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November 02, 2008

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theo

thanks for your reply!

how do you measure economic well-being in our country? the earnings and tax numbers above omit the distribution of wealth. the top 5% of our country owns nearly %60 of its wealth. what is the material impact to the economic well-being of the top 5% if their tax contribution is proportionally twice their share of AGI?

i am strenuously suggesting the ruling class is manipulating the system to generate a great deal for itself. and it is precisely because of their wealth and not their income that this happens:

first, i should define what i mean by our ruling class.

the wealth of the top 5% (individuals) is increasingly and overwhelmingly based on owning stakes in financially successful corporations.

corporations and coalitions of corporate interest (and funding) have enjoy unprecedented access to shaping law and policy at the highest levels of our government. if a company can link profitability to influencing legislation or to the successful deployment of its officers into government positions to shape policy from within for some specific (and frequently narrow) interest, why would it not pursue such a course of action? because it's wrong? it's not! the founders didn't specify which angels and devils could sit on our lawmakers' and executives' shoulders to ply and beseech.

i'm sure a lot of the wealthiest shareholders in these companies would feel uncomfortable walking up the hill to personally demand lower taxes on their income. that would smack of ingratitude. however, it's easier to live with a tax cut obtained via proxy though, in much the same way people have affairs in cyberspace via avatar.

with a psychological (and institutional) buffer in place, the top 5% can feel comfortable reaping benefits dislodged by the focused influence of our aggregate wealth--these abstract non-voting entities we've created who nevertheless shape our laws.

the top % are not the ruling class; they just created what now dominates. in the old days, the word for this was Gollem.

if, however, you still don't buy there's an overall trend of nest-feathering by the rich in our country conducted by proxies surrounding and within government using everyone's tax dollars as the till, and you believe that it's all happening by accident, then i return to my question about the imagined end-game: at what point does the concentration of wealth reduce the number who hold it to a point where they are inevitably overcome by those who do not? 100,00 people? 10 people? 1? why would one not seek to reverse such a trend?

Tim Abbott

Crossposted (with a small addition) from the comments at the original Tigerhawk post:

This has made me think back to my bible study classes in High School (at that nice Episcopal prep school I suggested TH consider among those he and his daughter are currently exploring). Theo and I are products of the place, but don't hold that against it.

"The poor you shall always have with you" - Matthew 26:11, but whether this prophesy is understood as describing preordained and predestined condition of life or an obligation to be with and not apart from those who are poor presents a theological puzzle for the disciples themselves, let alone for Christians 2,000 years on.

Deuteronomy 15:11 "For the poor will never cease to be in the land; therefore I command you, saying, 'You shall freely open your hand to your brother, to your needy and poor in your land.'

Mark 14:7 "For you always have the poor with you, and whenever you wish you can do good to them; but you do not always have Me.

John 12:8 "For you always have the poor with you, but you do not always have Me."

So are Christians to exhibit a kind of paternal charity, or do charity when it suits them, or understand that they are part of a closed system and must not distance themselves from those who are poor? You can find demoninations and personal beliefs that emphasize any of these interpretations.

And then there are the beatitudes - "Blessed are the poor for yours is the kingdom of God. Matthew translates it differently as "the poor in spirit", making more of a muddle. Tricky stuff, theology.

You began your post, TH, with the issue of greed, and about all that I can be absolutely sure of in that regard is that it is not limited to any particular social strata, and no one likes being accused of being greedy when a) they manifestly believe they are not and b)there is ample evidence of hypocrisy by those making the accusation. This is why it is one of Christianity's seven deadly sins. It is a wedge.

TigerHawk

Just to back up the last paragraph in my previous comment, in 2005 (the last year for which I could find data in a really quick search), the top 1% earned 21.20% of aggregated AGI, but paid 39.38% of aggregate federal income tax. Barack Obama's notorious top 5% earned 35.75% of AGI, and paid 59.67% of federal income taxes. Link. Now, you can argue whether that is "progressive" or "not nearly progressive enough," but it hardly suggests that the "ruling class" is manipulating the system to generate a great deal for itself.

TigerHawk

I dunno the number of people who consume more than they produce, but it is large. Start with all the Americans who are manifestly living beyond their means notwithstanding holding down a job. They are consuming more than they produce. Allowing for the good point that monetary income does not capture many contributions, subtract all the people who really are doing some great stuff for no pay. Candidates: Parents who are doing an excellent job of raising children who will be productive, people who do significant and substantive volunteer work, and wives and husbands who specialize in nonremunerative work so that their spouse can specialize in work for money. Add back all the people who do not have jobs because of choices they made. There are many, but as a large employer I can say that people who reliably show up to work on time, are cheerful on the job, do not without good justification stir up trouble with their co-workers, and who always try to get better at whatever they are doing, will not find it difficult to get a job under most circumstances. It helps if you are willing to live where there are jobs, too.

