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The Question Conservatives Can't Answer
The following fact was sent to numerous conservative pundits, politicians, and profitseekers:
Based on Tax Foundation figures, the richest 1% has TRIPLED its share of America's income over the past 30 years. Much of the gain came from tax cuts and minimally taxed financial instruments. If their income had increased only at the pace of American productivity (80%), they would be taking about a TRILLION DOLLARS LESS out of our economy.
And a question was posed:
In what way do the richest 1% deserve these extraordinary gains?
This question was not posed in sarcasm. A factual answer is genuinely sought. It seems unlikely that 1% of the population worked three times harder than the rest of us, or contributed three times as much to American productivity. Money earned from tax cuts and minimally taxed financial instruments is not productive income. And while some big earners have developed innovative ideas and leading-edge businesses, it seems fair to say that taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet), the National Institute of Health (pharmaceuticals), and the National Science Foundation (the Digital Library Initiative) has laid a half-century foundation for their idea-building.
So I asked anyone out there to explain, defend, or justify the fact that over 20% of our country's income (it was 7% in 1980) now goes to the richest 1% of Americans.
Very few responses were forthcoming. To his credit, renowned economist and writer Thomas Sowell took the time to respond. Unfortunately, his response relied upon classical economic theory: "Most people are paid voluntarily by others to whom they supply goods and/or services, and only to the extent that others value what is supplied enough to part with their own hard cash."
Mr. Sowell is also a believer in economic mobility, claiming that people often move from one earnings quintile to another over time. While there's some truth in this, Treasury Department figures show that nearly 9 out of 10 of those in the top 1% remained in the top quintile of earners over a ten year period.
A few other conservatives responded to my question, with varying degrees of coherence in their arguments. Reference was made to the "Pareto Efficiency," a situation in which an allocation of resources makes at least one individual better off without making any other individual worse off: the result is said to be a net improvement overall. But this does not address the resulting contribution to inequality, which is the main point.
Another respondent claimed: "What we found is that the rich did get richer over the last 30 years, but so did the middle class, the working class and the poorest."
But based on 1980 dollars and IRS data, this is how U.S. income has been redistributed since that time:
- Incomes for the top 1% have gone from $148,000 to $450,000
- Incomes for the next 9% have gone from $46,000 to $50,000
- Incomes for the next 40% have gone from $17,500 to $15,000
- Incomes for the bottom 50% have gone from $5,400 to $3,750
As it stands, the question remains unanswered. Maybe if we offer a prize...?
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97 Comments so far
Show AllI think a better, more simple question is, if the 1%'ers are the job creators, and the job creators have seen their wealth increase so dramatically, why is unemployment so high, and why is the so-called recovery a jobless one? That's a flat out contradiction. The only way out is to admit they aren't job creators, or the rest of us 99%'ers are just plain lazy. But that can't be the case because productivity has gone up dramatically. This simple little question exposes them for what they are: greedy un-American hypocrites.
Hear, hear.
Well said!
Not really "Well Said." Productivity has gone up because, (a) technology has increasingly replaced humans in the work place, and (b) GDP includes foreign sales, and corporate profits generated by foreign workers paid lower wages. So American workers aren't necessarily harder workers, it is just that fewer of them are needed to consume or produce.
What is significant is on the economic principle of efficiency, optimality is achieved by making the condition of increasing numbers of human beings more miserable. Neither is consumption a concern, since foreign consumption substitutes for domestic consumption. It's kind of a cross between Malthus and Marx.
Production is supposed to exist for the benefit of humans, but instead it comes to exist for itself, at the cost of humans. Economists are concerned with production and efficiency, not with the human condition. When human consumption is considered a substitutable variable, something is very, very, wrong with economics.
Productivity has gone up because companies are laying off workers. Remaining workers have to work harder and faster to pick up the slack for the same or less wages. It's that simple.
basic argument of yours; we should all remember it in order to answer the question
I would like to suggest that Paul Buchheit's organization set up an essay contest for kids aged 12 - 18 to write an essay on this matter, offering a $1000 or something like that prize. This might be one way to skip over the MSM censorship of this issue and directly educate the people. I am sure there are ways to let kids know about it on facebook or the like. Maybe one prize winner per state?
Just a thought.
I think that's an excellent suggestion!!!!!
