While the media searches for some common narrative in the recent Wall Street protests, I offer a simplified explanation: Arrogance.
The arrogance (or perceived arrogance) of many of the economic elite drives much of the current frustration. Take this recent press release from hedge fund manager John Paulson.
The top 1 percent of New Yorkers pay over 40 percent of all income taxes, providing huge benefits to everyone in our city and state. Paulson & Co. and its employees have paid hundreds of millions of dollars in New York City and New York State taxes in recent years and have created over 100 high paying jobs in New York City since its formationThis quote sheds so much light on the nexus of disagreement between protesters and top earners. When Paulson & Co. touts its job creation and income tax payment as social virtues, protesters see only unchecked hubris.
That top earners pay a disproportionate share of income taxes is not up for debate, nor is the fact that their income has risen relative to the rest of the American population. While this in itself would seem sufficient justification for public outcry, it is the attitudes of many of the financial elite, evident in the Paulson quotation, that are particularly galling.
Evidently, it is not enough that the financial elite have reaped the benefits of technological and productivity gains over the past decades. Nor are many simply content with the power and political connections afforded by this new wealth. Instead, it almost seems as if they want the rest of the country to thank them for such status.
The implication that private sector job creation is some sort of public service is particularly infuriating. Investors do not part with their money in order to create jobs. Rather, job creation is often a hurdle on the road to a return on investment (though in recent years, job destruction seems the better path to increased returns).
This would be maddening enough if jobs were being created. Yet unemployment is at record highs. Corporate profits remain strong and upper-echelon incomes continue to increase, yet the trickle-down effects that Paulson seems to extol (and wants us to thank him for) are currently nonexistent.
The truth is that the resulting wealth gap, combined with fewer middle- and lower-income jobs, is particularly bad for the American consumption-driven economy. Lower- and middle-income earners spend a higher percentage of their income, pumping more of each marginal dollar earned back into the economy. When wealth is concentrated near the top, less money is spent on goods and services, which only further decreases domestic demand (and investment).
Is it any wonder then why the top 1 percent is paying over 40 percent of New York's income taxes? Maybe it's because that is simply where the money is. Yet again, implies Paulson, the other 99 percent should be grateful towards them for providing that tax base.
Again, what arrogance!
Apparently, it is not enough that the wealthy should be thanked for their job-creation, but we should also be thanking them for their taxes, even as many of them argue for lower rates. (Not to pick on Paulson, but the million plus dollars he has donated this cycle to tax-cutting advocates or politicians, or his avoidance of the already low and Buffett-criticized capital-gains tax, speak to what he seems to think of paying taxes.)
The record federal deficits of recent years stem from a decrease in tax revenue, which itself is a result of a weakened economy combined with lower tax rates. Yes, federal stimulus spending has increased the deficit, but it was intended to kick start a flagging economy hampered by the very inequality that caused it in the first place. But isn't this what government is for, to correct imbalances and solve problems that threaten the general welfare? Isn't this what tax dollars are meant to address?
No one is under the belief that government can solve all inequality, nor is there a history in this country of major class conflicts. In part, this is because tax rates on the rich have traditionally been very high, and income and wealth relatively well distributed.
Yet the United States today has some of the highest rates of income inequality in the industrialized world. And how do many of the new top earners respond? By advocating for even lower taxes, failing to create the jobs that they claim to be responsible for, and overinflating their own perceived societal worth.
Apparently, the rest of America should be quiet and appreciate the great things that the wealthy do for this country by .... simply being wealthy. Is it thus really any surprise that people are upset, or have taken to the streets?
As the media searches for the Wall Street protesters' common message, it should look no further than this perceived upper-income arrogance. The economic elite have already done so well over these past decades. Must they publicly pat themselves on the back as well?