It’s difficult to tell for sure but it looks like the fourth quarter isn’t off to a very good start for Mr. Market, which dropped 200 points today, something that makes yesterday’s roller coaster ride look that much more suspicious.
Um, ‘economic downturns’ are a bit strange as not everybody suffers…equally that is. Most ordinary people have seen their retirement accounts shed 50% of their value and their homes have lost 30% (if they haven’t lost it outright!)
How do you suppose the 400 wealthiest faired? Well, tonight’s offering takes a look at precisely that topic…If you think the losses are brutal, think again!
What Recession? As the Economy Crashed Around Them, 400 Richest Americans Lined Their Pockets with $30 Billion
By Les Leopold, Huffington Post. Posted October 1, 2009.
It's great to know that during the worst economic crisis since the Great Depression, the wealth of the 400 richest Americans, according to Forbes, actually increased by $30 billion. Well golly, that's only a 2 percent increase, much less than the double digit returns the wealthy had grown accustomed to. But a 2 percent increase is a whole lot more than losing 40 percent of your 401k. And $30 billion is enough to provide 500,000 school teacher jobs at $60k per year.
Collectively, those 400 have $1.57 trillion in wealth. It's hard to get your mind around a number like that. [Picture it as roughly ten percent of the annual US GDP…] The way I do it is to imagine that we were still living during the great radical Eisenhower era of the 1950s when marginal income tax rates hit 91 percent. Taxes were high back in the 1950s because people understood that constraining wild extremes of wealth would make our country stronger and prevent another depression. (Well, what did those old fogies know?)
Had we kept those high progressive taxes in place, instead of removing them, especially during the Reagan era, the Forbes 400 might each be worth "only" $100 million instead of $3.9 billion each. So let's imagine that the rest of their wealth, about $1.53 trillion, were available for the public good.
What does $1.53 trillion buy?
It's more than enough to insure the uninsured for the next twenty years or more.
It's more than enough to create a Manhattan Project to solve global warming by developing renewable energy and a green, sustainable manufacturing sector.
And here's my favorite: It's more than enough to endow every public college and university in the country so that all of our children could gain access to higher education for free, forever!
Instead, we embarked on a grand experiment to see what would happen if we deregulated finance and changed the tax code so that millionaires could turn into billionaires. And even after that experiment failed in the most spectacular way, our system seems trapped into staying on the same deregulated path.
Instead of free higher education, health care and a sustainable economy, we got a fantasy finance boom and bust on Wall Street which crashed the real economy. We have our 400 billionaires, and we have 29 million unemployed and underemployed Americans. We have an infrastructure in shambles. We have an environment in crisis. We have a health care system that would make Rube Goldberg proud. And we have the worst income distribution since 1929. [and sadly that’s only part of the problem!]
I hazard to guess that each and every Forbes 400 member could get by with a net worth of $100 million. I don't think that would kill their entrepreneurial drive or harm our economy--in fact it would be a major boon to the economy to step back from the edge of such massive concentration of wealth. The real problem is getting there from here. A wealth tax that kicks in when you become worth more than $100 million would be a good start. The Eisenhower tax rate on adjustable gross income over $3 million a year would help as well.
And please let's not call it socialism, now that we've placed the entire financial sector on welfare to the tune of over $13 trillion in subsidies and guarantees. (By the way, the yearly budget outlays for means tested programs for low income citizens is about $350 billion per year. So Wall Street's welfare is about 37 times as large as welfare for poor.)
So if narrowing the income/wealth gap isn't socialism, what is it? It's the America that thrived in the 1950s and 1960s. It's the America that created a middle-class and vowed never to let the financial gamblers return us to another depression. It's an America that put its people to work and built an infrastructure that was the envy of the world.
Where's Dwight David Eisenhower when we need him?
Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and author of The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It
Ugh! It gets a little ‘revisionist’ at the end there where it falsely supposes high taxes rather than our virtual monopoly on production around the globe was responsible for the prosperity of the post war decades…
But that’s part and parcel of the Republican Disease, especially when viewed through liberal eyes! It probably never occurred to Ike to slash taxes like his Democratic successor would before being assassinated!
But I digress, the train wreck known as our economy has had many engineers and most of them weren’t ‘elected’.
In fact it is less than helpful to continue to look in the rearview mirror when it comes to addressing this crisis, never mind solving it. What’s done is done, the only thing that matters is what we do going forward.
But we can’t move forward without, er, ‘correcting’ the past, if we fail to ‘undo’ what has been broken, we have no hope of restoring a solid foundation under our society.
Naturally, I want to remind you good citizen that the $1.57 trillion (as in ‘thousand billion’) represents raises you never got and lower prices you never paid…
If that don’t piss you off, you’re not thinking about how you and yours have been/are being ‘abused’…
Thanks for letting me inside your head,
Gegner
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