Back when I taught in Florida, I was attempting to explain why progressive taxes made sense, when one resource-enhanced student exclaimed: "If the poor don't like being poor, then why don't they get rich!" My explanation was not as simple as the viral U-Tube of Elizabeth Warren, but I did say that everyone benefits from society, and the rich benefit more.
Progressive taxation means that if you get more from society, enabling you to become rich, then you should also pay more: you didn't do it alone. Furthermore, a good portion of government services, including police and our imperial military benefit the rich disproportionately.
But the United States is still cursed with its "pioneer" heritage, memorializing people like Daniel Boone, who went out into the wilderness and thrived. Of course, even the Daniel Boones depended on others to raise them, teach them to shoot a gun, even get dressed. Most had mothers and fathers, at least. Most were also aided by fellow pioneers, and, surprisingly, by indigenous people they encountered along the way: even they didn’t do it alone. However, that's the story we tell ourselves in these disUnited States.
That's why Herman Cain, and now Governor Perry, are proposing to replace our (very mildly) progressive income tax with a flat tax. A flat tax implies that everyone benefits equally from the present configuration of society. Lenin pointed out that the poor also benefit from bridges: they can sleep under them.
Cain's 9-9-9 proposal would not benefit everyone equally. The poor, the elderly and those on fixed income, would see their taxes rise considerably, most others would see their taxes rise, too, but the wealthy would see their taxes fall even more. There would be huge savings for the ultra-rich like the Koch brothers, even though they pay lower tax rates than most taxpayers pay already. Their main sources of wealth are capital gains and the hedge-fund traders' special loophole for their outrageous profits, and in both cases, since Bush W's tax "reforms," they are taxed at lower rates than work.
In fact, that's what the OWS movement is about: the unfair advantages of those who don't work, except with numbers: from hedge-fund heads, to bank honchos, to corporate CEO's, to speculators, to inherited wealth; these are the 1%. Thing is, it's been that way for years, and getting worse. While productivity has doubled since the '70's, wages have remained stagnant. Guess where all the extra money went.
The US today, has the most unequal income of all developed countries: we match Turkey! We've been on a trajectory towards a society like fifth century Rome, divided between all-powerful Senators holding all the wealth, a vanishing middle class, and the Senator's serfs. Cain and Perry know where they're headed. Thanks to OWS, a growing number of Americans are opening their eyes, even some Democratic politicians.
Let's hope corporate billions can't undo their anger.
Wednesday, October 26, 2011
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Wall Street, Greed & Disaster - "Foreclosure of American Dream By Wall Street"
ReplyDelete- Nalliah Thayabharan
Wall Street is a confidence trick, a dazzling edifice built on paper promises, gambling, bets and rampant speculation. Wall Street doesn’t manufacture or produce anything. The Wall Street however attractive it may appear is built on paper.
Modern day bank robbers are at Wall Street but they wear grey suits and not masks. Rampant speculators, propagandists and financiers of Wall Street are given some unfair advantage over the average consumers and taxpayers and the cumulative effect of the people watching selfishness prevail over the public interest has been an undermining of the public’s trust in the present US government. There’s no question the Wall Street is rigged against the average consumers and taxpayers. The Wall Street has a lot more information. Wall Street jerry-rig the system so that Wall Street always win. If the Wall Street loses trillions, the US Treasury will bail the Wall Street out so it can go back and do it again.
50 trillion dollars in global wealth was erased between September 2007 and March 2009, including 7 trillion dollars in the US stock market, 6 trillion dollars in the US housing market, 8 trillion dollars in the US retirement and household wealth, 2 trillion dollars in the US individual retirement accounts, 2 trillion dollars in the US traditional defined benefit plans and 3 trillion dollars in the US nonpension assets. Greed, arrogance and incompetence created a massive meltdown, cost trillions, and still Wall Street comes out richer and more powerful.
