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    The Pie Is Shrinking So Much The 99% Are Beginning To Starve

    Charles Hugh Smith
    January 30th, 2018
    PeakProsperity
    Comments (33)
    Read by 6,508 people

    This report was originally published by Charles Hugh Smith at PeakProsperity

    pie

    Social movements arise to solve problems of inequality, injustice, exploitation and oppression. In other words, they are solutions to society-wide problems plaguing the many but not the few (i.e. the elites at the top of the wealth-power pyramid).

    The basic assumption of social movements is that Utopia is within reach, if only the sources of the problems can be identified and remedied.  Since inequality, injustice, exploitation and oppression arise from the asymmetry of power between the few (the financial and political elites) and the many, the solution is a reduction of the asymmetry; that is a tectonic realignment of the social structure that shifts some power—economic and/or political—from the few to the many.

    In some instances, the power asymmetry is between ethnic or gender classes, or economic classes (for example, labor and the owners of capital).

    Social movements are characterized by profound conflict because the beneficiaries of the power asymmetry resist the demands for a fairer share of the power and privileges, while those who’ve held the short end of the stick have tired of the asymmetry and refuse to back down.

    Two dynamics assist a social, political and economic resolution that transfers power from those with too much power to those with too little power: 1) the engines of the economy have shifted productive capacity definitively in favor of those demanding their fair share of power, and 2) the elites recognize that their resistance to power-sharing invites a less predictable and thus far more dangerous open conflict with forces that have much less to lose and much more to gain.

    In other words, ceding 40% of their wealth-power still conserves 60%, while stubborn resistance might trigger a revolution that takes 100% of their wealth-power.

    History provides numerous examples of these dynamics.  Once the primary sources of wealth-generation shifted from elite feudal landowners to merchants and industrialists, the wealth (and thus the political power) of the landed elites declined. As the industrialists hired vast numbers of laborers drawn from small farms and workshops, this mass industrialized labor became the source of the wealth generation; after decades of conflict, this labor class gained a significant share of the wealth and political power.

    The civil rights and women’s liberation movements realigned the political and economic power of minorities and females more in line with their productive output, reducing the asymmetries of ethnic and gender privileges.

    In broad-brush, progressive social movements seek to broaden opportunities and level the playing field by reducing the asymmetric privileges of dominant classes defined by power and privilege.  The core mechanism of this transition is the recognition and granting of universal human rights: the right to vote, the right to equal opportunity, and rights to economic security, i.e. entitlements that are extended universally to all citizens for education, healthcare, old-age pensions and income security.

    Again in broad-brush, these movements have largely been categorized as politically Left, though many institutions deemed conservative (for example, various churches) have often provided bedrock support for progressive movements.

    Social movements which seek to limit the excesses of state power tend to be categorized as conservative or politically Right, as they seek to realign the asymmetry of power held by the state in favor of the individual, family and the traditional social order.

    The Expanding Pie Fueled Expanding Entitlements

    Writer Ugo Bardi recently drew another distinction between Left and Right social movements: “Traditionally, the Left has emphasized rights while the Right has emphasized duties.

    As rights manifested as economic entitlements rather than political (civil liberty) entitlements, rights accrue economic costs. As Bardi observes: “Having rights is nicer than having duties, but the problem is that human rights have a cost and that this cost was paid, so far, by fossil fuels. Now that fossil fuels are on their way out, who’s going to pay?”

    I would argue that the cost was also paid by higher productivity enabled by the technological, financial and social innovations of the Third Industrial Revolution, roughly speaking the interconnected advances of the second half of the 20th century.

    These advances can be characterized as expanding the economic pie; that is, generating more energy, credit, technological tools, opportunities, security and capital (which includes financial, infrastructural, intellectual and social capital) for all to share in a socio-political-financial allocation broad enough to make everyone feel like they were making some forward progress.

    This long-term, secular expansion of the pie naturally generated more demands for additional entitlements and rights, as the economy could clearly support the extra costs of allocating additional wealth and resources to the many.  From the point of view of the few (the elites), their own wealth continued expanding, so there was little resistance to expanding retirement, education and healthcare entitlements.

    But in the 21st century, the expansion of the pie stagnated, and for many, it reversed. Adjusted for real-world inflation many households have seen their net incomes and wealth decline in the past decade.

