Wealth Distribution in the USA:Worse than we Imagine... Much Worse!

A revealing video with only the fault that its dismissal of socialism as equality of income is propagandist and not true. Socialism means "from each according to their ability to each according to their work", but with a much more equitable distribution of wealth than under capitalism, and so approximating more to what the film depicts as the average US citizen's idea of an ideal distribution.

Tax the Rich: a True Fairy Tale

Tax the rich: An animated fairy tale, is narrated by Ed Asner, with animation by Mike Konopacki.

Written and directed by Fred Glass for the California Federation of Teachers—an 8 minute video about how we arrived at this moment of poorly funded public services and widening economic inequality. Things go downhill in a happy and prosperous land after the rich decide they don't want to pay taxes anymore. They tell the people that there is no alternative, but the people aren't so sure. This land bears a startling resemblance to our land!

For more info, www.cft.org. © 2012 California Federation of Teachers

Published on Dec 5, 2012

People: Let this be the Final Crisis

Capitalist society in England stood at a parting of the ways. The crisis was far more than commercial and industrial—it was a profound social crisis, a turning point in social development. The times were apocalyptic. All social values were being re-valued. Society was racked by the civil strife of the “two nations”. The air was full of doubts and questionings and suffused with the…

…deep wrath of the whole working class, from Glasgow to London, against the rich, by whom they are systematically plundered and mercilessly left to their fate, a wrath which before too long as time goes by—a time almost within the power of man to predict—must break out into a Revolution, in comparison with which the French Revolution, and the year 1794, will prove to have been child’s play.

Condition of the Working Class in England, 17

This startling sense of imminent social upheaval, this feeling that we stood face to face with a crisis, solvable to all appearances by force only, was not the exceptional apprehension of the great revolutionary. It is to be found running through the literature of the period. It was the theme of all serious thought and utterance on social affairs. It runs through the pages of Disraeli, Carlyle, Kingsley, Gaskell (who was prophesying revolution as early as 1833), John Stuart Mill:

I cannot think that the working class will be permanently contented with the condition of labouring for wages as their ultimate state… It is not to be expected that the division of the human race into hereditary classes, employers and employed, can be permanently maintained).

And it was symptomatic that The Times of London found it necessary to thunder editorially:

War to the palaces, peace to the cottages—that is a battle-cry of terror which may come to resound throughout our country. Let the wealthy beware!

----oOo----

It seems that as long as the people who do the work in our society will not learn from history they are doomed to repeat it. This is not a description of the present crisis but one of England in the 1840s, edited lightly from Allen Hutt, The Final Crisis, (1935). At least two similar major periods of economic crisis, paid for by the people who are employed in unemployment or wage cuts, have interverned between the 1840s and today—four crises in 170 years, yet those who suffer to pay their price simply accept the lies of the rich, and continue being exploited. Isn’t it time that people who have to work for a living—us!—pulled the rug from beneath the idle fat cats who purport to rule us? To do so we first need to recognize that we are being made fools of, and then to do what The Times saw as a likelihood:

Let the wealthy beware!

Middle Class Support for Welfare Goes Up When They Feel at Risk Themselves!

Three researchers from Yale and Ohio State University, Philipp Rehm (Ohio State), Jacob S Hacker and Mark Schlesinger (Yale) examined attitudes to welfare policies within the US and across 13 other countries. The researchers surveyed people’s support for unemployment insurance across 13 nations (Portugal, Switzerland, Netherlands, Norway, Denmark, Sweden, Spain, Finland, Ireland, Germany, Australia, United Kingdom, United States). They then surveyed US residents alone on their support for specific social policies within the United States and asked people to assess major economic risks—both their level of worry about them and their level of expectation that they themselves would experience them. Rehm said:

We also probed their attitudes about spending on existing programs, the role of government relative to the private sector in providing economic security, and hypothetical social programs that could be created to deal with major economic risks. Our research all produced highly consistent results across nations and within the US.

They found that support for welfare policies goes up when economic difficulties strike higher up the social scale. Popular support gets broader and opinion less polarized. Where the risk of unemployment or other misfortune threatens mainly people already on low incomes and at the bottom of the social scale, opposition to the welfare state among the generally better off is strongest. When, in times of widespread recession, that threat begins to climb the social ladder, support for welfare policies tends also to migrate up the ladder and to widen out among a larger proportion of the population.

