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“Plutocrats Feeling Persecuted”: Angry That They Don’t Receive Universal Deference

Robert Benmosche, the chief executive of the American International Group, said something stupid the other day. And we should be glad, because his comments help highlight an important but rarely discussed cost of extreme income inequality — namely, the rise of a small but powerful group of what can only be called sociopaths.

For those who don’t recall, A.I.G. is a giant insurance company that played a crucial role in creating the global economic crisis, exploiting loopholes in financial regulation to sell vast numbers of debt guarantees that it had no way to honor. Five years ago, U.S. authorities, fearing that A.I.G.’s collapse might destabilize the whole financial system, stepped in with a huge bailout. But even the policy makers felt ill used — for example, Ben Bernanke, the chairman of the Federal Reserve, later testified that no other episode in the crisis made him so angry.

And it got worse. For a time, A.I.G. was essentially a ward of the federal government, which owned the bulk of its stock, yet it continued paying large executive bonuses. There was, understandably, much public furor.

So here’s what Mr. Benmosche did in an interview with The Wall Street Journal: He compared the uproar over bonuses to lynchings in the Deep South — the real kind, involving murder — and declared that the bonus backlash was “just as bad and just as wrong.”

You may find it incredible that anyone would, even for an instant, consider this comparison appropriate. But there have actually been a series of stories like this. In 2010, for example, there was a comparable outburst from Stephen Schwarzman, the chairman of the Blackstone Group, one of the world’s largest private-equity firms. Speaking about proposals to close the carried-interest loophole — which allows executives at firms like Blackstone to pay only 15 percent taxes on much of their income — Mr. Schwarzman declared, “It’s a war; it’s like when Hitler invaded Poland in 1939.”

And you know that such publicly reported statements don’t come out of nowhere. Stuff like this is surely what the Masters of the Universe say to each other all the time, to nods of agreement and approval. It’s just that sometimes they forget that they’re not supposed to say such things where the rabble might learn about it.

Also, notice what both men were defending: namely, their privileges. Mr. Schwarzman was outraged at the notion that he might be required to pay taxes just like the little people; Mr. Benmosche was, in effect, declaring that A.I.G. was entitled to public bailouts and that its executives shouldn’t be expected to make any sacrifice in return.

This is important. Sometimes the wealthy talk as if they were characters in “Atlas Shrugged,” demanding nothing more from society than that the moochers leave them alone. But these men were speaking for, not against, redistribution — redistribution from the 99 percent to people like them. This isn’t libertarianism; it’s a demand for special treatment. It’s not Ayn Rand; it’s ancien régime.

Sometimes, in fact, members of the 0.01 percent are explicit about their sense of entitlement. It was kind of refreshing, in a way, when Charles Munger, the billionaire vice chairman of Berkshire Hathaway, declared that we should “thank God” for the bailout of Wall Street, but that ordinary Americans in financial distress should just “suck it in and cope.” Incidentally, in another interview — conducted at his seaside villa in Dubrovnik, Croatia — Mr. Benmosche declared that the retirement age should go up to 70 or even 80.

The thing is, by and large, the wealthy have gotten their wish. Wall Street was bailed out, while workers and homeowners weren’t. Our so-called recovery has done nothing much for ordinary workers, but incomes at the top have soared, with almost all the gains from 2009 to 2012 going to the top 1 percent, and almost a third going to the top 0.01 percent — that is, people with incomes over $10 million.

So why the anger? Why the whining? And bear in mind that claims that the wealthy are being persecuted aren’t just coming from a few loudmouths. They’ve been all over the op-ed pages and were, in fact, a central theme of the Romney campaign last year.

Well, I have a theory. When you have that much money, what is it you’re trying to buy by making even more? You already have the multiple big houses, the servants, the private jet. What you really want now is adulation; you want the world to bow before your success. And so the thought that people in the media, in Congress and even in the White House are saying critical things about people like you drives you wild.

It is, of course, incredibly petty. But money brings power, and thanks to surging inequality, these petty people have a lot of money. So their whining, their anger that they don’t receive universal deference, can have real political consequences. Fear the wrath of the .01 percent!

