Are the rich just like us? In one sense they are – they eat, sleep and defecate just like everyone else. They love, cry and die – just like everyone else. But when you’re dealing with policy – no, they aren’t just like everyone else. It’s fashionable (one of those evergreen fashions) to argue that the policies that benefit the rich, benefit everyone. There are certainly policies that benefit everyone, but there are few policies which primarily benefit the rich which are to everyone’s interest. Let’s run through this in a bit more detail.
Rich
Most rich people get most of their money from investments – also known as unearned income. So when investment income is taxed at a lower rate than earned income (what you get on your paycheck), which it is – then those who rely primarily on earned income are being taxed at a higher effective rate. This is a deliberate policy choice.
When jobs are outsourced, the profits still flow back into the hands of US investors. While many people own stock and bonds (especially through pension funds) this disproportionately benefits the rich because the rich (as noted above) disproportionately receive their money from unearned income.
When the domestic economy does badly, but corporate and general investment profits are up – the rich do fine because the cost of things they want (like servants) goes down as supply goes up. Those few people they do deign to employ cost less.
When tax changes are made that are less progressive (moving to fees or flat taxes, for example, and away from income tax) it benefits the rich – because they earn more money and regressive taxes benefit those with more.
When asset appreciation is only taxed at death it benefits the rich, because much of their net wealth is only taxed when they die.
When estate taxes are gotten rid of – it benefits the rich (or rather their children).
When public schools are defunded it benefits the rich. Their kids aren’t going to them anyway, and now they don’t have to pay for your kids to go there.
When capital flow laws are relaxed it benefits the rich. Do you need to move a million dollars out of China in a few minutes to get an extra .1% overnight return? No?
When the spread between inflation rates and the interest rate is high it benefits the rich, because most of them are creditors. It hurts the middle class and the poor – because they are debtors.
When bankruptcy laws are tightened it hurts the poor and the middle class and helps the rich.
The Middle Class
When jobs are plentiful, it benefits the middle class. But if you’re already middle class and you keep your job, but others are losing theirs, you can win relatively – especially if prices are dropping relative to your salary.
When jobs pay well and are keeping up with inflation, it benefits the middle class.
When house prices go up it benefits the middle class – because they have the majority of their money in their houses – that’s their savings account. It hurts the poor, because they can’t get housing and it hurts the subset of the middle class that doesn’t yet have a house, because they can’t get one.
When medical care prices increase it hurts the middle class because their employers stop paying for it, pay for less or leave the country to a domicile where either the government provides it (Canada) or they don’t have to provide it.
The Poor
When rent, food or fuel costs go up it hurts the poor because they spend most of their income on those three things. It hurts them disproportionately compared to the pain to the rich.
When the economy doesn’t produce new jobs it hurts the poor because they then can’t get jobs, especially the long term poor who are only hired when those with more recent experience are used up.
When medical care becomes more expensive it hurts the poor, because they can’t afford it. So they live in pain, or with chronic diseases, and get treated only when it’s close to mortal and they can’t be turned away.
When mandatory sentencing for blue collar crime goes in, it hurts the poor because more of them commit crime and it takes away their husbands and their sons.
When some drugs are made illegal while others with psychoactive effects are legal but prescribed only to those who can afford both price controlled drugs and doctors prescriptions it hurts the poor.
Yes Virginia, the rich are different…
…not because they are better or worse than us, not because they are bad people, but because they have different interests and different incentives and they live in a world that is different from the one the middle class or the poor live in. Policies that enrich them could enrich everyone. There are policies and economies that help everyone. From 1945 to around 1970 the rising economy made everyone better off equally – the rich, the middle class, the poor. Everyone prospered together.
It can be that way, but it doesn’t have to be. You can make the pie bigger – or you can make your slice larger. Over the last thirty years Americans have fought over the pie. Warren Buffett once noted that if there was a class war then his class was winning. There is a class war and the rich are indeed winning – and it is one of the things that is slowly destroying the United States.
Everyone can be prosperous. But everyone can’t be rich. Choose what sort of society you want – or have others choose for you.
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Hey Ian….
Aloha, Ian!
How come almost everyone that wins a big lottery prize has a sucky life after?
Hi Ian,
What will it take for us to regain interest in growing the pie for everyone? Besides a Democratic electoral landslide, I mean.
haven’t finnished, came down to ask for typo fix;
missed the n behind “known
I will read this after I say HAPPY BIRTHDAY IAN!
(and to your birthday twin Mutant Poodle wherever he may be at the moment)
And one thing the rich don’t understand is that their actions can destabilize our society to the point that it will collapse.
My post:
‘Theory of Pie’.
Explains a little about how that can happen.
The rich of France circa 1790’s lost their heads for keeping them buried in the sand. It was their choice and they didn’t choose wisely.
Birthday? Ian has a Birthday? No wonder he seems so much wiser today.
it’s a great piece Ian, great, I can save this page and reference it but I disagree with one sentence;
this isn’t true
when home prices go up it doesn’t benefit the middle class till they retire and sell the house, IF they can afford to live somewhere else once they sell the house
selling the house before they retire gives them nothing because they still have to live somewhere, they will pay higher rent due to higher housing costs
the only time home value improvement benefits the homeowner is if their market appreciated at a greater rate then the general population
otherwise the gains are linear
oh, didn’t know it was Ian’s b-day, is there a party?
I will bring teh keg
I view most of the Republican rich as greedy. And some of the Democratic rich as greedy too. The operative words here are “most” and “some”.
prosperously wise
When you’ve never had to work for a living, it can make a difference in your outlook on things.
jared diamond should be mandatory reading.
p.s. love your theory of pie. i’m gonna use that one.
