Are You A One Percenter

[vt]

Guess who's number 1? Washington, D.C., home of the most liberal population in the U.S.


http://cnsnews.com/news/article/tere...eral-place-usa


http://www.investmentu.com/article/d...l#.VDBEjfk7uM4

[dcarrigg]

Re: Are You A One Percenter

Guess who's number 1? Washington, D.C., home of the most liberal population in the U.S.

Yeah. Because it's a city. Manhattan would blow it out of the water if it wasn't aggregated with upstate farm towns. Ditto with San Francisco and places inland. Boston would look a lot worse without the rest of Mass factoring in. Etc. Etc.

Big fancy cities pay/cost more than rural hinterland.

No big shock there.

[vt]

Re: Are You A One Percenter

The numbers say otherwise. Washington, D.C. has a much larger percentage living below the poverty line than the U.S. average, California, Illinois, or Massachusetts:

http://www.census.gov/prod/2012pubs/acsbr11-01.pdf

[dcarrigg]

Re: Are You A One Percenter

The numbers say otherwise. Washington, D.C. has a much larger percentage living below the poverty line than the U.S. average, California, Illinois, or Massachusetts:

http://www.census.gov/prod/2012pubs/acsbr11-01.pdf

Yeah. Because it's a city. Maybe I just wasn't clear before. Even in the most urbanized state - NJ - there are a lot more suburbs/exurbs/rural places that balance out the numbers. If you looked at just Newark, it'd look worse than DC.

Basically, the problem is comparing a city to a state. Cities - especially bigger cities - are where the winner-take-all / superstar effects focus in the US. They are where inequality is highest. Both the very, very rich and the very, very poor congregate in them.

Comparing DC to NYC or SF or Chicago or LA or Baltimore or Boston or somewhere like that makes some sense.

Comparing DC to Texas or California or Wyoming makes no sense. At least not to me.

And you're sort of picking up on this VT with your posts here. How could DC have the richest 1% and the highest poverty when compared to states simultaneously? Because the inequality is highest. Where is the inequality highest? Cities.

[vt]

Re: Are You A One Percenter

Dcarrigg,

I applaud and share your desire to see inequality reduced. Past efforts have done little to change the percentages.

I understand well that D.C is a city; I was born there and lived the first half of my life in the city:-) I still live nearby.

D.C. has seen many low income citizens forced out by the higher real estate prices,; most moving to Prince Georges county on the city's southeastern edge.
The city does retain upper income blacks and well as an influx of highly educated, highly paid whites. Gentrification is continuing.

Yes cities are not states, but the numbers in poverty vs. the numbers of rich are present whether by city, suburb, or state. The point I was attempting is that liberal policies have failed to decrease poverty; in fact all that has happened to money spent has been to create a highly paid group of bureaucrats who, while sincere, do little to help the poor or create employment opportunities for the middle class. I don't see much better solutions from the conservative side either.

As I written before only a new leadership with ideas like EJ espouses will begin to turn things around.

[dcarrigg]

Re: Are You A One Percenter

VT, to be fair, past efforts have done a lot to change the percentages. They've increased them. Liberal or conservative. Doesn't much matter post-LBJ. The Washington Consensus rules. Sign onto any and all trade deals, no matter the damage to America. Financialize and commoditize everything and anything. Continue to relax banking laws and regulations at every turn - or simply choose not to enforce them. Reduce the number of tax brackets at all levels of government until someone making a billion per year pays the same rate as someone making a hundred thousand. That's pretty much the game plan. It's working fine. I don't see leaders in either party trying to change it. Not even to level off inequality to a constantly increasing rate. They're setting policy so it accelerates, so the rate of increase itself increases every year. Probably it wouldn't be so bad if it came with increased growth. But it doesn't. It might actually slow growth after a certain point. It's hard to be certain. A perfectly equal society's no good. There's no incentive. Forcing it is too repressive. But I think a perfectly unequal society's no good either. That's just a god-king. There's probably a point in between that's optimal for economic growth and life in a democratic society. But we're barreling towards perfectly unequal faster and faster as we speak. It'll be interesting to see if our way of life can survive and what happens when/if we hit a breaking point.

All that aside, you're right on the poverty front insofar as not much has moved the needle at all since the Great Society. I'm pretty convinced things would sink if you pull the lifeline away. But it's clear it's just helping the poor tread water. Not much helping them into shore. And not much help on the middle class job front. Although, like I said, there will never be help on the middle class job front so long as the bipartisan consensus is to increase inequality at an ever accelerating rate. The point of those policies is the elimination of the middle class. Convergence, man. They talk about convergence. They want you making the same thing your counterpart in India or China makes. And the only way that's happening is if you make less and they make more. All of the G20 and Davos crowd's global economic policy is organized around that principal, so far as I can tell. Although parts of India and all of Bangladesh, most of sub-saharan Africa, and some other places are simply left out of the equation.

