The Source of Bloomberg's Big Bucks
As of November 2019, Democrat presidential candidate Michael Bloomberg was “the 12th richest person in the world, with a net worth estimated at $61.8 billion.” That quote came from this paragraph, which also gives one a sense of how quickly Mr. Bloomberg’s net worth has grown. On Valentine’s Day 2020, Forbes’ profile listed Bloomberg as the 8th richest person in America, and the magazine’s “real time net worth” gizmo calculated his wealth at $62.8B. Pretty soon we’re gonna be talking “real money.”
In March of 2009, Forbes pegged Bloomberg’s wealth at $16B, a $4.5B bump-up from the previous year, and “the world's biggest increase in wealth in 2009.” And that, mind you, happened during the financial crisis. Do a little math, and one sees that since 2008 Michael Bloomberg’s wealth has more than quintupled.
But just how did Mr. Bloomberg amass so much money? Well, it seems Mike has a product: the Bloomberg Terminal, a computer system widely used by the financial-services industry. In December, Vox ran “How Mike Bloomberg made his billions: a computer system you’ve probably never seen” by Emily Stewart. To subscribe to Bloomberg Terminal, go to the Bloomberg Professional Services division of the company, but know that it will set you back about “$20,000 to $25,000 per seat per year for fast access to information and the tools available with the proprietary trading platform.”
Information can be rather expensive, as it is the lifeblood of the equities market. Sad to say, but we can’t “share in the wealth” as Bloomberg L.P., Mike’s parent company, isn’t publicly traded. As the first version debuted in 1982, Bloomberg Terminal would seem to be the oldest part of Bloomberg L.P., which started up in 1981. A key fact to savor here is that despite the multiplicity of the divisions in Mike’s diverse far-flung conglomerate of a company, Bloomberg Terminal, the computer system, accounts for as much as 85 percent of its total revenue.
Since his company is primarily a software and computer services outfit, it’s fair to say that Bloomberg made his fortune off the backs of computer programmers. However, despite the impressive success of Bloomberg’s software business, the CEO himself didn’t program. Bloomberg sought to fix that problem by taking an online course. On Jan. 5, 2012 he tweeted: “My New Year's resolution is to learn to code with Codecademy in 2012!” The BBC reported: “It is not clear what Mr Bloomberg hopes to do with his new computer skills.” Such a musing is apt when one considers that five weeks after Mike’s tweet, he celebrated his 70th birthday. Maybe Mr. Bloomberg amused himself by writing a program that spits out prime numbers or does the knight’s tour. Whatever, he was smart enough not to give up his day job as the head honcho of an impressive global company.
Bloomberg’s rival for the Democrat nomination, Joe Biden, has suggested that displaced coal miners learn how to program computers. At the Daily Caller we read: “The former vice president similarly said during the July 31 Democratic debate that there would be no place for fossil fuels -- including coal -- under his administration.” And at a December event in New Hampshire, Biden said: “Anybody who can go down 300 to 3,000 feet in a mine can sure as hell learn to program as well… Anybody who can throw coal into a furnace can learn how to program, for God’s sake!”
It’s true that some Americans can quickly learn the rudiments of some high-level programming language, like COBOL, and then write a program to do some low-level task, like spit out some dinky report. But becoming a dependable programmer involves much more than knowing a programming language. This will be driven home when you get a 3 AM call to leave your warm bed and come into work. And when you arrive there and turn into your cubicle what do you see sitting in the middle of your desk but a foot-high stack of interconnected computer paper; it’s called a “core dump” and it’s all in hexadecimal code (i.e. machine language, not COBOL) and you’re supposed to find out what the hell happened to a batch update program that just blew up and which must run before the program that cuts the payroll checks can be run, and the program is not one that you wrote nor know anything about, but it’s a program that you must fix and pronto. And the thing is: the program that blew up might not even be the problem. So, to function as a programmer, you often need to be something of a sleuth, a detective.
This kid started programming computers before Mike Bloomberg formed his company in 1981, which means before the debut of the personal computer by IBM. It was during the “Age of the Mainframe Computer,” RIP. Back then, businesses and institutions had large staffs of applications programmers developing systems specifically for those enterprises. One couldn’t just saunter into Best Buy and buy a DVD to do your payroll, taxes, or whatever; your programmers had to write such software for you. And back in those hoary days of yesteryear when I would encounter jokers like Joe Biden pooh-poohing the difficulty of writing computer programs, I’d think about how quickly they could become dependable productive programmers. And what I came up with was: a minimum of a year of fulltime work and study. And that’s a year not for somebody “who can throw coal into a furnace,” but for your average PhD without experience in computers.
Of course, nowadays one can’t find PhDs without computer experience. Indeed, one would be hard pressed to find Americans who don’t own computers, inasmuch as their smartphones are sophisticated computers. So virtually everybody has some experience with some kind of computer, even if it’s just the self-check-out lines at Walmart or an ATM. Despite that, it may be more difficult to learn programing now than 40 years ago, because computers do so much more now. Even when mainframes ruled the Earth, programmers had to continually be updating their knowhow by learning new programming languages, new operating systems, new access methods, etc. etc.
It’s a pity that at the aforementioned event when Biden spoke of the ease of learning to program that no one thought to ask the obvious question: Vice-President Biden, can you program? If Joe can’t program computers, then his observations on the ease with which coal miners can retrain and move into a radically different profession carry no weight and can be summarily dismissed. Now more than ever, it’s essential that our leaders know what they don’t know.
Unlike Joe Biden, Mike Bloomberg is someone who appreciates the rigors of working in Information Technology. However, Bloomberg doesn’t appreciate the brains it takes to be a farmer, which Victor Davis Hanson passionately responded to on Tucker Carlson’s show on Fox News. (For more of VDH on farming, listen to this podcast at Hoover.) Bloomberg’s “genius” was in correctly identifying a need 40 years ago and then filling that need. And to corner the market on market information, Mike had to hire a bunch of “nerds” who could program.
It should be fairly obvious that computer programming might not be quite as simple as Joe Biden thinks it is. If it were so simple, then why would some of the biggest personal fortunes in the world be those of people in the software biz? There was a time when Microsoft’s Bill Gates was the richest man on the planet. Biden’s claims about the ease of learning to program are facially false. (I’d say Mr. Biden needs a “core dump.”) But the question remains: What the devil is old Joe really planning to do about all the coal miners he’s planning to put out of work?
Jon N. Hall of ULTRACON OPINION is a programmer from Kansas City.
Bloomberg
and his fellow oligarchs lay down the law: Not a penny more in taxes
Many
of the billionaires who own America and consider it their fiefdom have rallied
behind one of their own, Michael Bloomberg, who last week announced a potential
run for the Democratic presidential nomination.
Bloomberg,
the three-time former mayor of New York and founder of Bloomberg News, is
himself worth an estimated $53 billion, placing him ninth on the list of
wealthiest Americans. He let it be known that he was taking steps to enter the
race pending a final decision to run, reversing his announcement last March
that he would not run because he believed former Vice President Joe Biden had a
lock on the nomination.
The
immediate developments that triggered his announcement were the rise in the
polls of Elizabeth Warren at the expense of Biden, the right-winger favored by
the Democratic Party establishment and Wall Street among the current field of
candidates. Polls show Warren leading in the first two primary states, Iowa and
New Hampshire, while Biden has dropped into fourth place behind Buttigieg and
Sanders.
The second event
was Warren’s announcement November 1 of a six percent tax on wealth holdings
above $1 billion as part of her “Medicare for All” plan. That tax is on top of
a previous proposal to tax holdings above $50 million at two percent.
Neither of these
taxes would be passed by either of the two big business parties, and Warren
knows it. The same is true for Bernie Sanders and his similar plan to finance
“Medicare for All” in part by increasing taxes on the rich. The two candidates
are engaging in populist demagogy in order to divert growing working-class
resistance and anti-capitalist sentiment behind the Democratic Party, where it
can be dissipated and suppressed.
