The Global Sociology Blog

It has been interesting these past days to hear about wealthy grumblings from the wealthy corners about potential repeal of Bush tax cuts and Wall Streeters complaining about feeling like “piñatas”. What are they complaining about? They won the class warfare, hands down when it comes to income and wealth distribution. So now, we are supposed to tend to their tender sensitivities?

Let’s review some recent data.

Poverty in the US:

Child poverty rises dramatically in most states via kwout

Child Poverty in the US:

Child poverty rises dramatically in most states via kwout

As the report notes:

“While the overall poverty rate was high in 2009, the child poverty rate was even higher. Nationwide, one in five children lived in poverty in 2009. The second Map [Above] presents the new data on child poverty rates by state, which ranged from highs of 31.0% in Mississippi and 29.4% in the District of Columbia to a comparable low of 10.8% in New Hampshire.”

And actually, the official poverty rate tends to underestimate poverty:

“Let’s revisit the 2008 Census total stating that 39.8 million Americans lived in poverty. It turns out that the National Academy of Science did its own study and found that 47.4 million Americans actually lived in poverty in 2008. The Census missed 7.6 million Americans living in poverty that year.

How did that happen? The Census Bureau uses a long outdated method to calculate the poverty rate. The Census is measuring poverty based on costs of living metrics established back in 1955 — 55 years ago! They ignore many key factors, such as the increased costs of medical care, child care, education, transportation, and many other basic costs of living. They also don’t factor geographically based costs of living. For example, try finding a place to live in New York that costs the same as a place in Florida.

So the Census poverty rate increase of 3.8 million people will put the 2009 National Academy of Science (NAS) number at a minimum of 51.2 million Americans. And if the margin of discrepancy is equivalent to the 7.6 million of 2008, we are looking at a NAS number of at least 52 million people for 2009.”

And there are many more factors listed over at the link that clearly show a terrifying picture of the extent of real poverty that is actually hidden.

One way in which redistribution to the wealthy has been done in the US is through favorable taxation for the wealthy and their ability to capture greater shares of income and limit taxation on wealth. Click on the image for larger view.

David Cay Johnston explains what these tax cuts did (I had not read this argument before):

“Total income was $2.74 trillion less during the eight Bush years than if incomes had stayed at 2000 levels.

That much additional income would have more than made up for the lack of demand that keeps us mired in the Great Recession. That would mean no need for a stimulus, although it would not have affected the last administration’s interfering with market capitalism by bailing out irresponsible Wall Streeters instead of letting the market determine their fortunes.

In only two years was total income up, but even when those years are combined they exceed the declines in only one of the other six years.

Even if we limit the analysis by starting in 2003, when the dividend and capital gains tax cuts began, through the peak year of 2007, the result is still less income than at the 2000 level. Total income was down $951 billion during those four years.

Average incomes fell. Average taxpayer income was down $3,512, or 5.7 percent, in 2008 compared with 2000, President Bush’s own benchmark year for his promises of prosperity through tax cuts.

Had incomes stayed at 2000 levels, the average taxpayer would have earned almost $21,000 more over those eight years. That’s almost $50 per week.”

Emphasis mine.

The result is this:

As Mark Thoma asks:

“Let me ask again: Is it possible for an outcome to be equitable when, as in recent decades, nearly all of the gains from growth accrue to one class?”

It is a rhetorical question, of course. That one is settled.

One way in which this happens is through the political process, of course.

So, guess who has truly recovered from the recession:

“The rebound by the economy and by financial markets has helped to swell the fortunes of the richest 400 Americans, among whom the total wealth has risen to $1.37 trillion, up 8 per cent in a year. In 2009, the price of admission to the list fell below $1bn for the first time since 2006, but it rose back into 10 figures this year.

New entrants include two with ties to Facebook, co-founder Eduardo Saverin, who is worth $1.15bn, and Mark Zuckerberg’s Harvard University room-mate, Dustin Moskovitz. Mr Moskovitz left Facebook in 2008 but still has a stake in the social networking giant that is worth $1.4bn on the private market where the company’s shares trade. At 26, eight days younger than Mr Zuckerberg, Mr Moskovitz is now the youngest billionaire on the list.

