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