Reich writes: "Republicans claim the rich are job creators. Nothing could be further from the truth."
Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
It's Inequality, Stupid
31 August 12
he most troubling economic trend facing America this Labor Day weekend is the increasing concentration of income, wealth, and political power at the very top - among a handful of extraordinarily wealthy people - and the steady decline of the great American middle class.
Inequality in America is at record levels. The 400 richest Americans now have more wealth than the bottom 150 million of us put together.
Republicans claim the rich are job creators. Nothing could be further from the truth. In order to create jobs, businesses need customers. But the rich spend only a small fraction of what they earn. They park most of it wherever around the world they can get the highest return.
The real job creators are the vast middle class, whose spending drives the economy and creates jobs.
But as the middle class's share of total income continues to drop, it cannot spend as much as before. Nor can most Americans borrow as they did before the crash of 2008 - borrowing that temporarily masked their declining purchasing power.
As a result, businesses are reluctant to hire. This is the main reason why the recovery has been so anemic.
As wealth and income rise to the top, moreover, so does political power. The rich are able to entrench themselves by lowering their taxes, gaining special tax breaks (such as the "carried interest" loophole allowing private equity and hedge fund managers to treat their incomes as capital gains), and ensuring a steady flow of corporate welfare to their businesses (special breaks for oil and gas, big agriculture, big insurance, Big Pharma, and, of course, Wall Street).
All of this squeezes public budgets, corrupts government, and undermines our democracy. The issue isn't the size of our government; it's who our government is for. It has become less responsive to the needs of most citizens and more to the demands of a comparative few.
The Republican response - as we saw dramatically articulated this past week in Tampa - is to further reduce taxes on the rich, defund programs for the poor, fight unions, allow the median wage to continue to fall, and oppose any limits on campaign contributions or spending.
It does not take a great deal of brainpower to understand this strategy will lead to an even more lopsided economy, more entrenched wealth, and more corrupt democracy.
The question of the moment is whether next week President Obama will make a bold and powerful rejoinder. If he and the Democratic Party stand for anything, it must be to reverse this disastrous trend.
Robert B. Reich, Chancellor's Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest is an e-book, "Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
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Comments
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How will decreasing taxes on the wealthy actually create jobs? Lets use Joe's Pizza House as the example of a small business. If Joe pays less in taxes, why will he hire another pizza maker? And for the fans of large corporations, we have Jane's Pizza Mansions, a large chain. Why will Jane (the CEO) hire more pizza bakers if her corporate taxes are less.
Convince me that Robert Reich, and the entire Progressive movement is wrong.
Joe wants more money so the more profitable the pizza business is the more pizza places Joe will open and that requires more workers.
On the other hand, if the Government takes more from his business then Joe will decide that he can end up with more money by starting a different business, perhaps in China!
Now much of the problem IS Government!
The Federal reserve has a dual mandate and one is to prevent Inflation from getting too high...not zero, but too high!!
The Fed DOES NOT think that Joe making a hundred million per year to be inflationary, but the Fed DOES think that all of Joe's employees getting a dollar an hour raise to be inflationary.
When the Fed raises Interest Rates it is to slow the rate of inflation MEANING: wage earners are getting the upper hand as far as wages are concerned and they don't want that!
But you and Reich likes a big Government, so don't complain when you don't get raises.
Oh, Joe does not care how much YOU make as long as he is constantly making MORE, it IS the Fed that wants to prevent you from making the big money as that is inflation!
The government did not take any business from Joe and once he invests some of his profits towards opening a new pizza house, the tax burden will decrease. Because profit rolled into investment can be deducted.
Sorry, try again. You are not even close to convincing me.
Thanks, for playing!
How do you figure the 50% isn't paying for anything? True, if a person is so poor, or has such a low paying job, that they don't need to pay income taxes, they still pay taxes. Ever hear about sales taxes, property taxes....?
According to the CBO: 400 people hold more wealth than the bottom 50%.
According to the CBO: The richest 10% control two-thirds of the country's net worth.
As you say, however, "these are facts that the entitled victims don't like to hear."
From abcnews.com, this fact check: "But federal income taxes are just a small part of the overall tax picture. There are still property taxes, state income taxes, payroll taxes, sales taxes and excise taxes, just to name a few.
To actually pay zero taxes, someone would have to be unemployed, not own any property, live in Delaware, Montana, New Hampshire or Oregon, where there is no sales tax, and not buy anything that has an excise tax, such as alcohol, cigarettes or gasoline."
