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13 February 2012  -  Economy

Where Do You Suppose The Wealth Of The One Percent Comes From?

By
4:08pm

The 99% - photo by Christopher Smith

Picture the total wealth of the United States as a giant pie. There are a few people in this country who have slices of pie so large you could combine the slices of millions of average Americans and it still would not equal the massive slices owned by these few wealthy elites.

That is a lot of pie!

It is a fact that the percentage of total wealth in this country owned by the top 1% is greater now than it has been since before the Great Depression. If the share of the pie owned by the 1% has increased what does that mean for the rest of us?

We all get less pie.

It is ridiculous to think that members of the 1% work THAT much harder than the rest of the population and it is equally ridiculous to think they work THAT much harder than their predecessors 30, 40 and 50 years ago.

In fact, it could be the opposite.

Look at CEOs who have all but ruined a company before walking away with tens of millions of dollars in compensation. Look at Republican presidential candidate Mitt Romney who makes an 8-figure income from his wealth. He doesn’t actually work. Instead he makes tens of millions each year from the investment income he receives from his hundreds of millions in wealth. Oh, and he only pays an effective tax rate of 13.9%. What’s your effective tax rate?

See a pattern here? … The game is rigged.

Money equals power and the people with the money are using that power to shape the laws and tax code to their benefit. The result of this manipulation is that they get richer while the rest get poorer.

This is all the result of a failed economic theory known by names such as supply-side, trickle-down, Reaganomics or as George H. W. Bush once called it, “voodoo economics“. If wealth doesn’t trickle down – and it doesn’t - that means tax breaks and legislation which benefit only the rich will result in more of the country’s wealth being distributed to people who are already obscenely wealthy. And since they sit on this wealth earning investment income that means less money being poured into the economy which means fewer jobs and lower wages for the rest of us.

Rule by oligarchy.

How much longer will we allow this country to be run by supply-side ”trickle-down” economic theory? Will the people who subscribe to this failed theory ever wake up and realize the damage being done to the poor and middle class? How much more damage needs to be done before people can admit they are wrong?

Unfortunately I don’t think we will like the answers to these questions.

In practice, supply-side economics has been very good to the 1%. Since many members of congress are in the 1%, approaching the 1% or are friends of the 1%, I don’t expect we will see them decry the failure of Reaganomics anytime soon.

It turns out all the Republicans howling about class warfare and wealth redistribution were right, only they got it backwards. The redistribution is to the top 1%. The warfare is being inflicted upon the rest of us.

dks

Recommended reading: Saving the Middle Class by Robert Kuttner

photo by Christopher Smith via Flickr

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  • think again

    You don’t think Mitt Romney works?  You must have a very narrow definition of work.  Does Warren Buffett work?  Did Steve Jobs work?

    And how about some credible sources for your idea that the 1% has more of the wealth that at any time since before the great depression?  It may be true, but I certainly wouldn’t believe it just because you write it.

    What is your solution to our “problems”, a “living wage” and a “wage cap”.  Or are you like Michael Moore who has no solutions but wants to invent a new economic system?

    And you never answered your own question about where the wealth of the 1% comes from except to imply some how that it was stolen by manipulating government policy. There was nothing to support that idea.

    If “supply side” and “voodoo economics” caused the top 1% to have so much of the “pie” then how did they have a larger percantage before the great depression? 

    You seem to be saying that republican tax policy is only about giving tax cuts to the rich, but if you look at the federal taxes paid by the lowest 20% it went way down as a result of republican tax policies.  Also, by Obama’s own admission, in dollar amounts, the “Bush tax cuts for the wealthy” went about 75-80% to people not making more than $200k per year/$250k for married. 

    Many of your statements here are  based on an misunderstanding of republican ideas.  I would try to set you straight, but I can see from the articles you have written that you aren’t open to the idea that the other side might have some credible ideas.

    • http://leftcall.com/ David K. Sutton

      You missed the point. Romney doesn’t have to work now. The income he makes is investment income on his hundreds of millions of wealth. Given the fact that he was born into wealth, that means he never actually HAD to work. That doesn’t mean he never did work. Of course he has had jobs. But do you honestly think investment income should be taxed a rate lower than earned income from a wage and a 40-60 hour work week?

      I can’t write every article on this site from a standpoint of a long-term research project. So not every article will contain citations and references to source material, although I do that plenty. Some articles are more stream of conciousness. I try really hard to make sure anything I do say is supported by evidence, even if I don’t cite it. But no, you aren’t supposed to take my word for it. I encourage everyone to think for themselves instead of being told how to think. Research and read up on the issues and make your own decisions. Always question what someone in a position of authority is telling you.

      I don’t pretend to have solutions to all the problems we face. That doesn’t mean you can’t diagnose what ISN’T working.

      Where does the wealth of the 1% come from? This should be self evident. Wealth isn’t created out of thin air. At any given time there you can put a dollar amount on the total wealth of the country. If the wealth of the 1% has grown disproportionately to the wealth of everyone else, it had to come from somewhere. I’m not saying that the 1% are literally stealing money from people. What I’m saynig is that government policy and regulations have been shaped to allow the 1% to accumulate more of the pie. Maybe you (and others) find no problem with this. I’m not necessarily saying it’s illegal, what I’m saynig is I would like to see some balance restored.

      Before the great depression we did not have a robust middle class in this country. Through much of the 1800s and into the early 1900s this country very much was a representative oligarchy (as it has become again) where a few wealthy elites country much of the dialog and the direction of the country. After the great depression, because of the New Deal, we saw the longest period of wealth and income equality this country has ever seen. This equality has been eroding over the past 30 years due to supply-side economics and parallel belief that the only way you motivate the wealthy is to give them more money while stating the opposite is true of the poor.

      If you initiate large scale across the board tax cuts (i.e. the Bush tax cuts) the biggest winners will always be those with the highest incomes. The higher your income, the more tax dollars you will keep. The argument that the top income earners already pay the largest share of the income tax (something Republicans love to point out) is both true and an argument for taxing them more (which of course counters the reason people point that out). Their disproportionate contribution towards the total tax pool is a result of what I said above, that the wealthy and powerful have been able to manipulate policy that allows them to accumulate more wealth. The more wealth that is accumulated, the more wealth subject to tax (even if it is a smaller tax rate – again, due to manipulation by the powerful). The fact that the wealthy might pay the largest share of real dollars towards taxes is cherry picking statistics. In fact, there are some Republicans in congress that point to that AND the fact that tens of millions of Americans pay no federal income tax as reason to say more people need to contribute. Like as if the poor have more money to contribute towards taxes. These Republicans conveniently ignore the fact that those people still pay payroll tax (medicare, social security), state and local taxes, real estate taxes (if they are lucky enough to own a home), gas tax, etc. If you are trying to make any point about the fairness of the tax system, the only stat that Republicans have to fall back on is the total dollar amount paid by the wealthy. Every other measure shows a system with massive favoratism towards the rich.

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