America’s Wealth Inequality Has Reached Staggering New Levels

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Jeff Bezos recently became the richest person on earth.

Bezos, head of the online retail behemoth Amazon, saw his wealth jump by $ 10 billion in just the past month to now more than $ 90 billion. That’s a stunning leap. But what’s truly stunning is that Bezos and the next two wealthiest Americans, Bill Gates and Warren Buffett, together now own more wealth than the entire bottom half of the American population combined.

The rich are getting richer.

We tracked the rise of today’s uber-wealthy in a new report, “Billionaire Bonanza 2017: The Forbes 400 and the Rest of Us,” published by the Institute for Policy Studies. We compared those at the top to the rest of the nation, whose economic condition isn’t plastered on the glossy pages of Forbes magazine, but instead buried in a study the Federal Reserve releases every three years.

We looked specifically at wealth — the money left over after totaling a family’s assets and subtracting their debt. Wealth is where the past meets the present. It’s a more accurate depiction of economic status than income, which just shows how much money one makes in a given year.

When Forbes first started compiling their famous list of the 400 wealthiest Americans in 1982, just $ 75 million would get you ranked. Even after accounting for inflation, that’s still less than $ 200 million in today’s dollars.

These days, the price of admission is a record $ 2 billion — more than 10 times higher.

This group of just 400 multi-billionaires owns a combined $ 2.68 trillion. That’s trillion with a T. And it’s more wealth than the bottom 64 percent of the U.S. population, an estimated 204 million people. That’s more people than the populations of Canada and Mexico combined.

On the other side of the economic spectrum, where the rest of the country resides, economic conditions are largely stagnant. The median family owns about $ 80,000 in wealth, excluding durable consumer goods like cars and appliances. This figure is essentially unchanged from 1983, when the Federal Reserve first started tracking household assets using a uniform survey.

In other words, despite 30 years of economic growth, the typical American family has barely seen a budge in their economic standing.

Today, about one in five households lives in “underwater nation,” with either zero or negative wealth. That figure is even higher for black and Latino households, the result of decades of discrimination.

We are witnessing the rising concentration and consolidation of our nation’s wealth into fewer and fewer hands. Most concerning is the potential for these wealth hoarders to use their outsized bank accounts to buy outsized power over our government.

A surefire way to make today’s economic inequality greater is to offer a massive tax break to the very wealthy, as President Trump’s “tax reform” plan would do. In fact, major tax breaks for the already wealthy is a big part of what’s created the inequality we see today.

When three people own more than half the country, and when a fifth of us have nothing, that’s the exact opposite of what we need to be doing.

The post America’s Wealth Inequality Has Reached Staggering New Levels appeared first on Institute for Policy Studies.

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Who Will Stop Stephen Miller, the Man Behind America’s Anti-Refugee Policy?

(Image: Freedom House / Flickr)

President Trump isn’t one to let a little cognitive dissonance get in the way of a nice dinner. So he didn’t miss Thursday’s gala fundraiser at the Kuwaiti embassy for the United Nations Refugee Agency (UNHCR), held at a time when his administration is barring a record number of refugees from entering the US.

Since 1980, presidents have set a ceiling on how many refugees the US may admit each year. That cap ranged from over 100,000 under Bush Sr and Clinton to around 80,000 for most of Bush Jr and Obama’s administrations. Trump recently lowered the ceiling to 45,000, the lowest it’s ever been, over the objections of the Pentagon, joint chiefs of staff, state department, and Vice-President Pence, all of whom wanted it higher. Trump is also seeking to enact new rules designed to block refugees from reuniting with family members and grind the resettlement process to a halt.

Why is the US turning its back on refugees who are fleeing humanitarian disaster and a group we consider a mortal enemy? As a recent New Yorker report details, this is largely the doing of Stephen Miller, Trump’s hardline anti-immigration immigration adviser.

In a White House characterized by organizational chaos, paranoia and general incompetence, a 32-year-old ex-Hill staffer with basic knowledge of the policy process can emerge as a one-eyed king in an administration of the blind.

Thus Miller has usurped the power of the National Security Council, state and defense departments to set refugee policy by himself, beyond the bounds of his formal authority, which is domestic, not foreign policy. Out of his depth as he is, his arguments are also unbounded by things like evidence and reason.

Miller’s, and thus Trump’s, fears are threefold: refugees are an economic, security, and cultural threat to the US.

Read the full article on the Guardian.

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Racial Inequality Is Hollowing Out America’s Middle Class

Kenneth Worles Jr. / Institute for Policy Studies

America’s middle class is under assault.

Since 1983, national median wealth has declined by 20 percent, falling from $ 73,000 to $ 64,000 in 2013. And U.S. homeownership has been in a steady decline since 2005.

While we often hear about the struggles of the white working class, a driving force behind this trend is an accelerating decline in black and Latino household wealth.

Over those three decades, the wealth of median black and Latino households decreased by 75 percent and 50 percent, respectively, while median white household wealth actually rose a little. As of 2013, median whites had $ 116,800 in wealth — compared to just $ 2,000 for Latinos and $ 1,700 for blacks.

This wealth decline is a threat to the viability of the American middle class and the nation’s overall economic health. Families with more wealth can cover emergencies without going into debt and take advantage of economic opportunity, such as buying a home, saving for college, or starting a business.

We looked at the growing racial wealth gap in a new report for the Institute for Policy Studies and Prosperity Now.

We found that if these appalling trends continue, median black household wealth will hit zero by 2053, even while median white wealth continues to climb. Latino net worth will hit zero two decades later, according to our projections.

It’s in everyone’s interest to reverse these trends. Growing racial wealth inequality is bringing down median American middle class wealth, and with it shrinking the middle class — especially as Americans of color make up an increasing share of the U.S. population.

The causes of this racial wealth divide have little to do with individual behavior. Instead, they’re the result of a range of systemic factors and policies.

These include past discriminatory housing policies that continue to fuel an enormous racial divide in homeownership rates, as well as an “upside down” tax system that helps the wealthiest households get wealthier while providing the lowest income families with almost nothing.

The American middle class was created by government policy, investment, and the hard work of its citizenry. Today Americans are working as hard as ever, but government policy is failing to invest in a sustainable and growing middle class.