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, September 26, 2013

September 28, 2013 Posted by | Financial Institutions | , , , , , , , , | Leave a comment

“Desecration Of Michigan’s Heritage”: Republicans Ambush Labor In Michigan

It takes a lot to get Theodore J. St. Antoine mad. But what really got my Uncle Ted’s Irish up (our family hails from County Roscommon) was Michigan Governor Rick Snyder conspiring with the Republican-controlled legislature to turn the ancestral home of American labor into a “right-to-work” state – and to do it through fast-track legislation snuck through without public hearings or even notice while angry citizens mobilizing to protest this desecration of Michigan’s heritage were barred by police from their own State Capitol until the wretched deed was done.

The new law, says the Washington Post’s E.J. Dionne, was passed “in a travesty of normal democratic deliberation” as Snyder and Republicans rushed the right-to-work bill through a lame-duck session in a way that was “insidious.”

The anti-union crowd waited until after the election to pass it, said Dionne. Then Snyder, who had previously avoided taking a stand on right-to-work “miraculously discovered that it would be a first-rate economic development measure.”

Further, the law was attached to an appropriations bill as a rider to make it much harder for voters to later challenge the law through a popular referendum. It was the first time, Ted told the Wall Street Journal, he had ever seen a right-to-work law passed using a spending bill as a human shield to prevent the people from later shooting it down.

And so in a curtly-worded letter to Governor Snyder, Ted, who is a long-time labor law professor and one-time dean of the University of Michigan Law School, wrote this: “You have been elected to represent all the people of this State. You should do so.”

Ted now devotes most of his time to speaking and writing about subjects like the Model Employment Termination Act, a law he wrote as official draftsperson and which protects workers against arbitrary and capricious bosses.

As I said, Ted has a long fuse and his equanimity has been honed by years spent mediating union and management disputes, including the dozens of Major League Baseball arbitrations he’s settled involving super stars (and super-sized egos) like Curt Schilling, Sandy Alomar, Jr. and Darryl Strawberry.

And so Ted was surprised and disappointed that Governor Snyder, who posed as a sensible centrist, would act in such a ruthless and underhanded way against labor in a state that honors and even reveres labor unions.

“Although I am a life-long Democrat, I voted for you because I felt you had the business acumen and the balanced judgment to lead Michigan through some serious financial difficulties,” Ted said to Governor Snyder.

Though he understood the pressures Snyder was under, Ted said the Governor’s actions were disappointing nonetheless since “almost no one who seriously studies labor relations believes so-called ‘right-to-work’ legislation is a matter of ‘worker freedom.'”

Existing federal and state law already forbids workers from joining a union against their will or being subject to its discipline, said Ted. What the law does require is that if a majority of the employees want union representation, the union and the employer may agree that all the employees in the unit must pay their fair share of the representation costs that the union is legally obligated to provide for all the employees in the unit, without discrimination among union members and nonmembers, said Ted.

“Right-to-work” laws, said Ted, allow some workers to become “free riders” who benefit from the fruits of the union’s negotiating without having to pay for those benefits.

“It’s wholly contrary to democratic principles to argue that the minority need not pay what can fairly be described as the tax that the majority has levied to fund the collective representative,” said Ted.

But let’s be honest with ourselves, Ted told Snyder. “‘Right-to-work’ legislation is not proposed for the benefit of workers. Its proponents are the same persons who in the past have opposed minimum wages, workers’ compensation, Social Security, and a wide range of other social legislation.”

Right-to-work laws are supposed to attract new business into a state, but studies say their track record is mixed as best. “What we do know is that as union strength has waned, income and wealth inequality in this country has greatly increased,” said Ted. “Both the working class and the middle class have been the losers. And the true objective of ‘right-to-work’ legislation is to stifle even further the strength of unions.”

Indeed, as Dionne says, “the moral case for unions is that they give bargaining strength to workers who would have far less capacity to improve their wages and benefits negotiating as individuals. Further gutting unions is the last thing we need to do at a time when the income gap is growing.”

And not just the income gap. At a time when Big Money is stronger than ever, our democracy pays a huge price not having the countervailing power which labor unions provide.

It’s hard not to see this vote against unions, so quickly after Republicans were soundly defeated all throughout the union strongholds of the Midwest, as being a petulant reprisal against those who beat them and an effort to pave the road to Republican victories in 2014 by using the law to erode the foundations of the opposition.

After Republicans lost the popular vote for the fifth time in the last sixth presidential elections, Dionne said he was initially hopeful Republicans understood “new thinking might be in order.”

