Collins is now co-director of the Boston-based nonprofit United for a Fair Economy, which launched the tongue-in-cheek group Billionaires for Bush or Gore. Collins spoke at Central United Methodist Church and at the International Institute.
Metro Times: We're always reading about the booming economy, that we're living in the best times the country has ever seen. Your book challenges that idea.
Chuck Collins: It's a great economic boom if you own a lot of stock and investments. But if you depend on a paycheck it's not been a very good economy. For the majority it's a precarious prosperity, based on working more hours and borrowing; it's not based on real wage growth. Real wages are still trying to catch up to what they were in 1973 when Nixon was president. That's going to become more apparent when there's an economic downturn and the mask of the new economy is pulled back.
People haven't really seen the ugly face of the new economic order. People who currently think they're comfortable are going to wake up and find they have $15,000 in credit card debt, and if they're fortunate enough to own their own home, its value will have gone down. The two jobs required to support their mortgage will be new-economy jobs — meaning no health insurance, no retirement security, temporary work, contingent work — and it'll be scary.
The wage gap between the average CEO and the average worker is now 475-to-1, which is up from 40-to-1 in 1980. The average CEO's pay is $10.2 million. The share of wealth owned by the richest 1 percent of households has gone from 19 percent in 1976 to 40 percent today. So we're moving toward the Brazilianization of our society, where you have extreme polarization of wealth and more people living behind walls. We have 2 million people involuntarily committed to prisons, and 8 million people in gated communities. It's the newest manifestation of white flight.
MT: Speaking of which, was there something about growing up in Bloomfield Hills that prepared you to write this book? Were you aware of economic apartheid back then?
Collins: I went to school with Kathy Iacocca, so I thought I was middle-class compared to some of these people. I was a child of privilege, but I also had the experience of carrying golf clubs at (a) Bloomfield Hills country club, so I was essentially a little servant to the corporate barons who played golf there, and I remember high wagers being placed on certain golf matches and business deals being negotiated on the back nine. And I remember that these guys would not invite me to sit in the golf cart, but would have me run 18 holes behind (them) on a hot summer day, and thinking, What is with these guys, what makes them think they're rulers of the universe?
MT: You use the word apartheid. Is there a racial dimension to the inequality?
Collins: Particularly in wealth and savings. Wealth is what you have to fall back on, what you have to pass on. A financial planner would tell you (that) you should have six months' financial reserves in the event of job loss, divorce, and yet in the whole society, 45 percent of the people have three months or less. For African-Americans, 79 percent have three months or less; for Latinos it's 72 percent.
MT: If some people have more than others, isn't that the way it's always been, in every society? What's different about now?
Collins: Periods of economic growth are when society is supposed to come together more. In the 30 years after World War II each fifth of the population saw their incomes double. But in the last 25 years, almost all the growth has gone to the richest fifth of households.
MT: Couldn't you say that's because they were smarter about what to do with the money they had? There's probably a lot of people kicking themselves because they didn't invest in dot com companies when the time was ripe.
Collins: It doesn’t have to do with individual choices, it has to do with the way the rules of the economy are tilted, which is to benefit asset owners. If we're playing Monopoly and I'm winning, and I get to change the rules so I can win faster, it's very different than if we were on a level playing field. The government's tax policies and global trade policies, in the last 20 years, have been great if you're a shareholder, terrible if you're a wage earner. If you own shares of GE, which pits workers against each other around the world in a race to the bottom, your share values have consistently continued to rise. If you're a GE employee, you probably lost your job.
Inequality has grown because there's been a power shift: the power of global corporations and Wall Street has increased, and wage earners have lost clout.
MT: How would you change the rules?
Collins: Inequality is really a democracy problem. We need to increase the power of workers, expand the right to organize, limit the influence of big money in elections, limit the power that corporations have in our society. We're supposed to rule them, not them to rule us.
Order Economic Apartheid in America on the United for a Fair Economy Web site, which spells out the wealth and income gap in video and audio: www.ufenet.org. Jane Slaughter is a frequent contributor to the Metro Times. E-mail her at [email protected]