To do better, Congress must redirect subsidies to the already wealthy and invest in opportunities for poorer families to save and build wealth.

For example, people can currently write off part of their mortgage interest payments on their taxes. But this only benefits you if you already own a home — an opportunity long denied to millions of black and Latino families — and benefits you even more if you own an expensive home. It helps the already rich, at the expense of the poor.

Congress should reform that deduction and other tax expenditures to focus on those excluded from opportunity, not the already have-a-lots.

Other actions include protecting families from the wealth stripping practices common in many low-income communities, like “contract for deed” scams that can leave renters homeless even after they’ve fronted money for expensive repairs to their homes. That means strengthening institutions like the Consumer Financial Protection Bureau.

The nation has experienced 30 years of middle class decline. If we don’t want this to be a permanent trend, then government must respond with the boldness and ingenuity that expanded the middle class after World War Two — but this time with a racially inclusive frame to reflect our 21st century population.

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Who Will Take America’s Place in Asia?

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(Photo: Wikimedia Commons)

Asia has been the future for more than a generation.

When Americans try to glimpse what’s to come, images of the Pacific Rim flood the imagination. For movie audiences in 1982, the rain-soaked Los Angeles of Blade Runner looked like downtown Tokyo. By 2014, the City of Angels in the Spike Jonze film Her had more of a Shanghai vibe. This upcoming October, with the release of Blade Runner 2049, Los Angeles will likely resemble Seoul.

Off-screen as well, Asia has been almost as good as a time machine. When I was coming of age, it was the place to go for anyone hankering for the next big thing. After college, a number of my classmates traveled to Japan to strike gold teaching English. Today, recent grads are more likely to visit the big cities of South Korea and China, or head further south to Singapore and Malaysia. They all come back, as I did in 2001 after three years in Asia, with stories of the future: bullet trains, otherworldly urban landscapes, the latest electronic gizmos.

So, it’s not surprising that when foreign policy elites think about what will replace a U.S. superpower in relative decline — speculation that has grown more feverish in the Trump era — they, too, look East. But no longer to Japan, which is passé, or South Korea, which has also perhaps peaked. Instead, they tremble before China, which has already surpassed the United States in gross economic output, while steadily enhancing its military capabilities. It seems like the only country remotely capable of challenging the United States as the world’s sole superpower.

The anxiety of declining U.S. influence became so intense during the Obama years that the notion of a Group of Two (G2) gained considerable currency: if we can’t beat ‘em, went the thinking at the time, then maybe we should join ‘em. However seriously intended such a proposal to co-rule the world with China might have been, the Obama administration never followed up beyond agreements on climate change and bilateral investment.

Ambitious and impatient, Beijing decided to strike out on its own. It has unveiled a twenty-first-century, industrial-strength version of the post-World War II Marshall Plan with which the U.S. once put a devastated Europe back on its feet.  China’s vision, however, focuses on the building up of all the countries on its periphery and some even further afield, as it tries to draw the whole Eurasian continent into its sphere of influence. Although it’s expected to provide an estimated $ 1 trillion to more than 60 countries, this “One Belt, One Road” plan is anything but a charity mission. It will direct a major influx of resources to Chinese construction companies, bring minerals and energy to Chinese factories, and promise a better potential return on investment than U.S. treasury bonds. Some infrastructure projects will also allay security concerns, like the energy pipelines to be built through Myanmar that will bypass the watery bottleneck of the Malacca Straits where a determined adversary could potentially shut off 80% of Beijing’s oil imports.

The victory of Donald Trump in the 2016 elections has only deepened anxiety over China’s ascendance among Washington’s policymakers and pundits. During his campaign, Trump frightened both the neocons and more conventional militarists with his talk of avoiding military entanglements overseas. As president, he has pledged to boost military spending but seems to have no idea of how to use all the Pentagon’s new toys other than to bomb the stuffing out of the militants of the Islamic State.

Nor does Trump care a whit about the soft power the United States has traditionally used to cultivate international support. For instance, Washington had long promoted international financial institutions and free trade agreements, but Trump has railed against the “false song of globalism.” China, meanwhile, is positioning itself to become the new overlord of global capitalism, even going so far as to set up a parallel international financial system to realize its vision. The Asian Infrastructure Investment Bank (AIIB), which began operations in January 2016 without the support of the United States or the European Union, will function like the World Bank in providing financing for China’s various building projects abroad. Whereas Beijing controls less than 5% of the votes at the World Bank, it commands 28% of the shares in the AIIB. Although still a small operation compared to China’s commercial banks, it will be quite capable of scaling up if the opportunity arises.

The contrast between Beijing and Washington has become even sharper around climate change. Trump’s denial of global warming — he once labeled it a Chinese “hoax” — has whetted the Beijing leadership’s appetite for global influence. As one of its top climate change negotiators said shortly after Trump won the November election, “China’s influence and voice are likely to increase in global climate governance, which will then spill over into other areas of global governance and increase China’s global standing, power, and leadership.”

All of this is part of a larger trend of power flowing from West to East. In 2010, North America and Western Europe were responsible for 40% of the global gross national product. By 2050, that share, the Economist Intelligence Unit estimates, will fall to 21%, with Asia’s share rising to a commanding 48.1%.

But don’t rush out to begin that crash course in Mandarin and exchange your dollars for yuan quite yet. The showdown between Beijing and Washington is unlikely to play out exactly as the Chinese hope and Americans fear.

The Decline of the United States

On a visit to Beijing in October 2016, in the presence of the Chinese leadership, Philippine President Rodrigo Duterte declared, “America has lost now. I’ve realigned myself in your ideological flow.” He went on to imagine a new axis of Russia, China, and the Philippines arrayed against the arrogance of American power.

Talk about shockers. The Philippines has traditionally been a cornerstone of U.S. influence in Asia, a place for Washington to station troops, dock ships, and, in the post-9/11 era, send military advisors to help suppress a Muslim insurgency. Moreover, Manila had gone toe to toe with Beijing over disputed islands in the South China Sea, even submitting its case to an international tribunal for arbitration. But that was before Duterte became president in May 2016 and labeled President Obama, who took a dim view of Duterte’s gruesome record of extrajudicial killings, a “son of a whore.”

