Conservatives are scared straight by a Frenchman

Conservatives are scared straight by a Frenchman. French economist Thomas Piketty has released his newest book, Capital in the 21st Century, and it’s got Conservatives all up in arms. Piketty’s book delves deep into the roots of wealth inequality, and demonstrates extensive research on the subject. He writes that, despite what Conservatives may think, there is no “magical” force that creates shared prosperity and wealth in capitalist societies.

Piketty goes on to warn that if we don’t address America’s wealth inequality epidemic quickly, America could end up with the most top-heavy society it’s ever seen. Even worse than the Gilded Age. Obviously, Conservatives don’t like to talk about wealth inequality, and don’t like to hear that they’re wrong, so naturally, they’re labeling Piketty as a “radical” and a “Marxist.”

In a book review in The New York Times, Conservative columnist Ross Douthat argued that “Marx Rises Again” in Piketty’s work. And over at the Conservative publication National Review, James Pethokoukis wrote a book review titled, “The New Marxism.”

So, what are the “radical” and “extreme” ideas that Piketty is presenting in his book? Basically, he’s saying that we have it all wrong in America. He’s right.

The central thesis of Picketty’s book is that capital ALWAYS gets a better return than labor - typically around 5-8% per year. It’s been this way for the past 1000 years or more. But as capital is soaring off the charts, returns on labor are only increasing at a rate roughly equivalent to GDP growth, right now about 1% per year. This is the reason why the wealthy elite are always getting wealthier, while the working class is always stuck in place as the working class.

If capital is always increasing by 5-8% per year, and labor is only increasing in line with GDP growth - and, in any case, only represents income, not wealth - the wealthy elite are always getting wealthier, doubling their wealth every 5 years or so, while the working class is always going to just be getting by. It's the way capitalism is structured. Capital makes money. Labor earns money - and a lot less money. Maybe that's why it's called "capitalism" and not "laborism."

The way the capitalist system is now, the wealthy elite, the people who make money with money, the Mitt Romney’s of the world, are going to get richer and richer, regardless of whether the economy in strong or weak. Meanwhile, the working class is only seeing an increase in their income - which rarely even turns into an increase in wealth - when the economy is doing well.

Working people are screwed when the economy is doing poorly, while capitalists - people who earn money with money - pretty much always do just fine. With this in mind, consider how badly - insanely - our income tax system is organized. It's completely upside down! Right now, the top tax rate on capital gains - money made with money - is 20%, while the top tax rate on labor income is 39%.

Even Reagan thought this was crazy, at least on one particularly lucid day. In a speech to students at Northside High School in Atlanta, Georgia in June of 1985, Reagan point out the absurdity of working-class Americans having to pay more in taxes than millionaires. He told the crowd of students that, “We’re going to close the unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share. In theory, some of those loopholes were understandable, but in practice they sometimes made it possible for millionaires to pay nothing, while a bus driver was paying ten percent of his salary, and that’s crazy. [...] Do you think the millionaire ought to pay more in taxes than the bus driver or less?” The students sounded, commonsensically and in unison, "More!"

Given that capital always appreciates faster than labor, the capital gains tax in America should be higher than income tax, not lower. Capitalists ought to be paying more in taxes than laborers. It’s that simple. Raise the Capital Gains tax to 39% where the earned income tax is. It's easy. Reagan actually did it - for one year. Or just do away with the Capital Gains tax altogether and make all forms of income from whatever source "earned income."

This is a very modest call for change, and it’s certainly nothing “radical,” despite what Republicans in Washington might say. Even at identical tax rates, capitalists will still get wealthy massively faster than laborers. But at least our income tax system won't be upside down. It’s time to take this small step towards solving America’s wealth inequality epidemic.

Comments

Kend's picture
Kend 8 years 32 weeks ago
#1

So this is it. The democrats solution to one in six with out a job is to divide and concour. Convince the middle class that people with money are evil. They are so evil we need to rob them of there wealth. I hate to bust your bubbles but the majority of pensioners make money with money. So by raising tax on capital gains you are going to reduce the standard of living of your seniors. So instead of reducing governments rediculous spending habits like spending millions of dollars to kick a farmer off grazing land in the middle of nowhere for no reason you would rather punish seniors. Way to go Thom you it a all time low. remember the money invested is after tax money It has already been taxed once. At least make the tax rates progressive so you only tax the wealthiest seniors. There is no reason why one senior should have a better life then any other one. That who be to capitalist.

