The plutonomy is permanent

Here's David Dayen on the "K shaped economy."  It's a phenomenon that, as he points out in the article, has been understood for a long time now. But its acceleration coming out the other side of the pandemic has brought us to a place of acute pain for many, even as that pain isn't well reflected in the numbers measuring the overall economy. 

How can we hold together the concepts of soft employment numbers, higher inflation, and climbing retail sales? You can search for reasons to explain why U.S. consumers are lying, spending with abandon even as they despise the economic picture. Or you can simply reject the average and look to the differences within the income distribution. If you do, you reveal the K-shape: Consumer spending is being driven by the top 10 or 20 percent, and unemployment, food insecurity, and gloominess are driven by everyone else. Both groups are experiencing inflation, but only the lower-income earners truly feel it. Higher-income folks are happy to spend more money on goods and services, bolstered by fat wallets and stock portfolios.

This is not that novel an analysis—like I said, Citigroup, among many others, figured it out 20 years ago—but it has huge implications. First, on inflation, if the primary buyers of goods and services (the richest 20 percent) are not price-sensitive, there is no reason to moderate prices to ensure that customers have an ability to pay. If inflation is not going to meaningfully reduce volume of sales, you can keep marking up higher. This is consistent with the story of higher corporate earnings, with companies “raising prices when they can.”

The same companies are also finding ways to ditch workers, moving to “human-light” operations, in the bloodless parlance of corporate-speak. Some of this reflects productivity gains from automation, but much is out of the necessity of doing more with less, because investment is seen as folly with Trump changing his mind every few seconds on policies where companies need certainty to invest. CEOs are also drunk on DOGE-ing their workforces, aping what the administration did to its federal workforce this year. The results of grinding remaining employees to the bone are likely to be unsustainable, but the spending appetites of wealthy consumers will conceal this.

Is it "likely to be unsustainable," though?  I'm not so sure. That the economy runs entirely on wealth circulating only among the wealthy as they trade on increasingly abstract speculative assets is pretty much taken for granted at this point.  The 21st Century has been characterized by one massive calamity after another and yet no amount of human suffering has managed to shake us off this path.  It's certainly why your democracy, such as it is, doesn't seem to be hooked up to anything that matters anymore. I can't see any reason it won't just go on like this forever, really.