Wednesday, February 02, 2005

The Poor Get Poorer and the Rich Get Richer

The poor don't rest nor are they permitted the pleasure of relaxation.
Carolina Maria De Jesús (1913 - 1977), writer and lecturer

Tonight President Bush is going to go for the hard sell to promote privatizing Social Security. Yet, most people can’t even manage their 401k accounts. Don’t count on any help from the White House to protect your savings, when this administration had an opportunity to work with New York State Atty. Gen. Eliot Spitzer, it opposed overhauls designed to curb fraud by investment bankers, mutual funds and stock analysts.

Now that the recent tax breaks have benefited the wealthy and depleted the nation's budget surplus, it means stockbrokers will shovel in the dough, especially if they get to manage the country's retirement savings. Once the coffers and personal bank accounts of Wall Street executives are full, then the administration before it’s through will do away with the inheritance tax and further expedite and ensure a more defined class-conscious society. Let's welcome the return of the Gilded Age.

20 comments:

B2 said...

Things don't change much, do they? If you want to know the truth, follow the money.

Chandira said...

DAMN that inheritance tax!! I might have to pay it twice, from England to the US. They all want a cut. But I'm with you on the rest.. :-)

Matthew Schiros said...

1.) Your title is mis-leading. Pick any given timespan, look at the numbers, and you'll see that, in America, the poor get richer and the rich get richer. It's just often the case that the rich get richer faster, since they have more to work with (the only period that this isn't true is during hte first year or so after a recession, when employment is out-pacing the market).

2.) Thank God the Bush administration didn't work with that anti-corporate, primadonna, power hungry Nazi known as Eliot Spitzer. Spitzer's personally taken over 2 billion in revenue out of New York, and not ONE company he's gone after has ever been convicted of any wrongdoings. There wasn't any fraud at Marsh, or Merril Lynch, there were just people making money, and an opportunity for Spitzer to put his face out there before the Gov. race.

3.) The WORST argument against Social Security is "people are too dumb to manage their investments". Is that really a position you want to espouse? And, you're factually wrong. 401(k)'s are marvelous successes.

4.) Even if people were dumb, they could just enroll in the Thrift Savings Program, which is the federal government's 401(k) plan, which everyone from a clerk to a Senator enrolls in.

5.) Tax breaks benefitted everyone. I know that you're probably some 19 year old kid who doesn't know a bit about economics, but you should really consider doing some reading into the subject. The "wealthy" (do you define this as anyone who makes over $200,000 a year, or some other line in the sand?) are the ones who create jobs, push R&D, increase production, and make the country go round. When they have investment capital, it benefits everyone. Look at the number of jobs created between Aug. 03 and Dec. 04 (over 2.5 million). That's a direct result of the Bush tax cuts.

6.) There never was an actual budget surplus, only unrealistic projections that Democrats have latched onto to prove that Clinton wasn't a total failure as a President. Those projections relied on growth numbers continuing the way they did during the Internet bubble, which was well on its way to collapsing at the beginning of 2000. Since, you know, the economy corrected itself, those projections hold no water.

7.) re: stockbrokers. What a Red Herring. Of course they'll get paid. So does everyone who works. What's your point? We should not allow 300 million Americans a choice in what to do with their money to spite some stock brokers? Now who's playing class games?

8.) Why is an inheritance tax a good thing? Is there a reason that, when I die, my kids should only get half of what I leave them? Did the government help me die? Should the government be able to tax me 4 times on the same money (when I earn it [income tax], when I spend it [sales tax], when I invest it [capital gains tax], and when I die [inheritence tax])? Does that make any sense?

9.) Only the Left has any kind of class consciousness. Those of us on the right are too busy making money for ourselves to be worried about what somebody else is doing. Class consciousness makes absolutely no sense in a society where everyone owns property. The whole reason that people bought it when Marx wrote about it was that, in his time, there were property owners and non-property owners, so only some people had the means to produce capital. Now everyone does, everyone wants to, and holding onto some antiquated idea of "class" just makes you look like someone who can't play in the Big Show with the rest of the adults.

