(NEWSER) – Pope Francis\’ blistering attack yesterday on the \”tyranny\” of unchecked capitalism in general and trickle-down economics in particular marks a fundamental shift in church thinking, writes Emma Green at the Atlantic. A half-century ago, the church largely condemned communism and embraced democracy, along with its underlying free-market system. The pope made clear yesterday that those days are long gone. \”This is more than just a lecture about ethics,\” writes Green. \”It’s a statement about who should control financial markets.\” And Francis clearly believes \”the global economy needs more government control—an argument that would have been unthinkable for the pope just 50 years ago.\”
Walmart\’s been caught trying to make a top-down social media strategy look like a grassroots action by hundreds of hourly workers—the retail giant is astroturfing, in other words. See, a social media \”Thunderclap\” lets hundreds of people post to Twitter or Facebook at the same time, increasing the likelihood that a topic will trend or at least start to break through the noise. A Thunderclap touting Black Friday as Walmart\’s Super Bowl was identified as being from \”a proud associate.\” But it turns out that proud associate was Umang Shah, Walmart\’s director of social strategy.
Outed by Eric Ming as the originator of the Thunderclap, Shah argued that \”proud associate\” wasn\’t deceptive because:
What are future historians going to call this age? Probably not the Era of Good Feelings, which is what we still call the Monroe-era embrace of small-r republicanism. (It was awfully brief.) The Gilded Age has been taken, although we’ve often heard that we’re living in a New Gilded Age.
Lately, I’m wondering if we’ve morphed even beyond that. We know the 1 percent have been partying in contemporary America as never before. And we know the workers at the bottom have been getting hammered. But this week we seem to have entered a phase when it’s OK for the corporations doing the hammering to drop any pretense that they’re supposed to be doing the opposite. It’s quite a moment.
A Walmart store in Canton, Ohio, has been getting some unwanted attention because an employee surreptitiously publicized a store food drive. But this isn’t your run-of-the-mill holiday-season food drive. It is not intended for Canton’s destitute. It’s for the store’s own employees. Signs attached to storage containers in an employee-only area of the store, photographed by the employee, ask other employees to “donate food items here so associates in need can enjoy Thanksgiving dinner.” “Associates in need.” Wow.
This is just one store, but corporate HQ has now involved itself, with a company spokesman attesting that this program shows the spirit of intense bonhomie that pervades the store and indeed the entire corporation. It’s just for workers who may have lost a home in a fire or “something else you can’t plan for,” the spokesman said.
As Ian Reifowitz of the Daily Kos pointed out, an article in The New York Times’s business section shows that our tax system has been successfully gamed to the point where the wealthiest Americans pay a much smaller percentage of their income than salaried, middle-class taxpayers. Using 2009 IRS data—the most recent available—America’s top 400 earners, who take in an average adjusted gross income of more than $200 million, paid less than 20 percent of those princely sums to the tax man. Those who only made it into the top 1 percent of earners—a few of whom earn as little as $344,000—paid 24 percent.
The reason for this is the ultra-rich’s income tends to derive from capital gains and dividend income. For instance, according to the figures compiled in AR: Absolute Return + Alpha magazine and quoted in the Times, 25 hedge-fund managers in the United States took home more than $350 million in 2009; a few boasted incomes in the billions. Hedge-fund managers and their lobbyists have managed to convince Congress to treat their income as capital gains rather than earned income, which lobbyists convinced Congress to tax at a mere 15 percent. Capital gains for the top 400 taxpayers represented an amazing 16 percent of all capital gains in 2009, the highest percentage by far since the statistics were compiled for the first time in 1992. Their dividend income, which is also taxed at a rate far lower than that of normal income, also hit its zenith in 2009, averaging $10.6 million per person.
The wealthiest Americans who hate \”takers\” enjoy $2 trillion in special tax carve outs, more than double the entire annual budget of Social Security.
As they accumulate more and more wealth, the very rich have less need for society. At the same time, they\’ve convinced themselves that they made it on their own, and that contributing to societal needs is unfair to them. There is ample evidence that this small group of takers is giving up on the country that made it possible for them to build huge fortunes.
They\’ve Taken $25 Trillion of New Wealth While Paying Less Taxes
The 2013 Global Wealth Databook shows that U.S. wealth has increased from $47 trillion in 2008 to $72 trillion in mid-2013. But according to U.S. Government Revenue figures, federal income taxes have gone DOWN from 2008 to 2012. Even worse, corporations cut their tax rate in half.
American society has gained nothing from its massive wealth expansion. There\’s no wealth tax, no financial transaction tax, no way to ensure that infrastructure and public education are supported.