Yes, what a wonderful idea you had
The ultimate reward for any investor is the capacity to live a decent life without having to sell one's labor. There is no inherent right to any returns beyond this level and in the interest of the economy performing for the public benefit, there is a need for government to heavily tax all non-wage income beyond that level. Private investment is inherently inefficient, tending toward bubbles driven only by demand instead of intrinsic value for the public benefit. A graphic representation demonstrating this through the US Census since 1929 is offered at my webpage:
http://home.roadrunner.com/~markwrede/NonFic/InvestProd.html
A very informative chart and an equally interesting site.
This is an approach that comes closer to the heart of the matter than mere partisan bickering, or purely political analysis.
Most people in the population still don't understand (not entirely their fault) that the nature of power and decision-making has shifted decisively from sovereign control (more or less... true mainly in the prosperous West) to private finance-oriented control. Markets became the exclusive index for measuring national success since the 80's, as opposed to industrial production and public-controlled services. Around that time, politicans began referring to us not as 'citizens' (which is bad enough), but to 'consumers'.
[Interesting that Sowell is one of the few brave enough to attempt an answer to this question. I detest his position, but respect him overall as someone interested in meaningful analysis. Thanks to him, I understood more about Marxist economics in his explanations than in the heaps of impenetrable theory generated by leftist academics.]
Some of the most whacked-out explanations for inequality in our society, however, come from those who least understand this situation. Ideology has blinded them to the actual events in their midst... poverty and inequality seem to them to arise from innate social malfunctions or retreat from tradition (in other words, Neo-con claptrap). It makes life easier to have such annoying symptoms explained away wholesale, but it doesn't resolve the issue. These are the ones who will go down kicking and screaming even as the illusion unravels and truth is slowly revealed.
A few other questions -
The top 25 hedge fund managers last year averaged $1 Billion in income, with the top hedge fund mana$ger pulling in $4 Billion. What does a hedge fund manager actually do?
How many jobs do they create (or destroy)?
Where does the money they 'make' come from?
Is this an economically sustainable activity - and for how long?
Finallly, if incomes over $100 million were to be taxed at 50 per cent and your income was say cut from $200 million, cut you get by on the remaining $100 million?
(hint: if you needed more $$, you could leverage it. . . on future income. . . )
The answer is. . ... . I am waiting. .. . waiting.. . . . waiting. . .
When Lehman Brothers imploded it's CEO (I believe his name is Fuld) lost most of his assets (in Lehman stock), so he was down to his last 100 million. Times were so hard that he had to sell one of his houses and an art collection to pay his bills. It would appear that he was so leveraged that 100 million did not bring in enough to pay his bills. I'm sure everyone who contributes to this site sympathizes with him.
These same arguments are repeated over and over again for how many years?
Where is the call to action, how do we change this corrupted system. It has gotten so it is in our face. Where are the people we need a leader with a call to action to defeat these power hungry greed elitists. We need someone who can coordinate all these groups working on the same thing.
Good cop/bad cop; bad cop/good cop. They are one in the same and the majority of the two parties are corrupted by money, free speech money, corporate personhood, and casino gamblers. Neither party is going to save this country from becoming a banana republic, feudalistic and guess who the serfs are. Beside labor being moved to slave labor countries, intellectual property and patents, science and engineers are moving overseas along with the related service jobs. This country is dysfunctional and corrupted to the core all three levels of our government and on down to the managers of departments. It has been for a long time but they've gotten brazen about in our face if you're paying attention but then 40% of Americans are being dubbed by these elite and another 40% are too busy working and watching entertainment tonight and reality TV.
So what are we to do? We need millions of people in cities across the country standing up for we the people. We need millions of people in NYC demonstrating outside Wall Street and in front of NBC,CBS,ABC, CSpan, CNN, MSNBC, et all demanding our public airwaves back and demanding that Wall STreet start loaning to Main Street and stop the Casino Gambling. We need millions in DC demanding that our elected officials start representing the people, that our Justice Department start prosecuting the people who brought this democracy down not just the little guys and the corporate person hoods who murder people in cases of Massey Mining and BP. We need "supremes" reigned in by a constitutional amendment stating that they cannot legislate, they are not elected officials.
We need to address these faulty trade agreements and if we can't do that then we need to put tarriffs on these corporations who are mfg overseas and then bringing the products back into America. We the American people can live a more sustainable and create a new mfg base and create what we need and if we had a healthcare system that was affordable and didn't have such a huge profit motive we could clean it up and we would be competitive and have healthy workers. We can do this in cities and communities across this nation. These Multnational have discarded the American workers, let's discard them and start producting again and end this continual war mongering machine and profiteering.