As for the point about how the upper class is going to "avoid the fate of any other tiny ruling class" in history, I have two responses. First, America's economic "upper class" is not a "ruling class." Yes, most politicians end up as relatively wealthy people and people with a lot of money undoubtedly have greater access and influence over those politicians (strange how that happens), but most wealthy people have nothing much to do with "ruling." Why? Because in America two other things distinguish the "rich" from their counterparts in less dynamic societies. First, we have a lot of downward social mobility. People fall out of the "upper class" and indeed pass right through the middle class on their way down all the time. I know quite a few adults who were born into affluence but have not learned how to make money in their own right and did not adjust their tastes and habits of consumption until they had burned through whatever advantage they had (these people would fall into the category of people who consume more than they produce, by the way). Second, America's rich, especially in the last couple of generations, work harder than anybody else. In my company there is a pretty good correlation between pay and hours worked from the CEO and CFO all the way down. Most of America's rich are far too busy making stuff, building stuff, growing stuff, and selling stuff to be bothered with "ruling."

And, of course, there is the final point that the top 1% pay a huge proportion of the total income tax load, much higher than their proportion of aggregate agjusted gross income. Fully 45% of Americans pay no federal income tax (one reason why Barack Obama's claim to cut taxes for 95% of Americans is transparent nonsense). If the "rich" are a ruling class, they certainly are not doing a very self-interested job of it.

theo

this is a great discussion.

TH, you refer to "the large number of people who seem to sleepwalk through life, accomplishing nothing in particular and ultimately living off of the efforts of others. Many of those people do not accomplish much in the commercial world, contribute much to their community, or do a particularly creditable job raising their children"

how large a number, 100,000, 1M, 10M 100M? who freeloads and how do you measure that? or in the absence of objective measure, from whence does such a belief arise?

i get why people with money resent it being taken from them, especially given the prospects of those with little or no money in our culture. what i don't get is the imagined end-game here: how our upper class thinks it's going to avoid the eventual fate of any other tiny ruling class in history that attempted to suppress a population while extracting and hoarding its wealth. personally, i'd much rather have shitty, state-mandated healthcare and a beige computer (wait a minute...) than my head in a basket, but i'm funny that way. -theo

TigerHawk

I see on my return to my own post that we were blog commenters passing in the night...

TigerHawk

ml -

Actually, ml, I do not have a problem with paying more taxes in the abstract. Who is to say that one rate is exactly right from all perspectives? My objection is to being insulted -- selfish and unpatriotic being the twin attacks from Senators Obama and Biden -- for not relishing the prospect of paying more. And the insults have not been limited to these two moments of candor; Barack Obama makes it a regular habit to insult corporate executives at every stop, in every stump speech. He expects us to take it and most of us do; we are, after all, just about the last people in America who accept their own denigration in the ordinary course of business. However, unlike some of my self-loathing executive colleagues, I know what my life's work is, and I do not appreciate being made some politician's whipping boy.

There is also something deeply hypocritical about all of this. If Obama and Biden and their followers who nod their heads and go along with denigrating me and my ilk actually believe that paying more taxes is patriotic, why don't they make voluntary contributions to the government? After all, people volunteer to do patriotic things all the time, like join the Marines or the Peace Corps. If paying more taxes is patriotic, why don't any of the well-heeled people who have extra money to give to Barack Obama's campaign contribute it to the United States Treasury instead? They damn themselves as hypocrites with their own inaction.

Finally, your figures are different than the ones I am familiar with. My marginal rate (federal and state income tax and Medicare tax) on wage income (which is more than 95% of my income) is already 45%. Obama's proposals would move it to 50% - 57%, depending on which version of his Social Security proposal you use. Now, you still might say that I "should" surrender more than half of my earnings to the government, that I am selfish for not wanting to do so, and that it is my duty as a citizen. I would respectfully submit that saying so makes you a socialist, or so darn close to one it is hardly worth arguing the point. Which I believe is the point that the McCain campaign has been making.

GT - I commented over at the other post and will repeat it here (without a critical typo): I appreciate that the flow of cash money does not capture even a fraction of the value that a person "produces," and I know there are people who do enormous good in the world and earn little or no money for the effort. I am not talking about those people. I am talking about the large number of people who seem to sleepwalk through life, accomplishing nothing in particular and ultimately living off of the efforts of others. Many of those people do not accomplish much in the commercial world, contribute much to their community, or do a particularly creditable job raising their children. The rest of us, whether we earn a lot of money in our professional lives or make contributions to our community by raising righteous children or working in soup kitchens or tutoring or campaigning on behalf of the black-footed ferret, carry along the people who genuinely do not produce. I suspect that many of those who believe that I and my ilk are selfish and unpatriotic fall into that category.

Martin Langeland

The reasoning appears to be thus:
Government is the problem;
Government demands taxes;
Taxes are used for programs that don't benefit me;
Taxes are given away wastefully;
Taxes should be lowered;
Taxes are bad;
Government is bad;
Government is the problem.

Rather a tight little circle which leads to the present.

Three basic problems with the assumptions.
Land can be owned.
Ridiculous. The time scale is too different. This is like a microbe claiming ownership of the creature whose alimentary canal he inhabits.

Labor is a cost of doing business.
Capital, whether assumed to be land or money is useless until labor shows up to make something of it. Capital is a secondary means oof production, not the primary. Capital is employed by labor.

I made it myself.
We live in a closed system. No one acts without consequence. What anyone does affects everyone to some extent.

Olivier Wendell Holmes, Jr.: “Taxes are what we pay for civilized society.”
Let those who get much through the government (Infrastructure, defense, a"safe" currency to do business in, etc.) Also pay a fair share that all might have some good. Is paying 39% rather 35% really such an imposition when the income is more than $200,000?

--ml

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