In 2008, the collapse of Lehman Brothers heralded a sustained period of global economic retraction. According to the National Bureau of Economic Research, the Great Recession lasted from December 2007 to June 2009.Economists have hailed the subsequent anemic recovery as proof of the resilience of capitalism, the wisdom of President Barack Obama’s economic policies or as proof that the recession was merely cyclical. On the contrary, economic statistics reveal a fundamentally weakened system that is increasingly concentrating wealth in the hands of the few at the expense of the vast majority. Professor of economics at the University of California, Berkeley Emmanuel Saez revealed the lopsided nature of the “recovery” following the Great Recession in a report published on Sept. 3. A full 95 percent of real income growth, adjusted for inflation, in the past three years has gone to the top 1 percent of American families. This leaves a mere 5 percent for the remaining 99 percent of families to divvy up. These statistics follow a recession in which 51 percent of losses were suffered by the bottom 99 percent. The recession resulted in unprecedented inequality, with the top 1 percent of earners raking in 19.3 percent of household income last year. The last time that this sort of disparity in income occurred was 1927, just before the stock market crash and the Great Depression. Income inequality has been exacerbated by the economic policies pursued by President Barack Obama’s administration. The Federal Reserve’s policy of quantitative easing is chief among these unequal economic policies. By buying trillions of dollars of financial assets during and after the crisis, the Federal Reserve has enabled the same stock market speculation that led to the Great Depression and the Great Recession. This is a massive transfer – $85 billion per month – of tax dollars to the banks. Moreover, quantitative easing, an inflationary measure, decreases the purchasing power of anyone whose wages are not increasing at least as fast as inflation. While not reaching hyperinflationary levels, quantitative easing certainly squeezes many families’ budgets. Quantitative easing has been coupled with a decrease in the civilian labor force participation rate. According to the Bureau of Labor Statistics, the civilian labor force participation rate decreased from 66 percent on the eve of the recession to 63.2 percent in August. The decrease explains the drop in unemployment rates, despite a minor increase in jobs available. Of those who can find work, there are 7.9 million employed part-time for economic reasons. Catherine Rampell, an economics reporter for The New York Times, said, “These trends are part of the reason that many people believe the standard unemployment rate of 7.7 percent understates the extent of underemployment. If you include both part-time workers who want full-time work and people who have stopped looking for jobs but still want to work, the unemployment rate is actually 14.3 percent.” These contrasting worlds – one of stagnant wages, low growth and mass unemployment; the other of wealth, obscene growth and stock bonanzas – are the reality of a supposedly recovering American economy.
