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TechnoratiThe economic talk is heating up again. Many businesspeople and politicians would love to convince America that the tax cuts should remain in place, to stimulate the economy and ensure less government interference in our lives.
In 1981 Ronald Reagan's Economic Recovery Act cut taxes. In 2001 George Bush's Economic Growth Act cut taxes.
Before 1980 our country was prosperous and relatively equal. A member of the middle class had stability, job security, a close bond with millions of Americans who were very much alike in economic terms. Since that time, our prosperity has continued, as worker productivity surged, but compensation for regular wage earners has remained stagnant. An average two-income family today has less disposable income than one-income families had 30 years ago.
America is currently experiencing the greatest disparity between rich and poor since the Great Depression, with an income gap that is worse than anywhere else in the developed world. The Gini Coefficient, a measure of inequality from 0 (everyone equal) to 1 (one person owns everything), has risen in the U.S. from .40 to .47 since 1980, and currently exceeds that of dictator-led countries such as Iran, Pakistan, Laos, Ethiopia, and Russia.
Hedge fund manager John Paulson made a smart bet against the mortgage industry in 2007 and 'earned' over three billion dollars. Three billion dollars would pay the salaries of all Chicago public school teachers, police officers, and firefighters for a full year.
This seems like an extreme example, but it's not. Between 1970 and 2000 the annual pay increase for wage earners, adjusted for inflation, averaged 5 cents per hour, while CEO raises averaged $660 per hour. The top 50 hedge fund managers in 2007 made a total of $29 billion. These 50 people made more money than ALL the Official Development Aid given by the U.S. to poor countries last year.
The top 15,000 income takers in this country made enough money to pay for all the gasoline, at $4 a gallon, used by American motorists last year. That's $300 billion.
So what's wrong with having rich people? Our economic growth is driven by the belief in a capitalist system, open to all, through which an industrious and risk-taking individual might become the richest person in the world. We admire this, aspire to it, desire to be like our wealthy role models. We do not wish to regulate the companies and executives who lead the way, for this would impede our country's economic progress. "Greed is good," said Gordon Gekko in the 1987 film "Wall Street."
But greed hasn't been good for the vast majority of Americans who are struggling to buy food and make house payments. Adam Smith, the father of capitalism, believed that unrestricted businesses tend to engage in "conspiracy against the public." John Kenneth Galbraith said, "Capitalism left to its own devices, doesn't work properly; it excludes the poor, ruins the environment, and fails to deliver enough collectively produced goods, such as roads, reservoirs, schools and hospitals."
The very wealthy will tell us that they pay the greater share of income taxes in this country. But hedge fund managers like John Paulson pay only a 15% capital gains tax on their billions. When income taxes, payroll taxes, sales taxes, and utility taxes are added up, the typical American wage earner pays about 40% in taxes. Billions of dollars are being made on financial deals that transfer the profits of America's productivity to the accounts of a few very rich people, while regular workers pay a higher percentage in overall taxes.
Nobody's blaming very rich people for making money. They should simply return a fair share, through progressive taxes, to the system that made their extraordinary wealth possible, just as average American workers are required to pay for the benefits accrued to them through the structure of society.
If not, inequality in the U.S. will continue to grow, with dangerous consequences. Inequality compromises the demobecomes a greater factor in the election process. It removes the incentive among the rich for the support of societal needs such as health care and infrastructure repairs. Inequality has even been shown to impact the health of, and incite violence among, those who don't fit into the elite group at the top. Supporting society with tax money makes the country safer and more livable for all of us.
In the end, if it's still difficult to see the value of fair taxation, it might be appropriate to ask if any one person is really worth 40,000 teachers.
Paul Buchheit is on the faculty of the Chicago City Colleges and DePaul University. He is the founder of Global Initiative Chicago (GIChicago.org), and the founder of fightingpoverty.org. He is the editor and main contributor to "American Wars: Illusions and Realities" (Clarity Press).
