The rich are winning. That much is obvious:
Three decades ago, the average corporate chief executive was paid 42 times as much as the average worker. Today that c.e.o. makes almost 600 times as much. The upper one percent of the American population now owns almost a quarter of all American income. The very rich’s share was less than one tenth thirty years ago, but then more than eighty percent of the intervening three decades of economic growth ended up in their bank accounts. The rest of that growth went to the just plain rich, who occupy the five percent immediately beneath the very rich, or to the wealthy, the five percent immediately beneath the just plain rich. And the average income of the bottom ninety percent of America did not increase at all.
By my calculations, the score over the last thirty years now stands: Rich 15, Everyone Else 0.
And some people are very pissed off about it.
Armand is one of those. He runs the two lift garage where I get my Honda serviced. I was in his office when he learned that a hedge fund manager with a nine figure income paid a lower tax rate than he did.
Armand slammed his wrench on the counter. “This is like the days of John D. Rockefeller and friggin J.P. Morgan,” he snapped. “The rest of us are getting screwed but the fat cats are steady haulin money to the bank. Make em ante up like everybody else.”
As much as I like him, Armand’s upset is the exception rather than the rule, and in the end, not particularly useful.
Anger is definitely not a representative American emotion when it comes to those with annual incomes far exceeding what the rest of us could ever hope to earn in a dozen lifetimes. Indeed, the country just gave a significant electoral margin to a political party devoted to making sure hedge fund managers earning $500 million a year pay lower tax rates than automobile mechanics earning $50 thousand. That message is clear: Tens of millions five figure earners other than Armand subscribe to special treatment for the rich. And being pissed off about it won’t get us very far.
We might get further by addressing the mythology behind this commitment to the upper crust. Despite its success, the case for letting the rich continue to dominate is severely flawed at best. Consider these four popular beliefs underpinning much of it:
The larger the pile of money at the top of the economic pyramid, the more money will be generated for the rest of us closer to the bottom. The record over the last thirty years refutes that notion on its face. Money does not trickle down nearly so much as it is suctioned up from the bottom. Without financial leverage at the base of our economic structure we look like Detroit. Wealth needs to be in circulation to ensure there’s enough to go around, and concentrating it at the top is at best a poor way of doing that, particularly in an economy increasingly dominated by the trading of money rather than the generation of industry.
I am going to be rich myself someday. Like everyone else, I have harbored this fantasy: daydreaming of my house at the beach and pied-a-terre in Manhattan, my full time gardener, lap pool, and secretary, traveling by private plane, giving my sweetheart diamonds, owning season tickets at courtside. Having reached Medicare age, however, I have finally become honest enough to admit that is never going to happen and give up being greedy on behalf of my imagined future fortune. I recommend it. Statistically, we all have a better chance of playing power forward in the NBA.
If the rich can make a fortune, it should all be theirs. The problem with this notion is our use of “make.” Generating wealth is a complex process. For it to happen, a financial system has to be maintained, infrastructure constructed, order established, workers trained, currency issued, markets underwritten, law enforced, citizenry serviced, commerce secured, and property protected—all public functions that are prerequisites to anyone’s private prosperity. Individual fortunes are in large part “made” by successfully spring-boarding off those communal institutions and conditions. Given that, anyone who prospers has the obligation to share a cut of their winnings with the social machine that makes it all possible, particularly those who have benefited from it the most.
Having so much money themselves, the rich are the best suited to control where and how the nation’s money is spent. This is a half truth. Certainly those who have made fortunes bring significant skills to our national decision making—of which we definitely need to avail ourselves. They do not, however, have anything more than a spotty record of allocating resources in ways that make for a more perfect union. And mastering the future approaching over our horizon clearly requires motivations other than just functional greed and perspectives other than just those of the most elevated. The forces of Capital alone can’t be entrusted to see us through. Universal partnership works far better than domination by those with the most.
The rich will always be with us. But they are only problematic when the disparity of incomes between the many and the few assumes such proportions that we effectively cease to be one nation, under law, and become a functioning plutocracy. America seems to have reached that point and continuing much further in this direction will cripple us. For America to make the most of what’s coming we need everyone to be a stakeholder in the civilization we will have to lean on. And if any one of us can pay a fifty percent tax and still have seven figures or more left over to deposit in the bank, they can well afford to up their ante when the country’s back is to the wall.
On that, Armand and I agree.
Before I retrieved my Honda from his shop a couple weeks ago, he taped a hand-lettered sign to my back bumper.
It said, “TAX THE RICH.”
And I haven’t taken it off.