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Of the 1%, by the 1%, for the 1%; interesting article

Original post made by Grace, Another Pleasanton neighborhood, on Apr 5, 2011

There's an article in the new Vanity Fair that deconstructs the current situation in the U.S. fairly well and describes what it means for many citizens in our country today. A bit of a cautionary tale, but I think it speaks pretty clearly to what a lot of us already know or sense. Would appreciate hearing some enlightened discussion on this article, in the context of national and local affairs.

Web Link

some exerpts:

"Third, and perhaps most important, a modern economy requires "collective action"—it needs government to invest in infrastructure, education, and technology. The United States and the world have benefited greatly from government-sponsored research that led to the Internet, to advances in public health, and so on. But America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports), in basic research, and in education at all levels. Further cutbacks in these areas lie ahead."

"Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society—something he called "self-interest properly understood." The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what's good for me right now! Self-interest "properly understood" is different. It means appreciating that paying attention to everyone else's self-interest—in other words, the common welfare—is in fact a precondition for one's own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn't just good for the soul—it's good for business."

Comments (24)

 +   Like this comment
Posted by "teacher lover"
a resident of Ironwood
on Apr 5, 2011 at 8:15 pm

"The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn't seem to have bought: an understanding that their fate is bound up with how the other 99 percent live."

It breaks my heart when I see all the teacher bashing on this forum. And then bashing of those who support teachers also. The middle class gets squeezed more and more every year, the rich get richer every year, and some misdirected yahoos decide it's the fault of teachers. It's all so much ignorance, fueled by misplaced anger, and so very counterproductive to who we should be attempting to be as a community.


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Posted by Jane
a resident of Downtown
on Apr 5, 2011 at 9:32 pm

I agree with 'teacher lover'. Some of us seem willing to cut slack to the super rich, but yet have no difficulty venting anger toward the hard-working men and women who teach our children.

It has been reported, for example, that the income of the 400 wealthiest Americans increased in 2006 almost 23 percent from 2005, to an average of $263 million. Further, the top four hundred wealthiest Americans paid slightly more than $18 billion in federal income taxes, or an average of $45 million on a record $105 billion in total income--the lowest effective rate in the 15 years since the IRS began to release such information.

By contrast during the past three decades, as the economy has grown much more slowly, America's infrastructure has fallen into grave disrepair. Simultaneously, all significant income growth has been concentrated at the top of the scale with the largest share of total income going to that top 1 percent of earners.

The effect of this trend has been to sour the attitudes of the middle class toward public investments. With so many Americans experiencing reduced circumstances, they have been made easy targets for right-wing ideologues and their corporate sponsors who have persuaded some citizens that the the cause of their predicament is a result of the taxes that they pay, not an excess of private greed. The mantra of "no new taxes" has thus led to the increasing impoverishment of the public sector as witnessed by the collapse of infrastructure and the increasing attacks upon the benefits public employees have been able to enjoy because of their unionization and collective-bargaining.

To see working- and middle-class people turn on one another like cannibals is a sorry and depressing spectacle.


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Posted by steve
a resident of Parkside
on Apr 6, 2011 at 8:31 am

I'm not rich but anyone's definition, but I have to say, I resent the popular notion that class envy and bashing the successful is productive.
As much as you folks think the rich are the problem, consider that rather than tearing them down, how about you make something out of yourself and quit blaiming others that you are part of the middle class acting like cannibals. The rich didn't get that way by begrudging others--most, if not all, became successful through hard work and by making intelligent decisions. If that's not the example you want to live by, fine; but, don't tear others down becasue you can't or won't raise yourself up.

P.S.-"By contrast during the past three decades, as the economy has grown much more slowly, America's infrastructure has fallen into grave disrepair." The reasons for this are the popularity of social welfare programs and foreign aid/wars. The social programs provide a disincentive for productivity and the wars are generated out of govt self-interest and our misplaced benevolence to 3rd world countries.


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Posted by George
a resident of Another Pleasanton neighborhood
on Apr 6, 2011 at 8:36 am

"most, if not all, became successful through hard work and by making intelligent decisions."

Have you been paying any attention at all to what's happened on Wall Street? AIG, Goldman Sachs, Morgan Stanley all getting bailouts and executives getting record bonuses all on the backs of people who actually built things and provided real services? Maybe this is one of the "social programs" you are talking about, bailouts of wealthy investment bankers?


