Am I worried about Socialism?
This is a question I was often asked for many years, especially the last ten. The answer was always no, I am worried about Feudalism. We often think about Feudalism in terms of medieval history, however, I believe can make a strong case it is happening today in the US.
I suspect there is no accepted definition of Feudalism, but in medieval times society and the government were organized around kings/queens, lord/ladies, clergy, serfs/fiefs. Viewers of the HBO series “Game of Thrones” [GOT] have a good understanding of Feudalism. First, there are the rulers of the seven kingdoms. Then the lords/ladies or rulers of the smaller “houses” who pledge to serve the rulers. These individuals, and it is a very small group, control most if not all the wealth and power. Finally, the rest; soldiers, farmers, shopkeepers, skilled workers, servants, slaves. Though these are the largest group in GOT, they have no power, no money, are often killed in battle, homeless after battles or forced into slavery, live in poverty, and generally exist to serve the rulers.
I am not a historian, but in addition to American History, two of my favorite time periods are medieval history from the end of the fall of Rome around 450 AD to 1100-1200 AD and the height of the Roman Empire. I would argue many if not most civilizations were built of some type of Feudalism including Japan, China, and the Ancient Middle East to name a few.
I would also argue the birth of the US was founded by men [and women] who believed each individual should have the right to make or choose their own destiny, regardless of birth. In fact, the Declaration of Independence specifically “that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness”. It truly scares that we may be moving towards a Feudalism.
Hopefully, I am wrong, but here is why I am worried.
As has been reported, there has been an increasing concentration of wealth in the US and the trend line, unless changes are made, continues to be in this direction.
- One study I reviewed said the amount of US wealth owned by the top 1% increased from 29% in 1992 to 42% in 2016. Another study, using different methodology said the increase was less. Regardless, the trend is clear and if the recently passed tax law by Congress if fully implemented will likely increase the shift of wealth to the top 1%.
- According to a recent EPI study using 2013 data, the top 1% had $1 million or more saved for retirement. By comparison, the 90 percentile was $274,000 or more and the 80 percentile was $116,000 or more. The same study said the median amount saved for retirement in the US was about $5,000.
The median household net worth in the US according to the 2013 US Census was about $80,000 and that includes equity in a residence.
- A recent study found that 47% of Americans if they need $400 in cash would either have to borrow the money or sell something.
- About 20% of US or roughly 43 million live below the poverty level.
Millennials, the next generation of American workers totally approximately 75 million individuals, have 300% more student debt than their parents. They are 50% less likely to own a home as would have been the case for the same age group in the 1970s.
- Millennials have never seen good economic times. Individuals graduating from college at the end of 1999 has lived through two substantial recessions. An individual who graduated from high school or college at the end of 2007, before the Great Recession, may end up being a lost generation of working adults.
- To me, student debt is much like becoming an indentured worker, where the former student has to work for years just to pay off the indenture or in this case student loans. Student loans can keep young adults in poverty and make it very difficult to buy houses and all the consumer goods which come with home ownership and in part drive our economy.
- The combination of lower incomes, student loans, and rising housing costs, both ownership and rent, make if difficult for millennials to buy a residence or even save for a down-payment for one.
In February 1968, the minimum wage was $1.60 per hour which would equate to $10.75 in 2014 inflation-adjusted dollars. In July 2009, the minimum wage $7.25 which equates to $7.80 in 2014 dollars. Low-income workers making less while wealth makes more to me is a sign of feudalism.
The drive to end estate taxes is another step towards feudalism in my estimation. Currently, the exemption for estate tax starts at over $5 million and for a couple is over $10 million. The drive to increase or end estate tax means that families will be able to control their wealth over multi-generations. Wealth they built in part by living in the US with its freedoms and economic opportunities. Feudalism in part means that a few families control wealth for many successive generations and the vast majority of society end up serving them, again for many generations.
- Currently, about 0.2% of all estates are subject to estate tax or about 2 out of every 1000 deaths.
All US citizens equally own public lands, obviously each of us has a very small share, but we own it. The trend to privatize public lands is in my estimation another example of the trend to feudalism. Privatizing public lands, National Parks and Forests essentially transfers ownership from all of us to a few.
Quality academic education at all levels is the key to upward mobility. Making education unaffordable for many makes it more difficult for households to grow economically. Financing secular education with public dollars is a step towards feudalism.
A study found that for the 2014 mid-term national elections, about 32,000 [one-tenth of 1%] individuals who report political contributions gave about $1.2 Billion dollars to the elections. Feudalism grows when a few individuals control the political process. Democracy grows when all have an equal voice.
Is my concern valid or not? Time will tell. It is personal. I was born into a poor farming family in NW Minnesota, the 5th of six kids spread out over 17 years. My father was killed in a farming accident when I was 5 ½. My mother, pushing 40, went to college and obtained a teaching degree. All six children graduated from college. All of us including my mother paid taxes for many years and contributed to the economy. Could that same scenario take place today? Maybe, but I suspect it would be difficult. We benefited from social security and a time period when higher education was much more affordable.
I would suggest the more people or households who do well economically in the US, the better we all will do. The more concentrated the wealth, the closer we move to feudalism, the more difficult it will be for a substantial percentage of the US to accumulate wealth and look forward to a comfortable retirement.
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