It’s Not About Eating the Rich
I don’t believe there is a Punitive Option for the Rich in Catholic Social Teaching. There is a Preferential Option for the Poor. If taxing the rich at some higher level will make things better for the poor, then I might feel more excited about the policy than I do, But I don’t believe it will make much of a difference for the poor. That’s not to say I’m positively opposed to taxing the ultra-rich. It’s plausible enough to me that they’re under taxed. If raising taxes on them reduces the deficit (perhaps it might, at least a little bit), then that might be some good that comes out of it. But I don’t believe it will address the structural problems in the economy that are making the ranks of the poor swell, and filling the middle class with distress. —Jim Pauwels
The manifestation of the “structural problem in the economy” is that the top 1% (i.e. the “rich”) own 49.7% of all investment grade assets (as of 2007), including 62.4% of the business equity, 60.6% of the financial securities, 38.9% of the trusts, 38.3% of the stocks, and 28.3% of the non-home real estate. Or to put it another way, the bottom 90% owns a whopping 12.2% of all investment grade assets in the United States.
Equity would seem to be a problem. But if we pretend that it isn’t; that the top 1% or the top 10% deserve to control these assets at this level, we still have another issue that people don’t pay enough attention to. The 1% “rich” picked up 42% of all new financial wealth generated in the US economy in the 21 years between 1986 and 2007. A total of 94% of all new financial wealth went to the top 20% of the population. There are two things to note here. First, when wealth becomes this concentrated, the bottom 80 or 90 percent of the population becomes strongly affected by the economic decisions of a small number at the top who control most assets. This means that contrary to what people like Herman Cain say, one is simply not solely responsible for one’s economic situation. Second, this concentration of wealth is also a concentration of political power. We have seen this political power lead to deregulation, the destruction of the union movement, and other things which have led to a small wealthy elite gaining more and more control over productivity increases that all of us have taken part in and sacrificed for. The tide is not lifting all boats any more. And while I will agree with Jim that there is no Punitive Option for the Rich in Catholic Social Teaching, I will submit that this isn’t (just) a problem of the poor. This is a problem of one small group of people dominating all social resources. This is what is destroying the middle and working classes. At the very least; at the very minimum, we have a moral right to live in a society where the rising tide lifts all boats. Yes, if we do what we need to do politically and socially to make things more equitable the rich will no longer have their own way and they will look at this as a punitive movement against them. But there is no Punitive Option for the non-Rich in Catholic Social Teaching either.
this concentration of wealth is also a concentration of political power.
Yes, and worrisome for democracy.
It’s not even about the top one percent – it’s about the top of that one percent. Here’s an article that parses the one percent:
http://sociology.ucsc.edu/whorulesamerica/power/investment_manager.html
“The higher we go up into the top 0.5% the more likely it is that their wealth is in some way tied to the investment industry and borrowed money than from personally selling goods or services or labor as do most in the bottom 99.5%. They are much more likely to have built their net worth from stock options and capital gains in stocks and real estate and private business sales, not from income which is taxed at a much higher rate. These opportunities are largely unavailable to the bottom 99.5%.”
“A highly complex set of laws and exemptions from laws and taxes has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes. They have real power and real wealth. Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules.”
“At the very least; at the very minimum, we have a moral right to live in a society where the rising tide lifts all boats.”
Richard Wilkinson is a British social epidemiologist. He and his colleagues have done extensive research demonstrating that polities with high degrees of income inequality have lower levels of public health (e.g., mortality rates), social capital (e.g., trust), and human capital (e.g., educational achievement) than similar polities with low degrees of income inequality.
Wilkinson’s research documents that these effects take place across the income spectrum so that, for example, nation A with a high degree of income inequality will have higher mortality rates in all income deciles than nation B with a low degree of income inequality.
http://www.equalitytrust.org.uk/
http://www.barnesandnoble.com/w/spirit-level-richard-wilkinson/1100823158
Interesting stuff and like the Equality Trust book and website.
New imaginative spaces for managing the economy WITHIN the body politic needs to be devised.
Clearly, the inequity has been growing for decades. There is a powerful neo-liberal agenda afoot that has been aided and abetted by all political parties across the political spectrum. Clinton (Democrat) and Paul Martin (Liberal) advanced neo-liberal political agendas that are not really all that dissimilar than their Conservative and Republican counterparts.
There is a saying in biology that the organism is never wrong. Take a look at the tea party and occupy Wall Street movement – both, I think, grass roots movements similar to the Egyptian movement but, alas, not as intense. Although the tea party and occupy Wall Street movement differ ideologically, they are similar in that they express a growing discontent with the political ruling class. Intuitively both groups understand that government is the problem and that government can craft solutions. Right now the core issues and solutions are inchoate but an answer will eventually emerge from these kinds of movements. But the current structures may need to be completely torn down. At first blush this sounds like anarchy but it really isn’t. It is just a different form of political arrangement.
From a political point of view, we are not really going to return to a boring, defunct, Marxist styled political solution. However, deep structural reform is essential and the only people I hear advancing compelling revolutionary kinds of ideas are from the libertarian side – like Ron Paul. I don’t agree in every aspect but at least he is advancing a tertium quid.
On our front page trhis morning, our State GOP is suing (as is happening in many states, )to do away with campaign contribution limits in the name of “free speech”
Of course, power and big money (see the covetness conversationm are wrapped up.
