The Real 'Re-Distribution' of Wealth

Avatar for songwright
iVillage Member
Registered: 06-28-1997
The Real 'Re-Distribution' of Wealth
12
Wed, 05-01-2013 - 12:10pm

I'm intentionally stealing the Conservative meme about how Liberals and Socialists are always trying to unfairly re-distribute the wealth from the rich to the poor -- and how that inevitably makes middle class people work harder to support a bunch of slackers and moochers..

Think of the revenue (Earnings) our economy generates like an enormous wedding cake that is divided up to feed everyone at the reception. 35 years ago, families in the top 1% of our society got about 9% of the cake - leaving the other 91% to be shared by everyone else.  In 2011 the top 1% received 21% of the cake.  This means that in addition to the overly large piece they got 35 years ago, they also got an additional 1/8 of the cake (12%).  To put that into perspective, 12% of our national earnings is just about exactly the TOTAL income of the bottom 50% of American families. To put that into clearer perspective, the income for someone at the TOP of the 50th percentile is about $33,000/year (about twice the official Poverty level for a family of 4) -- all of the remaining 49% of Americans have gradually LESS income. Think real hard about those last numbers the next time you see some pundit on Fox complaining about how the 'poor' (the bottom FIFTY PERCENT??) don't have enough 'skin in the game' because they don't make enough income to owe any Federal taxes.

This redistribution of an extra 12% of our total national income to the top 1% earners is the greatest 're-distribution' of wealth in American history. Taking a look at the state of our economy is all the evidence you need to see exactly how giving all this extra income to the 'job creators' has worked out.

The Conservative argument is that you 'can't tax the rich enough to balance the budget'. Really?  National earnings last year were around $13.4 Trillion.  The extra 12% of our national income that is now going to the top 1% totals $1.6 Trillion.  Since the 2013 US budget deficit is currently running around $1.2 Trillion, it is evident that just the extra amount of personal income the 1% have added over the last 35 years is enough to not only balance the Federal Budget, it would also pay down the National Debt by $400 Billion.

My object in this little exercise is to hopefully get you readers to WAKE UP!!!  Over the last 35 years our system has been systematically skewed more and more to the advantage of the uber-wealthy minority of our society - mostly the top  0.1%.  The increase from 9% to 21% of our total national earnings represents a 133% increase in their share of the 'cake'. Over the same period, median income after inflation has FALLEN by almost 7%. And the inevitable result of this massive redistribution of wealth is a staggering economy -- where the bottom 50% of our population doesn't have enough money in their pockets to sustain Demand for products and services.  And this lack of Demand means that there is no incentive for manufacturers/employers to provide the Supply of goods and services necessary to keep people employed -- which is why we have REAL unemployment in the US at close to 16%.

This is NOT rocket science ... it is Economics 101.  And it is why Conservative politicians just HATE raw, uncooked numbers -- because they so clearly expose the damage their policies have done to our nation. Just this year, THEIR solution was to fight to preserve the Bush Tax Cuts for the wealthiest Americans, while re-instituting the Payroll Tax on the people who actually buy the products and use the services that stimulate employment.  They recently allowed the FAA to redirect the Sequester budget cuts that were causing flight delays - just before they adjourned Congress and started flying home to their districts.  But they didn't bother to redirect the cuts that have caused thousands of senior Medicare patients to lose their Chemo-therapy drugs, or to the over 4,000,000 economically challenged seniors who have lost access to Meals on Wheels, or to the 70,000 economically disadvantaged schoolchildren who are losing their Head Start program.

I'm 65 years old, and I am both DISGUSTED and EMBARRASSED at the state to which we have let our society fall.  We are no longer the 'land of opportunity' I grew up in, where the American Dream was vibrant and real.  Instead we have become the 'land of the greedy rich and influential'.  And I'm mostly embarrassed because this is STILL A DEMOCRACY.  Apathy and laziness have caused the American people to accept being spoon-fed lies and mis-information -  while generations of our elected Representatives have sold out our future - and most importantly OUR CHILDREN'S FUTURE - to a corporate and financial Aristocracy that spends a lot of the wealth they are taking out of our society to make sure that only the Representatives that support their continual wealth and power grab get re-elected.  You can all sit back and listen to pundits pontificate, or you can WAKE UP and use your power at the ballot box to reclaim our national heritage -- before it is too late.  If you don't, your grandchildren will look back at these moments and curse you.  And they will be justified.

