So Say the Rich: "Don't Blame Us For Having All the Money!"
A recent Washington Post article by James Q. Wilson is filled with the tired old defense mechanisms of people eager to justify a 30-year transfer of wealth to the rich.
Mr. Wilson begins by alluding to the degree of economic mobility that supposedly gives everyone a chance to move up the ladder through hard work and perseverence. He cites a Federal Reserve report which states that less than half of people in the top 1 percent in 1996 were still there in 2005. But he doesn't mention that nearly 90% of them remained in the top quintile of earners after ten years. Ten years. In that amount of time people should be moving up or down as they begin or end careers, but instead they remain close to their starting points.
Other reports make it very clear that the U.S. ranks near the bottom of developed countries in economic mobility.
Mr. Wilson next suggests, in a way that makes the obvious sound like a point for his side, that education is one of the keys to equality. "The problem facing the poor is not too little money, but too few skills and opportunities to advance themselves." That sounds suspiciously like a form of inequality. And wealthy America is partly to blame. The author's plea to "teach the poor marketable skills" runs up against at least two impediments: (1) A study by Citizens for Tax Justice shows that state tax avoidance by large corporations is about $14 billion for one year; and (2) A study from the Center on Budget and Policy Priorities reports that state education cuts amount to about $12.7 billion for one year.
It's hard to educate the poor when our largest corporations aren't paying their taxes.
Mr. Wilson also proposes that the increase in two-earner households may have contributed to inequality. But he overstates the case. His reference to 1950 data clouds the fact that the percent change of women and men in the work force was approximately the same from 1980 to 2010, and that the percent change in income by number of earners in a family was approximately the same from 1990 to 2010.
The author's identification of Greece as a less unequal country seems inappropriate at best, as is the implication that the poor are better off because they have a phone and a TV set, and the claim that poverty is less of a problem than in the past. Consumption may have risen for the poor, but their current incomes barely meet expenses. Their debt has risen, their savings have been depleted.
Despite all this, Mr. Wilson considers it 'moral' to institute a flat tax, even though it would reduce taxes on the 1% of Americans who have tripled their share of the income pie through an orchestrated flow of financial gains over the past thirty years. No mention is made of the 10% of Americans who own 80% of the stock market, where minimal taxes on capital gains make 'unearned' income more attractive than wages earned from labor. No mention of lucrative financial manipulations such as the 'backdating' of stock options to a lower purchase price, or the declaration of income as "carried interest" to get a lower tax rate. No mention of exemptions in the tax code, such as home mortgage interest and employer-provided health insurance and pensions, which largely benefit wealthier Americans.
The author also relies on polls of the American public to make his point: work hard, don't rely on government, become rich. But Americans typically underestimate the extent of poverty and inequality in our country. Recent census data suggests that almost 50% of Americans are in poverty or at a "low income" level. Anyone trying to maintain a household in which 97% of their earnings go to essential expenses understands the reality.
Perhaps the mainstream media should be informing the public about ways to correct the continuing transfer of wealth to the rich, rather than resorting to an emotional "don't blame us."