Billionaires & the Rise
of Socialism
Surveys
are showing overwhelming support for raising taxes on top earners, including a
new POLITICO/Morning Consult poll released Monday that found 76 percent of
registered voters believe the wealthiest Americans should pay more in taxes. A
recent Fox News survey showed that 70 percent of Americans favor raising taxes
on those earning over $10 million — including 54 percent of Republicans.
By JM Hamilton (2-9-2019)
Wow, the times are changing, and
rapidly.
There was a time in
America when the middle class, and even in some cases the poor, cheered the boy
or girl who made good; but now, when a billionaire pulls themselves up by their bootstraps, Americans increasingly ask who said plutocrat killed or stole from? And fortunately or unfortunately, depending
upon one’s perspective, Americans are coming to realize that is they who are
the victims of the billionaire class… it is the 99% who have been robbed, or,
all too often, had their lives cut short, by the very system the plutocracy
have built.
Horatio Alger – and the American
Dream – are dead now. Mr. Alger was
strangled to death by a rapacious billionaire class, as well as, Wall Street
analysts and mavens, who place accelerated & quick profits before the
economic, fiscal, moral, and political health of the nation. (In fact, it is these very same analysts & mavens, who often confuse Walls Street’s general health, w/ Main Street’s health; when in the modern era, the two street’s interests have – in most
instances – become diametrically opposed.
In short, what is good for Wall Street – layoffs, downsizing, consolidation, the offshoring of labor, and financial engineering, that is loading companies up with debt – is not good for Main Street.)
Despite the GOPs politics of
division, fear, and hatred, Americans – rapidly – are waking up to the
realization that it is not one another we have to fear, but the billionaire
class.
We saw last week story after
story of how Americans – the clear majority of Americans – want to see the super-wealthy
taxed in a more progressive manner, whether it be by estate, income, or wealth
(or better yet, if we ever are going to level the playing field, and contain
& mitigate the growing threat the robber baron class presents to the 99%
and representative democracy… why not the trifecta?).
Of course, the powerful and the
rich reacted as they always do.
Ø Trump played the
“socialist” card during his State of the Union address.
Ø More than one plutocrat said that higher taxes upon the super-wealthy would cause the United
States to end up like Venezuela.
Ø While Kevin Hassett,
who chairs POTUS Trump’s Counsel of Economic Advisors, called Demo plans to tax
the kleptocracy, “economically illiterate.” (This from a man who predicted the Dow would hit 36,000, back in the '90s.)
Clearly, the billionaire class is
running scared and in the process failing to ask the key questions: Why now? Why are a majority of Americans increasingly
warming up to the idea of higher taxation upon the exceptionally wealthy, and
the transfer of wealth to those in need?
The problem for the Davos elite is that POTUS Trump campaigned upon the fact that the economy, the government, and the nation are rigged, as did a leading 2016 Democratic candidate, Senator
Sanders (Mr. Sanders not only campaigned upon the argument, but then,
illustrated it first hand, when the Clinton campaign & its proxy, the DNC,
stuck the proverbial knife in the Senator’s back throughout the primary process).
In short, most American’s aren’t buying the plutocracy’s amateurish sales job, which is largely premised upon
fear. That is to say, most Americans are well aware that the financial elite
are engaged in their own special brand of socialism & the raiding of the
government, courtesy of campaign contributions, Gucci Gulch lobbyist, and a US
government that is owned.
This is not good. Capitalism – not crony capitalism – but the
capitalism that provides excellent customer service, innovative products &
services, well paying jobs, and rising opportunity has a future (particularly
when coupled w/ healthy social programs provided by the state, that support the
least among us, or those left behind by a predatory elite). In short, a capitalism that is defined by many competing entrants into the market place is what is needed.
What doesn’t have a future is an
American economy where: a few billionaires rule our country; wages stagnate for
decades; monopolies & cartels control the majority of sectors w/in the
macro economy; companies are bankrupted & pension funds looted for grandiose profits; and any
prospects of upward mobility are about as slim as winning the lottery.
Fear doesn’t have a future for American labor. When forty percent of
Americans live a hand to mouth existence, and one in five children live in
poverty… socialism – particularly, the
highly successful brand seen in Western Europe, Scandinavian countries, and
Canada – seems like an outstanding alternative.