There’s no punitive option for the rich, but what is the story of Lazarus and Dives about?
I thought Jim P.’s comment was quite disheartening in that it speaks from the”good Catholic” “I’ve got mine” mindset that justifies the Cains, Cantors, Roberts,Alito, etc. that’s screwing the poor in the us.
Very sad….
Look at the Valerie Schultz article in the new America about young folks walking away from the Church today.
“The manifestation of the “structural problem in the economy” is that the top 1% (i.e. the “rich”) own 49.7% of all investment grade assets (as of 2007), …”
Can you provide the link to the data? It would be very interesting to see what valuation methodologies they use for closely-held assets, the valuation dates, and what they are doing on tax rates.
“It’s Not About Eating the Rich”, but then
“The manifestation of the ‘structural problem in the economy’ is that the top 1%…”
I think it’s unfortunate that concern for the poor so easily morphs into concern that too many people are too rich. If you want to convince the people who disagree with you, which includes a significant number (and perhaps a majority) of Americans, I would recommend the following:
1. Check your feelings for the rich at the door, it only distracts you. People who disagree with you, rich or poor, rightly or wrongly, see your statements about the rich as a form of class envy, and are going to look askance at any recommendations you have.
2. Focus on the poor. For example, acknowledge that there are cases where the long-term poor are poor because of poor behavior and poor choices. Advocate for policies that will reward people for productive behavior, and not reward them for destructive behavior. Welfare reform in the 1990s probably fits this category.
3. Ok, now that you’ve got them interested in what you have to say, be as factual as possible and don’t overstate your case. Explain to them why you think the poor in societies with flatter income distributions are better off, in absolute terms, than the poor in societies with steeper income distributions. Luke has taken this tack, and it got me to look read some of the links he provided. FWIW, I have some problem with the methodology in the first study I looked at, but that’s beside the point. He’s gotten something started.
4. Try very hard not to sound angry, bitter or anti-American. That’s the stereotype, right or wrong, so why risk feeding into it?
Thanks but no thanks. I think we should stick with that poor Hebrew girl.
“He has cast down the mighty from their thrones and has lifted up the lowly. He has filled the hungry with good things and has sent the rich away empty”
Jeanne -
Thanks for the eye-opening site with the article by the big-time financial manager. It corroborates what I already had read, plus I learned even more about the gross injustices in the system. Things are *structurally* much worse than I had thought .
Here’s the end of it for the skeptics. (Everyone NEEDS to read the whole thing.)
“Not surprisingly, Wall Street and the top of corporate America are doing extremely well as of June 2011. For example, in Q1 of 2011, America’s top corporations reported 31% profit growth and a 31% reduction in taxes, the latter due to profit outsourcing to low tax rate countries. Somewhere around 40% of the profits in the S&P 500 come from overseas and stay overseas, with about half of these 500 top corporations having their headquarters in tax havens. If the corporations don’t repatriate their profits, they pay no U.S. taxes. The year 2010 was a record year for compensation on Wall Street, while corporate CEO compensation rose by over 30%, most Americans struggled. In 2010 a dozen major companies, including GE, Verizon, Boeing, Wells Fargo, and Fed Ex paid US tax rates between -0.7% and -9.2%. Production, employment, profits, and taxes have all been outsourced. Major U.S. corporations are currently lobbying to have another “tax-repatriation” window like that in 2004 where they can bring back corporate profits at a 5.25% tax rate versus the usual 35% US corporate tax rate. Ordinary working citizens with the lowest incomes are taxed at 10%.
“I could go on and on, but the bottom line is this: A highly complex set of laws and exemptions from laws and taxes has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes. They have real power and real wealth. Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules. I am not optimistic.”
4′Try very hard not to sound angry, bitter or anti-American.”
MAT —
What you don’t seem to realize is that getting angry at huge financial injustices is about as American as you can get. Or it used to be. This country was founded to overcome the enormous inequities of the English monarchial system. The Founding Fathers, thank God, got mad enough to stage a revolution — and they were mostly middle-class, not poor.
The people who are spouting nonsense about “class warfare” as if this were the 1917 Russian Communist revolution don’t know their history.
“4′Try very hard not to sound angry, bitter or anti-American.”
MAT —”
For the record, your attempt at smearing me notwithstanding, I did not write those words.
“People who disagree with you, rich or poor, rightly or wrongly, see your statements about the rich as a form of class envy, and are going to look askance at any recommendations you have.”
The people who defend the super rich tax breaks are ignorant about the tax law schemes that have been enacted in secret over the last 4 decades, Give them the measly mortgage interest deduction and they think they are riding on the same tax deal train as the super rich. Ask the rich defenders about ‘carried interest’ income; ?? If they can’t explain snicker loudly..
The vast majority of people do not live near or work in contact with that 1% super rich who own the 50% of all the money making assets. This 1% do not commute to jobs either… their income is money making money i.e. stocks, bond, real estate, inheritance. Their expense account living lowers their tax burden to maybe 5-10% of income. Most people do not know that the super rich are taxed at 15% at most . Super rich real estate is depreciated so steep that even the 15% is overstated. Many super rich, Buffet Feinstein etc are embarrassed enough to call for sharing a greater tax burden. Trump and other buffoons are so proud of their phony wealth they insist on the status quo. The reason Trump’s phoney campaign was phony , he would never show his tax return.