And we have more and more poor, in this country.
I was at the supermarket yesterday, buying groceries on plastic, because I’m out of money until my next paycheck. I saw an elderly couple, in their late 70’s at least, dressed neatly and carefully, all buttoned up with hats and coats – cold here. They were shopping – carefully – looking closely at prices at the meat counter. In their shopping cart there was a small bunch of bananas, a medium can of tomato sauce, and a can of spam. They spent a few minutes looking at chicken, and then went regretfully on.
I don’t mind that they have different interests and different goals. I mind that they keep winning in America and the rest of us keep falling farther behind.
I would rather bake a bigger pie myself, than hoard it all…!
I’m reading him now. “Guns Germs and Steel”.
the “rich” want to know why they didn’t invest better for their retirement.
The middle class might be coincident with the idea of some sort of re-distribution of wealth. The poor certainly would. The wealthy would not.
cause they don’t have any idea how to use all that money wisely.
I’ll go with that. ;0)
that’s a nice theory citizen, however you have a typo, please to fix so I can link;
form > from
thanx in advance
True. They dont’ understand people who live simply. Who pay their bills, pay off their homes, perhaps put their kids through school and feel that they have done well. And now, who cannot afford to heat their homes or have food in the house.
The Bush and Cheney families are not like most Americans.
I would add teh wipped cream, teh ice cream, teh boston cream
then I would sell at big profit and buy more pie
try collapse if you liked that one.
nor are the families of most of our DC elected officials
Can anyone show me that the gulf between the haves and have nots is not growing?
Diamond’s “Collapse” is also on the required reading list
Nah. They’re crooks.
Well ok den.
imo, really shows what happens when the elites are not affected by their decisions but the rest of society is.
but i would be great at using that money!
raven, log into aim please. want to show you something.
hey citizen, I LOVE this sentence and will use often, within the bracket is mine as inferred by the rest of the piece;
Ian,
You posts are uniformly great and I enjoy them quite a bit. This is the first quibble I’ve had:
“not because they are better or worse than us, not because they are bad people, but because they have different interests and different incentives and they live in a world that is different from the one the middle class or the poor live in.”
I disagree. These folks are highly educated, and have access to realms of reports and data. They know exactly what they are doing.
They try to bullshit us, and themselves, with their free market religion, and the mantra that only the lazy or the stupid are poor.
They must marginalize the “other” (like we did gooks in Vietnam,ragheads in Iraq and liberals in the media) to justify their wrong-doing.
I’ve dealt with too many of the greedy bastards to cut them any slack. There are occasional exceptions, but IMV, not statistically significant.
Compare working families income increases, savings, investments and buying power over the last almost eight years, with that of the wealthy. What do you see?
Agreed.
Some people are smart. They inherit money and connections (Bush etc.). Some are not. And these folks obviously deserve to struggle month to month just to make ends meet.
I’m off to the County delegate meeting. gottta go. and Ian is one of my favs here at the Lake. so sorry.
nite, all!
Re house price gains benefitting middle class.
Often it hurts the middle class. As housing prices rise, real estate taxes increase. If your house rises faster than your wages, you are taxed out.
This is a classic slow motion gentrification of inner city strategy. It’s at work here in Houston as the poor in the wards near downtown are forced out by tax foreclosure sales.
The rich don’t really seem to gain by impoverishing the populace either. They have to wall themselves off in gated communities, pay more for security, and live in increased risk of crime when they venture out. They complain bitterly about the guy’s accent in the c-store or about the fact that the lowest bidders on their remodel can’t speak english. Their happiness is not increased nor their worry lessened.
$15,000,000,000 per month for unwinnable wars. Do you honestly think the wealthy are picking up this tab?
Our income is what it is because of the society that supports us. If you take a doctor or lawyer and stick them in a poor third world country, suddenly they aren’t making as much money, if any.
Because the society supports our salaries, all of us need to give back to it in the form of taxes, with the wealthier giving a higher percentage. Republicans and conservatives have been taught not to believe in this social responsibility.
Wait ’til the recession hits. That should be fun.
I think that our grandchildren will.
And pretty soon gasoline prices are set to spike.
I think our children are catching on. Hence the youth turnout for Obama
I think I am younger than you are. That’s my KIDS turning out, but not old enough to vote yet. My grandkids will pay 30+ yrs down the road.
The media’s role is to assure us everything is fine. They happily report the stock market is going up (without explaining the ‘Bill Gates and 9 unemployed guys in a bar’ phenomenon), the surge is working (for Halliburton and the Carlyle Group{how the hell does the fact that the Bushes and the Bin Ladins sit on the board of this outfit escape due scrutiny?}), and that the unemployment rate is down (a lot of folks are holding two jobs).
All of which is why Chris Matthews reminds me of a carny barker – “step right up folks, and let us beguile you out of your rent money!”
The rich see America’s problems differently, generally speaking, because they’re rich.
A truly enlightened or perhaps more farsighted upper class would begin to realize that the current efforts to in effect reestablish the feudal system will lead to a quite nasty French Revolution-style pushback. Not over a period of centuries as things move more quickly in our times, but within two decades at the most.
your post was really good and I didn’t realize that consequence of higher home price
I want to comment on the part I made bold above
even if we discard the things you mention a person does when they become wealthy, they don’t benefit BECAUSE they would have acquired MORE wealth if the entire society progressed
what really happens when they suppress others wealth is they create a greater divide, they appear more wealthy then everyone else even though they would actually have MORE wealth if everyone grew
and that’s what they want, they don’t really want more wealth, they want there to be a bigger difference between them and everyone else
And at the rate we’re going, their grandchildren, and perhaps beyond.
