Home > Plutonomy, upward income redistribution > And the rich get richer

And the rich get richer

from Susan Feiner

A camel and a rich man walked into a fun house. Reflections bend. Turning to each other they asked, “Mirror, mirror on the wall, who’s unfairest of them all?” 

Camel said: “Dude. Unfairest? That’s easy. It’s this country’s economy.”

Rich man: “Say what? This is the fairest place in the world. America is the land of opportunity.”

Camel said: “Not now. Things have changed. In America if you’re born poor, you’ll probably stay poor. Sixty-five percent of Americans born into the bottom fifth of the population stay there, and only 8 percent of the men born at the bottom make it to the top. But 12 percent of British men, and 14 percent of Danish men climb to the highest strata of their societies. Don’t believe me? International comparisons ‘shocked’ John Ridgeland, former aide to President George W. Bush. He said Republicans should talk about the ‘lack of access to the American Dream.’ ”

Rich man: “Pshaw. Put your shoulder to the boulder. Work harder.”

Camel: “You’re doing great because the game is rigged. You guys, the 1 percent, have the economy in a death grip. For three decades, you’ve used your wealth to buy political power. You’ve used that power to cut your taxes and hold down our wages.”

Rich man: “Stop whining, big boy. Everyone knows that lower taxes stimulate the economy.”

Camel: “Wrong again. In the 1950s and ’60s, the top income tax rate was 90 percent, and economic growth was over 5 percent per year for most of the period. Since the Bush tax cuts, which lowered the top tax rate to 35 percent, economic growth’s been way down, only hitting 5 percent twice, and most of the time it’s barely topped 2.5 percent. Cutting taxes at the top is a big part of why the rich keep getting get richer. Over the past 30 years the lion’s share of new income went to you guys. Today the top 10 percent captures nearly 30 percent of the nation’s income. We’ve not seen income this unequal since 1929.”

Rich man: “Why are you complaining? Money at the top creates jobs.”

Camel: “I don’t think so. Once you have all the mansions you need (in Aspen, Martha’s Vineyard, Palm Beach, Beverly Hills) each overseen by an executive manager who hires gardeners, housekeepers and chefs, stocks the wine cellars, makes sure the pool’s the right temperature and the private jet is ready to go, what the hell else can you buy? More Picassos and Renoirs? New platinum bathroom fixtures? Throw out the Jimmy Choos and get new ones (on sale for just $795)? Another vintage Rolls? Or how about a half-dozen tranches of subprime mortgages?”

Rich man: “But, but ”

Camel continued: “Spending on luxury goods doesn’t employ the middle class because it doesn’t replace the purchasing power destroyed when giant corporations downsize, outsource and subcontract. That shrank payrolls by the millions. Even with some 10,000 people retiring daily, the U.S. economy needs some 27 million new jobs just to get everyone who wants a job back into full-time employment.”

Rich man: “People who aren’t working just don’t want to.”

Camel: “What planet do you live on? There are four job applicants for every available job, and 12.7 million are officially unemployed. Another 8.1 million are working part time but want full-time work, while 6.3 million are so discouraged they’ve given up looking. The horrifying truth is that 27.1 million people (16.8 percent of the labor force), are without full-time work. And this isn’t fair.”

“Get over it, man. You’re just jealous,” said the rich man. “People at the top, like me and my CEO buddies, get paid what we’re worth. Our boards of directors know they have to pay us top dollar. That’s why my friends and I got 23 percent raises in 2010 and 14 percent raises last year, bringing our average compensation to $12.9 million.”

Camel: “What a load of hooey. Why are those raises deserved? The S&P 500 index ended 2011 at the same level it started. Meanwhile, workers’ productivity has more than doubled since the 1970s. But their median (inflation-adjusted) incomes have stagnated. For every hour worked, each worker today produces twice as much as they did 30 years ago, but the amount they’re paid hasn’t budged. That, my friend, is why pay at the top is exploding. And you think that’s fair?”

Rich man stomped his feet. “I can’t believe you’re saying this. Don’t you know that in a market system, the best rise to the top? It’s competition. It’s supply and demand. There’s nothing unfair about it.”

“Hold on a second,” said Camel. “Remember the 2008 financial implosion? Who was responsible for the shortsighted, predatory speculation that blew up the economy? If that’s the best, God save us from the second-best! The U.S. economy’s already lost $3 trillion in output because of that crash. Since 2008 we could’ve had $3 trillion more worth of stuff — food, medicine, transportation, day care, education, pollution abatement — if the rich hadn’t totally mismanaged the economy.”

Catching a breath, Camel went on. “And let me tell you a thing or two about competition. It’s workers desperate for jobs who compete. When you’ll do anything to keep your family fed and the utilities on, any job is better than no job. But they can’t find work.”

Rich man: “No way. They could get jobs if they really wanted them.”

Camel: “Way. Every time one of my friends applies for a job, so do four other people. Joblessness is the national crisis.”

Rich man sighed. “I run a business. I know what’s best for the country. We’d employ millions in a heartbeat if the government didn’t keep wages so high.”

Camel: “I know we’re in a fun house, but come on. Real (inflation-adjusted) wages aren’t too high; they’re way too low. If we’d pegged the minimum wage to inflation in the 1970s, the federal minimum would be $10.55 per hour, not $7.25.”

Rich man: “You want to raise the minimum wage at the same time you’re complaining about unemployment? Now that’s totally bonkers.”

Camel: “I bet you didn’t know that after Illinois raised its minimum wage, employment there grew more than it did in the surrounding states where minimum wages didn’t rise. Even Desmond Lachman, a conservative scholar from American Enterprise Institute knows this. He pointed out that corporations are exploiting their strong ‘bargaining power to cut benefits and wages, and to shorten hours … (which) very much jeopardizes our chances of experiencing a real recovery.’ ”

Rich man: “You want me to believe that fairness means raising taxes on the rich and increasing the minimum wage?

Camel: “Yep.”

Rich man: “Forget it.”

They exit the fun house.

Camel said: “Hey, only two rides left. I know I don’t fit through Eye of the Needle. Does it matter that you won’t get into the Kingdom of God?”

  1. July 17, 2012 at 12:07 pm

    Love this! It is a great illustration of what I have been writing about. I use a more direct approach, using economic logic and historical records (not political rhetoric, even if by necessity it is interwoven with politics). I have a facebook page devoted to this:
    Economics Online Tutor
    which is an extension of my teaching website of the same name; I have added a section of my wrtings on related topics to go along with the textbook portion. I also have a blog on Open Salon with a few of my writings. Completely consistent with the message of this post.
    Very good!

  2. Manuel Angeles
    July 18, 2012 at 4:56 am

    I shall be using this as my intro next semester, and will look for Jerry´s stuff…

  3. October 11, 2012 at 12:17 pm

    Haha, totally excellent!

  4. October 11, 2012 at 5:59 pm

    Justaluckyfool, ” Perhaps this is the reason for 800,000 increase in part time job numbers.”

    OCT 2012

    *******From:” Desmond Lachman, a conservative scholar from American Enterprise Institute knows this. He pointed out that corporations are exploiting their strong ‘bargaining power to cut benefits and wages, and to shorten hours … (which) very much jeopardizes our chances of experiencing a real recovery.’ https://rwer.wordpress.com/2012/07/17/and-the-rich-get-richer/#comment-24471

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