Thursday, December 09, 2010

So what would be hurt if America simply eliminated wealthy people?

Ted Frier suggests a really different relationship between America's rich and the rest of us.
In an essay last July that asked the provocative question: "have the American people outlived their usefulness to the rich?" one-time William F. Buckley protégé Michael Lind may have put his finger on why today's Republicans can so unashamedly insist on billions for the wealthy while guiltlessly threatening to cut off any help at all for Americans who are out of work.

Time was, says Lind, when the rich and everyone else co-existed according to an ancient and honored social contract: "In return for receiving a disproportionate amount of the gains from economic growth in a capitalist economy, the rich paid a disproportionate percentage of the taxes needed for public goods and a safety net for the majority."

The economic elite needed ordinary people to consume the products put out by the factories the rich invested in. The upper class also needed commoners to be foot soldiers to fight its wars against "totalitarian empires that would have created a world order hostile to a market economy."

But globalization has eliminated the first reason for the rich to support this bargain, says Lind, while the emergence of quasi-public mercenary armies like Blackwater has undermined the second.

"And this marks a historic change in the relationship between capital and labor in the US," Lind insists.

Even the robber barons of the Gilded Age generally recognized the necessity of a rapprochement with labor, says Lind, because the rich lived near the working classes, depended on the domestic American market for their fortunes and were always generally alert to labor strikes and the prospect of revolution should their exploitation of the masses get out of hand.

But this is no longer the case. "Many of the highest-paid individuals on Wall Street have grown rich through activities that have little or no connection with the American economy," writes Lind. "They can flourish even if the US declines, as long as they can tap into growth in other regions of the world."

This is the central argument against supply-side wizardry and extending tax cuts for the rich.

Elites can make money from factories in China by selling to consumers in India, says Lind "while relying entirely on immigrant servants at one of several homes around the country." Between the profits they can earn from overseas factories in countries policed by brutal autocracies, and factories in the US manned by non-voting immigrant labor, "the only thing missing is a non-voting immigrant mercenary army whose legions can be deployed in foreign wars without creating grieving parents, widows and children who vote in American elections." That, maybe in part, is what the Dream Act is about.

There was a time when rich and poor alike subscribed to the promise that a rising tide raises all boats. But American investors and corporate managers no longer need the rest of America to prosper, says Lind, since "they can enjoy their stream of profits from factories in China while shutting down factories in the US." And if Chinese workers have the impertinence to demand higher wages, says Lind, American corporations can find low-wage labor elsewhere.

It may be true that the rich are invested in foreign corporations that do most of their business in the US Market. But this too is changing.

"American consumers are tapped out," says Lind, "and as long as they are paying down their debts from the bubble years, private household demand for goods and services will grow slowly at best in the United States. In the long run, the fastest-growing consumer markets, like the fastest-growing labor markets, may be found in China, India and other developing countries."

The point is, says Lind: If the rich do not depend for their wealth - or even their security -- on American workers, consumers and soldiers "then it is hardly surprising that so many of them should be so hostile to paying taxes to support the infrastructure and the social programs that help the majority of the American people. The rich don't need the rest anymore."
This is an interesting and in fact realistic evaluation of the relationship between the American wealthy and the rest of us. But Ted is asking if the wealthy need the rest of us. That question can easily be reversed! What do we need the wealthy for??

Face it. If the top 2% of the American population own over 40% of the wealth in America, then the American wealthy are well on the way to becoming the new American aristocracy. Aristocracy - That's the American government! That means that America is on the way to no longer being a democracy.

Any surprise in that? The current American federal government is controlled by the 100 wealthy people in the Senate, and the American Congress is controlled by the K-Street lobbyists for the wealthy. Who provides the money used by the candidates for President? largely America's wealthy, that's who.

Why is a major element of the conservative American party demanding elimination of the only American tax on wealth - the inheritance tax? Come on. The children of the wealthy did absolutely nothing to earn their inheritance! All they do is fight to protect that wealth. That is the definition of being conservative. America is no longer a meritocracy in which people personally earn what they are paid. When 2% of the population mostly inherit their wealth and own over 40% of America's wealth, that is an aristocracy that is controlled by those who never earned what they control.

