I think it’s important to emphasize one of the dangers of wealth concentration: irresponsibility about the wider economic consequences of their actions by those at the top. Wall Street created the investment products that produced gross economic imbalances and the 2008 credit crisis….Average people could only destroy themselves financially, not the economic system….[T]he collapse was primarily due to the failure of complex mortgage derivatives, CDS credit swaps, cheap Fed money, lax regulation, compromised ratings agencies, government involvement in the mortgage market, the end of the Glass-Steagall Act in 1999, and insufficient bank capital. Only Wall Street could put the economy at risk and it had an excellent reason to do so: profit. It made huge profits in the build-up to the credit crisis and huge profits when it sold itself as “too big to fail” and received massive government and Federal Reserve bailouts. Most of the serious economic damage the U.S. is struggling with today was done by the top 0.1% and they benefited greatly from it.
Not surprisingly, Wall Street and the top of corporate America are doing extremely well as of June 2011. For example, in Q1 of 2011, America’s top corporations reported 31% profit growth and a 31% reduction in taxes, the latter due to profit outsourcing to low tax rate countries. Somewhere around 40% of the profits in the S&P 500 come from overseas and stay overseas, with about half of these 500 top corporations having their headquarters in tax havens. If the corporations don’t repatriate their profits, they pay no U.S. taxes. The year 2010 was a record year for compensation on Wall Street, while corporate CEO compensation rose by over 30%, most Americans struggled. In 2010 a dozen major companies, including GE, Verizon, Boeing, Wells Fargo, and Fed Ex paid US tax rates between -0.7% and -9.2%. Production, employment, profits, and taxes have all been outsourced. Major U.S. corporations are currently lobbying to have another “tax-repatriation” window like that in 2004 where they can bring back corporate profits at a 5.25% tax rate versus the usual 35% US corporate tax rate. Ordinary working citizens with the lowest incomes are taxed at 10%.
I could go on and on, but the bottom line is this: A highly complex and largely discrete set of laws and exemptions from laws has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes.….Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules. ….
If you’re not angry, you’re not paying attention.
Politicians never tire of tropes, and there’s one tickling many on their tongues these days: Americans want Washington to deal with its debt, just like we do in our own families. Which is funny, given that American families have never been so deeply indebted….American families….ended 2010 with more debt than income.
…[T]he debt explosion didn’t happen by accident, and it didn’t happen to everyone equally. We got into this predicament because financial services companies designed businesses to put us here. And the worst players among them specifically targeted the low-income communities of color that are still most vulnerable to their dangerous products.
At the close of the 20th century, the financial sector came unhinged, encouraged by Washington’s bipartisan blessing and driven by big banks’ hunt for large, fast profits. Subprime refinances and other exotic mortgages were the most widely damaging result. But financial firms dreamed up debt-trap products ranging from rent-to-own furniture to subprime credit cards with exploding rates, all meant to prey upon consumers (read: workers) who were making less money even as prices climbed for basic and luxury goods alike.
This is all without talking about student loans, pre-paid debit cards, personal finance companies, tax-day loans, car loans, debt settlement and foreclosure scams, or the proliferating number of checking account products that look an awful lot like payday loans. The financial waters are shark infested. We have rarely so badly needed a regulator like the new Consumer Financial Protection Agency.
And yet, Republicans have vowed to filibuster the nomination of the bureau’s director until the White House agrees to cut its power. The bureau already must answer to a board of existing bank regulators—the same ones who have thus far refused to do a thing on behalf of consumers. It is already housed inside the Fed rather than as a standalone agency and has a cap on its budget. But as….Ari Melber reported in an essential piece detailing the corporate attack on financial-sector accountability, the Chamber of Commerce spent $17 million lobbying against the CFPB in the first quarter of 2011 alone. There could be no more essential fight for the coming years than making sure the Chamber does not get its money’s worth.
10 shocking, illuminating moments that prove just how out of touch the powerful really are.
