The case for class warfare

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By now, just about everyone who cares about the economic wars in America has read the Joseph Stiglitz piece in Vanity Fair. It's nothing new, really -- the same stuff a lot of people have been saying for a long time now. But the fact that it was written by a Nobel Prize winner and that the piece ran in a popular magazine typically dedicated to the lives of the rich and famous has brought a lot of welcome attention to the message:

In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.

And:

Some people look at income inequality and shrug their shoulders. So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. That argument is fundamentally wrong. An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul.

And:

The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don’t need to rely on government for parks or education or medical care or personal security—they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had. They also worry about strong government—one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good. The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes.

Over at CalBuzz, they're talking about how class warfare may be the next big winning strategy in California politics:

As a political matter, it’s time for Jerry Brown to reach for his inner La Follette and start sounding some good, old fashioned, Wisconsin style populism. Instead of going after the railroads, as La Follete did, however, Brown should aim at the ultra-wealthy, the oil companies and other greedy corporate interests who have a) allowed the California Republican Party to gridlock the budget process and b) fought to keep special corporate loopholes, including outrageously low property tax rates from Prop. 13.

The latest polls show that more than 75 percent of Californians (including 60 percent of Republicans) think it's a good idea to raise taxes on people who make more than $500,000 a year. The California Federation of Teachers is talking about a ballot initiative for the fall. Brown ought to be on board with that; hell, he ought to be out front making the case.

I'd like to see some Inner La Follette in San Francisco, too. City Attorney Dennis Herrera, who seems to support the Twitter tax break, is at least talking about the need to refrom the local tax structure.  Although he's using the same dumb old language of the anti-tax folks:

The city’s economic analysts have estimated that the current business payroll tax depresses employment in San Francisco by 1 percent, by driving up costs to employers to hire more workers. For some real-life perspective, that’s about 5,500 jobs that would otherwise be available to unemployed and under-employed San Franciscans right now. City economists also blame the current business payroll tax for depressing local wages—which, in turn, depresses local spending.

Which is enough to make me scream. The payroll tax doesn't affect any rational business decision on hiring; it can't. It's just too minor a factor. And if you want to say that without a payroll tax, a company with several hundred employees might be able to hire a couple more, you're missing the point: The payroll tax is just a rough estimate for the size of a firm -- and if San Francisco had a gross receipts or commercial rent tax instead, that company would be paying roughly the same amount for a different tax.

Of course, if we had a better tax structure, more companies would pay; right now, so many outfits have so many ways to avoid the payroll tax that only about ten percent of local businesses pay it at all. And I'm in complete agreement with Herrera (and David Chiu, and others) who argue that we need to get rid of the payroll tax altogether and create a better, fairer business tax. But that's not because very modest taxes (and that's what the city charges) drive companies out of San Francisco or prevent job growth -- it's because too many pay nothing at all. (Yes, applying the payroll tax to stock options is a big financial disincentive. It's also easy to fix, without giving half of the central city a tax break that will cost hundreds of jobs. Yes: Cost jobs. Because when the city loses tax revenue, it has to lay off employees. Public sector jobs are jobs, too.)

I have been asking -- begging -- city officials for 20 years to get serious about tax reform, to put together a summit, a task force, a committee that can overhaul the entire local tax structure. But let's not talk about lower taxes creating jobs. That's just nonsense. Investment creates jobs. Good education and infrastructure attracts businesses. The goal of a new tax policy ought to be to make the city's revenue generation more progressive (the rich pay more) and more fair (almost everyone pays something) -- and to bring in at least a few hundred million more dollars a year.

In fact, the goal ought to be to follow the advice of Professor Stiglitz and do whatever we can here at home to fight wealth inequality (the same way we do our small part here in SF to fight global warming, childhood obesity and overuse of plastics).

I'm not a big fan of war, but I believe in self-defense -- and over the past 30 years, the powerful interests in this country have waged an all-out war on the poor and the middle class. And for the most part, we haven't bothered to fight back. We've surrendered, over and over again, and now we've become a nation of serfs, forced to work more hours for less pay with less security and a declining quality of life -- just so the top 1% can be richer than ever before.

At the great T. Pynchon wrote:

They've been paying you to love it

But the time has come to shove it

And it isn't a resistance, it's a war.

Right here in San Francisco, too. Can we at least talk about that? Please?