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Posted by taxpayer
a resident of Another Pleasanton neighborhood
on Apr 6, 2011 at 9:06 am

According to the National Taxpayers Union (www.ntu.org), the following is the Percentage of Federal Personal Income Tax Paid by taxpayers in 2008:

Top 1% pay 38.02% of the Federal Taxes
Top 5% pay 58.72%
Top 10% pay 69.94%
Top 25% pay 86.34%
Top 50% pay 97.30%
Bottom 50% pay 2.7%

It looks like the higher earning people are paying plenty!




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Posted by George
a resident of Another Pleasanton neighborhood
on Apr 6, 2011 at 9:40 am

" the following is the Percentage of Federal Personal Income Tax Paid by taxpayers in 2008"

How much Medicare and Social Security tax are the top 1% paying?

Web Link

"One reason is that the top 1 percent now receive a greater share of income than at any time covered by CBO's statistics, though those households receive only slightly more than the 17.8 percent share they got in 2000."

"The change in income distribution is only one reason the top 1 percent pay more now than before their income tax rates were cut. The major reason is what the CBO and other tax experts call "real bracket creep." Even though income tax brackets are adjusted upward each year for inflation, there is still a tendency for incomes to grow faster than inflation, causing more income to be taxed in higher brackets."

Also notice that all "taxpayer's" data was before the TARP and Federal Reserve bailouts of investment banks and others. Please help me understand why it was so important to use my tax dollars to bail out failed investment bankers?


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Posted by steve
a resident of Parkside
on Apr 6, 2011 at 9:55 am

George-the social program that resulted from abuse of the system was the TARP program.
You can always find a minority that abuse the system. A recent example was in yesterday's Valley Times citing investment manager's for CALPERS that are being indicted for investment fraud and other illegal activities. You know, THAT CALPERS--the one that is at the end of the puppet strings of the public employee unions. The ones who supposedly represent the interests of those poor, downtrodden workers slaving away for your govt. Maybe CALPERS is part of the 1%.
In any case, by way of your votes, you've enabled your govt to use your tax dollars to bail out not only investment bankers, but also public employee unions, 3rd world countries, ACORN, Fannie and Freddie, etc.


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Posted by George
a resident of Another Pleasanton neighborhood
on Apr 6, 2011 at 10:11 am

"In any case, by way of your votes, you've enabled your govt to use your tax dollars to bail out..."

My votes? How did my votes do that? What about your votes?


 +   Like this comment
Posted by milt friedman
a resident of another community
on Apr 6, 2011 at 10:44 am

Let's see. I make $10 million running the company I inherited from good old Dad. After taxes, I'm left with $6.5 million (not considering all the ways my high-priced lawyer is able to find me shelters and loopholes).

You make $40 thousand and only pay a grand or so. Leaving you with $39 thousand.

So, I'm left with $6.5 million, and you're left with $39 thousand. Sounds fair to me. Oh, yeah, and GE didn't spend a nickel on fed taxes this past year.

What could be fairer? Now, let's get back to the important stuff like teacher bashing, shall we? It's the patriotic thing to do.


 +   Like this comment
Posted by skyking
a resident of Oak Hill
on Apr 6, 2011 at 11:02 am

More for the teacher bashers:


Teachers are driving up taxes, and they only work 9 or 10 months a year! It's time we put things in perspective and pay them for what they do - BABYSIT! We can get that for less than minimum wage. That's right. Let's give them $3.00 an hour and only the hours they worked; not any of that silly planning time, or any time they spend before or after school. That would be $19.50 a day (7:45 to 3:00 with 45 min. off for lunch and plan - that equals 6 1/2 hours). Each parent should pay $19.50 a day for these teachers to baby-sit their children. Now how many students do they teach in a day...maybe 30? So that's $19.50 x 30 = $585.00 a day.

However, remember they only work 180 days a year!!! I am not going to pay them for any vacations.
LET'S SEE....
That's $585 X 180= $105,300 per year. (Hold on! My calculator needs new batteries).
What about those special education teachers and the ones with Master's degrees? Well, we could pay them minimum wage ($7.75), and just to be fair, round it off to $8.00 an hour. That would be $8 X 6 1/2 hours X 30 children X 180 days = $280,800 per year.
Wait a minute -- there's something wrong here! There sure is!

The average teacher's salary (nation wide) is $50,000. $50,000/180 days = $277.77/per day/30 students=$9.25/6.5 hours = $1.42 per hour per student--a very inexpensive baby-sitter and they even EDUCATE your kids!) WHAT A DEAL!!!!



