A CEO, a Tea Party member and public employee sit at a table, with 12 cookies on a plate. The CEO grabs 11 cookies and tells the Tea Party member, "You better watch him. He wants your cookie."
The CEO took 11 out of 12 cookies. This isn't a question of what's fair. The CEO has the economic power to take 11 cookies, and he does.
I found a conservative blog that explained this point of view. The CEO deserved 11 cookies. Without the CEO, the 12 cookies would never have been baked. No one would have anything without the CEO. Not only did the CEO deserve 11 of the 12 cookies, but if we somehow had 15 cookies, the CEO would deserve 14. If the CEO made 24 cookies in China, he should get 23. The Tea Party member and the public employee should thank the CEO for their one cookie.
The conservative blogger acknowledged that his interpretation wasn't funny.
A recent study said that 93% of all new income in America in 2010 went to the richest 1%. The remaining 7% of all new income in the country was split up (not evenly of course) among the remaining 99% us.
For 99% of us, the average income gain was $80 for the year. The average gain for the richest 1% was $105,637 for the year. The average gain for households in the very richest 0.01% was 4.2 freakin' million dollars that year.
I immediately thought back to the cookie joke. Seven percent is essentially one in 15. Indeed, in 2010, CEOs did get 14 of the 15 cookies! The rest of us, 99% of America, split the remaining cookie.
It should be no surprise, then, that inequality is at historic highs in America, and widening fast.
Joseph Stiglitz's new book is called The Price of Inequality: How Today's Divided Society Endangers Our Future. What Stiglitz adds to public discussion is an analysis of dangers of this inequality in terms of political stability, social cohesion, public trust, and ultimately economic prosperity.
Stiglitz is a Nobel Prize laureate in economics, former chief economist at the World Bank, and he served on the Council of Economic Advisors in the Clinton administration. He puts the issue squarely in political terms, paraphrasing Bill Clinton's campaign motto, "It's the politics, stupid!" We in the 99% have lost political power. The richest 1% have consolidated political power, and used it to shape our society to their advantage.
By shoveling 93% of new income to the top 1%, we are currently living the cookie joke in full measure. This isn't working. If trickle-down policies could ever work, then our figurative cookie-bakers would already have hired millions of new employees. They didn't. It hasn't worked for the last 35 years.
It doesn't work.
Well... it doesn't work for 99% of us. Stiglitz puts it this way, "We've been shaping our society to create people who are more selfish." Increasingly, policies are created by the richest 1%, and for the richest 1%. Their interests are placed first, through globalization, privatization, deregulation and insanely expensive political campaigns.
Meanwhile, 99% of us are put at risk. We risk losing our jobs, our economic security, our homes, health care, education for our children, and economic opportunities.
"As always [the rich] seem to be the winners from the policies that they advocated and that imposed such high costs on others."
This is bad for democracy, bad for our future as a nation, bad for our ability to solve serious problems on national and international levels, bad for the environment and the planet, and just plain bad.
We could just as well shape society to restore balance to our social, political and economic life. We start with a rehabilitation of the Social Contract. We need each other to prosper. That is, our neighbors must prosper for us to prosper.
We need to restore trust in institutions of civil society. That includes government.
Bad government and bad policies can threaten our future. Good government and good policies can raise our living standards and provide economic, social and political security.
Warren Buffet recognizes that fact. For all his intellect, hard work and cookie-baking skills, if he had been born in Bangladesh he knows his net worth today would be a tiny fraction of his current billions. His success depended on prosperous customers and sound government.
We can manage globalization better, and we can manage our domestic policies better.
Democracy works best when we have strong institutions of civil society and when all stakeholders are involved in decisions. Institutions of civil society speak for the environment, human rights, labor rights, public health, education, fair and honest elections, reasonable regulation, good corporate governance, and investment in public goods.
It's not enough to "make business succeed," or to "compete in a global economy." We need to finish the thought: "... and raise the standard of living for us and our children."
Follow Stan Sorscher on Twitter: www.twitter.com/sorscher
Those nations that learn best how to collaborate and work interdependently are going to dominate the world.
There are but two parties; there never have been but two parties.
Founded in the radical question, whether PEOPLE or PROPERTY shall govern.
Democracy implies a government by the people.
Aristocracy implies a government of the rich.
In these words are contained the sum of party distinctions.
