The Return of the Super-Elite

http://jacobinmag.com/2018/07/income-inequality-super-rich-economic-policy-institute/

by raleighm • 8 years ago

99 90 8 years ago

tzahola• 8 years ago

A spectre is haunting...

mnm1• 8 years ago

Sommelier and Price found that so far during the recovery from the Great Recession, the American top 1 percent has captured nearly 42 percent of all income growth.

Is that surprising? The people that created the recession also benefited the most from it at the expense of everyone else. It wouldn't surprise me if the recession was created on purpose for this exact reason. Regardless, we know the solution (high taxes especially corporate taxes and regulation) that can reverse this trend peacefully. We unfortunately also know the solution that can reverse this trend violently. At this point, it's just a matter of waiting and seeing which solution the US will pick. I have my non US passport ready to go at a moment's notice. I'm pretty sure I know which solution the US prefers, the one the US has always preferred in its history: violence.

viburnum2• 8 years ago

Forget UBIs and other bandaids. Just simply taxing their wealth away would transform society. Plutocratic governence won't end until there are no more plutocrats.

rectang• 8 years ago

This is why I object to the "who cares about inequality if all boats are rising" argument. Massive disparities of wealth lead to massive disparities of political power and a government which serves the interests of plutocrats above all other concerns.

closeparen2• 8 years ago

And yet populism is soundly defeating the global business community for votes.

ta1234567890• 8 years ago

Agreed. However, how do you make them tax themselves? The super-elite control politics and government, so why would they tax themselves more? How do you create the proper incentives for that to happen?

jumelles2• 8 years ago

They'll never agree to it; we just have to outnumber them and outvote them.

cocoa19• 8 years ago

Unless all developed countries organize to tax wealthy people, why would wealthy people invest in countries that tax their wealth away?

If countries don't play ball with rich people, they can just move to another country that is more "business friendly" (including low taxes). What am I missing?

maxxxxx3• 8 years ago

You are missing the fact that tax is not the only factor for people to stay. California is an expensive state by most measures but somehow it doesn't seem to have a problem keeping rich people in state.

hakfoo2• 8 years ago

The people can move, but the assets can't really.

If Amazon or Apple sets up shop in some"friendly" jurisdiction that's underwater at high tide, most of their operations and sales are still coming from other countries, and the taxman can intervene there. The inventory coming into the country; their offices; hell, even their patents/trademarks/copyrights could be captured by a state actually out for blood.

samstave• 8 years ago

My problem with this is simply that I feel that tax money is irresponsibly spent. Infra in the US is crumbling, we prop-up the profits of the same companies we are talking about taxing and defend them with the military that we pay for from the taxed wages of the people who work for said entities...

Its a pretty bad loop of corruption and inefficiencies.

I'd love to see a true accounting of how money is taxed, allocated spent and wasted.

Just because something is "taxed" doesnt mean that the funds are used correctly - look at the Lotto, gas taxes and the recycling tax fund which was looted.

wahern2• 8 years ago

Yes, it'd be just as transformative as it was in Cuba and Venezuela.

swframe22• 8 years ago

To paraphrase Keyser Söze

"The greatest trick the Super-Elite ever pulled was convincing the world that inequality is a desired outcome of a properly functioning economy".

nostrademons2• 8 years ago

I would think that the more straightforward paraphrase is even better:

"The greatest trick the Super-Elite ever pulled was convincing the world that they didn't exist."

I doubt you'd find many people who actually agree that inequality is a desired outcome of a properly functioning economy (even if it's true). However, the Super-Elite have been remarkably successful at disappearing into the background and making the world forget about them. Look at the headlines today: they're about ICE & undocumented immigrants, or Nazis in Charlottesville, or Russian interference, or antifa protesters. You see very few news stories about private jet vacations or the real-estate holdings of the super-wealthy.

swframe22• 8 years ago

I agree. The super wealthy prefer seclusion but it is hard to hide a 10 bedroom mansion and a superyacht. It is better to provide a strong "foxnews education" so there is no need to hide.