Anyways, who knows?

I always refer back to this clip.

[jk]

Re: Are You A One Percenter

i so love that clip, dcarrigg. and i agree with what you're saying. as to what ends it, i think we look at history. the post civil war, original gilded age ran from about the lows of the panic of 1873 to the panic of 1893. the post-wwi roaring 20's ended in the great depression. the only corrective to these periods of excessive inequality and economic bubbles appears to be an economic bust. that's when things get really dangerous.

[Thailandnotes]

Re: Are You A One Percenter

Revolt of the Rich

It was 1993, during congressional debate over the North American Free Trade Agreement. I was having lunch with a staffer for one of the rare Republican congressmen who opposed the policy of so-called free trade. To this day, I remember something my colleague said: “The rich elites of this country have far more in common with their counterparts in London, Paris, and Tokyo than with their fellow American citizens.”

That was only the beginning of the period when the realities of outsourced manufacturing, financialization of the economy, and growing income disparity started to seep into the public consciousness, so at the time it seemed like a striking and novel statement.

At the end of the Cold War many writers predicted the decline of the traditional nation-state. Some looked at the demise of the Soviet Union and foresaw the territorial state breaking up into statelets of different ethnic, religious, or economic compositions. This happened in the Balkans, the former Czechoslovakia, and Sudan. Others predicted a weakening of the state due to the rise of Fourth Generation warfare and the inability of national armies to adapt to it. The quagmires of Iraq and Afghanistan lend credence to that theory. There have been numerous books about globalization and how it would eliminate borders. But I am unaware of a well-developed theory from that time about how the super-rich and the corporations they run would secede from the nation state.

I do not mean secession by physical withdrawal from the territory of the state, although that happens from time to time—for example, Erik Prince, who was born into a fortune, is related to the even bigger Amway fortune, and made yet another fortune as CEO of the mercenary-for-hire firm Blackwater, moved his company (renamed Xe) to the United Arab Emirates in 2011. What I mean by secession is a withdrawal into enclaves, an internal immigration, whereby the rich disconnect themselves from the civic life of the nation and from any concern about its well being except as a place to extract loot.

Our plutocracy now lives like the British in colonial India: in the place and ruling it, but not of it. If one can afford private security, public safety is of no concern; if one owns a Gulfstream jet, crumbling bridges cause less apprehension—and viable public transportation doesn’t even show up on the radar screen. With private doctors on call and a chartered plane to get to the Mayo Clinic, why worry about Medicare?

Being in the country but not of it is what gives the contemporary American super-rich their quality of being abstracted and clueless. Perhaps that explains why Mitt Romney’s regular-guy anecdotes always seem a bit strained. I discussed this with a radio host who recounted a story about Robert Rubin, former secretary of the Treasury as well as an executive at Goldman Sachs and CitiGroup. Rubin was being chauffeured through Manhattan to reach some event whose attendees consisted of the Great and the Good such as himself. Along the way he encountered a traffic jam, and on arriving to his event—late—he complained to a city functionary with the power to look into it. “Where was the jam?” asked the functionary. Rubin, who had lived most of his life in Manhattan, a place of east-west numbered streets and north-south avenues, couldn’t tell him. The super-rich who determine our political arrangements apparently inhabit another, more refined dimension.

To some degree the rich have always secluded themselves from the gaze of the common herd; their habit for centuries has been to send their offspring to private schools. But now this habit is exacerbated by the plutocracy’s palpable animosity towards public education and public educators, as Michael Bloomberg has demonstrated. To the extent public education “reform” is popular among billionaires and their tax-exempt foundations, one suspects it is as a lever to divert the more than $500 billion dollars in annual federal, state, and local education funding into private hands—meaning themselves and their friends. What Halliburton did for U.S. Army logistics, school privatizers will do for public education. A century ago, at least we got some attractive public libraries out of Andrew Carnegie. Noblesse oblige like Carnegie’s is presently lacking among our seceding plutocracy.

In both world wars, even a Harvard man or a New York socialite might know the weight of an army pack. Now the military is for suckers from the laboring classes whose subprime mortgages you just sliced into CDOs and sold to gullible investors in order to buy your second Bentley or rustle up the cash to get Rod Stewart to perform at your birthday party. The sentiment among the super-rich towards the rest of America is often one of contempt rather than noblesse.