MAT —
i apologize for mistakenly writing your name instead of Mark’s. I wasn’t trying to smear you, truly.
“i apologize for mistakenly writing your name instead of Mark’s.”
I didn’t realize you were quoting someone else. No worries. Although I feel bad for Mr. Proska that his writing could be confused for mine.
“I wasn’t trying to smear you, truly.”
Oh, so you were trying to smear me? Many times I have read words that were intended to smear and yours are nowhere near that. But, I do wonder if I was misunderstood. You say, “…getting angry at huge financial injustices is about as American as you can get.” But my point is that many do not see the huge financial injustices that you see—that’s why they are not angry. First you need to convince them of the injustice.
MAT—You are too kind, my friend.
From the article that Jeanne pointed to: “The picture is clear; entry into the top 0.5% and, particularly, the top 0.1% is usually the result of some association with the financial industry and its creations. I find it questionable as to whether the majority in this group actually adds value or simply diverts value from the US economy and business into its pockets and the pockets of the uber-wealthy who hire them. ”
Wealth that goes into multiple millions and even dozens of millions defies the imagination. What does it mean to be so rich? Even if you eat choice food at every meal, you can only eat so much. Even if you sleep in the most delicate sheets, you can only use one pair of sheets at a time. The very rich have too much money to spend on themselves. In a way the money is not really theirs: they’re not spending it on themselves, except for a tiny fraction. What money buys them, once they have gotten their subscription to the opera and their apartment in Manhattan, is power and influence. That’s why I worry this situation might be a threat to democracy: they have much, much more of a voice in political affairs than the typical US citizen.
Some might say: “But the fact that they have become rich shows that they know how to manage money, and so it is good to trust them to make good choices for the economy. They know better.”
Once some distantly related cousin organized a large reunion and I got to spend a little time with the super-rich. At one point, a woman and I were both watching our daughters swim. I asked her:
- do you have other children?
- no, just this child.
- she’s an amazing swimmer for her age!
- thanks. I spend a lot of time taking her into the water.
- so, what do you do in life?
- well, mostly I take care of her.
- really? You have only one child, and you’re a stay-at-home mother? Most people I know don’t do that until their third child. You’re lucky to be able to afford it. Very lucky!
- well [slightly embarrassed...], I also spend some time helping with the schools. I sit on some boards, and we try to help articulate and implement school policies to improve the curriculum and the education the children receive.
Later I realized that she was heiress of big money and felt a bit foolish.
I think that they are the new nobility: the ones who take their role seriously view it as their duty to try to use their wealth to influence society positively. Not a bad attitude, but giving such power to a few individuals goes completely against my democratic beliefs.
I just want to add that I don’t think people are complaining that too many people are rich. That’s a straw man.
They’re saying the rich don’t carry their fair share of the burden for the common good.
I live in what’s ben labelled the richest US cointy with one Catholic church in town and a quite consrvative pastor.
My experienc ehere, what I see on line, and what I gather from talking to people all over the US is that in disccussin gCatholic values in matters politic, poltics usually shapes the view proffered and not the Catholic values.
In my parish and I wonder in Jim P.’s for example is there any fear of rocking tye boat in talking about these issues?
While BXVI and the uSCCB said preach on poverty, not a peep here.
if we do what we need to do politically and socially to make things more equitable the rich will no longer have their own way and they will look at this as a punitive movement against them. But there is no Punitive Option for the non-Rich in Catholic Social Teaching either
_____________________
One ought to be careful complaining of wealth inequity in the United States.
I dare say that everyone posting and commenting here lives fairly comfortably and is not affected one iota by the “inequity” that Warren Buffett’s wealth is several billion dollars more than theirs.
But you don’t need to be a billionaire or a millionaire to be fat cat rich.
Everyone posting and commenting here is super rich compared to the people of some Third World country.
Any of you want to eliminate any possible hypocrisy on your part and volunteer to have 90 percent of your wealth taken from you and given to people in Somolia or Bangladesh to correct these inequities?
Any pretended inequity caused by Buffett holding on to his superwealth as compared to your middle-class life, living in comfortable homes with the leisure to surf the web, is dwarfed by the very real and substantial inequity caused by those on the left complaining about Buffett, et al., who won’t give up their own wealth to give to Third World people living squalor so they don’t starve to death or die of dysentary because their water supply is basically a sewer.
@Bender (10/8, 5:18 pm) “Everyone posting and commenting here is super rich compared to the people of some Third World country.” Agreed. Heck, compared to some people in this country, too.
I once had a pastor who preached to be careful about point a finger at other people “because when you’ve got one finger pointing out, you’ve got three pointing back at yourself”.
Having said that, I don’t understand the logic of your final paragraph.
*First, Buffett is giving away huge chunks of his wealth.
*Second, he’s going around the country saying that tax rates should be raised on himself and his economic peers.
*Third, how is the “very real and substantial inequity” in global wealth and income “caused by those on the left”?
Speaking just for myself, I’m not “complaining” (in the sense of whining) about wealth inequity in the US. I’m “complaining” in the sense of documenting an ongoing trend (growing wealth and income inequality), as well as its negative effects on society as a whole (including the affluent). Further, I observe that it’s consistent neither with Catholic social teaching nor with democratic (small ‘d’) political tradition.