But the
modern-day lords and ladies who inhabit the world of the super-rich are
indignant over any possibility of having to give up a part of their fortune to
pay for things such as health care, education, housing and a livable
environment. And they are petrified at the prospect of popular anger against
the staggering levels of social inequality erupting into revolutionary
upheavals.
They do not fear
Warren, a self-described “capitalist to my bones,” or Sanders, a long-standing
Democratic Party operative, so much as the possibility of reform proposals
encouraging social opposition. They want to block their candidacies so as to
exclude the issue of social inequality from the 2020 election.
The levels of
wealth wasted on this parasitic elite are almost beyond comprehension. Here is
how economist Branko Milanovic put it in his 2016 book Global
Inequality:
It is very
difficult to comprehend what a number such as one billion really means. A
billion dollars is so far outside the usual experience of practically everybody
on earth that the very quantity it implies is not easily understood—other than
that it is a very large amount indeed... Suppose now that you inherited either
$1 million or $1 billion, and that you spent $1,000 every day. It would take
you less than three years to run through your inheritance in the first case,
and more than 2,700 years (that is, the time that separates us from Homer’s
Iliad) to blow your inheritance in the second case.
And yet, there are 607 people in the United
States with a net worth of over a billion
dollars.
Bloomberg, a liberal on
so-called social issues such as abortion, gun control and the environment, is a
vicious enemy of the working class. As New York mayor from 2002 to 2014, he attacked
city workers, laid off thousands of teachers, cut social programs and presided
over the biggest transfer of wealth from the working class to Wall Street in
the history of the city. He expanded the hated “stop and frisk” policy that
encouraged police to brutalize working class youth.
Last January he
denounced Warren’s proposal to tax wealth above $50 million as “probably
unconstitutional.” Echoing Trump’s anti-socialist propaganda, he warned that
seriously pursuing the plan could “wreck the country’s prosperity” and pointed
to Venezuela as an example of the supposed failure of “socialism.”
Over the past several
months, at least 16 billionaires have gone on record opposing proposals for a
wealth tax. This chorus has grown more shrill since the release of Warren’s
Medicare plan.
JPMorgan CEO Jamie
Dimon, declaring that “freedom and free enterprise are interchangeable,”
complained on CNBC last week that Warren “vilifies successful people.”
Microsoft founder Bill
Gates, whose personal fortune of $108 billion places him second in the US
behind Jeff Bezos (whose Washington Post has run a string of
editorials denouncing wealth taxes, the Green New Deal and other proposed
reforms), said last week, “I do think if you tax too much you do risk the
capital formation, innovation, the US as the desirable place to do innovative
companies.”
Billionaire Mark Cuban
tweeted that Warren was “selling shiny objects to divert attention from
reality” and accused her of “misleading” voters on the cost of her program.
Hedge fund owner Leon
Cooperman, worth a “mere” $3.2 billion, appeared on CNBC and said, “I don’t
need Elizabeth Warren or the government giving away my money. [Warren] and
Bernie Sanders are presenting a lot of ideas to the public that are morally and
socially bankrupt.” A few days later he announced his support for Bloomberg’s
potential candidacy.
The New York
Times, the voice of the Democratic Party establishment, has run a number
of op-ed pieces denouncing Warren’s wealth tax proposal, including one by Wall
Street financier Steven Rattner, who headed up Obama’s 2009 bailout of GM and
Chrysler until he was forced off of the Auto Task Force because of corruption
charges laid by the Securities and Exchange Commission. While he was on the
panel, he imposed a 50 percent across-the-board cut on the pay of newly hired
GM and Chrysler workers.
But for fawning toward
the oligarchs, viciousness toward the working class and yearning for an
authoritarian savior from social unrest, it is hard to beat this week’s column
by the Times ’ Thomas Friedman, headlined “Why I Like Mike.”
Calling for
“celebrating and growing entrepreneurs and entrepreneurship,” he writes: “I
want a Democratic candidate who is ready to promote all these goals, not one
who tries to rile up the base by demonizing our most successful entrepreneurs…
Increasingly the Democratic left sound hostile to that whole constituency of
job-creators. They sound like an anti-business party… The Democrats also need a
candidate who can project strength. When people are stressed and frightened,
they want a strong leader.”
This is under
conditions of record stock prices on Wall Street and ever rising levels of
social inequality. A recent study by economist Gabriel Zucman showed that the
richest 400 Americans now own more of the country’s wealth than the 150 million
adults in the bottom 60 percent of the wealth distribution. The oligarchs’
share has tripled since the 1980s.
In their new
book, The Triumph of Injustice, Zucman and Saez show that in
2018, for the first time in US history, the wealthiest households paid a lower
tax rate—in federal, state and local taxes—than every other income group. Since
1980, the overall tax rate on the wealthy in America has been cut in half,
dropping from 47 percent to 23 percent today.
The United States is
not a democracy in any true sense. It is an oligarchic society, economically
and politically dominated by a slim but fabulously wealthy elite.
The ferocious response
of the oligarchs to the half-hearted proposals of Sanders and Warren to cut
into their fortunes underscores the bankruptcy of their talk of enacting
serious reforms within the framework of capitalism. The same goes for the
pseudo-left organizations such as the Democratic Socialists of America and
Socialist Alternative that have jumped with both feet onto the Sanders
bandwagon, and will no doubt shift over to Warren should she win the
nomination.
There is no way to
address the urgent problems of health care, education, housing, the environment
and war without directly attacking the stranglehold over society exercised by
the corporate-financial aristocracy. Their wealth must be expropriated and put
toward the satisfaction of the social needs of the working class, the vast
majority of the population.
The corporations and
banks must be taken out of private hands and turned into publicly owned
utilities under the democratic control of the working class, so that the
production and distribution of goods can be rationally and humanely organized
to meet human needs, not private profit.
This is a revolutionary
task. The key to its achievement lies in the growing upsurge of class struggle
in the US and internationally. This movement will expand, but it needs a
conscious political leadership.
THE REASON TRUMP IS NOT PROSECUTING EMPLOYERS OF
ILLEGALS IS TO KEEP WAGES DEPRESSED!
More Americans Are Going on Strike
For decades, the
decline of the American labor movement corresponded to a decline in major
strike activity. But new data released by the Bureau of Labor Statistics, or
BLS, indicates a recent and significant increase in the number of Americans who
are participating in strikes or work stoppages. As a report from the
left-leaning Economic Policy Institute explained on Tuesday, strike activity
“surged” in 2018 and 2019, “marking a 35-year high for the number of workers
involved in a major work stoppage over a two-year period.” 2019 alone marked
“the greatest number of work stoppages involving 20,000 or more workers
since at least 1993, when the BLS started providing data that made it possible
to track work stoppages by size.” Union membership is declining, but workers
themselves are in fighting shape.
EPI credits the
strike surge to several factors. Unemployment is low, which bestows some
flexibility on workers depending on their industry. If a work environment
becomes intolerable or an employer penalizes workers for striking or
organizing, a worker could find better employment elsewhere. (Though federal
labor law does prohibit employers from retaliating against workers for
participating in protected organizing activity, employers often do so anyway,
and under Trump, the conservative makeup of the National Labor Relations Board
disadvantages unions when they try to seek legal remedies for the behavior.)
The other reason
undermines one of Donald Trump’s central economic claims. Though the president
points to low unemployment as proof that his policies are successful, the
economy isn’t booming for everyone. Wage growth continues to underperform.
People can find jobs, in other words, but those jobs often don’t pay well. As the
costs of private health insurance rise, adding another strain on household
budgets, Americans are finding that employment and prosperity are two separate
concepts.
Without a union,
exploited workers have few options at their disposal. They can take their
concerns to management, and hope someone in power feels pity. They can stage
some kind of protest, and risk the consequences. Or they can find another job,
and hope their new workplace is more equitable than the last. Lackluster wage
growth suggests that this last option is not as viable as some right-to-work
advocates claim. Unions afford workers more protection. Not only do they
bargain for better wages and benefits, union contracts typically include
just-cause provisions, which make it more difficult for managers to arbitrarily
fire people for staging any sort of protest at work. Discipline follows a set
process, which gives a worker chances to improve. Retaliation still happens,
but would likely happen more often were it not for union contracts, which are
designed to act as a layer of insulation between workers and managers with ill
intent.