And many corporations, like GE, paid no taxes last year--while raking in record profits.
under age 5...... 6.9% of the 2010 population
5 to 9 6.6%
10 to 14 6.8%
15 to 19 7.1%
20 to 24 7.0%
Or, in composite:
26.4% age 19 or under
24.6 % age 17 or under
http://factfinder.census.gov/servlet/STTable?_bm=y&-geo_id=01000US&-qr_name=ACS_2009_5YR_G00_S0101&-ds_name=ACS_2009_5YR_G00_
All taxes? That would include sales taxes paid by persons with only government income. A fast growing group.
In other words, the top 1% share of income grew nearly five times faster than their share of taxes.” http://blogs.wsj.com/wealth/2011/09/26/why-the-rich-pay-40-of-taxes/
And more importantly, that money is not being used productively like buying goods and services that would put it back into society but is being hoarded into offshore accounts. Estimates go as high as 32 trillion dollars mostly from American investors. Our country is in crisis. After WW2 we raised taxes on the wealthiest to restore our economy and our country prospered including the wealthiest. We need to reestablish those rates now to strengthen our nation and if you create jobs give big tax breaks.
When we talk about tax rates, we have to remember that a tax rate is the rate on the books, it is not the actual amount that a corporation actually pays in hard actually cash. If a corporate giant like GM actually paid 35% of their income to the nations coffers we would be much better off. When it turns out that GM actually pays NO corporate income tax in a particular year, the whole argument of tax rate fairness falls right off the cliff, into myth of trickle-down economics.
To quote you:
"The U.S. has the highest corporate tax rate in the developed world."
What does that actually mean?
From the viewpoint of objectivity, we have to ask the following questions:
How do we compare with the 'developed world,' if we want to consider ourselves as part of the 'developed world,' when it comes to things like infant mortality, poverty levels, literacy; prison population, health insurance systems, infrastructure conditions, murder by gunfire, voter turnout, high school graduation, single parent households: am I leaving anything out? I'm sure I am!
Objectively, we are not as 'developed' as we would like to believe. We are overdeveloped in some area, and underdeveloped in many more areas.
Common sense has completely, just like Elvis Presley, left the premises.
Look, most R's and D's are idiots when it comes to politics. The only people that understand how it works are the 1% that fund our elections. While the voters are diverted to the little fires the Fat Cats are bribing the politicians who make the rules.
Get used to it, or throw out all incumbents in November.
Jack Lohman
http://MoneyedPoliticians.net
You need to THINK more, instead of simply accepting claims about complicated matters at face value.
Yes, they have the right to close the factories. But why should they then get tax breaks HERE for moving the jobs overseas?
"You are obviously a communist"--nam e-calling instead of coherent arguments don't cut it as far as I'm concerned. You haven't convinced me you're right and I'm wrong. "You have the right to live here" is a bit condescending, don't you think? And "I wish you would leave . . . and go somewhere else."--childis h. And why should WE have to leave? Speaking for myself, I was born here. And where else is there to go? Close-minded bigots are everywhere, as are tyrants. I realize that my staying and fighting for my right to exist, to be treated like a human being and paid a living wage annoys you, but I will not apologize.
Who or what gives you that "right?"
Oh, OK -- finally we've gotten down to it. The tactic of leveling "Communist" charges against those who disagree with you goes way back and indicates, shall we say, a certain level of intelligence. That's the nicest way I can put it.
Sad...this was a good discussion and it looked at first like you were serious about contributing to it -- guess not.
When we dont buy your Fox news garbage you resort to name calling. Geee Im so convinced, now that your refered to the people here as communists LOL! NOT!!!
If they can afford all of those luxuries, I say that they can certainly afford to pay for their own kids' school lunches, too! Don't you agree?
Bah! Humbug!
You got 9 thumbs down so far. It will be 8 after I cast my vote.
Doesn't anyone understand or appreciate irony anymore.
Bah! Humbug! Indeed. Maybe these nay-sayers need a visit from those gentle ghosts of past, present and future.
Apparently not, BDB...sigh. Total thumbs down now = 39 -- ridiculous.
However, the differential between the red numbers accumulated by my target, "perkinse" and me Indicate that my efforts were not a complete waste of time! To You Few, thanks.
.
Freedom does not result from free markets and free market capitalism. Freedom is the product of freedom of speech and democracy, and democracy is the result neither of free markets nor of capitalism.
Miners used to use a canary in a cage to test for dangerous concentrations of gas. Like a caged canary, the health of the middle class is a test for the health of a democracy. The American middle class is disappearing, and American democracy is in danger.
Fifteen years ago, I began an intense study of American history. At one time, I believed that if you worked hard, you would be rewarded with some success. Those people who failed were to blame for their own failures. Over time, my views changed. Louis Brandeis was an Associate Justice of the Supreme Court from 1916 to 1939 and a great man. I came to embrace his dictum, you can have great concentrations of wealth or you can have democracy, but not both at the same time.
