Greedy Capitalists Hogging Wealth Are Not Causing Income Inequality

[Non-RedNeck Westsider]

(Banging head on desk) I give up!

I hate to break it to you, but the desk won't feel a thing.

[Dog Walker]

(Banging head on desk) I give up!

I hate to break it to you, but the desk won't feel a thing.

I know, but Bill isn't within reach. He's either pretending to be obtuse or is one of those people who can't count to twenty-one without playing with themselves.

[finehoe]

Oligarchy, American Style
By PAUL KRUGMAN
Published: November 3, 2011

Inequality is back in the news, largely thanks to Occupy Wall Street, but with an assist from the Congressional Budget Office. And you know what that means: It’s time to roll out the obfuscators!

Anyone who has tracked this issue over time knows what I mean. Whenever growing income disparities threaten to come into focus, a reliable set of defenders tries to bring back the blur. Think tanks put out reports claiming that inequality isn’t really rising, or that it doesn’t matter. Pundits try to put a more benign face on the phenomenon, claiming that it’s not really the wealthy few versus the rest, it’s the educated versus the less educated.

So what you need to know is that all of these claims are basically attempts to obscure the stark reality: We have a society in which money is increasingly concentrated in the hands of a few people, and in which that concentration of income and wealth threatens to make us a democracy in name only.

The budget office laid out some of that stark reality in a recent report, which documented a sharp decline in the share of total income going to lower- and middle-income Americans. We still like to think of ourselves as a middle-class country. But with the bottom 80 percent of households now receiving less than half of total income, that’s a vision increasingly at odds with reality.

In response, the usual suspects have rolled out some familiar arguments: the data are flawed (they aren’t); the rich are an ever-changing group (not so); and so on. The most popular argument right now seems, however, to be the claim that we may not be a middle-class society, but we’re still an upper-middle-class society, in which a broad class of highly educated workers, who have the skills to compete in the modern world, is doing very well.

It’s a nice story, and a lot less disturbing than the picture of a nation in which a much smaller group of rich people is becoming increasingly dominant. But it’s not true.

Workers with college degrees have indeed, on average, done better than workers without, and the gap has generally widened over time. But highly educated Americans have by no means been immune to income stagnation and growing economic insecurity. Wage gains for most college-educated workers have been unimpressive (and nonexistent since 2000), while even the well-educated can no longer count on getting jobs with good benefits. In particular, these days workers with a college degree but no further degrees are less likely to get workplace health coverage than workers with only a high school degree were in 1979.

So who is getting the big gains? A very small, wealthy minority.

The budget office report tells us that essentially all of the upward redistribution of income away from the bottom 80 percent has gone to the highest-income 1 percent of Americans. That is, the protesters who portray themselves as representing the interests of the 99 percent have it basically right, and the pundits solemnly assuring them that it’s really about education, not the gains of a small elite, have it completely wrong.

If anything, the protesters are setting the cutoff too low. The recent budget office report doesn’t look inside the top 1 percent, but an earlier report, which only went up to 2005, found that almost two-thirds of the rising share of the top percentile in income actually went to the top 0.1 percent â€" the richest thousandth of Americans, who saw their real incomes rise more than 400 percent over the period from 1979 to 2005.

Who’s in that top 0.1 percent? Are they heroic entrepreneurs creating jobs? No, for the most part, they’re corporate executives. Recent research shows that around 60 percent of the top 0.1 percent either are executives in nonfinancial companies or make their money in finance, i.e., Wall Street broadly defined. Add in lawyers and people in real estate, and we’re talking about more than 70 percent of the lucky one-thousandth.

But why does this growing concentration of income and wealth in a few hands matter? Part of the answer is that rising inequality has meant a nation in which most families don’t share fully in economic growth. Another part of the answer is that once you realize just how much richer the rich have become, the argument that higher taxes on high incomes should be part of any long-run budget deal becomes a lot more compelling.

The larger answer, however, is that extreme concentration of income is incompatible with real democracy. Can anyone seriously deny that our political system is being warped by the influence of big money, and that the warping is getting worse as the wealth of a few grows ever larger?

Some pundits are still trying to dismiss concerns about rising inequality as somehow foolish. But the truth is that the whole nature of our society is at stake.

http://www.nytimes.com/2011/11/04/opinion/oligarchy-american-style.html?_r=1

[buckethead]

(Banging head on desk) I give up!

I hate to break it to you, but the desk won't feel a thing.

I know, but Bill isn't within reach. He's either pretending to be obtuse or is one of those people who can't count to twenty-one without playing with themselves.

Bill is clinging to a version of history that he bought from others. It's not easy to dump it, once you've bought into it. The good news is that he's in the conversation. When one has facts to present, one should present them.

