The Propaganda Barrage

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          You see it and hear it every day in the mainstream (corporate) media, stories and assertions designed to cover up the true state of the economy and the direction it’s headed.   Most people read the headlines and don’t have the time or ability to study and think about that the “experts” and the authorities are telling them. 

          It’s getting harder to cover up the crisis, though, with every school that closes and every public sector employee that gets laid off, and every increase in the price of gasoline and groceries.  As Barry Lynn puts it, “[w]e can believe what we see with our own eyes.” [1]

         The mainstream media continues to mess with labor statistics and the CPI to minimize our impression of unemployment and inflation (more on that later), however, and it finds every opportunity to try to suggest that everything is just fine.            Here are a couple of good recent examples:

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          “What recession?” asked a March 16, 2011 CNN Money article.  “The millionaire population jumped in the U.S. by 8% last year, fueled by the stock market recovery, according to an industry report on Wednesday.”   The average reader might walk away from that headline with an impression that there is no recession! 

          Here’s more from the article:  “‘The millionaire comeback continues,’ said George H. Walper Jr., president of Spectrem Group.   But he added that many millionaires are still operating under a cloud of caution.  ‘While investors are feeling positive about their own portfolios, they are not convinced that the economy has recovered,’ said Walper. ‘Our ongoing polling and research indicates that investors remain unconvinced that we are back on solid ground.’  In the prior year of 2008, the millionaire population plunged 27%.”

           Stop:  Who are the “we” that investors ar not convinced “are back on solid ground”?  The article implies that it’s all of us, the whole economy, and that the fortune of millionaires rises and falls with the “economy.” 

          Actually, it’s not true that  stock market performance is necessarily correlated with the fortunes of most Americans or the underlying economy.  Here’s a conservative representation of financial wealth distribution:         

          It shows the top 1% holding 42% of financial wealth in 2007; by some accounting, they held more than 50%, and today the top 1% may hold more than 70% of all financial wealth. 

          All millionaires are in the top 5%, which held 69% of the financial wealth in 2007 according to this chart, which also shows the top 10% holding 91% of the wealth.  The bottom 80% have only 7%, with most of that group having zero net worth.  So stock market performance only affects the wealth of a few people, at the top of the income ladder.  

          This high level of inequality has reduced the degree to which the stock market affects or is affected by the health of the underlying economy.  Instead, that performance could improve in the face of a continuing recession and increased unemployment, with people at or near the bottom already reduced to scraping out a meager existence, with little control over how much they must spend.  Stock market performance does not reflect their incomes or borrowing.  Indeed, it could have as much or more to do with the worldwide performance of global stocks.

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          Another misleading article, this one from MarketWatch just yesterday (4/25/11), hyped the American Dream that “you too” could be a millionaire:

          “The 7% solution: Let money and time work for you, no matter your age.

          “The millionaire next door could be you.  All it takes is money and time; it always does. But what this really means is you have to save money over time, and that’s where so many of us struggle.

          “Reaching age 65 with $1 million saved requires strong discipline and sustained effort. You need to recognize the importance of starting early and putting money away regularly. But even if you don’t have as much time, you still have options other than a last-ditch Hail Mary pass.  It can be done — even if you start with just $10,000.”

          Sadly, no, not for hardly anyone any more.  Middle class wealth and incomes have been and are being drained into the coffers of the wealthy at an alarming rate over the last 10-15 years.  People have tried to save, but ever since the rich lowered their taxes in 1980 people with lower incomes have become net borrowers when their wealth ran down or out, and their real incomes declined:

           These articles are propaganda because they don’t reveal the truth about what nearly everyone in the bottom 99% is up against. Their wealth is being constantly transferred to the top in an economy that only serves the rich, as the rich devise schemes to privatize (and get still more wealth for themselves from) their retirement and health care systems.

          The sad reality of the economic situation faced by most Americans, unfortunately, will not be addressed by the mainstream media, which serves the wealthy.  They will just keep blowing sunshine, in the face of the gathering storm.             

 JMH – 4/26/11

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[1] Barry C. LynnCornered: The New Monopoly Capitalism and the Economics of Destruction, John Wiley 2010, p. 252.

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