Comments

(and it feels more like 200 years to me) then maybe, just maybe, your message isn't finding resonance and critical mass.

Punishing life's winners to subsidize life's losers isn't what America is about. You claim the US is more unequal than Europe? Damn right! It should be. Because our rich are much richer than their rich. And that pulls everyone up. There are far more people in the U.S. who are affluent, comfortable and financially secure than some place like Denmark with 60% income tax. Five million millionaires! Everyone has a shot at the dream here.

If after 20 years nobody is listening to you, chances are you're singing the wrong song.

Posted by TheDoc on Apr. 05, 2011 @ 6:20 pm

"our rich are much richer than their rich. And that pulls everyone up" - So then, please explain our poverty, infant mortality, teen pregnancy, and high-school dropout rates, which are much higher than in any other advanced Western country.

The idea that concentrations of wealth produce social mobility is a free-market fundamentalist lie. The robber-baron era resulted in general prosperity only for the robber barons themselves. And, believe it or not, social mobility is higher in the class-addled UK than in the supposedly egalitarian US.

Dismantle public education, eliminate inheritance taxes, and crush the unions -- all of which are essential components of the grand conservative program -- and you destroy the ladder that millions of Americans have used to pull themselves into the middle class. Result: a new aristocracy. Didn't we fight a revolution over that?

Posted by Peter on Apr. 06, 2011 @ 8:46 am

You are sadly misinformed. Greater inequality of wealth actually drags everybody down, including the rich. The other reply to your comment isn't just making things up, this is born out by research comparing various countries.

Posted by Josh A. on Apr. 12, 2011 @ 6:20 am

Just what we need MORE of in San Francisco.

Posted by Lucretia Snapples on Apr. 05, 2011 @ 7:22 pm

"Punishing life's winners to subsidize life's losers"... from someone that is guaranteed to barely have a pot to piss in.

Hey, "Doc", here's a bit of advice: It's really, really, really unhealthy to stick your nose and mouth up someone's ass, no matter how much money and power they have and all in the hopes that they'll like you better for it. Ya know, the very strong odds are that you definitely qualify as one of those "losers". You are not in the top 1%, you aren't in the top ten, I reckon you may barely scrape the top half.

See, pal, this isn't like praying to a god for something, a god you can't see, because your faith tells you to--this is worshiping people who have nothing but contempt for their most ardent supporters, namely, losers like yourself.

No one ever got diddley by kissing up. Read your history. And the only thing courtiers to the powerful ever get when times go south is the same shaft everyone else gets.

Now go brush your teeth and wash your face so you don't make your mom sick--it's time to get out of the basement.

Posted by Matty on Apr. 05, 2011 @ 7:51 pm

Thanks for the discussion above, Tim Redmond.

You and Joseph Stiglitz are right that the disparity between rich and poor in America is appalling and inexcusable. In the name of justice, and to promote the viability of democracy, this gap should be greatly reduced.

Unfortunately, however, you forgot to mention half the problem: the folly and ineptitude of the American left in general, and the city's progressives in particular, in coming up with practical solutions.

The American left generally lacks social skills and doesn't know how to talk with anyone who doesn't already agree with its dogmas.

This fault has reached sublime heights with our local progressive sect. They are increasingly known for their anti-intellectualism, anti-feminism, anti-culturalism, age-ism, and anti-Semitism. Their operatives are often dishonest, scheming, and paranoid.

A gaggle of fools with never defeat a clique of power.

This is the reality that eventually must be faced by you, the Ayatollah Brugmann, the Greens, and the Milk Clubbers.

It will no longer do to pretend the problem doesn't exist.

Posted by Arthur Evans on Apr. 05, 2011 @ 9:27 pm

that is a problem?

If I have a million and Bill Gates has 50 billion (which he does) then that is a massive disparity - far more than any in Europe or elsewhere.

But does it really matter? How so? Only if I am envious of him and that's hardly a reasonable basis for political action.

No, what matters is that I still have a million, and I'm doing fine. So what does it matter that someone somewhere whom I don't know has that much?

Moreover, the reason I have that million is quite possibly because I work for the company he founded, or bought shares in it, or otherwise was more productive because of MSoft products.

Comparing yourself to others is ultimately a game of futility. What matters is my opportunity to emulate his success. And nowhere is that more likely than the U.S.