But after the sneak attack Republicans launched against labor in Lansing, Dionne is not so sure anything has really changed. It now looks as if Republicans are once again in the hands of those who reject adjusting to a new electorate and new circumstances and instead believe the strategy for future victories lies in using naked government power to “alter the political playing field in a way that diminishes the political influence of groups likely to be hostile to the conservative agenda.”

And that is why my disappointed uncle sent his “Dear Rick” letter to Michigan’s Governor Snyder.

 

By: Ted Frier, Open Salon, December 19, 2012

December 20, 2012 Posted by | Collective Bargaining, Unions | , , , , , , , | 1 Comment

“The Future Of The American Union”: Lincoln, Liberty And Two Americas

Four score and seven years ago our fathers brought forth, upon this continent, a new nation, conceived in liberty, and dedicated to the proposition that all men are created equal. Now we are engaged in a great civil war, testing whether that nation, or any nation, so conceived and so dedicated, can long endure.”

Those are the opening words of Abraham Lincoln’s Gettysburg Address, and they seem eerily prescient today because once again this country finds itself increasingly divided and pondering the future of this great union and the very ideas of liberty and equality for all.

The gap is growing between liberals and conservatives, the rich and the not rich, intergenerational privilege and new-immigrant power, patriarchy and gender equality, the expanders of liberty and the withholders of it. And that gap, which has geographic contours — the densely populated coastal states versus the less densely populated states of the Rocky Mountains, Mississippi Delta and Great Plains — threatens the very concept of a United States and is pushing conservatives, left quaking after this month’s election, to extremes.

Some have even moved to make our divisions absolute. The Daily Caller reported last week “more than 675,000 digital signatures appeared on 69 separate secession petitions covering all 50 states,” according to its analysis of requests made through the White House’s “We the People” online petition system.

According to The Daily Caller, “Petitions from Alabama, Florida, Georgia, Louisiana, North Carolina, Tennessee and Texas residents have accrued at least 25,000 signatures, the number the Obama administration says it will reward with a staff review of online proposals.” President Obama lost all those states, except Florida, in November.

The former Republican presidential candidate Ron Paul took to his Congressional Web site to laud the petitions of those bent on leaving the union, writing that “secession is a deeply American principle.” He continued: “If the possibility of secession is completely off the table there is nothing to stop the federal government from continuing to encroach on our liberties and no recourse for those who are sick and tired of it.”

The Internet has been lit up with the incongruity of Lincoln’s party becoming the party of secessionists.

But even putting secession aside, it is ever more clear that red states are becoming more ideologically strident and creating a regional quasi country within the greater one. They are rushing to enact restrictive laws on everything from voting to women’s health issues.

As Monica Davey reported in The New York Times on Friday, starting in January, “one party will hold the governor’s office and majorities in both legislative chambers in at least 37 states, the largest number in 60 years and a significant jump from even two years ago.”

As the National Conference of State Legislatures put it, “thanks to an apparent historic victory in Arkansas, Republicans gained control of the old South, turning the once solidly Democratic 11 states of the Confederacy upside down.” Arkansas will be the only one of these states with a Democratic governor.

As Davey’s article pointed out, single-party control raises “the prospect that bold partisan agendas — on both ends of the political spectrum — will flourish over the next couple of years.” But it seems that “both ends of the political spectrum” should not be misconstrued as being equal. Democrats may want to expand personal liberties, but Republicans have spent the last few years working feverishly to restrict them.

According to a January report from the Guttmacher Institute: “By almost any measure, issues related to reproductive health and rights at the state level received unprecedented attention in 2011. In the 50 states combined, legislators introduced more than 1,100 reproductive health and rights-related provisions, a sharp increase from the 950 introduced in 2010. By year’s end, 135 of these provisions had been enacted in 36 states, an increase from the 89 enacted in 2010 and the 77 enacted in 2009.” Almost all the 2011 provisions were enacted in states with Republican-controlled legislatures.

According to the Brennan Center for Justice at the New York University School of Law, at least 180 restrictive voting bills were introduced since the beginning of 2011 in 41 states. Most of the states that passed restrictive voting laws have Republican-controlled legislatures.

An N.C.S.L. report last year found “the 50 states and Puerto Rico have introduced a record 1,538 bills and resolutions relating to immigrants and refugees in the first quarter of 2011. This number surpasses the first quarter of 2010 by 358.” That trend slowed in 2012 in large part because of legal challenges. Many of the states that had enacted anti-immigrant laws or adopted similar resolutions by March of last year, again, had Republican-controlled legislatures.

