Robber Barony Is Back

http://topincomes.g-mond.parisschoolofeconomics.eu/#Graphic:
select:
United States
1917-2009
Average Incomes
bottom 90% average income - including capital gains

Shows the submerged 90% of us earn the same (per family) in real terms as we did in the late 1960s. Yet the typical family now has more wage earners, working more hours.

Same site, select
Top Income Shares
top .01% - including capital gains

Shows the hunting animals eating the entire carcass except during 1942-1981, when we had effective antitrust law, labor law, and progressive taxation.

In only these forty years was the average family income of the top .01% "only" 165 times the average family income.  Before 1942 and after 1981, the rich took a much larger share.  In 2010 it was 462 times the average and increasing.  (If only the top .01% earned anything, their share would be 10,000 times the average.   That the one family in 10,000 now takes nearly 5% of all the income, is appalling.)

The rich get their income not for what they do, but for what they own.  They claim to be "job creators."  In truth, the only job creator is a customer, who buys something.  We have to get money back in the hands of those who spend it--the nonrich.  When the only people with money to spend have all the stuff they can use, the economy collapses.  These booms and busts happened regularly up through the Great Depression.  It was political action that transformed the working class into the middle class, avoiding the booms and busts.  Deregulation, detaxing the rich, eroding worker rights, free trade, since 1981 are bringing back the bad old days of many serfs, one lord.  Only political action can reverse the trend.  We have to restore antitrust laws, restore workers' rights, establish fair trade not free trade, tax the rich.

Norway has a much fairer balance of power between employees and employers, partly due to nationwide collective bargaining.  U.S. labor laws have been eroded since they were enacted in 1935, by anti-labor court decisions and anti-labor legislation.  Now, management can ignore labor agreements and labor law without serious consequences.

Norquist Beyond the Thunderdome

Irresistible title on Huffington Post: "Patriotic Millionaires to Grover Norquist: 'Move to Somalia.'"

WASHINGTON — Patriotic Millionaires for Fiscal Strength, millionaires who want the government to tax them more, met with foremost anti-tax guru Grover Norquist in Washington late Wednesday afternoon.... Patriotic Millionaires ... believe that America has been good to them and that it is their duty to give back. ...

In an interview with The Huffington Post, Norquist felt the group only represented liberal interests. "They were there with a heavy partisan message," Norquist told HuffPost Thursday. "The kinds of arguments I got from these old people weren't interesting when I was 12, the left has not advanced. These guys are Democratic Party hacks. [emphasis added]

Norquist, full-time lobbyist, president and founder of Americans for Tax Reform, who has never run for office much less been elected, is advocate-in-chief for the extreme right-wing no-taxes-not-ever, drown-government-in-a-bathtub political ideology. According to Norquist, paying taxes is not just a partisan message, but a "heavy partisan message." Since when is taxation a left-wing idea? As Mr. Norquist well knows, some Republicans actually believe in taxation. Norquist's hubris allows him to believe that it's up to him to determine what's left and what's right. No doubt he also believes that government is a left-wing idea. And democracy. You know, radical lefty stuff like that.

Norquist (age 55) calls the members of the Patriotic Millionaires who went to visit him "old people." "Old people"? Who does he think he's talking to? A bunch of never-trust-anyone-over-thirty teenagers? I wasn't able to find out exactly which group members met with Mr. Norquist, or exactly how old they are, but in what I found it didn't appear that any were more than about ten years older than old Norquist, and one or two were younger. Check out this photo of the visiting old-geezer delegation of millionaires. Funny how Norquist seems to fit right in with the old white men at the table, isn't it?

"The kinds of arguments I got from these old people weren't interesting when I was 12." Really? Aside from there being very few 12-year-olds who find the idea of taxation especially riveting, since when is "interesting to a 12-year-old" a criterion for the validity of an idea? Norquist is freely admitting here that what he found uninteresting as a 12-year-old is still uninteresting to him today. And he's complaining that the left hasn't advanced?