The apparent defection of the Philippines was the coup de grâce for one of the Obama administration’s most heralded foreign policy efforts aimed at staving off American decline. In October 2011, just before the Arab Spring broke out, Secretary of State Hillary Clinton authored an article in Foreign Policy laying out what would become known as the “Pacific pivot.” The United States, at the time, was fitfully trying to extricate itself from wars in Iraq and Afghanistan. Thanks to imports from Mexico and Canada, as well as investments in shale fracking and sustainable energy, Washington was no longer quite so dependent on Middle Eastern oil. The Obama administration felt that it might finally put the failures of the Bush years behind it and turn to new horizons.

The Pacific pivot should have been called the Willie Sutton policy. When Sutton was asked why he robbed banks, he replied, “That’s where the money is.” So, too, with Asia. It contains four of the top 11 economies in the world: China’s, Japan’s, India’s, and South Korea’s. With the United States focused on losing bets in Iraq, Afghanistan, Syria, and Yemen, China has been cornering this rich Asian market. By now, it has become the leading trading partner for South Korea, Japan, Australia, and virtually all of Southeast Asia.

To recapture its edge in the region, the Obama administration promoted a free trade compact known as the Trans Pacific Partnership (TPP). U.S. negotiators managed to achieve the near impossible by getting a dozen disparate countries on the same page while leaving China out of the picture. But Congress proved, at best, lukewarm on the deal. And sentiment among the American public ran even colder — so cold, in fact, that one of its chief architects, Hillary Clinton, fearing that the trade agreement might take her presidential bid down in flames, came out against it in 2016. Withdrawing from the TPP would, of course, be one of Donald Trump’s first acts as president.

The United States, in fact, faces more than just an economic challenge in Asia. Washington had long considered the Pacific to be an “American lake.” It currently has 375,000 military and civilian personnel stationed within the Pacific Command’s ambit and devotes roughly half its naval capacity to Pacific waters. It maintains treaty alliances with Japan, South Korea, and the Philippines, as well as dozens of military bases in the region. But China, after more than a decade of double-digit increases in military spending, has begun pushing back against American pretensions to be the only Pacific power around. It has developed new weapons to deny the U.S. military access to its coastal waters and has come to excel at cyberwarfare, vacuuming up huge amounts of confidential data by hacking into U.S. government agencies. Meanwhile, in the world of spy versus spy, China has managed to plug leaks on its end by jailing or killing more than a dozen U.S. intelligence assets.

Even before the ascension of Donald Trump, the Pentagon’s effort to pivot eastward had come up short. For all its overwhelming military edge, Washington has increasingly found itself unable to dictate outcomes through force anywhere in the Greater Middle East. The rise of the Islamic State in Iraq and Syria, the resurgence of the Taliban in Afghanistan, and turmoil in Yemen and Libya have all continued to bedevil the U.S. military.

In the meantime, the Obama administration made some token rearrangements of its forces in the Pacific, sold some high-tech weaponry to its allies in the region, and threw some brush-back pitches at Beijing. But in the end, as with so many of Obama’s initiatives, the Pacific pivot proved largely aspirational.  The U.S. never really pivoted out of the Greater Middle East.

As a presidential candidate, Trump was content to bluster about Chinese threats, even as he also threatened to withdraw the U.S. nuclear umbrella from both Tokyo and Seoul. He demanded that U.S. allies pony up more money for American help and protection, while offering no new ways of anchoring the United States in the Pacific.

Now in the Oval Office, Trump has sent mixed signals. He’s repaired relations with Chinese leader Xi Jinping, but he’s also been pushing a major rise in the Pentagon budget. And what country would be the target of those additional tens of billions of dollars in military spending? The U.S. Navy certainly doesn’t need a 350-ship force to counter the Islamic State. Trump has welcomed the election of South Korea’s new president, Moon Jae-in, but also insists that he wants to renegotiate “bad” trade and security deals with South Korea. He has tried to bully North Korea, but has also held out the possibility of meeting personally with that “pretty smart cookie,” Kim Jong-un.

Thanks to his erratic pronouncements, even though it’s early in Trump’s term, American influence in the region is already dropping as inexorably as the president’s approval ratings at home. Add to this mix a president who only wants big wins but doesn’t see the likelihood of that happening in Asia and you have the definition of decline.

That decline has, in recent years, often been calculated in terms of approaching horizons: when North Korean missiles can reach the West Coast; when China’s military spending pulls closer to the Pentagon’s; when Japan and South Korea, like the Philippines, begin to reconsider their allegiances. Now, in the Trump era, add one more item to the list: when Asia faces an incompetent, corrupt, and self-defeating administration in Washington.

The way seems clear enough for China, the strongest country in Asia, to fill the potential vacuum.  But, as they say, the best-laid plans oft do go astray.

The Weakness of Asia

Japan is the incredible shrinking country. Between 2010 and 2015, the population of America’s most steadfast ally in the Pacific dropped by a million people to just over 127 million. As a result of a strikingly low fertility rate and negligible immigration, there could, according to official projections, be only 85-95 million Japanese by 2050. By 2135, after living in a fossilized society, the last Japanese, at the age of 118, could breathe his or her final breath. This worst-case scenario, as spelled out by former trade negotiator Clyde Prestowitz in his recent book Japan Restored, is perhaps far-fetched, but Japan is nevertheless on a path toward what looks like national seppuku: ritual suicide by attrition.

Ah, well, that’s Japan, you might think. It’s been in a fiscal funk since its economic bubble burst back in 1990. But the rise, stagnation, and shrinkage of that country remains a cautionary tale for all the other lands that have followed its path of export-led and state-facilitated growth.

After all, South Korea has entered its own period of diminished economic expectations, with anemic growth, widening inequality, and pervasive corporate corruption. Young South Koreans, facing the prospect of unemployment or poorly compensated contract labor, refer to their country as “Hell Choson,” a play on the Choson dynasty that ruled from 1392 to 1897. Taiwan, another member of the “flying geese of industrialization” responsible for Asia’s tremendous economic growth, faces a strikingly similar set of problems, according to economist Frank Hsiao, including “low and stagnating wage rates, increasing income inequality, the hollowing out of domestic industries, and languishing exports.”

