Income Disparity:

The broadening of socioeconomic class disparity over the last 30 years can be directly tied to the disproportionate changes between consumer price indexing and per capita income performance in relation to overall GDP performance. The imbalances in the earnings and distribution of gains throughout the economic chain over the last 30 years, are at the heart of the people's frustrations and our core foundational economic troubles.

To wit, here are the challenges: 

1) 25% of US workers make $10 per hour or less which places them below the poverty line. In short nearly 1-4 working Americans are economically underperforming, and sinking with the weight of inflation adjusted living expenses. This is a product of the changes in the matrix and composition of the modern US economy, deteriorating education systems, and the calcification of income disparities. 

2) Per capita earnings have increased at a slower rate than inflation (consumer price index), and total national GDP, creating a broad purchasing power disconnect. This further diminishes the standing of 98% of all Americans on the international quality of life scaling system.

3) Post tax household income reporting for a period from 1979- 2008 shows that income rose better than 350% for the richest 1% of households, 80% for the remainder of the top 20%, just 21% for the middle 20%, and a scant 6% for the bottom 20% of households.

4) An inflation adjusted $100 in spending in 1980 would require $258.14 today just to match directly to the consumer price index; with essentials such as fuel, and food requiring $368.78 in today's earnings. This statistic alone demonstrates neatly how the lower 98% of Americans have suffered quality of life depreciation in the last 30 years.

5) National annual GDP has risen from a level of $2.789 trillion in 1980 to $14.58 trillion (roughly a 5X increase) in 2008, however the per capita GDP has only risen from $12,186 in 1980 to a level of $41,557 in 2008 (a rise of 3.4X).

6) And lastly, for our purposes, the total American consumer debt in 1980 was $355 Billion or 12.7% of GDP, whereas current level of consumer debt is $2.58 trillion or 17.7% of GDP. Add to that statistic, an international trade deficit of $568 Billion for fiscal year 2008 alone, and our picture of our modern foundational American economic malaise becomes very clear.

The key to changing this is to stop the alarming trend of having over 79% of our economy based on services, and rampant consumerism of foreign goods. We need to promote free trade, but also produce durables again, develop clean and green technologies, medical and pharmaceutical breakthroughs, and begin exporting our goods again into a growing global marketplace hungry for modernity. 

We need to demonstrate more consumer discipline, having a market based real cost structure that factors environmental costs into the purchase price. We need to tame the run away money markets, with tough, smart, regulation that strengthens innovation and growth while protecting our systems and consumers. Lastly, we need wage, labor and tax policy that is fair, competitive and addresses the notion of the unfair and unbalanced income concentration that creates social inequality.

In short, we need be better informed and significantly wiser regarding economics and civics. We need to hold private and public sector leaders to a standard far higher than the one we have set now. We can not do that till we as citizens change first. And if the track record of the last 30 years isn't enough motivation then nothing ever will be. Let's not burn through the promise of another generation.

The Real Source of Financial Instability: Consumer Debt

While the media gives it's due airtime to the feigned moral outrage of the Republican Party regarding the Federal Government's Debt obligations and continued deficit spending, the media has completely failed American citizens in addressing the true core issue of our economic imbalance: consumer spending and household debt.

  American's are justifiably uneasy about an accumulated Federal Debt total that exceeds 70% of annual GDP, but say nothing about the boat anchor around the neck of society which is consumer debt. Currently, reporting indicates that Household Debt per person for fiscal year 2007, was $46,115 or 123% of GDP. Compare that to the Per Capita earnings (in 2005 International Dollars) for America at $41,557. This in and of itself, demonstrates the escalation in debt spending to GDP, and the recent recessionary fall in GDP/economic contraction. This has made our problem far worse than most people realize.

Add to this the further contraction of tax revenues from spiraling unemployment, and the Federal debt figures, as they relate to our economy generally look to worsen considerably. And even though this is troubling, the underlying issue remains the unpaid debt obligations on the consumer side, specifically mortgages and credit cards. With unemployment helping to drive consumer debt rates higher in relation to GDP, we are in a situation not seen since the depression: Consumer debt to GDP exceeding 100%, and not forecasted to return below that level any time soon.

This situation was created by the great trap of economic restructuring and performance as America's response and contribution to globalization. We have relied on consumer spending, on a substantial amount of goods which are manufactured elsewhere, as the engine of our growth. Perpetuating that spending level became the focus of financial institutions, who created financial products and soft lending procedures that allowed people to continue to spend above their means, and over leverage themselves, all in the name of growth.

This has proven an enormous bubble produced by such a poor set of decisions, conducted by virtually every segment of society, whose outcome will be proved to be so severe, as to provide a significant repudiation of many of the economic principals of the last 20 years. And that's true for the theories of the GOP and Dems alike, both of which have proven insufficient to the tasks of understanding the effects of globalization, the emergence of the information age, and demonstrating the leadership to help steer our country into a place of lasting, sustainable dominance in both.

Just remember, a society of 303 million people, has just over 450 million Visa cards. That's not credit cards, that's VIsa cards. And we wonder....