Matthew Schiros said...
This comment has been removed by a blog administrator.
The Misanthrope said...
This comment has been removed by a blog administrator.
The Misanthrope said...

Matthew, thank you for your comments. I will respond, but unfortunately I am not rich and I have to work, so it may be later this evening or tomorrow before I can get back to you. Thanks again for commenting.

Anonymous said...

Matthew, you're being sarcastic right? For a moment there I thought you were serious.. Very funny!! lol

The Misanthrope said...

Matthew, Privatization works in some cases, but not in all cases. Government needs an active role in society. Government needs to enforce fair play and when necessary be the friend, the helper and the agent of the people at large in the contest against entrenched power, whether it is a monopoly of oil companies, a cartel of HMOs or military contracting companies. Our society needs to help others who do not have the opportunity to help themselves.

If everything is privatized society ends up as a war of all against all, powered by individual cunning in the pursuit of wealth and power. How do you help? You help by understanding --


That a Social Security card is not a private portfolio statement, but a membership ticket in a society where we all contribute to a common treasury so that none need face the indignities of poverty in old age.

That our nation can no more survive half democracy and half oligarchy than it could survive half slave and half free, and that keeping it from becoming all oligarchy is steady work – our work.

That tax evasion is not a form of conserving investment capital but a brazen abandonment of responsibility to the country.

That income inequality is not a sign of freedom of opportunity at work, because if it persists and grows, then unless you believe that some people are naturally born to ride and some to wear saddles, it’s a sign that opportunity is less than equal.

That public services, when privatized, serve only those who can afford them and weaken the sense that we will all rise and fall together as “one nation, indivisible.”

That prosperity requires good wages and benefits for workers

The eight-hour day; the minimum wage; the conservation of natural resources and the protection of our air, water, and land; women’s rights and civil rights; free trade unions; Social Security; a civil service based on merit – all these were launched as citizens’ movements and won the endorsement of the political class only after long struggles and in the face of bitter opposition and sneering attacks. Democracy doesn’t work without citizen activism and participation. Trickle-down politics is no more effective than trickle-down economics. (this from a post back in October: http://tonermishap.blogspot.com/2004/10/reconsider-your-vote-for-george-bush.html)

The Misanthrope said...

I have to post again, in order for the orignal post to show up.

On The Mark said...

Matthew -- It's always nice to see a well-thought-out response (whether one agrees or not), but you obviously haven't been following the Marsh case too closely. They settled with Spitzer for $850 million -- I'm sure it wasn't because they were in a charitable mood. Even the CEO said: "This agreement culminates a dark period in this company's history," said Marsh & McLennan chief executive Michael G. Cherkasky, who also apologized for former employees' "unlawful" and "shameful" behavior.

I do agree that they should do away with the inheritance tax. We get taxed enough during our lifetimes. Leave us alone when we're dead.

Matthew Schiros said...

Sorry for the double post. My browser burped.

Misanthrope:
I'm not rich either, I just work a tech support job, so I get to sit in front of a computer all day. Take your time responding.

Anonymous: The funny thing is, I think the EXACT same thing about most of the stuff the left says too. Hrm....

Misanthrope's Response:

You say:
"Matthew, Privatization works in some cases, but not in all cases. Government needs an active role in society. Government needs to enforce fair play and when necessary be the friend, the helper and the agent of the people at large in the contest against entrenched power, whether it is a monopoly of oil companies, a cartel of HMOs or military contracting companies. Our society needs to help others who do not have the opportunity to help themselves."

I'm sorry, can you show me any industry that's more productive under state control than it is under private control? Privatization works because there's actually a motive to succeed: the need to eat. Government workers administering a program don't have that motivation at all, a.) because the program probably doesn't affect them at all, and b.) because government workers can be completely incompetent and still keep their jobs.

I vehemently disagree with the portrait of American conflict that you paint. It's not Us (the people) v. them (the evil corporations) with only the evil government to intervene. Those evil corporations do great things for us, as a society, and as individuals. They employ more people, with better wages and better packages, than anyone else. They produce goods that we need, services that we want.

