We are not broke, or even close. We have more money, income and wealth than 10 years ago, even more than 20 years ago, and way more than 30 years ago. So when lawmakers are making Sophie’s choices about whether to cut basic health to nothing, or to cut two weeks out of the school year, or to close down programs at the University of Washington, we’ve got to start asking the basic question: “Where is the money?”
Well, in the post-World War II era, right up to about 1980, average wages grew fairly steadily, tracking the increasing productivity of the American worker. That makes sense, as productivity measures the value-added per worker. Of course, these increases in productivity were shared proportionately between corporations, their shareholders, and their workers, so prosperity buoyed everyone.
Since 1980 we have had tremendous growth in productivity — an increase of 80 percent. And what happened to wages? For the typical worker, real hourly wages grew by 10 percent. The connection between productivity and wages had been severed. And it has only gotten worse in the past 10 years, with wages stagnant and jobs disappearing.
Since Washington depends mostly on sales tax for public revenue, when people’s wages are flat (or they lose their jobs) they don’t buy so many products and public receipts tumble. That’s what is really threatening middle class services like K-12 education and our public colleges and universities, parks and recreation facilities, care for the disabled and blind, and clean-up of contaminated land and water.
What about that extra money? In 1968 the average income of the top 1 percent of households in the country was 10 times the average income of everyone else, all 99 percent of us: $390,000 for the top and $40,000 for everyone else. By 2007, the average income of the top 1 percent had jumped to $1.4 million, 30 times the average income of the bottom 99 percent ($46,000).
The other place you’ll find the money is in corporate profits, which are now 22 percent above their pre-recession level. All this money going to corporations and the very wealthy might generate jobs somewhere — but not necessarily in our state. Corporations don’t abide by national boundaries or a sense of patriotism. They are looking for the absolutely lowest short-term cost of production. And that is more likely in China that at home.
Meanwhile, last November, Steve Ballmer, the 33rd wealthiest person in the world with a net worth of $33 billion, sold off $2 billion in stock to “diversify his holdings and to help with tax planning.” So much for job creation. This month Paul Allen, with $14 billion in wealth, bought a refurbished Russian MIG fighter jet. And Jeff Bezos, owner of Amazon, whose net worth is $12.3 billion, refuses, in any state where he can get away with it, to collect sales taxes on Amazon sales, further starving state governments from revenue for middle class services (and giving him a big advantage over bookstores on Main Street!).
What do these guys have in common? They are among the wealthiest people in the world, and they want their wealth only for themselves. So they all pitched in with six figure contributions to defeat Initiative 1098 last year, which would have taxed their income above $400,000. Not a lot, but why give up anything when you are at the pinnacle?
Here’s why: That 1098 money would have funded Basic Health, which is about to run out of money. What would Paul Allen, Steve Balmer and Jeff Bezos say to the woman who just wrote me about her situation?
“This can truly be a life or death issue for some of us. I was diagnosed with a very early-stage melanoma just two weeks ago, and now need to be seen by the dermatologist every couple of months, and also have other medical issues. My husband has had abnormal PSA tests in the past that we need to monitor.
“We feel very lucky to be on Basic Health. I don’t know what will happen to us if it ends…”
Mr. Allen, Mr. Ballmer and Mr. Bezos: We can’t make you fund public services. But your hearts might lead you there. Why don’t you simply give $100 million for Basic Health? That’s about seventeen one-hundredths of your combined wealth — small change for the health of the citizens of our state. You are not broke. And we don’t need to be.
John Burbank is executive director of the Economic Opportunity Institute (www.eoionline.org). His email address is john@eoionline.org.
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