would argue that (1) the superiority of capitalism is not a belief but, rather, a valid opinion that can be effectively defended by the facts and (2) this view suffers from a false dilemma logical fallacy. We’ll get more into the second point at the end of the article but, suffice to say, capitalism doesn’t have to be “bad” or “wrong” just because we need manage it better by restoring it to its proper form and function.
The Complete Picture of Wage-Productivity Decoupling in America
Because of all the issues and disagreements involved with the productivity-wage comparison I prefer to add one addition variable to the equation: corporate profits.
If the apparent gap really is just illusionary (i.e., a mathematical error) and driven by secondary employee compensation and overestimated inflation, then corporate profits should reflect that—meaning they should mirror any change in real wages. Afterall, their after-tax profits should capture the full cost of those “secondary benefits” (Accounting is a zero-sum game) and reflect the IPD inflation rate.
I also like to substitute GDP for productivity as a control (check and balance).
However, when we examine the data, we find this is simply not the case:
For consistency, I have used GDP (as a check against productivity) chained to 2012, real full-time wages (chained to the 1982-84 CPI), and corporate profits after taxes and without inventory valuation or capital consumption adjustments (IVA/CCAdj) as a percent of GDP (chained to 2012 as well). Finally, I started in 1979 rather than 1973 (when data for all three variables became available). If we went back to 1973, the relative gap would be even larger!
What we find is that corporate profits grew even faster than GDP (dashed line represents to trend) and, therefore, real productivity—meaning the gap is even larger.
That gap between GDP (or real productivity) and real wages means something—it represents real money. Corporate profits make it clear where that real money went.
This is precisely what Stansbury and Summers were referring to when they wrote, “Our findings imply that even as productivity growth has been acting to push workers’ pay up, other factors not associated with productivity growth have acted to push workers’ pay down.”
Those other “factors” are corporate and investor greed (which we’ll identify in the next section). Corporations have shifted wealth from the one stakeholder group (the workers) to another stakeholder group (shareholders). Afterall, again, that gap represents real money—it had to go somewhere!
The elites have dismissed the idea of the stakeholder perspective and, instead, determined it is in their own self-interest to focus exclusively on the needs of shareholders—workers be damned.
Known as the “Profit Maximization” approach, Milton Friedman argued that “the sole purpose of a business is to generate profits for its shareholders.”
I don’t disagree with that position in the least; however, I believe it must be view from the perspective of a long time-horizon. If applied to the short run, it can actually damage (or even destroy) a business over the long term. If viewed through the lens of time, it fits perfectly within a stakeholder perspective. To ensure long-run success (meaning generating maximum but lasting profits), a business must carefully balance the needs of all stakeholders.
For example, if company XYZ can save money (i.e., make higher profits for its shareholders) by dumping hazardous waste into a local lake… is that really a good idea? It may be if you are only interested in how much money you can make in the short run. However, harming the environment and community (both stakeholders) certainly won’t maximize profits over the long run—and therefore fails the profit maximization test and, more broadly, fails to utilize a stakeholder perspective!
The same is true for taking advantage of employees in the name of driving profits for shareholders. It may boost profits in the short run (as the chart clearly shows). However, it will damage the business in the long run. And if all of corporate America is engaged in this destructive, short-term thinking, it will damage our broader economy and society as a whole over the long term as well—ultimately leading to a wealth gap, income inequality, civil unrest, a revolution, and—if the system is not fixed—to the collapse of our system and society. Not a good outcome.
This also ties back to the “inflation” argument fallacy. It’s the “dark” side of the inflation coin they don’t want to talk about.
Inflation does play a role. In an article by Jennifer Castle and David Hendry (examining the impact of the Great Recession on real wages in the UK), the authors “find that when inflation is low, wages are slow to adjust. However, when inflation is high, employees notice and employers are pressured to respond.”
Thus, in our recent low-inflation world, wages have been artificially suppressed—despite rising productivity. In other words, businesses have grabbed the gains and passed them on to the C-suite and shareholders, to the exclusion of the workers. They can get away with this because the consequences are less visible with low inflation. Workers don’t see (or “feel”) the looting—their purchasing power is relatively unimpacted.
Castle and Hendry add that “firms determine (product) real wages, so all additional price `wedges’ must be borne by wage recipients.”
In other words, as those employment taxes and benefit costs rise, the employee bears the cost—not the business or its shareholders. “Total” compensation rises, but not real wages—and that’s what matters.