I’d welcome your reply to my earlier question, as well as your views on wealth and income inequality.
Ann said: A“I wasn’t trying to smear you, truly.”
Mark said: Oh, so you were trying to smear me?
Ann replies:
Mark, that was in reply to MAT. It was MAT who said that I was trying to smear *him*. I wasn’t trying to smear anybody.
Another interesting take on the income divide, which distinguishes between those who get rich making stuff and those who get rich manipulating money, because, well, they can! As the old saying goes, when the bank robber was asked why he robbed banks, he replied, “because that’s where the money is.”(OWS = Occupy Wall Street)
“And I think that’s part of what’s behind the OWS protests. Their rhetoric is sometimes anti-capitalist. But it’s never anti-Steve-Jobs-capitalist. It’s anti-Goldman-capitalist. See the difference? One is a genius, the other a usurer. One is a person, the other a faceless corporate entity. And when I checked out the protest a few days ago, for every red-flag-waving Marxist in the crowd, I spotted a dozen people who wanted jobs—not Steve Jobs, but the old fashioned kind, the kind where you worked and got paid for what you did, and it was an “honest living,” and even if you were just building webpages, you were building something, dammit, and that was real and human and true.”
http://www.religiondispatches.org/dispatches/jaymichaelson/5226/steve_jobs%2C_%23occupywallst%2C_and_usury
“I think it’s unfortunate that concern for the poor so easily morphs into concern that too many people are too rich. If you want to convince the people who disagree with you, which includes a significant number (and perhaps a majority) of Americans, I would recommend the following:”
I’m not sure where you got the idea that this thread is about the poor. It’s about the middle class and the rich.
“1. Check your feelings for the rich at the door, it only distracts you. People who disagree with you, rich or poor, rightly or wrongly, see your statements about the rich as a form of class envy, and are going to look askance at any recommendations you have.”
I was waiting for someone to say this and frankly I am disappointed that it was you. The thread is full of statistics. Either you think that this income equality is fine or you don’t. Fair play to you.
“2. Focus on the poor. For example, acknowledge that there are cases where the long-term poor are poor because of poor behavior and poor choices. Advocate for policies that will reward people for productive behavior, and not reward them for destructive behavior. Welfare reform in the 1990s probably fits this category.”
I am focusing on the middle class. Is that wrong? Or is it now Marxist and un-American to talk about anyone but the poor?
“3. Ok, now that you’ve got them interested in what you have to say, be as factual as possible and don’t overstate your case. Explain to them why you think the poor in societies with flatter income distributions are better off, in absolute terms, than the poor in societies with steeper income distributions. Luke has taken this tack, and it got me to look read some of the links he provided. FWIW, I have some problem with the methodology in the first study I looked at, but that’s beside the point. He’s gotten something started.”
My case is made up of facts and I think that it would be very hard to overstate it. The thing that frustrates me is that there is tons of data out there showing what I talk about in various ways. I think it is the case that you don’t want to see it and there is not a thing that Luke or I or anyone else can do about it.
“4. Try very hard not to sound angry, bitter or anti-American. That’s the stereotype, right or wrong, so why risk feeding into it?”
Ah, so you pulled the anti-American card after all. Why. Because it looks like I am talking about classes and QED anyone who talks about classes is a socialist or something worse.
FYI, here is what I sound like when I am angry:
A small percentage of the population is starting to monopolize the wealth of the richest country that ever existed because they are cynical and greedy and in the meantime, the people they are screwing the most are buying in to an infantile disorder called libertarianism that not only denies that this is going on; it virtually denies that there is a society at all (as opposed to a conglomeration of people who by the grace of God get to use the United States as their business address).
Can you see the subtle difference in tone?
“But my point is that many do not see the huge financial injustices that you see—that’s why they are not angry. First you need to convince them of the injustice.”
Mark –
I agree that many don’t see the financial sector and the banks and large corporations that way. I doubt that even *most* people see it that way. Until rather recently I was one of them. But that’s why we need to yell and scream about what is actually going on and has been going on for a long time.
The article Jeanne recommends is by a financial manager, certainly no enemy of the rich. Yes, everyone should look at at the facts about the loopholes built into our tax system — loopholes only the very rich can take advantage of. So i’ll repeat the address:
http://sociology.ucsc.edu/whorulesamerica/power/investment_manager.html
This is not a matter of envying the very rich. It’s a matter of recognizing great injustices, and it ain’t a pretty picture.
“Can you provide the link to the data? It would be very interesting to see what valuation methodologies they use for closely-held assets, the valuation dates, and what they are doing on tax rates.”
Here’s a link.
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
But don’t try to dazzle me with a bunch of trader talk. I used to be in the business too. Nothing that you imply is going to suddenly reveal that assets in the US are distributed equally and I think you know it.
“Any pretended inequity caused by Buffett holding on to his superwealth as compared to your middle-class life, living in comfortable homes with the leisure to surf the web, is dwarfed by the very real and substantial inequity caused by those on the left complaining about Buffett, et al., who won’t give up their own wealth to give to Third World people living squalor so they don’t starve to death or die of dysentery because their water supply is basically a sewer.”
Yeah, don’t complain about your roaches because the guy next door has rats.