Stephen Schwarzman, the hedge fund billionaire CEO of the Blackstone Group who hired Rod Stewart for his $5-million birthday party, believes it is the rabble who are socially irresponsible. Speaking about low-income citizens who pay no income tax, he says: “You have to have skin in the game. I’m not saying how much people should do. But we should all be part of the system.”

But millions of Americans who do not pay federal income taxes do pay federal payroll taxes. These taxes are regressive, and the dirty little secret is that over the last several decades they have made up a greater and greater share of federal revenues. In 1950, payroll and other federal retirement contributions constituted 10.9 percent of all federal revenues. By 2007, the last “normal” economic year before federal revenues began falling, they made up 33.9 percent. By contrast, corporate income taxes were 26.4 percent of federal revenues in 1950. By 2007 they had fallen to 14.4 percent. So who has skin in the game?

While there is plenty to criticize the incumbent president for, notably his broadening and deepening of President George W. Bush’s extra-constitutional surveillance state, under President Obama the overall federal tax burden has not been raised, it has been lowered. Approximately half the deficit impact of the stimulus bill was the result of tax-cut provisions. The temporary payroll-tax cut and other miscellaneous tax-cut provisions make up the rest of the cuts we have seen in the last three and a half years. Yet for the president’s heresy of advocating that billionaires who receive the bulk of their income from capital gains should pay taxes at the same rate as the rest of us, Schwarzman said this about Obama: “It’s a war. It’s like when Hitler invaded Poland in 1939.” For a hedge-fund billionaire to defend his extraordinary tax privileges vis-à-vis the rest of the citizenry in such a manner shows an extraordinary capacity to be out-of-touch. He lives in a world apart, psychologically as well as in the flesh.

Schwarzman benefits from the so-called “carried interest rule” loophole: financial sharks typically take their compensation in the form of capital gains rather than salaries, thus knocking down their income-tax rate from 35 percent to 15 percent. But that’s not the only way Mr. Skin-in-the-Game benefits: the 6.2 percent Social Security tax and the 1.45 percent Medicare tax apply only to wages and salaries, not capital gains distributions. Accordingly, Schwarzman is stiffing the system in two ways: not only is his income-tax rate less than half the top marginal rate, he is shorting the Social Security system that others of his billionaire colleagues like Pete Peterson say is unsustainable and needs to be cut.

This lack of skin in the game may explain why Romney has been so coy about releasing his income-tax returns. It would make sense for someone with $264 million in net worth to joke that he is “unemployed”—as if he were some jobless sheet metal worker in Youngstown—if he were really saying in code that his income stream is not a salary subject to payroll deduction. His effective rate for federal taxes, at 14 percent, is lower than that of many a wage slave.

After the biggest financial meltdown in 80 years and a consequent long, steep drop in the American standard of living, who is the nominee for one of the only two parties allowed to be competitive in American politics? None other than Mitt Romney, the man who says corporations are people. Opposing him will be the incumbent president, who will raise up to a billion dollars to compete. Much of that loot will come from the same corporations, hedge-fund managers, merger-and-acquisition specialists, and leveraged-buyout artists the president will denounce in pro forma fashion.

The super-rich have seceded from America even as their grip on its control mechanisms has tightened. But how did this evolve historically, what does it mean for the rest of us, and where is it likely to be going?

That wealth-worship—and a consequent special status for the wealthy as a kind of clerisy—should have arisen in the United States is hardly surprising, given the peculiar sort of Protestantism that was planted here from the British Isles. Starting with the Puritanism of New England, there has been a long and intimate connection between the sanctification of wealth and America’s economic and social relationships. The rich are a class apart because they are the elect.

Most present-day Americans, if they think about the historical roots of our wealth-worship at all, will say something about free markets, rugged individualism, and the Horatio Alger myth—all in a purely secular context. But perhaps the most notable 19th-century exponent of wealth as virtue and poverty as the mark of Cain was Russell Herman Conwell, a canny Baptist minister, founder of perhaps the first tabernacle large enough that it could later be called a megachurch, and author of the immensely famous “Acres of Diamonds” speech of 1890 that would make him a rich man. This is what he said:

I say that you ought to get rich, and it is your duty to get rich. … The men who get rich may be the most honest men you find in the community. Let me say here clearly … ninety-eight out of one hundred of the rich men of America are honest. That is why they are rich. That is why they are trusted with money. … I sympathize with the poor, but the number of poor who are to be sympathized with is very small. To sympathize with a man whom God has punished for his sins … is to do wrong … let us remember there is not a poor person in the United States who was not made poor by his own shortcomings.