Palindromedary's picture
Palindromedary 8 years 32 weeks ago
#2

But Kend...they (the wealthy) robbed US of OUR wealth. How do you think the wealthy get wealthy? They get that way by screwing their employees out of decent wages yet expecting to raise prices on products they manufacture or sell. And since the US doesn't much manufacture anything anymore..the merchants sell goods manufactured in cheap labor countries. But most wealthy people have ridden the manufactured bubbles they created in their F.I.R.E. (Finance, Insurance, Real Estate) pyramid schemes that makes them rich. They get that way by manipulating people to spend their money on things they can't afford, on things they don't need, or for things that continually break or become useless (planned obsolescence).

These wealthy people are not hard working or deserving of the wealth they have amassed. They are, largely, flim-flam scammers that deserve to have all their wealth confiscated. And then, we need to throw the bums into jail cells for a long, long time.

The very fact that these criminals have gotten away with their scams...in large part... is because they have propagandized to us that they are the job creators. But that is such a FARCE, especially since they have destroyed so many jobs in the US by relocating our jobs overseas. There is no good reason, no good excuse, that they deserve to have lessor taxes than everyone else in this country. They have gotten away with this long enough. We need to triple or quadruple their taxes if they are going to not hire locally.

And on top of the huge tax breaks the ruling elite have manipulated for themselves, by hiding their wealth in off shore accounts to avoid paying taxes. They have even stolen our jobs in favor of offshore sweat shops where even children are made to work long, hard and dangerous hours. They do this, in part, because they don't have safety laws and protections of their workers, or environmental laws, and they pay those workers just a fraction of what they had to pay us for our jobs. And the pollution they create in other countries doesn't always stay in those countries. They may feel the adverse affects more acutely but it eventually gets around to us as well.

Oh, and I don't think raising the taxes on pensioners is their biggest worry. Wall Street, where all their money is, is one big casino full of card sharks and rigged roulette wheels. With the unfair advantage of high frequency trading lots of people's pensions will act like they've been high vacuumed sucked dry.

http://www.motherjones.com/politics/2013/02/high-frequency-trading-dange...

Kend's picture
Kend 8 years 32 weeks ago
#3

Palin this is exactly what I am talking about the ones who earned there wealth by UN ethical ways of course should go to jail but they are a very few. The majority of people with wealth made it by starting a small business and growing it. The pay there employees a decent wage and give them the best benefits they can.

I have said a thousand times if you are stupid enough to invest in stocks you deserve everything you get. You are right Wall Street is just a scam for the rich to get richer. But don't punish the hard working middle class who has done well honestly for those crooks.

Palindromedary's picture
Palindromedary 8 years 32 weeks ago
#4

But, you know, these people live in "glass houses" and vast fortunes could be sunk in an instance if someone were to find these fiber optics cables and blast them to bits. When these high-frequency traders, using high speed computers, transmit millions of buy/sell orders in fractions of a second in order to beat every other normal trader, they would be very vulnerable to any delay. Even a rogue software that caused problems for about 45 minutes before they found the problem at Knight Capitol in New Jersey nearly destroyed them. Another 15 minutes and they would have been destroyed...completely de-capitolized and decapitated. I'm not saying it's a good idea...just that it could happen...just like that disputed pipeline could be attacked some place out in the wilderness. If you don't have the people on your side...anything could happen. And it looks like Nebraska has a lot of people that might just do something like that if the pipeline becomes operational.

Palindromedary's picture
Palindromedary 8 years 32 weeks ago
#5

Kend: I don't dispute that there are a lot of, perhaps, medium rich people that are merchants or other business people who have made some pretty good money by taking certain chances and/or made good business decisions. But I think that there are many, many more who would not think twice about scamming people out of their money.

Bernie Madoff was just the tip of the iceberg. And he is exceptional because of the massive pyramid scheme he created and because he actually turned himself in and actually went to jail. There are many, many others like Madoff, or even bigger scammers who have not yet been caught, or if they have, they were not prosecuted.