Indeed he is. Advanced how? No doubt Norquist wants the left to move on from the tired old ideas of justice, equity, and democracy. Is he suggesting that the left should advance as the right has "advanced"? The most casual observation of the Republican presidential debates is indication enough of how the right has "advanced."

And finally, Mr. Norquist labels the Patriotic Millionaires who met with him as "hacks." Webster's Third New International Dictionary defines "hack" (as Norquist is using the word) as follows: "3 a : one who hires out his professional service : one who forfeits individual freedom of action or initiative or professional integrity in exchange for wages or other assured reward : HIRELING, MERCENARY." Uh yeah. Right. Those damned hireling mercenary millionaires who want people like themselves to pay more taxes. Unconscionable.

Norquist's response to the millionaires was the oh-so-predictable "there's nothing stopping you guys from paying higher taxes; just send a check to the government!" Eric Schoenberg, adjunct associate professor at Columbia Business School, pointedly asked Norquist: "Would you be willing to sign a pledge where you're willing to forgo all the benefits that government provides? Are you willing to sign a pledge that says you don't want the U.S. military to protect you? That you will refuse to contact the police if somebody steals from you? That you will refuse to contact the fire department if your house is on fire? Because that's the equivalent! Why should you get a free ride? Why should you benefit from my willingness to support the government?" Norquist claims that if he didn't have to pay any taxes for it, he would indeed forgo all of those things. Schoenberg responded: "There's an easy way to do that: move to Somalia!" There's an idea. But of course hard-core ideologue Norquist attributes Somalia's problems to "too much government."

Norquist needs to be banished somewhere where not only does he not benefit from any past or present government services, but neither does anyone he might want to do business with. Picture what Norquist's no-taxes/no-government world would look like: Mad Max on steroids. No wonder these guys want everybody to carry a gun. They prefer the rule of the gun to the rule of law. This nightmare scenario would make feudalism look "advanced."

Mr. Norquist, you are the hack. In fact, you are a greedy old hack who hasn't advanced any more than a selfish, immature, immoral 12-year-old. Paying taxes is not a partisan activity, sir. (Ooh, is it possible that I'm channeling Keith Olbermann?) Paying taxes is a matter of patriotism and duty and concern for the well-being of our country, all of our country. Your moral bankruptcy compels you to care only for yourself. Somalia is too good for you. You really deserve to live somewhere where there are no public services and no rule of law. I suggest you go beyond the Thunderdome.

Only Money Has Free Speech

As it is now, advertisers make the decisions about the media, not the people, because the media exist for the purpose of making money. . . .

The fact that people with money can hire lobbyists to represent them in Washington limits equity in the political system. Poor people don’t have the money for this—if they spent everything they had, they couldn’t get enough money together to equal the lobbying power of the rich. After an election, people don’t have access to government, because lack of money prevents them from having equal access to the people in power. That’s an inequity that’s built into the system. That’s where money is more powerful than people.

People do have a right to vote. But whom do they have a right to vote for? They have a right to vote for whoever is chosen. That’s our dilemma right now. It starts with how much it costs to run for office—it now costs $3 million to run for governor in Tennessee. That rules out a lot of people. So the choice is between two people who are willing to spend $3 million, which is not a democratic choice. You can say that the people have a right to vote, but they only have the right to choose between two millionaires or people whom other people with money are willing to back.

—Myles Horton, The Long Haul, © 1990, pp. 169-170

ALEC Corporations: Boycott Them

Corporate members of the American Legislative Exchange Council write model legislation and pressure state legislatures to adopt it. These laws break unions, take away worker protections and environmental regulations, capture control of government for use of corporate interests at the expense of the public good. They include: AT&T, Kraft Foods, UPS, Walmart, Amazon.com, FedEx, Frito-Lay, HP, JC Penney, McDonalds, Microsoft, Miller Brewing Company, Outback Steakhouse, Sprint Nextel, Sony, Time Warner, United Airlines, Verizon, Visa, American Express, KFC/Taco Bell, Walgreens, and hundreds of others. Money you spend there will be used as weapons against democracy, against the middle class, against the environment, against civil liberties. Check the list before you buy. Shop at the smallest, most local places.