Evidently Conwell was made of sterner stuff than the sob-sister moralizing in the Sermon on the Mount. Somewhat discordantly, though, Conwell had been drummed out of the military during the Civil War for deserting his post. For Conwell, as for the modern tax-avoiding expat billionaire, the dollar sign tends to trump Old Glory.

The conjoining of wealth, Christian morality, and the American way of life reached an apotheosis in Bruce Barton’s 1925 book The Man Nobody Knows. The son of a Congregationalist minister, Barton, who was an advertising executive, depicted Jesus as a successful salesman, publicist, and the very role model of the modern businessman.

But this peculiarly American creed took a severe hit after the crash of 1929, and wealth ceased to be equated with godliness. While the number of Wall Street suicides has been exaggerated in national memory, Jesse Livermore, perhaps the most famous of the Wall Street speculators, shot himself, and so did several others of his profession. There was then still a lingering old-fashioned sense of shame now generally absent from the über-rich. While many of the elites hated Franklin Roosevelt—consider the famous New Yorker cartoon wherein the rich socialite tells her companions, “Come along. We’re going to the Trans-Lux to hiss Roosevelt”—most had the wit to make a calculated bet that they would have to give a little of their wealth, power, and prestige to retain the rest, particularly with the collapsing parliamentary systems of contemporary Europe in mind. Even a bootlegging brigand like Joe Kennedy Sr. reconciled himself to the New Deal.

And so it lasted for a generation: the wealthy could get more wealth—fabulous fortunes were made in World War II; think of Henry J. Kaiser—but they were subject to a windfall-profits tax. And tycoons like Kaiser constructed the Hoover Dam and liberty ships rather than the synthetic CDOs that precipitated the latest economic collapse. In the 1950s, many Republicans pressed Eisenhower to lower the prevailing 91 percent top marginal income tax rate, but citing his concerns about the deficit, he refused. In view of our present $15 trillion gross national debt, Ike was right.

Characteristic of the era was the widely misquoted and misunderstood statement of General Motors CEO and Secretary of Defense Charles E. “Engine Charlie” Wilson, who said he believed “what was good for the country was good for General Motors, and vice versa.” He expressed, however clumsily, the view that the fates of corporations and the citizenry were conjoined. It is a view a world away from the present regime of downsizing, offshoring, profits without production, and financialization. The now-prevailing Milton Friedmanite economic dogma holds that a corporation that acts responsibly to the community is irresponsible. Yet somehow in the 1950s the country eked out higher average GDP growth rates than those we have experienced in the last dozen years.

After the 2008 collapse, the worst since the Great Depression, the rich, rather than having the modesty to temper their demands, this time have made the calculated bet that they are politically invulnerable—Wall Street moguls angrily and successfully rejected executive-compensation limits even for banks that had been bailed out by taxpayer funds. And what I saw in Congress after the 2008 crash confirms what economist Simon Johnson has said: that Wall Street, and behind it the commanding heights of power that control Wall Street, has seized the policy-making apparatus in Washington. Both parties are in thrall to what our great-grandparents would have called the Money Power. One party is furtive and hypocritical in its money chase; the other enthusiastically embraces it as the embodiment of the American Way. The Citizens United Supreme Court decision of two years ago would certainly elicit a response from the 19th-century populists similar to their 1892 Omaha platform. It called out the highest court, along with the rest of the political apparatus, as rotted by money.

We meet in the midst of a nation brought to the verge of moral, political, and material ruin. Corruption dominates the ballot-box, the Legislatures, the Congress, and touches even the ermine of the bench. The people are demoralized. … The newspapers are largely subsidized or muzzled, public opinion silenced, business prostrated, homes covered with mortgages, labor impoverished, and the land concentrating in the hands of capitalists. The urban workmen are denied the right to organize for self-protection, imported pauperized labor beats down their wages. … The fruits of the toil of millions are boldly stolen to build up colossal fortunes for a few, unprecedented in the history of mankind, and the possessors of these, in turn, despise the Republic and endanger liberty. From the same prolific womb of governmental injustice we breed the two great classes—tramps and millionaires.

It is no coincidence that as the Supreme Court has been removing the last constraints on the legalized corruption of politicians, the American standard of living has been falling at the fastest rate in decades. According to the Federal Reserve Board’s report of June 2012, the median net worth of families plummeted almost 40 percent between 2007 and 2010. This is not only a decline when measured against our own past economic performance; it also represents a decline relative to other countries, a far cry from the post-World War II era, when the United States had by any measure the highest living standard in the world. A study by the Bertelsmann Foundation concluded that in measures of economic equality, social mobility, and poverty prevention, the United States ranks 27th out of the 31 advanced industrial nations belonging to the Organization for Economic Cooperation and Development. Thank God we are still ahead of Turkey, Chile, and Mexico!

