INEQUALITY FOR ALL ... WHY THE RICH SHOULD BE TAXED MORE

Last night at a Bakersfield screening for Robert Reich's documentary "Inequality for All" I was asked to lead a Q&A with the audience after the show. The documentary was full of information that got many in the audience thinking about the reckless direction of our economy and society, and what we need to do to turn things around.

Among the first points made by Reich in the film was how the top 1 percent of America has seen their share of income swing radically upward since the 1970s. Specifically, in a span of 30 years it more than doubled, and reached levels not seen since right before the Great Crash of 1929.

For Reich the swing in income looks very much like a suspension bridge ...

I noted during the Q&A that the top 1 percent of wage earners believe that their income gains are "earned" because - if we are to believe their argument - they are smarter, harder working, and more deserving, among others. Conversely, if your income and financial situation has stagnated or worsened - as is the case with America's middle class - it's because you are not smart enough, hard working enough, and less deserving. Worse, many are viewed as whiners and moochers.

Both assumptions are simply not true.

Let's make this real simple. The rich are getting richer because of legislative favors that include tax gifts, deregulation, state sponsored globalization (Bretton Woods / Treaties), state supported outsourcing (tax inducements), technological advancements that facilitate outsourcing, manipulation of the law, a string of market bailouts, artificially cheap money, and many other developments that have nothing to do with being harder working or smarter than middle-class Americans.

Put another way, as I point out in my book, the state creates the conditions under which wealth is created. The fact that the rich have gotten richer because of favorable legislation, regular bailouts and deregulation tells me that they should pay more to the state that helps their riches grow.

Put more bluntly - and following Reich's cue during the film - one of the things that we need to do is raise taxes on the top 1 percent of wage earners. I made this point during the Q&A.

Towards the end of our Q&A discussion one of the last questions of the evening was about raising taxes on the richest Americans. The person asking the question was curious as to why it's always mentioned that we need to raise taxes on the top 1 percent. I answered by noting that we have bills to pay, and that the real issue is one of fairness. I left it at that since we were at the end of our evening discussion.

I should have said more. This is what I would have added with more time.

I would have made it clear that the richest Americans need to pay more than they do now (15-20 percent on capital gains, and 39.6 percent marginal rate on other income) because they have been enjoying state supported successes that you and I help to subsidize with our taxes. Think about the following:

1. SOCIALIZED LOSSES: Investors enjoy built in tax advantages for making investments. If they sell their stocks at a loss they can deduct it as a capital loss from their next tax bill. You and I pay for this. Nice.
2. SOCIALIZED LOSSES, II: Did you know that if an investors' losses are so big and they can't use them all in one year they can carry them forward so that they can be applied to another year? It's part of the carry forward law. You and I also pay for this.
3. BAILOUT FEVER: One of the lessons of capitalism is that if you make stupid decisions you're supposed to lose your money. Not so under our current system (see #1 and #2 above). Thanks to a series of market bailouts for Wall Street our nation's biggest market players have seen their financial portfolios surge rather than tank. You and I backstopped the bailouts.
4. CHEAP MONEY: Thanks to Alan Greenspan and the Federal Reserve the biggest financial players have been able to access dirt cheap money. Specifically, because of the Greenspan Put every time market players make a mess of things the Fed is there to push cheap money into the market for the nations biggest financial institutions. You and I pay for the gambling and market crashes that occur because of the cheap money.
5. INCOME IS INCOME. Why should income from investments be taxed at a lower rate when the income that I make - after investing years and money into getting my degree - is taxed at two (and perhaps three) times the rate that the richest Americans pay?  

Seriously, apart from being granted favorable legislation and deregulation gifts, where's the fear of losing money in the market if your investments and market bets are backstopped with tax favors, bailouts, and artificially cheap money?

Put more simply, those who have made a lot of cash in this fixed market environment need to help pay the trillion dollar tabs that we've run up while subsidizing their "market" successes.

How simple has it been for America's richest class to make money? Think about this. Things have been rigged in the favor of the top 1 percent to such a degree over the past 30 years that a monkey throwing darts could have made money in the market.