The rich see us as a drag on their portfolio. When US Airways was abusing the BK code to break labor contracts, the sole concern of a rich couple I met at a social do was, would the ungrateful employees go on strike and disrupt their vacation?
The real genius of the republican las lain in their ability to convince them that the rich will invest their savings if only they are not “confiscated” by the government.
Rich people have more money than they know what to do with. if they have more, they stash it for the next generation or the one after that.
The Laffer curve was the biggest piece of intellectual fraud ever. since the beginning of time, every two-bit tyrant and despot has known that higher taxes raise more money.
I’ve heard “a rising tide floats all boats.” Right. When your yacht motors past my rowboat your wake swamps me.
Look. If you want a robust economy, you cut taxes and start wars. Right Mr. McCain.
they can raise my tide any time now.
Even the Fascist Henry Ford figured that out..can’t buy a Model T if you are broke.
((( Eli )))
Happy Birthday buddy !
I’d love it too — if I had a yacht!
Even my outrigger canoe has capsized…! ;-)
B*I*N*G*O
Capital has been manipulated as a notional value on which derivative transactions are calculated and profit and loss are realized. Finance capitalism, through income disparity condoned by supply-side ideology of keeping profit for the rich in the name of capital formation and letting the working poor be taken care of through trickling down from the rich, has constructed a financial infrastructure that channel profits to a few and assigns losses to the many. The inequity is mind-boggling. At least the capitalists of industrial capitalism used their own money. In finance capitalism, the retirement funds of workers are manipulated by financiers to exploit workers.
http://www.henryckliu.com/page153.html
Henry Ford was also somewhat of a racist.
Uh, Dood, it’s Ian’s BDay…! *g*
ROFL
Hi CT, how’s life in Paradise ?!!
Well… I’m really not at all worried. The coming tax rebates will cure all.
and anti semite
Really? Happy Birthday, Ian!
They sure will. I’m planning on putting an end to global warming with mine. What are you and Lahoma going to do with yours?
Maybe somewhat of a racist but he hated Jews with a passion. A really despicable human being.
Because how happy you are tracks how much purpose you have in life very well, and most people aren’t very good at giving themselves a purpose when they have enough money.
Yes. That’s what I was talking about. Very much anti-Jewish.
I extend my BDay greetings to both, too…! *g*
Fixed it, thanks Perris.
Good post. I love the description of making more pie.
Don’t bother, Bob Lutz says global warming doesn’t exist … /s
Has anyone seen Kirk ? I wonder if his head exploded when he read Lutz’s comments …
My position is that if one is an anti-semite, then that perhaps qualifies as being racist as well.
Thanks all for the kind words on the birthday. The big 4-0.
I certainly hope his head is okay — it’s one we can’t afford to lose.
I think it would be better to say it benefits those who are in houses, provided they handle it properly. Houses were, for decades, essentially the middle classes retirement income and price increases were to their benefit. But there’s also a generational aspect, and house prices going up tended to make it harder for the next generation to become middle class.
Overall I don’t like high house prices, but they’re one of the 3rd rails of American politics for a reason.
Happy birthday Ian. The best is yet to come.
Oh, yeah — I remember that one! It was 22 years ago… They weren’t lying when they said life begins at 40, you know!
My baby Sis (only sib) turns the big 4-0 in June…! ;-)
They’re acting in their best interests. They often know that screws everyone else, but it is their best interest.
There are exceptions amongst some of the very richest folks. Warrent Buffet, for example, who wants higher taxes on the rich and a higher estate tax.
Kirk, if I’ve missed your response to Lutz’s remarks, please forward them to me via FB.
GM is one of the largest Corporations and to have an officer say that the World’s scientific body are fools certainly demonstrates why that company is in such dire straits …
I don’t know what Lahoma is going to do with hers. But I am going to add it to my Christmas club and buy some gifts for the not so wealthy children in our little town this coming December. ;0)
L. says hello.
Has Mr Buffet endorsed anyone as yet ?
The Perfect Storm created by Bush, Greenspan, and Banks Gone Wild is sweeping across financial sectors, bigger than the subprime mortgage crisis; credit derivatives.
Looking Into The Derivative Beast’s Cave
Elaine Meinel Supkis
http://elainemeinelsupkis.type…..l#comments
Numbers That Do Not Add Up
by Rob Kirby
Having just learned about the plans of U.S. financial elites to cease publication of another swath of economic data, producing this short report took in a timely fashion has taken on new meaning – after-all, in another month or two – the data on which it is based may have disappeared too.
http://www.financialsense.com/…../0215.html
Bush (and Greenspan) makes Nixon look like an amateur. I always wondered why Negroponte was brought in and given enormous power.
Article from 2006: Intelligence Czar Can Waive SEC Rules
Now, the White House’s top spymaster can cite national security to exempt businesses from reporting requirements
President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye. …this is the first time a President has ever delegated the authority to someone outside the Oval Office
http://www.businessweek.com/bw…..=rss_daily
If a Bush impeachment for high crimes and treason is on the table it definitely won’t be about Iraq. It’ll be about the economic collapse of our financial system.
The 1%’ers didn’t elect Reagan, Reagan, Bush I, Bush II, Bush II. The genius of the Criminal Enterprise (aka the Republican Party) is having people vote against their self interest. I was in West Texas last week and all that I heard was people of marginal income trash Obama and Hillary. Tell people we need “Single Payer” and the come back is “I don’t want Socialized Medicine. I am beginning to think it is F’ing hopeless unless the coming depression changes a lot of peoples minds.