This raises disturbing questions for those who call themselves conservatives. Almost all conservatives who care to vote congregate in the Republican Party. But Republican ideology celebrates outsourcing, globalization, and takeovers as the glorious fruits of capitalism’s “creative destruction.” As a former Republican congressional staff member, I saw for myself how GOP proponents of globalized vulture capitalism, such as Grover Norquist, Dick Armey, Phil Gramm, and Lawrence Kudlow, extolled the offshoring and financialization process as an unalloyed benefit. They were quick to denounce as socialism any attempt to mitigate its impact on society. Yet their ideology is nothing more than an upside-down utopianism, an absolutist twin of Marxism. If millions of people’s interests get damaged in the process of implementing their ideology, it is a necessary outcome of scientific laws of economics that must never be tampered with, just as Lenin believed that his version of materialist laws were final and inexorable.

If a morally acceptable American conservatism is ever to extricate itself from a pseudo-scientific inverted Marxist economic theory, it must grasp that order, tradition, and stability are not coterminous with an uncritical worship of the Almighty Dollar, nor with obeisance to the demands of the wealthy. Conservatives need to think about the world they want: do they really desire a social Darwinist dystopia?

The objective of the predatory super-rich and their political handmaidens is to discredit and destroy the traditional nation state and auction its resources to themselves. Those super-rich, in turn, aim to create a “tollbooth” economy, whereby more and more of our highways, bridges, libraries, parks, and beaches are possessed by private oligarchs who will extract a toll from the rest of us. Was this the vision of the Founders? Was this why they believed governments were instituted among men—that the very sinews of the state should be possessed by the wealthy in the same manner that kingdoms of the Old World were the personal property of the monarch?

Since the first ziggurats rose in ancient Babylonia, the so-called forces of order, stability, and tradition have feared a revolt from below. Beginning with Edmund Burke and Joseph de Maistre after the French Revolution, a whole genre of political writings—some classical liberal, some conservative, some reactionary—has propounded this theme. The title of Ortega y Gasset’s most famous work, The Revolt of the Masses, tells us something about the mental atmosphere of this literature.

But in globalized postmodern America, what if this whole vision about where order, stability, and a tolerable framework for governance come from, and who threatens those values, is inverted? What if Christopher Lasch came closer to the truth in The Revolt of the Elites, wherein he wrote, “In our time, the chief threat seems to come from those at the top of the social hierarchy, not the masses”? Lasch held that the elites—by which he meant not just the super-wealthy but also their managerial coat holders and professional apologists—were undermining the country’s promise as a constitutional republic with their prehensile greed, their asocial cultural values, and their absence of civic responsibility.

Lasch wrote that in 1995. Now, almost two decades later, the super-rich have achieved escape velocity from the gravitational pull of the very society they rule over. They have seceded from America.

Mike Lofgren served 16 years on the Republican staff of the House and Senate Budget Committees. He has just published The Party Is Over: How Republicans Went Crazy, Democrats Became Useless, and the Middle Class Got Shafted.

http://www.theamericanconservative.c...t-of-the-rich/

[dcarrigg]

Re: Are You A One Percenter

Excellent piece. I just want to call out these two paragraphs:

_____________________________________

If a morally acceptable American conservatism is ever to extricate itself from a pseudo-scientific inverted Marxist economic theory, it must grasp that order, tradition, and stability are not coterminous with an uncritical worship of the Almighty Dollar, nor with obeisance to the demands of the wealthy. Conservatives need to think about the world they want: do they really desire a social Darwinist dystopia?

The objective of the predatory super-rich and their political handmaidens is to discredit and destroy the traditional nation state and auction its resources to themselves. Those super-rich, in turn, aim to create a “tollbooth” economy, whereby more and more of our highways, bridges, libraries, parks, and beaches are possessed by private oligarchs who will extract a toll from the rest of us. Was this the vision of the Founders? Was this why they believed governments were instituted among men—that the very sinews of the state should be possessed by the wealthy in the same manner that kingdoms of the Old World were the personal property of the monarch?

[Woodsman]

Re: Are You A One Percenter

Excellent piece. I just want to call out these two paragraphs:

_____________________________________

Conservatives need to think about the world they want: do they really desire a social Darwinist dystopia?

The objective of the predatory super-rich and their political handmaidens is to discredit and destroy the traditional nation state and auction its resources to themselves. Those super-rich, in turn, aim to create a “tollbooth” economy, whereby more and more of our highways, bridges, libraries, parks, and beaches are possessed by private oligarchs who will extract a toll from the rest of us. Was this the vision of the Founders? Was this why they believed governments were instituted among men—that the very sinews of the state should be possessed by the wealthy in the same manner that kingdoms of the Old World were the personal property of the monarch?

