PAUL JAY: Welcome to The Real News Network.
I’m Paul Jay in Baltimore. And welcome to another edition of The Henry Report with James
Henry, who now joins us from New York City. James is an investigative journalist, an economist,
an attorney. He used to be chief economist at the international firm McKinsey & Company. Thanks for joining us, James. JAMES S. HENRY: Quite welcome. JAY: So Pew came out with a new research study
you’ve had a look at. What do you make of it? HENRY: Well, it’s consistent with what we
know about wealth in the United States. The top 7 percent of households, about 8 million
people, have seen their net worth increase to a mean of about $3.2 million in the last
three years, during the–2009 to 2011, while the rest of us, you know, the bottom 111 million
households, saw their net worth decline by about 4 percent to less than $150,000. And
there’s many people who have no net worth at all, and indeed are in debt in this period. This study is interesting, but it’s a little
bit incomplete, because it doesn’t pick up the last two years. It stops in 2011. And
if anything, things have gotten worse, ’cause what’s really driving this differential is
the fact that most ordinary Americans don’t own stocks. Their main source of wealth, if
they have wealth at all, is housing, and the housing market has been dismal. Even today
it’s barely recovering. But on the other hand, the stock market has
seen a tremendous resurgence, in the United States especially, driven partly by the fact
that the rest of the world isn’t growing, that people are parking their money here.
But you’ve seen basically stock prices recover nicely since the deficit of 2009, early 2009.
And so wealthy people have continued to benefit from this. And so we would expect, if we looked
and updated these estimates now, we’d see the trend not, you know, just continue. It
wouldn’t just be a 28 percent increase for the top group. It would be something more
like 35 to 40. JAY: And you can just imagine when you’re
talking to someone who’s in that top tier group, who has seen their income increase
dramatically over the last three years, and you say to them, well, austerity’s terrible
because it’s going to prolong the recession, I imagine them saying, “And your point is?”
I mean, they’re doing–they have cheap money, they have cheap labor, and the stock market’s
doing just wonderful. So why exactly, if I’m in that position, do I want the recession
to end? HENRY: Well, one reason would be that you
look forward to the political consequences of this and the kind of fear that eventually
someone in Washington or, you know, the political party system in this country will notice the
fact that most people are not better off, they’re worse off, and that existing policies
aren’t working. I mean, instead we’ve seen, you know, the–in
fact, maybe this is another cause of comfort for the top-floor group. You know, we’ve seen
relatively little concern on the part of policymakers about the radical increase in poverty and
inequality in this country, and they’re bound and determined to make middle-class and poor
people pay for the costs of this recession that they had nothing to do with, no responsibility
for, by cutting things like Social Security and spending on lots of social programs. So, you know, I don’t know why the rich have
anything to fear. They certainly haven’t gotten much hard medicine from the Obama administration,
even though the millionaire tax increase, you know, has been implemented. That’s about
the only thing you can really point to in terms of increased pain for the top. And at
the same time, you’ve seen payroll taxes increase by even more, so that’s pretty much offset
any distributional effects there. So, you know, maybe we have to appeal to the rich
on moral grounds. I don’t know whether [crosstalk] JAY: Good luck. HENRY: Yeah. Well, we–you know, we’re sort
of out of–in Europe, you know, where they’ve seen even deeper cuts in government spending
and wider disparities, you’ve seen the beginning of mass movements. You know, Occupy movement
in the United States has kind of left the field. You know, I have no really good explanation
for that other than the fact that our political leaders, there are darned few of them who
have been willing to take up the cause here. JAY: Right. I mean, if you think about political
consequences, I don’t think they’re going to come from within the stratum of people
that are doing so well. And so, many politicians are beholden to them. And then the way the
party system is here, you think if you’re going to punish the Democrats for not being
tough on this and then you’re going to support the Republicans–. I guess it’s time people
have to start thinking about something more independent of all of this. HENRY: You’d like to believe that during this
period of time, which is now approaching the length of the Great Depression in the ’30s
and shows, you know, sort of very mediocre performance, even in the United States, that
there would be some political consequences for, basically, accepting this kind of budget,
this kind of, you know, I would call it bloodletting approach to economic policy, you know, over
time. And we have more and more long-term unemployed, many more people who are living
on the margins of existence. Twenty-three percent of U.S. kids are in poverty. And,
you know, many seniors are experiencing the same thing. The problem is that these groups that are
worst hit here and are seeing their wealth and incomes decline, you know, are just the
least well represented in Washington at this point in time. JAY: I should add, in the media as well. HENRY: And the media as well, and I hate to
see it. JAY: Alright. Thanks for joining us, James. HENRY: You’re welcome. JAY: And thank you for joining us on The Real
News Network.

Tagged : # # # # # # # # # # # # #

16 thoughts on “Recession and Austerity Good for the Rich”

  1. The less money going into private hands from government, the more private hands going to private banks to get the money…

  2. it will be good for them until the point where the bubble can't be sustained any longer by simply pushing the illusion of money around.

  3. Hey, it takes that hard edge and guts often to bring out news like this. I love him just the way he is. That rebel spirit is a beautiful thing.

  4. But it's manufactured by them(as well as it was back in 1929's one)!After crisis,a massive wealth shift took place.Already we moved onto a neo-feudal era!

  5. Stock prices have only "recovered" if you don't consider inflation. Or rather actual inflation which is actual cost of living increases. This is why on another real news video they showed commodities doing so well.

    Well it's not that commodities are doing so well either, it's simply that the dollar is plunging so bad. And that's the measure we use for everything else.

  6. the guest is absolutely correct that in a recession the poor are left with almost nothing but their houses (or apartments) as their only asset.

    very few people in such desperate situation would dare to take the plunge by selling their houses and use the money received to restart all over again. so far i knew only one guy from my country who'd migrated to a Third World country to restart his livelihood again.

  7. would that be more like 250k to 250m, and not 250b?

    250b would let you rule a country because less than half of all the countries in the world each has less than that amount in its foreign reserves. you can make yourself into a king!

  8. There are some in the wealthy elite who believe in paying significantly higher marginal tax rates, but far fewer who would support increasing capital gains and earned interest. The latter two deserve more focus from those of us on the left

Leave a Reply

Your email address will not be published. Required fields are marked *