Economic events that make better off people feel insecure are likely to reduce their traditional opposition to welfare. This has the effect of raising a nation’s average support for welfare intervention as those who normally perceive themselves as self sufficient feel at greater risk of losing jobs, homes and other major fundamentals of life.

Conversely, when economic hardships strike only those who are generally on low incomes most of the time, opposition to the welfare state remains strong higher up the social scale. It takes a more widespread misfortune, such as national or global recession, to shift attitudes. The paper says:

To create cross class coalitions—that is, a wider proportion of the population supporting the welfare state—risks have to broaden in reach, not just deepen in impact on the already disadvantaged.

The conclusion is that a broad coalition of support across the social divide is necessary for welfare states to survive:

There seems little question that welfare states cannot long swim in a sea of public hostility, that widespread support is a necessary condition for their sustenance.

It seems a patently obvious conclusion, but says nothing about why people should be so opposed to welfare when the research shows they turn to supporting it when they themselves feel insecure. Welfare is a security net! Remove the net and it is missing when you need it. In other words, it is common sense to want to have a security net, and there is no time better than the present to prove it.

The middle classes, for the first time in several generations, are beginning to realize that they too can feel the need for security when the ruling class starts to pull the snug rug of middle class complacency from beneath them, for the smug rug includes the safety net. For that reason the agents of the ruling class, supposedly democratically elected governments of get rich quick opportunists, will squeeze the blood from the underclasses before they will squeeze anything from the middle class.

The point of Rawls's “Veil of Ignorance” is to put everyone in the situation of not knowing where in society you will end up. If you know you are wealthy and are complacent about your position in society, then you will not care a hoot what happens to your neighbours. If you consider that you might end up poor or disabled, whether by misfortune or bad judgment, then you will insist upon society providing the welfare safety net that you will need to keep you alive and perhaps sane. Quit apart from that, though, which is still an argument from self interest, people in putatively Christian societies ought to have sufficient compassion for the poor and disadvantaged to want to have them protected.

There is a final reason for welfare, another selfish reason for the middle classes, and that is the need for everyone to have some money to spend. In a hierarchical society like western societies, money has to be injected at the base. It is then inevitably spent by the poor on their necessities, and someone has to supply those needs—small shopkeepers and services, or people employed at the lowest level of supermarkets and service industries. That money therefore moves up. The “trickle down” idea is manifestly nonsense, because the rich spend their money wherever in the world they like, and mostly not in western supermarkets!

It is therefore in the best interests of everyone to support the welfare state. Any of us not at the top of the heap might need it, and all of us do need it for society to work properly. It also ensures that we are doing the most honorable thing, and that is caring for the welfare of the least in our society. That alone ought to be sufficient when people like to claim to be Christian.

The Upper Classes are More Dishonest—Official!

A series of studies conducted by psychologists at the University of California, Berkeley and the University of Toronto in Canada and reported by the NSF reveal something the well off may not want to hear. Those who are relatively high in social class are more likely to engage in unethical behavior. Lead researcher Paul Piff of UC Berkeley said:

Our studies suggest that more positive attitudes toward greed and the pursuit of self-interest among upper class individuals, in part, drive their tendencies toward increased unethical behavior.

Relative to the lower class, the upper class are more likely to break the law while driving, more likely to exhibit unethical decision-making tendencies, more likely to take valued goods from others, more likely to lie in a negotiation, more likely to cheat to increase their chances of winning a prize and more likely to endorse unethical behavior at work.

Piff explained:

The relative privilege and security enjoyed by upper class individuals give rise to independence from others and a prioritization of the self and one’s own welfare over the welfare of others—what we call greed. This is likely to cause someone to be more inclined to break the rules in his or her favor, or to perceive themselves as, in a sense, being “above the law”.

They therefore become more likely to committing unethical behavior.

Procedures

Piff and colleagues conducted seven survey, experimental and naturalistic studies to determine which social class is more likely to behave in unethical ways—to engage in behaviors that have important consequences for society such as cheating, deception or breaking the law.

