It's tough to be a billionaire

By Michael J.W. Stickings

Glenn Greenwald looks at the self-pity of the Koch brothers et al.:

Since the financial crisis of 2008, one of the most revealing spectacles has been the parade of financial elites who petulantly insist that they are the victims of societal hostility: political officials heap too much blame on them, public policy burdens them so unfairly, the public resents them, and -- most amazingly of all -- President Obama is a radical egalitarian who is unprecedentedly hostile to business interests...

I'm not someone who sees the Koch Brothers as some sort of unique threat. I mostly regard them as little more than a symbol of the death of democratic values in the U.S. -- the way in which the possession of vast financial resources is an absolute prerequisite to making any impact on the national political process, and conversely, how those without such resources are politically inconsequential and impotent (short of their fomenting serious social unrest)...

For billionaires to see themselves as the True Victims, to complain that the President and the Government are waging some sort of war against them in the name of radical egalitarianism, is so removed from reality -- universes away -- that's it's hard to put into words. And the fiscal recklessness that the Kochs and their comrades tirelessly point to was a direct by-product of the last decade's rule by the Republican Party which they fund: from unfunded, endless wars to a never-ending expansion of the privatized National Security and Surveillance States to the financial crisis that exploded during the Bush presidency. But whatever else is true, there are many victims of fiscal policy in America: the wealthiest business interests and billionaires like the Koch Brothers are the few who are not among them.

Much of this self-pitying anger is directed at Obama, which is pretty hilarious given that, as Greenwald points out, Obama has been very much a part of the problem, allowing the corporate control of America that was so much a part of the Bush II presidency (and so much a part of America -- see the excellent Inside Job, if you haven't already -- regardless of who's in the White House and which party controls Congress) to continue. In that regard, he hasn't really changed anything, even if Republicans keep trying to portray him as a socialist. He is nothing of the kind. He has been very good to Wall Street and very good to Corporate America generally.

And as for the billionaires:

This is exactly the psychological affliction that leads Wall Street plunderers and tycoons and billionaires to see themselves as the victims of the resentful lower-classes and the "radical egalitarians" who run the U.S. Government. Even as they get richer and everyone else gets poorer, even as the very few remaining restraints on their political power are abolished, even as the disparities in wealth and power grow ever-larger, they become increasingly convinced that everything is stacked against them, that there is a grand conspiracy to deprive them of what is rightfully theirs. All of this could be confined to a fascinating, abstract psychological study if not for the fact that the people who think this way exercise the most political power and continue to exercise more and more.

And for the fact that, as American democracy collapses in on itself and becomes a sham, and as American wealth is concentrated more and more in the hands of the plutocracy, the vast majority of the American people, many of whom are sinking further and further into debt and further and further into abject hopelessness and utter despair, have little to no power at all.

I'm not sure that's quite what the Founders envisioned.

Taxing the super rich like it's 1959

By R.K. Barry

Robert Reich, who was Secretary of Labour in the Clinton Administration from 1993 to 1997, has a very interesting blog on the current state of affairs that contains any number of useful observations. 

I recently came across one of his posts, which laid out some rather compelling facts about the grossly uneven distribution of wealth in America and how it is that we have come to be in a situation where we can't pay for the things that any civilized society really should be able to fund.

No great surprise, but nearly everyone in America has bought into the idea that we need to radically reduce expenditures rather than give any thought at all to increasing revenues through taxation, specifically by taxing those who can most afford it – the super rich.

We have heard this before, but the numbers, as I say, are compelling.

I do recommend that you read Reich's post in its entirety, but here are a few interesting bits:

Today's typical 30-year old male (if he has a job) is earning the same as a 30-year old male earned three decades ago, adjusted for inflation.

The bottom 90 percent of Americans now earn, on average, only about $280 more per year than they did 30 years ago. That's less than a 1 percent gain over more than a third of a century. Families are doing somewhat better but that's only because so many families have to rely on two incomes.

This may not sound catastrophic, but, and here's the rub, the American economy is more than twice as large now as it was thirty years ago. So, Reich asks, where does all the money go? And the obvious answer is: to the top:

The richest 1 percent's share of national wealth has doubled – from around 9 percent in 1977 to over 20 percent now. The richest one-tenth of 1 percent's share has tripled. The 150,000 households that comprise the top one-tenth of 1 percent now earn as much as the bottom 120 million put together.

In so many ways, I have to say that I don't care what one's politics are. This is just wrong. 

But you might think that with the economy growing so rapidly over the past 30 years, those benefiting the most would be called upon to kick in a bit more. You would be wrong. The power of the super rich has been such that they have been able to make just the opposite happen:

From the 1940s until 1980, the tax rate on the highest earners in America was 70 percent or higher. In the 1950s, it was 91 percent.