On the other hand, for the elites, their real capital gains absolutely rise—they are taxed at a discounted rate to the already suppressed earned income of the workers and they don’t shoulder a fair share of the “wedge” costs. They simply benefit disproportionately (the game has been rigged in their favor) and the wealth gap just continues to expand.
This redistribution (theft) of capital is precisely why the returns on capital (gains via equity) have been outpacing the returns to labor (pay from working). There’s no free lunch—the gains achieved by one group of stakeholders must be offset by losses born by the others.
A true free market, capitalistic system would naturally gravitate towards a healthy balance between stakeholders (known in economic speak as an equilibrium)—providing equitably-shared benefit to all and protecting the health and long-term viability of the “organism.” Sadly, our system has been hijacked, manipulated, and rigged to produce the exact opposite.
Why is this the root of the wealth gap (wealth inequality) in the US? Because the stakeholders that have benefited (to the detriment of other groups) from this misallocation of capital (the product of improved productivity) represent a very tiny sliver of our society.
The money (wealth) was taken from the pockets of the workers who earned it by their labor and was transferred directly to shareholders—meaning it flowed into the financial markets. Let’s now take a look at the makeup of the financial markets and determine the distribution of households owning a share in that equity.
The Trunk of the Wealth Gap Tree: Who Really Owns the Markets?
Who owns the equity in the financial markets (from a household/family perspective)?
If we had a normal distribution for equity ownership in America (as one would expect in a healthy, vibrant, sustainable economic system and society), then those workers—despite their stagnant wages—would have indirectly benefited from the flow of capital from business to shareholders.
However, we do not have a normal distribution. Rather, we find that the more wealth a family (household) has, the greater the share of total equity they own. And that share grows exponentially at the high end.
This can also be illustrated this way:
Shockingly, as of 2016, the top 0.1% of wealthy families owned 17% of the total household equity in the market. The top 1% owned a ridiculous 50%–that’s one HALF—of the equity (and that rose to 56% in 2019). Include just the top 10% of households by net worth and you find they own 92% of the nation’s equity held by individuals.
That means the rest of the country—a full 90% of our citizens (the commoners)—owned a paltry 8% stake of the total equity held by individuals. And, the bottom 50% of folks check in at a meaningless 0.75%.
This is why we have an extreme and ever-increasing wealth gap in America.
The system rewards the controlling elite by redistributing wealth to them via capital redistribution by big business (illicit profits gained by fleecing the working class) and the Fed, as well as a crony system of rules stacked in their favor.
A perfect example of this is stock buybacks. Capital is directed away from increasing real wages for the employees and used to buy back shares. This in turn pumps up the company’s stock price—benefiting those who own the lion’s share of the equity market. And hey, if things go bad… Uncle Sam will bail them out and bill the commoners!
The bottom 90% are being fleeced to support the greed of the elites. They are—to borrow from the Matrix—the virtual batteries of the elites. The commoners have become nothing more than that—just cogs in the great economic machine now misshapen to grind-out wealth for the exclusive benefit of the elites. Beyond that, they have no real value. Just keep working, borrowing from your future to live beyond your means, and spending!
As we noted earlier, history is clear about what that produces: eventual societal collapse. It is hard to avoid, hard for the elites to recognize and accept, and, when it happens, it happens quickly. The point of no return—akin to the event horizon of an economic blackhole—is crossed quickly and unbeknownst to the elites (i.e., long before the “trend” reveals it).
But it gets worse… much worse. The wealth divide has actually expanding even exponentially faster this year—thanks to the redistributive (quantitative easing) actions of the Federal Reserve. No wonder Chairman Powel is now referred to by many as the Robin Hood of the rich (or the elite ultra-rich).
Let’s take a look at this Fed action more closely before we explore the potential solutions/outcomes and what we can all do about it in our personal lives.
The Great American Wealth Gap: The Tree Blossoms with Fed Action to Redistribute Wealth
In the wake of the pandemic and the resulting shock to our economic system, the Federal Reserve stepped in to “save” the day.
However, the Fed lives in a bubble (an elite bubble) and only knows how to do one thing: protect the elite. That is there singular concern and focus—not the needs or plights of the commoners. The elite must be protected at all cost.
As a result, the Fed—under the leadership of one Jerome Powell—initiated a new round of quantitative easing—more massive than ever before and with an unlimited ceiling. No, they are not calling it that (they don’t want the commoners to understand what’s really happening!). However, if it looks like a duck, quacks like a duck… well, you know the deal.
