Shocking New Research Reveals Obama's Legacy Could Be an America of Aristocrats and Peons
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Making the rich richer is a terrible idea.
Making the rich richer is a terrible idea for several reasons. For one thing, it kills jobs. When regular people have money in their pockets to pay for things like food, clothing, or going to the movies, they are actually creating jobs. The taco stand can hire another cashier when people come in to spend their money on tacos.
But there are only so many tacos you can buy. If you have much more money than you can possibly spend, you’ll likely sock it away or invest in financial assets or start doing risky speculation, which doesn’t create any jobs. With banks deleveraging (cutting back on loans) and many companies fearful of borrowing given anemic rates of economic growth, your savings won’t be recycled. Even if you’re a rich person who builds a company, chances are you’re not creating very good jobs, and you’re also destroying plenty of them. High unemployment makes it easy to hold wages down and squeeze more and more work from desperate workers. Apple executives like to brag about all the American jobs they create, but a great many of them are crappy retail jobs featuring $26,000 salaries and little chance of a long-term career.
An economist might say that the economic return to capitalists has gone up at the expense of economic return to labor.
As Nick Hanauer, founder of Second Avenue Partners, told Bloomberg:
“I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.”
You can see the truth of Hanauer’s statement when you realize that while the concentration of wealth in America has been heating up for the last couple of decades, the job market has been pretty bleak. That’s what happens when Washington policy becomes “Who Wants to Help a Millionaire?”
If making the rich richer is destructive, why do we do it? We’re not supposed to be a country of aristocrats and peasants who labor at the pleasure of the wealthy. We’re supposed to be free and proud citizens whose labor, investment and idea drive the economy.
What’s happened is that the rich have been using the fairy tale of “rugged individualism” and our healthy skepticism of too much government to convince many of us that we shouldn’t have programs designed to promote economic equality and benefit ordinary people rather than the rich. And, of course, they’ve unleashed their bankrolls in Washington, where, since Newt Gingrich came on the scene, Congress has turned into what political economist Thomas Ferguson describes in the Financial Times as a “Best Buy system” where positions of power go to whoever can raise the most cash. “Uniquely among legislatures in the developed world, US congressional parties now post prices for key slots in the lawmaking process,” writes Ferguson. “The practice makes cash flow the basic determinant of the very structure of lawmaking.”
The rich are getting richer in that they control our legal and political systems. They aren’t going to give up this control voluntarily.
If we continue on this path of functional feudalism, we can look to history for hints as to what might happen. In the late 18th century, peasants in France expressed their anger at the brutes who were extracting their wealth by rounding them up in the Place de la Concorde and separating their heads from their bodies. Hopefully we can go a more peaceful route, joining forces in a mass movement that pushes our elected officials to get our economy and society back into balance through fair taxes, a robust social safety net, investment in working people, rules of the road that curb Wall Street’s excesses, and a plan to bring the financial sector back to a manageable size.