Under Ronald Reagan the top rate dropped to 28 percent. Under Bill Clinton it rose to 39 percent and then under George W. Bush dropped to 36 percent (which is, of course, where the Republicans want to keep it).

Reich goes on to talk about big slashes to estate taxes and capital gains taxes, but you get the picture.

To add insult to injury, Reich makes the point that even before the current economic downturn the middle class's share of the nation's total income had shrunk while their tax burden had grown as they paid bigger chunks of their income in payroll taxes, sales taxes, and property taxes than they did before.

A lot of right wingers want to talk about common sense. Well, it makes no sense to me that public services and programs that the middle class and poorer Americans count on are poised to get the axe while this gross, and relatively new, uneven distribution of wealth in America does incredible damage to the fabric of the country.

The obvious point that Reich makes is that we need to hike taxes on the super rich -- not that this is going to happen any time soon.

No, we are going to continue to vilify public sector employers and big government in general. We are going to let big money buy all the means of mass communication and politicians it needs to convince everyone that what we really need is smaller government, which is just another way of saying that people, a growing number of people, will simply have to do without what they need to live a decent life.

A more equitable scheme of taxation would go a long way to solving the problems we are told can only be solved by massive cuts, but that would simply seem to make too much sense.

I'll give Professor Reich the last word:

Do this and we can afford to do what we need to do as a nation. Do this and you prevent setting the middle class against itself. Do this and you restore some balance to a distribution of income and wealth that's now dangerously out of whack.

Amen.

(Cross-posted at Lippmann's Ghost.)

Union-busting and the Koch brothers' plans for our future

By R.K. Barry

As we consider attempts by Governor Scott Walker of Wisconsin to bust public sector unions, not to mention New Jersey Governor Chris Christie's constant rants against these unions in his own state, it doesn't take a genius to figure out that there is a plan afoot – a concerted effort by Republican politicians to do something that they always wanted to do but may not have previously seen a clear path to accomplish.

And, although former White House Chief of Staff Rahm Emanuel has been widely credited with saying that one should never let a good crisis go to waste, it seems his best students have been Republican governors.

Yes, the economy went to rat shit because of the malfeasance of Wall Street types, leaving everyone feeling vulnerable to personal economic collapse, which, in turn, has given Republican politicians the excuse they have longed for to get rid of public sector unions.

It's pretty simple. Point to people who have bargained their salaries and working conditions in good faith, have come to agreement with their employers as part of a legitimate negotiating process, and make them a target for others who are in precarious employment situations, or perhaps unemployed.

Feed on the worst aspects of human nature, which is to say that if some people are not doing well, others, with whom they may generally occupy the same economic class, should not be doing well either. Make it sound like everyone in a public sector union is driving a luxury car and vacationing in the Riviera. Divide working people so they cannot be a threat to the power of wealth and privilege in American. Make then forget who got us into this mess in the first place and stop them from asking annoying questions. Brilliant.

What is not being talked about enough, I believe, is that the assault on public sector unions is an assault on the idea that government is an effective force for good in our society. But, in this case, it's a two-for-one sale. Attacking public sector unions is an attack on the idea of an expanded role of government but also on the idea of unions: two forces that have always been a major impediment to massive private wealth in the United States doing whatever it chooses to do (while admittedly playing that role imperfectly).

Two things that wealth and privilege hate in America: government regulating their activities and working people having their own independent base of power. Take away collective bargaining for public sector unions and you clear the way for making government smaller and destroy yet another potential oppositional force. 

The rhetoric of someone like Governor Christie is priceless. In his world, gold-plated public sector contracts are paid for by working people who don't happen to be on the gravy train. This creates the potential of working people at each other’s throats with the goal of reducing the size of government and its ability to regulate the economy while destroying unions all at the same time. Who would have thought that an economic crisis could be so useful for the power elite?

How any working people can believe that smaller government and fewer effective unions will mean that they will have more freedom and autonomy to do the things they want to do is beyond me.

Whether one wants to go back and look at John Kenneth Gailbraith's theory of countervailing power or some variant of Robert Dahl's theory of pluralism, whatever else their defects, it's pretty obvious that there is real and concentrated economic power in America and those who hope to have real freedom and autonomy had better consider how they will come together, and organize, to challenge that power. Government at times can be helpful, unions as well, as can many different kinds of social movements.

Working people who fail to organize in their own interests or fail to support others who do will wonder how it is that their piece of the pie got so small.

Reduce the size and effectiveness of government, destroy the right of people to bargain collectively, to organize politically, and you will have ceded the entire playing field to the same Wall Street hacks and their cheerleaders in the Republican Party who have grown pretty comfortable with the growing inequalities of wealth in America.

The genius of the right is that they have always been able to find ways to get working people to fight amongst themselves.

