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Lottery Economy
Does limited government mean allowing one man to take $4 billion from the economy in one year? Hedge fund manager David Tepper did this in 2009, making enough money to pay the salaries of every police officer, firefighter, and public school teacher in Chicago.
To anyone who cries socialism at the first hint of taxes, do you want to accept a system that says a person making a clever bet on the market is 50,000 times more valuable than the person who comes rushing to your house in an emergency?
Free market defenders claim that the rich deserve what they earn because of hard work and initiative, and that any redistribution of such compensation is socialism. But did Tepper 'earn' his $4 billion? Is that fair compensation for a savvy guess about the upturn of financial instruments? Isn't the financial system partly responsible for his success? The long history of market structuring and government deregulation fashioned by countless free-market advocates and supported by voters had something to do with it. Instead, a paycheck of $4 billion redistributes much of America's assets to one well-positioned man.
But, some would ask, don't the very rich give it back through taxes? Not really. They pay less than 23% of their incomes in federal income tax. If state and local taxes, social security tax, and excise taxes are included, the lowest-earning half of America pays 24% of their incomes in taxes.
But doesn't the great wealth of the rich stimulate the economy? Not necessarily. Low-income earners have a higher "Marginal Propensity to Consume," which means that they spend a greater percentage of their overall income on consumption. High-income earners, on the other hand, will save more. The very rich in our country have put much of their money into mansions, yachts, jewels, and art.
But haven't the very rich lost massive parts of their fortunes in the recession? They've lost money, but no more, percentage-wise, than average mid-level earners. Wealth data from the Census Bureau and the Federal Reserve show that the richest households have INCREASED their median incomes relative to other earners since 2006.
But won't we all be rich someday, if we leave the markets alone? Just as we'll all be pro athletes someday. 90% of us have a common enemy. Based on Internal Revenue Service figures, if we had all participated in an American economy that quintupled in value since 1980, the average middle-income family would be making $45,000 a year instead of $35,000.
Twenty-five years of shrewd financial strategies, government deregulation, and tax cuts have allowed the richest 1% to TRIPLE their incomes, AFTER TAXES, while the bottom 90% has seen their share drop over 20%. According to IRS figures, the richest 1% took in about 6.5% of America's total income in 1980. In 2006 it was about 19.5%. That's a TRILLION dollars a year, one-seventh of America's total income.
The result of this reverse flow of money is that the United States has the highest level of economic inequality in the developed world. It has greater inequality than at any time since the Gilded Age of rich industrialists in the late 19th and early 20th centuries.
To you libertarians and Tea Partiers and anti-government free-market advocates: MOST OF US ARE ON THE SAME SIDE! Most of us should not pay any new taxes. Our hard-earned money has flowed to a small percentage of Americans who love to hear the old socialist argument.
Yes, the government should have a minimal role in a capitalist society, but even the greatest free-market economists have recognized the dangers associated with unregulated greed. A progressive federal income tax provides needed regulation. We had this between the 1950s and 1970s, when society had a healthy degree of economic equality.
Instead, essential police and firefighting forces are being reduced. Teacher layoffs are increasing classroom sizes, weakening an educational system that should be the heart and soul of our country. Low-income people traveling to their jobs on off-hours take the brunt of transit cutbacks. We're seeing cutbacks in after-school programs in low-income areas and reductions in library hours and park services. Plus, of course, increases in state income taxes, sales taxes, property taxes, gas taxes, cigarette taxes, utility costs, license fees, parking meter rates.
We're hurting ourselves in a more personal way, too. In 'The Impact of Inequality,' Richard Wilkinson documents the numerous studies that correlate inequality with shorter life expectancies, increased disease and health problems, and even higher murder rates. Most analysts attribute these effects to the stress of 'relative deprivation' -- trying to survive in a community where economic, educational, and health care disadvantages persist in an otherwise prosperous environment.