Seriously, click on the link here to learn about monkeys making money in the market.

Do yourself a favor and watch Robert Reich's "Inequality for All." And bring a notebook. There's so much information (and that's a good thing) that you might regret not bringing it (or buy the DVD when it comes out) ...

If you you live in Bakersfield there will be showings at the Maya Theater on Thursday (11/13) and Saturday (11/15).

- Mark 

YES, IT'S CLASS WARFARE ...

Let's assume that the nation's richest 1 percent saw their total wealth drop from $126 million in 2007 to $77 million in 2010. That's a collapse of about 40 percent. What would the nation's political, financial, and media elites do? This is a question that James Carville raises at CNN.

Carville reflects on the Federal Reserve's report this week that the bottom 99 percent of America saw their total net wealth drop by almost 40 percent after the 2008 market meltdown (from $126,000 to $77,000). Then Carville ponders what would have happened if the same story was told about the wealth of our nation's richest one percent. What if they lost 40 percent of their total wealth?

But we already know what would have happened. We don't even have to ask. Consider the following.

Wall Street's 2008 collapse and the threat that it would drag down capital markets compelled America's financial elites to get their political Oompa Loompas in Congress to act. They wrote up legislation that would dump more than $1.5 trillion into Wall Street and the economy. Both the Bush and Obama administrations signed off on this (TARP/Stimulus).

Then the Federal Reserve started "printing" trillions of dollars while Wall Street got the Treasury Department to start covering their ridiculous market bets with a myriad of government sponsored bailout programs (see also this, this and this).

So, no, we don't even have to ask what would have happened if America's financial elites lost 40  percent of their wealth. Just the threat of a prolonged market collapse compelled Congress and our government's financial institutions to initiate a monster trillion dollar rescue on behalf of our nation's moneyed elite.

But when the bottom 99 percent actually lose 40 percent of their wealth ... well, that's another story. The fact that little has been said about the vast majority of ordinary middle-class Americans losing 40 percent of their wealth is astounding.

But here's the real point over looked by just about everyone. At the same time that the bottom 99 percent saw 40 percent of their wealth nest(s) disappear the top 1 percent actually saw their wealth and incomes increase through 2010-11.

This is critical because we all know that if the nation's richest class lost 40 percent of their wealth - while the bottom 99 percent actually saw their wealth increase - the process would immediately be tagged as some kind of apocalyptic Robin Hood syndrome.

Now, what would we call this? Hmmmm ... let's see ... what would we call a transfer of wealth where one class benefits disproportionately at the expense of another? Let's get serious, if what happened to the bottom 99 percent had happened to the top 1 percent it would have been called class warfare.

But since it happened the other way around it's best that we, well, quit casting blame and look to the future.

As multi-billionaire and the Oracle of Omaha Warren Buffet put it: “There’s class warfare, all right ... but it’s my class, the rich class, that’s making war, and we’re winning.”

Sigh ...

- Mark

WHAT HAPPENS WHEN HARVARD ECONOMISTS SMOKE SUPPLY-SIDE CRACK

N. Gregory Mankiw is a Harvard economist.

In an early edition of his popular economic textbook he wrote that supply-side economics - which assumes that cutting taxes and putting more money in the hands of the rich will promote growth and reduce deficits - was a "crank theory." This was no great insight on his part. Mankiw was looking at the results of the Reagan, Bush I, and Clinton administrations.

Then Mankiw was invited into the inner circles of political power, and started smoking supply-side crack.

In 2003 Mankiw became Chairman of George W. Bush's Council of Economic Advisers. There he provided academic cover for President Bush's economic policies, which promised that - surprise, surprise - lower taxes on the rich would lead to higher rates of investment and growth.

 After vouching for President Bush's policies Mankiw stood by and watched as the Bush administration blew through $5.4 trillion in projected budget surpluses, effectively doubled our national debt, and blew up the economy in 2008. With that kind of record you would think Mankiw would be hiding in some cave in Afghanistan. Think again.

In fact, Mankiw's doubling down. Only this time Mankiw's not just trying to peddle a thoroughly debunked economic theory about lower taxes on the rich leading to more economic growth and smaller deficits.