IAN! Your birthday cake!
We need to give the American rich some real problems — like making do on 5% of their unearned income, as we tax the rest of it to restore our economic balance. Like making do with only two homes, after we seize the others to house homeless vets. Like making do without extravagances like million dollar cars and boats unless they pay 200% tax on these sillinesses.
We need to tax the parasitic Paris Hiltons in our country to the point where they need to actually earn a living. It’s time to end the plight of the American aristocracy — it’s time to suit up in The Class War!
We need to nationalize the oil companies, big pharma and big healthcare. We need to try and imprison anyone currently serving on an interlocking Board of Directors. We need to win this Class War that’s been waged on us since Reagan!
Well, I’m not sure that’s true. It is a negative, but what really matters about being rich is the differential — how much richer than everyone else you are. I lived in Bangladesh for a time as a kid, and at my father’s salary (nothing special back in Canada or the US) we were very rich there. had 5 servants, lived really well (don’t let anyone tell you appliances are better than servants, they aren’t).
There’s also the power equation — money equals power and it equals more power when the rest of the country is a lot poorer than you. And power is very seductive.
How rich, and how powerful you are is relative. There are negatives (living in compounds) but there are huge positives to big gaps too. If you’re on the rich side.
Um … Raven and Marion … just in case I haven’t said it often enough … I really, really love you … *g*
Headline: $270 Million Lottery Ticket Sold in Georgia
But today’s rich mostly make their money off of various investments and not by selling direct to the US public. They don’t really see the connection and they figure they can sell to Chinese and Indians and Europeans and so on.
Hmmm… Raven did just mention that nobody who’s won a Lottery has had an easier life…! ;-)
Redistribute the wealth. Stop the wars and increase taxes on the wealthy and corporations, and put those monies into infrastucture, education, health care, creation of jobs, and helping to pave the way to a greener planet.
Well said Ian, your words comfort ……thank you.
Thanks Betsy. :) LOL.
wow, that post is an incredible compilation, frightening stuff there, especially negraponte saying it’s can be a “national security risk” for bussiness to have to report
we are in tons of trouble
I don’t believe he has, not 100% sure.
His problem$ will be my problem$ … *g*
I’m ready, willing, and able… I know how to breach obstacles and deploy effective defensive positions…! ;-)
Well done — easy enough for even me to understand ;-) Now if only we had such comments on the teevee, people might start voting their values.
If you pay your fair share of taxes, you probably won’t be wealthy.
teddy, that’s a great post but I really think we have to start calling this “reacquiring assets that were taken from the middle class”
I don’t want to call these “taxes”, I want to call them usage fees and re acquiring assets…it’s all in how the discussion is framed
here’s your real cake!
We do in Canada and many of us enjoy a very good standard of living …
When bankruptcy laws are tightened it hurts the poor and the middle class and helps the rich.
Didn’t the bankruptcy law actually help the rich, allowing them to shelter money in the event of bankruptcy?
I don’t see a problem with earning money from investments…The problem is that the system is rigged..with insider trading…”K Street Project”..fraud and not paying fair taxes..etc..etc..
What I love is when candidates loan their campaigns millions of dollars.
“The genius of the Criminal Enterprise (aka the Republican Party) is having people vote against their self interest.“
That is so true!
How people barely making ends meet continually support pissing 15 billion a month down the drain that otherwise could go to better schools, infrastructure repair, (and the jobs that come with that) etc. is way beyond me.
My Grandmother was from Collingwood. If you know where that is. ;0)
Dinner bell rings … hugs to all of you !!!
Yes’M, it does…*g*
in other words;
For rich folks, poverty ROCKS!
there’s no problem with earning money from investments, the problem is taxing those earnings at a lower rate then people who work for the money
exacerbate that liability with the fact that some of the investments wind up overseas where there aren’t labor laws and we not only harm our own economy taking funds from the middle class, we also encourage child labor and slave labor with that practice
we need to over tax any investments that go overseas to try to keep our assets in our economy
More and more I’m seeing folks pay for their groceries and medicine with credit cards.
Where do youlive?
I’ve been seeing that for 5 yrs.
The
piratesrich such as Pirate Romney hide their stolen taxable wealth in offshore entities such as Cayman Islands. The FBI should take notes on Angela Merkel’s war on tax cheats.‘The Tax Scandal Has Reached a New Level’
In one of the biggest tax evasion scandals in recent German history, an informant last week provided the government in Berlin with data on hundreds of people hiding their wealth in nearby Liechtenstein. On Thursday, the scandal widened to include German banks.
http://www.spiegel.de/internat…..39,00.html
Eat the rich.
I agree that things are screwed up…but I don’t agree with the dicotomy of “worked for the money” vs investment income. I worked 90-100 hours a week for a lot of years and put money in a teacher’s retirement fund..which they invested. I sure hope those investments do well..because I worked damn hard for that investment income.
I’m literally working poor. Being payed cashier’s wages for a very much NOT a cashier’s job. Meanwhile the corporation rakes in profits while i have my hands full making rent every month and my living expenses.
Seeing things equalized across the board would be nice, but egads. It’ll take years to do and i(and the many like me) dont’ HAVE years. I rent an apartment, with no intentions of every buying a home. My parents are blue collar and managed to do so. If things stay this way? I’ll never get the chance to buy one if i change my mind, either. Because someone wants to stay rich, and i can’t get enough to make ends meet.