We have discussed this massive redistribution of wealth by the Fed repeatedly on our live streams:
In essence, the Fed is skirting federal law by using an legal loophole or exception (there’s always one of those for the elites) that permits them to actually create and use shell organizations (aka “facilities”) to funnel liquidity (cash) into the market with the stated intention to enable investors to deleverage their massively risky portfolios.
That’s code for: The wealthy got way overleveraged in high-risk investments over the longest bull run in history… and now we are going to bail them out. That means they got to benefit from years of high returns, but now get to avoid the downside (i.e., the high risk they “accepted” when they invested).
Frank Borman once astutely quipped that “capitalism without bankruptcy is like Christianity without hell.” You get high returns precisely because you are willing to accept high risk, which means you can, and sometimes will, lose big time. That’s the risk-reward relationship. Every investor understands that… but apparently it no longer applies (like so much else) to the elites.
Instead, the rich get to lock-in their wealth gains (some of it at better than fair market value), while the middle class is on the hook for all those high-risk assets (now owned by the Fed).
Those assets are garbage and worth a tiny fraction of what the Fed paid the elite for them. A loss will be ultimately be taken—born by the tax-paying commoners!
Again, who exactly benefits from this action? Oh, that’s right the wealthy elite:
It’s essentially a private bailout for the top 10% and, more specifically, the top 1 percent—a bailout by the Fed elites and for the elites… all at the expense of the middle class “commoners.” The middle class just got fleeced again!
Don’t buy the “we have to support and save the market” argument. The “market” now means the elites and uber-rich.
They’ll say we “must” save the precious 401Ks of the “folks” but, what they won’t say, is that the bottom 90 percent of American families only own an 8% stake in household equity… and the bottom half (that’s HALF) of our country holds only a 0.75% stake.
It’s hard to fund a 401K when you’re trying to survive and care for a family and your real wages have been stagnant for 40+ years! (On a side note, that’s why the majority of Americans are dependent on future social security support for retirement—they haven’t had the opportunity to build their own retirement nest egg like past generations. The American Dream has been stolen.)
This isn’t about protecting the commoners… it’s about protecting the ruling class—the wealthy elites. The broke commoners will just be sent the bill and put further into indentured servitude!
The fact is that a very small group of unelected, unaccountable and highly secretive elites (the Fed) is unilaterally picking winners and losers. Whether it’s determining who will win (bailouts and favorable tax treatment for big business and the elites) or who will lose (demanding low interest rates that penalize those who have their money in the bank rather than the markets), it is a rigged system—rigged by the elites and for the elites.
One must wonder why, given the record corporate profits shown earlier, big business would suddenly need bailouts, low-interest and forgivable loans, and special tax treatment from the commoners? Clearly, in the immortal words of Shakespeare, something is rotten in the state of Denmark???
Yet, our Republican leaders proudly declare that they are in no hurry to provide similar assistance to the commoners? They reason it could be abused and we need time to see if these folks really need help???
As if big business and the elites have completely abused the system for decades? The elites just don’t get it… and it’s why we will continue to have growing civil unrest, a possible full-out revolt, and a great awakening that could potentially lead to a systemic collapse of our society.
Don’t Throw the Baby Out with the Bathwater: Real Capitalism Is the Solution
Humans don’t function well in the absence of hope and opportunity.
I want to be expressly clear: the problem is not with capitalism or a free-market system.
The problem is that we have allowed our powerful and inherently good capitalistic system to degrade into a crony system—one with a stacked deck of special rules that exclusively benefits the elites.
The truth is that all systems—even the best of the best—can fail. Capitalism is not a guarantee of a bright future. It is susceptible to special interests and manipulation by a growing class of elites over long time horizons—it must be guarded and protected. It must be wisely managed and maintained with appropriate preventative care. We entrusted that to our government representatives, and they failed us. They used their positions to become powerful and wealthy—and now they only represent themselves and the other elites, not we the commoners.
Too much of anything—even beneficial things like aspirin or water—can be bad (even fatal) if abused. That doesn’t mean we abandon the use of aspirin or stop drinking water!
Capitalism (the free market economy) is hands-down the best economic system humanity has ever had. Socialism is just a further step in the wrong direction—it is more of what we already have and don’t want (viz., social, economic, and power stratification).
Understand, I am not saying the personal property (wealth) should be taken from anyone—in this case the elites—simply because they are rich and should share it. That is absurd and dangerous. That is the path of Marxism (socialism) or communism.