We are moving toward two Americas with two contrasting — and increasingly codified — concepts of liberty. Can such a nation long endure?

By: Charles M. Blow, Op-Ed Columnist, The New York Times, November 23, 2012

November 25, 2012 Posted by | Politics | , , , , , , , , | Leave a comment

“Let Me Count The Ways”: Would A Republican Candidate Lie About Taxes?

The United States faces a gigantic economic choice next year, and last night’s debate centered largely around what Mitt Romney would do about it. Romney’s plan is to lock the Bush tax cuts into place, reduce the long-term deficit entirely through spending cuts, enact an additional 20 percent tax rate cut that would disproportionately benefit the rich and cover the cost through unspecified closings of tax deductions. But Romney labored tirelessly, and with evident success, to portray himself in a far more egalitarian light. Every time President Obama described the cost of his tax rate cost, Romney dismissed it as untrue, pledged that his plan would not reduce the current tax burden on the rich, and even implied that he would make the rich pay higher taxes by closing their loopholes.

It was a virtuoso performance. But what does it tell us about how Romney would govern if elected? Here he was making promises about how he would govern that flatly contrasted with his plans. Which promises should we believe? Ross Douthat argues that Romney’s soothing moderate rhetoric shows that he is likely to govern as the moderate he presented himself as.

It’s worth considering a similar — in many ways, identical — episode that took place a dozen years before. During the 2000 election, the growth of a budget surplus offered the country a major choice. Al Gore proposed to use most of the surplus to retire the national debt and the balance for public investment. George W. Bush proposed a large, regressive income tax that Gore warned would exacerbate inequality and jeopardize the soundness of the budget.

Then, as now, the Republican simply denied over and over that his plan would do what the Democrats said it would. Bush portrayed his plan as devoting just a small fraction of the surplus to tax cuts and described his tax cut itself as benefitting the poor far more than the rich. And you certainly could find circumstantial evidence to suggest that Bush might govern the way he portrayed himself, rather than the way his plan read. He had governed in a bipartisan way in Texas, he had explicitly denounced the conservative wing of the Congressional GOP, and he had surrounded himself with moderate advisers like Michael Gerson and Karen Hughes.

But Bush in fact followed through on what his plan actually did, which happened to be what Gore described it as, and not what Bush described it as. His promises to maintain the budget surplus and direct most of the tax cuts to lower-earners fell by the wayside. What mattered was the party, and the Republican Party was committed to a policy of regressive tax cuts.

The Bush-Gore debates centered primarily around Gore’s endless, frustrating attempts to pin down Bush’s priorities. I compiled pieces of Bush denying he would pursue what turned out to be the centerpiece of his administration’s economic agenda.

Here’s Bush in the first presidential debate:

I want to take one-half of the surplus and dedicate it to Social Security. One-quarter of the surplus for important projects …

tonight we’re going to hear some phony numbers about what I think and what we ought to do. …

this is a man who has great numbers. He talks about numbers. I’m beginning to think not only did he invent the Internet, but he invented the calculator. It’s fuzzy math. It’s a scaring — he’s trying to scare people in the voting booth. Under my tax plan that he continues to criticize, I set one-third. The federal government should take no more than a third of anybody’s check. But I also dropped the bottom rate from 15% to 10%. Because by far the vast majority of the help goes to people at the bottom end of the economic ladder. …

After my plan is in place, the wealthiest Americans will pay a higher percentage of taxes then they do today…

Let me tell you what the facts are. The facts are after my plan, the wealthiest of Americans pay more taxes of the percentage of the whole than they do today.

The second presidential debate:

First of all, that’s simply not true what he just said, of course. And secondly, I repeat to you —

MODERATOR: What is not true, Governor?

That we spent — the top 1% receive 223 as opposed to 445 billion in new spending. The top — let’s talk about my tax plan. The top 1% will pay one-third of all the federal income taxes. And in return, get one-fifth of the benefits, because most of the tax reductions go to the people at the bottom end of the economic ladder. …

GORE: I think that what — I think the point of that is that anybody would have a hard time trying to make a tax cut plan that is so large, that would put us into such big deficits, that gives almost half the benefits to the wealthiest of the wealthy. I think anybody would have a hard time explaining that clearly in a way that makes sense to the average person.