The new BLS data
reveals that despite their relatively small numbers, unionized workers are
exercising the power afforded them by their contracts. Elected officials ought
to listen to what this activity tells them. A strike wave is a symptom that the
economy is actually not as healthy as it superficially looks. Nobody withholds
their labor unless they’ve exhausted all other options. Strikes and stoppages
stem from exasperation, sometimes even desperation. Workers know they’re
playing a rigged game, and they’re running out of patience.
“The remarkable thing is how weak wages are, how weak the
economy is, given that as a result of the tax bill we have a $1 trillion
deficit.”
Donald Trump is ‘just wrong’ about the economy, says Nobel
Prize-winner Joseph Stiglitz
President Donald Trump told business and political
leaders in Davos, Switzerland last week that the economy under his tenure has
lifted up working- and middle-class Americans. In a newly released interview,
Nobel Prize-winning economist Joseph Stiglitz sharply disagreed, saying Trump’s
characterization is “just wrong.”
“The Washington Post has kept a tab of how many lies and
misrepresentations he does a day,” Stiglitz said of Trump last Friday at the
annual World Economic Forum. “I think he outdid himself.”
In Davos last Tuesday, Trump said he has presided over a
“blue-collar boom,” citing a historically low unemployment rate and surging
wage growth among workers at the bottom of the pay scale.
“The American Dream is back — bigger, better, and stronger than
ever before,” Trump said. “No one is benefitting more than America’s middle
class.”
Stiglitz, a professor at Columbia University who won the Nobel
Prize in 2001, refuted the claim, saying the failure of Trump’s economic
policies is evident in the decline in average life expectancy among Americans
over each of the past three years.
“A lot of it is what they call deaths of despair,” he says. “Suicide,
drug overdose, alcoholism — it’s not a pretty picture.”
The uptick in wage growth is a result of the economic cycle, not
Trump’s policies, Stiglitz said.
“At this point in an economic recovery, it’s been 10 years since
the great recession, labor markets get tight, unemployment gets lower, and that
at last starts having wages go up,” Stiglitz says.
“The remarkable thing is how weak wages are, how weak the
economy is, given that as a result of the tax bill we have a $1 trillion
deficit.”
As the presidential race inches closer to the general election
in November, Trump’s record on economic growth — and whether it has resulted in
broad-based gains — is likely to draw increased attention.
BLOG: THE GREATEST TRANSFER OF WEALTH TO THE RICH OCCURRED
DURING THE OBAMA-BIDEN BANKSTER REGIME
“The middle class is getting killed; the middle class is getting
crushed," former Vice President Joe Biden said in a Democratic
presidential debate last month. "Where I live, folks aren't measuring the
economy by how the Dow Jones is doing, they're measuring the economy by how
they're doing," added Pete Buttigieg, a Democratic presidential candidate
and former Mayor of South Bend, Indiana.
Trump has criticized Democrats for tax and regulatory policies
that he says will make the U.S. less competitive in attracting business
investment.
“To every business looking for a place where they are free to
invest, build, thrive, innovate, and succeed, there is no better place on Earth
than the United States,” he said in Davos.
Stiglitz pointed to Trump’s threats last week of tariffs on
European cars to demonstrate that turmoil in U.S. trade relationships may
continue, despite the recent completion of U.S. trade deals in North America
and China.
“He can’t help but bully somebody,” Stiglitz said.
Max Zahn is a reporter for Yahoo Finance. Find hi
Bloomberg:
2019 a Good Year for Wealthy; Jeff Bezos Remains on Top Despite $9 Billion Loss
in Divorce
For the already wealthy and those
who struck gold for the first time, 2019 was a good year for the rich.
Bloomberg News’ billionaire index
is reporting on the money
made this past year, including Amazon founder and Washington Post owner Jeff
Bezos remaining on the top of the heap despite a divorce settlement with his
ex-wife that led to a $9 billion decrease in his portfolio:
The leveraging of a giant
social-media presence, a catchy tune about a family of sharks and a burgeoning
collection of junkyards are just a few of the curious ways that helped make
2019 a fertile year for fortunes to blossom around the world.
Kylie Jenner became the youngest
self-made billionaire this year after her company, Kylie Cosmetics, signed an
exclusive partnership with Ulta Beauty Inc. She then sold a 51% stake for $600
million.
It has been almost two months since
the Washington Nationals captured their first World Series championship, but
people around the world are still singing along to the baseball team’s adopted
rallying cry: “Baby Shark, doo-doo doo-doo doo-doo.” The Korean family that
helped popularize the viral earworm are now worth about $125 million.
The new wealthy includes Willis
Johnson of Oklahoma who has amassed a $1.9 billion fortune from building a
network of junkyards that sell damaged automobiles, according to Bloomberg
News.
Bloomberg reported that the 500
wealthiest people around the world added $1.2 trillion to their wealth,
“boosting their collective net worth 25 percent to $5.9 trillion.”
“Leading the 2019 gains was France’s
Bernard Arnault, who added $36.5 billion as he rose on the Bloomberg index to
become the world’s third-richest person and one of three centibillionaires —
those with a net worth of at least $100 billion,” Bloomberg reported.
Ironically, Bezos was one of 52
people who had a decline in their fortune, in his case because of a divorce
settlement with MacKenzie Bezos who is now on the billionaires list ranking No.
25 with a net worth of $27.5 billion.
Bloomberg reported on the winners:
- The 172 American billionaires on the
Bloomberg ranking added $500 billion, with Facebook Inc.’s Mark Zuckerberg
up $27.3 billion and Microsoft Corp. co-founder Bill Gates up $22.7
billion.
- Representation from China continued to
grow, with the nation’s contingent rising to 54, second only to the U.S.
He Xiangjian, founder of China’s biggest air-conditioner exporter, was the
standout performer as his wealth surged 79 percent to $23.3 billion.
- Russia’s richest added $51 billion, a
collective increase of 21 percent, as emerging-market assets from
currencies to stocks and bonds rebounded in 2019 after posting big losses
a year earlier.
And “losers”:
- Rupert Murdoch’s personal fortune
dropped by about $10 billion after proceeds from Walt Disney Co.’s
purchase of Fox assets were distributed to his six children, making them
billionaires in their own right.
- Interactive Brokers Group Inc.’s Thomas
Peterffy saw his wealth slump by $2.1 billion as investors weighed a
reshaped competitive landscape for brokerage businesses after rival
Charles Schwab Corp. eliminated commissions and agreed to buy TD
Ameritrade Holding Corp.
- WeWork’s Adam Neumann saw his fortune
implode — at least on paper — as the struggling office-sharing company’s
valuation dropped to $8 billion in October from an estimated $47 billion
at the start of the year. Still, SoftBank Group Corp.’s rescue package
left Neumann’s status as a billionaire intact.
And the new billionaires:
- White Claw, the “hard seltzer” that was
the hit of the summer among U.S. millennials, helped boost Anthony von
Mandl’s net worth to $3.6 billion.
- Mastering the art of fast-food
deliveries proved rewarding for Jitse Groen, whose
soaring Takeaway.com NV lifted his wealth to $1.5 billion.
- The popularity of soy milk gave eight
members of Hong Kong’s Lo family a combined $1.5 billion.
A new Gilded Age
has emerged in America — a 21st century version.
The
wealth of the top 1% of Americans has grown dramatically in the past four decades, squeezing both
the middle class and the poor. This is in sharp contrast to Europe and Asia,
where the wealth of the 1% has grown at a more constrained pace.
The Lessons of Theodore Roosevelt
To get out of our Second Gilded Age, look no
further than how we got out of the first one.
We’ve been rocked by
scandals over the past year involving the nation’s most wealthy and powerful.