To be clear: I am NOT arguing for equality in outcomes but, rather, for equality in opportunities.
Everyone’s outcomes within our system will be different. However, everyone should be playing the same game, by the same rules. Unfortunately, over the past two and a half centuries, our system has inevitably become corrupted by a class of elites who have grown exponentially in power and wealth—the result of which is a significant and material loss of opportunity for the commoners.
I—and most other Americans—have no problem with someone being rich. It is part of the American Dream for all of us to strive towards a greater financial position in life. We respect wealth—as long as it is acquired appropriately. That means through work and by playing by the same rules as everyone else.
Rather, I am saying that a portion of the wealth currently in the possession of the elites represent ill-gotten gains. It was stolen from its rightful owners. The system enabled a tiny class of citizens to take advantage of others and fleece them—failing to pay them a reasonable wage for their labor and borrowing against them without their real knowledge or consent to pad their own pockets.
That is no different to breaking into someone’s house and stealing their TV. I’m not going to defend the thief’s right to have the TV simply because it is currently in his possession???
Theft—whether overt or covert, blue-collar or white-collar—is wrong and a violation of natural law. It is one of the primary drivers behind the very revolution our nation fought against the King of England—theft and redistribution of wealth (aka economic inequality) via illegitimate taxation and a discriminative set of rules that were stacked in the favor of the elites.
Legitimate gains and wealth belong to the owner—as fruits of their labor. It should be vigorously defended by our system of law. Ill-gotten gains should be returned to their rightful owner—as fruits of their labor. That too should be vigorously defended by our legal system.
There is a difference and, at the risk of being misunderstood and taken out of context, I’ll take that risk in the hope that our readers have the intellectual and moral capacity to understand this critical nuance.
At the very least, the flow of illicit wealth needs to be shutoff and the system fixed to restore equality in opportunity for the commoners and equality in burden for the elites.
When the elites and ruling class systematically steal from the people (and their future generations), we have the right to declare our grievances, demand they be addressed, and revolt if they are not. That was, in fact, what our Declaration of Independence was all about. It’s why we have a Second Amendment right under our Constitution to bear arms and maintain a well-armed militia.
Americans still desire the American dream—a dream that can only be delivered by capitalism. We must restore true capitalism—not extinguish its flame forever.
Our system is broken; however, that doesn’t mean we must throw the baby out with the bathwater. Rather, we must come together to repair the system and restore the hope and opportunity to the people—with equality—that only a truly free market economy and sound legal/tax system can.
The middle class is waking up to the reality. They are recognizing that their American dream has been stolen from them by an elitist thief in the night. This means that the ranks of the resistance (or reform movement) is growing—and swelling at an increasing rate.
This is not a racial problem—it is a class problem. And by class, I mean the commoners as a whole—the 90 percent.
The great awakening has begun, and the ultimate outcome is inevitable—the system will be changed.
The options we have before us are: Do we (1) do it peacefully or painfully and (2) do we restore capitalism or replace it with a far worse alternative.
The elites need to wake up—they alone control our ability to not only avoid collapse but to do so peacefully. They must listen, accept, and act.
We the people need to stop fighting each other and recognize that we have all been played and manipulated. We need to come together to deliver the message to an elite class that refuses to see the writing on the wall: The system must be fixed!
Be not ignorant: the system will be fixed—one way or the other. As I said, nature will always move to restore balance, harmony, and stability. We can either peaceably assist in that inevitable transformation (restoring a free market system that cherishes equality of opportunity—regardless of race, sex, creed, or socio-economic position), or we can let nature do her thing through creative destruction (a societal collapse).
The Growing Economic Divide Will Fuel Broader & Deepening Civil Unrest
Humans don’t function well in an absence of hope and opportunity.
What was initially born in the lower-income portion of our population (the first to suffer the effects of the coming collapse) has now begun to spread—penetrating the middle class. More and more Americans are realizing we have been sold into bondage and servitude to fuel the insatiable appetite of the elite class for wealth and power.
Their greed has robbed more and more folks of the American dream. Enough is never enough for them.
Until the elites recognize and respond to the broad, intense, and ever-increasing socio-economic inequality in America, the ranks of the reformation movement will continue to grow.
Make no mistake about it, we are witnessing the birth in history of a new “great awakening.”