It's what Beard established a 100 years ago in his Economic Interpretation of the Constitution:

An Economic Interpretation of the Constitution of the United States is a 1913 book by American historian Charles A. Beard. It argues that the structure of the Constitution of the United States was motivated primarily by the personal financial interests of the Founding Fathers. More specifically, Beard contends that the Constitutional Convention was attended by, and the Constitution was therefore written by, a "cohesive" elite seeking to protect its personal property (especially bonds) and economic standing.

Beard examined the occupations and property holdings of the members of the convention from tax and census records, contemporaneous news accounts, and biographical sources, demonstrating the degree to which each stood to benefit from various Constitutional provisions. Beard pointed out, for example, that George Washington was the wealthiest landowner in the country, and had provided significant funding towards the Revolution. Beard traces the Constitutional guarantee that the newly formed nation would pay its debts to the desire of Washington and similarly situated lenders to have their costs refunded.

[ProdigyofZen]

Re: Are You A One Percenter

It's what Beard established a 100 years ago in his Economic Interpretation of the Constitution:

Yes, but all doctrines are going to be written by people in power, or the elite.

As Keynes said "I can be influenced by what seems to me to be justice and good sense; but the class war will find me on the side of the educated bourgeoisie."

and "How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeois and the intelligentsia who, with whatever faults, are the quality in life and surely carry the seeds of all human advancement?"

[DSpencer]

Re: Are You A One Percenter

VT, to be fair, past efforts have done a lot to change the percentages. They've increased them. Liberal or conservative. Doesn't much matter post-LBJ. The Washington Consensus rules. Sign onto any and all trade deals, no matter the damage to America. Financialize and commoditize everything and anything. Continue to relax banking laws and regulations at every turn - or simply choose not to enforce them. Reduce the number of tax brackets at all levels of government until someone making a billion per year pays the same rate as someone making a hundred thousand. That's pretty much the game plan. It's working fine. I don't see leaders in either party trying to change it. Not even to level off inequality to a constantly increasing rate. They're setting policy so it accelerates, so the rate of increase itself increases every year. Probably it wouldn't be so bad if it came with increased growth. But it doesn't. It might actually slow growth after a certain point. It's hard to be certain. A perfectly equal society's no good. There's no incentive. Forcing it is too repressive. But I think a perfectly unequal society's no good either. That's just a god-king. There's probably a point in between that's optimal for economic growth and life in a democratic society. But we're barreling towards perfectly unequal faster and faster as we speak. It'll be interesting to see if our way of life can survive and what happens when/if we hit a breaking point.

All that aside, you're right on the poverty front insofar as not much has moved the needle at all since the Great Society. I'm pretty convinced things would sink if you pull the lifeline away. But it's clear it's just helping the poor tread water. Not much helping them into shore. And not much help on the middle class job front. Although, like I said, there will never be help on the middle class job front so long as the bipartisan consensus is to increase inequality at an ever accelerating rate. The point of those policies is the elimination of the middle class. Convergence, man. They talk about convergence. They want you making the same thing your counterpart in India or China makes. And the only way that's happening is if you make less and they make more. All of the G20 and Davos crowd's global economic policy is organized around that principal, so far as I can tell. Although parts of India and all of Bangladesh, most of sub-saharan Africa, and some other places are simply left out of the equation.

Anyways, who knows?

I always refer back to this clip.

dcarrigg,

Can you help me understand your rationale behind what you are saying?

Why do you see growing inequality in the US as a bad thing and yet also see declining inequality ("convergence") in a global sense as a bad thing?

You seem to be saying there is a sweet spot of equality for economic growth and the US is trending too far towards inequality. Certainly you don't think the world at a whole needs more inequality?

If your attitude was simply self-serving and amounted to believing in whatever was best for you that would be consistent. However, your post above and others throughout itulip suggest you are motivated by justice for the poor and middle class. Yet, when it comes to a Mexican factory worker or computer programmer in India, suddenly the push for justice disappears. In that situation we should craft legislation so that they stay poor and we stay rich in a relative sense, because we are American and they aren't.

I just don't understand how it's consistent to push for laws to reduce inequality domestically while simultaneously advocating laws to increase or maintain global inequality. Does a small group of people with a disproportionate share of income, wealth, land and natural resources describe the oligarchs/plutocrats/one percenters? Couldn't the same description fit America as seen by the rest of the world?

[dcarrigg]

Re: Are You A One Percenter

dcarrigg,

Can you help me understand your rationale behind what you are saying?