The idea of "fair play" bothers me as well. Is it your opinion that one person shouldn't be able to enter into a contract with another freely, even if that contract disadvantages one of the parties? If the person is willing to be disadvantaged, why should the government intervene? If your concern is pricing, then I'd argue that the greatest tool for fairness is always in place: the market. With the market calling the shots, you can guarantee that transactions will be not only fair, but beneficial to the consumer, because there will always be someone else out there ready to provide the good or service if one company should fall flat.

And who's really without opportunity? The mentally retarded? The handicapped? I would argue (successfully) that there are private charities that would deal with this small fraction of the cases in the country.

"If everything is privatized society ends up as a war of all against all, powered by individual cunning in the pursuit of wealth and power. How do you help? You help by understanding --"

Are you a Marxist? I don't want to answer this statement until I know, because the answer changes. I'm trying to figure out the basis of your argument.

"That a Social Security card is not a private portfolio statement, but a membership ticket in a society where we all contribute to a common treasury so that none need face the indignities of poverty in old age."

Sure, but if you made it private, not only would you guarantee that no one would have to be old and poor, but you'd ensure that they'd be poor and middle class, at least! If you took the money you were forced to pay into Social Security through the course of your career, and invested it in the S&P 500, by the time you retired, you'd be $600,000 better off than you would be under Social Security.

There's a Constitutional argument against Social Security as well, but I have a feeling that would be futile in this forum. No offense to you, I just doubt that you, or any other liberal, views the Constitution as having any restriction on the redistribution power of the State.

And if it were as you say, a common treasury, etc..., why would it be non-solvent? That's not a treasury, that's a debt. A debt to the tune of $10 trillion.

"That tax evasion is not a form of conserving investment capital but a brazen abandonment of responsibility to the country."

I find it disturbing that you frame taxes as some kind of obligation, as though any man should be compelled to give up the product of his labor to another. Back where I come from, we call that theft.

It also creates a problem of the slippery slope it creates. If we can justify any seizure of private property for the "common good", is there any seizure that we can't? What tax rate would you support?

"That income inequality is not a sign of freedom of opportunity at work, because if it persists and grows, then unless you believe that some people are naturally born to ride and some to wear saddles, it’s a sign that opportunity is less than equal."

Income inequality is simply a market recognition that not all people are capable of the same things. Some people are smarter than others, some stronger, some better at math, some with more experience. Not everyone can do the same job, and not everyone can do the same job as well as another. What you're doing here is confusing equality of opportunity with equality of circumstance.

Equality of opportunity is this: given two people, with the same characteristics, same intelligence, attractiveness, social skills, upbringing, education, capital sources, have the same maximum level of achievement. Extended, it's that regardless of circumstance, no one is restricted from achieving anything. The difficulty of achievement may be different, but there's no ceiling.

Equality of circumstance is this: trying to eliminate the innate differences between any two individuals.

I think that we're probably both intelligent enough to anticipate my answer to your list of social programs, so I won't list it here. This comment is long enough as it is.

I would like to say, however, that trickle down economics worked like magic, as evidence by the boom in the 80's, which set the foundation for the boom of the 90's, and the technology we have today.

On The Mark:
I know it was an $850 million settlement. Have you seen Spitzer's tactics? Corrupting the jury pool with fake leaks before a trial? Throwing every law in the book at a company in order to force a settlement? Publicly extorting companies into paying his "settlements"?

Hell, it's just easier to pay him off than deal with the court costs and the trial and the potential award if they lost.

Matthew Schiros said...
This comment has been removed by a blog administrator.
On The Mark said...

Matthew --

That is one of the great falsehoods, and where you lose credibility in your argument. I advise companies in crisis, and NO company admits to "unlawful" activities and pays nearly $1 billion in fines to make something go away unless, of course, they've done something wrong.

Matthew Schiros said...