Several states have implemented more progressive tax systems. And they have apparently not caused wealthy people to transfer their fortunes out-of-state. A 2008 study by Princeton University determined that "the 'half-millionaire tax,' at least in New Jersey, appears to be an effective and efficient revenue-generation mechanism, having little impact on migration patterns among half-millionaire households." Similarly, little adverse effect of higher taxes was found in Maryland or Oregon. A study by the California Budget Project revealed that the number of high-income households actually grew during periods of higher income tax rates for top earners. Oregon recently passed Measures 66 and 67, which impose modest income tax increases on the wealthiest residents and raise the corporate minimum tax for the first time in 80 years.
Progressive taxes in these states have helped to preserve public services and repair infrastructure. The same should be done at the national level. The rich people won't move away. They know they've got it good.
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26 Comments so far
Show AllThe products of Ronny Raygun's Revolution.
Environmental justice <-> Economic justice <-> Social justice!
When are ordinary people going to wake up? This article, as so many others have, reminds us that we have been asleep at the wheel for a very long time. What is it 30 or 40 years?
We've seen our wages stagnate. We've seen our contributions to taxes, employer provided benefits, health insurance do nothing but go up year after year. If you are lucky enough to have access to health insurance through your employer, you are paying a lot more and have much higher deductibles, co-pays, limits, and provisions that reduce coverage. With all this and stagnant wages we can't afford to use the health insurance that we are paying for.
We've seen our 401ks decimated.
We've seen jobs decimated.
Local real estate taxes and services fees are increasing at a rate that will soon become an unfathomable burden for ordinary people.
Public schools, state colleges and universities are in serious financial predicaments. Closing schools. Cutting teaching positions. When all the while we are being told that education is our only way out of the situation we are in. Well ... how's it going to work if this is the path?
The corporations, the big banks and wall street are all doing quite well ... in fact ... things have never been better.
How are things going for you?
Organize.
Boycott.
Wake up.
"education is our only way out of the situation we are in"
education is education is not education...
perhaps education is the way, but not the current form or substance of education...
what if the education were regarding how to live within the natural parameters of our only world, and how to identify, and deal with, those that would violate such?
then, education would, indeed, be the way...
what we have now is not...
The levels of income and wealth inequality in the US (as measured in economists' recognized 'gold standard' (GINI Coefficient of Income / Wealth Inequality) are 'off the charts' in comparison to any functioning democracy --- and are most closely comparable to Robert Mugabe's dictatorial kleptocracy in Zimbabwe.
The US GINI level of inequality is far above the level at which the CIA predicts 'social disorder' and potential revolution in any country that does not control the populace with police-state measures.
Have a nice day,
Alan MacDonald
Sanford, Maine
Guy walks into the Bellagio, bets half of the Other People's Money he's been hired to invest on black.
Black hits. Guy takes his $4 billion skim. Did he 'earn' it?
Oops - red hit. Guy loses. Government forces We The People to replace the money Guy lost - our money - with our kids' and grandkids' projected tax revenues. Did Guy earn that?
Guy returns to the table. Big Corporate News reports there are signs of economic recovery. What signs? Guy has returned to the table and is betting - er, I mean, earning - again.
Until red hits again... then Guy testifies to the Senate that there was no way anyone could have ever foreseen the little ball dropping onto a red number...
And We The People stand around with our thumbs up our asses waiting for Guy and his fellow economic terrorists who stole all of our money and killed over 8 million jobs to 'fix' the economy they destroyed.
OK then...
The results of the"Reagan Revolution" are there for us all to see. The discredited trickle down theory has left us with excrement all over the majority of society. We need to toss it back at that upper percentage!