Posted by TheDoc on Apr. 06, 2011 @ 5:40 am

The vast majority of people make under 40,000 a year and not a million dollars a year as you suggest. We have millions of people who live in dreadful poverty in this country. Wake up

Posted by Guest on Apr. 06, 2011 @ 8:47 am

but does that justify confiscating the wealth of the winners, and redistributing it among the poor like some latter day Robin Hood?

If Robin Hood carried on like that today, he'd be in either prison or Congress.

Posted by TheDoc on Apr. 06, 2011 @ 9:26 am

Christian economic sharia: "there will always be poor."

-marc

Posted by Guest on Apr. 06, 2011 @ 9:43 am

The real world that many of us live in.

Oddly the liberal economic theory is that opening the borders and driving down wages will lead to less economic disparity.

Posted by maltlock on Apr. 06, 2011 @ 10:33 am

That Chicago School crap would be neoliberal economic theory.

Liberal economic theory, as practiced historically in the US involves Keynesian demand side policies, coopted unions and a social safety net to stabilize capitalism.

-marc

Posted by marcos on Apr. 06, 2011 @ 11:05 am
and

opening the borders to help break meat packer unions, drive down wages for low skilled jobs, make service industries careers where these jobs were held by people going to school.

The liberal open borders policy is a perfect fit for the super capitalists they hate.

Posted by matlock on Apr. 06, 2011 @ 9:24 pm

technically that's an aphoristic truth, right?

whatever "poor" gets eliminated/elevated, then that new lowest percentile becomes the new "poor."

Posted by proggy boy on Apr. 06, 2011 @ 10:34 am

the spirit level delusion

It debunks these ravings around class that this brand of liberal here puts forth.

Posted by maltlock on Apr. 06, 2011 @ 10:32 am

Thanks for your note above, TheDoc.

With great concentrations of wealth come great concentrations of power. Which is harmful to democracy.

Democracy thrives best when there is a large and prosperous middle class, and when the gap between rich and poor is narrow.

In the U.S., we have a few hundred families with astronomical wealth. At the same time, there are millions of people who don't have enough to eat, suffer from inadequate medical treatment, and who have lost their homes.

This contradiction is an affront to justice.

The trick is to institute enough leveling in order to correct such imbalances, while not stifling productivity and creativity.

We can argue over the details of the leveling. But I hope we can agree that we want to strengthen democracy and correct social injustice.

Posted by Arthur Evans on Apr. 06, 2011 @ 8:25 am

and America has the largest middle class population on the planet. most people aren't poor - they're comfortable, and much more so than most other places.

So if I am a comfortable member of the middle-class, I don't see a huge issue with the odd Buffett or Gates, both of whom have made many others richer too.

Also look at what they did with their money. They set up charities and foundations. Much good is done in the world by the wealthy - they mostly aren't "evil" at all - they're just good, honest folks.

Again, I implore readers to focus on building your own wealth, and not envying those with more. There will always be someone with more. We should focus on raising the opportunities for the poor and not attacking the rich as though their very existence is a problem to be solved.

Posted by TheDoc on Apr. 06, 2011 @ 9:30 am

Most folks will never strike it rich, will never build wealth. That's the way it has almost always been, except for the post-WWII golden age of the US when marginal tax rates were northward of 70%, and that's the way it will continue to be as wealth continues to concentrate, just like most folks who rely on 401(k) plans will end up impoverished as seniors while the banksters which hold those pools of cash take a little off the top a lot.

The jig of economic quackery is up, the issue is solely whether the hundreds of millions being screwed with economic sharia will unite and organize to revisit 1789.

-marc

Posted by marcos on Apr. 06, 2011 @ 9:40 am

It is very likely that a 30 year old in San Francisco, making the city average salary of 80K pa, will be a millionaire by the time they are 60.

Posted by TheDoc on Apr. 06, 2011 @ 10:23 am

Quack, in 30 years, the buying power of $1m in 2011 dollars will be significantly less than the buying power of $1m in 2011 dollars today.

So yeah, if the dollar is still in the same form as it is now in 30 years time, it changed when Nixon took it off the gold standard and will probably change again soon, then you might have a case.

But as to whether job security over a working lifetime or the safety of one's savings or one's ability to procure the necessities in life and have some left over for leisure will be preserved at these levels or rise is a very open question.

Weimar Germans were all millionaires, and most all Zimbabweans were billionaires not long ago.

-marc

Posted by marcos on Apr. 06, 2011 @ 10:47 am

India has a middle class of around 400m that is larger than the entire population of the US.

