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Wednesday, February 16, 2011

Class warfare?

In the January/February Atlantic, business journalist Chrystia Freeland wrote about the rise of the global "super-elite":
Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn’t succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today’s super-rich are increasingly a nation unto themselves.
Thanks to "free trade" and the information revolution, tremendous gains in productivity have mainly served to concentrate wealth -- reflected in skyrocketing executive pay and Wall Street bonuses, for example.

The rest of us have not done as well:
the vast majority of U.S. workers, however devoted and skilled at their jobs, have missed out on the windfalls of this winner-take-most economy—or worse, found their savings, employers, or professions ravaged by the same forces that have enriched the plutocratic elite. The result of these divergent trends is a jaw-dropping surge in U.S. income inequality. According to the economists Emmanuel Saez of Berkeley and Thomas Piketty of the Paris School of Economics, between 2002 and 2007, 65 percent of all income growth in the United States went to the top 1 percent of the population.
I've blogged before about income inequality in the US, and of course "two Americas" was a major theme of John Edwards in his campaigns for the presidency, but Freeland closes with a warning about open class warfare that few analysts have offered:
The real threat facing the super-elite, at home and abroad, isn’t modestly higher taxes, but rather the possibility that inchoate public rage could cohere into a more concrete populist agenda—that, for instance, middle-class Americans could conclude that the world economy isn’t working for them and decide that protectionism or truly punitive taxation is preferable to incremental measures such as the eventual repeal of the upper-bracket Bush tax cuts....The lesson of history is that, in the long run, super-elites have two ways to survive: by suppressing dissent or by sharing their wealth. It is obvious which of these would be the better outcome for America, and the world. Let us hope the plutocrats aren’t already too isolated to recognize this.
Maybe it's time to reread Sinclair Lewis.

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1 comment:

  1. What a shame the author seems to know nothing about the US tax code. The very people she is talking about have no concerns about the earned income brackets to begin with. They take their income as dividends and therefore pay around 15%. This is an obvious reality and makes her notions about the super rich useless.