BUSH: That’s the kind of exaggeration I was just talking about. (LAUGHTER)

The third presidential debate:

But the top 1% will end up paying one-third of the taxes in America and they get one-fifth of the benefits.

Under my plan, if you make — the top — the wealthy people pay 62% of the taxes today. Afterwards they pay 64%. This is a fair plan. You know why? Because the tax code is unfair for people at the bottom end of the economic ladder. If you’re a single mother making $22,000 a year today and you’re trying to raise two children, for every additional dollar you earn you pay a higher marginal rate on that dollar than someone making $200,000, and that’s not right. So I want to do something about that.

 

By: Jonathan Chait, Daily Intel, October 4, 2012

October 5, 2012 Posted by | Election 2012 | , , , , , , , , | 1 Comment

“The Rise Of The Super Rich”: GOP Congress Really Does Make The Rich Richer

Are you rich and want to get richer? Vote Republican! The stronger the GOP is in Congress, the larger the share of wealth the top 1 percent controls, according to a new study in the October issue of American Sociological Review, which confirms what we figured all along — there’s a direct connection between the rightward shift of Congress and the upward advance of the richest Americans’ net worths.

From 1949 through 2008, the impact of a 1 percentage point increase in the share of seats held by Republicans in the House (a little over five seats) raised the top 1 percent’s income share by about .08 percentage points.

“At first glance, this might seem negligible,” said Thomas Volscho, a sociologist at CUNY-College of Staten Island who co-authored the study. But it’s not. “Given that the estimated national income in 2008 was more than $7.8 trillion, an increase of only 1 percent in Republican seat share would raise the income of the top 1 percent by nearly $6.6 billion. That equates to about $6,600 per family in the top 1 percent.”

The ASR study, “The Rise of the Super-Rich,” looks at the experience of the 1 percent from just after World War II to 2008 and identifies several other factors that have propelled the top tier’s rise. The fact that the uber wealthy have gotten richer much faster than lower-income brackets has been well documented and helped spark the Occupy movement, but this research looks at the role that policy and other variables have played.

Beyond politics, Volscho and Kelly found that the decline of private-sector union membership, and the increasing financializing of the economy — which has heightened the impact of financial-asset bubbles — were also key contributors to income inequality and the rise of the 1 percent. Over the 60 years the paper studied, a 1 percentage point decrease in union membership among private sector workers was linked to a more than 0.4 percentage point increase in the income share of the super-rich.

But the most surprising finding of the study may be the impact a GOP Congress has on income inequality. “Based on our analysis, Democrats appear to favor an economic system that produces more egalitarian outcomes even before any redistribution occurs,” the study concludes. “In essence, the market is not completely beyond the influence of politics and policy, and it is not just in the realm of explicit redistribution that political parties produce divergent distributional outcomes. Political decisions in part ‘make the market.”

Interestingly, the party affiliation of the president did not significantly impact the wealth share of the top 1 percent. Volscho told Salon he was surprised by that finding. Instead, it’s Congress that has the bigger impact. “It was surprising, but not. Because if you look at, in 1995, the Republican takeover over Congress, that’s when you started to see the spike in the top 1 percent,” he said. “They had been doing well since around 1980, but not as well as around 1995. And the stock market boom started in 1995 as well, but we took that into consideration and that had an independent effect.”

The study doesn’t get into specific policies that impact income inequality much, calling for further research on the subject, but it doesn’t take a Ph.D. to make some pretty good guesses. Republicans (with help from Democrats, no doubt) have pushed tax cuts that disproportionately impact the wealthy, opposed redistributive programs, decreased financial regulation, which allowed for the explosion of financial speculation, cut education funding, etc. “There are so many things, appointments, heads of agencies, mundane policies and regulations that filter down from Congress into government agencies that potentially can aid the very rich,” Volscho said.

But a Republican president like Mitt Romney could help in that they would “make that pro-1 percent legislation flow through so much quicker,” Volscho said. Of course, this isn’t too surprising — polls consistently show that Americans think Romney and the GOP would do more to help the wealthy. Now social science shows they’re right!

 

By: Alex Seitz-Wald, Salon, October 2, 2012

October 5, 2012 Posted by | Congress | , , , , , , , , | 1 Comment

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