Therefore, anything that concentrates wealth in the 1% and harms the middle class is bad. Anything that decreases the concentration of wealth and helps the middle class is good for freedom and democracy.
Just a detail comment: Freedom includes what you said plus the right to own property and an effective judicial system. I thinks it is reasonable to say that unbalanced wealth leads to writing of unbalanced laws and unfair judiciary.
We are intelligent people. There must be some way to legally siphon these people down to a manageable size without widespread bloodshed.
Inconvenient, I guess, and strays from the GOP agenda and thought menu.
Jack Lohman
http://MoneyedPoliticians.net
It's a simple inverse relationship almost ... as concentration of wealth and power increases the whole country and economy declines. How do Republicans miss that, or do they just think it's unimportant as long as they have more than the guy next to them ?
You know darn well the only way you will bring those people back is when you have enough customers to make their hiring profitable. Any other reason would bankrupt your company.
So, as I asked. How will cutting taxes on wealthy persons add jobs? (I have no idea if you are wealthy or not, if you are; then your first-hand knowledge will be invaluable)
Could you explain?
I asked politely, jimattrell. Because, however upset you and those who've lost their jobs may be, if you just say "thanks to him" without explaining, it sounds like sour grapes and irresponsibly blaming someone else. Even if this has been caused by external factors over which you'd no control and which you couldn't foresee, it's still no use to say "thanks to him", without clarifying how "he" caused your misfortunes. Might as well blame God, the Devil, or gremlins.
Interesting that you attribute such great destructive powers to one man, a President whose every step has been impeded and every act systematically sabotaged - cfr. Mitch McConnell after Obama's election: "the single most important thing we want to achieve is for President Obama to be a one-term president." A "policy" that put party before country and inevitably damaged the economy and the national interest.
And really, maybe as a Conservative, you ought to take your own advice, and accept a little frickin' personal responsibility for the failure of your business.
RSN, I asked jimattrell in some detail to explain those three words - but you seem to have ditched my reply.
We can all sympathise better with people if they don't make unsubstantiated statements attributing their troubles to others.
It would be nice if jimattrell could tell us how this one man's action or inaction lost some 70 men their jobs.
Plus, perhaps, any other contributory factors.
You must learn to diversify your product line. Presidents of the United States tend to vary in their purchasing habits. You can't rely on one customer for the health of your company.
This is basic stuff; right out of Harvard's MBA curriculum!
At least you were nice enough to thank him for not buying more of your product. I really don't think the "thank you" was heart felt, but it showed good character.
So companies like Bain Capital create jobs with the wealth?
No, sir, these companies are job LIQUIDATORS, eliminating jobs to capitalize by selling the companies for pure profit. And then they insist on tax breaks for the money they gained.
Sorry, but I bet your company was in serious trouble, along with the rest of the economy, before Obama took office. It may have taken a while for your troubles to manifest themselves.
BTW, I'm truly sorry your company and its employees took a downturn.
So when you make a statement like "nothing is further from the truth", you are kind of revealing that you yourself are pretty far from the truth in your own way, Reich.
As for the false equivalency of the Democratic and Republicans. Politics makes people irrational, people will lie at a moments notice when all they care about is their party, or just one issue. In the future, sooner than you think, the idea of politics controlling society will be as absurd an idea as we see religions controlling societies today. Govt. has -ZERO- rights to have -ANY-thing to say about who we marry, or how much we get paid, or whether we grow plants, or any other personal decisions. Our kids and grandkids are going to look at us like we were a previous evolutionary branch, that is how stupid this is.. and the good news is less and less people are buying in to the two-party system every day. I can't wait. GOOD RIDDANCE! That's why BOTH parties support NDAA, CISPA, expanding the patriot act, wiretapping.. because they are protecting their political power from the people.. it's not about terrorists.. it's about YOU and how you are going to change when you wake up. And you are waking up. That is why they are passing these crazy laws.
I must have missed the part where Mr. Reich called himself a "jobs creator." Wait, I'll go back and read it again.
Nope, I still don't see "I, Robert Reich, am a rich jobs creator" anywhere. What I do see is, "Republicans claim the rich are job creators. Nothing could be further from the truth. In order to create jobs, businesses need customers. But the rich spend only a small fraction of what they earn. They park most of it wherever around the world they can get the highest return.
The real job creators are the vast middle class, whose spending drives the economy and creates jobs."
What I understand from what he's written here is that if you start a business, and a lot of people purchase your services or goods, and you get rich, it isn't necessarily because you started rich. Also, that the economic inequality between the rich and the not-rich is getting worse. But I suppose that's just my own bias.
Oligarchy today – the tyranny of wealth – is doing just the same thing, but is unlikely to come to such a happy end, either for the oligarchs or for the rest of us.