In two naturalistic field studies that examined unethical behavior on the road, researchers were surprised by the differences between upper and lower class people, finding upper class drivers were significantly more likely to pursue their own self-interests and break the law while driving than were lower-class drivers. In these studies, the researchers defined social class by an observable cultural symbol of social class—namely, their car. Drivers of higher-end automobiles were four times more likely to cut off other vehicles before waiting their turn at a busy, four way intersection with stop signs on all sides. In addition, they found upper class drivers were significantly more likely to drive through a crosswalk without yielding to a waiting pedestrian.

In another laboratory study, the upper classes were more likely to cheat to improve their chances of winning a cash prize. Piff and colleagues first measured social class using the MacArthur scale of subjective socioeconomic status, where participants rank themselves on a 10-rung ladder relative to others in society in terms of their wealth, education and the prestige of their jobs. Participants then played a “game of chance” in which a computer presented them “randomly” with one side of a six-sided die on five separate rolls. Participants were told higher rolls would increase their chances of winning a cash prize, and were asked to report their total score at the end of the game. In fact, die rolls were predetermined to sum up to 12. The extent to which participants reported a total exceeding 12 was a direct measure of their cheating. The researchers concluded greed was a “robust determinant of unethical behavior”.

Plato and Aristotle deemed greed to be at the root of personal immorality, arguing that greed drives desires for material gain at the expense of ethical standards.

Due to their more favorable beliefs about greed, upper class people are more willing to deceive and cheat others for personal gain.

Study 4 sought to provide experimental evidence that the experience of higher social class has a causal effect on unethical decision-making and behavior. It was the only study in which researchers manipulated participants into temporarily feeling either higher or lower in social class rank to test whether these feelings actually caused people to behave more or less unethically.

At the end of the study, the experimenter presented participants with a jar of individually wrapped candies, ostensibly for children in a nearby laboratory, but informed them that they could take some if they wanted. This task served as a measure of unethical behavior because taking candy would reduce the amount that would otherwise be given to children. People in this study, who were made to feel higher in social class rank, took approximately two times as much candy from children than did people who were made to feel lower in social class rank. Piff concluded:

Across all seven studies, the general pattern we find is that as a person’s social class increases, his or her tendency to behave unethically also increases.

Impose a Supertax to Recoup the Money Robbed from our National Treasuries

After the UK bank bailouts in 2007-8, which the National Audit Office said emptied the British exchequer by almost a trillion pounds, UK Labour Chancellor, Alistair Darling, said the banks were henceforth to show restraint, and boasted of the 50 percent supertax he had imposed on bankers’ bonuses. Actually, it was a one-off payroll tax that would only raise £550 million—about 0.06 percent of the money the robbers had received. The bleating professional defenders of the City called it a fresh attack on that sacred institution, but nothing is being said about it now that banks are rewarding their executives, like Stephen Hester of RBS, for that staggering robbery of the treasuries of all the leading capitalist countries, leaving everyone except the ruling junker class tantamount to being bankrupt.

The measure, feeble and ineffective as it was, would prompt defections from the City, the publicity lobbyists claimed. All of these bankers can, apparently, get immensely rewarding jobs anywhere else in the world, and now they shall! It is their own propaganda, though doubtless, like all greedy opportunists, they believe it. And Darling said the banks would actually pay the bonuses tax, so the burden again falls on us, guileless slaves of the rich, whether it is through the exchequer or through the banks that we are robbed. John Whiting, tax policy director of the Chartered Institute of Taxation, immediately warned that the banks would find ways around the tax!

Bonuses are only part of the problem. Income tax is not merely unfair, it is regressive—the richer you are, the less you pay. One of the very richest men in the USA, Warren Buffett, has openly admitted that his tax rate (18 percent) is lower than that of his lower class secretary (30 percent). Can anyone deny that it is grossly unfair that the rich should pay less national tax than those who are much poorer? How is it possible? When income tax was introduced temporarily in 1842, even Queen Victoria paid it. The monarchy later, when it became a normal feature of government funding, was excused it. But in 1992, the British Queen volunteered to pay it again—no doubt with some persuasion—but hoping to gain popularity at a time when monarchy was under criticism.