At the end of the day, Americans
are keenly aware that socialism works, just as capitalism works. They also know that socialism, like
capitalism, in the hands of a dangerous dictator, or thug politician, can be
manipulated – by corruption or fraud – to benefit an elite few and turned against
the many.
In fact, America is full of excellent examples of socialism that does work:
Social Security, Medicare, the DOD (when it's not engaged in failed
nation building), the local fire department… and w/in the private sector, the
NFL, Wall Street banks (bailed out during the 2008 crisis), and insurance
companies are all outstanding examples of a socialism that works (in some instances for the few, and in other instances for the many).
Which
brings us to what is socialism?
Socialism, in its purest form, is the pooling of risk by a group of
citizens or a society, and collectively ceding power to a private collective or
governmental body to manage said risk.
Socialism subverts the ego and id, and dethrones individualism, and
forms a community that comes together – bands together – to mitigate risk (or
an existential threat) at a micro or macro level. (Many people probably don’t know this but the
State of Israel was pioneered by socialists, European & Russian emigres – fleeing pogroms & racism –
to scratch out a living on communal farms in a desert, called Palestine. To
survive a hostile environment, the founders of the State of Israel, Zionist,
lived on communal farms, called a kibbutz.
Many of these communes are alive and well, w/in Israel, to this very
day. Who knew America's number one ally in the Middle East was, & remains, to some degree – gasp – socialist?)
Insurance, a classic example, is
the pooling of risk at a micro – economic level. So that if, by way of example, a business or
property owner suffers an unforeseen event or loss, said owner doesn’t have to pay
for the loss in its entirety, like a rugged-individualist would – by themselves. Number crunchers, actuaries, know the
probability that so many buildings – w/in a pool of risk - will catch fire in a
given year. Armed with this data, the
underwriter, if they do their job correctly, prices the risk or premium, so
that no single policyholder or participant w/in the pool suffers a catastrophic
loss (which could harm said business owner’s earnings, if not land the business,
itself, in bankruptcy).
Socialism requires risk and
sacrifice however, not unlike capitalism.
When someone pays into social security all their lives – basically
another example of the pooling of risk or socialism – they run into the
possibility they could die at an early age, whereby they never see payout. Likewise, any participant in a capitalist,
or socialist, project runs the risk of lost labor, time, or wages (versus engaging
in alternative endeavors, also known as opportunity costs).
If we are honest with ourselves,
aren’t American workers – in an increasingly consolidated American
crony-capitalist economy – facing a similar set of downside risks? By adopting the crony-capitalist model - w/
increasingly diminished employment opportunities or options, and very little say in the
economy or government - isn’t American labor incurring the opportunity costs of
an alternative system, that potentially is far more rewarding? Whether that system is a more compassionate
form of capitalism, an enhanced mixed economy, or outright socialism?
When both systems – capitalism and
socialism – work in harmony, it’s the best of both worlds. However, when the financial elite prey upon
the tremendous resources of the US government for their personal enrichment,
while paying at tax rates significantly below the middle and upper middle class
(that is if they bother to pay any taxes at all), it tends to upset a great
many Americans. When the financial elite throw verbal Molotov cocktails at anybody who decries, or threatens, the rigged system they have built for themselves, the people eventually catch on to the
con. And when this same billionaire
class, run up the debt to pay for their own 2008 bailout, and then use this
same debt as an excuse to enforce government austerity upon the people, it’s
bound to incite political rebellion.
Therefore, the overthrow of
establishment/centrist political parties – who represent the billionaire class’
interests – throughout the West. Hence,
Brexit… and the arrival of populist parties that would have been considered
extreme and inconceivable before the 2008 financial crash. Republicans, and establishment Dems, who have
handed out a byzantine tax code the size of telephone directories for the
wealthy, and well healed tax attorneys & accountants, but don’t have the
courage to offset trillion dollar tax cuts w/ offsetting cuts in government
spending… in effect, financing tax cuts
for the wealthy… are running up huge
deficits, and robbing this & future generations, to coddle an ultra-wealthy donor class, today.
