UK military fear: middle class could become revolutionary class


Richard Moore

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Economic Armageddon Is Coming

By Joel S. Hirschhorn

04/24/07 "ICH" --- -- Stop being a compliant consumer.  Face the ugly truth.  
Don¹t get fooled by the stock market.  Accept the need for the mistreated middle
class to become the revolutionary class.  The British military establishment's 
most prestigious think tank sees what too few over-consuming Americans are 
willing to anticipate.  Unjustified and mounting economic inequality is planting
the seeds for global economic conflict.

Here is what the new report from the UK Defense Ministry's Development, Concepts
and Doctrine Centre warned might happen by 2035.  "The middle classes could 
become a revolutionary class. The growing gap between themselves and a small 
number of highly visible super-rich individuals might fuel disillusion with 
meritocracy, while the growing urban under-classes are likely to pose an 
increasing threat...Faced by these twin challenges, the world's middle-classes 
might unite, using access to knowledge, resources and skills to shape 
transnational processes in their own class interest."

Consider the wisdom of economist John Maynard Keynes: The rich are tolerable 
only so long as their gains appear to bear some relation to roughly what they 
have contributed to society.  Think of it as proportional and justified economic
success.  This can be tolerated by poor and middle class people if they believe 
the economic system is fair and properly rewards those who work harder or have 
better capabilities.  But truly obscene economic rewards angers people.  When 
most prosperity and wealth is unfairly channeled to relatively few Upper Class 
people, it is only a matter of time until fuming, resentful people in the Lower 
Class decide enough is enough and revolt.  Perhaps violently, if the political 
system remains controlled by the Upper Class.

A ton of data demonstrate how crazy our economic system has become where a 
relatively few receive astronomical gains that no rational person could see as 
justified.  One study tracked down home ownership data for 488 CEOs in the S&P 
500 Index set of companies. The typical home of the CEOs has 12 rooms, sits on 
5.37 acres, and carries a $3.1 million price-tag.  Companies big enough to rate 
S&P 500 status hiked their median CEO pay by 23.78 percent in 2006 to $14.8 
million.  In comparison, U.S. worker weekly wages rose just 3.5 percent in 2006.

Despite what you hear about the sagging housing market and the many people 
facing foreclosure, business at the top end of the U.S. housing market is 
booming.  Sales of homes in the $5 million-and-up price range rose 11 percent 
last year, reports the Dallas-based Institute for Luxury Home Marketing. Ten 
residential properties sold for over $28 million in 2006. The most expensive in 
New Jersey sold for $58 million; it went to Richard Kurtz, the CEO of Advanced 
Photonix, a telecom supplier.  In the ³ultra-luxury market² a set of suites in 
New York¹s fabled Plaza Hotel was converted last year into one-bedroom condos 
that start at $6.9 million.

From another study we learn that pay for American college presidents over the 
past decade has jumped seven times faster than pay for college faculty.  In 
1996, only one college president took home over $500,000. In 2006, 112 college 
presidents hit that mark. Meanwhile, after inflation, compensation for college 
professors increased just 5 percent since 1996.  And college students have faced
rapidly mounting tuition far higher than inflation rates.

CEOs are getting away with economic murder.  Bob Nardelli, the CEO who departed 
Home Depot early this year, had an exit package worth $210 million.  IBM CEO Sam
Palmisano took home $18.8 million in 2006 and will receive $34.9 million in 
deferred pay and $33.1 million in retirement benefits when he leaves IBM.  Even 
more extreme is the case of Occidental Petroleum CEO Ray Irani. The interest 
income alone on the $124 million that ended the year in Irani¹s deferred-pay 
account totaled $679,396.  The Los Angeles Times estimated Irani's total payoff 
for 2006 at $460 million.  Leslie Blodgett, the top exec at cosmetics giant Bare
Escentuals, collected $118.9 million in 2006, with most of that coming from the 
$117.7 million she cleared cashing out stock options.  She received 4 million 
additional stock options before 2006 ended.

Economists Emmanuel Saez of the University of California at Berkeley and Thomas 
Piketty of the Paris School of Economics found that the richest 10 percent of 
the U.S. population received 44 percent of the pretax income in 2005. This was 
the highest since the 1920s and 1930s (average: 44 percent) and much higher than
from 1945 to 1980 (average: 32 percent).  With more than 140 million U.S. 
workers, that top 10 percent equals 14 million workers.  The bottom half of that
top 10 percent had incomes of about $110,000.  That may not seem all that high, 
except that the overwhelming majority of Americans can never expect such income.
And remember that many of these top 10 percent Americans are married to or 
living with equally highly paid people.

When it comes to obscene economic inequality, however, you must focus on the 
huge gains received by the richest 1 percent - some 1.4 million people. Their 
share of pretax income has gradually climbed from 8 percent in 1980 to 17 
percent in 2005.  Their average income was $371,000.  Who is in the top sliver 
of richness?  Economists Steven Kaplan and Joshua Rauh of the University of 
Chicago estimate that there were about 18,000 lawyers, 15,000 corporate 
executives, 33,000 investment bankers (including hedge fund managers, venture 
capitalists and private-equity investors) and 2,000 athletes who made roughly 
$500,000 or more in 2004.

Do those at the top pay their fair share of taxes?  Middle class Americans, 
after nearly 30 years of tax-cutting, are now paying about the same share of 
their incomes in federal taxes that they paid before Ronald Reagan entered 
politics.  In contrast, America's richest have seen the share of their incomes 
that goes to federal taxes cut by over half.  That what happens in a failed 
democracy and the rich control the political system.

What the future holds for the victimized middle class will not only depend on 
the uncontrolled greed of the wealthy Upper Class and its control of the 
political system.  It will also be linked to the coming tsunami of global 
warming impacts on climate, sea level, water supplies, crops and disease.  There
will be devastating impacts on hundreds of millions and perhaps billions of 
people worldwide.  Lower Class people will be sacrificed ­ left to suffer the 
consequences.  The rich will retreat to their walled, protected and well stocked

Add to this scenario the inevitable collapse of the entire economic system.  At 
some point it will not be controllable as it is now by those in banking and 
finance, able to manipulate it to sustain economic injustice.  Eventually the 
inherent fundamental absurdities of the global economic system will prove 
unsustainable.  The wealthy Upper Class will have siphoned off most of the 
world¹s wealth and hoarded resources to maintain a luxury lifestyle.

What the future holds: Lower Class economic slaves fighting to survive in a 
medieval, ugly and bleak world that so many science fiction stories have 
portrayed.  In that hell their best option will be to rise up and revolt against
the rich and powerful Upper Class.  With such a prospect, global class war on a 
sick planet, prevention is a priority.  For us, that requires paying much more 
attention now to economic inequality, economic injustice, economic apartheid and
the many attacks on the middle class.  If not, we get Economic Armageddon along 
with environmental disaster.

[See to learn about the author¹s new book.]

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