Anyone remember the old tale about the plight of the mice who were being eaten alive by the cat? They finally came to a solution for their problem...put a bell on the cat so that they would be forewarned of his coming and could run for safety. But then, the question arose among the mice, "Who will 'bell the cat'?"
This is the predicament "we the people" find ourselves while attempting to confront our enemy, the wealthy "cat burglars", who are intent on stealing our common wealth which includes our air, water, food, land, roads, parks, forests, rivers, oceans; our ability to vote, unionize, protest, resist, recall, strike; and our access to information via monopolistic ownership of our airwaves, print media, and publishing houses.
Our "cat monster" has grown so huge that our meager attempts to restrain it and hold it to account are laughable to those we seek to "bell". For instance, how are we to demand that our "Justice Dept. start prosecuting..." or that the Supreme Court can be "reigned in by a Constitutional Amendment" when those who would propose either of these solutions are totally corrupted by corporate money and power? Are we to jump up and down and yell, or sit down and do nothing? The power of the people has become so severely limited and our police so militarized that we truly are on the verge of learning what it is like to live in a Plutocracy. And we continue to bring on more punishment to ourselves by insisting on voting against our own best interests thanks to Mr. Murdoch's brainwashing machine which also pits us against each other so that even the dream of "millions of us in DC" will not happen...we're become too hateful and antagonistic toward each other to even unite to defend ourselves. Sorry to be such a pessimist, but all one needs to do is study human behaviour to know that we've been had!
season341,
You said it all! And very well at that!!!
I like the energy of your call to action---because we sure do know that Washington, business and capitalism are laughing at the vast majority of struggling human beings. We sure do know they and the insiders are not going to allow significant change if they can help it---and, we know that they cannot win. They cannot win, as soon as we get organized and peacefully determined. I say again, they cannot win unless we do nothing. SO---I can only highly recommend Martin Luther King Jr.'s last call to action and ideas for it. When he was slain in 1968 it took the wind out of the progressive movement which then was achieving so much. I think we could gain tremendous bonding power by (so to speak) returning in our progressive hearts to that moment of his greatest promise and our great national grief and outrage for what is being done by so few to so many. You can find King's plans for an organized, peaceful, determined "poor people's march on Washington" in his last book of essays, "The Trumpet of Conscience." And BLAZING with vision it is---with the intent, nerve, and clear mind to really do what he talks about. Occupying every official office that makes the murder machine turn, and stopping it, with an articulate set of demands in hand, until they are met. Furthermore, King explores national AND international organization, which he foresaw as crucial because capital too is global. If the book is hard to find (I had to hunt it down), you can read extended excerpts at jackdempseywriter.wordpress.com . Highly recommended---the time is short, and I take another glimmer of hope from Van Jones' new organizing efforts and the October2011 movement which has plans in D.C. for the Fall. Check these out, sisters and brothers. THEY CANNOT WIN.
We need, we need, we need...
We need debt-free, interest-free money, issued by the government, not by the privately owned, for-profit federal reserve.
HR 6550, the National Emergency Employment Defense Act.
http://www.govtrack.us/congress/billtext.xpd?bill=h111-6550
Well, the Constitution says we can. Or Yes We Can.
Having ranted against the supposed "discipline" of economics numerous times on this site, I do not disappoint again--if you have not tired of reading my rants. Relevantly, this time, I would like to comment on the following passage from Paul Buchheit's article:
"renowned economist and writer Thomas Sowell took the time to respond. . . , his response relied upon classical economic theory: 'Most people are paid voluntarily by others to whom they supply goods and/or services, and only to the extent that others value what is supplied enough to part with their own hard cash.'"
Translation: "What is ought to be, and what ought to be is." After all, what is wouldn't be unless it were. And, what isn't would be unless it wasn't. Now, in logic this is designated "begging the question."
What is so wonderous--nay, splenderous--about economists is their brilliance is such it is beyond logic. Being beyond logic, all things which economists assert are true. And, how is their truth known? Why, it is that an economist asserted it!
My old econ professor explained that:
"Economics is what economists DO! Which includes structuring analyses and predictions that are at least partially true, regardless of what actually happens."
(He was tenured and half tanked most of the time so he had no fear of the truth.)
In the real world, the sharp money guys are the hedge fund managers. Near as I can tell, they are skilled statisticians that clean up by betting on the stupidity of everyone else.