And I was reading the Forbes Fortune 500 the other day where they had photos and short bios, along with the net worth, of richest people in the US. They all seem to be decent people and have even given to various charities. There are only a few who have given away much of their wealth to worth causes. But even Savings and Loans scandal swindler Charles Keating gave $1.25 million of stolen money to Mother Theresa. He donated $100,000 to the Society of Saint Vincent de Paul and more that $1 million to Covenant House and lots of other donations. What a sweet heart, eh? But, at one time his Lincoln Savings and Loan assets climbed to $5.5 billion. What is a puny one or million dollars compared to his net worth? That would be almost comparable to someone of the working class giving one dollar to charity and expecting to be revered as a great, magnanimous person. And so many of these very wealthy people, while cheating many people out of their money, one way or another, and paying way less than most working people, expect to be praised as generous beings. When you steal a lot of money..you can afford to give a little in return...and that's all they are giving...just a little. It buys them kudos in their society pages.

historywriter's picture
historywriter 8 years 32 weeks ago
#6

Frankly, Kend, you'd be a great deal more credible if you used standard, grammatical English--not to mention facts and reasoning.

chuckle8's picture
chuckle8 8 years 32 weeks ago
#7

Kend -- If you used facts, reasoning or even read what Thom said this blog would be boring.

chuckle8's picture
chuckle8 8 years 32 weeks ago
#8

kend -- I am having a hard time determing how promoting a progressive tax structure shows the people with money are evil.

bobcox's picture
bobcox 8 years 32 weeks ago
#9

If you take the BLS Consumer Expenditure table including incomes, and extract the necessities (sums) for life, Food, Clothing, Shelter, Transportation (workers have to get to their work location), Medical and Education and subtract the sum of each of these for the median incomes of the tabled income classes, you find that those earning less than $20,000 per year, have a negative flow of incomes. This does not include any extra,m beyond Social Security for Pension or to carry them when not working. The proportion of incomes for the upper income classes for the necessities drops from almost 200% for those under $5,000 per year to about 9% or less for those having incomes over $150,000 per year. Unfortunately the BLS Consumer Expenditure tables do not give larger incomes but classify the largest income group as "Greater than $150,000. To get the information for incomesover $50,000 you have to extract from the BLS table for higher incomes.

delster's picture
delster 8 years 32 weeks ago
#10

Frankly if we are going to start bolstering our arguments with stories of charitable donations to religious organizations perhaps we should refer to scripture regarding capitalistic practices, money changers, and rich men crawling through eyes of needles. There are some pretty sweet deals that come with charitable giving not to mention turning a blind eye. I'm pretty tired of the elite always trumpeting the S word or Marxism to divert attention away from other words like scam, ripp off, and elite entitlement.

If we as a democratic society are truely conservative financially then we should worship an honest and level playing feild of economics and not try to poisen the idea with misleading titles or suggestions of socialism. A level economic playing feild with rational and just rules and regulations is not scialism. Its fair play. Ofcourse some folks will be subject to good and sometime unusual fortune, but not every friggin day by the same relatives, buddies, and cronies. C'mon !

Kend's picture
Kend 8 years 32 weeks ago
#11

Yes history I would but that is the first time I think I have ever seen the word grammatical. I guess I should of stayed in school. Which one of my facts is not true?

Kend's picture
Kend 8 years 32 weeks ago
#12

What fact isn't true?

Kend's picture
Kend 8 years 32 weeks ago
#13

chuck. I just think if when it comes to taxing capital gains The guy with $20,000 invested should not be taxed the same as a guy with $20,000,000,000.

Mark Saulys's picture
Mark Saulys 8 years 32 weeks ago
#14

Kend, you're babbling incoherently. Don't panic! You'll be fine, you just won't have more than your fair share.

chuckle8's picture
chuckle8 8 years 32 weeks ago
#15

Kend -- When you say taxed, do you mean tax rate or the amount of taxes? Do you think the guy with 20e9 invested should have a higher tax rate than the guy with 20e3 invested?

DAnneMarc's picture
DAnneMarc 8 years 32 weeks ago
#16

Kend does raise an interesting point. Raising Capital Gains taxes alone does little to solve the BIG problem. We need to raise taxes on high income earners. Screw Capital Gains. High income is where the focus needs to be regardless of how that income is earned.

Otherwise, everyone who earns money from Capital gains is going to pay, big; and, some of them are very low income earners. We need to stay on the same page about this, my friends.

