Wednesday, October 17, 2012

Social Insecurity

What’s a robber baron to do
When he doesn’t get what he wants
Should he threaten the whole ship and crew
Or jet to one of his haunts
To an Alpine or Cayman bank
Then dine with a few of his rank
On the finest food and whine
From the Potomac to the Rhine
That redistributing wealth
Is bad for his health
As news announcer Gabriel Heatter used to say:  “There’s good news tonight!”  (You may be on Social Security if you remember Gabriel).  Our economy is within about 6% of where it was at the height of the bubble and before the catastrophic collapse.  There is also good news for the very wealthy, for they have scooped up 93% of the wealth created since the economic collapse in 2007.  Corporate profits are at record highs and so is the stock market.  Income taxes for individuals and corporations are at the lowest level in about 50 years.  One might ask:  What are they complaining about?  You may have been making some logical assumptions that this is pure economic wailing by the wealthy.  Actually, the pain may be mostly social by those who see themselves as the only rightful heirs of our nation.  They may feel they earned 100% of the money and the irresponsible 99% have brazenly dared to steal 7% of the “new” wealth.  There has always been a big disparity in wealth and the bottom half reached a high point in wealth in 1995 when they held 3.6%.  That plush condition fell to 1.1% after the “Bush” collapse, mainly due to home equity losses of the middle class.  Plutocrats do not relate well to the rest of us and they take special steps to reinforce the distance.  Allow me to cover some of the differences and you may begin to understand why the new robber barons are fearful of social development, education, taxes (especially inheritance taxes) and voting by the hoi polloi.  Those could be dramatic game changers.

In my youth, really, I caddied summers for the years from age 10 to 18.  When I began, the compensation for one bag of clubs for 18 holes was 75 cents.  I was not allowed in the clubhouse, but for that matter, neither were Jews, Blacks and Latinos.  In fact, I recall one Jewish gentleman who became a Freemason in order to apply for membership.  He was denied membership despite his wealth, business success and Freemasonry.  He was allowed to play as a guest of a member provided he paid the fees.  Unfortunately, that was common in the “good old days.”  Despite my low wages that later improved to $1.25 per bag for 18 holes, there were no benefits for caddies such as food or sanitation facilities except for the great outdoors.  There was shade while you waited for your name to be called. You gave golfing advice, found lost balls, and served as a human donkey for all their belongings.  And I was able to enjoy walking in sunshine and rain and sometimes acting as a portable bar while the players had me carry rum and Coca Cola along with glasses and ice. Please don’t lecture me on carrying alcohol for adults.  I depended on tips to buy books for college and paid for all my tuition and books for three years at Fitchburg State Teachers College (now University of Massachusetts, Fitchburg).  If you carried only one bag and the average round took four hours, you can calculate that caddies often earned well less than the minimum wage that was $ 0.50 per hour at the time.  I can hear you say:  “That was then and this is now.”  Fair enough. Allow me to present examples from today.

The holding company that runs The Red Lobster and The Olive Garden restaurants has recently changed its compensation package.  It now pays wait staff $2.13 per hour instead of the national minimum wage.  Additionally, they force the employees to work part-time without benefits and they pool all the tips.  The last factor is especially delicious since they are imposing a collective society to support a capitalist enterprise.  I can begin to understand if some of Romney’s 47% feel unmotivated if they are forced into a collective where the LCD (lowest common denominator) is that clumsy waiter who spills soup and is rude to customers.  He sets the pace for my compensation and if I don’t like it, I can apply at McDonalds.  Capitalism, Soviet style, may be the new model for US business.  David Siegel, billionaire owner of Westgate Resorts, recently made this statement:  “The economy doesn’t currently pose a threat to your job (the company has never been so profitable).  What does threaten your job however, is another 4 years of the same Presidential (sic) administration.”  “Of course, as your employer I cannot tell you whom to vote for, and I certainly wouldn’t interfere with your right to vote for whomever you choose.  In fact, I encourage you to vote for whomever you think will serve your interests the best…If any new taxes are levied on me, or my company as our current president plans, I will have no choice but to reduce the size of this company…So, when you make your decision to vote, ask yourself, which candidate understands the economics of business ownership and who doesn’t?  Whose policies endanger your job?....”  Hmm, it seems that we have privatized threats while invoking the freedom to vote.  That reminds me of Soviet rules where either you could work or go to church, but not both. That was “freedom to worship” with a similar vindictive outcome.  And how is smaller government the solution to that?  It can look the other way, that’s how. We need larger government to ensure mandatory trans-vaginal ultrasounds in seven states but smaller government to prevent unwanted voting.  Siegel is building a 90,000 square foot home in Florida.  That sounds more like a warehouse, but I can only assume that it is merely a cozy winter cottage and that he spends his summers abroad; perhaps in the breezy Caymans.

Robert Murray of the Murray Coal and Murray Energy Companies has gone a step further.  He has had employees actually contribute to Romney and has had them stand on stage as a backdrop to Romney while Romney campaigned on stage and while their pay was docked.  Murray claimed that he had suspended pay and a company spokesman said:  “Attendance was mandatory but no one was forced to attend the event.”  Let me think about that.  Do I want to eat today?   I am free to go hungry.

