Keeping up with the Rockefellers

Wherein I present a theory to explain the resistance to economic reform

After my last post about the disparity in wealth and income in this country, I have been giving some additional thought to the causes behind this inequity.  I’m not referring to the question of why wealth has concentrated in the hands of the few- that is the natural consequence of our economic framework and the regressive taxation of the last decade.  Rather, I have been puzzling over why the vast majority of people have not loudly demanded that the wealthy pay a fairer share of the nation’s tax burden.

I have a theory, and I want to briefly describe and explain it.  I call it aspirational identification.

In short, we all want to be rich.  In every aspect of our lives, we are bombarded with images glorifying wealth and luxury.  We are conditioned to desire expensive clothing, jewelry, vehicles, and homes.  Given the opportunity, millions would line up for the chance to participate in degrading game shows with the goal of winning a vast sum of money.  The internet plies us with get-rich-working-from-home schemes, penny stock market trading strategies, and other shortcuts to achieving enormous wealth.

By its very nature, an economic system based on competition encourages us to take risks, in order to earn big rewards.  Some succeed, most fail.  But that aspiration, our deep-seated urge to join the ranks of the wealthy, may go a long way to explaining why the middle- and lower-classes have such a difficult time making an enemy of the upper 1%.  We all want to be like them, and given the choice, we would join their ranks without a second thought.

While the average and even above-average earner cannot truly identify with the elite, our aspirations can.  When we become fabulously wealthy, we want an opportunity to enjoy the wealth, not turn over the bulk of it to the government for redistribution.  Even though most of us will never truly achieve financial plenty on the scale of the 1 percenters, we would like to believe that, should we beat the odds, we will enjoy the full benefits of our tremendous fortunes.

Unlike my previous post, I don’t have statistics or psychological studies to back up this theory; call it a “gut feeling.”  However, I believe it goes a long way towards understanding why it is so difficult to get those who are not wealthy to unite behind the premise that our economic future depends on requiring the super-rich to pay a greater share of the cost of running our nation.

~Andrew

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Published in: on October 14, 2011 at 10:28 pm  Comments (1)  

Why the 99 Percent Have it Right

Exploring the merits of class warfare

When the Occupy Wall Street movement began to receive widespread media attention, its organizers and participants were accused by many on the right of engaging in “class warfare.”  This charge has been leveled against Democratic presidents, progressive tax reform proposals, and even get-out-the-vote initiatives.

The connotation of this charge is that currently, the classes are at peace, and any attempt to radically upset the balance of economic power on behalf of the lower and middle classes is an unfair, and unprovoked, attack on the wealthy.

However, by simply looking at the economic trends over the past thirty years, you can see that the wealthy have been conducting a rather one-sided form of class warfare for decades, and they are winning big.

I want to point out four trends that, taken together, demonstrate the extent and success of this war by the wealthy.

-The wealthy are paying much less in taxes than they did thirty years ago.  How much less?  The top rate has fallen from 70% to 35%.  Moreover, much upper class income is in the form of capital gains, taxed at only 15%.  The wealthy have used their political influence during the 1980s and the first decade of this century to dramatically reduce their personal contribution to the government.

-Despite the doubling of the US economy over the past three decades, wages have remained flat, if adjusted for inflation.  This means the masses’ purchasing power has not improved.  In recent years, we have maintained a higher standard of living mostly due to borrowing, but as credit lines have dried up, most people have had to reduce their lifestyle, some dramatically.  The same is not true of the wealthy; the top 1% now make 20% of the total income in our country.

-One result of the breakdown in our tax distribution and income distribution has been the concentration of wealth.  40% of our nation’s wealth is in the hands of 1% of its population.  Of all the data and statistics out there, I find this to be the most gut-wrenching.  99% of us have only 60% of our nation’s wealth.  Scary.

-Finally, as the result of our tax policies skewed towards protecting the wealthy, government services are contracting.  Schools are underfunded, especially at the university level.  The result is high tuition, often funded by (you guessed it!) student loans.  Our government cannot solve its fiscal deficit because half of our politicians will not consider any proposal that increases taxes, under any circumstances.

The middle class today is worse off than it was in 1980.  We are told that the government must spend less, and that we cannot rely on it for vital services, such as infrastructure or health care.  We are pitted against each other any time a new revenue-generating proposal is floated in Washington- the “no new taxes” line in the sand is as deep and potent as ever.  We are given distracting wedge issues, usually related to social policy, to keep the focus away from the blatant inequity in our nation’s wealth and income.

Most troubling of all, we are told that our country is becoming poor, and weak, and is unable to solve its fiscal problems.  We are told that we will soon be surpassed by other superpowers, and that our government is the problem, not the solution.  These assertions are, utterly and demonstrably, bullshit.

The wealthiest among us are doing pretty well for themselves, and should be asked to bear a fairer share of the costs of running a first-class nation.  We can afford to conduct the cutting-edge research we need to remain a world leader.  We can afford to educate our citizens.  We can afford the infrastructure we need to transition into the 21st century.  We can afford to provide everyone, no matter how wealthy or poor, with universal health care when they get sick, preventative care to prevent illness and disease, and medication when necessary.

The only thing holding us back is a small minority, holding a tremendous bulk of our nation’s treasure, and exercising a disproportionate amount of influence over our country’s political process.   The super-rich need to contribute their fair share, and help us climb out of our economic trouble by providing the money needed for real stimulus.  This is not socialism; it is fair, necessary, and fitting to a country ostensibly governed by and for the people.

-Andrew

Published in: on October 12, 2011 at 8:31 pm  Leave a Comment