Honestly, I wonder if a symbolic model would work better for our society. Ask the rich to set aside 20% of their wealth to provide low interest rate (~1% to 2%) loans to the poor to be used specifically on self-improvement (housing, infrastructure, education, policing, healthcare, childcare, etc). The loans start small and increase with good payment history.

edanm• 8 years ago

I doubt you'd find many people who actually agree that inequality is a desired outcome of a properly functioning economy (even if it's true).

I don't agree (with your statement). I mean, I don't think most people actively begrudge people having a better situation than them - just like they don't sit around getting angry that Rachmaninoff is a better composer than them, or that Michael Jordan is a better basketball player. I think people do sometimes instinctively feel that one person having more wealth is somehow depriving them - but that's not universal, and only comes up in certain situations.

"The greatest trick the Super-Elite ever pulled was convincing the world that they didn't exist."
You see very few news stories about private jet vacations or the real-estate holdings of the super-wealthy.

Like, I don't think you're actually claiming that there's any conspiracy here of the super-elite, despite the wording. But I don't get your point. You think it takes active work to make it so that there are no news stories about the super elite? I mean, I don't expect the newspapers in poorer countries to be filled with stories about how much better everyone in America has it. I don't think it's because Americans did anything special - it just doesn't really interest people.

And again, I don't think everyone in Africa feels that the fact that most Americans are better off than them is necessarily so terrible. I think this sentiment tends to come up in certain situations (especially when explicitly talking about economic inequality), but not in general.

patkai• 8 years ago

Good one! Let me try another angle: the greatest trick is to cover up the simple fact that the redistribution of wealth is arbitrary. We could agree that the owners of German Shepherd dogs do not pay VAT on Thursdays if they have a green hat on. Royals and the like were convincing people for who knows how many millennia that their status and power is from god. In a way we have the same with current tax laws, we all think they come from "somewhere", whether it's a necessity or logic, experience or a textbook. The search space is much larger than what we make use of.

maxxxxx3• 8 years ago

That's what I am telling people all the time. The "economy" is not a natural law but it's completely man made and can be adjusted to whatever goals a society wants to achieve. Obviously there are some constraints but there are a lot of parameters that can be tweaked. The owner class has convinced us that shareholders and property rights are the most important players but there is no reason why this can't be balanced with other things like workers rights, health care or retirement systems for all.

Terr_• 8 years ago

Also, it's not just the "redistribution" of wealth that has some "clear former owner", but also how people divide "new" value that is created on-the-fly.

Consider a company that mines for gold -- how much of that new value is split between the people who own the land, the people who dig the ore, the people who process the ore, the people who lent some money long ago, etc.

barrkel2• 8 years ago

Inequality of outcomes is a requirement for incentives to improve. Correlated variance in income in return for variance in production is just. Generally, prices provide information about where more production is required, though at the cost of obscuring how that production was obtained.

What we quibble about is (a) the distribution of the income function relative to the individual's production, and (b) how much income gets distributed on the basis of mere ownership, rather than production.

The super-elite benefit much more from (b) than from (a). Mobility of capital means (b) is generally under-taxed.

Karrot_Kream• 8 years ago

Agreed that we need variance on the overall distribution of incomes to produce incentives to more efficiently produce goods, but not necessarily the bimodal distribution that's forming now. Not really disagreeing with you: I agree that we do not tax ownership-based income enough.

windows_tips3• 8 years ago

Inequality of outcomes is a requirement for incentives to improve.

What proof do you use?

njoro• 8 years ago

"Inequality of outcomes" is essentially what we don't have. These days, as capital has become even more important, your likely outcome is relatively easy to calculate. In many major cities today it is almost better to be wealthy and unemployed, than successful and wealthless. This state of things is somewhat expected of Europe, but lesser so of the US, or at least not of Americans.

notahacker3• 8 years ago

The tricky part is, of course, that legitimate economic efficiency arguments can be made for allowing the highly productive to bequest their incomes to beneficiaries who are mere owners (to encourage the originators of the wealth to continue to be productive). But in practice, that leads to concentration of resources in the hands of people who are not necessarily as productive as their predecessors

The other confounding factor is that "production" itself in dollar terms is not some immutable variable, but the price-system reflecting the aggregate desires of all those people holding resources. As ownership of resources becomes more concentrated, the measure of income from production becomes less an ability to meet the needs of wider society through effort and skill and more the ability to secure the patronage of a member of a diminishing number of superrich.