    Despite the endless media rah-rah about “growth” and “recovery,” it is self-evident to anyone who bothers to look beneath the surface of this facile PR that the pie is now shrinking. This dynamic is increasing inequality rather than reducing it.

    The Shrinking Pie And Stagnant Productivity

    It is a truism of economics that widespread increases in productivity are required to generate equally widespread increases in income and capital, i.e. productive wealth. To the consternation of many, productivity has stagnated since 2010; no wonder household income for all but the upper crust has gone nowhere.

    If we glance at a chart of productivity, we see a strong correlation with speculative investment bubbles (the dot-com and housing bubbles 1995-2005) and speculative spikes fueled by central bank monetary stimulus (2009-10).  Absent bubbles and monumental excesses of central bank stimulus, productivity quickly sinks to its secular trend line: downwards.

    Chart of US productivity growth since 1980

    This next chart depicts the long-term trend line of productivity through all four industrial revolutions. Note the decline concurrent with the 4th Industrial Revolution (mobile telephony, the Internet, AI, robotics, peer-to-peer networks, etc.) and the depletion of cheap-to-access-and-refine oil:

    Chart of declining GDP per capita over the past 2 centuries

    The unwelcome reality is that the economy is changing in fundamental ways that cannot be reversed with policy tweaks, protests or wishful thinking.

    Consider the percentage of the gross domestic product (GDP) that goes to employee compensation (wages and salaried). Labor’s share of the GDP has been in a downtrend since 1970, which not coincidentally was the peak of secular productivity:

    Chart showing wages becoming a smaller percentage of GDP over time

    In this below chart of the distribution of wealth in the U.S., we find the same correlation to the downtrends in productivity and labor’s share of the economy.  The bottom 90% of households’ (the many) share of the wealth pie topped out in the early 1980s and has declined precipitously since, while the wealth of the top 0.1% (the few) has more than tripled since the late 1970s:

    Distribution of Wealth In the US since 1917

    This next chart depicts the remarkable (and recent) spike income growth the few have recently enjoyed, at the expense of everyone else:

    Chart showing Soaring Income Inequality

    The increase in wealth and income inequality and the decline of productivity and labor’s share of GDP are the result of structural changes in the economy, changes with far-reaching consequences.

    While it’s appealing to identify policies endorsed by self-serving insiders and elites as the source of these changes, that is far from the whole story. Much of this growing asymmetry stems from profound changes in the global economy that depreciate labor (as conventional labor is no longer scarce) and increase the gains of the top few in a “winner take most” allocation that benefits speculation, leverage and new ways of organizing labor and capital that reward the organizers far more than the users/participants.

    In this new era of a steadily shrinking pie, the sources of inequality and related social problems have also shifted.  As a result, the social movements that were effective in the past are no longer effective today. Attempts to address rising inequality with the old tools are fueling frustration rather than actual solutions.

    In Part 2 — Social Unrest: The Boiling-Over Point, we examine why our existing models for social change have slipped into ineffectual symbolic gestures that fuel fragmentation and frustration — and why that will lead to a dangerous boiling over of the 99% against the elites controlling the system.

    When that happens (and it seems inevitable at our current trajectory), the rending of our social fabric will happen stunningly fast. The ensuing social disunity and disruption will be of the sort many alive today have never seen.

    Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

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    Author: Charles Hugh Smith
    Views: Read by 6,508 people
    Date: January 30th, 2018
    Website: https://www.peakprosperity.com/

    Copyright Information: This content has been contributed to SHTFplan by a third-party or has been republished with permission from the author. Please contact the author directly for republishing information.

    33 Comments...

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    1. Menzoberranzan says:

      I turn on the TV to watch the weather and what do I see? Maxine the mouth Waters badmouthing President Trump. After that the congressional black caucus saying that he has divided the country. Desperate they are about losing their voting base and the scum illegals that should in their pea brains that need to be added to that pathetic base. If their ever was a divider it was Barry Bama the scum muslim fa ggot. I can only conclude that there will indeed be a shooting war here and it’s getting close. I’ve got my weapons and many, many thousands of rounds, my body armor and spare parts, my love of my family, country, and race to provide the will.

      • grandee says:

        checking in on the state of the union

        who is the designated survivor during this one?
        Sonny Perdue

        Once upon a time it was…

        wait for it…

        Jan. 27, 2010: Sec. of State Hillary Clinton and HUD Sec. Shaun Donovan

        Here’s a list of Cabinet members who were named “designated survivors” and did not attend the State of the Union over the past 10 years:

        ht tp://www.foxnews.com/politics/2018/01/30/what-is-designated-survivor-sonny-perdues-state-union-role-explained.html

      • 2018 Is Now says:

        You didn’t think she was going to say something nice about a white man.