Why do you see growing inequality in the US as a bad thing and yet also see declining inequality ("convergence") in a global sense as a bad thing?

You seem to be saying there is a sweet spot of equality for economic growth and the US is trending too far towards inequality. Certainly you don't think the world at a whole needs more inequality?

If your attitude was simply self-serving and amounted to believing in whatever was best for you that would be consistent. However, your post above and others throughout itulip suggest you are motivated by justice for the poor and middle class. Yet, when it comes to a Mexican factory worker or computer programmer in India, suddenly the push for justice disappears. In that situation we should craft legislation so that they stay poor and we stay rich in a relative sense, because we are American and they aren't.

I just don't understand how it's consistent to push for laws to reduce inequality domestically while simultaneously advocating laws to increase or maintain global inequality. Does a small group of people with a disproportionate share of income, wealth, land and natural resources describe the oligarchs/plutocrats/one percenters? Couldn't the same description fit America as seen by the rest of the world?

Sure. I'll help you understand.

The first thing you need to understand is that inequality worldwide is not decreasing. It is in fact increasing. And accelerating. Just like in the US.




So now that the myth that inequality is decreasing world wide has been dispelled, let me bring you around to the punchline:

2 classes. 1 worldwide nobility. 1 worldwide peasantry. The peasants converge. The nobility converge. But the difference between the peasants and nobility increases at an ever increasing rate.

In order for the peasants to converge, you need to wipe out what was formerly called the middle class. You need to gut it. Otherwise the nobility don't have total control.

You need to demolish the entire space between six figures and eight figures. That's the space where it's possible to climb. There needs to be a clearly differentiated split between those who earn income from labor and those who earn income from capital. It needs to be difficult to transition from the former to the latter.

The first world middle class must be sacrificed to converge with the lower classes in developing countries. But the first world upper class must be left unscathed to grow ever richer. See, the goal is not to lift everyone. Oh, heavens no. The goal is a global two-class system. Chumps who work for a living, and those who call the shots.

How would one go about creating such a system? Maybe one would create a world trade organization that propagates trade agreements that have precisely zero regard for labor standards and labor mobility yet encourages the free-flow of capital and goods. Maybe one would create world tax competition and standards that routinely tax capital income at a lower level than labor income, and which stops being progressive on the labor side at the six figure point. Maybe one would allow offshore tax havens and avoidance to grow to a bonanza of tens of trillions of dollars. Maybe one would halt the breakup of monopolies and encourage consolidated industries. Maybe one would work to financialize every market possible and find ways to charge an ever increasing and ever more bewildering set of tolls, fees, rents, and other regressive economic tools to disproportionately syphon wealth off the aspiring poor/middle class. Maybe one would take commodities that were once free and drop a price tag on them in the process. Maybe one would let large financial institutions speculate wildly on basic commodities and form unregulated derivatives markets to drive up the big three costs of middle class life: food, housing and energy.

That seems like a pretty solid recipe for decreasing labor's share and increasing capital's share of total economic output. And sure enough, we see it in the data worldwide wherever you look:



So inequality between the 99% or whatever might be decreasing between some countries. But inequality between the 99% and the 1% (or 99.9% and 0.1% or whatever number you choose) is increasing drastically in every country such that total inequality is increasing quickly.

Did you read the post by Thailandnotes?

It was 1993, during congressional debate over the North American Free Trade Agreement. I was having lunch with a staffer for one of the rare Republican congressmen who opposed the policy of so-called free trade. To this day, I remember something my colleague said: “The rich elites of this country have far more in common with their counterparts in London, Paris, and Tokyo than with their fellow American citizens.”


That was only the beginning of the period when the realities of outsourced manufacturing, financialization of the economy, and growing income disparity started to seep into the public consciousness, so at the time it seemed like a striking and novel statement.

Does what I'm saying seem at all more consistent to you now?

[DSpencer]

Re: Are You A One Percenter

Sure. I'll help you understand.

The first thing you need to understand is that inequality worldwide is not decreasing. It is in fact increasing. And accelerating. Just like in the US.

Does what I'm saying seem at all more consistent to you now?

I wasn't trying to imply that inequality worldwide is decreasing, just that in limited situations where it is, you seem to be opposed to those situations.

Yes, I understand your thought process better now. For me, it is overly conspiratorial and complex. It seems much more likely that companies outsource labor to reduce expenses and increase profit than as part of a global conspiracy by the nobility to destroy the first world's middle class to gain total control.

I doubt you will find many believers among the "peasant class" in India who are taking American jobs. It will be a hard sell to convince them they are playing right into the nobility's hand and that what's really best for everyone is for the middle class in America to keep those jobs and make several times as much money to do them. They just need to take one for team peasant.