China has a middle class that is about the same size as the US population.

-marc

Posted by marcos on Apr. 06, 2011 @ 11:27 am

what does that mean, besides nothing?

Posted by Guest on Apr. 28, 2011 @ 2:23 pm

Tim seems perpetually baffled that the money other people earn isn't automatically his.

Posted by Guest on Apr. 06, 2011 @ 8:31 am

Concentrations of wealth are like when one person wins all the hands of a poker game and cleans everyone else out so they have to fold.

When the game ends like that, nobody else gets to play anymore.

-marc

Posted by marcos on Apr. 06, 2011 @ 9:04 am
wat

Your assertion that there's a finite amount in the economy is untrue. It works well for your class warfare but little else.

Posted by Guest on Apr. 28, 2011 @ 2:26 pm

You can continue to believe that in spite of the facts.

Posted by Guest on Apr. 06, 2011 @ 9:39 am

Thanks for your thoughtful response above, TheDoc. Here are some thoughts –

You say:

“America has the largest middle class population on the planet. most people aren't poor - they're comfortable, and much more so than most other places.”

It’s true that many of the poor in the U.S. are much better off than great masses of people, say, in India.

But the conditions for the poor in India are horrific and inexcusable. They should not be used as a justification for less severe poverty elsewhere.

As to the U.S. itself, millions of people live under terrible conditions – not enough to eat, no housing, no medical care.

And even people who are moderately comfortable often face dreadful challenges. I personally know people who lost everything they owned in order to provide medical care for a relative. There’s no good reason for this inequity.

You say:

“if I am a comfortable member of the middle-class, I don't see a huge issue with the odd Buffett or Gates, both of whom have made many others richer too.”

You’re overlooking something – the corporatocracy.

Most of the super rich are plugged into huge corporations. These have accumulated astounding amounts of wealth and power.

The public must continually be on guard against the huge corporations in order to protect consumers, workers, and the natural environment.

The huge corporations act like a state within the state, which is a threat to democratic institutions. Their beneficiaries are the nation’s super wealthy families, who are in a symbiotic relationship with them.

The corporatocracy must be kept in check, and the super rich should be taxed more.

You say:

“Also look at what they did with their money. They set up charities and foundations.”

Yes, some are philanthropists and should be acknowledged for their good works. Many others, however, cannot make the same claim.

You say:

“Much good is done in the world by the wealthy - they mostly aren't ‘evil’ at all - they're just good, honest folks.”

When any institution, company, or individual acquires too much power or wealth, the imbalance itself becomes evil, even though particular individuals within the system may have good intentions.

We would all do well to remember the injunction written on the wall of the temple of Apollo at Delphi:

“Nothing to excess.”

Posted by Arthur Evans on Apr. 06, 2011 @ 10:17 am

We would all do well to remember the injunction written on the wall of the temple of Apollo at Delphi:

“Nothing to excess.”

We would ALL do well to remember that when posting on the internet, but i digress.

Thanks for your insights Arthur, but you are missing the point. Capitalism has become a train without a driver. There are no checks and balances anymore as witnessed by the last few years of private institutions setting up private banking systems, tax evasion countries.

The fascinating part of this is that anyone who places money into a bank savings or a retirement account, is in receipt of interest from a bank or trust or a annuity of some description, unless they self-direct those investments and accounts is as big a part of the problem as most employees in most companies.

Posted by Ian Waters on Apr. 14, 2011 @ 10:48 am

What a bunch of BS

Posted by Guest on Apr. 28, 2011 @ 2:30 pm

Millions of tons of food go to waste every year in this country, while millions of people go hungry, because they can't afford to buy it.

But we can't hand out food to the poor, because food rots quickly and that's inefficient. One solution?
http://www.newsweek.com/2010/10/25/the-new-fix-for-poverty-give-cash-to-...

The reason this doesn't happen is that notwithstanding what we were taught in civics class, money is a vote. Money is a direct, legally backed claim upon the allocation of scarce social resources. That's what a vote is. Voting is merely an indirect claim upon scarce social resources, and voting fails due to both a principal-agent tension and the speed/relative strength of money.

This is why we live in oligarchies and not democracies - the rich simply have more say as to the allocation of scarce social resources, and the poor have almost no say. A positive feedback loop makes the rich richer, and because the poor cannot financially compensate those who help them, altruism toward the poor is punished in our society...yet, each of us WANTS to be altruistic. That is human nature.