There is another even more obvious simile for this problem of excess, used by the 11th century Chinese scholar Cheng Yi – see The Tao of Organization, Cheng Yi, translated by Thomas Cleary, pp. 132-133 (http://www.amazon.com/Tao-Organization-Dynamics-Shambhala-Editions/dp/1570620865).
To paraphrase this, supposing you want to build up a dyke and take earth from the top to strengthen the base, the entire structure will be secure; but if you take from the base to build up the top, there's a danger the whole thing will collapse. To quote the Conservative politician Disraeli, “The palace is not safe when the cottage is not happy.”
These people are living in a dream world, a dream that’s already secreting cosmic nightmares.
But JLohman is right. We must get the money out of politics or all our other battles are lost.
It's all nonsense to think that anyone making massive amounts of money should be exempt from paying taxes to a government simply because they provide jobs. Perhaps if companies practiced shared profits one could argue for that, but all we see are low paid workers and profits all going to the top and stockholders.
It appears we have lost any sense of common good in our society as we see a rejection of the concept that taxation is a price we pay to maintain a civilized society.
The lesson here is, The Law of Gravity doesn’t apply to money.
John Kenneth Galbraith put it another way: “The less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows.” So--they get oats, we get road apples.
It also doesn't help when one assembly line worker gets a "new job" as a janitor, or a lawyer gets a job as a vulture capitalist.
Even if it makes your friends/relativ es angry to hear you tell the truth about the GOP/TP - keep on telling them the truth.
Don't forget to mention that Social Security / Medicare / Education are NOT entitlements. We pay into those "programs" with specific tax dollars that we MUST pay (Yes you do pay for public education with the bonds, etc. in your area)
Love Reich - he should be the Sec of Labor in Obama's next term (2012-2016) because he knows and SPEAKS out
Public education is paid for with federal, state, and local property and sales taxes. The bonds (plus interest) are retired with State & local taxes.
I agree wholeheartedly with your posting and the sentiment behind it!
But what do you expect?
The Republicans say that 'rich' people create jobs...this has been proven not true.
But, what do you expect from the Republicans?
It's the STUPID Republicans, after all!
Several decades ago, Margaret Thatcher claimed: "There is no alternative". She was referring to capitalism. Today, this negative attitude still persists.
I would like to offer an alternative to capitalism for the American people to consider. Please click on the following link. It will take you to an essay titled: "Home of the Brave?" which was published by the Athenaeum Library of Philosophy:
http://evans-experientialism.freewebspace.com/steinsvold.htm
John Steinsvold
“Insanity is doing the same thing over and over and expecting a different result."~ Albert Einstein
This could be an instructional thing teachers could use to show their students how f'ed up our government is: pick the biggest d-bag in class, give them an entire bag of candy, and tell the rest of the class that no, he really doesn't have to share unless he wants to.
This is what is running our government: spoiled children who will never have enough toys.
Why would you give the same to the kids that don't dress up at all for Halloween as the kids that go all out and spend hours on their costumes?
It's a new century. The old battles between left and right have ended.
The Communists in China won the Cold War... Nixon went to China during the 1970s and he made a deal with the Communists... Nowadays, American capitalists and Chinese Communists are delighted to work together.
George Orwell predicted this situation in his book "Animal Farm." At the end of the book, the workers can't tell the "capitalist pigs" from the "Communist pigs." All of the pigs look the same.
What's next for America? Easy to explain... The big corporations will try to increase their wealth and power at the public's expense. When the middle class voters complain, they'll be told that "welfare cheats and bums" are responsible for the nation's problems.
The Republicans will complain about "socialism," while building economic and political support for China.
What's left for the left? Even in Occupy camps, words like "socialism" are seldom heard. In 1912, socialists were prominent in American politics and the labor movement was active. The times have changed.
Here is the most serious problme the Democratic party has: Money.
The lies that have been flowing non-stop via television right now can not be refuted fast enough and some of the rotten spagetti will stick to the wall. And that is not tomato sauce, you see up there, but blood.
Mitt and Ryan's remarks are blatent lies but are only refuted here on RSN articles from newspapers and blogs. The average person or voter does not read RSN, or the newspapers like the New York Times. They read the New York Post, a right wing rag, and they absolutely believe every word said in it because of their need to identify with rich white guys. Or they listen to the Fox network of sick but effective and sometimes even crazy tea party lies. Those papers and networks make a great deal of money.
Hence, the money will talk, and everything else will walk.
In coming years, people will ask, "Where have all the flowers gone?"
"When will they ever learn?"--You're right, probably never.
Yea right
Of course It has Nothing to do with endless flexible yet to be defined rules, regulations and taxes Obama has foisted upon them.
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