      • Billy Jack says:

        America’s Hunters Pretty Amazing
        A blogger added up the deer license sales in just a handful of states and arrived at a striking conclusion: There were over 600,000 hunters this season in the state of Wisconsin… Allow me to restate that number: 600,000!
        Over the last several months, Wisconsin’s hunters became the 8th largest army in the world. (That’s more men under arms than in Iran. More than France and Germany combined.) These men, deployed to the woods of a single American state, Wisconsin to hunt with firearms. And NO ONE WAS KILLED. That number pales in comparison to the 750,000 who hunted the woods of Pennsylvania’s and Michigan’s 700,000 hunters, ALL OF WHOM HAVE RETURNED HOME SAFELY. Toss in a quarter million hunters in West Virginia, and it literally establishes the fact that the hunters of those four states alone would comprise the largest army in the world. And then add in the total number of hunters in the other 46 states. It’s millions more. 
        ——————————————————– The point? ——————————————————–
        America will forever be safe from foreign invasion with that kind of home-grown firepower! Hunting… it’s not just a way to fill the freezer. It’s also a matter of national security.
        That’s why all enemies, foreign and domestic, want to see us disarmed. Food for thought, when next we consider gun control. Overall it’s true, so if we disregard some assumptions that hunters don’t possess the same skills as soldiers, the question would still remain… What army of 2 million would want to face 30 million, 40 million, or 50 million armed citizens???
        For the sake of our freedom, don’t ever allow gun control or confiscation of guns.
        (If you agree, as I do, pass it on, I feel good that I have an army of millions who would protect our land, and I sure don’t want the government taking control of the possession of firearms.)

        http://www.hankjr.com/americas-hunters-pretty-amazing/
        Posted by Freewill at 11:47:00 PM 0 com

    2. Heartless says:

      Utopia IS within our reach. All people have to do is be happy with what they do and can create for themselves. Find pride and enjoyment in labor, their work. Cut the crap chasing after the latest and greatest. Learn to be satisfied at the end of a day with a sore back and the certain knowledge they did the best they could do. Look at family, neighbors, friends as the wonders they are. People, just like each of us who want the same things. A word, notice, some little praise, tolerance, acceptance of their wishes to try in their own directions. We all want utopia; yet, it is right in front our noses. All we have to do unfortunately (and this is the hard part) is stamp out all those who seek to prevent us from seeing that.

    3. Traitor Hator says:

      Looks like we may all be on bicycles soon? Get a good one .

      • Genius says:

        Yup, get one with at least 400cc engine and offroad knobbies. Honda makes the best! Oh you said bicycles lol.

        • Ketchupondemand says:

          Too many mountains to ride a bicycle in this neck of the woods. We be walkin’.
          If the pie goes away I will miss red wine.

          • Traitor Hator says:

            I read the Vietcong would load bicycles and walk them? A high quality motorized bick has 3 horsepower and can be geared low. Walked and pedaled with motor assist up hill. My BBR tuning stage 4 kit is a blast. I’m going to get a mikuni VM18 carb. The plastic top one was either defective and plastic? 60 pound motor bick . Fast enough. Get small,miss small?

    4. Naya says:

      You’re confusing productivity with the movement of wealth. Everyone knows the top 1% have gained more wealth, faster, and easier in the past 25 years than ever in history.
      A CEO used to make roughly 7 to 10 times the wage of the average employee.
      Now they make thousands of times more.
      The playing field needs to be leveled out, but anytime anyone says anything someone complains and says its “capitalism”, or they throw out socialist labels.

    5. SmokinOkie says:

      Stick A Fork In It- It’s Done
      .
      Did somebody say pie? Is it pecan? Banana cream? Apple? Whatever it is, I’ll rake it!
      Seriously though, the doom and gloom is often just too much. Ignoring a problem won’t make it go away but sometimes you need a break. Not that I’m advocating the ostrich technique, or joining the sheeple flock.
      It’s just that, sometimes, a person needs to get outside. Breathe some fresh diesel exhaust, pee on the tires, and take a stroll around the truck stop. (or however it is you unwind)
      .
      .
      Now about that pie thing…
      This is easy as pie
      It’s a piece of cake
      The greatest thing since sliced bread
      That takes the cake
      We’re gonna be toast
      Where’s the beef?
      Flat as a pancake
      Comparing apples to oranges
      When life gives you lemons
      .
      How come all the great old sayings make me hungry?