Why are we currently sending Americans to fight in Afghanistan? We were attacked in 9/11 as a direct blowback from the political operations of American oil companies in the Middle East. The Mullah's in Iran took power because they were rejecting the Shah which BP and the American CIA had placed into power to replace the legitimately elected Iranian Prime Minister Mohammad Mosaddegh He threatened to nationalize Iran's oil companies.
From my experience both inside and outside the Republican Party, I've gradually come to believe that one of the major differences separating Republicans from Democrats is that Democrats view service in Congress as the pinnacle of their careers while Republicans look at their time on Capitol Hill as an internship - a chance to do their time, pay their dues and build up a resume of favors and chits they can cash in later for a far more lucrative second career as lobbyist or corporate hack.

Yes, Democrats pass through the same revolving door between government and K Street that Republicans push on. But Republican behavior while still in government seems far more devoted towards creating jobs for themselves when that Big Day finally arrives and they get to make the jump to an appreciative corporate sector.

I am thinking, of course, of parasites like Wendy Lee Gramm (wife of former Senator Phil), the one-time federal regulator with the Commodity Futures Trading Commission who enabled Enron to become the 8th largest corporation in American, and a ticking economic time bomb, when she gave its corrupt owners a waiver to trade energy derivatives without oversight -- and then jumped into bed with the company as a member of Enron's board and, adding insult to injury, its audit committee.

I am also thinking of former Louisiana Republican Congressman Billy Tauzin. As chairman of the House Energy and Commerce Committee, Tauzin was instrumental in writing a Medicare drug benefit into the 2003 bill that specifically barred the government from negotiating drug prices for Medicare recipients. With that chit for Big Pharma firmly in hand, Tauzin was able to cash in his time in government for a position as president of the Pharmaceutical Research and Manufacturers of America.

The point is, examples of corruption like these are now so commonplace they often pass without notice or comment and are very nearly to the point of being accepted as the new political normal.
Consider this carefully. Nothing is enacted today in American politics unless the very wealthy get their share of it and permit it. The American wealthy killed the public option during the effort to create universal health care.
Business lobbyists aren't supposed to act as surrogate whips for the Republican leadership or personally draft statutes themselves. "But it turns out there's no actual law against it."

Scientists and bureaucrats are expected to testify truthfully to Congress when asked. "But it turns out that no regulation prevents political appointees from keeping them muzzled and providing bowdlerized testimony in their place."

All of these things, says Drum, "serve a single purpose: passing business-friendly pork as efficiently and as quietly as possible. Tax bills, energy bills, Medicare prescription bills: all become mere vehicles for corporate largesse."

And when push comes to shove Republicans simply lie.

"Lying has become a systematic necessity," writes Chait. The reason is obvious. "If the Republicans had truly believed that the public shared their goals, businessmen would simply have come forward to proudly announce their support for the tax cuts, explaining that rewarding wealth and success would create a rising tide for one and all."

But they didn't. Instead, says Drum, Republicans sold their tax cuts as a way of giving back the surplus to hardworking Americans. Then Republicans sold it as a way to fight recession. Then they sold it as a way of making the tax code fairer to the poor. "Any rationale would do," says Drum, "except the real one." And America invaded Iraq to destroy Weapons of Mass Destruction.

You can tell that America's New Oligarchy and their Republican house servants are waging class war against the rest of America today because they squeal "class warfare!!!" whenever their shenanigans are found out and exposed.

Eventually, says Drum, someone needs to notice "that Republican policy is no longer rooted in any kind of recognizable conservative principle" and is instead "little more than a program of preventing the middle class from sharing in the gains of economic growth and divvying up the resulting loot among the richest of the rich."


Americans, says Lind, need to begin exercising their unused political authority to demand that their elected representatives give them a new social contract that requires American corporations and America's economic elites to create jobs in this country, for American workers.

And if that doesn't interest corporate shareholders and their managers, says Lind, then perhaps they can do without those legal privileges which are granted to them courtesy of the sovereign American people - such as the legal right to form corporations and do business at all.

The American people, says Lind in short, need to start insisting "that the United States will be a democratic republican nation-state, not a post-national rentier oligarchy.
Really. What do we need the super wealthy for anyway? All that want from the rest of us now is our bodies in their wars to protect their international wealth.

It's time to return to a 90% inheritance tax. America should return to being a middle class nation with little room for power controlled by inherited (read unearned) wealth!

1 comment:

rashid1891 said...

But this is no longer the case. "Many of the highest-paid individuals on Wall Street have grown rich through activities that have little or no connection with the American economy," writes Lind. "They can flourish even if the US declines, as long as they can tap into growth in other regions of the world."