He is factually correct about 50% of Americans with zero federal income tax liability.

Others have shown where income taxes on the uber wealthy come to a smaller percentage of income once you factor in payroll taxes and cost of survival. He gets it. We shouldn't expect an immediate reversal on an anonymous message board however.

I can learn from Bill, and he can learn from me.

It's a good thing.

Keep coming back Bill.

[Dog Walker]

Well said, Bucket!

[Timkin]

I must be missing something when I am reading this.  Did I understand that 50% of the people do not pay income tax???

Is that 50% unemployed or making income below the taxable level?

Sorry . I really don't want to look like a total moron but I think I read that it is fact that 50% have no tax liability.. to me this means they pay no tax.

?

[Timkin]

Oh no.. not at all. I just find the figure of 50% staggering, not to mention misleading.  I guess factoring in Retirement age, young people who do not or are too young to work, unemployed , what have you, I guess it could be.   It just seems like ,as i said a staggering percentage but I guess it is not impossible.

[Timkin]

makes sense when you put it that way. 

[NotNow]

In the interest of truth, Politifact explains that the "50% don't pay taxes" number refers to households, not individuals.  So in fact, 50% of households don't pay income tax.  Whether the taxing system is fair or not I will leave to previous posters. 

I like the FAIR tax.

http://www.politifact.com/florida/statements/2011/sep/16/debbie-wasserman-schultz/debbie-wasserman-schultz-says-wolf-blitzer-was-wro/

[BridgeTroll]

Never mind that there are more ways than military service to 'serve' this country or our society.

I would certainly like to see more of this...

[BridgeTroll]

Never mind that there are more ways than military service to 'serve' this country or our society.

I would certainly like to see more of this...

How do you mean?

Paid opportunities... with benefits similar to the military... providing service to the country.  Not everyone is able to serve in the military.  Contrary to popular belief... they are pretty selective.  Those who do not make the grade to serve in a military capacity should be able to serve in some other form.

One example could be service in the National Park service... or some kind of education support service.  I would welcome anyones ideas for such a program...

[NotNow]

In the interest of truth, Politifact explains that the "50% don't pay taxes" number refers to households, not individuals.  So in fact, 50% of households don't pay income tax.  Whether the taxing system is fair or not I will leave to previous posters. 

I like the FAIR tax.

http://www.politifact.com/florida/statements/2011/sep/16/debbie-wasserman-schultz/debbie-wasserman-schultz-says-wolf-blitzer-was-wro/

In point of fact, politifact is incorrect.  A quick reference with the GAO clears that up.

Source? 

I am simply quoting a website.  I checked some others and found that "household" is the commonly accepted format.  And since that is how we pay our income taxes, it seems to make sense:

http://money.cnn.com/2011/04/14/pf/taxes/who_pays_income_taxes/index.htm

http://www.cbo.gov/publications/collections/taxdistribution.cfm

But I would be interested in seeing the GAO source that you mentioned.

[NotNow]

Never mind that there are more ways than military service to 'serve' this country or our society.

I would certainly like to see more of this...

How do you mean?

Paid opportunities... with benefits similar to the military... providing service to the country.  Not everyone is able to serve in the military.  Contrary to popular belief... they are pretty selective.  Those who do not make the grade to serve in a military capacity should be able to serve in some other form.

One example could be service in the National Park service... or some kind of education support service.  I would welcome anyones ideas for such a program...

Anyone can serve now by volunteering.  There is the Peace Corps, which offers an avenue of service for all ages.  There is the Job Corps, which offers free occupational training and education for young people.

I don't personally believe that there is any way to replicate an institution such as the US Military in any civilian service agency.

[NotNow]

I tend to think of military service as a compelling example of selfless and honorable service to one's country.  Service in which some citizens sacrifice in ways most other citizens will never know, up to and including their own life.  I can think of no better nor more honorable way to serve "our society".

[NotNow]

You are mistaken.  No other occupation asks for such selflessness and sacrifice in peacetime.  Young men and women stand ready tonight, and every night in cesspools, frozen wastelands, deserts, and oceans around the world so that we can sit safely at home and type these words.  In time of war, many of those same people will place their bodies, their future and their lives on the line.  This can not be marginalized into "just like any other career". 

What you call "government directed violence" is actually defense of the national interest of our country, at times, defense of our countries and even our personal survival.  It is not "evil", it is honorable and very, very necessary.  It always will be.

And though despised by some, marginalized and belittled by others, US service men and women continue to make those sacrifices, even make a career of it.  Not for money, but usually because they hear the call for service and see the value in what they do. 

It is a difficult, dangerous, and sometimes dreadful duty, borne by hero's all.  And I admire those that are willing to bear that burden for all of us.