For the fifty to sixty percent of
Americans who are making it and live a comfortable existence, today, these can be challenging and frightening times. Fate and the economy have smiled upon you,
seemingly, and the middle & upper-middle class don’t want change. As the system is rigged against all forms of
labor – via collusion w/in industries, not to hire from one another;
non-compete agreements; monopoly & monopsony powers w/in the industrial
& service economy – yes, change is highly disconcerting for those who are
doing well. AI, globalization, and tech
have only added to labor’s uncertainty, whether you’re making it or just
getting by.
But change is inevitable, and the
US has more than a few industries, like Big Coal, that should go the way of the
buggy whip. One way to insure yours and
your family's survival – during these challenging times - is to support candidates
& politicians willing to challenge, and break up the power base of an elite
few. And that base of power is vast
and unseemly wealth, as well as, the source of that wealth (as often as not,
rent seeking cartels and monopolies).
The elimination of concentrated wealth better insures the stability of our democracy, the economy, labor
markets, and our government. As it
stands, the kleptocracy can, indeed, turn this nation into Venezuela, so concentrated is their power and so dominant is their sway over the economy.
It is no idle threat.
The super-wealthy, and Wall Street banks in particular, can manipulate the US economy… just ask Fed Chairman Powell about taper-tantrums.
It is no idle threat.
The super-wealthy, and Wall Street banks in particular, can manipulate the US economy… just ask Fed Chairman Powell about taper-tantrums.
Americans used to view the
prospect of wealth, as a ticket away from the cares and worries of this world;
and that’s why citizens, perhaps naively at times, had bought into the American
dream: that anybody can make it big; that anybody can become wealthy. But increasingly, the dream has vanished, (and billionaires have played no small role in making that aspiration disappear) all
the more so for those of limited education and means. We are also seeing a younger generation come up in America, who are not entirely enthralled by materialism.
As such, socialism, and heightened government regulation of business activities, increasingly, is seen as a means
to mitigate the risk of a crony-capitalist system that benefits a privileged
few at the expense of many. (Examine the GI Bill as yet another outstanding socialist program that made America great,
and rewarded US soldiers, who risked their lives for a grateful nation & world.)
Government intervention &
redistributive policies, in favor of the people, are seen as a means to provide
freedom from the cares and worries of a world turning particularly violent -
economically & politically - against, nearly, the majority of Americans w/ limited,
or no, resources.
As for our billionaire friends,
they’d probably do well to remember that the catalyst for both the American
& French revolutions were excessive taxation foisted upon the mercantile, middle, and lower
tiers of society (while royalty, aristocracy, and nobles often escaped taxation,
altogether). Interestingly, some of the taxes
issued by the English monarch against the American colonies were used to pay
for – what was increasingly viewed as -
an occupying British military force.
These taxes not only were issued directly by the state, England, but
also, indirectly by monopolies – empowered by the state (aka the British East India Company) – in the form of attempted monopolistic taxation/profit taking, against
the American colonies.
Some may recall the famous
dumping of the tea, in a then, colonial backwater, Boston Harbor.
And hence, the rumbling of the
tumbrels to the Place de la Concorde within Paris, relatively, a few short years
later.
Given their colossal power, both
w/in the private & public spheres, w/ no checks or balances against same,
Americans have every right to ask if their current rulers – the billionaire class - should even be allowed to exist?
P.S. For those who say the wealthy contribute to
charities & foundations, my response would be that the detrimental impact the
ultra-wealthy have upon the economy & government far outweigh the
good. For those who say taxing the
ultra-wealthy will not pay down the national debt, JMH would remind those
individuals that tax policies also serve a social role (to control and contain bad
behaviors & outcomes, while also, encouraging behaviors society deems favorable). And finally, to those who say the Green New
Deal & social spending are unaffordable, given the national debt, JMH
responds that the Federal Reserve, via monetary policy, can make good things
happen. If the Fed can print trillions
to bailout billionaires, banks, finance credit card wars, and provide tax cuts
for the ultra-wealthy, surely the Fed can expand its balance sheet - or even
write down Federal debt - to pay for social spending for the nation and the
99%.
Copyright JM Hamilton Publishing
2019