We’ve learned that a twisted multimillionaire allegedly procured and raped
girls in his Manhattan mansion and on his private Caribbean Island; entitled
celebrities and corporate plutocrats paid millions of dollars in bribes to get
their kids into elite universities; pillars of the Hollywood and media
establishments have used their stature to sexually prey upon underlings; and,
yes, our president was caught lying about possibly violating campaign finance
laws with hush money payoffs to a porn star and Playboy bunny.
This
moral corruption is accompanied by the regressive government policies of a
scandal-stained administration. President Donald Trump is rolling back programs
that protect consumers, voting rights, the environment, and competitive
commerce faster than Congress can issue subpoenas. His cabinet includes
17 millionaires, two centimillionaires, and one billionaire with a combined
worth of $3.2 billion, according to Forbes. He presides over the most
corrupt administration in American history, one marked by nepotism and
self-dealing. His so-called “A Team” of senior officials has undergone a record
75 percent turnover since he took office—most of whom
resigned under pressure, often caught up in
scandal.
Commerce
Secretary Wilbur Ross, whose net worth is estimated at $600 million, reflected the arrogance and empathy
deficit that typifies the Trump White House during last winter’s record-long
government shutdown. He suggested that federal workers just take out loans
until they got paid.
But
nobody tops the swamp king, Trump himself. Forget the sleaze, forget the
obstruction of justice, forget the constant dissing of Congress. His defying
the Constitution’s emoluments clause alone would, in a normally functioning
American democracy, make him the subject of impeachment. Instead, he flouts the
rules as if they don’t apply to him. If he gets his way and hosts next year’s
G-7 summit at Mar-a-Lago, we may as well send the Constitution to the shredder.
And yet, as more recent controversies have shown us, including the Varsity
Blues college admissions scandal and Jeffery Epstein’s sex trafficking racket,
this kind of indifference to moral values is not confined to government
grandees.
So,
what gives? Is America drowning in a marsh of unchecked corruption and
entitlement brought on by latter-day Louis XVI’s and Marie Antoinettes? Are the
uber-wealthy out of control? There’s something rotten in America and, if we
don’t fix it soon, we invite a new wave of national decline and social
disintegration.
The
good news is that we have faced similar challenges before. Some prescriptions
from a previous era may provide a lodestar for a future Democratic president to
steer the country in the right direction. As Mark Twain, who coined the term
“the Gilded Age,” once said, “The external glitter of wealth conceals a corrupt
political core that reflects the growing gap between the very few rich and the
very many poor.” He was talking about the original Gilded Age, but that
diagnosis could just as easily apply to our current American condition.
The
first Gilded Age was marked by rapid economic growth, massive immigration,
political corruption, and a high concentration of wealth in which the richest
one percent owned 51 percent of property, while the bottom 44 percent had a
mere one percent. The oligarchs at the top were popularly known as “robber
barons.”
Theodore
Roosevelt, who was president at the time, understood that economic inequality
itself becomes a driver of a dysfunctional political system that benefits the
wealthy but few others. As he once famously warned, “There can be no real political democracy unless there is
something approaching economic democracy.”
His
response to the inequities of his times, which came to define the Progressive
Era, have much to teach us now about how to sensibly tackle economic
inequality. It’s worthwhile to closely examine the Rooseveltian playbook. For
instance, his “Square Deal” made bold changes in the American workplace,
government regulation of industry, and consumer protection. These reforms
included mandating safer conditions for miners and eliminating the spoils
system in federal hiring; bringing forty-four antitrust suits against big
business, resulting in the breakup of the largest railroad monopoly, and
regulation of the nation’s largest oil company; and passing the Meat Inspection
Act and Pure Food and Drug Act, which created the FDA. He prosecuted more than twice as many antitrust suits
against monopolistic businesses than his three predecessors combined, curbing
the robber barons’ power. And he relentlessly cleaned up corruption in the
federal government. One-hundred-forty-six indictments were brought against a
bribery ring involving public timberlands, culminating in the conviction and
imprisonment of a U.S. senator, and forty-four Postal Department employees were
charged with fraud and bribery.
Now,
we are in a Second Gilded Age, facing many of the same problems, and, in some
ways, to an even greater degree. The gap between the rich and everyone else is
even greater than it was during the late 19th Century, when the richest two
percent of Americans owned more than a third of the nation’s wealth. Today, the
top one percent owns almost 40 percent of the nation’s wealth, or more than the
bottom 90 percent combined, according to the
nonpartisan National Bureau of Economic Research. The first Gilded Age saw the
rise of hyper-rich dynastic families, such as the Rockefellers, Mellons,
Carnegies, and DuPonts. Today, three individuals—Jeff Bezos, Bill Gates, and
Warren Buffett—own more wealth than the bottom half of the country combined.
And three families—the Waltons, the Kochs, and the Mars—have enjoyed a nearly
6,000 percent rise in wealth since Ronald Reagan took the oath as president,
while median U.S. household wealth over the same period has declined by three percent.
The
consequences of this wealth gap are dire. Steve Brill explains in his book Tailspin that, by
manipulating the tax and legal systems to their benefit, America’s most
educated elite, the so-called meritocracy, have built a moat that excludes the
working poor, limiting their upward mobility and increasing their sense of
alienation, which then gives rise to the populist streak that allowed
politicians like Trump to captivate enough of the American electorate.
Similarly,
psychologist Dacher Keltner’s research shows that power in and of itself is a
corrupting force. As he documents in The Power Paradox, powerful people
lie more, drive more aggressively, are more likely to cheat on their spouses,
act abusively toward subordinates, and even take candy from children. Too
often, they simply do not respect the rules.
For
example, in monitoring an urban traffic intersection, Keltner found that
drivers of the least expensive vehicles virtually always yielded
to pedestrians, whereas drivers of luxury cars yielded only about half of the
time. He cites surveys covering 27
countries that show that rich people are more likely to admit that it’s
acceptable to engage in unethical behavior, such as accepting bribes or
cheating on taxes.“The experience of power might be thought of as having
someone open up your skull and take out that part of your brain so critical to
empathy and socially appropriate behavior,” says Keltner.
That’s
why we need to reform our political system if we are to survive the rampant
amorality and lawlessness of the Second Gilded Age. Simply put, so very few
should not wield so much sway over so many.
One
of the first priorities of an incoming administration should be to narrow the
wealth and income gap. French economist Thomas Picketty favors a progressive
annual wealth tax of up to two percent, along with a progressive income tax as
high as 80 percent on the biggest earners to reduce inequality and avoid
reverting to “patrimonial capitalism” in which inherited
wealth controls much of the economy and could lead essentially to oligarchy.
The
leading 2020 Democratic candidates favor raising taxes, as well. Elizabeth
Warren has proposed something commensurate to Picketty’s two percent wealth tax
for those worth more than $50 million, and a three percent annual tax on
individuals with a net worth higher than $1 billion. She has also proposed
closing corporate tax loopholes. Joe Biden wants to restore the top individual
income tax rate to a pre-Trump 39.6 percent and raise capital gains taxes.
Bernie Sanders has proposed an estate tax on the wealth of the top 0.2 percent
of Americans.
Following
Theodore Roosevelt’s example, we need to aggressively root out the tangle of
corruption brought on by Trump and his minions. This has already begun with
multiple and expanding investigations led by House Democrats into the
metastasizing malfeasance within the Trump administration. Trump’s successor,
however, should work with Congress to appoint a bipartisan anti-corruption task
force to oversee prosecutions and draw up reform legislation to prevent future
abuses.
“Of
all forms of tyranny, the least attractive and the most vulgar is the tyranny
of mere wealth, the tyranny of a plutocracy,” Roosevelt once warned. The free
market has made America the great success it is today. But history has shown
that unconstrained capitalism and a growing wealth gap leads to an unhealthy
concentration of wealth in the hands of a few. When the gap between the haves
and the have-nots goes unchecked, populism takes hold, leading to the election
of dangerous demagogues like Trump, and the disastrous politics they bring with
them. It is not too late to reverse course. But first, we need to re-learn the
lessons from our first Gilded Age if we are going to get out of the current
one.
