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Weekly Audit: We welcome our new plutocratic overlords

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Meet the new global elite. They're pretty much the same as the old global elite, only richer and more smug.

Laura Flanders of GritTV interviews business reporter Chrystia Freeland about her cover story in the latest issue of the Atlantic Monthly on the new ruling class. She says that today's ultra-rich are more likely to have earned their fortunes in Silicon Valley or on Wall Street than previous generations of plutocrats, who were more likely to have inherited money or established companies.

As a result, she argues, today's global aristocracy believes itself to be the product of a meritocracy. The old sense of noblesse oblige among the ultra-rich is giving way to the attitude that if the ultra-rich could do it, everyone else should pull themselves up by their bootstraps.

Ironically, Freeland points out that many of the new elite got rich from government bailouts of their failed banks. It's unclear why this counts as earning one's fortune, or what kind of meritocracy reserves its most lavish rewards for its most spectacular failures.

Class warfare on public sector pensions

In The Nation, Eric Alterman assails the Republican-controlled Congress's decision to scrap the popular and effective Build America Bonds program as an act of little-noticed class warfare:

These bonds, which make up roughly 20 per cent of all new debt sold by states and local governments because of a federal subsidy equivalent to some 35 per cent of interest costs, ended on December 31, as Republicans proved unwilling even to consider renewing them. The death of the program could prove devastating to states' future borrowing.

Alterman notes that the states could face up to $130 billion shortfall next year. States can't deficit spend like the federal government, which made the Build America Bonds program a lifeline to the states.

According to Alterman, Republicans want the states to run out of money so that they will be unable to pay the pensions of public sector workers. He notes that Reps. Devin Nunes (R-CA), Darrell Issa (R-CA) and Paul Ryan (R-WI) are also co-sponsoring a bill to force state and local governments to "recalculate" their pension obligations to public sector workers.

Divide and conquer

Kari Lydersen of Working In These Times explains how conservatives use misleading statistics to pit private sector workers against their brothers and sisters in the public sector. If the public believes that teachers, firefighters, meter readers and snowplow drivers are parasites, they’ll feel more comfortable yanking their pensions out from under them.

Hence the misleading statistic that public sector workers earn $11.90 more per hour than "comparable" private sector workers. However, when you take education and work experience into account, employees of state and local governments typically earn 11% to 12% less than private sector workers with comparable qualifications.

Public sector workers have better benefits plans, but only for as long as governments can afford to keep their contractual obligations.

Who's screwing whom?

Former Secretary of Labor Robert Reich is calling for a sense of perspective on public sector wages and benefits. In AlterNet he argues that the people who are really making a killing in this economy are the ultra-rich, not school teachers and garbage collectors:

Public servants are convenient scapegoats. Republicans would rather deflect attention from corporate executive pay that continues to rise as corporate profits soar, even as corporations refuse to hire more workers. They don't want stories about Wall Street bonuses, now higher than before taxpayers bailed out the Street. And they’d like to avoid a spotlight on the billions raked in by hedge-fund and private-equity managers whose income is treated as capital gains and subject to only a 15 per cent tax, due to a loophole in the tax laws designed specifically for them.

Signs of hope?

The economic future looks pretty bleak these days. Yes, the unemployment rate dropped to 9.4% from 9.8% in December, but the economy added only 103,000, a far cry from the 300,000 jobs economists say the economy really needs to add to pull the country out its economic doldrums.

Andy Kroll points out in Mother Jones that it will take 20 years to replace the jobs lost in this recession, if current trends continue.

Worse yet, what looks like job growth could actually be chronic unemployment in disguise. The unemployment rate is calculated based on the number of people who are actively looking for work. Kroll worries that the apparent drop in the unemployment rate could simply reflect more people giving up their job searches.

For an counterweight to the doom and gloom, check out Tim Fernholtz's new piece in The American Prospect. He argues that the new unemployment numbers are among several hopeful signs for economic recovery in 2011. However, he stresses that his self-proclaimed rosy forecast is contingent upon avoiding several huge pitfalls, including drastic cuts in public spending.

With the GOP in Congress seemingly determined to starve the states for cash, the future might not be so rosy after all.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

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