The real answer from many on the right would be this. GOD loves rich people and hates POOR ones. Proof is he gave the rich all the goodies because their GOOD. Poor people are bad and need to be punished and punished daily fro their inherent badness and fallen status. That most wealth is inherited only confirms this theory since GOD passes wealth on to the children of the good because by birth they are also good. Like wise poor children are born bad and need to be seen as such. The funny part are all the POOR right wing rednecks who buy this even though it means they are condemning themselves in the process.
Nah, God gives vast wealth to the most undeserving, because these vast riches riches damn them to Hell and ensure that they won't be bothering God in Heaven. :)
And No Cops Allowed either. Woody said so.
Perhaps this well written essay should be sent to conservative writer Michael Medved who has written a column in today's USA Today in which he puts forth the notion that the rich in this country have been unfairly treated by progressives and who poses the question:
""Isn't it obvious that America needs more, not fewer, millionaires?"
Medved also believes in his infinite wisdom that:
"Poor people, on the other hand, need to change, and they know it" while also believing that "it makes no sense to penalize successful people with higher tax rates" because "their effort and imagination add jobs and growth while subtracting nothing from society at large."
It would appear that Mr. Medved is not exactly a shining example of a compassionate conservative.
He is, however, either a consciousless conman or an imbecile. I think the Yiddish term is "schmuck".
Once again the old lie..."their effort and imagination add jobs and growth while subtracting nothing from society at large."
What bloody jobs, where are these mythical jobs and yes they bloody well DO subtract MUCH from society....they subtract money and keep it for themselves. In the main poor people work and make money so that rich people can become VERY rich. The very rich graft and claw over each other so they can become the SUPER rich. The foundation for this wealth is the work of the poor who are doing 2 or three jobs (benefiting whom?) The Super rich have found ingenious ways to make money by NOT working or producing but simplyby moving non existant money around and paying themselves each time they do. I get very tired of this blame the victim notion that the poor have only themselves to blame from people who in many cases not enjoy the wealth they have without the work of the poor.
More millionaires? That's funny. In 1923 Germany, everyone was a multi-billionaire. We may get there yet.
This is what happens when money is thought to be more real than forests, farms, and factories.
"their effort and imagination add jobs and growth ..."
Yeah, in China.
I'm happy for the richest 1%, but there's another side to this question: in what way might it be DANGEROUS for this fraction to control 40% of all America's wealth and take in 20% of all her income?
I think the answer is all around us. Excess wealth isn't invested well for the simple reason that there's no reason to invest it well. Proper investment is hard work, after all. But, if wealth isn't invested well, its invested poorly, and the result of poor investments, over time, is a diminution of wealth for everyone. Too many of the excessively wealthy park their wealth in items of limited value, or, worse, negative value. Think of yachts, month-long vacations, or, worse, a Koch Bros investment in the Tea Party. Think of 'investing' in a housing bubble cuz it makes your advisor wealthy in the short term and you're on permanent vacation so don't want to think about it.
Necessity isn't just the mother of invention. Its the mother of good investment. Too much of America's wealth is now an orphan. It knows no discipline, it careens from one bubble to another like a drunken sailor. This is because the people who own it could care less how its invested, or misinvested.
If you take his last two figures for average income,
# Incomes for the next 40% have gone from $17,500 to $15,000
# Incomes for the bottom 50% have gone from $5,400 to $3,750
That means that 90 % OF WAGE EARNERS IN THE U.S. ARE GETTING PAID, ON AVERAGE, LESS THAN $9,000 PER YEAR.
THAT'S ONLY $750 A MONTH
THAT'S ONLY $174 A WEEK!!!
Here's a better question historically which predates currency in any form. Why are they called conservatives? If we simply use a two syllably word we get an extremely helpful cue-- con servatives. Ask it that way, Why are they called con sevaatives over the last 10 millennia? It's because they con the rest of us into letting them have more than their share of the pie, as all civlized societies 10 millennia ago would readily see. All creat the pie and all should get the same share of the pie. Isn't that just common sense as it was among indigenous people of this hemisphere and Pacific before their exposure
Western savagery through the Eureopan invasion as John Pilger would aptly refer to same.
Actually, here the prefix "con" means "with," not "contrary," which is the root of "conman." "Contrary man" is someone who appears to be what he is not. "Grifter" is better.