In "Defending the One Percent" Mankiw argues that the generational wealth of the top 1 percent of the population is understandable if we consider that the "educational and career opportunities available to the top 1 percent" aren't much different from those available to the middle class. This leaves us to conclude that inequality is really the result of the top 1 percent being smarter and harder working then the rest of us.

No real time is given in Mankiw's article to discussing favorable legislation, access, a culture of bailouts, legal protections, inheritance, family networks, weak regulations, gender, race, ethnicity, etc. If you're not part of the 1 percent  that's on you.

Jonathan Chait took at a look at Mankiw's "one percent" paper for New York Magazine and called it an "embarrassing piece of ignorant tripe" (Mankiw's use of birth condition, organs and equality of opportunity was especially convoluted). In my view Chait was being generous.

Mankiw is smoking supply-side crack, again.

- Mark

WHY GROWING INEQUALITY IN AMERICA IS ALL WRONG FOR AMERICA

Breaking down figures provided by the Federal Reserve, the People's Policy Project found that the top 1 percent of Americans gained $21 trillion in wealth since 1989 while the bottom 50 percent lost $900 billion. This means that wealth inequality in America is worse today than it was in the 1920s, right before the market collapsed and created the conditions for the Great Depression.  

If we're to believe in the logic of the market, the wealth gains of the top 1 percent over the past 30 years is due to the fact that they're smarter, stronger, harder working and better looking than the rest of us. 

But we know better. Since the 1980s the U.S. government has deliberately created the conditions for wealth to accumulate at the top, while systematically working to drain more of it from those at the lower end of the economic scale. 

How does this happen? Very simple. It's deliberate and, as I pointed out in an earlier post, it's happened before. History helps us see how it's happened, and how we're cutting our own throats in the process.

Arnold Toynbee, author of the epic A Study of History, believed that there was nothing in the biology, geography, or mysticism of a civilization that determined their destinies. In his view, theories of master races, an abundance of natural resources, or Manifest Destiny-like visions don't determine history. What determines a society's ability to adapt, survive, and prosper as a civilization is the way it responds to collective challenges.

Toynbee believed how great civilizations - or at least the 21 or so civilizations that he located - responded to challenges depended on how "creative minorities" acted when confronted with protracted problems.

It could be spiritual, as was the case when the Catholic Church responded to the Dark Ages by organizing Germanic tribes and kingdoms into a single religious (and Catholic) community. This helped make the Dark Ages less dark, and set the stage for the emergence of feudalism and, eventually, the rise of our modern nation-state system by 1648.

Historian Arnold J. Toynbee

Responding to challenges could also be physical, as when the Sumerians organized society to drain and reconstitute the swamps of present day Iraq, in the process building large scale irrigation systems that allowed the agriculture revolution in the region to take off. The ability of the United States to conquer the vast expanse of the continent with canals, the railroads, and the Army Corps of Engineers is evidence of responding to the collective challenge of geography too.

When civilizations stop responding to big challenges creatively they begin to spin into gradual collapse, with nationalism, militarism, and the tyranny of a despotic minority overshadowing and finally replacing the ingenuity of creative minorities. 

It's at this time that civilizations begin to swirl the drain of history.

According to Toynbee, apart from nationalism, militarism, and tyranny, one of the features of a civilization in decline was growing wealth inequality - or what Toynbee might have called the "schism" between the never "satiated" elites and the unfortunate "hungry" pawns at the bottom.

Once incomes and wealth became more concentrated great civilizations were on the path of decay. This path was paved by the reluctance of elites to participate in the maintenance of society and, especially, to the maintenance of those at the bottom rungs of society. This is what makes growing inequality today so troublesome.

Compared to history's financial gluttons - when there were fewer rules, and slavery was legal - the income (and wealth) gaps we're experiencing today tell us that history is whispering in our ear. And it's not good.