Unfortunately, this will fuel broader and more intense civil unrest. It will come in many forms, and its flames will be fanned by elites across the political and ideological spectrum.
They still think they can control it—and they will continue to attempt to manipulate the unrest and commoners for the benefit of their own self-interests. But if you play with fire long enough, you will eventually get burned—ask Rome (or King George) how that economic inequality turned out for them.
My hope is that the movement can grow large enough to force (peaceably) the systematic reform and change to occur that we so desperately need in order to put our nation back on the path to prosperity and, more importantly, “Life, Liberty, and the Pursuit of Happiness.”
If we come together as a people—a broad and diverse class of commoners, we can restore the balance, continue our great experiment, and resume our journey towards truly becoming a Republic representing “one Nation under God, indivisible, with liberty and justice for all.”
In the meantime, we will encounter a messy, chaotic, and at times misguided and violent process. Be prepared!
Our nation is facing a massive socio-economic threat—one underpinned by an ever-expanding wealth gap that is producing tremendous inequality and lack of real opportunity.
The path we are on has been accelerated by the pandemic catalyst.
I cannot stress enough that this is not fundamentally a race issue. The vast majority of Americans no longer see racial differences. We happily belong to close networks of professional and personal connections that cross all demographics—whether race, nationality, sex, creed, or other. Even our families have become melting pots—bringing together for good what others would attempt to divide for evil through identity politics.
Is there some degree of racism in America? Yes, of course. It comes in many shapes and sizes—and points in all directions. The inescapable truth of human depravity is that, in any large population, there will always be an element of every ill and sinful disposition known. But it is the exception—not the norm. We must remember that and have trust and faith in our fellow Americans.
Where it does exist, we should make every effort to collectively root it out and destroy it. It serves no purpose but to weaken and hurt us—individually and as a people.
However, the overarching problem—a clear and present danger—that we face is socio-economic inequality—a problem increasingly impacting the vast majority of Americans (the growing ranks of the “commoners”).
In resolving this great issue of our time, we must come together to break free from the yoke placed around our collective necks by the elites (and their supporters) who aim to play, manipulate, and control us in a futile attempt to maintain their grip on power and feed their unquenchable appetite for wealth.
Whether we succeed (and peacefully fix our broken system) or fail (and face a societal collapse and/or institution of an inferior system of governance and economy), we are most assuredly going to face bumpy times ahead.
Great awakenings are always characterized as periods of civil unrest and creative destruction. They are a necessary evil. They help nature restore balance, harmony, and stability… but they come at a steep price in the short run.
If we understand the larger battle that is transpiring around us, we must embrace the realization that the civil unrest will only grow. Like birth pangs, it may subside for a time, but it will return even stronger. The pattern will continue until we have a resolution—one way or the other.
That means we must take advantage of every opportunity to prepare ourselves and our family.
Don’t fall into the trap of mistaking a lull in the unrest for closure or an end. Keep preparing… and keep praying that we as a people can rise to challenge and come together to reform our Republic and place it back on a surer footing—one that provides hope and equality in opportunity to all.
The American dream and our hopes for our future generations lie in the balance.
As always… hope for the best, prepare for the worst, and in all things pray.
You may or may not be a Christian; however, I thought it would be beneficial to remind all that God is not silent on this issue. Through His Word (which supports the tenets of capitalism), He speaks directly to the issue of wages, declaring:
“Behold, the wages of the laborers who mowed your fields, which you kept back by fraud, are crying out against you, and the cries of the harvesters have reached the ears of the Lord of hosts.” (James 5:4)
“Woe to him who builds his house by unrighteousness, and his upper rooms by injustice, who makes his neighbor serve him for nothing and does not give him his wages.” (Jeremiah 22:13)
“Now to the one who works, his wages are not counted as a gift but as his due.” (Romans 4:4)
Conservatives, who claim to be upholding a biblical worldview, should be cautious about blindly supporting the elites—replacing faith in and allegiance to Christ with faith in and allegiance to our fallible and arguably corrupted human system of governance and economics.
It is all too easy to allow self-interests to cloud one’s judgement.
Many have become far more concerned with protecting the status quo and wealth of the elites than defending the commoners for the wages appropriately due them; more concerned with protecting a political ideology than defending truth, liberty and justice.
Much like Jude, I find myself “compelled to write and urge you to contend for the faith that was once for all entrusted to the Saints” (Jude 3).
God takes equality—of all shapes and sizes—very seriously and we would be wise to do the same. The future of our great nation depends on it.