The relationship between the basic economic concepts of productive efficiency (viz. creating as much value as possible) and allocative efficiency (viz. ensuring resources are exchanged to permit everyone to obtain as much value as possible without someone else having to subsidise it) therefore exists in tension.

candu• 8 years ago

Or we could give up the illusion that individual production is easily measurable, especially where it comes to highly collaborative / creative industries. (See: any number of debates on "10x" engineers, C-suite compensation, how much managers vs. their reports ought to get paid, etc. - and that leaves out discussions of more "team-oriented" cultures where success is thought of as a collective endeavor.)

notduncansmith• 8 years ago

You can have inequality of outcome with a much higher floor than what we have today. Social benefits are not an attempt to smooth things out, it’s scraping the excess from the very top to raise the bottom up to a dignified existence.

martythemaniak• 8 years ago

I have a better idea. How about we just assert whatever it is that we want to be true, repeat the assertion enough times and then just want until our minds become warped enough to believe it.

Say you want better healthcare. Do we really want to go down the rabbit hole of establishing metrics (infant mortality, obesity rates, whatever), having wonks work out policy, have bureaucrats turn the massive Ship of State towards that goal towards redistributing taxes and modifying lifestyles, spend years following up on all this? It's insane, people can't have democratic control over this, we can't expect them to put up with it.

Instead we can just vote in someone who'll us we'll be "beautifully covered", then we'll all get together frequently to listen to him tell us how great things are going, then we'll hype each other telling each other how great things are. Who you're gonna believe, some rando egghead on TV yammering about metrics, or your community? As long as we all believe, everything will be great. And your shitty health? Well, you did what you could. shrug

askafriend• 8 years ago

At this rate, we'll be left with no option but to go down your suggested path anyway.

sobellian• 8 years ago

The joke is that we are actively going down this path in the US.

PowerfulWizard• 8 years ago

I'm not sure that it is possible to analyze this, but I'd like to see a breakdown of the >$10 million net worth range based on whether it was earned in America or not. You can change the American tax code all you want, but if it is only being used as a storage system (due to a good track record of stability and maintenance of property rights) then I'm not sure it will have much of an effect. For example, I think Venezuela was basically looted over the past few years, and I'm sure a lot of that money went into i.e. Florida real estate. I wouldn't credit any study of the super rich that is only looking at one country.

An as far as using post-WW2 as an example, I'd like to see an example of a way to reduce inequality that doesn't involve killing millions and destroying Europe.

jchanimal4• 8 years ago

I don’t think policy can fix this. The only peaceful solution I can imagine is a general rebellion against the use of money to organize our economy. If you are reading this you are a prime candidate to implement alternatives. Hint: bitcoin isn’t it.

wycs• 8 years ago

Money seems like an extremely good coordination mechanism to me. Name something that can perform the purpose of money that is not more coercive and less efficient than money.

jchanimal4• 8 years ago

Money’s problem is its commodity nature. It obscures the supply chain and puts unjust gains on the same footing as useful work. A replacement would make supply chains transparent and make relationships and reputation primary.

I have a pet project along these lines but I’d like to hear other ideas: https://www.wired.com/2014/07/document-coin

prolikewh0a6• 8 years ago

How about re-implementing unions in mass? When union membership rises, inequality declines [1].

[1] https://www.epi.org/news/union-membership-declines-inequalit...

v_lisivka• 8 years ago

But unions are also making business less efficient, so eventually it will be surpassed by an another business, so business will move to country with cheaper labor or will die.

internet_user• 8 years ago

must be ERC20 tokens then? /s

pmoriarty2• 8 years ago

The elimination of money would be one of the most disruptive events in the history of humanity. It's likely that many millions if not billions of people would die in the ensuing turmoil and our society as we know it today would cease to exist.

Consider just two critical aspects of our society that require money to run smoothly and efficiently: modern medicine and industrial agriculture. Billions of people depend on them to survive, and the reason people participate in them as they do is mostly for money.