Union Yes

Stanley Fish: University faculties need to unionize, so instructors have a voice in increasingly corporate universities.

William Cronon:
"McCarthy helped create the modern Democratic Party in Wisconsin by infuriating progressive Republicans, imagining that he could build a national platform by cultivating an image as a sternly uncompromising leader willing to attack anyone who stood in his way. Mr. Walker appears to be provoking some of the same ire from adversaries and from advocates of good government by acting with a similar contempt for those who disagree with him.

"The turmoil in Wisconsin is not only about bargaining rights or the pension payments of public employees. It is about transparency and openness. It is about neighborliness, decency and mutual respect. Joe McCarthy forgot these lessons of good government, and so, I fear, has Mr. Walker. Wisconsin’s citizens have not."

William Cronon is a professor of history, geography and environmental studies at the University of Wisconsin–Madison.

--TomRW

You keep using that word...

I'm all for personal responsibility. But you keep using that word. I do not think it means what you think it means....

Why object so strenuously to the "redistribution of wealth" when in fact, in the last thirty years, we've seen the most massive redistribution of wealth the world has ever seen?

Why is it okay for Wall Street to tank our economy and then be rewarded for it? Where is the "personal responsibility" in that?

Why is it that welfare for humans is right out but welfare for corporations is fine?

And why is it okay for the rich to soak the rest of us, but the suggestion that the the super-rich should pay their fair share of taxes is "class warfare"?

There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.
--Warren Buffett

Why do we persist in calling this a democracy when elected officials pay no attention to voters who have a modest income but can't do enough for the very rich? Pretty sure there's another word for a system of government that works like that.

The Price of Inequality

This article, adapted from The Price of Everything: Solving the Mystery of Why We Pay What We Do, by Eduardo Porter, explains that wider communications, bigger companies, and deregulation are creating a pay structure where fewer and fewer people are taking more and more of the money, leaving the vast majority with no hope of sharing the benefits. This is a natural process. Wealth concentrates until the only people who can buy anything don’t need to, and the economy collapses. Both that article and this one point out that, in Frank Rich's words, "America can’t move forward until we once again believe . . . that everyone can enter Frontierland if they try hard enough, and that no one will be denied a dream because a private party has rented out Tomorrowland." Bob Herbert points out that in the recession of 2008 to the present, many unemployed people have lost that hope. As Paul Krugman says in The Conscience of a Liberal 2007 (p. 18), “Middle-class societies don’t emerge automatically as an economy matures, they have to be created through political action.” The political actions we need are progressive taxation, regulation to prevent abuse of economic power, public education, and a social safety net. And we should focus not on Gross Domestic Product, which harmfully accrues disproportionately to the wealthy, but on the average income of the poorest half or poorest 35% of the people, as recommended by Muhammad Yunus, "banker to the poor" and Grameen Bank founder.

Too, corporate executive pay often is more plunder than compensation.

Judge Invalidates Required Health Insurance

A federal district court invalidated the provision that citizens are required to buy health insurance, on penalty of a fine. SCOTUSblog article. NYtimes readers' comments.

The question for the court is, may the federal government transfer its taxing power to private business interests?

Usually the transfer of wealth to favored industries is done slightly less obviously: the government levies a tax, then forgives part of it if you buy what the favored industry sells. You aren’t required to buy it, but you pay more tax if you don’t.

Linda Greenhouse wrote an excellent analysis of the judge's decision.

Soak the Rich

From 1980 to 2005, more than four-fifths of the increase in the nation's income went to the highest-income 1%. Share of total income going to the highest-income 0.1% rose from less than 4% in 1981 to more than 12% in 2007. Why? Top tax rates plunged. In 1981 the top marginal tax rate was 69%. In 1982 it dropped to 50%, permitting the income share of the top 0.1% to more than double in just the first five years of lower taxes on the rich. From 2003 to 2007 the top rate was down to 35%--and the highest-income 0.1% were absorbing 12% of the nation's wealth.