We have sucked a great deal of wealth out of the Third World, it is true. But that’s a topic for another thread. In any case, you don’t care, so why are you concern trolling, middle class man?
‘Wealth that goes into multiple millions and even dozens of millions defies the imagination.’
Claire –
I”m not talking here about dozens of millions — I’m talking about *hundreds* of “billions”. Here’s Larry Kudlo, interviewing the president of Bank of America (the larges U.S. bank).
http://www.moneynews.com/LarryKudlow/BofACEO5FeeNeededtoPayforDodd-Frank/2011/10/06/id/413558
It seems that BoA is sitting on 230 BILLIONS of capital which it is obviously in no hurry to invest, even while this country is crying for capital for new investments. Even Kudlow, generally a friend of the rich, isn’t too impressed.
“I’m not sure where you got the idea that this thread is about the poor. It’s about the middle class and the rich.”
Unagidon, sorry, my mistake. It seemed to me that Jim’s words evinced concern for the poor so when you quoted him I thought that was your focus.
“I was waiting for someone to say this and frankly I am disappointed that it was you.”
Not sure what to make of your disappointment with me.
“I am focusing on the middle class. Is that wrong?” Absolutely not! As I said, my bad.
“Ah, so you pulled the anti-American card after all. Why. Because it looks like I am talking about classes and QED anyone who talks about classes is a socialist or something worse.”
Well, I don’t really think I pulled the anti-American card, just provided some unsolicited advice (not to you personally, but to anyone who cares to listen) on what people may think if the argument is presented in a certain way.
“Can you see the subtle difference in tone?” Uh, yup.
Just as Unagidon does not advocate eating the rich (but a round of demonizing them will do), so I am not playing the Marxist card but only recalling something I read long ago that this post reminded me of.
“The history of all hitherto existing society is the history of class struggles…the modern bourgeois society that has sprouted from the ruins of feudal society has not done away with class antagonisms. It has but established new classes, new conditions of oppression, new forms of struggle in place of the old ones…Our epoch, the epoch of the bourgeoisie, possesses, however, this distinct feature: it has simplified class antagonisms. Society as a whole is more and more splitting up into two great hostile camps, into two great classes directly facing each other — Bourgeoisie and Proletariat.”
———–
While I’m here, let me make a plea for at least the semblance of fairness and balance — Why not make someone like Jim Pauwels a contributor? It would break the near monopoly held by members of one end of the political spectrum that is usually in evidence here. Someone as fair-minded as Unagidon no doubt would favor the breakup of elite dominance and increased competition. The views of the 80% of the population not part of the Democratic left, however misguided they may seem, would be given at least a brief hearing. This is not a plea for Ayn Rand or Herman Cain or even Joe the Plumber but for an articulate non-Michael Moore type conversant with the Catholic ethos. Utopian dream?
It seems to help angry people to find and fix on a clear villain and a clear victim. The rich and the poor do nicely for some people. It may not make much sense, once you start mucking about in the complexities, but complexities are for wimps. Stay focused!
I posted this material about ten days ago on another thread, but given its connection to the reference to class struggle in Patrick Molloy’s comment, I thought it would be good to post it again. The following quotes are from “Neither capitalist nor Marxist: Karol Wojtyla’s social ethics,” by Jonathan Kwitny, Commonweal, Oct. 10, 1997: http://findarticles.com/p/articles/mi_m1252/is_n17_v124/ai_20039477/?tag=content;col1
Anne: yes, 230 billions is a lot of money! But that’s not the wealth of an individual, fortunately.
About taxing a very rich person: since the individual has too much money to spend on himself, what is the difference between taxing and not taxing, really? The difference is that in one case, the state gets to decide how the money (from tax) is used. In the other case, the individual gets to decide how the money is used.
One of the problems, Gene, with advocating class struggle is that in the end, when all the fires have been put out and all the people are sleeping it off, you will always have some kind of system in place, and any system will exploit the people. The corruption of communism that we all witnessed in the middle of the past century was no accident, no small correctable flaw. Whenever a system lends itself to permanent control by a few people, the same thing will happen every time. The perpetual chaos of a pluralistic representative democracy may be the best antidote available for the intellectual’s silly dream of a perfect society.
“One of the problems, Gene, with advocating class struggle is that in the end, when all the fires have been put out and all the people are sleeping it off, you will always have some kind of system in place, and any system will exploit the people. The corruption of communism that we all witnessed in the middle of the past century was no accident, no small correctable flaw.”
I for one would not advocate Marxism or Communism, but it doesn’t follow that there are no classes or that there isn’t a struggle between them. We might like to think that the top one percent or ten percent who hold most of the wealth in this country got there by working hard, being smarter, etc. But the concentration of wealth has massively increased in just the last 30 years. Are we to think that there was something that changed that made these people smarter or work harder than the rest of us, or that 90 percent of us suddenly became lazier or dumber? There is an economic structure. We know this because we saw it break down a couple of years ago. The structure creates both interests and possibilities. But right now we have a political problem in that the majority of the population is being systematically excluded from any power within the structure. Larger decisions are being made by a smaller number of people supported by a political ideology that says that this does not matter and that the repercussions of these decisions are no one’s fault and no one’s responsibility except those who are victimized by them.