There are trillions dollars of new money taken again from Americans to make deals and hand out outrageous bonuses. And when these trillions run out Wall Street will come back for more until the dollar becomes junk. The value of the US dollar declined very significantly during the last 70 years. The value of the US dollar in 1940 was worth 2,000% more than the value of the US dollar now.
Many big US manufacturers are outsourcing to Mexico and China to increase their profits, adding more unemployment in the USA. Manufacturing jobs in the USA declined 37% between 1998 and 2010. Since manufacturing industries declined in the USA, the US competitiveness in the global marketplace is also declined.
Robust financial markets don’t imperil capitalism. In the early 1980′s Wall Street began to escape reasonable important regulations of the marketplace. The US government gradually adopted a “too big to fail” policy for the Wall Street, saving lenders to failing businesses from losses. The demise of Glass Steagall act helped spawn the credit crisis by allowing the Wall Street to create financial instruments that escaped reasonable limits, including constraints on speculative borrowing and requirements for the disclosure of important facts. The extremely liucrative hedge funds and other risk management derivatives including credit default swaps don't fund or invest in successful growing businesses. The credit default swap market was the single biggest cause of the crash 4 years ago.
The Wall Street eventually posed an untenable risk to the US economy—a risk that culminated in the trillions of dollars’ worth of the US government bailouts and guarantees that the US government scrambled starting in late 2008. But in 2008 the US government was compelled to replace private risktakers at the Wall Street with government capital so that money and credit flows wouldn’t stop, precipitating a depression. As a result, these Wall Street became impervious to the vital market discipline that the threat of loss provides. The Wall Street lenders to financial markets continue to understand that the US government would protect them in the future if necessary. This implicit guarantee by the US government harms capitalism and economic growth.
ReplyDeleteThe top 6 US banks had assets of less than one fifth of US GDP in 1995. Now they have two third of US GDP. The financial crisis was created by the biggest US banks to consolidate power. The big banks became stronger as a result of the bailout by the US Treasury. The big banks are turning that increased economic clout into more political power. Wall Street has undue influence on the US government policies and this situation reflects a failure of democratic representation for the other 99 percent Americans.
Oligarchy is the political power based on economic power. And it’s the rise of the Wall Street in economic terms, that it’d turn into political power. And Wall Street then feed that back into more deregulation, more opportunities to go out and take reckless risks and capture trillions of dollars.
Wall Street only has the lobbyists. Today more than 42,000 Wall Street lobbyists manipulate USA's 537 elected officials with huge campaign contributions that fund candidates who support their agenda. It no longer matters who's the President of USA.
Since the heads of Wall Street and their representatives are afraid because they don’t have the substance or the arguments, they will not come out and debate with the people who occupy the Wall Street.
The political and economical leadership of the US has chosed to cartel profits and transformed the US economy to serve the colluding and unlawful oligarchy. The political and economical leadership of the US is bailing out failed paradigms with trillions of dollars while committing social injustice to its people. The political and economical leadership of the US including the US Congress have now become Wall Street's "Trojan Horses". The US banks are borrowing money at near zero interest from the US government, then lending it back to the US government at even mere fractions higher interest than they are paying. The net interest margin made by the US banks by lending the money back to the US federal government in the first 6 months of 2011 is 210 billion dollars.
Due to the oligarchs’ rapacious looting and their purchase of a politically protected luxurious lifestyle, the people of the US are on the road to permanent serfdom under a police state. The democracy was not given to the people of the US on a platter. It is not theirs for all time, irrespective of their efforts. Either people of the US organize and they find political leadership to take this on or they are going to be in deep trouble.
The failure of governance to address the current critical issues have already produced catastrophic consequences. Now we are experiencing a major global paradigm shift and it is still unfolding. The financial situation of states including California, Illinois, Nevada, Arizona, Florida, New Jersey and Michigan is now more dire than ever. Inevitably in very near future the US government will order police or military to martial law which may lead to a second American revolution.
“There is no calamity greater than lavish desires, no greater guilt than discontentment and no greater disaster than greed”
- Laozi
"Greedy desire is endless and therefore can never be satisfied"
- Buddha