Number 2: The Palaces That Taxpayers Built
In Louisville, Ky., as the city struggles with high unemployment, Goldman Sachs engineered a scheme to construct a huge new sports arena that is now siphoning millions of dollars of public money into the investment bank’s coffers. In Jefferson County, Ala., Goldman orchestrated the construction of what’s been called “the Taj Mahal of sewer-treatment plants” — a massive boondoggle that has bankrupted the county and, once again, made Goldman huge money. And in New York, where public budgets are being gutted, Goldman just opened a monstrous $2 billion headquarters, financed by what Bloomberg News calls “unprecedented” aid from taxpayers. […]
Definitely click through to the link. This will get your blood boiling. This isn’t a democracy; it’s a fucking plutocracy.
Number 4: For Me, but Not for Thee
One of the hallmarks of Let Them Eat Cake-ism is an absolute lack of self-awareness mixed with a complete disregard for hypocrisy or personal responsibility. The end result is an especially nauseating “for me, but not for thee” attitude.
In this recession, that has manifested itself as bankers walking away from their obligations to cover their own losses and happily vacuuming up public bailout dollars — all while lecturing strapped homeowners about their moral responsibility to pay their bills.
Recall that in February 2009, Jamie Dimon — the $17-million-a-year CEO of the bailed-out JP Morgan — went on CNBC to deliver a sermon about the moral obligation of covering one’s own losses and not running to someone else for help.
"I don’t think just because someone’s underwater [in their home], they say, I don’t have to stay there," he said. "They’re supposed to pay the mortgage, and we should teach the American people, you’re supposed to meet your obligations, not run from them."
How deceptive for politicians to stress “entitlements” when they talk about gutting Social Security and Medicare, two programs long paid for by their beneficiaries. The Republicans make it sound as if they’re doing us a favor, cutting government waste by seeking to strangle America’s two most successful domestic programs. And now Barack Obama seems poised to join their camp in undermining the essential lifeline for most of the nation’s seniors, many of whom lost their retirement savings in the banking meltdown.
These threatened programs are not government handouts to a privileged class, like defense contractors and bailed-out bankers, who do feel eminently entitled to pig out at the federal trough. On the contrary, Social Security and Medicare have been funded by a regressive tax that falls disproportionately on working middle-class income earners, while caps in the system leave the wealthy—most notably the hedge fund hustlers who helped cause today’s economic crisis—largely untaxed.
While there are many plausible ways to ensure the future of Medicare and Social Security—and extending a fair share of the burden to wealthier individuals is a good place to start—such changes should not be considered in the context of a bargain to raise the debt ceiling. These programs have nothing at all to do with a national debt that has spiraled out of control in the past four years as a result of untethered corporate greed. In that time the debt—already inflamed by two wars fought on the credit card while President George W. Bush cut taxes for the wealthy—rose a whopping 50 percent as a consequence of the deepest recession in 70 years, brought on by the banking collapse.
It is absurd that Medicaid, along with Medicare and Social Security, is on the chopping block when there is no serious effort to find savings in a defense budget equal to that of the rest of the world’s nations combined, and still at Cold War era levels despite the lack of a sophisticated military enemy. And that the GOP-led House has gotten a supposedly progressive president to consider doing serious damage to our most vulnerable population in order to placate Republicans determined to continue massive tax breaks for the wealthy is morally obscene.
Here, then, is my concise breakdown of the two biggest reasons why greed and inequality are bad: First: When people at the top are greedy, workers don’t get their just rewards. For a long time in this country, there was a very close relationship between productivity growth and wage growth. Increased productivity is a good thing because it means we’ve come up with new ways to make more stuff with less effort. Now take a look at this chart:enlarge
As you can see, productivity started rising more rapidly than wages in the 1970s and has only accelerated since. This means, roughly speaking, that workers are now producing more but getting paid less. How in God’s name is this possible? Well, technology and globalization are definitely part of the answer. But I think there’s also something to be said for the fact that we’ve developed a real Randian “Cult of the Rock Star CEO" culture that values the output of the person at the top of the chain as key to creating wealth for everyone else (and if this sounds like economic fascism to you, well, you’ve got a point).[…]
Second: Greed can turn you into a dumbass. There’s this weird myth out there that the more money a Rock Star CEO has, the more money he’ll invest into his business, thus creating more jobs for everyone. While this is certainly true in some cases, I don’t think it’s at all true across the board. And what’s more, I think having too much money can give you a feeling of invincibility that can lead you to do stupid things.