I’m working to change my position in this, but even then i doubt i’ll invest in a home. At least not here, anyway. The fun part will be finding someone to hire me in at better wages than i’m making now! The nasty little trick of checking your credit record when you apply for a job is stupid too. As if my ability to pay bills back(or when i can’t because my pay sucks!) affects the fact that i’ve held several jobs and left every job i’ve had on good terms. Just that my credit record is crappy because i dont’ get paid enough–and so get passed over for a job that i probably could be a real company asset in. Way too many booby traps out there for the working poor.
It all needs to change!
The bankruptcy laws may have really screwed the pooch…people are paying their credit cards and walking away from home mortgages.
I’ve had another email from the CFO (I’m the ceo) upstairs calling into question whether I have considered the cost benefits (the cfo reminds me we are taxed on food in this state) of fried chicken and mashed potatoes as compared to standing rib roast and caviar. Fact of the matter is, I hadn’t. But I am considering it now. I think the economics of the situation point to me fixing fried chicken and mashed potatoes for supper tonight. Adios for awhile.
Southwestern Oklahoma.
where did everyone go?
Wow. I live in Kansas and I’ve made a point to notice that kind of thing. I always pay in cash(tips) No. One. Ever. Pays. In. Cash. Ever.
(when I’m there, anyway.)
I noticed ya said it quietly, Lahoma might dispute that…! ;-)
Southwest Oklahoma.
Howdy, Ma’am! I’m prepping my Tex-Mex supper, Chicken Fajitas and Beef Burritos…! ;-)
Plus, they have a ’safety-valve’ if you’re rich – you can put all of your assets into a huge home in Florida or Texas – like OJ.
I often pay in cash when shopping or in restaurants. My weekend job pays cash and I use it for incidentals and groceries during the week. The real job goes towards the big bills.
A variation of this is in its 2nd or 3rd generation in Chicago. The earlier phases were marked by 1) depressed inner city values relative to the newly opening (and highly segregated) suburbs and outlying districts of the city, which led to long-term physical decline; 2) massive bulldozing and construction of highly concentrated public housing in subsections of the inner city; to now 3) razing of that, with replacement by “gentrified” developments and rising values in the surrounding older housing stock, which is still rehabbable into top value. Slowly all but a thin top layer of black upper middle class is getting financially squeezed out of the more central areas.
I truly suspect that Chicago getting the Olympics was the intended endgame; big plans to take over the well-used public park that runs through the center of the slowly gentrifying black community for Olympic venues, including the main stadium are part of the bid. However, the credit crunch might be large enough to have put a crimp in that due to the damage on everyone’s credit and income opportunities.
Many have misestimated(bushspeak)are MBA prezinet. The question is how much longer can he keep the scam under the sheep’s radar until implosion.
The memo Bush signed on May 5, which was published seven days later in the Federal Register, had the unrevealing title “Assignment of Function Relating to Granting of Authority for Issuance of Certain Directives: Memorandum for the Director of National Intelligence.” In the document, Bush addressed Negroponte, saying: “I hereby assign to you the function of the President under section 13(b)(3)(A) of the Securities Exchange Act of 1934, as amended.”
A trip to the statute books showed that the amended version of the 1934 act states that “with respect to matters concerning the national security of the United States,” the President or the head of an Executive Branch agency may exempt companies from certain critical legal obligations. These obligations include keeping accurate “books, records, and accounts” and maintaining “a system of internal accounting controls sufficient” to ensure the propriety of financial transactions and the preparation of
financial statements in compliance with “generally accepted accounting principles.”
http://www.businessweek.com/bw…..=rss_daily
and meanwhile, thanks to the Bankruptcy Bill, you can’t pay a mortgage payment without paying credit card bills, which means more people have to lose their homes.
I’m also the head of the board of directors. )
L.
You got it.
And Happy Birthday to Ian and others!
Same day as an aunt of beloved memory, who had an eventful life and lived well into her 90s having seen many places in the world. May you continue the “tradition.”
Yes it did. It made bankruptcy easier for them allowed them to shelter more, as you say. Very lopsided ugly bill.
How so?
If taxes are fair, and investments are properly regulated, there’s no problem. But right now it’s a huge case of socialized risk and privatized profits.
Here’s a list of the
selloutssenators who voted for the 2001 bankruptcy bill:36 ‘Democratic’ Senators Vote For Credit Card/Banking Industry’s Bankruptcy ‘Reform’
http://www.commondreams.org/he…..316-03.htm
Lopsided in part because middle class and poor people now find it more difficult to declare bankruptcy for reasons beyond their control, such as catastrophic medical expenses. Other reasons?
Yeah, the credit check for unemployment is an ugly trap, and one that should be illegal. But then I’m not sure I wouldn’t like to see credit bureaus overhauled massively or even disbanded anyway.
It’s harder to declare bankruptcy, you can keep less of your goods, you are forced to pay back more. It’s actually easier for corporations and the rich to keep goods and declare bankruptcy. Don’t remember the exact details, but it was a very ugly bill.
So you have two votes and can over-rule him, eh lahoma? *g*
Tax the rich til there are no more rich.
One of the reasons taxing unearned income at a lower rate is so hard to change is that along with the rich, retired people live on unearned income from their savings.
The taxes on unearned income could be structured so that the first $10-30,000 was untaxed, but retirees would still be convinced that the government was coming to get them. People didn’t even understand the estate tax, much less understand that their hundred dollars worth of tax breaks means others are getting millions.
also lopsided because the rich can keep their mansions if they file for bankruptcy.