Some of the shine is even wearing off China’s economic miracle. The days of annual double-digit growth in its gross national product are long past.  Officials are happy now if they can cite growth figures closer to 7% (and even those are believed to be overstated). The Chinese labor force has been contracting since 2012. Strikes and labor protests increased dramatically in 2016, while unrest continues in China’s westernmost provinces of Xinjiang and Tibet. The government’s official anti-corruption campaign, despite netting some highly placed individuals, has only driven the corrupt into more discrete forms of graft.

Meanwhile, it’s not only Japan that faces a demographic crisis. The fertility rates of both Taiwan (1.12) and South Korea (1.25) are even lower than Japan’s (1.41), while China’s (1.6) is only a bit higher. None of them is close to the replacement rate of 2.1. Approaching 2050, all four countries will have to dig deep to pay the retirement benefits and healthcare costs of all the industrious workers currently outperforming their counterparts elsewhere in the world. What was once called “Japan passing” — investors skipping that country in search of better opportunities elsewhere in the region — is already morphing into “China passing.” Financial flows are also going to be affected by the rising waters of climate change, which, later in the century, will threaten major cities like Tokyo, Shanghai, Hong Kong, and Singapore.

Predicting the coming supremacy of the East has been a veritable cottage industry in the West, and its stock is still rising as China’s One Belt, One Road venture, meant to tie the vast Eurasian continent together, goes head to head with Trump’s “my way or the highway.” The future, however, promises to be far messier than China or its boosters imagine. Demographics, corruption, and reduced economic growth — not to mention environmental degradation and the declining legitimacy of its ruling party’s ideology — are by no means the only problems that Beijing faces.

Asia’s New Nationalism

The United States once billed itself as the antidote to nationalism in Asia. After World War II, it established a permanent military presence across the region to prevent the resurgence of Japanese militarism. It portrayed itself as a neutral party, with no territorial ambitions. It restored the island of Okinawa to Japan in 1972. It refused to take sides in several island disputes in the region. In this way, its liberal internationalism squared off against the illiberal Communisms of China, North Korea, Vietnam, Cambodia, and Laos.

Both these supranational ideologies, which flourished in the region during the Cold War, have entered hospice care in the twenty-first century. Communism has functionally disappeared from the region, replaced by nationalisms of varying degrees of intensity.  Xi Jinping’s China and Kim Jong-un’s North Korea are hardly the only places where nationalism has taken root.

In Japan, for instance, Prime Minister Shinzo Abe is busy trying to rebuild the very militarism that the United States once professed to despise. A succession of U.S. administrations has aided and abetted this right-wing nationalist effort to dispense with the country’s post-World War II “peace constitution” and push the Japanese Self-Defense Forces onto the offensive.

Nationalist leaders, meanwhile, have assumed power throughout Southeast Asia: the murderous president of the Philippines, Rodrigo Duterte; the former military commander, now prime minister of Thailand, Prayuth Chan-ocha; and the corrupt Najib Razak, prime minister of Malaysia. Even more ominously, nationalism has taken hold in South Asia, particularly in India, which recently replaced Great Britain as the world’s sixth largest economy and where Prime Minister Narendra Modi has made Hindu exceptionalism the heart and soul of his ruling party.

One obvious result of this rising nationalism has been escalating arms imports across the region. According to the Stockholm International Peace Research Institute, India became the world’s largest arms importer in 2012-2016. During that period, Southeast Asia’s arms imports rose by more than 6%, with Vietnam jumping to 10th place globally. In 2012, for the first time, Asia surpassed Europe in overall military spending.

Both the nationalist rhetoric and those weapons imports are certainly linked to regional perceptions of the waxing and waning of great powers. To reinforce their claims to the South China Sea and several other disputed territories, countries in the region feel the need to arm themselves in the face of a newly aggressive China and a perennially distracted United States.

At the moment, those two countries are cooperating in one key area: pouring money into the kind of military hardware that could someday lead to a catastrophic showdown.  This reality has led ever more foreign policy analysts to invoke the “Thucydides trap,” in which a rising power like Athens (read: China) takes on the hitherto dominant power Sparta (read: America) in a long, debilitating conflict like the Peloponnesian War (read: World War III).

But the conflicts in Asia may, in fact, shape up quite differently. Movements for greater self-determination are undercutting the reach of both the rising and the reigning superpower. Consider the contrasting examples of Myanmar and South Korea.

China is the largest investor in Myanmar, and at one time the two countries were as thick as thieves. But relations between them have grown tense. In 2011, the new civilian-led government in Myanmar stopped work on the Myitsone dam, one of a number of mega-projects financed by Beijing. “Plenty of Burmese blame China for helping to prop up the military junta,” writes journalist Tom Miller in his new book, China’s Asian Dream. Newly enfranchised, the Burmese have taken aim at projects like Myitsone, where 90% of the electricity generated would have gone to China. Myanmar’s leader Aung San Suu Kyi must now decide between permanently mothballing the dam, which would require paying back the $ 800 million owed Chinese financiers, or going forward with a deeply unpopular project she previously opposed.  

The example of Myanmar is not unique. Sri Lanka has recently swung away from China and back toward India. Filipino President Duterte has recently edged back toward a United States led by Donald Trump, who has praised the Philippine leader’s drug war (despite its massive human rights violations). Vietnam is perennially suspicious of China’s geopolitical intentions, but anti-Chinese sentiment has also been building in LaosIndonesia, and Malaysia. One Belt, One Road might outstrip the Marshall Plan in size, but it lacks the underlying regional political solidarity that ensured the latter’s success.

And yet China is not alone in feeling a backlash in the region. In South Korea, for instance, a decade of conservative rule came to a crashing end with the impeachment of President Park Geun-hye on corruption charges, a hastily organized election, and the victory of progressive Moon Jae-in. The new South Korean leader is no firebrand, so don’t expect a dramatic break with Washington. South Korea has been subservient to the United States for too long to risk that any time soon. Moon has, however, promised to take another look at the missile defense system — the Terminal High Altitude Area Defense (THAAD) — that the United States worked so hard to deploy in South Korea before he took office. The new president also wants to mend fences with China, the country’s largest trading partner, and revive a more cooperative relationship with North Korea as well.