~ SW

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Avatar for xxxs
Community Leader
Registered: 01-25-2010
Tue, 05-21-2013 - 10:05pm

There are big donors and big money on both sides...and one side always loses so...

   That is the problem.  The doners choose by virtue of their money who will run.  The voters choice is decided by the donors from primaries to election

  You said "the population has exceeded the employment" and that's quite different from shrinking employment, as evidenced by the fact that prior to the crash we had roughly the same number of people and unemployment was low.
    The crash allowed many jobs to be eliminated altogether.  Those positions are not coming back ever

 

You didn't mention capital gains specifically.  You're right, raising the tax rate on capital gains won't hobble the economy, but it will seriously stunt it by removing incentives to invest, thereby damaging the economy and also hurting the people who depend on college and retirement investments.

    Investment is alway based upon the get principle.  It would not matter if they paid taxes,  because the game is too addictive.

 

  NYC is not losing any of it's billion dollar clients.  The big financial companied could move anywhere.  But they are not.

 Removing an ailing company creates marketshare for healthier companies...good for the economy.  And acquiring companies allows the mother company the ability to expand their business and hire more people...again, good for the economy.  The "pirates" as you call them who buy ailing companies and sell them piecemeal are, again, removing a wounded member of the herd and building up the other companies that buy the assets.

  That is Darwin Days!  But the truth is that many of the companies are being destroyed are profitable.  What the takeover does is to reduce the employmnet and hamper the development of competition.

 

 

No, guaranteeing money for one person obligates and takes that money from another.

There is no such proof.  That does not happen.

Of course it does...where do you think the money comes from?

  Social Security is incurance What is insurance then?   Based upon the gamble one will live long enough.

  I should have said the tax code of the early 70's  It encouraged investment and was the dreiver of franchise businesses as the code rewarded the risk and the increased employment.

chaika

iVillage Member
Registered: 10-17-2012
Wed, 05-22-2013 - 7:41pm

That is the problem.  The doners choose by virtue of their money who will run.  The voters choice is decided by the donors from primaries to election

Not always.  We have a lot of "grass roots" candidates that get elected.  It's also true that they need a lot of money behind them to campaign, but it's a bit of a chicken-and-egg thing.


    The crash allowed many jobs to be eliminated altogether.  Those positions are not coming back ever

True...but then we don't have a lot of horse-shoers and wagon makers around any more.  Hopefully the change will end up being positive and create new jobs.

    Investment is alway based upon the get principle.  It would not matter if they paid taxes,  because the game is too addictive.

But it does matter.  When the risk to return becomes equitable with more secure investments, then the why take the risk?  The economy will suffer dramatically.  That is exactly why the government lowered the cap gains tax rate...to encourage investment.

 

  NYC is not losing any of it's billion dollar clients.  The big financial companied could move anywhere.  But they are not.

It's not easy for large companies to relocate, but rest assured, they're certainly looking at it and are probably already trying to find ways to cut the bottom line...cutting jobs, finding new suppliers and outsourcing overseas.  The impact was so bad that France has suddenly done an about face.  Actually, if you look at New York, they have too...marketing all sorts of financial incentives trying to attract businesses.

  That is Darwin Days!  But the truth is that many of the companies are being destroyed are profitable.  What the takeover does is to reduce the employmnet and hamper the development of competition.

If a company was profitable, then it wouldn't be destroyed.  It would be too difficult and too expensive for another company to try and pull that off.  What might happen is that another company would buy the "profitable" competitor and then run both companies...like a car company buying another car company and then selling all of the models under one umbrella.  You might lose a few management jobs due to consolidation, but by and all, it's a positive for the economy.

  Social Security is incurance What is insurance then?   Based upon the gamble one will live long enough.

Yes.  The "gamble" on the part of the government is that enough people will NOT live long enough to be reimbursed the full amount of their payments so that the excess will cover those other people who live so long that they exceed the amount they paid into the system.  That's not turning out to be the case, which is why the current model is unsustainable.


  I should have said the tax code of the early 70's  It encouraged investment and was the dreiver of franchise businesses as the code rewarded the risk and the increased employment.

It amounts to the same thing.  Giving people and businesses more of their own money allows them to spend more of their own money which stimulates the economy.

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