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- Vigilante, Sozadee, CA -
My sincere thanks to TomCat over at Politics Plus (http://politicsplus.blogspot.com/) for running this brilliasnt piece which appeared in today's early edition of that outstanding progressive blog. This could have been written by my clone, in that it so identically mirrors my own beliefs on the subject of the increasing gap between the ultra-rich and everybody else in this country today. I will have additional commentary below the conclusion of this fabulous piece.
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Here’s a fascinating article by Les Leopold:
We are entering the billionaire bailout society.
For the past thirty years we have minted billionaires, and we have created the most unequal distribution of wealth since 1928-29. This didn't happen by accident. We deliberately deregulated the financial sector and we deliberately eliminated the steep progressive taxes on the super-rich that had kept in check our income distribution.
By unleashing capital and finance we were supposed to get an enormous investment boom in real goods and services. Instead we got a fantasy finance boom as Wall Street marketed derivatives to those with excess capital. We also got the biggest crash since the Great Depression.
Perhaps the most dramatic measure of our emerging billionaire bailout society is seen by comparing compensation for the top 100 CEOs and to that of average workers (the 100 million or so non-supervisory production workers). In 1970 the ratio was 45 to 1. By 2006 it was 1,723 to one.
Another critical feature of the billionaire bailout society is the creation of institutions that are too big to fail. Historically, our anti-trust division was supposed to prevent that. But it became another casualty of our grand deregulatory experiment. So financial institutions grew to the point where their failure would bring down our system. We tested that idea last fall when we let Lehman Brothers go under: It crashed global financial markets and moved us to the brink of a depression.
So in our billionaire bailout society we bail them out instead of breaking them up. We bail out all of them - not just the basket cases like A.I.G, Citigroup, GM etc. The popular media line is that once a financial institution repays TARP, it no longer is on government welfare. No so.
TARP is only one of the many government bailout programs that pours billions into the coffers of Goldman Sachs, JP Morgan Chase and, Morgan Stanley. Their bottom-lines and bonuses, for example, were fattened when we allowed A.I.G. to pay off its bets (with our money) at par value to these large financial institutions. Had A.I.G. gone under they all would have been on the edge of collapse.
As Joe Nocera put it in the New York Times :
So let's add it up: the $12.9 billion in A.I.G. help, the $10 billion in TARP, the F.D.I.C. guarantee program, the easy money trading distressed securities into the TALF program. I can't say for sure how much of the $16 billion the firm has set aside for bonuses can be attributed to government assistance of one form or another. But it's got to be a fairly substantial amount -- at least $2 billion or $3 billion.
And that's a very conservative estimate. It might be the case that the entire bonus pool is equal to the subsidies pulled in from taxpayer support. But this is to be expected in our billionaire bailout society.
Perhaps the most damaging feature of our billionaire bailout society is the "jobless recovery." This oxymoron refers to an economy that is growing, but that can't produce nearly enough jobs to reach full employment (an unemployment rate below 5 percent). Our current jobless recovery will be the worst ever. Right now the BLS (U6) jobless rate stands at 17.0 percent -- and climbing. (This counts those without work plus those who have part-time jobs because they can't find full-time work.) If the billionaire bailout society becomes permanent, we may never see full employment again.
Why is that? Because you don't need a full employment society to mint billionaires. Reflect for a moment on Goldman Sachs. They do not have individual depositors. They are not public brokers. They do not make loans to small business. They are in the business of making money by playing the financial markets, from mergers and acquisitions, from trading, and from creating and selling fantasy finance instruments.
In our billionaire bailout society these are unquestioned positive activities. But what value do they produce in the real economy? What is their contribution to market efficiency? How do they lower the cost of capital? How do these activities create jobs in the real economy? Good luck answering those questions because they don't do any of that. They just make money for themselves while producing little or no value to our society.
It's obvious we need to break up these large institutions so that we won't have to bail them out the next time around -- which may come sooner than expected given the lack of jobs and the fact that the financial casino is open again.
But we can't solve the bailouts without addressing the billionaire part of the equation.
Two years ago the richest 400 Americans had a combined wealth of $1.57 trillion. Last year during the crash their wealth dropped to "only" $1.27 trillion. Now they are set to rise again. We need to tie their wealth of our richest to putting our people back to work.
Here's the simplest and most controversial approach: a 10 percent wealth tax on all those with more than $500 million -- until unemployment drops below 5 percent. The money collected would come to about $150 billion a year. That money should be directly invested in public works programs to put our people to work -- a Green Corps to weatherize every home and office in the country -- a Youth Corps to provide work for unemployed high school and college graduates.
(I realize that many Americans detest the idea of taxing anyone's assets, even billionaires'. But let's be realistic: That's where our society's wealth has gone and we need that wealth to put people back to work. Some billionaires do create large numbers of jobs, but not enough. They can contribute more and not feel a bit of pain or suffering.)
To break away from the billionaire bailout society we need to tie the creation of wealth to the creation of work. We no longer have a system that can produce an adequate number of jobs through the normal working of the business cycle. The invisible hand of the market just won't do it. That's why it's called a jobless recovery. We need direct intervention… [emphasis added]
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There you have it, folks: a shining example of talking no-nonsense truth to power and money. With a very small number of unproductive people just sitting on their money at will, there is absolutely no reason for the huge numbers of jobless we have now to exist. Nor is there any good reason for millions of people to have no or sorely inadequate health care coverage, or for others to be homeless. Forcing the unproductive super-wealthy to pay a wealth tax is wholly justified and can and should become a reality.