Meanwhile, in Japan, opposition from politicians, activists, and ordinary citizens in Okinawa has blocked a plan hammered out in Tokyo and Washington to close an old U.S. military base in the city of Futenma, only to build a replacement elsewhere on the island. Okinawa is where America houses a good deal of its Pacific firepower. The refusal of Okinawan inhabitants to support the construction of the new base has not only scrambled the Pacific plans of both Barack Obama and Hillary Clinton but given new legitimacy to the idea of withdrawing U.S. forces from Japan and South Korea to a secondary tier of islands like Guam.

The growing willingness of Asian countries to put their own interests above those of their putative patrons has also made it more difficult for the region to find common ground. “Asia is not remotely cohesive,” writes Jessica Mathews of the Carnegie Endowment for International Peace. “There is no ‘East’ comparable to the ‘West.’ Though the region is integrating economically, it is riven by active conflicts, bitter historical memories, and deep cultural divisions.”

Past as Prologue?

If liberal internationalism no longer appeals to U.S. allies in Asia — or, indeed, to the new leadership in Washington — it might be easy enough to assume that the future will be a replay of the past: the return to a Sinocentric universe that prevailed for 1,000 years or more in the region. Instead of local satraps loaded with gifts visiting an emperor in Beijing, the leaders of Cambodia, Laos, Myanmar, and the Philippines will build dams and ports and pipelines with Chinese money and then repatriate much of the proceeds to that country.

As it happens, though, the intensification of nationalism in Asia has greatly complicated this picture and may leave leaders like Duterte playing Beijing off against Washington, or striking out on their own, or perhaps seeking help from India — or even Saudi Arabia, which has made a bid for greater influence among Muslim-majority countries like Indonesia and Malaysia.  If the rise of China has caused much anxiety in the West, so has the possibility that no country will become dominant in Asia in the wake of U.S. decline and that a new kind of chaos will descend on the region.

“The idea of a multipolar world, without dominant powers and guided solely by the rule of law, is theoretically attractive,“ Financial Times journalist Gideon Rachman writes in his recent book Easternization. But he adds, “I fear that just such a multipolar world is already emerging and proving to be unstable and dangerous: the ‘rules’ are very hard to enforce without a dominant power in the background.”

For years, Asia has contemplated an alternative to both Chinese and American hegemony. Following the example of the European Union, politicians and scholars have imagined a future of economic and political integration. But the Association of Southeast Asian Nations, the Shanghai Cooperation Organization, and similar efforts continue to fall far short of the EU ideal (which itself looks increasingly shaky and fragmented).

In other words, despite all those dreams of Asia’s glittering future, it’s unlikely to resemble the peaceful prosperity of Europe, nor is it likely to see a continuation of U.S. hegemony or a repeat of the China-centered system of centuries past. It’s likely, however, to involve population decline, economic contraction, heightened nationalism, and rising waters — a future, in short, filled with troubles and dangers of every sort.

Although Washington still commands considerable power in the region, it could stand back, Trump-like, and just watch everything unravel. Or, alongside Beijing, it could make a serious investment in a new organization of security and economic cooperation, in which the United States and China would be equal partners, the region could have its collective say, and the new nationalism would be deprived of its major raison d’être.

Without such a supranational vision that could bring the region together around the twin threats of climate change and economic inequality, one thing is essentially guaranteed.  The Asia to come won’t look shiny and new like some Hollywood movie. The future may not look like Asia at all, but more like Europe circa 1913, at the edge of conflict and cataclysm.

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Reagan’s Tax Reform Was A Bipartisan Effort of Surrender to America’s Deepest Pockets

ronald-reagan-tax-reform

(Photo: Wikimedia Commons)

Bitter partisanship. Hopeless gridlock. A tax code littered with loopholes that only special interests could love.

Washington’s latest attempt to overhaul the federal tax code, the first under Donald Trump, is getting underway with all these familiar realities in place. But despair not, former U.S. senator Bill Bradley advises in a prominently featured New York Times commentary, we can overcome all these obstacles.

President Ronald Reagan signs the Tax Reform Act of 1986. The legislation dropped the tax rate on income in America’s top income bracket to 28 percent, a level down from the 70 percent America’s richest faced in 1980 and the 91 percent they faced as late as 1963. Credit: White House photo.

How can Bradley, a New Jersey Democrat, be so sure? He cites his own personal experience within the convoluted legislative process that produced the Tax Reform Act of 1986. Lawmakers involved in that process, Bradley informs us, faced a similar set of obstacles. They overcame them all, says Bradley, “showing that clear principles, legislative skill, and persistence could change a fundamentally unfair system.”

We do, today, certainly live in different times, Bradley acknowledges, but “perhaps the lessons of the past show a way forward.” Now as then, he asks us to keep in mind, a little “trust and mutual respect” — a willingness to compromise — can go a long way.

Bradley’s particular take on the 1986 Tax Reform Act actually offers up nothing particularly new. Washington insiders have considered the 1986 tax bill a smashing success for quite some time. They mourn the loss of the bipartisan comity that made the effort possible – and blame our current tax mess on that loss.

Blame belongs elsewhere. Yes, we do need to learn the lessons of 1986, as Bradley suggests. But we first need to recognize what the 1986 Tax Reform Act represented. What Bradley and his wistful insider buddies hail as a success amounted much more to a surrender — to America’s deepest pockets.

In the years right after World War II, these deepest pockets fell under siege. In the new America that emerged out of the New Deal, America’s wealthiest faced tax rates that soared above 90 percent on earned income over $ 400,000. These rates ate away, year by year, at the top 1 percent’s share of the nation’s income and wealth.

America’s middle class, by contrast, prospered as never before. In the immediate post-war decades, the real incomes of average Americans doubled.

Bradley and his Wall Street wing of the Democratic Party have a different story to tell about the postwar years.