Mark Saulys's picture
Mark Saulys 8 years 32 weeks ago
#17

Competitive society works thus. The richest people are the most unethical because being unethical gives them an advantage. It doesn't take long for most people in business to figure that out so pretty soon there are no ethics in business or even society in general.

The rich got rich by stealing the product of someone else's labor. Ever since the domestication of plants and animals that's been the case, or rather, ever since the principle of domestication got applied to other people.

Aliceinwonderland's picture
Aliceinwonderland 8 years 32 weeks ago
#18

Marc says raising taxes on high income earners is the ticket; otherwise "...everyone who earns money from Capitol Gains is going to pay, big; and some of them are very low income earners. We need to stay on the same page about this, my friends." Count me in, Marc! I agree 100%. - AIW

SHFabian's picture
SHFabian 8 years 32 weeks ago
#19

It's not possible to have a legitimate discussion about the economy and our prospects of economic recovery/survival as long as we ignore poverty. Not everyone can work, due to health or circumstances, and there aren't jobs for all who need one right now. We know from our own history that refusing to spend $.01 of the people's money on the people's survival today will inevitably cost $1.00 or more in the future. Those who live more comfortable lives can't grasp that it's not possible for millions of workers, on today's low wages, to save enough money to tide them over following a layoff. They are a single job loss from losing everything, with no way back up. Families are torn apart, futures are wiped out -- a high price to pay for a damaged economy. Those who are left destitute don't disappear. From the costs of foster care placement to health care costs to the costs of routinely cycling the homeless through jails, our socioeconomic policies take a heavy toll on the budget. It's great to talk about job creation -- been doing just that for decades. But until then, one way or another, we are going to have to face the high cost of ignoring American poverty.

SHFabian's picture
SHFabian 8 years 32 weeks ago
#20

True, and this was why laws and regulations were implemented (and enforced) on big business, the financial industry and the rich from FDR until Reagan. Reagan then began the deregulation frenzy that is bankrupting America.

dseger 8 years 32 weeks ago
#21

Moving toward taxing capital gains the same as income from work would help to level the economic playing field. As pointed out by Warren Buffet, why should his tax rate be less than his secretary's. Many people say they want freer markets and want less government interference, but at the same time they want the government to give specialized tax breaks to capital gains. Taxing capital gains the same as income from work would allow workers to share in more of the productivity gains. With a lot of the wealth going toward the top, we don't need the government to give specialized tax breaks to the top. Tax changes could be done gradually, since sudden, big changes could be disruptive to the economy.

Mark Saulys's picture
Mark Saulys 8 years 32 weeks ago
#22

Capital gains are essentally gambling winnings and should be taxed at a higher rate than earned income.

jproctor67's picture
jproctor67 8 years 32 weeks ago
#23

As I'm not a rich Senior but an Independent Senior I find your statement so rediculous and factless it is just outright wrong. The super rich that Thom is referring too aren't the seniors that have modest savings in their accounts. You Teabaggers just can't seem to get a handle on reality of today in America. When the super rich and that excludes nearly all seniors pay 20% on unearned money that they didn't sneak off into some foreign tax shelter country. A hard working American that works between 40 and 50 hours a week and makes $55,000.00 per year pays 39% on the income and the super rich that have $55 million in a money making account that doesn't require any work pays only 20% on say he only gets 5% unearned money which is $2.75 million where is the balance in that system of taxaction You creatures that support the super rich that don't care about you in the least.

chuckle8's picture
chuckle8 8 years 32 weeks ago
#24

Did anyone notice that all freedom, personal liberty, free enterprise etc. organizations are started by and/or funded by billionaires?