Since the economic power of the mass of people is weak; since the power of labor is dead because the union movement is dead; since the power of the American middle class is diminished because they don’t count any more in a world market; all we have left is the vote. But we are told that people who look at the complexity of the economy and see a power shift are elitists; people who see that both the existing wealth and the generation of new wealth are moving to the hands of an ever smaller number of people are just envious of those people; people who want this financial inequality to be redressed if only to make up for the things that the mass of people had in the recent past, like good manufacturing jobs, health benefits, decent wages, equitable shares in productivity gains, decent schools, and decent roads are greedy and foolish perpetrators of dangerous foreign socialist ideas. The last thing we have, the vote, is being eroded in so many ways and when this is over, the ownership of the many by the few will be complete.
“But don’t try to dazzle me with a bunch of trader talk. I used to be in the business too. Nothing that you imply is going to suddenly reveal that assets in the US are distributed equally and I think you know it.”
I didn’t imply anything, nor am I a trader. Looking at the data (or in this case, estimates of data) is how I test hypotheses I may or may not have. I can assure you I would not try to persuade you from your opinion.
David S. –
About purported class warfare — here’s a paricularly good article by Friedman showing how it has been the Republicans who have for generations pushed the kind of populism that results in class antagonism, not the Democrats. For instance, the Brie-and-Chardonnet stereotypes come from the Republican PR people, not from the Democrats.
http://readersupportednews.org/opinion2/277-75/7778-the-wall-street-occupiers-and-the-democratic-party
Here’s eleven reasons to despise the banks:
http://readersupportednews.org/news-section2/320-80/7787-11-facts-about-biggest-banks
Good heavens, it would take an exceptionally dense person to believe any of that. We all understand that the super rich got there – for the most part – simply because the system is skewed in their favor. Of course that’s not good. The problem is, how does one correct things in an economically and ethically sane way? (We can’t speak of a morally sane way, because politics isn’t even slightly about morality.) Remember the baby and the bathwater.
In an important way, that’s not at all bad. An essential part of the design of the American republic involved protecting the people against themselves – making it a representative democracy instead of a direct one. People are easily and quickly excited and prone to do unwise things in the heat of their excitement. Congress puts a distance between popular passions and the creation of new laws. And then, of course, the courts protect against the popular passions that make it through Congress. The people are not supposed to rule directly.
“So many ways”? What many ways?
@David Smith (10/9, 2:13 pm) Re: the vote being eroded in “so many ways”, the Brennan Center at NYU recently released a report that estimates as many as five million voters may lose the right to vote or have sufficient obstacles placed in their way as to effectively prevent/discourage them from voting. http://www.brennancenter.org/content/resource/voting_law_changes_in_2012 These voters are all in states where Republican-controlled legislatures have passed or are considering laws to restrict the franchise and/or make it harder for people to vote.
See also this article by longtime moderate Democratic policy work/strategist Ed Kilgore: http://www.thedemocraticstrategist.org/strategist/2011/10/the_truth_about_voter_suppress.php#more
“Second, this concentration of wealth is also a concentration of political power. We have seen this political power lead to deregulation, the destruction of the union movement, and other things which have led to a small wealthy elite gaining more and more control over productivity increases that all of us have taken part in and sacrificed for. ”
Globalization anyone? Expanding access to education? You seem to be skipping over a few relevant facts in this “narrative.” Megan McArdle had some interesting thoughts on this: http://www.theatlantic.com/business/archive/2011/09/the-new-new-new-economy/245028/
Moreover, the “99%” is HIGHLY diversified; I’m troubled by the lumping together of various groups in the “99%.” Josh Barro makes this point: http://www.nationalreview.com/agenda/279319/we-are-99-percent-even-rich-people-josh-barro
Finally, I remain puzzled about exactly what the solution being asserted is: is it a tinkering with the tax code to “redistribute” the benefits of our increasingly complex financial system, or is it the destruction of that system and its replacement with something else? What is that something else? Is the problem political? Is it only with the Republicans? What of Democrats like Jon Tester or Bill Nelson or Mary Landrieu? Bill Daley?
Hey David .. I think you are coming around …you say.’ simply because the system is skewed in their favor. Of course that’s not good. The problem is, how does one correct things in an economically and ethically sane way? ‘
The answer start.. ‘skewing’ it back away from their favor.. David ..on board?
“Globalization anyone? Expanding access to education? You seem to be skipping over a few relevant facts in this “narrative.”
There we go again with the diluting of the American situation into the world situation. Yes, globalization is proletarianizing the world, but that just means that everyone everywhere is suffering from the 1 percent problem, not just us. Now you can stack us up against the rest of the world and say that even the poor in the US are rich compared to the middle classes in other countries. But that’s a red herring that resets the bar at a lower level. The fact is relative to themselves the middle and lower classes are stagnating and declining and yet the net mass of national wealth continues to grow. It is complicated. But it is not hard to see.
“Finally, I remain puzzled about exactly what the solution being asserted is: is it a tinkering with the tax code to “redistribute” the benefits of our increasingly complex financial system, or is it the destruction of that system and its replacement with something else?”
This too is a red herring until one admits that the distribution of wealth has become a problem. I don’t think you are. The next question is how and when it became a problem? Then next question is whether anyone else has a better partial solution to the problem. Saying that the system is too “complex”, especially after an economic melt down where we discovered that the system was made too complex explicitly to obfuscate things, is a cowardly way to pass on taking political responsibility for it.