Just how much have the super-rich taken over the past five years? Each of the elite 5 percent — the richest 12 million Americans — gained, on average, nearly a million dollars in financial wealth between 2008 and 2013.
2. For the First Time in History, They Believe They Don\’t Need the Rest of Us
The rich have always needed the middle class to work in their factories and buy their products. With globalization this is no longer true. Their factories can be in China, producing goods for people in India or Europe or anywhere else in the world.
They don\’t need our infrastructure for their yachts and helicopters and submarines. They pay for private schools for their kids, private security for their homes. They have private emergency rooms to avoid the health care hassle. All they need is an assortment of servants, who might be guest workers coming to America on H2B visas, willing to work for less than a middle-class American can afford.
A lot of people are making money off the poor. The Center for Responsible Lending, a North Carolina non-profit that tracks predatory lending practices, issued a revealing report earlier this month on payday loans, which carry annual interest rates as high as 400 percent. Using data compiled by the Consumer Financial Protection Bureau, the center found that most borrowers repeatedly rolled over or renewed loans.
The center’s analysis also found that “the median annual income of a borrower was $22,476, with an average loan amount of $350.” Most crucially, though,
This table comes courtesy of UC Berkeley’s Emmanuel Saez and the Paris School of Economics’ Thomas Piketty, everyone’s favorite inequality-tracking researchers (thanks to Annie Lowrey for pointing out the paper). They’ve added preliminary 2012 numbers to their dataset on growth in Americans’ — and in particular rich Americans’ — incomes, which gives us three years of data (2010, 2011, 2012) during the recovery, in addition to the full 2007-2009 span of the Great Recession. That lets us compare what happened to incomes in the recovery to what happened in past recoveries, and what happened during the recession to what happened in past recessions.
Shockingly — shockingly — what they found is that while only 49 percent of the decline in incomes during the recession was born by the top 1 percent (whose income share fell to 18.1 percent due to the recession), 95 percent of income gains since the recovery started have gone to them. This is a big change from past recessions and recoveries. Only 65 percent of the expansion under George W. Bush, and 45 percent of that under Bill Clinton, went to the top 1 percent. The rich bore a greater share of the 2001 recession’s damage than of the Great Recession’s, and the differential between the amount lost in the recession and gained in the recovery was much smaller last decade.
Hey, who says America is in decline? The U.S. is still more awesome than the rest of the world at making at least one thing. And that thing is income inequality.
A new paper by economists Facundo Alvaredo, Anthony B. Atkinson, Thomas Piketty, and Emmanuel Saez lays out just how much better at making inequality the U.S. is than everybody else and tries to explain how it got that way.
Since the 1970s, the top 1 percent of earners in the U.S. has roughly doubled its share of the total American income pie to nearly 20 percent from about 10 percent, according to the paper. This gain is easily the biggest among other developed countries, the researchers note. You can see this in the chart below, taken from the paper, which maps the income gains of the top 1 percent in several countries against the massive tax breaks most of them have gotten in the past several decades. (Story continues after chart.)
When a little birdie dropped the End Game memo through my window, its content was so explosive, so sick and plain evil, I just couldn’t believe it.
The Memo confirmed every conspiracy freak’s fantasy: that in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet. When you see 26.3% unemployment in Spain, desperation and hunger in Greece, riots in Indonesia and Detroit in bankruptcy, go back to this End Game memo, the genesis of the blood and tears.
The Treasury official playing the bankers’ secret End Game was Larry Summers. Today, Summers is Barack Obama’s leading choice for Chairman of the US Federal Reserve, the world’s central bank. If the confidential memo is authentic, then Summers shouldn’t be serving on the Fed, he should be serving hard time in some dungeon reserved for the criminally insane of the finance world.
The memo is authentic.
I will admit to having been amused at the error strewn Huffington Post piece which insisted that doubling the wages of McDonald’s workers to $15 an hour would have only a minimal effect on the price of a Big Mac or the dollar menu. Clare O’Connor here at Forbes describes what went on. My amusement isn’t at the errors in the calculation, nor in the way that it was subsequently re-reported. We all make errors at times and the important thing is what one then does: just as Mother always said, ‘fess up and try not to do it again. On which point everyone has acted excellently.
My amusement rather is about the fact that a doubling of, or a halving of, or any other change in, the wages of McDonald’s MCD +0.2% workers will have absolutely no effect whatsoever on the price of a Big Mac or the dollar menu. For prices are not set by the cost of production of something, but by the supply and demand for that item.