If you replace money with, say, barter, how many sheep or goats are you going to pay for a modern hospital or for a pharmaceutical factory, or the network of roads and airports needed to deliver food and other goods? How are you going to transport all those sheep and goats throughout our ever more interconnected world? At the very least, the infrastructure is just not there for us to switch to barter anywhere in the foreseable future.

Even if we could/did switch, all sorts of new power structures would likely arise and overthrow existing ones, and it's far from guaranteed that the transition will be bloodless. More likely, a lot of people would oppose it and it's not inconceivable that wars could be started over it -- especially as the change would probably not happen globally at once, but some countries would convert to barter first while others will still have money, leading to power imbalances, migration of money and the people who have it, massively influencing the economies, societies, and politics of the countries involved.

If the switch from money is not to barter, then to what? It's good to think about these things, and it's critical that our world change from the destructive course it's on now, but I for one don't see a way to extract money out of the equation without massive suffering.

My own slim hope rests on consciousness change, perhaps through education, increased communication, and maybe even psychedelics. The psychedelic renaissance has begun, and these substances are one of the most effective means of attaining radical changes in perspective and increasing creativity. Perhaps through them some solution that's not yet evident could arise, and if enough people change their mind maybe we could change our society towards a more positive and inclusive model.

jchanimal4• 8 years ago

Barter has never been how economies were organized, except under duress like a prison camp. If you are interested in the topic I suggest David Graeber’s Debt: The First 5000 Years. The takeaway- relationships and reputation among groups of people who know each other have organized economies far longer than money has. IMHO social media should allow us to act like a global village, and villages don’t need money to coordinate.

dosr_• 8 years ago

pfft psychedelics have existed throughout history all around the planet. If and when it has had impact, it's mostly been indirect or accidental. There is a paper somewhere out there from the 70's, which tried to estimate how many important historical figures were using something or the other, and after looking at a few thousand their best guess was under 3%. I think. Can't remember the numbers clearly.

The current circus show will return to some balanced "normality" once the media/social medias bullshit reinforcement mechanism namely the likes/upvotes/views/retweets/clicks/ratings is regulated. This mass overloading of people's minds with information they will never be fully trained to handle will break down soon enough. You can see that breakdown happening all over the place. People are still in denial that celebs like Obama and Trump were propped up by the same mechanism. Not dismantling that mechanism will keep propping up more and more bizarre and inept celebs with best pandering abilities in various power heirarchies not just politics. There are clowns in the army and judiciary who are playing the same game Trump and Obama play.

Removing/delaying/temporarily hiding the reinforcement of people superficial beliefs is the only way sanity returns.

closeparen2• 8 years ago

Central Planning as a Service?

jumelles2• 8 years ago

Extreme solution: wealth caps. Outlaw billionaires.

downrightmike2• 8 years ago

Eat cake

downrightmike2• 8 years ago

This downvoted comment is exactly what I expected, because as much as we have changed and advanced as a people, with all the events since the French revolution, humanity will continue to struggle against oppression.

ve55• 8 years ago

This article should mention a lot of other factors that are important, including changes in technology, automation, globalization, etc. It's too short-sighted to simply say that the problem America faces is as simple as a small group of people or laws, that if removed, suddenly would fix society's ills. There are many other factors in play that should not be neglected.

mruniverse• 8 years ago

Why is it short-sighted to say if inequality or laws that cause inequality are removed, then societal ills will be fixed?

If we can make laws that cause ills then we can remove those laws and their ills.

foxhop2• 8 years ago

We have a minimum wage to prevent absurd exploitation, I see no reason to nit have a sane maximum wage (and networth)

gnicholas• 8 years ago

Sounds like an invitation to shell games and shell companies. And exodus to more tax-friendly jurisdictions. Source: I used to be a tax lawyer.

Even if this weren’t the case, people would be disincentived from working hard jobs if there were a maximum wage.

galaxyLogic• 8 years ago

Once you have enough wealth to control the media, you've "made it". You could say that people like Putin have accomplished that. So it's not that rich people want more money because it allows them to consume more. I assume it is because more wealth allows them to control other people.

The Return of the Super-Elite

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