Men by their constitutions are naturally divided into two parties:
1. Those who fear and distrust the people, and wish to draw all powers from them into the hands of the higher classes.
2. Those who identify themselves with the people, have confidence in them, cherish and consider them as the most honest and safe, although not the most wise depositary of the public interests. In every country these two parties exist, and in every one where they are free to think, speak, and write, they will declare themselves. Call them, therefore, Liberals and Serviles, Jacobins and Ultras, Whigs and Tories, Republicans and Federalists, Aristocrats and Democrats, or by whatever name you please, they are the same parties still and pursue the same object.
The last one of Aristocrats and Democrats is the true one expressing the essence of all. --Thomas Jefferson to Henry Lee, 1824.
The CEO has shot himself and the company in the foot.
And that's where we are today.
Then they'll take their millions and - whatever. It won't be a hard life.
"If trickle-down policies could ever work," - what exactly is a 'trickle-down policy"? Specifically, what economist, or what school of economics espouses the "trickle down theory"? A link would be highly appreciated.
More class warfare; don't concentrate on what I have,or what I desire and then how do I get there. No, better to focus on my envy and my desire to use the force of government to institute "fairness", as defined by me! Don't get me wrong, I'm not defending cronyism - the true enemy of the people.
Societies can either be free, or they can be "fair" (egalitarian); they cannot be both.That was the disastrous mistake the French made in 1789 - Brotherhood, Liberty, and Equality - #2 & #3 cannot be achieved at the same time.
This is a short tome that is worth reading. It was written in 1935, just as FDR's regime was really getting cooking. It makes a point of distinguishing the economic means of making a living from the political means, as well as the difference between government (a good thing) and the state (a very bad thing):
http://mises.org/books/Our_Enemy_The_State_Nock.pdf
It comes from a joke by Will Rogers. http://en.wikipedia.org/wiki/Trickle-down_economics
And "that person" is, in the end, the "person" that benefits from the wealth generated by low taxes. Wealth buys tax reform that favors wealth.
What economist espouses "trickle down theory"? Are you seriously that uninformed? You can look up supply side economics, or you can just do the short version called "Reagonomics".
Buffet was correct when he said, "There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”
Again, supply side economics says nothing about "trickle down effects" nor "Reaganomics" - more disparagement by the ignorant.
Low taxes "generate wealth" -please advise the mechanism by which that statement is true. I was always under the impression that wealth (or more correctly stated, income) must be genrated for there to be anything to tax!
Or won't that sell to BHO's voting base? It's only a couple points, right? Besides, what right do high earners have to the fruits of their labor anyway. What they've got belongs to the rest of us, right?
You could tax the top 1% at 100% and not touch the unfunded liabilities of SS and Medicare. And BHO's desired expansion of Medicaid will now be a fully Federal expense for those states that opt out. That's going to take far, far, far more cash from SOMEbody. Who's that somebody gonna be?
By the way, how does the "1%" control congress? The Reps only control the house.
The millionaire will pay $50,000 more that will mean his next mansion will have one less bathroom.
Tragically, this has always ended up with a bunch of cookie crumbs.
If they stole them, call a cop.
The highly productive obviously produce far more wealth than do the marginally productive, and the unproductive. We should be grateful for this fact. If the highly productive did NOT greatly outproduce the marginally productive and the unproductive, there wouldn't be anything to RE-distribute, and we'd ALL be poor!
By what right are the workers due anything more?
Please. Warren Buffet recognizes that he is one of the 0.0001% that has the money, influence and power to milk the corrupt system for all it's worth.
http://reason.com/archives/2012/02/09/warren-buffett-baptist-and-bootlegger/singlepage
"Buffett is very much a political entrepreneur; his best investments are often in political relationships. Indeed, the success of some of his biggest bets and the profitability of some of his largest investments rely on government largesse...
An April 2011 working paper found that firms with political connections were much more likely to get TARP funds than firms that were not well connected. The study found that politically connected firms, despite the infusion of federal funds, were outperformed by unconnected firms. In other words, poorly run but well-connected companies got the loot.
'The pattern is clear: The bailout money and the perks are concentrated among the big banks, the ones who pay the lobbyists and make the campaign contributions, while the healthy banks pay the freight.'
Buffett needed the TARP bailout more than most. Berkshire Hathaway firms received $95 billion in TARP money. TARP-assisted companies constituted a whopping 30 percent of Buffett’s publicly disclosed stock portfolio. The folksy outsider, the Houston Chronicle concluded in an April 2009 investigative piece, was one of the top beneficiaries of the banking bailout.”