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Posted by George
a resident of Another Pleasanton neighborhood
on Apr 6, 2011 at 11:45 am

"You can always find a minority that abuse the system."

Minority? Can you name a single investment bank or large commercial bank that wasn't bailed out? The only one I can think of is Lehman Brothers. Apart from that, they were all bailed out, as far as I know.


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Posted by milt is a pill
a resident of Parkside
on Apr 6, 2011 at 12:03 pm

Hey Milt, if you have a problem with the way wealth is distributed, you should have worked harder to get rich parents when you were younger.


 +   Like this comment
Posted by Steven
a resident of Pleasanton Meadows
on Apr 6, 2011 at 3:53 pm

How's that old saying goes:

"The best way to help the poor is to not be one of them"

That way there are resources for the true poor.


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Posted by b
a resident of Another Pleasanton neighborhood
on Apr 6, 2011 at 9:32 pm

My life and my pocketbook are richer because I focus on raising the tide, not just my own boat.


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Posted by To "b"
a resident of Another Pleasanton neighborhood
on Apr 6, 2011 at 9:42 pm

Thank you... I love it, and appreciate your quote. (And gee, where are the rest of the WWJD folks when it really, really matters, when folks are being turned out of their homes and haven't had a job in two years, not for lack of trying?)


 +   Like this comment
Posted by Stacey
a resident of Amberwood/Wood Meadows
on Apr 6, 2011 at 11:27 pm

Stacey is a registered user.

One of the reasons California's budget got hit so badly in the Great Recession was the too heavy reliance on taxing the income of the so-called rich. Americans are rather mobile between economic classes and the reliance on taxing the rich exposes the budget to all the big risks the rich take. I'm all for progressive taxation, but not too progressive.


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Posted by CA not average
a resident of Another Pleasanton neighborhood
on Apr 6, 2011 at 11:27 pm

No way SKYKING are you going to attempt to con us into believing CA union teachers fit in the national norm ! ! Tain't so .
Ca teachers are well paid incomparison to national.
NO pity here.
Steven, it would be good if the users and freeloaders stepped aside so we could track those who at least TRIED.


 +   Like this comment
Posted by Stacey
a resident of Amberwood/Wood Meadows
on Apr 6, 2011 at 11:29 pm

Stacey is a registered user.

I should also mention that the recent extended tax cuts for everyone was pretty poor. When 99% of Americans would benefit from extending a tax cut that did not include the top 1%, that's a pretty big supermajority.


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Posted by Progressive Contrarian
a resident of Stoneridge Park
on Apr 7, 2011 at 12:04 am

I have a similar concern, but am not sure this rant demonstrates the problem. I'll address the original request - a discussion of the article in Vanity Fair, it doesn't mention teachers at all.

- In the article there are no citations or specific government references to prove the numbers like 1% control 40%

- Liars, damn liars and statistics: If you look at trusts and names on stock and bond certificates on the NYC and NASDAQ maybe 1% control 40% of named assets.
a) how does the statistic take into account the value of the ten million small businesses in this country? Their owner's wealth is wrapped up in something not well measured.
b) To provide a retired teacher with an annual $50,000 pension, the pension fund has to have $1 million invested at 5%. In the stock market those retirement funds compromise 35% of assets, very little attributable to the wealthy who don't need pensions. The investment for the retired teacher and the hundreds of thousands in retirement funds for people not yet retired aren't included in these percents
c) I consider myself middle class. Today my big screen TV, high speed Internet, iPhone, greener car, kitchen appliances, quality of clothes and medicine are all better than they were ten years ago, and twenty and thirty. Most of my middle class friends feel they are better off (BTW, for my job I travel a lot. People in England, Greece, Beijing and Argentina are all feeling better off than 10, 20 or 30 years ago - "It's the technology, Stupid".) It seems a hollow argument to convince me otherwise. Politicians, pundits and journalists have been quoting Reagan's "Are you better off than eight years ago" line for 25 years now - it was a tired, illogical campaign cliche then. i.e. Americans were feeling better of for the same technological reasons just mentioned, but he pressed the button about the political despair caused by the Iran hostages, Watergate and Viet Nam - most which barely impacted the average American. *** I have three close friends from H.S. on the V.N. Wall in DC, but other than they died young and I protested, how has my life been impacted?
d) The article writer is like a Biblical prophet of doom. "We will be punished for our actions. The leaders have failed us. We are on some road to perdition." Sorry Charley, I've been hearing it for decades. The populace doesn't even hear it anymore. Wonder why less than 55% show up for elections? They don't see how it impacts them.
e) I wish statistics was part of journalism school. Last paragraph: "The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles...." OK, by definition, even if we limited wealth in this country to $50 million per family - they still would have the best lifestyle. BY DEFINITION, there has to be a top 1%. Did this journalist cite a PEW Research study of wealthy people? What is his evidence to project onto them no concern for fellow men and women? I've read about the Gates and Perot's using their money to eradicated malaria, fight diseases, poverty and environmental pollution. Many billionaires in this country don't care if taxes get raised - first, they have plenty, second you don't take them on their net worth, you only tax income. e.g. Bill Gates may be worth $60B, but he only takes a few hundred million per year in pay and dividends to spend on things. This article complains that he 'controls' the billions even if he has promised to donate them. We don't pay income tax on our assets - just our income.