Economists:
America’s Elite Pay Lower Tax Rate Than All Other Americans
The wealthiest Americans are paying a lower
tax rate than all other Americans, groundbreaking analysis from a pair of
economists reveals.
For the first time on record, the
wealthiest 400 Americans in 2018 paid a lower tax rate than all of the income
groups in the United States, research highlighted by the New York Times from
University of California, Berkeley, economists Emmanuel Saez and Gabriel
Zucman finds.
The analysis concludes that the country’s
top economic elite are paying lower federal, state, and local tax rates than
the nation’s working and middle class. Overall, these top 400 wealthy Americans
paid just a 23 percent tax rate, which the Times‘ op-ed columnist David Leonhardt notes
is a combined tax payment of “less than one-quarter of their total income.”
This 23 percent tax rate for the
rich means their rate has been slashed by 47 percentage points since 1950 when
their tax rate was 70 percent.
(Screenshot via the New York Times)
The analysis finds that the 23
percent tax rate for the wealthiest Americans is less than every other income
group in the U.S. — including those earning working and middle-class incomes,
as a Times graphic
shows.
Leonhardt writes:
For middle-class and poor families,
the picture is different. Federal income taxes have also declined
modestly for these families, but they haven’t benefited much if at all from the
decline in the corporate tax or estate tax. And they now pay more
in payroll taxes (which finance Medicare and Social Security) than in
the past. Over all, their taxes have remained fairly flat. [Emphasis added]
The report comes as Americans
increasingly see a growing divide between the rich and working class, as the
Pew Research Center has found.
Sen. Josh Hawley (R-MO), the leading
economic nationalist in the Senate, has warned against the Left-Right
coalition’s consensus on open trade, open markets, and open borders, a plan
that he has called an economy that works solely for the elite.
“The same consensus says that we
need to pursue and embrace economic globalization and economic integration at
all costs — open markets, open borders, open trade, open everything no matter
whether it’s actually good for American national security or for American
workers or for American families or for American principles … this is the
elite consensus that has governed our politics for too long and what it has
produced is a politics of elite ambition,” Hawley said in an August speech in
the Senate.
That increasing worry of rapid
income inequality is only further justified by economic research showing a rise in
servant-class jobs, strong economic recovery for elite zip codes but not for
working-class regions, and skyrocketing wage growth for the billionaire class
at 15 times the rate of other Americans.
Census Says U.S. Income Inequality Grew ‘Significantly’ in 2018
(Bloomberg) -- Income inequality in America widened
“significantly” last year, according to a U.S. Census Bureau report published
Thursday.
A measure of inequality known as the Gini index rose to 0.485
from 0.482 in 2017, according to the bureau’s survey of household finances. The
measure compares incomes at the top and bottom of the distribution, and a score
of 0 is perfect equality.
The 2018 reading is the first to incorporate the impact of
President Donald Trump’s end-2017 tax bill, which was reckoned by many
economists to be skewed in favor of the wealthy.
But the distribution of income and wealth in the U.S. has been
worsening for decades, making America the most unequal country in the developed
world. The trend, which has persisted through recessions and recoveries, and
under administrations of both parties, has put inequality at the center of U.S.
politics.
Leading candidates for the 2020 Democratic presidential
nomination, including senators Elizabeth Warren and Bernie Sanders, are
promising to rectify the tilt toward the rich with measures such as taxes on
wealth or financial transactions.
Just five states -- California, Connecticut, Florida, Louisiana
and New York, plus the District of Columbia and Puerto Rico -- had Gini indexes
higher than the national level, while the reading was lower in 36 states.
The
Democrats’ opposition to Trump is not based on his imposition of austerity
measures, or his vicious assault on immigrants. While they will not mount a
serious challenge to a proposal that will literally take food out of the mouths
of school children, they were complicit in passing the Republicans’ $1.3
trillion tax cuts in 2017 and the record $738 billion defense budget agreed to
earlier this year.
Trump
proposal denies free school meals to half a million children
The Trump
administration has provided a new analysis of how proposed changes to
eligibility for the Supplemental Nutrition Assistance Program (SNAP), commonly
known as food stamps, will impact children who participate in the National
School Lunch and School Breakfast programs. By the White House’s own admission,
these changes mean that about a half-million children would become ineligible
for free school meals.
Secretary of
Agriculture Sonny Perdue has described the changes as a tightening up of
“loopholes” in the SNAP system. But those affected by the changes are not
corporate crooks or billionaires, but hundreds of thousands of children who
stand to lose access to free meals. For many American children, free school
breakfasts and lunches make up the bulk of their nutritional intake, and they
stand to suffer permanent physical and psychological damage as a result of the
cuts.
Children receive a free
lunch at the Phoenix Day Central Park Youth Program in downtown Phoenix. (AP
Photo Matt York)
The sheer
vindictiveness of the proposed rule change is shown by the minimal savings that
would result—about $90 million a year beginning in fiscal year 2021, or a mere
0.012 percent of the estimated $74 billion annual SNAP budget. Put another way,
the savings would amount to two-thousandths of a percent of the $4.4 trillion
federal budget. But while this $90 million might appear as small change to the
oligarchs running and supporting the government, it will be directly felt as
hunger in the bellies of America’s poorest children.
SNAP provided benefits
to roughly 40 million Americans in 2018 and is the largest nutrition program of
the 15 administered by the federal Food and Nutrition Service. Along with
programs such as the Nutrition Program for Women, Infants and Children and
school breakfast and lunch programs, SNAP has been a major factor in making a
dent in the hunger of working-class families. But despite these programs’
successes, the Trump administration is seeking to claw them back, with the
ultimate aim of doing away with them altogether.
The US Department of
Agriculture (USDA), which administers the food stamp and school meal programs,
says that the new analysis presented last week is a more precise estimate of
the impact of rule changes in SNAP the USDA first announced in July. The main
component of the rule change is an end to “broad-based categorical eligibility”
for the food stamp program. Food stamps are cut off for households whose
incomes exceed 130 percent of the federal poverty line, or $33,475 per year for
a family of four, calculated after exemptions for certain expenses.
Under “broad-based
categorical eligibility,” which is currently used by over 40 states, households
can be eligible for food stamps based on their receiving assistance from other
anti-poverty programs, such as Temporary Assistance for Needy Families. Under
this rule, which has been in effect for about 20 years, states are allowed to
raise income eligibility and asset limits to promote SNAP eligibility. This
prevents many households from falling over the “benefit cliff,” which happens
when a small increase in income results in a complete cutoff of benefits,
leaving a family worse off than before the rise in income.
According to the USDA,
the rule change on broad-based eligibility would throw more than 680,000
households with children off SNAP. About 80 percent of these households have
school-age children, amounting to about 982,000 children. Of those, 55 percent,
or about 540,000, would no longer be eligible for free school meals, although
most would be eligible for reduced-price meals. About 40,000 would be required
to pay the full meal rate.
However, this does not
paint the full picture. Households thrown off SNAP would be required to apply
separately for access to free or reduced-price school meals. The USDA admits
that its cost estimates “do not account for potential state and local
administrative costs incurred due to collecting and processing household
applications … and also do not account for any increased responsibility placed
on the households to complete and submit a school meals application.”
While the Trump
administration claims that the proposed changes to SNAP eligibility are aimed
at closing up “loopholes” and stopping people from claiming benefits they’re
not entitled to, the reality is that there is no evidence that broad-based
eligibility has allowed significant numbers of people to supposedly “game the
system.” A 2012 Government Accountability Office investigation found that only
473,000 recipients, or just 2.6 percent of beneficiaries, received benefits
they would not have received without the broad-based eligibility offered by
many states.
There is consistent
evidence that SNAP contributes to a decrease in food insecurity, a condition
defined by the USDA as limited or uncertain access to adequate food. By one
estimate, SNAP benefits reduce the likelihood of food insecurity by about 30
percent and the likelihood of being very food insecure by 20 percent. Census
data has shown that SNAP also plays a critical role in reducing poverty, with
about 3.6 million Americans, including 1.5 million children, being lifted out
of poverty in 2016 as a result of the program.