Our modern "schism" works like this. American conservatives today see a world where those with wealth earned it on their own. Liberals like Hedrick Smith - author of Who Stole the American Dream? - and I see wealth created by corporate lobbyists and obsequious members of Congress, who douse their rich patrons in favorable legislation, undeserved bailouts, unrelenting attacks on labor, and wealth friendly tax cuts that effectively guarantee financial success and class dominance - all at the expense of the American middle class.

Put another way, growing inequality in America - and $21 trillion in new wealth for the top 1 percent - is a deliberate process that has more to do with political connections than hard work. Arnold Toynbee would recognize it. We should recognize it, and understand what it means for our future. But we don't. 

We're approaching our future as if history never happened. 

Worse, we're acting like historical illiterates.

- Mark

WEALTH INEQUALITY ... THE GAME IS RIGGED

Chuck Collins - co-author of "Wealth and our Commonwealth: Why America Should Tax Accumulated Fortunes" -  has an article that explains how wealth inequality is "wrecking the world" and what we need to do to address the issue in the United States.

Wealth Inequality in the United Kingdom

To help make his point Collins starts by telling us that by 2010 at least 25 of the largest 100 corporations in the United States were paying their CEO more than they paid in U.S. taxes. Worse, we learn that the top 1 percent took home over 21 percent of our nation's total income in 2010, which was up from 8 percent in 1979.

How did this wealth shift happen? Collins makes it clear that mysterious market forces, or the logic of the invisible hand, had little to do with these developments. Rather, the game is now rigged to favor those who are already wealthy.

More specifically, Collins writes:

“The rules of the economy have been changed to benefit asset owners at the expense of wage earners, and these rule changes have benefited global corporations at the expense of local businesses.”

As evidence of these changing rules Collins writes that between 2001 and 2010 the U.S. borrowed more than $1 trillion to give wealthy tax payers earning more than $250,000 "substantial tax breaks, including the 2001 Bush era tax cuts".

However, as I never tire of pointing out in class, when it comes to thinking of new ways to pay back the $2.7 trillion that the federal government has "borrowed" from the social security fund we're told that America is broke.

How did we get to the point that we borrow trillions and give tax breaks to those who already have millions of dollars, but then turn around and tell the American worker that built the social security surpluses "tough luck, you're going to have to learn to do more with less"?

Economists Emmanuel Saenz and Thomas Piketty make it clear that our economic problems started when we shifted our economy's focus from building good products, offering sound services, and market innovation to simply borrowing money so we could gamble on financial products (i.e. the "financialization" of the American economy). When the Federal Reserve offers our nation's largest financial players near zero interest rates (0.1 percent) but then tells you and me that we have to accept whatever rate the banks offer there's something wrong in America.

The impact this shift has had on our lives can't be understated. The fact that the top 10 percent of income earners in America now take home over 50 percent of all national income tells us that something is awry in America.

Perhaps the biggest problem according to Collins is how growing wealth inequality has "distorted all the arenas of life that matter" in America. Today we are seeing the erosion of support for community institutions that are middle-class pillars, like public schools, public libraries, public parks, and public infrastructures. The flip side of this coin is a society whose embrace of mindless individualism is only matched by the glorification of financial institutions that, ironically, have had a field day feeding at the public trough of public bailouts, cheap money (thank you Alan Greenspan), and favorable legislation.

The end result is a general reluctance to see the world as it is.

How do we fix these problems? Chuck Collins has several common sense suggestions, which include taxing the top 1 percent at the same rates we did in the 1960s, reining in CEO pay, breaking up the big banks, and putting an end to corporate tax dodging (no more tax havens in the Cayman Islands), among others.

There's more, which you can check out here. But make no mistake. We are in trouble. The status quo is not sustainable.

- Mark 

INCREDIBLE ... THE TOP 0.01% MAKE 42% OF ALL POLITICAL CONTRIBUTIONS IN AMERICA

Check this out. In 2012 the richest .01 percent of all Americans - or the top 1 percent of the top 1 percent - spent about 42 percent of all the money that is paid out trying to influence American politics. As a point of contrast consider this: In 1980 this segment spent only about 16 percent on political campaigns.

Wait. It gets worse. Corporations now spend more money lobbying Congress than the American taxpayer spends funding Congress. 