Of course, they probably don't see themselves as having much in common with America's "peasant class". From a global perspective, the first world middle class isn't a middle class at all. It is the one percent:

The true global middle class, falls far short of owning a home, having a car in a driveway, saving for retirement and sending their kids to college. In fact, people at the world's true middle -- as defined by median income -- live on just $1,225 a year. (And, yes, Milanovic's numbers are adjusted to account for different costs of living across the globe.)

In the grand scheme of things, even the poorest 5% of Americans are better off financially than two thirds of the entire world.

It only takes $34,000 a year, after taxes, to be among the richest 1% in the world. That's for each person living under the same roof, including children. (So a family of four, for example, needs to make $136,000.)

http://money.cnn.com/2012/01/04/news...world_richest/

I'm not trying to be overly antagonistic and I don't disagree that some of the things you mention are happening. I just don't believe that it's due to a vast conspiracy and don't believe that America can just have a closed economy and isolate itself economically from the rest of the world.

[dcarrigg]

Re: Are You A One Percenter

Forget the conspiracy. There isn't one. Forget the terms nobility and peasant. I simply used hyperbole to make the idea clear.

There is only self-interest.

When the global elite meets at the WTO or the Davos World Economic Forum or the G20 or the World Bank or wherever else to discuss world economic policy, they meet to advance their own interests. Why else fly all the way to Switzerland or wherever? When they donate to political causes, they donate to advance their own interests. Otherwise why throw the money away? The thing is that we know what their interests are: More for themselves and less for everyone else. That's why capital's share is increasing and labor's share is decreasing. That's why inequality is increasing faster everywhere and at all times. That someone in India or China earns an extra $1 per hour at a factory job is incidental. It occurs if and only if someone else lost $20 per hour first. That $1 per hour matters to people today, and will maybe for another 10 years, but it's not a ladder out of poverty. As soon as it becomes $5 extra per hour, the work there will up and vanish and run to Bangladesh or Nigeria or wherever the next low-wage frontier is. The game is set up so they cannot win regardless. And who sets the rules of the game? Ah. You don't need conspiracies for that. Just institutions.

And if you think a stagnating and sinking middle class throughout the first world is a great thing, that's fine. You're allowed to hold that opinion. It's just from my vantage point, old small 'r' republicanism was always about smashing the nobility - decentralizing control, both political and economic, spreading ownership of both land and business widely, ensuring as many people as possible have both stakes and skin in the game along with a fair opportunity to play. And yet here in the land of the birth of the modern republic in the 21st century we agree that we should tax someone making $30,000 at a lower rate than someone making $300,000. But we tax someone making $300,000 exactly the same or a higher rate than someone making $3,000,000 - or $30,000,000 - or $300,000,000 - or $3,000,000,000. As many orders of magnitude as you want.

In the end of the day, someone making $30,000 lives a life far more similar to someone making $3,000 or someone making $300,000 than they do someone making $30,000,000. You trade in your bike for a used chevy or your used chevy for a new cadillac - your room for a small house, your small house for a fancier one. But you don't set up six generation iron irrevocable trusts, set up super PACs, and sit back while even paltry T-bills fill your coffers for doing nothing - nevermind engage in complicated offshore tax avoidance schemes and trade in restricted funds and engage in financial fraud from a vantage point above the law. The game is rigged. You don't need to close yourself off from the rest of the world. But you don't have to write the details of every trade agreement such that they benefit capital and punish labor either.

So maybe you laugh at me for calling it nobility. And maybe you're right to do so. But then again Ted Turner owns more land than any European Baron could ever dream of. He gets special tax privileges for earning his money by capital gains, and special political access. He personally owns enough land to make a Rhode Island AND a Delaware. How far is the US from just naming Senate seats as hereditary Forbes 500 families and making the transition back to the House of Lords complete? That's hyperbole again for now, but you can answer that one how you want to. It probably doesn't matter anyways.

And maybe none of this matters to you. I think it probably doesn't. I think you probably side either one of two ways. Either you actually think that an accelerating and ever increasing inequality leads to increasing growth for everyone. But if that's true, then why doesn't it pan out in the data? Or you dislike the status quo, but you'd rather see a scenario with ever increasing inequality for philosophical reasons - i.e. you think the middle class and poor in the first world deserve harsh punishment, moral judgement, and ever decreasing incomes and living standards. The good news if this is where you fall is that you'll get your wish. It's happening. But if that's the case, I just think you ought to be careful what you wish for.

But maybe I'm wrong? What's your take on this whole mess anyways?