Arrgh, Rahmbo now airing on Cspan1…
I agree..The greed of the 0.1%’ers is bringing the whole system down and a lot of “middle class” people are going to see any hope of being able to retire going right into the shitter.
There’s some advantages to credit when the system works, but it’s been so badly abused that a total reboot and reformat would likely be best. Which again, isn’t going to happen. At least, not in my lifetime in the US.
My official Certification as a Pharm Tech should help even the odds, but for now i’m stuck with the rules of the status quo. No matter how much i hate it! I can work the system in a lot of cases, but there’s nothing that can be done when the system is actively negating any effort within your means. There are so many more that are worse off than i am, and it angers me. I can barely get resources of my own to begin with, the only loophole out there is to become pregnant(which i refuse to do because it’s a really dumb reason, among others). Then the government falls all over itself to give you money for food and housing, if you’re poor enough.
I love being penalized because i’m single, no kids and no husband. Really.
My partner and I live in SillyValley. In most places in America, our income (low $100K combined) would be considered “wealthy.”
There’s no chance in hell we’ll ever ba able to afford a house in SillyValley, we’d have to buy elsewhere. I think that speaks loudly to the destruction of the middle class.
I know this sounds a little off topic, but bear with me. I was reading commentary about fashion shows and the effect, especially in London and Europe of the newly rich oligarchs from Russia and Asia. One of the reasons designers are using fewer and fewer models of color is because these newly rich will only buy clothing that has appeared on models who “look like them.” So, being rich can have unintended consequences…
We have a teacher friend, who teaches in the same school we do, who can’t afford the debit on his pay for health insurance. His wife (a Native Indian) has been having seizures. If it weren’t for the Native Indian hospital, about forty miles away, this woman would have nowhere to turn. This is not right.
Lahoma
retirement funds are supposed to be exempt from taxes
the middle class should be investing and earning on that investment, the upper class who make un earned income should be paying tax on their salary just like the rest of us
i agree completely. and it is not just about health care either.
Happy Birthday, Ian, welcome to your fifth decade!
You just lump it in with all income and make a very progresive income tax, so that if retired folks are making less than what you think is reasonable, they don’t get taxed or hardly get taxed. It’s a fairly easy fix.
By not taxing the rich at the same rate we encourage them to keep their money in lower safer performing assets.
That is until we reach a point where the top heavy rich seek risker investments to make money. So instead of starting a company or just investing in a well run company they decide to pay games with energy trading Enron, Real Estate the sub prime collapse, Hedge funds doing interesting tricks etc.
Happy Birthday Ian:)
I dont want to start anything but I wonder how these vendors are feeling. They will have to go to the time and expense of court against HRC.
Married and kids has significant tax advantages. But overall single with kids is a good route to poverty, as I’m sure you know, even if the government will make sure you at least don’t starve.
Canada’s much the same way, as you may also know.
AmericaBlog links to a great Google Doc (NSFW) that explains the Subprime mess.
From the TPM Bankruptcy archives:
President Bush at the bankruptcy bill signing ceremony:
Under the new law, Americans who have the ability to pay will be required to pay back at least a portion of their debts. Those who fall behind their state’s median income will not be required to pay back their debts.
The President’s comment is simply not true. Let me count just some of the ways:
1) Under current law, everyone pays back taxes, child support, alimony and student loans, and if they want to keep the house or the car, they have to pay those loans too. This bill expands the list of non-dischargeable debts for EVERYONE, regardless of income, and it expands the amounts that they have to pay for cars and other assets. To say that people leave bankruptcy and “don’t have to pay back their debts” is just plain wrong.
2) The means test will require EVERYONE who files bankruptcy–regardless of income–to file new forms, detailed budgets, tax returns and new affidavits. If the person cannot afford the higher lawyers’ fees to manage this new work or if the person trips over one of the requirements, then she is tossed out of bankruptcy–regardless of whether she is above or below median income. In some places, the means test bites above-median and below-median debtors differently, but it bites everyone.
3) The dozens and dozens of other provisions in the bill that are aimed at consumers have no income test. They apply to everyone, regardless of income.
4) The millionaires’ loopholes remain open. To say that those with above-median income will pay something is true only for the common folk. The millionaires can still slide through.
Hope I’m not winding up redundant, as I skip some posts.
I think the point about income of the wealthy from financial investments versus producer activity had to do with the point that even Ford understood that workers had to have some discretionary income, so they could buy what he was making and selling.
If you get money hand over fist without that kind of contact with the rest of the world, the connection between your well-being and that of working people might not be obvious, especially to people who also are otherwise insulated from the world.
It’s like all that modern-day military jet pilots (don’t) know about war, compared to the infantry.
Yeah, but at least i’d make a livable wage there! Right now? I’m underpaid for the job that i do, and it’s not really worth staying with the company that’s going to abuse my skills like this. As much as i want to stay with my coworkers and my patients, i can’t stand this.
How hard it is to pay your employees for the position they’ve been trained to do. Especially when it’s something as critical as healthcare? OH yeah. Retail pharmacy, therefore you get treated accordingly downscale. Frustrating on so many levels.
It’s actually easier for corporations and the rich to keep goods and declare bankruptcy.
And as we are seeing now, it’s easier (possible!) for a corporation in bankruptcy to get a write-down of the principal value of an asset that has depreciated, for determining how much of a loan against the asset has to be repaid. Called a “cram-down” popularly. Try getting one against your rapidly depreciating house. (Note that they were banned for individual homeowners in the 1970s, not under the 2005 atrocity.)
