Screw the little people

Bad news. If you are reading this and have a net worth of less than a million bucks- you fall into the category of little people. Don’t believe it? With the gap between rich and poor widening faster than at any time in history in this country, we even have laws on the books that keep the “little people” out of certain markets- call it “economic discrimination” – and it’s going to continue to get worse. Read about this rule from the SEC:

But the Securities and Exchange Commission doesn’t let just anyone buy shares in a corporation that hasn’t gone public. Pre-IPO sales are limited to “accredited investors,” people with a demonstrated net worth of $1 million or a yearly income of $200,000. It’s been that way since 1982, when Rule 501 of Regulation D of the Securities Act went into effect. The measure was intended to protect less-informed investors—widows and orphans, in Wall Street parlance—from gambling away their savings. So who has bought pre-IPO Facebook stock? A reported 10 percent of the company went to the Russian investment group Digital Sky Technologies, whose backers include one of that country’s richest oligarchs. In other words, the extremely wealthy.

via Let the Little Guys Get in on Pre-IPO | Magazine.

And while many blame the investment banks and AIG collapse for the start of this depression (which we can’t bear to call a depression)- I think as gas prices start to rise to the $3 level again, that what really killed the economy was the rise in gas prices to near $4 a gallon. To the über rich, $4 a gallon is no big deal, the people living on the edge (both financially and sprawl wise) those hikes in gas prices were the straw that broke the camel’s back. The recent post-election-day moves by the Fed- code worded as  “quantitative easing” – which is flooding the financial markets with cash and devaluing the dollar- makes oil more expensive.

While the financial markets might like a cheaper dollar and the Wall Street casino likes having more chips to play with- the impact on the little people is huge. If you can’t pay for gas, you can’t get to work- and the rest is down hill.

The latest election did nothing to change the balance of power- the rich chose who would win. Hell, it’s almost at the point that you have to be rich to run for office anymore (and trust me- from personal experience- running for office is a costly endeavor). It’s pretty clear that politicians who are willing to allow laws like the above-mentioned SEC ruling- aren’t that concerned with keeping the playing fields level. In fact, when we look at the disbursements of the TARP- we see that our money (tax dollars) was being funneled straight back into the hands of those who blew it- instead of the American working class taxpayers who are less than pawns in the grand game of politics.

Mark my words- as gas prices continue to climb- they will have the greatest effect on the general health and well-being of the buying public. Putting gas in the tank at $3+ a gallon will do more to slow down consumer confidence than anything else. With gold hitting all-time highs- we know that those who talk about “trickle down economics” are more worried about protecting their wealth- than growing their portfolios or investing in our country.

With two years left in Obama’s presidency- and a Republican House to deal with, there should only be one focus for this administration- and it’s how to get Main Street humming again. Reeling in the financiers and their financial wizardry should be at the top of the list- forcing new rules stopping cashing out by executives if their companies either lay off American workers- or they accept government support. Patent and trademark protections should be eased on companies that operate as American companies in name only- if a majority of what you sell is made in China- live with their patent law protection. At some point we have to stop rewarding those who screw the little people- because, well- we’re the ones who are being asked already to pay for their transgressions.

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2 Responses

  1. John Ise November 14, 2010 / 1:53 pm

    Reading this post goes right along with the NY Times op-ed today!
     

