The Five-Step Process to Cheat the Middle Class Worker

It's so artfully done, and so diabolical, that one can picture secret seminars in subterranean Wall Street meeting rooms, guiding young business recruits in the proven process of taking an extra share of wealth from the middle class. Their presentation might unfold as follows:

1. Boost productivity while keeping worker wages flat.

The trend is unmistakable, and startling: productivity has continued unabated while wages have simply stopped growing. Improved technologies have reduced the need for workers while globalization has introduced the corporate world to cheap labor. In effect, the workers who built a productive America over a half-century stopped getting paid for their efforts.

Paul Krugman suggests that a "sharp increase in monopoly power" is another reason for the disparity. As John D. Rockefeller said, "Competition is a sin." That certainly is the rule of thumb in banking and agriculture and health insurance and cell phones. Yet despite the fact that low-wage jobs are increasingly defining the American labor market, apologists for our meager minimum wage claim an increase will worsen unemployment. So it remains at $7.25. A minimum wage linked to productivity would be $21.00 per hour.

2. Build up a financial industry that has no maximum wage.

This is where the money is. In 2007, before the financial crisis, a Harvard survey revealed that almost half of the school's seniors aspired to careers in finance. The industry's share of corporate profits grew from 16% in 1980 to an astonishing 45% in 2002.

And there's no limit to the earning potential. Hedge fund manager John Paulson conspired with Goldman Sachs in 2007 to bundle sure-to-fail subprime mortgages in attractive packages, with just enough time for Paulson to collect other people's money to bet against his personally designed financial instruments. He made $3.7 billion, enough to pay the salaries of 100,000 new teachers.

3. Keep accumulating wealth created by the financial industry.

Experienced schemers have undoubtedly observed that over the past 100 years the stock market has grown three times faster than the GDP. The richest quintile of Americans owns 93% of such non-home wealth.

In the last 25 years, only the richest 5% of Americans have increased their share of non-home wealth, by the impressive rate of almost 20 percent.

In just one year, the richest 20 Americans earned more from their investments than the entire U.S. education budget.

4. Tax yourself as little as possible.

The easiest and least productive way to make money - holding on to investments - is also taxed at the lowest rate. In addition to the capital gains benefit, tax ploys like carried interest, performance-related pay, stock options, and deferred compensation allow hedge fund managers and CEOs to pay less than low-income Americans, and possibly even nothing at all.

The richest 400 taxpayers doubled their income in just seven years while cutting their tax rates nearly in half. U.S. corporations can match that, doubling their profits and cutting their taxes by more than half in under ten years. The 1.3 million individuals in the richest 1% cut their federal tax burden from 34% to 23% in just 25 years.

5. Lend out your excess money to people who can no longer afford a middle-class lifestyle.

As stated by Thom Hartmann, "The 'Takers' own vast wealth, and loan it out at interest to everybody from students to governments.." Overall, Americans are burdened with over $11 trillion in consumer debt, including mortgages, student loans, and credit card liabilities.

Wealth has largely disappeared for the middle- and lower-income classes. More than $7 trillion has been lost in the decline of home prices since 2006. Young college graduates have an average of $27,200 in student loans, and the 21-35 age group has lost 68% of its median net worth since 1984, leaving each of them about $4,000. Median net worth for single black and Hispanic women is a little over $100.

So we're hanging on by the frazzled thread of debt that indentures us to the rich and makes it harder and harder to fight back against the theft of our middle-class wealth. As we struggle to support ourselves, the super-rich remain on the take, driving us ever closer to the status of most wealth-unequal country in the world.