Kend's picture
Kend 8 years 32 weeks ago
#25

Tax rate. %

Aliceinwonderland's picture
Aliceinwonderland 8 years 32 weeks ago
#26

Yes Chuck, I have noticed that. And here's something else I've noticed: these so-called "freedom" & "liberty" organizations have nothing whatsoever to do with freedom or liberty; just the freedom of the robber barrons to rip us off. - AIW

Aliceinwonderland's picture
Aliceinwonderland 8 years 32 weeks ago
#27

"jproctor", you need only scan the blog archives to see that 99% of Kend's assertions are ridiculous and factless. Like most conservatives, he makes up his own "facts" to support his opinions. It's a conservative trademark! - AIW

Kend's picture
Kend 8 years 32 weeks ago
#28

Sorry proctor but Thom wants to raise capital gains tax on everyone. i am pretty sure there is some seniors in America that have smaller amounts, $20,000 or $50,000 invested and that income helps them in there non working years if you tax all capital gains the same it will hurt those smaller investors. Wouldn't it?

chuckle8's picture
chuckle8 8 years 32 weeks ago
#29

Kend -- I thought the tax policy that can be derived from what Thom said is that the progressive tax that applies to income should also apply to capital gains. Our current tax structure does allow a deduction for being over 65. The amount of income tax on 20K to 50K is minimal.

Palindromedary's picture
Palindromedary 8 years 32 weeks ago
#30

Kend: If they are smart, they won't have any of their money "invested" in the crooked Wall Street Casinos. With high frequency trading and insider trading, you are as good as broke anyway when you put your money on the Wall Street roulette wheel. The Wall Street Quants, with their high speed computerized trading programs, and high speed fiber optics channels trading many thousands of trades per second ensuring that they never lose means that normal investors don't have a chance. If they don't understand that and what they are up against, they will eventually lose all their money to these crooks. Congress is just now trying to tackle this problem due to some very embarrassing revelations about this scam. But, will Congress be cowed, like they are in everything else, into passing effete legislation, or dropping it all together?

DancingBear's picture
DancingBear 8 years 32 weeks ago
#31

Friends, we keep arguing over how to reform the income tax system, but what we really need to be working for is a leveling tax on individual wealth/net worth - we should tax people based on what they own (both here and overseas) with the goal of achieving a leveling of wealth inequality through direct redistribution. It doesn't need to be a total leveling, but it should be enough to close the wealth gap to the point that no one is left living in poverty anymore. A debt jubilee to wipe the books clean on all student debt would also be a constructive step.

If we want to achieve anything at all we need to be thinking big (bigger then just income tax), because anything we demand will inevitably be whittled down. Demand the stars, but settle for the moon. With that in mind we might consider demanding class-war crimes trials as well. It was the rich after all who broke the social peace of the Fordist economic compact by declaring an open class-war of aggression upon the American working people under Reagan. I'm a peaceful guy, but I confess that the idea of a long queue of shackled Wall Street banksters and CEO class-war criminals running up Broadway to a guillotine in the middle of Central Park does have its appeal from time to time in those darker hours of the night.

chuckle8's picture
chuckle8 8 years 32 weeks ago
#32

Dancing Bear -- The shortcoming of your plan is that it requires a benevolent dictator. The new deal and the great society policies seemed to be accomplishing the goals you desire. I think a first major step towards acquiring something like those policies would be the passing of "card check". One more democratic senator in 2009 and we would have had card check.

Palindromedary's picture
Palindromedary 8 years 32 weeks ago
#33
Quote DancingBear: ...we might consider demanding class-war crimes trials as well. It was the rich after all who broke the social peace of the Fordist economic compact by declaring an open class-war of aggression upon the American working people under Reagan. I'm a peaceful guy, but I confess that the idea of a long queue of shackled Wall Street banksters and CEO class-war criminals running up Broadway to a guillotine in the middle of Central Park does have it's appeal from time to time in those darker hours of the night.

Sounds good! But before we can demand anything we will have to get rid of the crooked, bought and paid for, politicians. In the French Revolution, the people didn't just complain and talk about a revolution....they just did it! Clever fellow, that Mister Guillotine! Sure put the fear of Zod in those royalist bastards. It actually changed history! Too bad the ruling elite has forgotten what the masses can do if they are ticked off enough.

By the way, I just saw the Disney movie "Bears". Did you know that full grown bears eat 90 pounds of salmon a day to store up enough fat for hibernation during the winter? I thought up a new bumper sticker: "Kill the bears, more salmon for us!" Just kidding of course! ;-} Those little bear cubs are so cute. But those big bears...well, I wouldn't want to meet one in the woods one day! Especially if he knew that I thought up that bumper sticker.

chuckle8's picture
chuckle8 8 years 32 weeks ago
#34

Palin -- neither French revolution elimnated the control of the 1%.