    Who Will Stand Up to the Superrich?
    By FRANK RICH

    IN the aftermath of the Great Democratic Shellacking of 2010, one election night subplot quickly receded into the footnotes: the drubbing received by very wealthy Americans, most of them Republican, who tried to buy Senate seats and governor’s mansions. Americans don’t hate rich people. They admire and often idolize success. But Californians took a hearty dislike to Meg Whitman, who sacrificed $143 million of her eBay fortune — not to mention her undocumented former housekeeper — to a gubernatorial race she lost by double digits. Connecticut voters K.O.’d the World Wrestling groin-kicker, Linda McMahon, and West Virginians did likewise to the limestone-and-steel magnate John Raese, the senatorial hopeful who told an interviewer without apparent irony, “I made my money the old-fashioned way — I inherited it.”
    To my mind, these losers deserve a salute nonetheless. They all had run businesses that actually created jobs (Raese included). They all wanted to enter public service to give back to the country that allowed them to prosper. And by losing so decisively, they gave us a ray of hope in dark times. Their defeats reminded us that despite much recent evidence to the contrary the inmates don’t always end up running the asylum of American politics.
    The wealthy Americans we should worry about instead are the ones who implicitly won the election — those who take far more from America than they give back. They were not on the ballot, and most of them are not household names. Unlike Whitman and the other defeated self-financing candidates, they are all but certain to cash in on the Nov. 2 results. There’s no one in Washington in either party with the fortitude to try to stop them from grabbing anything that’s not nailed down.
    The Americans I’m talking about are not just those shadowy anonymous corporate campaign contributors who flooded this campaign. No less triumphant were those individuals at the apex of the economic pyramid — the superrich who have gotten spectacularly richer over the last four decades while their fellow citizens either treaded water or lost ground. The top 1 percent of American earners took in 23.5 percent of the nation’s pretax income in 2007 — up from less than 9 percent in 1976. During the boom years of 2002 to 2007, that top 1 percent’s pretax income increased an extraordinary 10 percent every year. But the boom proved an exclusive affair: in that same period, the median income for non-elderly American households went down and the poverty rate rose.
    It’s the very top earners, not your garden variety, entrepreneurial multimillionaires, who will be by far the biggest beneficiaries if there’s an extension of the expiring Bush-era tax cuts for income over $200,000 a year (for individuals) and $250,000 (for couples). The resurgent G.O.P. has vowed to fight to the end to award this bonanza, but that may hardly be necessary given the timid opposition of President Obama and the lame-duck Democratic Congress.
    On last Sunday’s “60 Minutes,” Obama was already wobbling toward another “compromise” in which he does most of the compromising. It’s a measure of how far he’s off his game now that a leader who once had the audacity to speak at length on the red-hot subject of race doesn’t even make the most forceful case for his own long-held position on an issue where most Americans still agree with him. (Only 40 percent of those in the Nov. 2 exit poll approved of an extension of all Bush tax cuts.) The president’s argument against extending the cuts for the wealthiest has now been reduced to the dry accounting of what the cost would add to the federal deficit. As he put it to CBS’s Steve Kroft, “the question is — can we afford to borrow $700 billion?”
    That’s a good question, all right, but it’s not the question. The bigger issue is whether the country can afford the systemic damage being done by the ever-growing income inequality between the wealthiest Americans and everyone else, whether poor, middle class or even rich. That burden is inflicted not just on the debt but on the very idea of America — our Horatio Alger faith in social mobility over plutocracy, our belief that our brand of can-do capitalism brings about innovation and growth, and our fundamental sense of fairness. Incredibly, the top 1 percent of Americans now have tax rates a third lower than the same top percentile had in 1970.
    “How can hedge-fund managers who are pulling down billions sometimes pay a lower tax rate than do their secretaries?” ask the political scientists Jacob S. Hacker (of Yale) and Paul Pierson (University of California, Berkeley) in their deservedly lauded new book, “Winner-Take-All Politics.” If you want to cry real tears about the American dream — as opposed to the self-canonizing tears of John Boehner — read this book and weep. The authors’ answer to that question and others amounts to a devastating indictment of both parties.
    Their ample empirical evidence, some of which I’m citing here, proves that America’s ever-widening income inequality was not an inevitable by-product of the modern megacorporation, or of globalization, or of the advent of the new tech-driven economy, or of a growing education gap. (Yes, the very rich often have fancy degrees, but so do those in many income levels below them.) Inequality is instead the result of specific policies, including tax policies, championed by Washington Democrats and Republicans alike as they conducted a bidding war for high-rolling donors in election after election.
    The book deflates much of the conventional wisdom. Hacker and Pierson date the dawn of the collusion between the political system and the superrich not to the Reagan revolution, but to the preceding Carter presidency and its Democratic Congress. They also write that contrary to the popular perception, America’s superhigh earners are not mostly “superstars and celebrities in the arts, entertainment and sports” or the stars of law, medicine and real estate. They are instead corporate executives and managers — increasingly (and less surprisingly) financial company executives and managers, including those who escaped with outrageous fortunes as their companies imploded during the housing bubble.
    The G.O.P.’s arguments for extending the Bush tax cuts to this crowd, usually wrapped in laughably hypocritical whining about “class warfare,” are easily batted down. The most constant refrain is that small-business owners who file in this bracket would be hit so hard they could no longer hire new employees. But the Tax Policy Center found in 2008, when checking out similar campaign claims by “Joe the Plumber,” that only 2 percent of all Americans reporting small-business income, regardless of tax bracket, would see tax increases if Obama fulfilled his pledge to let the Bush tax cuts lapse for the top earners. The economist Dean Baker calculated that the yearly tax increase at the lower end of that bracket, for those with earnings between $200,000 and $500,000, would amount to $700 — which “isn’t enough to hire anyone.”
    Those in the higher reaches aren’t investing in creating new jobs even now, when the full Bush tax cuts remain in effect, so why would extending them change that equation? American companies seem intent on sitting on trillions in cash until the economy reboots. Meanwhile, the nonpartisan Congressional Budget Office ranks the extension of any Bush tax cuts, let alone those to the wealthiest Americans, as the least effective of 11 possible policy options for increasing employment.
    Nor are the superrich helping to further the traditional American business culture that inspires and encourages those with big ideas and drive to believe they can climb to the top. Robert Frank, the writer who chronicled the superrich in the book “Richistan,” recently analyzed the new Forbes list of the 400 richest Americans for The Wall Street Journal and found a “hardening of the plutocracy” and scant mobility. Only 16 of the 400 were newcomers — as opposed to an average of 40 to 50 in recent years — and they tended to be in industries like coal, natural gas, chemicals and casinos rather than forward-looking businesses involving the Green Economy, tech or biotechnology. This is “not exactly the formula for America’s vaunted entrepreneurial wealth machine,” Frank wrote.
    As “Winner-Take-All Politics” documents, America has been busy “building a bridge to the 19th century” — that is, to a new Gilded Age. To dislodge the country from this stagnant rut will require all kinds of effort from Americans in and out of politics. That includes some patriotic selflessness from those at the very top who still might emulate Warren Buffett and the few others in the Forbes 400 who dare say publicly that it’s not in America’s best interests to stack the tax and regulatory decks in their favor.
    Many of the countless tasks that need to be addressed to start rebuilding an equitable America are formidable, but surely few, if any, are easier than eliminating a tax break that was destined to expire anyway and that most Americans want to see expire. Two years ago, Obama campaigned on this issue far more strenuously than he did on, say, reforming health care. Now he and what remains of his Congressional caucus are poised to retreat from even this clear-cut battle. You know things are grim when you start wishing that the president might summon his inner Linda McMahon.

    Brilliant or Bozo? Thumb up 2 Thumb down 1

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