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okaycuckoo, May 12, 2013 in House prices and the economy
Is this accurate?
If it is the more people that see this the better, but just because its on youtube doesn't make it correct....... However it wouldn't surprise me one bit if this is true.
I have echoes in my ear of the ''Rage Against The Machine'' Lyrics of ''Take The Power Back''
I posted this here before:
Even without doubting the factual accuracy of the video, the results themselves are rather strange.
Looking at the "perceived" graph, CEOs would be earning 12-15 times as much as cleaners. Given that the "ideal" graph is much more egalitarian, I find it hard to believe that most Americans are prepared to grumble about this, really quite modest earnings ratio.
In fact, the "ideal" graph has virtually equal widths for the second and third quintiles, implying virtually the same earnings and effectively no progression incentive from one to the other. Even the top quintile is only about 3 or 4 times as wide as the bottom quintile, implying an amazingly flat CEO/cleaner earnings ratio of 3 to 4. Not even the old communist states stipulated that!
That is to say, this claimed "ideal" graph represents something so close to strict mathematical egalitarianism as makes practically no difference.
Of course, none of the above is to deny that the current 1% concentration is unsustainable.
Roll on citizen's income!
The trouble with using so called 'wealth' to measure inequality is in a practical sense, its irrelevant. You cant tax it at anything near the rate required to reduce inequality in a meaningful way - its been blown up by various credit bubbles and now QE to such high value that the yield of this wealth is pathetic - 2 or 3%. Any tax above this rate means you are taxed simply to 'hold' wealth, and wealth that doesnt yield but has ownership costs is surely a liability. A 2% tax on 54trn worth of wealth wouldnt even clear the US deficit, let alone begin to fund any additional social programs. what it would do is virtually eliminate any return on wealth, and thus valuations would have to be lowered to produce a higher yield to compensate for the tax. Only then of course, the tax rate would have to rise to compensate for the lower valuation.
So we are left with tackling what causes 'wealth' to be at such strastopheric levels in the first place.(debt) Which neither the left nor right will tackle because they are both addicted to debt. It seems a common misconception that the rich get richer whether the economy is down or not, the situation for the poor only improves when the economy is good. In reality, inequality tends to rise when the economy is good, and falls when it is bad.
As MISH shows, with income...(i suspect wealth will be even more pronounced.)
What we actually see is the wealthy have benefitted massively from QE, the poor have suffered. (despite QE being most slavishly pushed by the so-called liberal-progressive like Krugman) Obviously this would come as no surprise to anyone other than politicians and economists, as it is of course the well-connected elite who have inflation-proofed assets, the first access to cheap credit, and large amounts of leverage that can easily turn into negative equity should the pyramid scheme fail. Consider also the falling proportion of wages as a % of GDP. With economies becoming more speculation/debt orientated, more income is derived from investments. It seems this is not by mistake. The left particularly have a dubious history with taxation of unearned income (probably because most the left are rich through inheritances, rather than graft). First we saw Chancellor Darling cut the CGT rate to 14%, and just recently we have seen the socialist fascist Hollande cut CGT taxes, whilst vastly increasing taxes on earned incomes! We see this consolidation of income distributed by asset values and yields before our eyes. Record low stock ownership in the US. Corporate share buybacks, the rise and rise of private equity. Basically anything to keep wealth out of the hands of the little people. All facilitated and taxpayer/saver subsidized by the wonders of QE allowing companies to borrow to buy their own shares at virtually no cost.
The only way of reversing wealth inequality is by cancelling and reversing the devastating policy of QE, every credit bubble since 1980, and re-installing the gold standard that helped cut off the worst of those bubbles. But with the right obsessed by house and stock prices thanks to the Reagan-Thatcher property owning democracy (despite ownership in shares and property falling, and being concentrated in fewer and fewer hands), and the left conned under the hypnotic thrall of Banskter-Bildeberg PR operative's like Krugman, what hope is there.
The QE point is correct I think- the 'wealth effect' seems limited to those who already had wealth. But QE cannot be blamed for the huge inequality that built up prior to the crash.
I think the truth is that Globalisation greatly helped those in a position to exploit the opportunities it created and greatly harmed a lot of people who found themselves competing suddenly with billions of new workers in the east. QE is just continuing the work that Globalisation and the deregulation of the financial system started.
The problem that the 1% have is that their wealth is mostly a collection of claims on the productive capacity of the real economy- but so successful have they been in plundering that economy that it now threatens to implode, at which point their wealth will also implode.
But the question is- who now has the power to correct this problem? So powerful have the 1% become that they have effectively neuterd the forces that might once have been able to intervene- both the Academic and Political establishments have been bought off- the regulators likewise.
Self control seems to be the one thing that money can't buy- so the wealthy will continue to gather more and more wealth to themselves until the system falls over and they lose control of the political landscape to a new order- who will then busy themselves in destroying the current elite in order to take their place.
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