Survival__ Structuring Prosperity for Yourself and the Nation - Charles George Smith [136]
At this juncture it is important to recall that any State/government is in essence a luxury that can only exist if an economy generates a substantial surplus.
No surplus, no government. Thus subsistence-level societies do not have stand-alone governments because there is not enough surplus food to feed essentially unproductive members of the society (government). Security and other community needs are provided gratis by the group itself as a form of mutual protection/benefit. The wealthy share their surplus in exchange for status ("potlatch").
As measured by fiscal and trade deficits, the U.S. economy has not produced a sustained surplus for decades.
We have consumed far more than we have produced, and borrowed the difference from nations which have generated surplus capital and goods.
The mass media/think-tank/State propaganda machine produces reams of material claiming to "prove" that this stupendous borrowing is not just sustainable but that it is in everyone's best interests.
But the "surplus" the U.S. is trading for tangible goods and capital is paper money and future promises to pay--both essentially worthless. At some point the fraud at the heart of this exchange of "value" will be revealed and the U.S. State and Elites will be reduced to depending on the actual tangible surplus generated by the U.S. economy.
This sharp reduction of available capital to spend will trigger collapse of the over-leveraged, over-indebted, credit-dependent status quo, which requires trillions of dollars in borrowed capital to support its gargantuan State and Elites.
It is also important to recall that relative inequality in national income and wealth rises and falls in long cycles, and changes are triggered by national crisis.
I previously noted that inequality was rather low in Colonial America and then rose as the U.S. industrialized. One result of the Great Depression was the decline of inequality, which enabled the post-World War II era of rising middle class wealth and income.
Thus it is entirely within historic norms to foresee a national crisis (insolvency) which results in dramatic declines of inequality--that is, the share of national income and wealth currently diverted to the Elites and State will drop precipitously. Since national income is a zero-sum game, this decline in equality means the productive classes' share of national income will rise--put another way, they will keep the income that is being transferred to the rentier/financial and State Elites in the present era of extreme inequality.
This implies the State's role as handmaiden/servant to the rentier-financial Elites will collapse along with State finances. Given the lack of negative feedback on the State's expansion and the positive feedback of printing and spending fiat money, there is no other possible end-state but collapse/insolvency.
Let's examine our era's extreme inequality in more detail.
According to a recent (July 2009) Wall Street Journal analysis of Social Security Administration data, the top 6% of wage earners (high-caste) take home 1/3 of the national wage/salary income ($2.1 trillion of the $6.4 trillion in total U.S. pay in 2007); when bonuses, stock options and other non-wage income is included, the percentage rises to approximately 50%. The high-caste share of national income has been rising at approximately double the rate of average workers. Over time, this differential enabled the top 6%'s share to rise from 28% of total income to 33% in just a few years. Thus inequality is rising quickly in the current status quo.
The top 1% of households own 2/3 of the productive wealth of the nation. This number is not static, of course; the gap between the top 1% and the 99% below is widening rapidly. Congressional Budget Office data show that between 1979 and 2006, the before-tax income of the