The article reads well. It is some passionate call to arms. Does the author want some mob rule and riot to tear down the mansions of the wealthy? Liberate the factories of the oppressors? Raise taxes? What is the proposed solution? I'm tired of finger pointing by people who have a paid obligation to pundit and fill pages of newsprint or HTML every week, even when there is nothing new to say

Keep quiet unless you have something to say that we can work on together.

P.C.


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Posted by Jane
a resident of Downtown
on Apr 7, 2011 at 1:45 am

Most of what you said doesn't make sense and indicates a high degree of disconnectedness from the real world. As in, for example, you lost three buddies in Viet Nam but, heck, it didn't impact your life at all. You know, that kind of disconnectedness. Then you state:

'I wish statistics was part of journalism school. Last paragraph: "The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles...." OK, by definition, even if we limited wealth in this country to $50 million per family - they still would have the best lifestyle. BY DEFINITION, there has to be a top 1%.'

You see, P.C., you're just not using your head. Try it again. And when you do, try thinking about the bottom 1% as well as the top 1%. I'll start you out on a re-think: yes, if we limited wealth in the country to $50 million per family, they'd still have a purdy darn good life. (I'd make it considerably less, but that's just me.) Now, take the tax money that ensures the $50 million cap, and start using it to give that BOTTOM 1% (or maybe even bottom 50%) better medical services, better schools, better housing.... What happens? The rich STILL have their nice lifestyle, but we've raised the standard of living for the bottom 50%. Pretty amazing, huh?

You see, it's like 'b' said above: it's about raising the tide; but you, unfortunately, seem not to be able to grasp that very basic humanitarian concept. No, instead, it's all about you, your individual boat, and your identity (probably irrationally) being tied to the rich (as you mistakenly idealize them).

Mucho thanks to skyking for a real eye-opening analysis. Very uplifting (as in 'raising the tide').


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Posted by George
a resident of Another Pleasanton neighborhood
on Apr 7, 2011 at 8:01 am

"What is the proposed solution? "

How about proper regulation of the financial services industry? Why not require all over-the-counter derivatives to be traded on regulated public exchanges like stocks and options? Why not put back a separation between commercial and investment banking, as we had with Glass-Steagall? Why not put the uptick rule back in place for shorting stocks. Why not cap incomes of bankers who take government bailouts?


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Posted by steve
a resident of Parkside
on Apr 7, 2011 at 8:56 am

Jane, are you really suggesting that this country redistribute income as you detailed in your utopian view? You can't really be this naive.
I know your viewpoint is popular amongst delussional California 'progessives' (although they espouse socialism), but this model doesn't raise the tide, it sinks the populous.
What incentive does the 1% have to contribute to society when they are living off the earnings from working adults?
Your utopian view was tried in the last century and failed miserably in many Communist/socialists states. Your unveiled hatred for achievers displays your own insecurities and misplaced guilt.


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Posted by George
a resident of Another Pleasanton neighborhood
on Apr 7, 2011 at 9:12 am

Hey Steve, Jane,

Any comments on my solutions? Why not focus on the root cause?


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Posted by steve
a resident of Parkside
on Apr 7, 2011 at 4:53 pm

Hi, George. I didn't respond to your earlier comments because I didn't just want to comment "I agree with you". But, there it is.
So much money being thrown around (even if it's just on paper) is bound to lead to corruption, skimming, scamming, etc.
While I typically don't espouse even more regulation in most areas, this is one place that requires greater oversight, at a minimum.


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