This is one of the best essays I’ve read in a long time.
If you don’t read the essay at least click the link at the bottom to jump to some quotes from it. This essay gets right to the heart of what I mean when I say Nobodyisflyingtheplane. The very essence of what it is to be an American is lost amid the scramble to get into the 1% before the doors slam shut. What so few seem to see, but this essay writer soundly declaims, is that the scramble itself and the closing of the doors is the problem not the solution. The conservative party, among it’s many other nefarious intents, wants everyone to believe that they can personally get into the elite club at the top. So believing, they will eternally support the exclusive protectionist policies of the conservative platform. This is plainly foolish. Even in the rosy colored remembrances we have of a particular time in our past when everyone was moving up and lives were improving, very few… wait, let me repeat that, very few people moved into the top economic strata in our country. We all buy into the belief in the glorious republic where anyone can make it. While that’s mostly true, we stretch this belief into one in which anyone can make it all the way to the top, and from there we stretch the mythology into I can make it to the top.
I’m sorry to say that’s just not true. The odds that you or anyone you know will become one of the economic elite in this country are astronomical. I’m saying this to a very intelligent, hard working, successful group of friends, but when you get down to it, its completely improbable. The problem with this is that we can’t let one party tailor our political, economic, and social policies for the few who will ever make this transition. Its tantamount to making the lottery our national fiscal policy. Conversly we can’t let the other party tailor policy for those who aren’t going anywhere no matter what we do for them.
what separates successful states from failed ones is whether their governing institutions are inclusive or extractive
Policy should allow for and reward occasional class jumping, but be tailored to an inclusive economy that raises the standard of living for the majority, not just the chosen few.
Extractive states are controlled by ruling elites whose objective is to extract as much wealth as they can from the rest of society. Inclusive states give everyone access to economic opportunity; often, greater inclusiveness creates more prosperity, which creates an incentive for ever greater inclusiveness.
The history of the United States can be read as one such virtuous circle. But … virtuous circles can be broken. Elites that have prospered from inclusive systems can be tempted to pull up the ladder they climbed to the top. Eventually, their societies become extractive and their economies languish.
NYTimes: The Self-Destruction of the 1 Percent http://nyti.ms/RD9yeF
Today, we think of social mobility as a good thing. But if you are on top, mobility also means competition.
Even as the winner-take-all economy has enriched those at the very top, their tax burden has lightened. Tolerance for high executive compensation has increased, even as the legal powers of unions have been weakened and an intellectual case against them has been relentlessly advanced by plutocrat-financed think tanks. In the 1950s, the marginal income tax rate for those at the top of the distribution soared above 90 percent, a figure that today makes even Democrats flinch. Meanwhile, of the 400 richest taxpayers in 2009, 6 paid no federal income tax at all, and 27 paid 10 percent or less. None paid more than 35 percent.
Historically, the United States has enjoyed higher social mobility than Europe, and both left and right have identified this economic openness as an essential source of the nation’s economic vigor. But several recent studies have shown that in America today it is harder to escape the social class of your birth than it is in Europe. The Canadian economist Miles Corak has found that as income inequality increases, social mobility falls
The reduction in social mobility is fueled by:
the tilting of the economic rules in favor of those at the top. The crony capitalism of today’s oligarchs is far subtler than Venice’s. It works in two main ways.
The first is to channel the state’s scarce resources in their own direction. This is the absurdity of Mitt Romney’s comment about the “47 percent” who are “dependent upon government.” The reality is that it is those at the top, particularly the tippy-top, of the economic pyramid who have been most effective at capturing government support — and at getting others to pay for it.
Exhibit A is the bipartisan, $700 billion rescue of Wall Street in 2008. Exhibit B is the crony recovery. The economists Emmanuel Saez and Thomas Piketty found that 93 percent of the income gains from the 2009-10 recovery went to the top 1 percent of taxpayers. The top 0.01 percent captured 37 percent of these additional earnings, gaining an average of $4.2 million per household.
The second manifestation of crony capitalism is more direct: the tax perks, trade protections and government subsidies that companies and sectors secure for themselves. Corporate pork is a truly bipartisan dish: green energy companies and the health insurers have been winners in this administration, as oil and steel companies were under George W. Bush’s.
Businessmen like to style themselves as the defenders of the free market economy, but as Luigi Zingales, an economist at the University of Chicago Booth School of Business, argued, “Most lobbying is pro-business, in the sense that it promotes the interests of existing businesses, not pro-market in the sense of fostering truly free and open competition.”