Toward the end of that debauched period, lenders simply weren’t producing enough mortgages to satisfy the Wall Street Securitization Machine that had spent the past decade piling more and more leverage onto banks’ balance books. The solution, it turns out, was to create “synthetic” mortgage securities that were little more than bets on other mortgages that the banks didn’t even own. Because a combination of low interest rates, tax loopholes and financial chicanery had given banks a whole ass-ton of money to play with, they had at that point literally run out of crappy mortgages to buy. So instead of, say, doing something more useful with it they decided to double down and create more crappy mortgages out of thin air. The brighter libertarians out there will concede that, yes, having too much money can make you stupid but eventually the market will make you pay for your mistakes and you’ll never get hired again. Capitalism works!
Well, sure, if you ignore all the misery and poverty that financial collapses cause, I guess the system is great. And let’s not mention that being thoroughly incompetent at your job is no obstacle to future employment if you’ve got good connections — for Christ’s sake, the World Bank has just appointed former Lehman Brothers chief risk officer Madelyn Antoncic as its damn treasurer! This is like baseball hiring Barry Bonds to be in charge of overseeing its drug-testing operation!
This book has been one of the most influential books in my life and helped me to think rationally and clearly and stop believing things that aren’t true and really understand that you should chase after joy not a false notion of happiness through the power of positive thinking
This is the same bullshit behind books like The Secret. And it’s more proof that the country is not run by grown-ups, but children who refuse to face facts and try to convince the rest of us to enter into their little games, e.g. George W. Bush as head clown cheerleader leading us into endless wars with the belief we were spreading freedom and fighting evil. How fucking childish was that black-and-white view of foreign policy?
Being an adult is not about feeling good, but about being realistic, being skeptical, being alert, being prepared:
"Move! It’s a leopard!"
The janitor in a posh apartment building effectively pays more in taxes than the average millionaire living in one of the units.
An Unfair Tax Burden: Citizens vs. Corporations
I’d love to see this juxtaposed with corporate wealth vs. personal wealth growth from 1943-2008. I suspect (but don’t know for sure) that corporate wealth has grown in inverse proportion to their tax burden.
I need this chart as a card to carry in my wallet so I can whip it out the next time someone accuses me of being a hypocritical liberal when I complain about the tax code.
I want so badly to put a link to this on my facebook, but I know it will just create a shitstorm that I don’t feel like putting up with.
I think it is so sad that we have to worry about pointing this out and causing shitstorms when really, anyone with a lick of sense in their brains should be able to see how wrong this arrangement is. Unless, of course, those causing the shitstorms actually LIKE paying taxes, which I sincerely doubt is the case.
"Yeah, but lower corporate taxes means a robust economy and more jobs for the rest of us! Right? Right?"
Potential Backpedaling of the Day: What’s the Gap up to? After updating its logo without so much as press release, the clothing retailer has suddenly taken to Facebook to comment publicly on the redesign for the first time… and to crowdsource a different logo?
Thanks for everyone’s input on the new logo! We’ve had the same logo for 20+ years, and this is just one of the things we’re changing. We know this logo created a lot of buzz and we’re thrilled to see passionate debates unfolding! So much so we’re asking you to share your designs. We love our version, but we’d like to see other ideas. Stay tuned for details in the next few days on this crowd sourcing project.
Passionate debates unfolding? Oh, you mean how everyone is saying the new design sucks. Anyway, those lambasting the logo now have an opportunity to put their digital pen where their mouth is and let The Gap see how they’d handle the task.
Tricked! It seems Gap deliberately leaked a shitty logo design to gin up interest in some sort of contest to redesign their logo. 1) Damn and 2) Tricking people into working for you for free? 3) Damn.