Now, "con" meaning "with," I'm unsure what "servative" means. Having just looked it up, I find it is neither a word, nor a prefix, nor a suffix. My guess is its root is "serve," as in "pre-serve." But, if so, "conservatives" should be "preservatives." And, how do you "preserve," unless prepare to serve? Even more confusing, how do you "con-serve?" Oh, hell, I don't know.
hmmm...interesting...if we took 'con' to mean 'against', the con-serve could be interpreted as 'against serving'...
this could mean not willing to be a servant or slave, or it could mean not willing to enable or further...
or, most to the point, not willing to serve, as food to a guest...
in other words: unwilling to share...
in this mode, 'preserve' also makes sense, as keeping food in a condition to be shared...
Powercorrupts,
Not really. Those are figures in 1980 dollars. You'd have to readjust for inflation in order to come up with today's actual dollar figures. One interesting thing to note is that the minimum wage in 1980 was $3.10, for a yearly full-time wage of $6448. This means that the incomes for the bottom fifty percent were lower than a full-time minimum wage worker in 1980. And people wonder why there is no demand in the market to create jobs now. We floated through the Nineties on cheap money (credit), but that house of cards had to collapse eventually.
: "Most people are paid voluntarily by others to whom they supply goods and/or services, and only to the extent that others value what is supplied enough to part with their own hard cash."
Fine, as it goes. But then the questions become: why do they value our labor so much less than they did 30 yrs ago. Why has no productivity gain gone to labor?
Why have we traded increased salaries, reflecting increased porductivity, for credit card debt?
Corporations pay you and your coworkers less because, individually, you are powerless.
Wages and benefits rose in the 20th century when unions used the threat of a strike to force companies to negotiate contracts. The decline in union membership tracks consistently with the concentration of wealth at the top. But that's history and and of no apparent interest to the modern american. Fools.
Concentrating wealth = concentrating power = totalitarianism
Direct democracy
The author asks " In what way do the richest 1% deserve these extraordinary gains" You can't get the right answer if you ask the wrong question. No one deserves anything, it's a meaning less question. The debatable answers hold no enlightenment for the people who suffer at the bottom of this system. What is the point of an economic system that allows some to spend more for a shower curtain, than others for an entire house. No one deserves or needs a $6000 shower curtain. The point of the system is not to allow a small percentage of us to waste resources in spectacular ways. It is to disempower the majority of us so we can be controlled, organized, and made to work longer and harder than we would otherwise. Taxes are not about raising revenue to meet human needs. They are to disempowed us, to keep us to busy, tired, weak, and broke to do anything about it. As long as we think this system is about the rich wanting a bigger house it will not change. You can't win the game when you don't understand how it's being played.
I'd suggest that you both are getting at the same point.
Q. In what way do the richest 1% deserve these extraodinary gains?
A. They don't.
The rich are barbarians with only one goal, more. More for themselves, less for everybody else. Do we really need to ask the question? This is the OVERfuckingRIDING fact of the last 5,000 fucking years!!! Further, the rich will destroy anyone and everything that stand in their way. So the real question is, "What are we going to do to stop them?"
Sowell is a classical cock. I have no choice but to pay rigged markets for gas, electricity and water, not to mention ridiculous rents driven up by a highly manipulated housing market. Would he really have us believe that I do it voluntarily because I value what is offered?
Don't worry - Obama will save us.
"Reference was made to the "Pareto Efficiency," a situation in which an allocation of resources makes at least one individual better off without making any other individual worse off: the result is said to be a net improvement overall."
This of course, is possible in this situation because the Fed Res PRINTS MORE MONEY......
Pareto Efficiency is impossible with regard to economics because all transactions are governed by the laws of thermodynamics, and the second law affirms that all transactions produce losses.
Yes, everything in Theory works in Practice... in Theory.
Well, that's not really the case, I think. If the economy was a zero sum game, and one percent of the people started accumulating more, thereby decreasing the money supply, the value of the dollar should rise accordingly, keeping the buying power of dollars the same as before. Of course, it's not a zero sum game.
Expanding and contracting the money supply has everything to do with the price of money itself. It's a good idea to expand the supply (print money) in a recession to counter the deflationary pressure and also to make money cheaper, for spending on credit will create the demand that can bring the economy out of recession.
A loss of compassion for our fellow man, high-lighted by the religious driven culture wars that now represent American politics, makes fertile ground for a growing gap between those who have everything and those who have very little. Economics can be explained in dispassionate language and numbers, but compassion is ethereal. The suffering, however, is very real. Shame on those who will not see.
"rocket surgeon" ...love it.
Also, everything you said is spot on.
Yeah, yeah. I been hearing these myths for decades and I am truly sorry, but they ain't true. I wish they were true. It would be nice. But believing something don't make it true.