One of Those Charts

The last time we had a big overhaul of the federal tax code was in 1986. Back then, the poorest 90 percent of the population owned 3 1/2 times as much as the richest 1/10th of 1 percent. I’ll say that again. In 1986, the net worth of the least wealthy 90% of Americans was 3.5 times the net worth of the richest 0.1%.

That’s not the America we live in today. As of 2013, the richest 1/10th of 1 percent owned as much as the poorest 90 percent. To repeat: the net worth of the richest 0.1% was the same as the net worth of the poorest 90%. 

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I’m sure the red line goes even higher now and the blue line goes lower. We should keep this astounding economic inequality in mind when we have the opportunity to vote eleven months from now. That will be eleven months after the Republicans ram through another overhaul of the tax code, one that helps the richest Americans get even richer.

Us, Them and Incentives Again, But Briefly

Remember when Clinton was President and the federal government briefly ran a surplus? The Republican response was: “Cut taxes!” Their justification was: “It’s our money, not the government’s!”. Since then, the surplus having been eliminated, the Republican response has been: “Cut taxes! That will lead to growth and reduce the deficit!” Which isn’t completely relevant to “Us, Them and Incentives”, but I’m getting there. It’s another example of how adherence to a political ideology can lead to inconsistency, especially when you try to justify what you already want to do. 

In writing about the Republican approach to incentives this week (less income for the rich will make them less productive, but less income for the poor will make them more productive), I may have been unfair. Maybe the Republican position makes sense based on the relative economic success of the rich and the poor.

After all, rich people are doing well, you might say, so they must be doing things right. Therefore, let’s reward them. That way they won’t get discouraged and stop doing things right. Poor people, however, aren’t doing well, so they must be doing things wrong. Obviously, we shouldn’t reward them for doing things wrong. And, if we don’t reward them, maybe they’ll start doing things right. In a capitalist nutshell, economic incentives should be given to productive people, and economic disincentives should be given to unproductive people.

This approach sounds an awful lot like social engineering, which the Republicans are supposed to be against. Putting that aside, however, the question is whether it’s a good idea to make life harder for people who are struggling and make it easier for people who aren’t. If you view life as a total morality play, in which good people prosper and bad people don’t, maybe it does makes sense. That is, we all know, the reason for heaven and hell (which St. Thomas Aquinas understood so perfectly).

But people are doing well or badly these days, economically-speaking, for lots of different reasons: skills, health, age, location, connections, work ethic, luck, education, competition and so on. In fact, one major hindrance to doing well economically is being poor to begin with (when you’re poor, it’s harder to get around, harder to fit in, harder to stay healthy, and so on). Once we view our fellow Americans as individuals with actual, often difficult lives, not simply as Us and Them, the reasonable response is to help the ones who are struggling, not the ones who are already getting ahead.

(Coming soon, “A Guide to Reality, Part 11”, I hope.)

Us and Them Again

As noted in an update to the post below, the Conservative Political Action Conference (CPAC) is having their annual convention, which means leading Republican politicians are getting the chance to express their deepest thoughts. So Senator Rubio of Florida got the opportunity to explain why Franklin Roosevelt had it all wrong — we should be very, very afraid.

Also today, Congressman Paul Ryan highlighted the difference between the right and the left by telling the story of a Wisconsin kid who’d prefer bringing his own lunch to school instead of mooching off the rest of us by getting a lunch at taxpayer expense.

Juliet Lapidos of the New York Times points out Congressman Ryan’s underlying, contradictory assumption:

[Ryan] argued that Americans want to work — every bit as much as the Republican Party wants them to work. “People don’t just want a life of comfort,” he said. “They want a life of dignity. They want a life of self-determination”….

In Mr. Ryan’s view, Americans would rather depend on themselves, or their families, than on the government. And yet, in Mr. Ryan’s view, if these same Americans gain access to government programs, they’ll jump at the chance to abandon their responsibilities, effectively exchanging a “life of dignity” for a “life of comfort.”

That doesn’t make sense. If all or most Americans, like the kid in Wisconsin, want their own lunch rather than a government lunch, then the prospect of a government lunch won’t change their behavior.

Ryan doesn’t notice the contradiction, since he thinks of his fellow citizens as Us and Them. On one hand, there are the honorable, hard-working Americans who hate the idea of getting help from the government (you know who they are). On the other hand, there are the dishonorable, lazy Americans who want nothing more than to live off government handouts (you know who they are too).

This is the same point I tried to make recently in a comment on another blog. There is a strange dichotomy between how Republicans expect poor people and rich people to respond to financial incentives:

— People who are struggling should receive as little financial assistance as possible, because helping them will only discourage them from becoming productive members of society. After all, they’re not really motivated to increase their incomes beyond the bare minimum. In their case, therefore, less income will translate into more work, and more income will translate into less work.

— People who aren’t struggling should receive as much financial assistance as possible, especially in the form of lower taxes, because helping them will encourage them to become even more productive members of society. In their case, more income will translate into more work, while less income will translate into less work!

It isn’t fun at all being poor or unemployed, but Republicans believe that making life as difficult as possible for the economy’s losers will convince them to do better. That’s because they’re not like us. They don’t care about improving their situations and they don’t respond to economic incentives the way normal people do.

Less money for the poor, so they will work harder; more money for the rich, so they will work harder. It makes perfect sense!

(Note: I’m going to try to lay off writing about right-wingers for a while. Maybe I’ll try fashion reporting. Or poetry! “There once was a girl from Nantucket, …”)

If You’ve Got It, Flaunt It

A friend and I spent some time at the local arboretum yesterday. It’s a pleasant place to stroll around or sit on a bench discussing weighty matters or nothing at all.

Walking along one of the paths, we came upon this backyard view of somebody’s new house, apparently getting its finishing touches.

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What this country definitely needs is lower taxes on rich people. How can you afford to furnish such a place and pay your utility bills when the Federal government demands a punishing 15% of your long-term capital gains?

What the 1% Want from Washington

I don’t think I’ve ever heard of an opinion poll targeted at the rich. But two political science professors did a survey of people in the Chicago area with an average net worth of $14 million. Their research found that:

“The biggest concern of this top 1% of wealth-holders was curbing budget deficits and government spending. When surveyed, they ranked those things as priorities three times as often as they did unemployment — and far more often than any other issue…. They were also much less likely to favor raising taxes on high-income people, instead advocating that entitlement programs like Social Security and healthcare be cut to balance the budget.

“The wealthy opposed — while most Americans favor — instituting a system of national health insurance, raising the minimum wage to above poverty levels, increasing the Earned Income Tax Credit and providing a ‘decent standard of living’ for the unemployed. They were also against the federal government helping with or providing jobs for those who cannot find private employment.”

Which explains why so many politicians talk about reducing the budget deficit instead of stimulating the economy and helping the unemployed and underemployed. And why so many politicians want to cut Social Security and never even think about expanding it.

http://www.latimes.com/news/opinion/commentary/la-oe-page-wealth-and-politics-20130322,0,3575694.story