For more on political influence and campaign spending by America's oligarchs, read this piece from Zero Hedge.

- Mark

WHY THE REPUBLICAN TAX CUT JIHAD NEEDS TO END

Imagine the following. Let's say you own a home that is worth $300,000. You put a small down payment on the house so your monthly payments are about $1,700. Would you rather have an annual salary of $54,000 to pay off your home mortgage or would you rather have $69,000?

What if the difference in your salary depended on you voluntarily giving up $15,000 so that your boss/manager could have a bonus every year? Would you do it? Would you do it if your boss/manager - who you have nothing in common with - promised to share in his prosperity by taking you water skiing on the boat he bought with his bonuses? What if he promised you twice?

Given the financial situation I just described it's hard to imagine anyone who would embrace the offer. So why in the world - given our current national debt woes - would we want to continue with the Bush era tax cuts that go primarily to the super rich and the financial managers on Wall Street? Yeah, I know they promised the wealth would trickle down, but check this out ...

The undisputed financial referee of the U.S. Congress, the Congressional Budget Office (CBO), has come out with their projections and analysis for our nation over the next few decades. It's not pretty.

The CBO points out that if we continue to maintain the Bush era tax cuts (listed in the graph as "Extended Alternative Fiscal Scenario") the total federal debt held by the public will grow from about 73 percent of GDP (what we produce) today to about 200 percent of GDP in 2037 (see also figure 1.2). Worse, federal revenues as a percentage of GDP will grow slightly from 16 percent today, and then stagnate at about 18 percent of GDP.

Translated this means that George W. Bush's tax cuts, which have primarily benefited the rich, will likely push our nation into bankruptcy if we keep them. They do nothing to remedy the financial hole we find ourselves in in today.

However, if we remove the Bush era tax cuts ("Extended Baseline Scenario") national revenue climbs to about 22-23 percent of GDP, and we have a chance. Federal debt held by the public doesn't hit 200 percent. Instead it drops to 53 percent (p. 2). This means we can begin to put a dent in the multi-trillion dollar financial hole that unfunded tax cuts for the rich and Wall Street bailouts have cost us since Ronald Reagan and the Bush's dumped their supply-side trickle down economic policies on the nation.

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On another but related note, according to the same CBO report, the total amount of national income that is projected to be excluded from social security taxes will jump from about 15 percent today to about 17 percent by 2037 (p. 64).

Why will this happen you ask? Because, currently, every penny a hedge fund manager from Wall Street earns after $110,000 is NOT taxed by social security. As income gaps between Wall Street and Main Street continue to rise more and more of our national income will be excluded from the social security tax. This means that the super wealthy (the top 1 percent) will continue to pay less into social security as a percentage of their income than you and I do (but we still get to pay for their bailouts).

Why is this important? Because if we raised the payroll tax limit from $110,000 to $300,000 there would be absolutely no problem with social security until at least 2075 (rescinding the Bush era tax cuts would help fix the problem too).

We would also bring some equity to our tax system when you consider that a family with two $100,000 incomes actually pays more into social security (since both are taxed separately) than the Wall Street hedge fund manager who brings home $5 million a year.
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Put another way, the GOP's tax cut for the rich jihad needs to stop. America's super rich have received the vast majority of all the income gains over the previous 30 years and all we have to show for it is a pile of debt and a casino economy structurally poised for (yet) another market collapse.

Main Street shouldn't have to shoulder the burden of every market collapse while America's super rich and Wall Street money managers walk away with all the gains.

- Mark

BAKERSFIELD ... WE'RE #1, FOR THE WRONG REASON (again)

According to the National Journal Bakersfield is #1 again ... when it comes to large cities in the U.S. with the lowest percentage of Latinos with a bachelors degree.

