America is a Protection Racket
Where is your hoard of gold?
That’s a nice hoard of gold you have there. It’d be a shame if anything happened to it.
A protection racket is a criminal scheme perpetrated by an organized crime group. The scheme involves the group guaranteeing protection to another entity or individual from violence, robbery, or other threats, in exchange for payments at regular intervals. The group operates outside the sanction of the law.
The economy in America and the way it operates is a bit of a protection racket, except is legal. It is codified in law and custom.
Invest early and often.
I’ve been a good little capitalist most of my life. I learned the magic of compound interest and saved and invested from an early age. Now, I’m middle aged, and I have a nice little nest egg for retirement. We can’t buy any islands or afford a tourist seat on a rocket to visit the edge of space, but we are doing alright.
Most people aren’t.
Approximately 54.4% of American families have retirement accounts, according to the Federal Reserve's 2022 Survey of Consumer Finances. That means nearly half of Americans do not have retirement accounts.
But for those that do, what do they have in those accounts? Let’s take a look:
But a small little nest egg isn’t all that people in retirement have. They also have social security.
The average Social Security benefit payment in 2024 was $1,783 per month. The average payment for retired workers receiving Social Security payments was $1,920 per month. The average monthly retirement benefit payment was $1,909.01, which comes to about $22,322 per year.
The “poverty” level for a family of two in the United States is at about $20,500. So social security by itself gets a retired couple just above the poverty line. Remember about half of the retired US population has no to little retirement income. These people are living just above the poverty line.
Right now, according to Consumer Affairs, about 1/3 elderly American’s live in poverty.
Even though retirees in America get Medicare for their health coverage, on average, seniors in the United States spend $586 per month for healthcare costs.
How does this compare to other countries?
I thought I’d take a quick look at other developed countries for the sake of comparison.
The poverty rate for seniors in Canada was 6.0% in 2022, compared to 5.6% in 2021 and 5.7% in 2019.
In 2024, 11 percent of elderly people in France lived under the poverty line, compared to eight percent in 2015.
In New Zealand, 16.8 percent of people over 65 were living in poverty in 2020.
In Germany, around 17.5 percent of senior citizens were at risk of living in poverty in 2022. The at-risk-of-poverty rate for older people aged 65 or over was 18.40 percent in December 2023.
The poverty rate of seniors in England is currently 25% for people aged 60-64. The poorest 20% of retirees have annual incomes below the minimum needed to live on, which is just £41 per week for food. Overall, relative pensioner poverty has risen to nearly 18%, the highest this century.
The OECD average poverty level for seniors is about 14%. America is more than two times that. Even Japan and England, which have their own serious problems with elderly poverty, are doing much better than the United States in terms of keeping their retirees out of poverty.
What is the purpose of America?
It is famously said that the business of America is business. That is indeed the case. Despite having just over 4% of the world’s population, in 2024, about 15.5% of the world’s GDP comes from the United States.
It is in our culture. We tend to work longer hours than other developed countries, take less vacation, and lead less healthy lifestyles than our peers in other developed nations. We also accept about 1/3 of our elderly population living in poverty.
The tradeoff is that we have a bigger economy than all other developed markets and are richer. Are we though?
I’ve shown this graphic a number of times, but it bears repeating.
The bottom half of America has had relatively little wealth creation in the past 50 years. Although the average retirement account is about $600,000, that number is skewed by those with huge retirement accounts. The median number of about $200,000 is a better representation of the typical retiree in America with any retirement savings. About half of those in America that reach retirement age have little to no retirement savings, and about 1/3 of our seniors will live on the poverty line.
That will only get worse as the impacts of climate change and ecological overshoot take hold.
We are told to save and invest and we will have money in retirement. The price of not having leisure in our working lives, not having security, and having a stressful work life where we have to kill ourselves just to stand still, is that we can participate in this wonderful economy and we will be set when we retire.
But hardly anyone is.
America is a protection racket. Our leaders tell us the equivalent of “That’s a nice economy you’ve got there, it would be a shame if anything happened to it.” The implication is that we should count our lucky stars that we live in the greatest economy the world has ever known, and if we stop killing ourselves to make that economy work, it could all go away, and wouldn’t we be sorry.
Look at the numbers.
No, we wouldn’t be sorry.
We would still retire just above the poverty line, but we would be happier and healthier.
We are killing ourselves so the 1% can steal $50 Trillion from us over the past 50 years. A 2020 study by the RAND Corporation put the first-ever price tag on how much income inequality costs American workers. The bill is $50 trillion. According to the study, $50 trillion has been diverted from working Americans to the wealthiest 1% since 1975.
By working ourselves to death, without adequate healthcare, and with no promise of an adequate retirement, we should all realize that we are essentially paying protection for a crap deal and we should stop paying for it.
Those large corporations that own our politicians and therefore own us don’t even do us the favor of employing us. The largest 500 companies in America, S&P 500 companies employ only 17% of workers in the US. Small businesses employ nearly half of the American workforce and represent 43.5% of America’s GDP. They are a critical part of our economic ecosystem where big businesses and small businesses are vendors, employees, partners, and customers to each other. Small businesses fuel the economy.
The protection racket.
A protection racket is a criminal scheme perpetrated by an organized crime group. The scheme involves the group guaranteeing protection to another entity or individual from violence, robbery, or other threats, in exchange for payments at regular intervals. The group operates outside the sanction of the law.
In the United States the protection racket is a scheme perpetrated by our leaders and the corporations and individuals who own our government. The scheme involves the promise of sharing in the bounty of America is we just keep our noses to the grindstone. We are effectively told; “That’s a nice job you’ve got there. It’d be a shame if anything happened to it.”
But 1/3 of us get poverty at the end of those days at the grindstone, and in America, three individuals hold more wealth than the bottom half of America. We have effectively set up a system that rewards dragons for collecting and sitting on huge piles of gold, while many of us struggle to survive.
The 50% should be the ones saying to the 1%, “That’s a nice economy you’ve got there. It’d be a shame if anything happened to it.”
If we did that – then things could change.
The dragons are sitting on a pile of gold that we collected for them. What if we stopped doing that?