The EconoFact Network
reports that SNAP has improved birth outcomes and infant health. When an
expectant mother has access to SNAP during pregnancy, particularly in the third
trimester, it decreases the likelihood that her baby will be born with low
birth weight. There is also evidence that the benefits of nutrition support can
persist well into adulthood when access to SNAP is provided before birth and
during early childhood. This can have a long-term impact on an individual’s
earnings, health and life expectancy. Conversely, food insecurity in childhood
correlates with greater risk of developing high blood pressure, diabetes,
obesity and cardiovascular disease later in life.
The proposed threat to
school lunches for half a million children has elicited little response from
Democrats in Congress, who are obsessively focused on the Trump impeachment
inquiry. Critical issues such as the health and nutrition of school children
are of little consequence to the Democratic Party, which instead gives voice to
those sections of the military intelligence apparatus that sees Trump’s
actions, particularly his sudden pullout from Syria, as endangering the global
interests of American imperialism.
The Democrats’
opposition to Trump is not based on his imposition of austerity measures, or
his vicious assault on immigrants. While they will not mount a serious
challenge to a proposal that will literally take food out of the mouths of
school children, they were complicit in passing the Republicans’ $1.3 trillion
tax cuts in 2017 and the record $738 billion defense budget agreed to earlier
this year. At $94.6 million, the cost of one of the US Air Force’s newest
and most technologically advanced fighter jets, the F-35A, would cover the $90
annual savings from depriving half a million US schoolchildren of free meals.
The Democrats’ opposition to
Trump is not based on his imposition of austerity measures, or his vicious
assault on immigrants. While they will not mount a serious challenge to a
proposal that will literally take food out of the mouths of school children,
they were complicit in passing the Republicans’ $1.3 trillion tax cuts in 2017
and the record $738 billion defense budget agreed to earlier this year.
Bloomberg:
2019 a Good Year for Wealthy; Jeff Bezos Remains on Top Despite $9 Billion Loss
in Divorce
For the already wealthy and those
who struck gold for the first time, 2019 was a good year for the rich.
Bloomberg News’ billionaire index
is reporting on the money
made this past year, including Amazon founder and Washington Post owner Jeff
Bezos remaining on the top of the heap despite a divorce settlement with his
ex-wife that led to a $9 billion decrease in his portfolio:
The leveraging of a giant
social-media presence, a catchy tune about a family of sharks and a burgeoning
collection of junkyards are just a few of the curious ways that helped make
2019 a fertile year for fortunes to blossom around the world.
Kylie Jenner became the youngest
self-made billionaire this year after her company, Kylie Cosmetics, signed an
exclusive partnership with Ulta Beauty Inc. She then sold a 51% stake for $600
million.
It has been almost two months since
the Washington Nationals captured their first World Series championship, but
people around the world are still singing along to the baseball team’s adopted
rallying cry: “Baby Shark, doo-doo doo-doo doo-doo.” The Korean family that
helped popularize the viral earworm are now worth about $125 million.
The new wealthy includes Willis
Johnson of Oklahoma who has amassed a $1.9 billion fortune from building a
network of junkyards that sell damaged automobiles, according to Bloomberg
News.
Bloomberg reported that the 500
wealthiest people around the world added $1.2 trillion to their wealth,
“boosting their collective net worth 25 percent to $5.9 trillion.”
“Leading the 2019 gains was France’s
Bernard Arnault, who added $36.5 billion as he rose on the Bloomberg index to
become the world’s third-richest person and one of three centibillionaires —
those with a net worth of at least $100 billion,” Bloomberg reported.
Ironically, Bezos was one of 52
people who had a decline in their fortune, in his case because of a divorce
settlement with MacKenzie Bezos who is now on the billionaires list ranking No.
25 with a net worth of $27.5 billion.
Bloomberg reported on the winners:
- The 172 American billionaires on the
Bloomberg ranking added $500 billion, with Facebook Inc.’s Mark Zuckerberg
up $27.3 billion and Microsoft Corp. co-founder Bill Gates up $22.7
billion.
- Representation from China continued to
grow, with the nation’s contingent rising to 54, second only to the U.S.
He Xiangjian, founder of China’s biggest air-conditioner exporter, was the
standout performer as his wealth surged 79 percent to $23.3 billion.
- Russia’s richest added $51 billion, a
collective increase of 21 percent, as emerging-market assets from
currencies to stocks and bonds rebounded in 2019 after posting big losses
a year earlier.
And “losers”:
- Rupert Murdoch’s personal fortune
dropped by about $10 billion after proceeds from Walt Disney Co.’s
purchase of Fox assets were distributed to his six children, making them
billionaires in their own right.
- Interactive Brokers Group Inc.’s Thomas
Peterffy saw his wealth slump by $2.1 billion as investors weighed a
reshaped competitive landscape for brokerage businesses after rival
Charles Schwab Corp. eliminated commissions and agreed to buy TD
Ameritrade Holding Corp.
- WeWork’s Adam Neumann saw his fortune
implode — at least on paper — as the struggling office-sharing company’s
valuation dropped to $8 billion in October from an estimated $47 billion
at the start of the year. Still, SoftBank Group Corp.’s rescue package
left Neumann’s status as a billionaire intact.
And the new billionaires:
- White Claw, the “hard seltzer” that was
the hit of the summer among U.S. millennials, helped boost Anthony von
Mandl’s net worth to $3.6 billion.
- Mastering the art of fast-food
deliveries proved rewarding for Jitse Groen, whose
soaring Takeaway.com NV lifted his wealth to $1.5 billion.
- The popularity of soy milk gave eight
members of Hong Kong’s Lo family a combined $1.5 billion.
A new Gilded Age
has emerged in America — a 21st century version.
The
wealth of the top 1% of Americans has grown dramatically in the past four decades, squeezing both
the middle class and the poor. This is in sharp contrast to Europe and Asia,
where the wealth of the 1% has grown at a more constrained pace.
The Lessons of Theodore Roosevelt
To get out of our Second Gilded Age, look no
further than how we got out of the first one.
We’ve been rocked by
scandals over the past year involving the nation’s most wealthy and powerful.
We’ve learned that a twisted multimillionaire allegedly procured and raped
girls in his Manhattan mansion and on his private Caribbean Island; entitled
celebrities and corporate plutocrats paid millions of dollars in bribes to get
their kids into elite universities; pillars of the Hollywood and media
establishments have used their stature to sexually prey upon underlings; and,
yes, our president was caught lying about possibly violating campaign finance
laws with hush money payoffs to a porn star and Playboy bunny.
This
moral corruption is accompanied by the regressive government policies of a
scandal-stained administration. President Donald Trump is rolling back programs
that protect consumers, voting rights, the environment, and competitive
commerce faster than Congress can issue subpoenas. His cabinet includes
17 millionaires, two centimillionaires, and one billionaire with a combined
worth of $3.2 billion, according to Forbes. He presides over the most
corrupt administration in American history, one marked by nepotism and
self-dealing. His so-called “A Team” of senior officials has undergone a record
75 percent turnover since he took office—most of whom
resigned under pressure, often caught up in
scandal.
Commerce
Secretary Wilbur Ross, whose net worth is estimated at $600 million, reflected the arrogance and empathy
deficit that typifies the Trump White House during last winter’s record-long
government shutdown. He suggested that federal workers just take out loans
until they got paid.
But
nobody tops the swamp king, Trump himself. Forget the sleaze, forget the
obstruction of justice, forget the constant dissing of Congress. His defying
the Constitution’s emoluments clause alone would, in a normally functioning
American democracy, make him the subject of impeachment. Instead, he flouts the
rules as if they don’t apply to him. If he gets his way and hosts next year’s
G-7 summit at Mar-a-Lago, we may as well send the Constitution to the shredder.
And yet, as more recent controversies have shown us, including the Varsity
Blues college admissions scandal and Jeffery Epstein’s sex trafficking racket,
this kind of indifference to moral values is not confined to government
grandees.