The cram-down feature, btw, is something the Senate Democrats are likely to consider in the coming week. The CR post I linked above has a link, and it also describes some of the mortgage banker pushback against that specific proposal. But along the lines not only of this one feature, but of some of the things RockPaperScissors has posted, get a load of this:
“The BofA Bailout”. Not only is it no doubt meant to counter any notion of making it necessary for banks, hedge funds, and the like to acknowledge losses on these loans, but it works against the possibility that files on the loans or the securities that were made from them get opened up and examined for the frauds (of one kind or another) that many of them probably are. And that’s before you get to the chance that, with a $ Trillion-deal like this encompassing much of the financial system, these schmoes really might try to jump National Security on us.
The independent pharmacist has been driven out of business mostly. Still, pharmacists do get paid quite a bit more, at least in Canada. Have you considered going back to school for that, since you’re single and childless?
Happy Birthday Ian!!!
May you have at least 40 more! That way you’ll have plenty of time to keep enhancing all of our lives and expanding our knowledge of things with your always excellent and enlightening posts.
Best wishes to you on your birthday, and always,
Eric
No. I’ve no intention of being a pharmacist. I like being a tech, actually. I just wish it was more rewarding in this company at least on a pay scale. The independent pharmacist is being pushed out here too. Especially by slow Medicare part D reimbursements that eat into their operating costs.
I don’t want to be payed as much as a pharmacist. But it’d be nice to have a living wage for what i do. I handle medications daily that help people and their confidential information. I don’t just run a register every day. I had to learn the information from the ground up as well. Instead i’m being payed as if i’m still just a cashier and nothing more.
I’m sure that the pharm tech wages in canada are below that of a pharmacist as well, but i doubt they’re that far below the cost of living.
What an incredible thread. Sorry I was away for this. Ian, brilliant as always.
Great post, Ian.
Thank you, Ian, that’s a great outline. I’m sure there’s millions of ways others can add more details. Such as….
When one of the biggest realty brokers in your city, a guy who’s been in biz for 35 years and he’s overextended and expanding when the real estate bubble collapses – a bubble caused party by the Fed artificially propping up a foundationally unsound economy – and the guy is forced to close his brokerage, the wealthy broker’s pride is hurt, and his cashflow goes down considerably.
But his home’s intact, his lifestyle doesn’t change. He goes on selling real estate and his other assets appreciate.
But the support staff, the clerks and accountants and receptionists and the maintenance staff get laid off. Some get rehired elsewhere and some don’t. They are penalized because of unsound or unwise decisions by subprime lenders, the Federal Reserve board members, the Congress and President, and, to a small degree, because of the decisions of the real estate broker.
The ones that don’t get re-employed within a few months in a faltering economy find their unemployment runs out, then their savings, they borrow to stay afloat till they get forced to make other choices. Like food stamps. Other social programs. Selling things on Craigslist. All the while hoping there’s no medical emergencies, auto repair needs or other unpredicttable extras that suddenly can take economic misfortune into despair land.
Minor luxuries disappear: cable Tv, a movie now and then, dinner out, all entertainment. Then the hard decisions come: give up the rental and rent a room somewhere? Sell off the household furnishings? Give up the ISP and the internet?
When you’re poor, it doesn’t take many months to get there.
It can be an adventure in innovation when you’re young. The young can switch occupations, like I did, doing anything for anyone to get by. The wages might dip, the job might suck, but I recall times like this and it never took longer than 4-6 weeks to find SOMETHING.
So many of the poor I worked with years ago as a welfare assistance worker, described stories like this. They’d bounce back, head to college, advance in their jobs. And the next economic downturn would force them back into the same discouraging cycle. Or a car accident. An illness. A divorce. Some other misfortune.
It only takes one or two of those other events, however, because most of the damage done is from the macro-economic cycles. Even if they make it to the lower end of middle class, there’s just no net too many times for millions of them, and they start feeling trapped.
They may work two jobs, look for more stable employers, try numerous ways to permanently break the cycle. And many still don’t. Not because they’re unmotivated, untalented, stupid or fit any other stereotype.
I used to be a case manager at a homeless shelter. I saw people with advanced degrees fall victim. People who worked at one job for 20 years fall victim. Sure, some had some self-inflicted problems, but quite a few really didn’t.
At 55, I find myself in this situation. I’ve bounced back from 2-3 bad life experiences before: employers that skipped town owing me thousands, a house fire, a difficult divorce. Plus all the macro-economic dips that required belt-tightening and lifestyle changes and moves to other states where the economy was better.
But in the specific situation I described as a supervisor working for a real estate broker, it’s especially hard to accept it yet again. Having my back against the wall. Thinking about shutting down after five years of blogging. Knowing that unless I get a break soon, i’ll be living in my car.
And when the next job comes, it’s start all over time. It takes years just to get back to break even. And it’s wayyyy more tiring at 55 than it was at 25.
That’s what it’s like to be poor. And when the next job comes, even the concept of retirement is just a mirage because Social Security isn’t enough for more than minimal shelter costs and food.
I prosper from a positive attitude and the enjoyment of friends and family. I no longer can even fantasize about wealth except some minimal degree of economic stability.
That, firepups, is what it’s like for a carpenter, cook, welfare assistance worker, apartment manager, shelter case manager, freelance writer, maintenance supervisor and blogger to be poor. Again. Even though I was marginally middle class last June.
A $300 tax rebate in May won’t fix the national economy nor my personal economy. I’ll muddle through this time. Maybe that last job interview will succeed. Maybe I won’t have to sell the computer. Maybe the car will keep running.