In 1909, British Chancellor of the Exchequer, Lloyd George, set income tax at 9d (9 pence) in the pound (3.75 cents in the dollar), for incomes less than £2,000, which amounts to about £160,000 at 2012 values. He set a higher rate of 12d (one shilling, or 5 percent) for incomes above £2,000, and an additional “surtax” or “supertax” of 6d (another 2.5 percent) on the amount by which incomes of £5,000 (£400,000 today) or more exceeded £3,000 (£240,000 today). This scheme, applied today, would mean rich people simply pay tax, not supertax, on earnings up to £240,000, but would owe the exchequer £4,000 as soon as they earned £400,000. Effectively, the rich would experience a hike in tax of just 1 percent of their income when they went through the £400,000 barrier, hardly a backbreaking jump. As things stand, the megarich would simply hire top accountants, lawyers and lobbyists to ensure the nation never gets the money they owe it, if everyone else does! But, if this sudden hike were sufficiently large, and avoidance and evasion of it were treated strictly as criminal, banks and corporations would not be inclined to overpay directors, and they would not want to recieve more than the limit and suffer the penalty of the tax barrier.

Republicans brag that, when they took Congress in 1994, they lowered taxes creating an improvement in the economy, and higher tax revenues. Since then they have perpetually called for the same strategem, even though the improvement they boasted of was short lived. What they want is lower taxes for the rich, but it is cutting taxation of the poor and middle classes that improves spending, business transactions, and ultimately the economy as a whole. Money rises like a gas through the classes of any capitalist society like ours, it does not trickle down like water, at least, if it does, it does not trickle down at home where it is needed!

Time series suggest that governments resist raising tax from the rich except in crises. Then they have sometimes lifted taxation into the supertax category of over 90 percent. When this is done, the revenue is fed in at the base of the economy in public projects and better benefits, lifting spending power at the base and thereby stimulating the economy throughout by the multiplier effect—the way each dollar or pound is spent over and over again, once someone poor gets it to spend in the first place, and the way an initial expenditure triggers further ones, like a tin of paint for the front door stimulating the decoration of the rest of the house, which now looks shabby, then new furniture, and with fresh aspirations, a new car, a new home, and so on. It is Keynesianism. It works! So, taxing the richest boosts the economy. Reducing taxes on the rich induces them to accumulate more capital which they regretably are too often ready to invest overseas for even better profits. Meanwhile, our own economy is deprived of liquidity and unemployment and poverty rise. Tax rates for the richest were being cut until 1928, but they failed to stop, and arguably exacerbated the Great Crash of 1929 and the following long depression, ended only by WWII. Our situation today is frighteningly similar.

Curiously, considering that the upper classes in the USA—not to mention many of the middle classes too, albeit perhaps influenced too much by patriotic propaganda—constantly demand foreign wars, the top rates of income tax go up while wars are being fought and afterwards when their costs have to be met. In WWI, the top US rate of income tax reached 77 percent, but in the aftermath of WWII it went as high as 94 percent. The US Right Wing, who bleat their propaganda line that Obama is a “commie” when he is not being a Moslem or a Satanist, would be certain that supertax equates to communism. Yet it has inevitably preceded the US economy picking up, so that the supertax was soon lifted. Perhaps too soon. UK supertax was lifted in 1973, but replaced by rates of income tax progressiing from zero for the very poorest to much higher levels for the rich, albeit falling short of a supertax. Maybe now, it should be a permanent feature of the modern capitalist state.

HM Revenue and Customs (UK) claims that twice in the post-war years, special tax rates have pushed income tax above 100 percent. Sad parasites of other people’s work received unearned income from stocks and shares, and apparently paid the taxman more than they earned. They must have been Warren Buffets living in cardboard boxes under railway arches. It is a highly dubious calculation which must assume that the different rates are applied additively. They were not. Some rates were either/or, not both in succession. No wonder the tax men leave the calculations to each of us ourselves to submit via self assessment. The people who do pay rates of over 100 percent are the poorest—those on benefits who lose all of certain benefits when they earn above certain levels of income. Unless the increase in income exceeds that lost by loss of benefits, income declines, so the effective tax rate of such poor people is over 100 percent. This is very common indeed, and explains why many people give up looking for work.