Jeff –
I don’t think anyone here has mentioned “redistributing” anything or eliminating the system for something else. So far as I can see everyone here is for reforming our lop-sided form of capitalism. That, it seems, could be done if there were regulations with teeth. Even Adam Smith admitted that regulation would be necessary because of defective human nature.
What those regulations should be is debatable (many want the Glass-Seagall Act or something like it back), but it does seem clear that regulating the financial industry, including especially the banks, is crucial to a workable system.
No doubt some among the Wall Street demonstrators are more radical. (I’ve said for a long time that Marxism isn’t dead because it wasn’t truly tried — the dictators took over the systems.) But you don’t have to be a radical or even a modified socialist to see that drastic measures need to be taken.
“The fact is relative to themselves the middle and lower classes are stagnating and declining and yet the net mass of national wealth continues to grow. It is complicated. But it is not hard to see.”
In no way have I denied this essential fact; and in no way in raising globalization, etc. am I trying to deny it. On the contrary, I’m only suggesting that there are various causes to this situation that you seem to be content with leaving out of your analysis. On my reading, you seem to collapse an analysis of the problem into some solution. As a conservative, and more importantly, as a business lawyer who routinely represents small businesses, I am gravely concerned about the dominance of “too-big-to-fail” banking institutions and increasing concentration of capital. But I don’t see in your analysis of that problem a solution that re-arranges the market to increase competitiveness. Outrage and anger isn’t solution, and I don’t see how asking for more certainty is equivalent to a red herring. Let’s start with your last sentence, which is a question I rased in my last post: who should take political responsibility? Is it W’s fault? The Republicans? Chris Dodd who took cushy mortgage deals from the very institutions he was charged with overseeing?
I’ve been away for a few days and didn’t realize that my comment had sprouted its own thread. I need to keep reminding myself to not post comments late at night.
Folks who have followed my comments on the economy probably already are aware that I am concerned that vast fortunes can be piled up by trading in secondary markets that don’t even pump investment funds into the hands of entrepreneurs. I cling to the view that the way out of our current financial morass is to encourage entrepreneurs to take risks with their own and other people’s money, because that’s really the only reliable way I know to restart the jobs engine.
Thus, in my view, a prudent tax policy is one that would distinguish between the professional investor who is profiting from investments in derivatives of derivatives, and the small business owner who earns a well-above-average income (but one that doesn’t put her in the top 1%) by employing other people to produce or deliver goods or services. Proposals to increase taxes on individuals earning more than $250K or $500K annually don’t adequately make this distinction.
Jeff –
As I see the sellers of derivatives of derivatives, what they really are are glorified clerks with computers to do their research for them. They do not deserve the phenomenal compensation that they get and should be taxed like the small business men.
While this post on NRO today from Reihan Salam doesn’t directly address some of the issues raised here, I found it helpful in raising some questions/responses/proposals from a right of center perspective. http://www.nationalreview.com/agenda/279831/questions-evasions-etc-reihan-salam
In particular, I think this paragraph raises some issues that might be overlooked:
“The author presents a series of graphs tracking average household income, and the change in the share of income earned by the top 1% and households by income since 1979. A good first step is to think through how the demographic composition of the U.S. population has changed over the intervening years. Has there been a sustained influx of less-skilled workers, with levels of educational attainment that more closely track those of southern European migrants of the early twentieth century rather than native-born U.S. residents? Have we seen a high level of family disruption, i.e., have we seen an increase in the number of U.S. households with children headed by single parents? Have we seen an increase in assortative mating, i.e., people with similar levels of educational attainment marrying each other? Are single-person households more common than they had been in 1979? Do we have reason to believe that there will be higher within-group wage and wealth dispersion in an older and more educated population, per the work of Thomas Lemieux?”
Jeff, none of your questions are about the accuracy of the data as such nor the fact that there has been a sharp bifurcation of wealth in the United States since 1979. But I am interested in this “right of center perspective”.
Has there been a sustained influx of less-skilled workers, with levels of educational attainment that more closely track those of southern European migrants of the early twentieth century rather than native-born U.S. residents?
Well, no. If this were true, however, then the spread between the rich and everyone else would look like some simple demographic trend; i.e. more poor people in the general mix might make it look like wealth is aggregating at the top. There are more poor people in the mix. It’s just that they are coming from the de-industrialization of the United States since the 1970′s. Or to put it another way, we didn’t have to import less-skilled workers. We grew our own.
But more interesting is the idea (and you do this throughout) that your questions try to reduce the situation to a series of moral choices that people made. In other words, you not only want to show that the variance in wealth is not structural, you want to show that the bottom 80 or 90 percent got to where they are today because of choices they made and not because of anything the top 1 or 10 percent did. Fair play to you if you can show that the gap is not structural, but your weighting of your questions to the choices made by the losers isn’t right of center. It’s pure sucking up to the rich.
Have we seen a high level of family disruption, i.e., have we seen an increase in the number of U.S. households with children headed by single parents?
Yes we have. But how does this lead to more wealth flowing to the top? For one thing, you’d have to show me that there are fewer single parents among the one percent. Are you able to do this? There are more households headed by single parents, but this is a national trend affecting everyone, isn’t it?
Have we seen an increase in assortative mating, i.e., people with similar levels of educational attainment marrying each other?
No, as a matter of fact. Most people marry within their class and always have.