So,
what gives? Is America drowning in a marsh of unchecked corruption and
entitlement brought on by latter-day Louis XVI’s and Marie Antoinettes? Are the
uber-wealthy out of control? There’s something rotten in America and, if we
don’t fix it soon, we invite a new wave of national decline and social
disintegration.
The
good news is that we have faced similar challenges before. Some prescriptions
from a previous era may provide a lodestar for a future Democratic president to
steer the country in the right direction. As Mark Twain, who coined the term
“the Gilded Age,” once said, “The external glitter of wealth conceals a corrupt
political core that reflects the growing gap between the very few rich and the
very many poor.” He was talking about the original Gilded Age, but that
diagnosis could just as easily apply to our current American condition.
The
first Gilded Age was marked by rapid economic growth, massive immigration,
political corruption, and a high concentration of wealth in which the richest
one percent owned 51 percent of property, while the bottom 44 percent had a
mere one percent. The oligarchs at the top were popularly known as “robber
barons.”
Theodore
Roosevelt, who was president at the time, understood that economic inequality
itself becomes a driver of a dysfunctional political system that benefits the
wealthy but few others. As he once famously warned, “There can be no real political democracy unless there is
something approaching economic democracy.”
His
response to the inequities of his times, which came to define the Progressive
Era, have much to teach us now about how to sensibly tackle economic
inequality. It’s worthwhile to closely examine the Rooseveltian playbook. For
instance, his “Square Deal” made bold changes in the American workplace,
government regulation of industry, and consumer protection. These reforms
included mandating safer conditions for miners and eliminating the spoils
system in federal hiring; bringing forty-four antitrust suits against big
business, resulting in the breakup of the largest railroad monopoly, and
regulation of the nation’s largest oil company; and passing the Meat Inspection
Act and Pure Food and Drug Act, which created the FDA. He prosecuted more than twice as many antitrust suits
against monopolistic businesses than his three predecessors combined, curbing
the robber barons’ power. And he relentlessly cleaned up corruption in the
federal government. One-hundred-forty-six indictments were brought against a
bribery ring involving public timberlands, culminating in the conviction and
imprisonment of a U.S. senator, and forty-four Postal Department employees were
charged with fraud and bribery.
Now,
we are in a Second Gilded Age, facing many of the same problems, and, in some
ways, to an even greater degree. The gap between the rich and everyone else is
even greater than it was during the late 19th Century, when the richest two
percent of Americans owned more than a third of the nation’s wealth. Today, the
top one percent owns almost 40 percent of the nation’s wealth, or more than the
bottom 90 percent combined, according to the
nonpartisan National Bureau of Economic Research. The first Gilded Age saw the
rise of hyper-rich dynastic families, such as the Rockefellers, Mellons,
Carnegies, and DuPonts. Today, three individuals—Jeff Bezos, Bill Gates, and
Warren Buffett—own more wealth than the bottom half of the country combined.
And three families—the Waltons, the Kochs, and the Mars—have enjoyed a nearly
6,000 percent rise in wealth since Ronald Reagan took the oath as president,
while median U.S. household wealth over the same period has declined by three percent.
The
consequences of this wealth gap are dire. Steve Brill explains in his book Tailspin that, by
manipulating the tax and legal systems to their benefit, America’s most
educated elite, the so-called meritocracy, have built a moat that excludes the
working poor, limiting their upward mobility and increasing their sense of
alienation, which then gives rise to the populist streak that allowed
politicians like Trump to captivate enough of the American electorate.
Similarly,
psychologist Dacher Keltner’s research shows that power in and of itself is a
corrupting force. As he documents in The Power Paradox, powerful people
lie more, drive more aggressively, are more likely to cheat on their spouses,
act abusively toward subordinates, and even take candy from children. Too
often, they simply do not respect the rules.
For
example, in monitoring an urban traffic intersection, Keltner found that
drivers of the least expensive vehicles virtually always yielded
to pedestrians, whereas drivers of luxury cars yielded only about half of the
time. He cites surveys covering 27
countries that show that rich people are more likely to admit that it’s
acceptable to engage in unethical behavior, such as accepting bribes or
cheating on taxes.“The experience of power might be thought of as having
someone open up your skull and take out that part of your brain so critical to
empathy and socially appropriate behavior,” says Keltner.
That’s
why we need to reform our political system if we are to survive the rampant
amorality and lawlessness of the Second Gilded Age. Simply put, so very few
should not wield so much sway over so many.
One
of the first priorities of an incoming administration should be to narrow the
wealth and income gap. French economist Thomas Picketty favors a progressive
annual wealth tax of up to two percent, along with a progressive income tax as
high as 80 percent on the biggest earners to reduce inequality and avoid
reverting to “patrimonial capitalism” in which inherited
wealth controls much of the economy and could lead essentially to oligarchy.
The
leading 2020 Democratic candidates favor raising taxes, as well. Elizabeth
Warren has proposed something commensurate to Picketty’s two percent wealth tax
for those worth more than $50 million, and a three percent annual tax on
individuals with a net worth higher than $1 billion. She has also proposed
closing corporate tax loopholes. Joe Biden wants to restore the top individual
income tax rate to a pre-Trump 39.6 percent and raise capital gains taxes.
Bernie Sanders has proposed an estate tax on the wealth of the top 0.2 percent
of Americans.
Following
Theodore Roosevelt’s example, we need to aggressively root out the tangle of
corruption brought on by Trump and his minions. This has already begun with
multiple and expanding investigations led by House Democrats into the
metastasizing malfeasance within the Trump administration. Trump’s successor,
however, should work with Congress to appoint a bipartisan anti-corruption task
force to oversee prosecutions and draw up reform legislation to prevent future
abuses.
“Of
all forms of tyranny, the least attractive and the most vulgar is the tyranny
of mere wealth, the tyranny of a plutocracy,” Roosevelt once warned. The free
market has made America the great success it is today. But history has shown
that unconstrained capitalism and a growing wealth gap leads to an unhealthy
concentration of wealth in the hands of a few. When the gap between the haves
and the have-nots goes unchecked, populism takes hold, leading to the election
of dangerous demagogues like Trump, and the disastrous politics they bring with
them. It is not too late to reverse course. But first, we need to re-learn the
lessons from our first Gilded Age if we are going to get out of the current
one.
Economists:
America’s Elite Pay Lower Tax Rate Than All Other Americans
The wealthiest Americans are paying a lower
tax rate than all other Americans, groundbreaking analysis from a pair of
economists reveals.
For the first time on record, the
wealthiest 400 Americans in 2018 paid a lower tax rate than all of the income
groups in the United States, research highlighted by the New York Times from
University of California, Berkeley, economists Emmanuel Saez and Gabriel
Zucman finds.
The analysis concludes that the country’s
top economic elite are paying lower federal, state, and local tax rates than
the nation’s working and middle class. Overall, these top 400 wealthy Americans
paid just a 23 percent tax rate, which the Times‘ op-ed columnist David Leonhardt notes
is a combined tax payment of “less than one-quarter of their total income.”
This 23 percent tax rate for the
rich means their rate has been slashed by 47 percentage points since 1950 when
their tax rate was 70 percent.
(Screenshot via the New York Times)
The analysis finds that the 23
percent tax rate for the wealthiest Americans is less than every other income
group in the U.S. — including those earning working and middle-class incomes,
as a Times graphic
shows.
Leonhardt writes:
For middle-class and poor families,
the picture is different. Federal income taxes have also declined
modestly for these families, but they haven’t benefited much if at all from the
decline in the corporate tax or estate tax. And they now pay more
in payroll taxes (which finance Medicare and Social Security) than in
the past. Over all, their taxes have remained fairly flat. [Emphasis added]
The report comes as Americans
increasingly see a growing divide between the rich and working class, as the
Pew Research Center has found.
Sen. Josh Hawley (R-MO), the leading
economic nationalist in the Senate, has warned against the Left-Right
coalition’s consensus on open trade, open markets, and open borders, a plan
that he has called an economy that works solely for the elite.