When a nation is divided into two contending classes, both cannot have their own way. Democracy is meant to ensure the majority rules, subject to its laws not oppressing the minority, but, for that, it has to be fair. It is not fair when one section owns all the media, and the rich can do that through their wealth. The American paranoia about socialism leads ordinary Americans to accept the rich man’s propaganda, and support the rich man’s interests contrary to their own. So that when sensible policies are proposed the people are confused by those who want a less practicable and more greedy policy, so that what emerges is precisely the wrong kind—acquiescence in wasteful policies, such as militarism and imperialism, rather than taking steps in the right direction.

The British Labour Party has exactly the same problem. Beguiled by Blairism and topped up in the Blair years with careerists and opportunists, it is quite incapabale of taking the right decisions. Even though the Con Dem coalition is on shaky ground, and the people are sick of the succession of Thatcherite policies over the last thirty years by successive governments, the Labour leadership is tied to its outdated mode of thinking—deregulated neo-liberalism—when something new, and actually left wing is needed in the face of the bankers and the junkers.

Cut the Working Week to Share Out the Work

Our economic system urging both parents to work causes immense damage to children. 20 per cent of young people aged 18-24 are unemployed in the UK, a far higher rate than for the rest of the age range (16-64), which was 8.4 per cent. In the US, the unemployment rate of 16-24 year olds was a staggering 53.4 per cent! Yet the government continually increases the retirement age forcing the elderly to work in the expectation that they will die without ever collecting a state pension, while the youth have zero prospects. Does this make any social sense? It will leave a generation of young people wasting their youths struggling to find work, while the elderly have to work to avoid pension poverty.

It is all part of the One Percent's strategy of bringing on a Third World wage economy by driving people to accept low pay or face losing their jobs in factory closures and switches to the Third World. This was proved by a report from the UK Labour Force Survey which found 5.3 million workers put in an average of 7.2 hours of unpaid overtime a week last year, worth around £5,300 a year per person.

What is needed for social and economic fairness is, first, for the rich One Percent to cough up more of their accummulated wealth—in short, for them to pay their whack to alleviate a crisis brought on by their own greed. Then, second, for everyone else the available work should be shared fairly. A shorter flexible working week would provide more free time, allowing parents to spend more of it with their children, and teenagers more chance to get work skills. 20 hours a week seems a sensible sort of level, but the whole idea flies in the face of orthodoxy. If wage rates remained the same, many people could not afford it, so other changes would have to be made. Readjustments have to be made—increasing pensions and reducing the retirement age, allowing jobs to be released for the young to get essential work experience.

One idea touted for long is that everyone should get a state allowance—rather like the UK Child Allowance—replacing multiple benefits, then those who would rather not work, the elderly, the infirm, yes and those content not to work but live on a low income but be able to develop their personal skills, be educated better, become artists, musicians, develop their own businesses They need not be employed, leaving them free to do as they wished, while those motivated by remuneration could fulfil their own ambitions. In this increasingly technological world, we all, governments too, have to get used to the fact that when robots are doing the work, employment will be at a premium, but businesses and the economy still requires people, employed or not, to be able to spend. Robots do not. Without spending power no one can buy, and no one can make money serving robots!

Anybody recognize this?-

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

It is the very beginning of the Constitution of the United States, of what is called the Preamble to it. This opening sentence declares clearly the purpose of the constitution, and you will note it includes “establish Justice”, and “promote the general Welfare”, not to mention “insure domestic Tranquility”.

It is easy to understand why rich, right wing demagogues like Rick Perry do not want to accept these fundamentals of the constitution, but why on earth do ordinary US citizens listen to these greedy Republican half wits, spouting off their own interests while confounding the foundational law of the USA. The whole selection procedure is a farce. None of them care who get selected as long as they stick to the right wing game plan. Their slight interest is to go down in history on the list of presidents, but they have no intention of serving “the people”—only their own people. They are selfish frauds. Humiliate them!

The Best Protest Sign

This protest sign says it all. Society is grossly unfair. The top 1% get more than anyone can need, while the rest get the American Dream.