Or maybe not.
(This isn’t a plea for sympathy. It’s just a deeper illustration of what Ian wrote. This is what poor is.)
Kevin, sorry to hear it. I know it’s not a plea for sympathy, but, yeah, I’ve been there. Two times in my life I would have been on the street if family hadn’t helped out, once if I hadn’t gone on welfare. Even now, I’m not that secure. It wouldn’t take much… and I know it.
The thing that gets me is that I haven’t seen a good economy for the lower class since the late 80s. I remember when security guard companies couldn’t get enough employees; when corner stores /always/ had signs in their window. Where bad jobs were easy to get. Sure, they weren’t good jobs, but they were jobs. There was wage pressure. There weren’t enough workers.
Never seen that since then.
Yup. And when I try for low wage jobs, the few that exist, they tell me I’m overqualified. Or that they know I’ll leave for better pay at the first opportunity.
There are some jobs out there, but in a university town (Eugene) they’d rather have an irresponsible, unreliable, flaky kid that may or may not stick around for 2 months.
I do have family that could help 3,000 miles away, but from here, I just can’t put the beg on them. They provided help at Christmas that – coupled with side work – got me this far.
Like I said, I’ll figger out something. It just sucks to be here again when a year ago, i thought I was all set for more upward mobility.
Excellent observation.
1.There is a caste system that has cultural implications apart from wealth that the wealthy include in their protective circles.
2.Many of the wealthy are in “the game” and it is played a certain way which excuses the damage it does to those who lose or are not in the game.
3.Many wealthy people give to charities that justify their conscience from guilt. These orgs that benefit from their largesse would not exist without poverty the system produces.
4. The amount by percentage of wealth given in America is very small…it does not impact the total wealth. Gates and Buffet are the exception.
5. about 95% of capital wealth is qwned by less than 5% of our population.
Ian 1945-1970 was a period of open opportunity for veterans for housing and education. Not a lot of wealth was garnered just a larger disposable income that facilitated the consumer economy that the wealthy created… Walmart had a huge growth of poverty and low end consumers.
The wealthy follow the money production on spread sheets then attack that source.
They made a huge mistake in the 80’s-present in out sourcing jobs…killing the goose that laid the golden egg…disposable income!
That would be worth posting and digging widely.
The $11 billion war debt and tax cut to the rich would be a good start.
Ian, keep this up and I’ll be running out of superlatives quickly. Some notes:
Up until the 1870’s, the concept of corporation was much the same as that of Great Britain (in Ireland the corporation is either the town or county government, unchanged from those times), concurrent with the opening of the western regions of the US, the corporation was altered in Law to accommodate business needs in the form of limited liability and unlimited life to vouchsafe the ability to accumulate capital in the building of the western empire (Transportation [railroads], communications [telegraph], extractive [mining], and industrial sectors that supported all else).
The corporation was the legal fiction that made the opening of the US west possible. And as with all good things, if a little is good, more is better. The competition between economic entities within a given economic field soon devolved into survival of the “fittest” entities – the corporations. The more able were to eliminate or absorb their less able competitors and evolved into either Monopolies or Oligopolies controlling a given economic market.
What is important is those who built and controlled the early business corporations were able to maintain their control through ownership of stock in diminishing portion of total share of stock issued to raise capital. Those stock held for control were further incorporated into holding corporations of various devices, “trusts” being popular as well as “foundations”, either form held controlling share of market controlling corporations that provided economic goods and services.
Since there is unlimited time as a corporate quality, the ownership of most economic function was entrusted to the corporate entity, the benefit of economic income going principally to the original owners of the shares and their heirs. This has not substantially changed since the mid nineteenth century nor is it likely to change without substantial upheaval to the social fabric or to the practice of Law.
Railing against such edifice belongs entirely to political economics and is emotional rather than rational, furthermore, will be used by political charlatans and demagogues to seek and obtain political power without the slightest ability to initiate rectification of egregious economic and political malfeasance and in so doing destroy a most valuable economic tool.
By banging two rocks together, mankind was able to leave footprints on the moon. It took a million or so years to do it but it was done. Economics is a history of that progress, from mankind’s earliest ecology to recording and remembering all the economic superstructures that have been built upon that ecology. Ignore that at your peril. The smoke and mirrors of political economics hide and confuse what needs to be known and taught. ;-)
P.S. Happy B-day Ian, 40 circuits del Sol – not bad, but it gets better an’ better. From someone who did not trust anyone over thirty just last Monday observing my 65th circuit del Sol. Your health is your wealth. ;-)
UNEARNED INCOME, Investment income. At one time I received $10K unearned investment income annually and when asked “What do you do?” (for a living), I would respond “Slave Owner”. The money I received, all tho unearned by me, was earned by someone. The plantation/investment was bought by inheritance from my parents, the income came from the work of others (earners). As slave owner I earned a portion of slave earnings by providing a plantation. I received a portion of the earner/slave income. The problem here is not that I received the slaves earned money, but that I received so much of it. (approx. 10%/yr of investment), for doing essentially nothing. I smell a crime scene!!!
The Estate tax/Death Tax/Anti-Aristocracy Tax should be near 100% to recycle the power of this system back to the few who can earn it, and away from those that inherit it. Who knows, when pushed, maybe an heir can earn.
Otherwise another crime scene, just like our rich buddies have us in Iraq
Thanks for explaining why
Improving the lives of the POOR affects US ALL
Improving the lives of the RICH only affects the RICH…
An excellent argument for “trickle-up” economics.