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Towns with worst Latino achievement in bachelors degrees

• 5%	Bakersfield, CA Total population 839,631 Percent of population that is Latino 49% Percent of Latino population that has bachelors degree 5%

• 6%	Visalia, CA Total population 442,179 Percent of population that is Latino 61% Percent of Latino population that has bachelors degree 6%

• 7%	Salinas, CA Total population 415,057 Percent of population that is Latino 55% Percent of Latino population that has bachelors degree 7%

• 7%	Stockton, CA Total population 685,306 Percent of population that is Latino 39% Percent of Latino population that has bachelors degree 7%

• 7%	Modesto, CA Total population 514,453 Percent of population that is Latino 42% Percent of Latino population that has bachelors degree 7%

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As a point of comparison, the cities with the highest percentage of Latinos with Bachelors degrees include Miami and Washington, DC. 

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Towns with best Latino achievement in bachelors degrees

• 26%	Miami, FL Total population 5,564,635 Percent of population that is Latino 42% Percent of Latino population that has bachelors degree 26%

• 23%	Washington, DC-VA-MD-WV Total population 5,582,170 Percent of population that is Latino 14% Percent of Latino population that has bachelors degree 23%

• 20%	Orlando, FL Total population 2,134,411 Percent of population that is Latino 25% Percent of Latino population that has bachelors degree 20%

• 20%	Boston, MA-NH Total population 4,552,402 Percent of population that is Latino 9% Percent of Latino population that has bachelors degree 20%

• 18%	San Francisco, CA Total population 4,335,391 Percent of population that is Latino 22% Percent of Latino population that has bachelors degree 18%

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The study cited by the National Journal evaluated educational attainment among Latinos in the top 150 metropolitan areas that are also home to at least 200,000 Latinos (37 in total).  You can read the National Journal's synopsis of the report, which includes high school graduates, here.

- Mark

WEEKEND READING (6-22-13)

Who had the worst week in Washington? The Majority Whip from my hometown (Bakersfield), Rep. Kevin McCarthy (Washington Post). It wasn't the first time ... not by a long shot.

Yet More Economic Nonsense ...
The anti-tax zealotry of Fox leads to the ridiculous conclusion that you should earn less in order to avoid paying more in taxes ... so, yeah, ask your boss to cut your salary so you can pay fewer taxes (Media Matters).

Bank of America home refinance employees were paid bonuses for pushing families into foreclosure. Relatedly, while processing loan applications designed to keep qualified homeowners in their homes BofA employees were "told to lie" ... so, yeah, the bonuses helped (NBC News).

The top 1 percent of income earners in America have not earned their 275 percent wage increase over the past 30 years. Their soaring salaries, stagnant middle-class wages, and rising income inequality were made possible by U.S. tax policy (Economic Policy Institute via Huffintonpost).


By the Numbers ... 
We're not #1? America doesn't have the #1 richest middle-class in the world ... we're ranked #27 (Alternet).

You just know the U.S. isn't here either ... The top 10 happiest countries (Travel Channel).

23 reasons why parents should not be allowed to text (Keep Smiling).

Pay attention ... 7 medicines that can wreck your sex life (AARP).

Car depreciation: 5 cars that lose value, fast (Bankrate).

Apart from registering republican (couldn't resist), the top 5 regrets of the dying (AARP).


NSA / Spy Stuff ...
Senator John Tester (D-MT): Snowden's release of top secret National Security Agency surveillance programs didn't compromise national security (TPM).

This is a good one ... Five myths about the National Security Agency (NSA) that you don't know about (Washington Post).

The NSA state of secrecy must end (Katrina vanden Heuvel / Washington Post).

The definition of Blowback (Upworthy).


Miscellaneous ...
What Congress and the media (willfully) ignore in the food stamp debate (The Nation).

Designers Dolce and Gabbana sentenced to jail for tax evasion, in Italy of all places (Zero Hedge).

The Wall Street Journal blows a lot of hot wind when it comes to explaining wind energy potential (Media Matters).

- Mark 

THE McCAINS ... SWIMMING IN IT

No wonder John McCain can't remember how many houses he and his wife occupy. They're too busy counting how much money they've made with Bush in the White House ...

According to a Center on Budget and Policy Priorities report the incomes of people like the "$100 million Trust Fund McCains" have grown in a manner that even put the top 1 percent of U.S. households to shame (you're in the top 1% if you make $376,000 per year).


