Monday, March 11, 2013

Wealth Tax. D'uh.

A while back I saw this video about the wealth inequality in the United States.  It reminded me of the old economic adage that if aliens had come to earth and collected all the wealth and evenly distributed it among humans and left for 50 years, when they came back the wealth would be concentrated into a few individuals. That's just a natural trait among humans: some are better at accumulating assets than others.

But there really is more to the story of wealth distribution. The way wealth is distributed varies depending on what is valued within the society at the current time. I doubt Bill Gates would have been as successful writing software had he been born in Mongolia under Genghis Khan 800 years ago. Charles Manson, on the other hand, might have parlayed his psychopathic conscious-less killing into a lieutenant-ship. Who knows?

Christopher at Christopher's Apologies had an odd take, a head scratcher. He presented the above video and basically shrugged off the epic wealth inequality, saying
"Just so we’re clear: there are no rules, laws, or regulations governing who can have money in this country or how much they can have.  So then what is it that prevents people from moving from one economic stratum to the next? Why is it so many people believe government needs to enter into the fray in order to level the playing field and redistribute wealth on behalf of the lowest income earners?"
Huh? Government redistributes wealth "on behalf of the lowest income earners"?  I have no idea what universe Christopher is observing. Did he even watch the video? Wealth is not being re-distributed to the lowest earners at all. That's the point. Nearly every single penny of efficiency squeezed out by the huge gains in worker productivity has been transferred directly into the bank accounts of the wealthiest 5%. I guess the Wal-Mart heirs deserve it all, Christopher is just sorry we cannot give them more.

We have socialized risks made by banks and oil companies and really every corporation, yet they keep their profits private. When they make money, great, they get to keep it, less of course some nominal income tax which is lower than mine....but when they lose money, oops, they need a bailout.  Nobody goes to jail, nobody even loses a bonus check. The laws are ALL in their favor.

Christopher adds, 
"My second problem with the video (and it’s premise) is that it stokes the fires of greed in people.  I won’t say that it creates greed in people since everyone has that flaw as part of their sinful nature, but media with this type of content pours gasoline on the greedy fire that burns in all of us."
While I'm not 100% sure his point here, I think he is concerned with "stoking" the greed of the less wealthy who are apparently pining for a free giveaway from the wealthy. The video is really just giving a blow-by-blow account of the statistics of the wealth distribution, and I think we can determine who has the greed and who doesn't. 

From the NYT:
A common statistical measure of inequality is the Gini coefficient, a number between 0 and 100 that rises with greater disparities. From the late 1970s through the early 1990s, the Census Bureau recorded Gini coefficients for income in the low 40s. Yet by 1992, the Gini coefficient for wealth had risen into the mid-70s, according to data from the Federal Reserve.
Since then, it has risen steadily, to about 80 as of 2010. In 1992, the top tenth of the population controlled 20 times the wealth controlled by the bottom half. By 2010, it was 65 times. Our graduated income-tax system redistributes a small amount of money every year but does little to slow the polarization of wealth.
These are stunning changes. The global financial crisis did make a dent in the assets of the wealthiest American families, but its effects for the bottom half were utterly destructive; the number of owner-occupied homes has fallen by more than a million since 2007. People in different socioeconomic strata are living ever more different lives, with dangerous results for society: erosion of empathy, widening of rifts and undermining of meritocracy.
History tells us that at some point the fabric of society deteriorates when a few have all the wealth-- think Czarist Russia or France circa 1790. Maybe we're not close to that point but that's the question. How soon until the the aliens come back to see how we've reallocated the wealth? I'm not clear at all on how greedy tendencies of the poor are a problem.
Robert Reich echos the New York Times on this topic, calling for a wealth tax just like property taxes that we all pay. Why not?

Instead we tax income and not wealth. We give a  negative incentive to work and produce, but Paris Hilton gets a pass. I can hear all the Rand-bots predicting that the wealthy will "Go Galt" and move their wealth off-shore and property values will sink and the apocalypse will commence. Really? Where else are the wealthy going to put their assets to be safe and their families protected? Mali? 

I comment not because I see anybody addressing the wealth inequality which is growing in logarithmic fashion-- we know who makes the rules. I just find it interesting that given all the insanity that has occurred with trillions in bailouts and transfers from our Treasury to the connected corporate elite, S&P profits at record levels, stock prices reaching new all-time highs, the wealthy getting wealthier and the poor getting poorer, yet we cannot collect enough to balance our budget...and we can STILL find apologists like Christopher who see nothing wrong here...move along.   

And, oh yeah, the poor are greedy.

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