DancingBear's picture
DancingBear 8 years 32 weeks ago
#35

Why would it take a dictator to pass a wealth tax or declare a student loan jubilee? Just elect enough progressive thinking politicians to pass these policies into law.

As for class-war crimes trials and a guillotine in Central Park you are correct, that would take a dictator. But to be absolutely clear here I was not being serious about that. As I said "demand the stars, but settle for the moon." That long line of Banksters and CEO class-war criminals leading to the "national razor" is nothing but a dark fantasy, not a part of any political program of change that I am advocating. I was being hyperbolic, and if some were confused, my bad.

chuckle8's picture
chuckle8 8 years 32 weeks ago
#36

DnBr -- I think it would take a dictator because neither FDR or LBJ could pass a wealth tax. I think if we could break the stranglehold on the media we might accomplish the student loan jubilee.

I was mostly thinking benevolent dictator when thinking about a worldwide wealth tax.

DancingBear's picture
DancingBear 8 years 32 weeks ago
#37

chuckle8 - I wasn't thinking of a world wide wealth tax involving everyone on the planet, but rather a wealth tax here in the USA that took into account people's overseas holdings as well as their domestic ones. And yes it is not an easy get, but neither was universal health care: TR, FDR, LBJ, and Bill Clinton all failed to get some kind of universal health coverage, but eventually Obama did get it done. The ACA is still far from perfect, but at least everyone is at long last covered in the places where the law is not being sandbagged by state officials. So the fact that FDR and LBJ couldn't get a wealth tax dosn't tell me it is impossible for our democracy to do, it just tells me that we need to keep pushing until the day comes when we can get it done.

DancingBear's picture
DancingBear 8 years 32 weeks ago
#38
Palin -- neither French revolution elimnated the control of the 1%.

Maybe not, but no one can deny that these events were deeply cathartic. The fact that the old rat-bastards were eventually replaced by a new crop of rat-bastards is simply an argument for cyclical nature of history.

chuckle8's picture
chuckle8 8 years 32 weeks ago
#39

DnBr -- The main concern I have is that people in 2008 kept pushing the agenda of taxing wealth. I think they should have applied most of their efforts to eliminate the bush tax cuts. The result was that most of the bush tax cuts became permanent. The few taxes on the rich that we won was worth 600 billion (10 yrs) vs the 6000 billion that the elimination of the bush tax cuts would have provided

Another facet of the tax structure of FDR was that Look magazine in the 60's said America would never have any billionaires. This was accomplished without any wealth tax.

Palindromedary's picture
Palindromedary 8 years 32 weeks ago
#40

DancingBear: #39-that wasn't my quote...I believe chuckle8 said that.#35 Ok, I see now...you just didn't make it clear whose quote it was.

Thom's Blog Is On the Move

Hello All

Today, we are closing Thom's blog in this space and moving to a new home.

Please follow us across to hartmannreport.com - this will be the only place going forward to read Thom's blog posts and articles.

From Cracking the Code:
"In Cracking the Code, Thom Hartmann, America’s most popular, informed, and articulate progressive talk show host and political analyst, tells us what makes humans vulnerable to unscrupulous propagandists and what we can do about it. It is essential reading for all Americans who are fed up with right-wing extremists manipulating our minds and politics to promote agendas contrary to our core values and interests."
David C. Korten, author of The Great Turning: From Empire to Earth Community and When Corporations Rule the World and board chair of YES! magazine
From Cracking the Code:
"No one communicates more thoughtfully or effectively on the radio airwaves than Thom Hartmann. He gets inside the arguments and helps people to think them through—to understand how to respond when they’re talking about public issues with coworkers, neighbors, and friends. This book explores some of the key perspectives behind his approach, teaching us not just how to find the facts, but to talk about what they mean in a way that people will hear."
to understand how to respond when they’re talking about public issues with coworkers, neighbors, and friends. This book explores some of the key perspectives behind his approach, teaching us not just how to find the facts, but to talk about what they mean in a way that people will hear."
From Screwed:
"Hartmann speaks with the straight talking clarity and brilliance of a modern day Tom Paine as he exposes the intentional and systematic destruction of America’s middle class by an alliance of political con artists and outlines a program to restore it. This is Hartmann at his best. Essential reading for those interested in restoring the institution that made America the envy of the world."
David C. Korten, author of The Great Turning and When Corporations Rule the World