Hedge fund management outfits are grossly unregulated. They seem to be out of the loop on all the current talk coming from Washington about regulating the big banks. Yet these are the sharks making the most obscene amounts of money in an economy which has been sent into a tailspin from all the financial deregulatory craze of the last thirty or so years. As local governments and municipalities struggle for tax revenue in a sluggish economy, more of them are turning to these hedge fund outfits offering a higher rate of return for their pooled investments. It is part of the ongoing over-financialization of the economy as more and more real jobs disappear into thin air. With less workers to tax, local governments and municipalities turn to playing the markets looking to make up for some of the lost tax revenues. It all adds up to bigger, fatter profits for the hedge funds dealers and a growing market for them. One which owes its auspices in large part to the hard luck misfortunes of those the local municipalities increasingly fail to service adequately.
In a lottery you are told your chances of winning. This is no lottery. Arrogant bastards in $4,000 suits sneer at congressional questions about how they stole us blind.
While they are sitting there, waiting on their turn to duck the question, they are planning on how to pull off the next heist. What they take for granted is 'We own enough of you little congresspeople to do as we damn well please. Don't try to get smart with us'.
Well said. We should be so lucky as to live in a lottery economy!
The "Trickle down" theory amounts to nothing but the little guy getting peed on.
It used to be standard practice for Republicans to say the name 'Ronald Reagan' in a hushed, reverent tone as if they were talking about one of the disciples.
I haven't heard that lately. They won't admit it but even they know how his gospel screwed us.
In a collapsing empire everything is for sale.
As long as you consider yourself "little" you will go nowhere.
The Finance Capitalists have you already beat psychologically by having you think of them as "big."
The unstated reflexivity in trickle down theory is that what trickles down is what rose up in the first place in the form of the Finance Capitalists' meta-economic fantasy, "money".
That does not mean all "money", as a category, is inherently unworkable economically.
What it means is that the Finance Capitalists impose their own version of "money", in the mode of mythologically infinite debt credit, which image is naively accepted by those supposedly below the elite in the economic hierarchy.
In the final and inevitable phase of trickle down in Finance Capitalism, the trickle down, nicely enough, is their blood.
The hedge fund operators pay only a 15 percent tax on their current earnings and 5 percent tax on their long-term capital gains – a rate much lower than paid by other taxpayers.
This is not corporate socialism?
"Free market defenders claim that the rich deserve what they earn because of hard work and initiative, and that any redistribution of such compensation is socialism."
How many banks and hedge funds have "We the People" bailed out over the past 30 years?
This is not corporate socialism?
These people do a public service on behalf of the owners of America, of taking over (financially) other countries. Thats the bright side.
The shadow side is that America is one of the countries they took over.
The US is a predatory Capitalist warfare state.
The US is Communism for the rich, Capitalism for the poor.
The US is from each according to need, to each according to greed.
The US is bankrupt.
USD is no longer the world reserve currency.
The US real economy is comatose.
No reform is possible.
It is much too late for that, if it ever was possible in the first place.
What look like "flaws" are actually what is designed in by the elite, and the System itself is designed to coopt and redirect all efforts to correct such "flaws" with other even more profitable ones.
Every patchwork "reform" is ultimately absorbed and turned back on itself.
Only radical restructuring has a chance--a small chance at that--of averting further collapse and catastrophe.
The very idea of radical restructuring, on the other hand, will strike many Right Wing and "Middle" Americans as itself catastrophic.
Ladies and Gentleman, choose your poisons.
In spite of indicators like the GINI coefficient and casino finance gambling by the haves, America still disproportionally consumes far too much of the world’s resources.
Perhaps by not stimulating the economy and bringing the empire to the brink of financial ruin the rich truly are saving us.
How does that tune go?..: ‘don’t worry be happy’!