How much did people like the McCain's make, you ask? Those living in the McCain's world have seen their average income rise $1.8 million per household since 2002.

As for the rest of us who occupy the bottom 90% of the income chart ($104,000 per year, and below) ... We saw our incomes "jump" 1.4%, for whopping income gain of $1,446 each.

But $1,446 actually means nothing (as, I'm sure you already know). Rising fees and deductibles eat away at our earnings. And at $4.00 a gallon we're just sending our income "gains" to Bush's Saudi friends and McCain's oil pals.

- Mark

WHAT IT TAKES TO BE IN THE TOP 1%

Want to live like you're part of the American elite that makes up the top 1 percent?

Unless you're fortunate enough to work on Wall Street, or in the financial sector - where your biggest mistakes are covered up and bailed out by Washington - you probably have some work to do. From Blue Nation Review ...

- Mark

IT'S OFFICIAL . . . 2014 WAGE GROWTH IN U.S. STALLED

It's official now. A study from the Economic Policy Institute found we had yet another year of poor wage growth in 2014. Wages essentially stalled or took a step backwards for the vast majority of Americans last year. In an interesting twist, because the biggest decline hit those with advanced degrees hardest - a 2.2 percent drop - falling wages can't simply be blamed on a lack of education or low skill levels.

In what might be considered some good news, workers in the bottom 40th percentile saw their wages increase by 0.3 percent. According to researchers who put the study together, much of this growth can be attributed to regions and states that increased their minimum wage.

Why is any of this important? Here's a meme that helps explain how low wages create a nation of working poor, which contributes to our national dependence on public assistance.

So, we need to ask ourselves, If the richest Americans have seen their share of the income pie grow why haven't ordinary Americans?

This is a fair question because beginning in the early 1980s we were told that reducing taxes on the richest Americans would lead to a booming economy that would make everyone better off.

In spite of a growing economy, this has not been the case ...

Think about the following.

According to David Cooper at the Economic Policy Institute, if minimum wage in America had been tied to an economic index after 1968 - rather than allowed to stagnate and wallow according to government policy and to the whims of the market - America's low wage earners would be far better off today.

Specifically, if we had indexed federal minimum wage in 1968 (then $1.15 / $1.60 an hour) to ...

* Inflation, minimum wage would be $9.25 today.
* Average hourly wages, minimum wage would be $10.59 today.
* Increases in productivity, minimum wage would be $20.16 today.
* Earnings of the top 1 percent, minimum wage would be $28.75 today.

Starting point of  minimum wage reflects purchasing power in 1968 (in 2012 dollars).
Actual minimum in 1968 wage was $1.15 / $1.60 an hour.

So, what's the answer? There are many suggestions, which include taking a look at our broader commercial and financial policies (which I discuss here and here). But there are also many naysayers, and economic illiterates weighing in on the discussion.

One of the challenges we have come from the intellectual midgets who use slippery slopes as their economic model. They like to argue that if we raise minimum wage to $15 an hour that we'll just end up at $25 or $35 per hour within  a week, at which point cute puppies die and economic Armageddon happens. What they ignore is what happened in America throughout the 1960s, and the economic realities of Seattle, San Francisco, and San Jose when they recently raised their minimum wage.

In my view, one thing is clear: More needs to be done to increase middle class wages in general.

How you do this is the tricky part. This is especially the case if minimum wage is going to become the middle class salary battleground. For example, should mom-and-pop stores and summer jobs for high school kids be excluded from minimum wage increases? Generally speaking, I think so.

Still, we need to acknowledge there will be little upward pressure on average wages if minimum wage is not increased. The last 40 years of trickle down economic policies make this clear.

Other issues those who oppose raising minimum wage need to consider include the declining amount of goods that can be bought with an hour of minimum wage work, rising tuition costs, purchasing power parity, the fact that so many minimum wage earners are heads of households, and the amount of public assistance that's required to help sustain someone working 40 hours a week, among other issues.

In the end, history tells us that the increasing wage and wealth gaps we are seeing in America today is not a sustainable path. Something needs to be done.

This is just not just me speaking. This the voice of every civilization through history.

- Mark