I’m now much more sympathetic to the ‘99 per cent’ analysis. First, a closer look at income growth figures suggests that, while the 19 per cent have enjoyed rising incomes, they’ve only barely maintained their share of national income. The redistribution of the past three decades has gone from the bottom 80 per cent to the top 1 per cent.
That suggests the possibility of a policy response in which the main redistributive thrust would be to reverse this process. This would almost certainly involve higher tax payments, but this would be offset by the restoration of public services, which are in economic terms a ‘superior good’, valued more as income rises. The top 1 per cent can buy their own services, and are largely unaffected by public sector cutbacks, but that’s not true of the 19 per cent.
Another important factor is the growth of economic insecurity. The myth of the US as a land of opportunity for upward mobility has been replaced by Barbara Ehrenreich’s Fear of Falling (another good source on this is High Wire by Peter Gosselin). Even if people in the top 19 per cent are doing well, they are less secure than at any time since the 1930s, and their children face even more uncertain prospects.
The introduction of the “American Jobs Act” was both a policy and rhetorical shift from the administration, away from the above the fray “most reasonable man in the room” strategy aimed at a narrow sliver of independent voters and toward a more aggressive, feistier Obama, one who is not afraid to run against the do-nothing Congress, take his case directly to the American people and ruffle a few feathers. It’s the Obama, quite frankly, that many of his supporters have been waiting quite some time to see.
Quoted from the speech:
But what we can’t do—what I won’t do—is let this economic crisis be used as an excuse to wipe out the basic protections that Americans have counted on for decades. I reject the idea that we need to ask people to choose between their jobs and their safety. I reject the argument that says for the economy to grow, we have to roll back protections that ban hidden fees by credit card companies, or rules that keep our kids from being exposed to mercury, or laws that prevent the health insurance industry from shortchanging patients. I reject the idea that we have to strip away collective bargaining rights to compete in a global economy. We shouldn’t be in a race to the bottom, where we try to offer the cheapest labor and the worst pollution standards. America should be in a race to the top. And I believe that’s a race we can win.
Follow the link to download a free copy of the book. We have.
Conservatives rely on the government all the time, most importantly in structuring the market in ways that ensure that income flows upwards. The framing that conservatives like the market while liberals like the government puts liberals in the position of seeming to want to tax the winners to help the losers.
This “loser liberalism” is bad policy and horrible politics. Progressives would be better off fighting battles over the structure of markets so that they don’t redistribute income upward. This book describes some of the key areas where progressives can focus their efforts in restructuring market so that more income flows to the bulk of the working population rather than just a small elite.
Tell this to the Republicrats:
In fact, the first recorded word for ‘freedom’ in any human language is the Sumerian amargi, a word for debt-freedom, and by extension freedom more generally, which literally means ‘return to mother,’ since when they declared a clean slate, all the debt peons would get to go home.
Is ‘wage slavery’ a mere metaphor? Perhaps not. Read the following paragraphs (I bolded the last one, the ‘money graph, as it were):
What’s been happening since Nixon went off the gold standard in 1971 has just been another turn of the wheel – though of course it never happens the same way twice. However, in one sense, I think we’ve been going about things backwards. In the past, periods dominated by virtual credit money have also been periods where there have been social protections for debtors. Once you recognize that money is just a social construct, a credit, an IOU, then first of all what is to stop people from generating it endlessly? And how do you prevent the poor from falling into debt traps and becoming effectively enslaved to the rich? That’s why you had Mesopotamian clean slates, Biblical Jubilees, Medieval laws against usury in both Christianity and Islam and so on and so forth.
Since antiquity the worst-case scenario that everyone felt would lead to total social breakdown was a major debt crisis; ordinary people would become so indebted to the top one or two percent of the population that they would start selling family members into slavery, or eventually, even themselves.
Well, what happened this time around? Instead of creating some sort of overarching institution to protect debtors, they create these grandiose, world-scale institutions like the IMF or S&P to protect creditors. They essentially declare (in defiance of all traditional economic logic) that no debtor should ever be allowed to default. Needless to say the result is catastrophic. We are experiencing something that to me, at least, looks exactly like what the ancients were most afraid of: a population of debtors skating at the edge of disaster.
And, I might add, if Aristotle were around today, I very much doubt he would think that the distinction between renting yourself or members of your family out to work and selling yourself or members of your family to work was more than a legal nicety. He’d probably conclude that most Americans were, for all intents and purposes, slaves.
And Buffet should know. He’s among the richest of the rich. This is an hour-long conversation with Charlie Rose.
This is a perfect time for a cooperative economy. Considering the disproportionate struggles faced by women and people of color during a recession, the cooperative economy presents an opportunity for all people, to leverage more power by making themselves the bosses, sharing ownership, and taking a collective approach to good management. Many people have already been let down by a top-down corporate or non-profit model in a recession-ridden society. Now is the time to rebuild the system, and build a society founded on justice, dignity, and respect for people and the planet.
Close the loopholes in the tax system!
But the biggest takeaway that I’d like to see people take from this paper is that fans of progressive taxation should be fans of tax reform. As you see in the text, the optimal marginal tax rate for high income people soars if you first (or simultaneously) enact loophole-closing measures to broaden the tax base. In a tax code with many loopholes, higher rates is largely an incentive to exploit loopholes. Close the loopholes, and you can soak the rich with much more efficacy.