11 Comments so far
Show AllOver a billion are homeless. Millions are starving. Every day that the sun shines and there are no major disasters, 24,000 people die from starvation or hunger related causes. 18,000 of these are children. The rich want it all and they have it. They will kill you and screw your pooch to keep it. They'll surrender nothing without first losing the protracted bloody struggle that they are currently winning. If we as a civilized society rise up and hunt down 18,000 of the richest and quickly slaughter them, butcher them, cook them and feed them to the dying kids, it still wouldn't solve all of our problems, and the Supreme Court would probably rule it unkosher. But the repercussions would go a lot farther than the husk and bleached pablum anecdotes being served up as nutrition by perfesser Buchheit.
i wonder if the folks who write these articles actualy get a bonus for saying things like
"dictator-led countries such as Iran"
the missle defense article claims the defense platform is intended to combat the threat of intercontinental ballistic misslies from Iran...
perhaps a new game is called for...
spot the deliberate placed propoganda in so called progressive articles..eh?
what's the point if they keep slipping this stuff in hoping the subliminal impact will carry them thru at the final vote
as for the gini...introducing a "maximum wage" would sort that out in a jiffy...lol not bloomin likely eh?
1) "For too many of us the political equality we once had won was meaningless in the face of economic inequality. A small group had concentrated into their own hands an almost complete control over other people's property, other people's money, other people's labor — other people's lives. For too many of us life was no longer free; liberty no longer real; men could no longer follow the pursuit of happiness. Against economic tyranny such as this, the American citizen could appeal only to the organized power of government. The collapse of 1929 showed up the despotism for what it was. The election of 1932 was the people's mandate to end it. Under that mandate it is being ended."- Franklin D. Roosevelt, Democratic National Convention 1936
2) Iran and Russia are led by dictators- notice how Putin still runs the country from the prime minister post, (what constitution?), and Iran bans all parties to the left of the center-right from participating in elections? Oh and btw, Ahmedinejad has to share power with an unelected religious elite under an ayatoallah who maintains control over the military? Let me guess, China is a democracy too? C'mon. And you know Pakistan up until has been lead since 1999 by the military not democratic government under rule of law.
www.labourstart.org
http://www.chinalaborwatch.org
http://www.iwsn.org/campaigns/kamangar-27may08.htm
http://www.newstatesman.com/human-rights/2008/05/trade-union-bus-workers
"Everyone knows, for instance, that rebellions, or even strong ferment, among the slaves in ancient times at once revealed the fact that the ancient state was essentially a dictatorship of the slaveowners. Did this dictatorship abolish democracy among, and for, the slaveowners? Everybody knows that it did not." - V.I. Lenin 'On the Paris Commune'
Karlof1 ---
Why are you acting like you've caught the author in some kind of "gotcha"?
He's making the point that the income of the entire nation has risen, but that almost all of that increase has benefited only the most wealthy among us.
He's on your side. He's not "full of it."
The rich people I know don't think they pay the greater taxes - they think they pay ALL the taxes. To them, my $200 tax bill, at the time I had the tax discussion with them, was mere pennies.
Now I'm so far below them (lower end of the poverty scale) they can't even see me.
It doesn't help that they own the government and media as well.
willysierens: Agreed. They're sociopaths and criminals. Greed is a disease that is threatening the survival of the earth. Those that aren't content to have a modest, yet happy life are a scourge to the planet. It's the greed of the predatory ruling class that has got us into the situation we are now where our very survival as a species is in question. All for a artificial creation known as money. It's retarded.
Congratulations for presenting this Mr. Buchheit. There are few voices willing to speak the truth. Gini's Turning 1 is a perfect example of the zero sum game of unrestricted capitalism.
"Nobody’s blaming very rich people for making money."
I am. They're thieves.
Also, if CD could repost the article after correcting the sentence
"Inequality compromises the demobecomes a greater factor in the election process"
so it would be more readable. Thanks.
This writer is full of it: "Since that time, our prosperity has continued, as worker productivity surged, but compensation for regular wage earners has remained stagnant." How can "prosperity" continue when, "An average two-income family today has less disposable income than one-income families had 30 years ago." Further, "dictator-led countries such as Iran, Pakistan, Laos, Ethiopia, and Russia." Iran and Russia are NOT led by dictators. So, at that point in his screed, his credibility is lost.
The growth of income inequality in the USA is a big problem, but it can be written about in a much more effective fashion,and with greater credibilty.