Therefore, Money is a Law, because it governs how we must live and what we must do. We have created a society in which money = fitness, and thus we are socially selecting at the upper echelons of power psychopaths who will do anything for money. There is no cost to their fitness if they exploit people or pollute or waste money or hoard money, and so their insane behavior continues.

The legal system (1) protects the wealthy, who can afford the best attorneys, buy politicians, and manipulate the tax code, and (2) takes violence off the table so the poor can't retaliate, when the rich commit daily acts of violence against the poor. Yet, game theory suggests that both punishment and reward are necessary for cooperation to exist.

In order to have the funds to reduce inequality, we would need to fund the IRS, get rid of agricultural subsidies, tax capital gains, reinstate the estate tax, etc. etc. But money is a vote, so tough luck.

http://www.newyorker.com/online/blogs/festival/2010/10/video-malcolm-gla...

http://www.americanprogress.org/issues/2011/03/not_broke.html

Posted by Jesus Gladwell on Apr. 06, 2011 @ 10:31 am

Mr. Guest, sir: I have never argued that other people's money should be mine. I am an employed San Francisco homeowner whose partner is a lawyer. I think that under Prop. 13, my taxes are too low. (And don't give me that crap about how I can freely volunteer to pay more; we give a lot of money to our public school, but that's not the point. Taxes don't work that way. They aren't voluntary; everyone contributes. Otherwise it doesn't work.)

I think that, for the sake our our society, taxes on the wealthy need to be raised significantly -- so that programs that create a stronger middle class and fight poverty -- public education being the top of the list -- are adequately funded.

It ain't jealousy -- I have no desire to be Bill Gates. In fact, I have no desire to be rich; like most people, I just want my kids to have a place to live and enough to eat and a chance to get a decent education. The thing is, I want that for other people, too -- because I think it's better for me and everyone else if there's less inequality in society.

And as I've said before: The progressives, the poor, the middle class -- we didn't start this war. The rich and their political puppets declared war on us. I'm just sick of watching everyone allow it to happen without fighting back.

And as for Buffet and Gates making others rich: Yes, they did. A few others. But over the same period where the wealth of the rich has exploded, the economic fate of the vast majority of Americans has declined. That's a simple fact that can 't be argued.

Posted by tim redmond on Apr. 06, 2011 @ 10:53 am

policies that drive down wages?

Posted by matlock on Apr. 06, 2011 @ 9:27 pm

In a post above, Tim Redmond, you say:

"taxes on the wealthy need to be raised significantly -- so that programs that create a stronger middle class and fight poverty -- public education being the top of the list -- are adequately funded."

Agreed!

But it's a mistake to call this effort "the case for class warfare," as you do.

The last thing the human race needs is another male calling for war or even using the imagery of war. Haven't we all suffered enough from male violence in the last ten thousand years?

A more accurate, and less toxic, description is this: the quest to restore a healthy balance to the body politic.

Social and economic imbalances imperil the well-being of the body politic and are unjust. The quest to restore a healthy balance invigorates the body politic and restores justice.

Positive images bring out positive energy. Let's appeal to what's best in everyone and build a grand coalition for positive change.

Posted by Arthur Evans on Apr. 06, 2011 @ 1:14 pm

"An economy in which most citizens are doing worse year after year—an economy like America’s..."

This is flat out wrong. 'Journalism' has become a joke with every hack out there able to write and publish on the internet.

Posted by Guest on Apr. 06, 2011 @ 1:44 pm

No case need be made for class war. It already exists, and the rich have been winning for centuries-and REALLY winning for the last four decades. What people of conscience need to make a case for is for the 99% to realize the class war exists, and to organize to fight. Union participation has been declining since the 70's (interesting since this marks the point when real wages started declining for most of US society). But we need Unions as a vehicle to organize around. We need to stop listening to the Right bashing unions (although they have and will always continue to do so), and at the same time we need to make Unions the vehicles we need to get more power (non-hierarchal, more responsive to workers). We need more control of our lives, we need more democracy, essentially.

Posted by Guest on Apr. 07, 2011 @ 8:26 am

What do you think of Matthew Bishop interviewing Joseph E. Stiglitz at the 92nd Street Y (video) - http://f4a.tv/fVagPo

Posted by Guest on Apr. 11, 2011 @ 12:59 pm