Mr Zuckerberg, meanwhile, enjoyed the biggest percentage increase in his fortune of anyone on the list, more than tripling to $6.9bn. Now No 35 on the list, he has leapfrogged the established media and technology moguls Rupert Murdoch and Steve Jobs, who are worth $6.2bn and $6.1bn respectively.”

So, yes, I agree with the rules laid out by Bill Maher…

“New Rule: The next rich person who publicly complains about being vilified by the Obama administration must be publicly vilified by the Obama administration. It’s so hard for one person to tell another person what constitutes being “rich”, or what tax rate is “too much.” But I’ve done some math that indicates that, considering the hole this country is in, if you are earning more than a million dollars a year and are complaining about a 3.6% tax increase, then you are by definition a greedy asshole.”

And John Scalzi:

“1. If you make a six-figure income, you are not allowed to argue on the Internets that you are poor.

2. You are not allowed to argue that you feel poor, which as we all know is just like being poor.

3. You are not allowed to posit the argument that if you hang around with people who make more than you, then you are allowed to have your wee little heart sing the Poverty Song because, after all, you make less than all of them and your life is sad.”

And Will Hutton’s arguments are written with Great Britain in mind, but they apply to other countries as well:

“We need a shared understanding of what constitutes fairness in order to restore our society. At present, there is none. The rich argue that it is fair for them to be so wealthy, in much the same way as Athenian noblemen believed that their riches were signifiers of their worth. They believe they owe little or nothing to society, government or public institutions. They accept no limit or proportionality to their wealth, benchmarking themselves only against their fellow rich. Philanthropic giving is declining; tax avoidance is rising; and executive pay is rising exponentially. All three are justified by the doctrine that the rich simply deserve to be rich. Meanwhile, the poor, in their view – and that of a virulent right-wing media – largely deserve their plight because they could have chosen otherwise. The mockery of chavs is premised on the assumption that they could be different if they wanted to be. The poor could work, save and show some initiative. So why should we indulge them by giving them state handouts?

(…)

This definition of fairness is a radical idea. It is not egalitarian; it is demanding. It challenges the economic and moral questions that have been ignored over the last two decades – the tolerance of towering disparities in wealth and power and the blind faith in individualism and markets. It is why we now need a Truth and Reconciliation Commission for British capitalism – to examine what happened over the last 10 years, apportion blame, demand atonement and use the lessons learned to build something better in the future. Open competitive markets that deny monopoly and offer proportional returns to productive entrepreneurs are the handmaidens of genuine wealth creation; monopoly and market rigging that reward the incumbent and unproductive are its enemies. Britain has too little of the former “good” capitalism and too much of the latter ” bad capitalism”, one of the reasons it incubated the forces that created the financial crisis. To repeat: fairness is the indispensable value that underpins good economy and society, and it will be the foundation stone of any sustainable new order.

Social polarisation must be halted and reversed. Britain cannot confront its challenges if great swaths of its society are disenfranchised and marginalised. Potential talent cannot be allowed to stand idle; potential opportunity cannot be squandered. Our ailing cities and neighbourhoods must be given their chance. We need to educate the mass of our people to a new level, teach them to use their brains in ways that their 20th-century predecessors never thought possible. This will then trump, or at least mitigate, the familiar cultural icons of class.

Fairness is the value that must saturate and animate the reinvention of British capitalism, our society and the reshaping of the British state. The current British political system and the British media are both in urgent need of reform. If British citizens are to become the authors of their own lives and the drivers of a national renaissance, they need reliable sources of information, genuine opportunities to participate in the political life of the country, and politics itself to possess the power to make a difference. Herd-like, populist, conservative media that disregard the impartiality of fact, do not hold the powerful to account, trivialise the quest for objectivity and, above all, trash plurality – the vital precondition for democratic deliberation – lets down the whole country.”