This is clearly too low to prevent the ever-increasing concentration of wealth. The natural progression continues until the only people who can spend money don't need to, and the economy collapses.

Piketty and Saez (pp. 79-81) show that under the high-tax regime of the 1940s through 1970s, share of income to those at the highest income remained quite constant for decades. (About 33% to 35% going to the highest-income 10%; about 10% to the highest-income 1%; about 3-4% to the highest-income 0.1%.) It's only since 1981 that the lid has blown off the ability of the rich to amass ever greater amounts of the nation's wealth.

Confiscatory taxation is one of the most important functions of government. Progressive taxation is uniquely effective at combating the natural tendency of the rich to get richer and everybody else to descend into serfdom.

Let

individual income tax rate = 1 - (income/poverty level)^-.2

for 0 tax at poverty level, 25% tax rate at about 4x poverty, 50% tax rate at about 30x poverty level, 75% tax at about 1000x poverty level.

For a graph, see
http://www.wolframalpha.com/input/?i=log+linear+plot++1+-+x^-.2++from+1+to+1000
where the vertical axis is the tax rate and the horizontal axis is the ratio of your income to the poverty level. The marginal tax rate would be 0.2 just above the poverty level and 0.8 at 1000 times the poverty level:
http://www.wolframalpha.com/input/?i=log+linear+plot++1+-+derivative%28x^.8%29++from+1+to+1000  

"Income" includes all income, including capital gains (which should be indexed to inflation), and including inheritance. "Income" should exclude income taxes owed to state and local governments on the current year's income. (It's important to exclude state income tax, to prevent the total tax from exceeding 100% for absurdly high income.)

The rich would still be rich. But the rate of widening of the gap would slow. And we would slow the rise in federal debt.

It's also crucial to institute progressive corporate tax. Corporations become ever larger, wealthier, more able to dictate market prices, supplier prices, wages and working conditions, and able to buy political influence to rewrite laws in their favor. They can increasingly soak us, their customers, squeeze their suppliers, keep their workers down--driving us all into serfdom except the business barons.

Let

Corporate tax = profit * [.44 + .1*ln(profit ÷ household poverty rate)/ln(1000)]

So that each doubling of corporate profit causes a rise of about 1% in tax rate (both total and marginal. Each 1000-fold increase in profit raises tax rate by 10%. A trillionfold increase in profit would increase tax rate by 40%.)

On the graph,
http://www.wolframalpha.com/input/?i=log+linear+plot++.44+%2B.1+log+x++%2F+log+1000+from+1+to+100000000 




the vertical axis is corporate tax rate and the horizontal axis is the ratio of corporate income to household poverty level.
  

A progressive tax on business profit would counter the corporate desire for mergers and acquisitions, creating ever more monopolistic conditions.

Of course, we also have to restore all the Progressive Era reforms begun in the Teddy Roosevelt administration and dismantled in and since the Reagan administration. Restore antitrust regulations, financial market regulations, food safety regulations. Repeal the anti-union changes to the Labor Act since 1935. Pass the Employee Free Choice Act.

We must stop subsidizing U.S. agribusiness overproduction of corn, soybeans, cotton, and wheat--which are then dumped below cost on Mexican and Central and South American markets, destroying agricultural economies and forcing millions of people to come to the U.S. seeking unauthorized work. These people are abused with impunity by their employers, because they are afraid of being deported. The availability of millions of zero-status workers drives down wages and working conditions for native U.S. workers.

Political policies have overwhelming effects on economic conditions for ordinary people.

Natural processes, left unchecked, yield a world of a few owners and the rest of us serfs.

Only aggressive, vigilant government action can keep these forces at bay.

Only aggressive, vigilant citizen involvement in the political process can ensure the government does what we vote for, rather than what the moneyed interests pay for.