Are single-person households more common than they had been in 1979?
Yes, but in all strata.
Do we have reason to believe that there will be higher within-group wage and wealth dispersion in an older and more educated population, per the work of Thomas Lemieux?
Yes. But so would Marx, since he would call this “social class”. The older, more educated population, by the way, makes up much of the disgruntled Tea Party as well as the protesters on Wall Street. But in any case, so what?
If the “center of right” position is either that this gap between the very rich and everyone else isn’t real or that it comes entirely from choices the people on the bottom have made, then we should see this “center of right” position disappear soon.
This piece by economist writer Robert Samuelson comes across as reasonably objective and fact-based. Headline: “Should we be angry at the rich?”
http://www.chicagotribune.com/news/opinion/ct-oped-1011-rich-20111011,0,5857841.story
“But more interesting is the idea (and you do this throughout) that your questions try to reduce the situation to a series of moral choices that people made. In other words, you not only want to show that the variance in wealth is not structural, you want to show that the bottom 80 or 90 percent got to where they are today because of choices they made and not because of anything the top 1 or 10 percent did. Fair play to you if you can show that the gap is not structural, but your weighting of your questions to the choices made by the losers isn’t right of center. It’s pure sucking up to the rich….If the “center of right” position is either that this gap between the very rich and everyone else isn’t real or that it comes entirely from choices the people on the bottom have made, then we should see this “center of right” position disappear soon.”
Please, unagidon. This is a blatantly unfair response to mine and Salam’s arguments. I have not done ANYTHING of the sort. Not ONCE have I suggested that the divergence in income is reducible to individuals’ “moral choices.” I’m merely suggesting that we include ALL relevant data. Apparently you didn’t bother to read the post because Salam doesn’t suggest anything of the sort, either. Again, I think I’m just suggesting you be a bit more open to other data that might produce various proposals. Just a thought in dialogue; not an attack. But as David Brooks argued yesterday, your move to reduce the problem to 99% pure and rightous folk against an evil, corrupted, greedy 1% is convenient for attacks, but it’s not helpful in reaching solutions. Geez.
If anyone is stll reading this thread – please check out this piece by Joel Kotkin in Politico. I don’t endorse all of the author’s rhetoric, but its economic analysis seems solid and sensible. It might be a source of common ground for folks here, as it addresses both the wealth inequality and the key role of small businesses.
http://www.politico.com/news/stories/1011/65768.html
I just lost a job to the recession. The company closed my branch. I had a 401k that I hadn’t sold through laziness and lack of the will to act on my own good common sense. It lost all the money my company put in it through a match and a lot of what I put in. It was through Vanguard and was actually one of the better ones available. A lot of others did worse.
A couple of years ago when the bank started to have to list the management fees it charges, a $37 charge appeared on my statement. Our company had three choices of mutual funds. It had about 4,400 employees at the time that this statement came out. The fees on that simple-to-manage fund for one year for one company were about $162,800. OUr company did all the paperwork for changes, so their bank had only to plug into a computer any changes that occured. Further. one could only change anything during a two week period once a year. One low level bank clerk should have been able to enter the changes for our whole company, even if everyone there changed their options, in that two week period. For that, the bank made $162,800, discounting any possible short sales or cashing of unknown derivitives insuring the deposits for themselves.
Whatever portion of that went to the salesman who sold this program to our company took him about two days to set up and then was handled by clerks later on. It became an annual income that he paid 15% taxes on and was taken from an account that I will eventually probably pay about 20% to 30% taxes on.
The banking industry has taken this rain of cash and used a portion of it to sway elections to keep the regulatory agencies from being able to regulate them. They have made sure that bankers are in charge of the banks and they have kept the good ol’ boy network intact. They have made sure that no derivitives are classed as insurance, which is what they actually are, and so kept themselves from being prosecuted for insurance fraud or regulated under insurance laws.
The Citizen’s United case has made this election swaying easier to do by a huge amount. While we have accepted the idea of corporate personhood for nearly all of our existance as a nation, we haven’t defined any way that I can see what we should do about that “personhood’s” citizenship. If a citizen has it’s main headquarters in another country, is incorporated in that country, isn’t it a citizen of that country and not this one? If it is then a citizen of Ireland or of the Bahamas, what is it doing freely trying to sway an election in the US?
I’m still waiting on the answer to that one.
Susan,
I’m terribly sorry about your job and savings. I hope you’re considering joining OWS. It’s time for some orderly civil disobedience. The plutocrats own Congress, the Court is packed with pro=large corporation lackies, and we have no redress.
FWIW – as a proposition, if capital gains are one’s primary source of income, then it seems fair and right that they should be taxed as income. The social justification for a low capital gains tax is that it would spur investment that generates jobs for folks at all echelons of society. It’s difficult to see that investing in swaps and mortgaged-back securities is getting factories built in Flint or Youngstown or Fort Wayne.
Suppose this happened – that taxes on capital gains were taxed at the same rate as taxes on wages. Tax revenues would increase. That would be helpful for some of the problems facing the nation: that revenue could be used to reduce the current deficit, to pay down some of the accumulated debt, and to strengthen social programs like Medicare and Social Security. These would morally good outcomes, and I’d think it would be very much in line with Catholic social teaching to support such a policy.
But I don’t see that it would help the poor.