Those of you who may be conservative Republicans, or who are moderately wealthy or even upper-middle income, who are sitting in your gated or comfortable bedroom communities, it is high time for you to come to your senses and stop having the paranoid, knee-jerk reaction you have to tax hikes. Don't be idiots. The super-rich, who pay little or no taxes anyway, are throwing you around like a yo-yo. They are screwing you, just as they are the poor, lower, and middle classes. They buy out your government and make it work against you, too. And to those of you who also fear any move by government to restrict income, remember that this would be a move directed only at the ultra wealthy, NOT YOU. And come to your senses: the super-rich pose a far greater threat to you and your standard of living and quality of life than do government and liberals combined! So rather than fight government attempts to regulate these bastards, or castigate liberals for supporting such a move, you would be far better off joining the cause and seeing to it that the very upper income people finally start earning some of the money they've been stealing from us!
People: it is time to put on your thinking caps and support this measure to restore strongly progressive taxation in this country. All of us in the lower 95% of the income scale (which is where we're at) will be MUCH better off, and the ultra-wealthy won't miss a few extra billion spent on fairer taxes anyway.
11 comments:
Some people like to compare political economy to a foot race and say lefties believe in handicapping the race to help everyone finish in the same time.
I think a more apt analogy is that capitalism is like a party where everyone's invited, but the people sending the invitations know damn well the vast majority can't attend. But still a lot of the people who can't attend hold on to the belief that some day they will be able to attend, and they hold on to that belief despite overwhelming evidence to the contrary.
...or maybe those sending invitations pick the pockets clean of those before they can get to the party, so they are then unable to attend?
A little bit of capitalism goes a long way and can be good. Competition is a good thing, and effort and honest resourcefulness should be rewarded. But an overdose of capitalism, what we have at the moment, with the ultra-wealthy rigging the entire system in their favor, freezing people's wages, and even neglecting people or killing them for profit, is bad, bad, bad. That's where a touch of socialism comes in handy: state supervision and regulation, progressive taxation, and safety nets for those who need them as well as fair wages are all good things and should be striven for and obtained.
During the reign of King George the wealthy reaped great rewards. It is now time for them to pay the piper. Tax the bastards. Tax them all to hell.
It's almost as if the super wealthy have embraced feudalism as their economic system of choice.
I'm a capitalist myself but with enough sense to know that unrestrained greed causes lots of misery.
Mad Mike,
You and I could be identical twins! :)
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Truth101,
If not feudalism, it would seem to be mere mock capitalism. I love your sensibility. I think most workers and small busionesspersons would consider themselves capitalists, but they are not the bad ones, for the majoriy of them actually earn their living without stealing it. Most of them also produce a product or service of value. Not so the trust funders or the Wall Street ripoffs. They are just thieves without guns. Everybody hates to see lazy poor or middle income people milking the system, and that is why many people dislike welfare. But nobody ever seems to raise hell about those skating by doing little or nothing, or doing very poor work, yet receiving gigantic paychecks and dividends. Those folks are far more vile and dangerous to everybody's well being than the stereotypical "welfare bum." For the "welfare bum" may actually be hungry or in greed, whereas the well-to-do skater is engorging himself at everyone else's expense in sheer greed. That is totally unjust, as those people know better and are simply parasites sucking the economic lifeblood out of those below them while they step on those below them and hold them down.
I've long believed that tariffs are one of the fairest types of taxes of all. In the 19th century, the U.S. had steep tariffs that averaged around 30 percent---and yet the nation grew at a fantastic rate that has never been surpassed.
Lincoln was a high-tariff man. He said tariffs were more fair than income taxes. The problem with the latter, he noted, is that it involves sending a invasive army of tax collectors out into the land "like a cloud of locusts."
By contrast, Lincoln noted, with a tariff, one only pays tax if one chooses to buy an imported product.
I guess the downside to all this is that, since Lincoln's time, America has lost its industrial and manufacturing base, so it's really pretty much impossible for Americans these days to get by without imports.
Marc,
I think your last paragraph says it all. But that is all the more reason we should undertake a massive infrastructure overhaul and creation boom. It would create millions of real jobs creating something real and lasting as opposed to the Wall Street parasites' preferred method of making easy speculative money off of pipe dreams.
Looking forward to your next post, Marc. You always write with such insight, intelligence, and passion over there are Beggars Can Be Choosers! :)
Lol Jack:-)
These people stole more in one day than all the welfare cheats did combined since 1965. But I guess we all have to look down to feel good about ourselves. Great post as usual, Jack.
Thanks, Max's Dad, and you're absolutely right about how much the Wall Street parasites have stolen vs. what welfare cheats have taken. Yet it's always the welfare cheats that people complain about. I think we all need to raise more hell with the Wall Steet thieves!
A-Freaking-Men Jack. We've got business owners in my hometown that think the government owes the tax breaks that contracts that keep them in country club splendor but God forbid the poor mom on welfare getting $300 a month.
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