“After World War II, federal tax rates rose steadily, loopholes proliferated, and the tax code grew more complex,” writes Bradley, now a managing director for a New York investment bank, in his New York Times piece. “By the 1980s, its unfairness was indisputable.”

Bradley’s story, in other words, starts with rising tax rates, a frame of reference that neatly jibes with the conservative Republican world view. Outrageously high tax rates, this view holds, will always trigger a mad — but understandable — scramble for loopholes. Lower the high rates, and loopholes will go the way of the dodo.

Progressive Democrats in the years after World War II saw that scramble for loopholes. But they also saw enormous value in high tax rates on high incomes. Their political response: fight to plug the loopholes.

In 1961, the newly elected Kennedy administration started down that loophole-battling road, then backed away, unwilling to expend the political capital necessary to prevail. President Kennedy instead ending up pushing for across-the-board tax cuts. He asked Congress to cut the tax rate on top-bracket income from 91 to 65 percent. Congress did eventually opt to drop the tax rate, to 70 percent, in 1964.

The rate remained at that top level until 1981, when the newly elected President Ronald Reagan signed legislation, backed by a sizeable cohort of Democrats, that slashed the top rate down from 70 to 50 percent. That reduction set the stage for what Bradley sees as the heroic grand compromise of 1986: Democrats agreed to lower top rates even further and Republicans agreed to plug loopholes.

By signing this 1986 compromise into law, Bradley believes, Ronald Reagan was acting reasonably and presidential. But Reagan had no real reason not to sign the legislation. The 1986 Tax Reform Act gave Reagan the significantly lower tax rates — 28 percent on income in the top tax bracket — he had been fighting for ever since he first confronted tax rates over 90 percent as a Hollywood movie star.

And what did Reagan and his fellow deep pockets have to give up in return for this substantially lower top rate? An assortment of loopholes they mattered much less with a top tax rate that had shrunk so low.

The most significant loophole plug in the 1986 Tax Reform Act, adds veteran Phoenix tax attorney Bob Lord, happened to involve the passive activity loss rules. This plug drove a stake in the heart of the tax shelter industry.

“But the truth is,” notes Lord, “that the IRS was clobbering tax shelter investors in court anyhow.”

The “compromising” the Reaganites did in 1986, Bill Bradley believes, shows that a bipartisan spirit can work political miracles. In fact, the 1986 miracle worked overwhelmingly one way. The Reaganites didn’t compromise away any of their core commitments. The Democrats did.

In the Tax Reform Act of 1986, Democrats like Bradley essentially rubberstamped the Reagan Revolution against a more equitable distribution of America’s income and wealth. They abandoned what little remained of the New Deal’s opposition to grand concentrations of income and wealth.

With their “bipartisan” support for the 1986 Tax Reform Act, Bradley and his lawmaker soulmates only hastened that concentration, as data compiled by Thomas Piketty and other economists for the World Wealth and Income Database make plain.

In 1980, the year of Ronald Reagan’s election, America’s top 1 percent accounted for 9.4 percent of the nation’s income. America’s poorest 50 percent that year took home almost twice that, 17.8 percent.

By 1985, the top 1 percent had closed that gap. Their share of national income after four years of the Reagan Revolution, had jumped by nearly a third. Americans in the bottom half of income-earners, meanwhile, saw their share dip by a third.

By 1989, the year Reagan left office, America’s top 1 percent was taking home nearly as much income as the bottom 50 percent. Since then, the 1 percent share has increased still higher, to over 20 percent. We’ve gone from an America where the bottom 50 percent earned double the income of the top 1 percent to an America where the top 1 percent makes double what the bottom 50 percent earns.

The really scary part? That 1 percent share could go even higher if we embrace the lessons of 1986 that Bill Bradley so wants us to cheer.

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This Could Be the Year to Close America’s Surplus Military Bases

Philadelphia Naval Shipyard

(Photo: Robert J. Sitar / Wikimedia Commons)

Describing the current policy landscape as “turbulent” would be understating things.

But some things haven’t changed. Like the perennial effort to convene a new Base Closure and Realignment Commission (BRAC) to look at shuttering military bases that the Pentagon doesn’t need. And the pushback from members of Congress who are hell bent on shutting down any discussion of this.

They’ve been successful with the shutdown for 11 years now. But this year may be different.

In a Senate Armed Services Committee hearing on the defense budget last week, Sen. John McCain, who chairs the Committee, accused his colleagues of “cowardice” in refusing to even talk about convening a process to decide which facilities should be closed and repurposed.

The Pentagon has estimated that the previous base closure rounds have saved taxpayers about $ 12 billion each year. Defense Secretary Jim Mattis, who pledged to go after Pentagon waste in his confirmation hearings, should be interested.

Will Congress be?

Read the full article on The Hill.

The post This Could Be the Year to Close America’s Surplus Military Bases appeared first on Institute for Policy Studies.

Miriam Pemberton is the director of the Peace Economic Transitions Project at the Institute for Policy Studies.

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America’s Construction Carnage

construction-carnage-wall-street

(Photo: Juan Camilo Trujillo / Flickr)

Try this the next time you find yourself standing on a Wall Street corner. Ask the first power suit you see why Wall Street’s finest deserve to be making $ 25 billion in bonuses a year.

Wall Streeters actually have a ready response for impertinent questions like this: We deserve the big bucks, they’ll tell you, because we take risks.

Truth be told, risk-takers do abound in the canyons of Manhattan. But to see them, you have to lift your line of sight off street level — and beyond the corner offices of Wall Street’s high-finance movers and shakers.

You have to look skyward, up into the “high steel” world of construction workers continually adding new towers to the city’s skyline.

These workers risk life and limb every day — and don’t get anywhere near the reward that those “risk-taking” power suits are grabbing.

How risky has construction work in New York become? Over the past two years, 31 construction workers in the city have died. Between 2011 and 2015, the city’s Department of Buildings reports, instances of on-the-job construction injuries climbed 250 percent.

But New York hardly counts as an isolated example. In 2014, the latest year with full stats, 899 construction workers nationwide died from fatal work injuries, a 9 percent increase over the year before.

Why so much carnage in construction? Some of the same factors that make Wall Streeters fabulously rich are making construction work tragically unsafe.

Start with the steady erosion of America’s unions.