Glendon Wayne
These Wall Street impresarios would have us believe that what they do is so difficult and intricate so as to be incomprehensible to anyone but themselves, ergo, they deserve every hundred million dollars that they're paid. After all without them, whither banking & finance? Certainly no bureaucrat could keep the banks going? Except in the nation with the world's fastest growing economy, China, there's a bureaucrat in charge of the publicly owned Bank of China, who, despite being paid "only" $300,000 USD, somehow manages to keep the economy growing at around a 10% clip, year after year. Which suggests that nationalization of banks here in America not only wouldn't hurt the economy, it would give the economy a giant boost to the tune of the 140 billion dollars that the six largest banks alone skim off from their annual take & dish out to their CEOs in the form of annual bonuses. Who'll replace these overpaid fat cats? Same as in China, a bureaucrat who's paid $300,000 bucks a year, and is plenty grateful to be getting this much. What about the the former bank CEOs? Those who engaged in criminal activities will bn tried and, if convicted, end up in the hoosegaw. Those who were clean will have to get a real job.
I had a dream. I dreamed that when the Goldman Sachs thieves were leaving the Capitol after dodging the questions today, they were served with arrest warrants for grand larceny and led away in handcuffs. Sweet dreams are made of this.
Real firing squads beat oneiric arrest warrants and prosecutions six ways to Sunday.
You could be dreaming your way through a five year trial, for Christ's sake, and still be bankrupt when you wake up.
Moreover, firing squads done right--precisely and carefully--make wonderful models.
They have a bracing, sobering effect on the likes of financiers, for example.
There is much to criticize about mainland China, which is still Communist in essence (and that all to the good) but the way they use firing squads in financial matters is instructive.
To most Americans this seems a bloodthirsty idea. Apparently, they cannot get it through their heads that Capitalism and especially Finance Capitalism, as with the private Health Insurers, kills people directly and as surely as if they were shot by firing squads.
The difference is that the private Health Insurers, and Finance Capitalism in general, kill people who have committed no crime.
Not only that, many of the executives actually enjoy murdering people by law and bottomline.
But that is only scratching the surface. Most Americans still have a hard time believing their incompetent, vicious, murderous elite just needlessly killed over a million Iraqis, directly and indirectly, and most of them women and children.
Yes, and of course, "Capitalism" did not kill millions of Irish or Indians or even the British Capitalists' own Englanders--oh no.
I'm sure that some enterprising American will come up with a new game, GRAND THEFT AMERICA. People will be able to shoot at derivtaives and the players that make them.
This will be better than the 10 most wanted list. Everyone will RECOGNIZE the people that got us into this game playing mess in the first place. Since there's no one on the planet that hasn't been affected by these games. The" big players"... we can call them the "Wallies" will feel like they're stuck on an island, like that Richard Connell short story of "The Most Dangerous Game."
Players will be asssigned costumes like everyday workers in America, and the Wallies will have a difficult time figuring out who to trust! Playing Super Parking Attendant will be such fun! Iron Man Waiter will be able to deliver a coup de crap at every meal!
If you miss a shot, a little big headed, big glasses wearing character named, Greenie, " will wander about saying, " This is just too complicated, I can't understand it." Extra points will be awarded by shooting the little "Greenie" before he gets all the words out.
Players will be challenged by the HEDGE, as they try to manuver around all the "exotics" hiding in the hedge bushes. It will be, of course, a giant HEDGE maze that no one can possibly figure out.
Two of the most fun characters to go after will be the square headed Cubic Zirconia ( named after Mr. Dimond of course, and the BLANK... a bald headed cyborg, with no face ( which is why he's the "Blank" Well, possibly he would have a squid for a face, wrapped around where the face used to be.
Oh, this could be such fun. Kind of like military people sitting in Arizona and firing their drone planes at unsuspecting civilians in Afghanistan.
PLEASE, PLEASE,talented Americans, I want to play this game. CREATE! Make it real, and make it soon too!
Great idea--a deck of cards with photos of the US leading Financial Capitalists on the back--and biographical information.
Sort of like what the US military used in Iraq.
Maybe found a Left United Front Gideon Society to leave free decks of cards in hotel rooms.
Keep the deck current by adding new cards as Financial Capitalists die of natural causes (and such) or lose their fortunes.
Profiting from civic deprivation.