    6. Kay123 says:

      The pie is getting smaller, we all know this.
      So let’s open up our borders and let a few hundred
      million more into our country! Right? Let’s make
      America like all the other S****HOLE countries who
      breed themselves into poverty. Then when they use
      up all of our resources, benefits, programs….see how much
      pie is left for the poor, people of this nation who paid the bills
      all of the last 50-70 years. We don’t get pie, we can’t
      even get s**t to get by on. The top scum skims the cream,
      welfare illegals get the milk, and the tax paying idiot gets the
      shaft.
      Now that I am flat on my back in a nursing home I am amazed
      at what abuse these ‘tapeworm’ nursing homes get away with.

      One hand washes the other here. They have ways to pick your
      pocket without revealing their hand. Late to deliver, quick to
      collect. They make deals with medicare….who claims to cover
      you….except when the road hits the metal… they don’t.

      Sure, bring a few million more to this country. Why not a
      few more hellhole nations while you are at it?
      This country was once worth living in……now it is a pigsty of
      the rich and famous…..and we American people “made them” our
      masters. Not our idols….our masters! They use their wealth
      against us…the very people who raised them up above society.

    7. grandee says:

      SmokinOkie

      good to hear from you again 🙂

    8. Paranoid says:

      Won’t miss the vast majority of them. The hand writing has been om the wall for years. Or as one happy sort said: “I’ll grind their bones to make my bread”

    9. cranerigger says:

      I’m watching Joe Kennedy lll, a descendant of one of the wealthiest families over the last century, tell me about income inequality. Talk about the POT calling the KETTLE black. His rebuttle to the President’s State of the Union speech is a pathetic repetition of the Demonrat talking points. The Hate-America-First crowd apparently has another hero.

    10. Willie Wonka says:

      Until we all get on the same page concerning what the American left /right paradigm really is we will never get anywhere. This author is as guilty as any. Religion has nothing to do with left or right, unless it is tyrannical and has a hand in ruling the populace. To reiterate AGAIN, the far left is any government/ societal structure, etc run by the state, church, or a group of oligarchs, technocrats, bureaucrats which is tyrannical in nature I.e. controls most everyday aspects of human life. The far right is anarchy. Our Founding Fathers genius invention was a society sitting just to the left of the far right. A society which was self governing based on inalienable rights given by God that no man had the right to take away from another. Of course the despots have been trying to undermine that freedom since its inception and they have almost succeeded.

    11. Traitor Hator says:

      I try to remember in the movie , The Good Earth, she heated up black dirt let the sand settle and had soup. And there’s usually worms in black dirt? For a stir fry?

    12. Traitor Hator says:

      Watched the movie, The treasure of the Sierra madre, today. Good prepper movie if you replace gold with food?

    13. Tooclose2call says:

      Just give every newborn an account with 1 million $ in it. Then in 20 years see who has made something of it and who has not. What you will see is exactly what you see out of your window today.

      You see, the metaphorical 1 million $ is the limitless opportunities that exist in America, that do not exist anywhere else.

      Get it yet? Socialism is just stupid.

    14. aljamo says:

      The minority who control the majority of resources have control of the killing arsenals and it’s highly doubtful that they are interested in sharing. Bad news for the common people.

    15. Bert says:

      US AND WORLD OBESITY RATES AT RECORD HIGH. We need to end entitlements to the all people in order to save them from eating themselves to death.

    16. Bert says:

      LOL The pie is shrinking only because the people are too fucking fat

    17. Sean says:

      This article is the old socialist mantra about leveling playing fields, pieces of a shrinking or finite pie, and the “rich” versus the rest of us. By the way, equality is only sought by humans, the rest of nature doesn’t recognize any “equality”. Nor does the universe. Anyway, socialists always want to draw the lines of distinction between the rich and everyone else, when the truth of the matter is that ordinary people get up off of their dead asses and make a fortune every day. The leftists always ignore this, and the talk always degenerates into “sharing”. Baloney. What’s mine is mine, yours is yours, and if you want more, go out an EARN it. Start your revolution, leftists, and see what happens.

     

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