Fewer construction workers today carry union cards, and this declining union presence has severe consequences for safety. Construction unions have traditionally run well-regarded safety training programs, and they give individual workers the clout they need to challenge hazardous working conditions.

Without unions, workers in construction regularly find themselves both inadequately trained and forced to labor in situations that could — and do — kill them. Of the 31 New York construction workers who’ve perished on the job over the last two years, 29 have died working on nonunion job sites.

Unfortunately, even union sites have become more dangerous, as huge national construction companies have come to dominate what used to be a small-business sector.

In years past, local unions could bargain with modest-sized construction contractors and not feel overmatched. Not anymore. Unions know that if they challenge today’s construction giants too strenuously on safety, construction work will flow even faster to nonunion operations.

And what about OSHA, the federal agency that’s supposed to protect the job safety of America’s working people?

The anti-government and anti-regulation hysteria of recent decades has left OSHA woefully understaffed. Chronic budget squeezes have trimmed the ranks of OSHA job-site inspectors down to about 2,200 — or approximately one compliance officer for every 59,000 American workers.

What could turn this situation around? We need stronger safety regulations, for starters, and a stronger OSHA to enforce them. We need public policies that give all workers a shot at gaining effective union representation.

We need, in other words, everything that the new Trump administration isn’t planning to deliver. Trump has already put the kibosh on any new hires at OSHA and announced plans to cut existing federal regulations — on workplace safety and everything else — by 75 percent.

More carnage is coming — unless we start making attacks on job safety politically unsafe.

The post America’s Construction Carnage appeared first on Institute for Policy Studies.

Sam Pizzigati is an associate fellow at the Institute for Policy Studies.

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America’s Dark Underbelly Is Now Its Face

donald-trump-third-base-1

(Photo: Gage Skidmore / Flickr)

An election that might have marked the ascension of America’s first woman president has instead proven historic for an altogether different reason. Namely, that Americans voted for the unabashedly anti-democratic alternative offered by her rival.

And they did it despite his almost cartoonish shortcomings.

Trump didn’t just offend pious liberals with his hard line on immigration, disdain for democratic norms, and disinterest in policy. He transgressed standards of decency across all political persuasions.

He bragged about sexually assaulting women. He disparaged injured war veterans. He was endorsed by the KKK. And now he’s America’s voice on the world stage.

How could that happen? Here’s one theory you might’ve heard:

After years of seeing their jobs outsourced, their incomes slashed, and their suffering ignored, the white working class threw in their lot with the candidate who cast aside political niceties and vowed to make their communities great again.

It’s a nice story — I even used to buy a version of it myself. But while Trump surely did clean up with white voters, the evidence simply doesn’t support the idea that they were as hard-up as the story goes.

For instance, Pollster Nate Silver found during the GOP primary that Trump supporters pulled in a median income of $ 72,000 a year — some $ 10,000 more than the national median for white households. And while many did come from areas with lower social mobility, they were less likely to live in the stricken manufacturing communities Trump liked to use as backdrops for his rallies.

So if it wasn’t the economy, was it Hillary?

Clinton was clearly unpopular, in many cases for defensible reasons. She was cozy with Wall Street. She backed poorly chosen wars. Apparently people didn’t like the way she emailed.

But when you consider that we chose to give the nuclear codes to a man whose own aidesrefused to trust with a Twitter account over a former secretary of state, it hardly seems like Trump voters were soberly comparing the two candidates.

Instead, Vox writers Zach Beauchamp and Dylan Matthews poured through scores of studies and found a much more robust explanation — and it isn’t pretty.

It’s what pollsters gently call “racial resentment.”

That is, Trump’s core supporters were far more likely than other Republicans to hold negative views of African Americans, Latinos, and Muslims. They overwhelmingly favoredthe mass deportation of immigrants. And they were the most likely Republicans to agree that it would be “bad for the country” if whites comprised a smaller share of the population.

What’s more, another study found, racially resentful voters flocked to the GOP candidate regardless of their views about the economy. Their views on race drew them to Trump, not their job prospects.

Scores of other data back this up. Despite years of job growth and the biggest one-year bump in middle-class incomes in modern history, another researcher found, Republicans’ views of both African Americans and Latinos nosedived during the Obama years.

Not even a slowdown in immigration itself staunched the venom. Net migration between the U.S. and Mexico fell to 0 during the Obama years, yet Trump still launched his campaign with an infamous tirade against Mexican “rapists” and “murderers.”

None of that is to accuse all Trump voters of racism. But even if the bulk of them were just Republicans following their nominee, the social science strongly suggests that one of our major parties has been captured by whites so anxious about the changing face of America that they were willing to vote alongside the Klan.

That fringe has turned mainstream. The Trump years to come may herald any number of horrors, but the scariest part may be what we’ve learned about ourselves.

The post America’s Dark Underbelly Is Now Its Face appeared first on Institute for Policy Studies.

Peter Certo is the editorial manager at the Institute for Policy Studies.

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America’s Staggering Racial Wealth Gap Is Getting Worse, Not Better

(Image: Flickr / Johnny Silvercloud)

(Image: Flickr / Johnny Silvercloud)

Two years ago this month, Michael Brown was shot by a white police officer in Ferguson, Missouri, sparking months of sustained protests and helping to ignite the Black Lives Matter movement. While police violence and inequities in our criminal justice system have dominated the discussion of our racial divide since then, there’s a lot more to the story.

Less covered — but just as startling — is the stark racial economic divide in this country.

In a new report called “The Ever-Growing Gap,” my co-authors and I examine 30 years’ worth of data on the wealth divide between white, black and Latino families. Even we were shocked at just how wide the chasm has become — and how much wider it’s going to get if we don’t do something about it.

Read the full article on Inside Sources’s website.

The post America’s Staggering Racial Wealth Gap Is Getting Worse, Not Better appeared first on Institute for Policy Studies.

Josh Hoxie directs the Project on Opportunity and Taxation at the Institute for Policy Studies.