“The same consensus says that we
need to pursue and embrace economic globalization and economic integration at
all costs — open markets, open borders, open trade, open everything no matter
whether it’s actually good for American national security or for American
workers or for American families or for American principles … this is the
elite consensus that has governed our politics for too long and what it has
produced is a politics of elite ambition,” Hawley said in an August speech in
the Senate.
That increasing worry of rapid
income inequality is only further justified by economic research showing a rise in
servant-class jobs, strong economic recovery for elite zip codes but not for
working-class regions, and skyrocketing wage growth for the billionaire class
at 15 times the rate of other Americans.
Census Says U.S. Income Inequality Grew ‘Significantly’ in 2018
(Bloomberg) -- Income inequality in America widened
“significantly” last year, according to a U.S. Census Bureau report published
Thursday.
A measure of inequality known as the Gini index rose to 0.485
from 0.482 in 2017, according to the bureau’s survey of household finances. The
measure compares incomes at the top and bottom of the distribution, and a score
of 0 is perfect equality.
The 2018 reading is the first to incorporate the impact of
President Donald Trump’s end-2017 tax bill, which was reckoned by many
economists to be skewed in favor of the wealthy.
But the distribution of income and wealth in the U.S. has been
worsening for decades, making America the most unequal country in the developed
world. The trend, which has persisted through recessions and recoveries, and
under administrations of both parties, has put inequality at the center of U.S.
politics.
Leading candidates for the 2020 Democratic presidential
nomination, including senators Elizabeth Warren and Bernie Sanders, are
promising to rectify the tilt toward the rich with measures such as taxes on
wealth or financial transactions.
Just five states -- California, Connecticut, Florida, Louisiana
and New York, plus the District of Columbia and Puerto Rico -- had Gini indexes
higher than the national level, while the reading was lower in 36 states.
The
Democrats’ opposition to Trump is not based on his imposition of austerity
measures, or his vicious assault on immigrants. While they will not mount a
serious challenge to a proposal that will literally take food out of the mouths
of school children, they were complicit in passing the Republicans’ $1.3
trillion tax cuts in 2017 and the record $738 billion defense budget agreed to
earlier this year.
Trump
proposal denies free school meals to half a million children
The Trump
administration has provided a new analysis of how proposed changes to
eligibility for the Supplemental Nutrition Assistance Program (SNAP), commonly
known as food stamps, will impact children who participate in the National
School Lunch and School Breakfast programs. By the White House’s own admission,
these changes mean that about a half-million children would become ineligible
for free school meals.
Secretary of
Agriculture Sonny Perdue has described the changes as a tightening up of
“loopholes” in the SNAP system. But those affected by the changes are not
corporate crooks or billionaires, but hundreds of thousands of children who
stand to lose access to free meals. For many American children, free school
breakfasts and lunches make up the bulk of their nutritional intake, and they
stand to suffer permanent physical and psychological damage as a result of the
cuts.
Children receive a free
lunch at the Phoenix Day Central Park Youth Program in downtown Phoenix. (AP
Photo Matt York)
The sheer
vindictiveness of the proposed rule change is shown by the minimal savings that
would result—about $90 million a year beginning in fiscal year 2021, or a mere
0.012 percent of the estimated $74 billion annual SNAP budget. Put another way,
the savings would amount to two-thousandths of a percent of the $4.4 trillion
federal budget. But while this $90 million might appear as small change to the
oligarchs running and supporting the government, it will be directly felt as
hunger in the bellies of America’s poorest children.
SNAP provided benefits
to roughly 40 million Americans in 2018 and is the largest nutrition program of
the 15 administered by the federal Food and Nutrition Service. Along with
programs such as the Nutrition Program for Women, Infants and Children and
school breakfast and lunch programs, SNAP has been a major factor in making a
dent in the hunger of working-class families. But despite these programs’
successes, the Trump administration is seeking to claw them back, with the
ultimate aim of doing away with them altogether.
The US Department of
Agriculture (USDA), which administers the food stamp and school meal programs,
says that the new analysis presented last week is a more precise estimate of
the impact of rule changes in SNAP the USDA first announced in July. The main
component of the rule change is an end to “broad-based categorical eligibility”
for the food stamp program. Food stamps are cut off for households whose
incomes exceed 130 percent of the federal poverty line, or $33,475 per year for
a family of four, calculated after exemptions for certain expenses.
Under “broad-based
categorical eligibility,” which is currently used by over 40 states, households
can be eligible for food stamps based on their receiving assistance from other
anti-poverty programs, such as Temporary Assistance for Needy Families. Under
this rule, which has been in effect for about 20 years, states are allowed to
raise income eligibility and asset limits to promote SNAP eligibility. This
prevents many households from falling over the “benefit cliff,” which happens
when a small increase in income results in a complete cutoff of benefits,
leaving a family worse off than before the rise in income.
According to the USDA,
the rule change on broad-based eligibility would throw more than 680,000
households with children off SNAP. About 80 percent of these households have
school-age children, amounting to about 982,000 children. Of those, 55 percent,
or about 540,000, would no longer be eligible for free school meals, although
most would be eligible for reduced-price meals. About 40,000 would be required
to pay the full meal rate.
However, this does not
paint the full picture. Households thrown off SNAP would be required to apply
separately for access to free or reduced-price school meals. The USDA admits
that its cost estimates “do not account for potential state and local
administrative costs incurred due to collecting and processing household
applications … and also do not account for any increased responsibility placed
on the households to complete and submit a school meals application.”
While the Trump
administration claims that the proposed changes to SNAP eligibility are aimed
at closing up “loopholes” and stopping people from claiming benefits they’re
not entitled to, the reality is that there is no evidence that broad-based
eligibility has allowed significant numbers of people to supposedly “game the
system.” A 2012 Government Accountability Office investigation found that only
473,000 recipients, or just 2.6 percent of beneficiaries, received benefits
they would not have received without the broad-based eligibility offered by
many states.
There is consistent
evidence that SNAP contributes to a decrease in food insecurity, a condition
defined by the USDA as limited or uncertain access to adequate food. By one
estimate, SNAP benefits reduce the likelihood of food insecurity by about 30
percent and the likelihood of being very food insecure by 20 percent. Census
data has shown that SNAP also plays a critical role in reducing poverty, with
about 3.6 million Americans, including 1.5 million children, being lifted out
of poverty in 2016 as a result of the program.
The EconoFact Network
reports that SNAP has improved birth outcomes and infant health. When an
expectant mother has access to SNAP during pregnancy, particularly in the third
trimester, it decreases the likelihood that her baby will be born with low
birth weight. There is also evidence that the benefits of nutrition support can
persist well into adulthood when access to SNAP is provided before birth and
during early childhood. This can have a long-term impact on an individual’s
earnings, health and life expectancy. Conversely, food insecurity in childhood
correlates with greater risk of developing high blood pressure, diabetes,
obesity and cardiovascular disease later in life.
The proposed threat to
school lunches for half a million children has elicited little response from
Democrats in Congress, who are obsessively focused on the Trump impeachment
inquiry. Critical issues such as the health and nutrition of school children
are of little consequence to the Democratic Party, which instead gives voice to
those sections of the military intelligence apparatus that sees Trump’s
actions, particularly his sudden pullout from Syria, as endangering the global
interests of American imperialism.
The Democrats’
opposition to Trump is not based on his imposition of austerity measures, or
his vicious assault on immigrants. While they will not mount a serious
challenge to a proposal that will literally take food out of the mouths of
school children, they were complicit in passing the Republicans’ $1.3 trillion
tax cuts in 2017 and the record $738 billion defense budget agreed to earlier
this year. At $94.6 million, the cost of one of the US Air Force’s newest
and most technologically advanced fighter jets, the F-35A, would cover the $90
annual savings from depriving half a million US schoolchildren of free meals.
The Democrats’ opposition to
Trump is not based on his imposition of austerity measures, or his vicious
assault on immigrants. While they will not mount a serious challenge to a
proposal that will literally take food out of the mouths of school children,
they were complicit in passing the Republicans’ $1.3 trillion tax cuts in 2017
and the record $738 billion defense budget agreed to earlier this year.
No comments:
Post a Comment