Yesterday’s historic Brexit vote caught many by surprise and is highly likely to inspire exit votes in Holland, France, Denmark, Italy, Spain and Hungary, in fact the Dutch and French are already calling for their own referendum on the subject. Then again when the government rides rough shod over the populace and ignores the democratic will of the people these types of outcomes are to be expected. The popularity of Bernie Sanders and Donald Trump are the domestic manifestation of the same thing and we are very likely to experience our own political upheaval in November for many of the same reasons, essentially a deep dissatisfaction with the status quo and the gross injustice and inequality that goes with it.
Much has been made of the systematic destruction of the middle class over the last 35-years or so and the record wealth and income inequality that came with it as earned income has declined steadily on a real or inflation adjusted basis over the same period. If one breaks this data down into quintiles or similar it becomes crystal clear that the rich are getting much richer while the poor slip deeper into poverty. A new study by the Urban Institute broke share of income into quintiles using the period 1979-2014. It noted that that the rich and upper middle class share of income jumped from 30% to 63.1% during the period in question. The middle class share of income fell from 46.4% to 25.8% over the same period while the lower middle class and poor saw their share of income plunge from 23.6% to just 11.1%. History is replete with examples of gross inequality such as this, they rarely end well because the more unequal a society becomes the more unstable it becomes.
This is Caleb Lawrence Registered Investment Adviser Scotts Valley Drive and Willis Road in the Scotts Valley Plaza, Suite 202 or call me toll free at 888-RICH PIG / 888-742-4744.
You can catch me on the radio at noon each business day as well on California’s central coast. KPIG 107.5 FM in the Monterey Bay or KPYG 94.9 FM in San Luis Obispo.
Rebroadcasts, additional writings and other entries are also available on my Blog at www.clinvestments.com
Advisory services offered through Caleb Lawrence Registered Investment Adviser Inc.