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Who’s Profiting From America’s Private Juvenile Prisons?

private-prisons-tallulah

No place in the world imprisons people at a higher per capita rate than the state of Louisiana. And that incarceration pays — for the profiteers who run the state’s private prisons

For the incarcerated, it’s a totally different story. In 1998, the New York Times described one of Louisiana’s privately run facilities, the Tallulah Correctional Center for Youth, as possibly the worst such prison in the nation, a site “rife with brutality, cronyism, and neglect.”

Grace Bauer-Lubow, whose son was incarcerated at Tallulah, became a leader in the grassroots drive that shut the facility down. That struggle looms large in a new report from the Institute for Policy Studies’ Criminalization of Poverty Project, Mothers at the Gate: How a Powerful Family Movement Is Transforming the Juvenile Justice System.

Report co-author Karen Dolan sat down with Bauer-Lubow to talk about the Tallulah facility, the fortunes made off it, and the families that closed it.

How did you come to know the Tallulah youth prison?

My son Corey was sent there at age 13 after breaking into a pickup truck. He went through a juvenile reception and diagnostic center, and the state of Louisiana decided that a rehabilitation treatment facility would be best for him. They showed me some very nice brochures about Tallulah.

I didn’t know anything about Tallulah beyond the brochures. I didn’t even know it was a prison. But when we drove up, it was nothing like a treatment facility. It was obviously a prison: concrete walls, razor wire, prison guards.

And then it would become clear, from the very first visit we had after his confinement, that he was being abused. He wasn’t receiving education and treatment. His face and ribs were black and blue with bruises. He wasn’t getting enough to eat. He was dirty with boils on his skin.

Can you tell us about the origins of the prison?  

The Trans-American Development corporation built this prison with zero background in youth development, rehabilitation, trauma, or mental health treatment. They were simply businessmen. And the money for Tallulah had to be borrowed against Louisiana’s credit. So in order to close it, they would need to default and drive down the whole state’s credit rating. So even though everyone knew rather quickly that Tallulah was a hell hole, there was no political will to close it.

Louisiana’s legislative auditor found that between January 1995 and April 2001, three executives at Trans-American Development Associates received $ 8.7 million dollars from the Tallulah deal. Even after lawsuits forced the state to take control of the prison in 1999, these three continued to grab over a half a million dollars per year. How did this factor into the appalling conditions at the prison?

You had this profit motive in there and no mechanism for oversight. The level of violence and mismanagement was stunning.

How could such cruelty proliferate in a facility for youth?

A number of reasons. The only place to file a grievance was with the Louisiana Department of Corrections, where complaints went to die. And, remember, many families feared retribution against their children on the inside if they complained.

I complained and weeks later got a form letter back saying they were investigating. I never got another response after that.

Trans-American operated under a shroud of secrecy. They hired guards and covered up violence. The secrecy began to unravel only after the Juvenile Justice Project of Louisiana and the U.S. Department of Justice got involved and launched a lawsuit.

The Louisiana secretary of education came out to assess the situation as a result of this lawsuit. She personally told me that my son was going to die if he stayed there under the conditions she found.

The prison health facilities at Tallulah couldn’t accommodate the number of serious injuries and sexual assaults, so some injured children had to be treated outside the prison, in public health facilities. That exposed some of the horrors of Tallulah, too.

Can you tell us about the Juvenile Justice Reform Act of 2003 and why it was necessary?

This state legislation was a direct result of our Close Tallulah Now campaign. It basically acknowledged that Louisiana had a ‘lock ’em up and throw away the key’ mentality, not a rehabilitation mentality.

Most of the children at Tallulah were there on petty offenses. They were a long way from their families and communities. The Juvenile Justice Reform Act favored facilities in children’s communities. It forced the state to take the money out of warehousing kids and put it back into the community to help them.

Tallulah was finally closed to juveniles in 2004. What brought the closure about?

A convergence of all of the right people, at the right time, with the right target. We had the Juvenile Justice Project of Louisiana and the Justice Department lawsuit and many allies and advocates. The community of Tallulah eventually began to turn against the prison as well, because all of the good jobs promised to the community never materialized.

And as soon families came into the fight, we had faces to the statistics. This is what finally began to shift the legislative bodies on this away from fearing a credit default, to saving children. Within two years, we built up the political will for change.

The Prison Legal News reports that Damon Hininger, the CEO of the nation’s largest private prison corporation, CCA, received a base salary of $ 882,807 in 2015, with over $ 2.5 million in other compensation. George Zoley, the CEO of the GEO Group, the country’s second-largest private prison corporation, pocketed a $ 1 million salary, with $ 5.6 million in additional compensation. If you had a chance to speak with one of these executives, what would you want them to know?

I once saw a GEO memo to shareholders that talked about how it made sense to invest in private prisons in Louisiana because the state had an increasing population of kids in the juvenile system that would be fed into the adult system, ensuring a large inmate population for the private prisons.

So I would tell these executives that I understand your wanting to make a buck. But why can’t you try to make that buck working to help children, not to break them?

I know the answer: Because they don’t care. If they invest in treatment, then the kids in juvenile facilities would go on and have happy and healthy lives and not fill their prisons. This has bred such hopelessness and despair, and this legacy is continuing on into the next generation.

We see stark racial disparities at every level of the juvenile legal system nationwide, from profiling and arrest, to sentencing and detention. Did you see evidence of this at Tallulah?

Absolutely. You walk in and there are about three white kids to about 85 black kids. That was true throughout the state. The racial disparities were blatant and shocking. A white probation officer told me that my kid got caught up in a corrections system meant for black kids. He didn’t use the word black. He used a different word that I am not going to say.

Tell us about your current work. You co-founded Justice for Families. What’s happening right now?

Justice for Families is a national alliance of local organizations and families committed to ending the incarceration epidemic. We’re founded and run by parents and families who have experienced the justice system and are working to end mass criminalization.

Right now, we’re working with juvenile justice agencies to meaningfully engage with families and communities. We’re using our perspectives, as families, to create tools and strategies that bring the voices of families into all decision making on juvenile justice, at every level.

The post Who’s Profiting From America’s Private Juvenile Prisons? appeared first on Institute for Policy Studies.

Inequality.org is a project at the Institute for Policy Studies.
Karen Dolan directs the Criminalization of Poverty project at the Institute for Policy Studies.

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