Mark,
I hope that you don't advise your clients in the same black and white methodology that you employ here. You should know, as well as anyone, that whether or not a large company is guily of wrongdoing has little to do with whether or not they settle the claim. It's all about which way will cost less money. If lawyers costs + [(chance of loss)*(probable monetary cost)] is greater than the settlement figure, they settle. Guilt and innocence has nothing to do with it, especially in a civil case, where juries will often come into the box with preconceptions of the defendant that they wouldn't have in a criminal case.

On The Mark said...

Matthew,

You're right. I never advise a client to admit to guilt when they're innocent. I also never advise a client to state publicly that its company acted unlawfully when it hasn't. It's just smart business practice and common sense.

Regarding your position: Marsh's reputation was already damaged (it's not like it settled to stay out of the press), so if the company was innocent, from a strategic point of view it would have made more sense to fight it out in court to prove its innocence. And when you're talking about a settlement of that size, and considering how big Marsh is, more millions of dollars to defend itself would have been more valuable than any advertising they could ever do (if they were innocent, of course).

The Misanthrope said...

Matthew, I am a bit tired from last night, nothing to do with politics, thank goodness. My fear is that corporations cannot go unchecked because we have seen what they will do, which is why anti-trust laws were created, but are rapidly being relaxed. CEOs only pay attention to the bottom line not the life line that jobs are to so many people. Imagine how many jobs Michael Eisner's bonuses could create, but instead they eliminate jobs for still bigger pay checks. The U.S. is losing its edge in quest of bigger and quicker profits.

I do not believe government should run our businesses, but government needs to be a stronger watchdog and provide a safety net for people who are left behind or can't get ahead. A country with a sharp division of rich and poor will never progress as rapidly as a country where people feel equal and feel as though anyone can reach the top. With the cost of everything soaring, there are many who cannot afford an education without getting deeply in debt to the size of a California house mortgage.

We could go back and forth on a number of issues, but my bottom line is this, it's people that matter, not the corporation or the politicians. This sounds rather Republican, err, rather hypocritical coming from someone who uses the pseudonym The Misanthrope, but it is through tremendous disappointments, not a loss of compassion for my fellow human.

Anonymous said...

"That is one of the great falsehoods, and where you lose credibility in your argument."

Personally, I find the suggestion that the creator of a website titled "How Was She.com" might ever have had any credibility to begin with quite laughable.

Anonymous said...

"That is one of the great falsehoods, and where you lose credibility in your argument."

Personally, I find the suggestion that the creator of a website titled "How Was She.com" might ever have had any credibility to begin with quite laughable.

steve_o said...
This comment has been removed by a blog administrator.
Libertarian Girl said...

Your arguments are fine if government was a completely transparent friend to the American people; most of the time it has not been.

The minimum wage was first fought for by whites who were afraid that blacks were undercutting them for jobs in the '30s-- "citizen activists" as you say. They wanted to block the black people from getting their jobs. Milton Friedman always said that the group that lost most by the minimum wage were poor blacks who were then left jobless; how does that stand up with your theory that the government is supposed to protect everyone with its laws?
How does the fact that today, the people who benefit most from a minimum wage increase are teenagers and already highly-paid union workers go along with your idea? My friends who work just above minimum wage jobs make less when the minimum wage goes up, because the company increases the teenagers' salaries and therefore decreases theirs in real terms. Unions push hard for minimum wage increases because their hourly wage is almost always three or four times the minimum wage, tied to it, not because they care about the actual minimum-wage earners.

The government of the United States is the United States' biggest polluter; how does that go along with your statement that it is supposed to be in charge of "conservation of natural resources and the protection of our air, water, and land"? Talk about putting the rooster in charge of the hen house.

The government was one of the largest discriminators in history with how it treated blacks in the early 1900s up until the '50s and '60s: Jim Crow laws, preventing them from voting, banning them from the military, experimenting on them, not allowing them to hold government jobs or go to public universities. How does that correspond with you saying that the government is supposed to uphold civil rights?

These are examples from the past, with the exception of the environment since our government is and has been our biggest polluter for a long time. However, do you really think that throughout time, corporations have been less evil than governments? Right now, our government is spying on us for no reason, ignoring our Constitution, and allowing corrupt workers to keep their jobs at taxpayer expense.

How's that for a steward of the poor?