The message from these small business owners (moral character, not business size) is both economic and social.  Do as I say or look for work elsewhere, and, by the way, I will set your pay, not the marketplace or a union.  Your option is to work under my conditions or not at all.  Murray is known for his many serious mine safety violations as well as his support of conservative causes.  Federal Election Commission charges are pending for his pay docking and his solicitation of money for Romney from workers.  Don’t even think of collecting Social Security.  Invest in a coal mine, or at least in Robert Murray.

Look, I know that Siegel, Murray and Romney don’t want to pal around with the likes of folks like me.  In fact, Mittens is so concerned that one of his neighbors in La Jolla, CA might actually talk to him in the driveway that he built a 3-car elevator to avoid all that and he hoists cars directly into his enclave.  The “one-percenters” prefer the social company of one-percenters.  It is nature’s way, after all, so that wealth can be accumulated after redistribution in the way they like.  Badgers associate with badgers, don’t they?  Maybe this is where we see things differently.  When I see $ 4 Billion being distributed annually to Big Oil in subsidies while they are “earning” record profits and I am paying record prices for gas, I am a quick read and understand that I am pretty low on the food chain.  When I see that a paycheck earned on the sweat of my brow or my education and training is taxed at twice the rate of a hedge fund manager or vulture capitalist, I understand my place in life.  It is not that I agree with the logic, but I understand.

Sadly, all this has created a new kind of Social Insecurity that does not portend well for our republic.  It may inflict damage to our capitalist system and sooner rather than later.  At some point, too few will be able to afford our goods and services and there will be accelerating pain and suffering by the least affluent among us.  Then, the few grasping hands of plutocrats and their heirs will choke off the system here-to-fore so well equipped to raise both the hopes and the means of millions.  The one-percent is insulated and does not hear or feel the pain, yet the hallmark of our national success to date has been our willingness to share both burdens and rewards.  A simple recognition and “thank you” might help, but it is not enough.  Thirty percent of our kids do not get enough to eat from day to day.  Can we afford another $4.8 Trillion in tax relief to double down on a trickle-down system that has never worked and cannot work?  There is a reason why the proponents have not explained the arithmetic.  There is no arithmetic to explain the impossible and no matter how small we make government, it will not be zero.  If one is to add up all the Romney proposed reductions in taxes (20%) and multiply it by the anticipated personal and corporate income, there is a shortfall of nearly $5 Trillion.  Worse, if we expand military expenditures by $2 Trillion beyond today when we spend as much as the next 17 nations combined, no matter how much the economy expands, our deficit will explode. Consider this:  If taking all tax burdens from the wealthy worked to create jobs here at home, why has it not worked over the past 11 years?  We are breaking profit records.  Have we used the wrong paradigm?  Do we make the wealthy complacent by feeding them too much through tax relief?  It is an ironic fact that when taxes have been higher, that personal equity poured into our economic system and employment was higher and income and wealth disparity was smaller.  Could it be that the plutocrats are more willing to take on risk when their taxes are higher instead of lower?  Could they set concrete goals of earning say $100 Million and then work to that end either by taking reasonable risks or getting extra tax breaks?   By hoping that the wealthy create jobs, are we acting against our own interests by sating them with the lowest taxes since the 50s?  Greed is only “good” if investors take reasonable risks instead of bailouts by the government.  That is how human motivation works to our advantage.  Do the wealthy envy the very possibility that the middle class might share in the largess of our nation?  The wealthy may be rich, but they are not stupid.  If they can reach their socioeconomic goals by doing nothing bur lobbying politicians, why should they create jobs here? 

Recall that any subsidy, any tax, any treatment of inheritance or import/export duty redistributes wealth.  Can we do this fairly and well?  Our assumption that the wealthy will automatically invest if we lower taxes on them is flawed.  We redistribute wealth right now and most of it goes to the wealthy who tend to hang on to it except for still more resort homes.  We reward personal investment income more than wage and salary income.   Do we want to further institutionalize that process through excessive inheritances to eliminate the American dream of socio-economic mobility?  We have fallen from first to about 20th among developed nations for socio-economic mobility.  While I have faith in people, it seems smarter to have policies and systems that support that faith.  Policies that reward job creation in the US and punish exporting jobs and punish capital flow to low wage centers might be a start.  I might be willing to wager my next Social Security increase to find out.  A tax code that rewards wage earners would put money in the middle class where it would be spent to propel the wheels of commerce instead of gilding idle property or exporting jobs to world low wage centers.  In Romney’s now famous secretly taped video, Mitt extols the virtue of Chinese workers who live in communal housing at factories that pay only 24 cents per hour.  Is that our destiny?  If low wages are the only counterattack to exporting jobs, then we need to reexamine our priorities.   If education is out of reach of any American, then we need to realign our priorities.  If women are once again being treated as property and baby machines as they are in seven conservative states, then we need to nationalize freedom for women.  If we have such disparity in income that 30% of our children go hungry on any given day, then we need to have a national dialogue on priorities.   

George Giacoppe
18 Oct 2012

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