Tea Partiers may think that reducing the size of government and the power of public sector unions will lead to a utopia where everyone, even the least among us, is free to realize his or her own version of the American Dream.

The Koch brothers sincerely thank you for being so naive.

(Cross-posted at Lippmann's Ghost.)

Perspective

By Carl 

Buried in this article is a very interesting line of thought for liberals: 

Compare these circumstances to those of 1911, a century ago. Even in the wealthier countries, the average person had little formal education, worked six days a week or more, often at hard physical labor, never took vacations, and could not access most of the world's culture. The living standards of Carnegie and Rockefeller towered above those of typical Americans, not just in terms of money but also in terms of comfort. Most people today may not articulate this truth to themselves in so many words, but they sense it keenly enough. So when average people read about or see income inequality, they don't feel the moral outrage that radiates from the more passionate egalitarian quarters of society. Instead, they think their lives are pretty good and that they either earned through hard work or lucked into a healthy share of the American dream. (The persistently unemployed, of course, are a different matter, and I will return to them later.) It is pretty easy to convince a lot of Americans that unemployment and poverty are social problems because discrete examples of both are visible on the evening news, or maybe even in or at the periphery of one’s own life. It's much harder to get those same people worked up about generalized measures of inequality.

This is why, for example, large numbers of Americans oppose the idea of an estate tax even though the current form of the tax, slated to return in 2011, is very unlikely to affect them or their estates. In narrowly self-interested terms, that view may be irrational, but most Americans are unwilling to frame national issues in terms of rich versus poor. There’s a great deal of hostility toward various government bailouts, but the idea of "undeserving" recipients is the key factor in those feelings. Resentment against Wall Street gamesters hasn’t spilled over much into resentment against the wealthy more generally. The bailout for General Motors' labor unions wasn't so popular either—again, obviously not because of any bias against the wealthy but because a basic sense of fairness was violated. As of November 2010, congressional Democrats are of a mixed mind as to whether the Bush tax cuts should expire for those whose annual income exceeds $250,000; that is in large part because their constituents bear no animus toward rich people, only toward undeservedly rich people. 

The question is, what is "undeservedly rich"?

Warren Buffet and United For a Fair Economy posit that all wealth is derived from society, and indeed, there is much truth there. A business cannot sell unless there is a collection of consumers ready to buy. That business relies on the population for its workers. It relies on the resources of that society, the infrastructure, and the raw materials that it or its suppliers need to produce goods which ultimately are provided for free by Mother Earth... indeed, it is estimated that a fair price for those raw materials, like air and water and minerals, would equal the cumulative gross domestic product of every economy on the planet, thus making world net profit precisely zero.

Clearly, one can make the case that between the raw materials and labor pool, society should devolve the majority of revenues from any business (the value-added tax is an attempt to put this into practice, however marginally). In practice, the individual entrepreneur is the one who stands to most benefit from commerce. In truth, he risks an awful lot too, but that's a different article. We're talking here about the ones who succeed.

I think we'd all agree that a guy who opens up a shoe repair shop and works long hard hours for little money building his business is entitled to some kind of payoff for his hard work. In practice, the truth is very different: success usually occurs more from sheer blind luck than from hard work. You can work really hard and make nothing of a company, but add a little luck, and you have success.

And I think we'd all agree that the guy who makes megamillions from his raw talent at hitting a ball with a bat is probably less deserving. Except we forget he had to work really hard and, yes, he plays a game but he plays it well enough to attract fans who pay the club even more money than he pays (here we're back to society as customer), and the money would either go to him or the even richer fellow (or woman) who owns the club.

In truth, both the shoe mogul and the ballplayer owe us a debt, and it is when they do not pay that debt that we get angry. Bailout a banker and we get mad, especially when a banker pays that loan back in a much shorter time that expected. Why did he need bailing out?

And yet, there's this curious construct that has us blaming the guy next door for taking a chance similar to the banker and biting off more than he could chew. The homeowner with the ubermortgage doesn't have the ability to take a loss on his house (like the banker, he can deduct interest off his bottom line, however). If the banker sells a house for less than he mortgaged it out, he can deduct that loss. If a homeowner sells a house for less than his mortgage, not only is he still in hock to the lender, but he can't even deduct the loss off his taxes.

Yet, we blame the homeowner and rant about bailing him out, but the banker may get our contempt, but we still enrich him with the use of his bank and his credit cards!

Tyler Cowen, the author of the article cited above, posits that the people who should be getting our contempt are the people who play with other people's money, and yet we tend to cut them slack because they are more removed from our day-to-day perspectives, yet they make enormous sums of money off our backs with very little risk.

From the mergermania of the 1980s to the recent housing bubble, these speculators have made trillions of dollars doing nothing but playing with our lives, our fortunes, and our sacred honors.

You say you want a revolution? I know where to begin.

(Cross-posted to Simply Left Behind.)