Note: this is a cross-post from The Realignment Project. In order to not clog up the front page with lots of re-posts, I'll just mention that I have additional posts out this week that are on a similar topic - one on the abolition of poverty (a similar, but different object from ending inequality), and the other on the establishment of a Fisc - that might interest people here at Economic Populist.

Introduction:

A recent paper by Professor Emmanuel Saez of U.C Berkeley provides further evidence for something that we've sensed already - economic inequality has never been greater in American history. We have finally succeeded in accomplishing that most dubious of accomplishments: we are now officially more unequal, more elitist, and more disproportionally in-egalitarian than the benighted America of 1929.

In 2007, the top 10% of Americans received 50% of the nation's wages. That number, the sheer unreality of the idea that a tiny fraction of the population should have the sheer unmitigated selfishness to claim every other dollar in wages paid out, pales before an even more troubling figure. The top 1% of Americans captured 2/3rds of income growth and 1/2 of economic growth from 2002-2007. At the same time that the rich have gotten even richer, the rest of us have not fared as well - indeed, even before the recession, the average working-age household lost $2000/year of income since the year 2000.

Can this state of affairs continue? And how can we stop it?

This morning the BLS reported that consumer inflation remained unchanged (seasonally adjusted) in June, declining -0.2% NSA. Year-over-year prices have fallen - 2.1% into deflation. YoY consumer deflation is only surpassed by 1949's -2.9% in the post-Depression era.

The 2009 first half inflation data unfolded in accord with the optimistic scenario I laid out in January:

In the Optimistic scenario, the fiscal and monetary stimuli, together with intelligent new political leadership in Washington, halt the meltdown perhaps by mid-year, and wage reductions remain the exception. In the Pessimistic scenario, the stimuli fail, and wage reductions spread, leading to a wage-price deflationary spiral.

In 1997 the Tennessee branch of the AFL-CIO made an agreement with the Corrections Corporation of America (CCA) to support the privatization of Tennessee's state prison system. This opened the door for Tennessee's prison labor being used to compete with private industry.
Currently the highest-paying prisoner in Tennessee earns 50 cents an hour to produce jeans for Kmart and JC Penney, among other things.

Of all the states, Tennessee unions should have been the last ones to support prison labor. The reason lies more than a century in the past, in the days following the end of slavery.