By Paul Buchheit
See original post here.
Middle America’s anger is misdirected: toward liberals because of the misperception that educated elites are trying to foist socialism on a capitalist nation; toward minorities and immigrants, even though their financial struggles are similar to those of moderate-income white Americans; and toward the federal government, even as Republican state leaders reject Medicaid expansion and food assistance for hungry children and families. But largely unnoticed is the 50-year quietly coordinated and insidious campaign to transfer American wealth to the richest people.
The Massive Takeaway
A 2020 TIME magazine article reported that in just over four decades $50 trillion has been transferred from working Americans to multi-millionaires. According to the Credit Suisse 2022 Global Wealth Databook, in approximately the last decade (2010-2021) America’s wealth has grown by over $80 trillion, up to $60 trillion of which was taken by the country’s millionaires and multi-millionaires (about 10% of the population).
The sordid history of the wealth grab is one of power, greed, and manipulation.
This is a staggering takeaway of wealth. The TIME article suggests that the amount is “enough to more than double median income—enough to pay every single working American in the bottom nine deciles an additional $1,144 a month. Every month. Every single year.”
This is where America’s anger should be directed. The 40-year trickle-down delusion, fashioned by economists, politicians, and financial experts, has deprived average Americans of the means to support their families in a comfortable, debt-free manner. It allows multi-millionaires to siphon off our country’s wealth effortlessly with the inevitable rise in the stock market. And it undoubtedly has contributed to the surge in “deaths of despair”—those from drug and alcohol abuses as well as suicide—that continue to increase among poor Americans.
How Did This Happen?
The sordid history of the wealth grab is one of power, greed, and manipulation. In 1971, corporate lawyer and soon-to-be Supreme Court justice Lewis F. Powell wrote a lengthy memo that rallied conservatives in their desire for business growth and free markets. Government, universities, and the media were the enemies. Political equality and shared prosperity were un-American.
Defenders of the rich argue that they’ve earned their wealth. But for the most part, they’ve simply learned how to exploit American prosperity.
Conservative think tanks sprung up. The “greed is good” philosophy of Ayn Rand was becoming justified. The influential economist Milton Friedman said “The free market system distributes the fruits of economic progress among all people” and then infamously teamed with economist Arthur Laffer to convince American leaders that decreasing taxes on the wealthy would allow increased revenues to “trickle down” to the rest of the country.
We were then comforted in years to follow, as inequality grew, by the Wall Street Journal claiming that “income inequality is simply not a significant problem” and The Economist boasting that “the world now knows how to reduce poverty.” The Charles Koch Foundation tried to shame us into compliance with the reassurance that earning $34,000 a year placed you in the Top 1% in the world.
The Labors and Taxes of Our Parents and Grandparents Created Our Nation’s Wealth
Defenders of the rich argue that they’ve earned their wealth. But for the most part, they’ve simply learned how to exploit American prosperity. Beginning in the 1950s, funding for modern computer technology came almost entirely from taxpayer dollars through the Department of Defense and other branches of government. As explained by Mariana Mazzucato: “From the Internet that allows you to surf the Web, to GPS that lets you use Google Maps, to touchscreen display and even the SIRI voice activated system—all of these things were funded by Uncle Sam.” Adds political economist Gar Alperovitz: “Between the mid-1980s and the mid-1990s the National Science Foundation spent $200 million to build and operate a network of regional supercomputing hubs called the NSFNET. Connected to the ARPANET, this network established Internet access for nearly all U.S. universities, making it a civilian network in all but name.”
In a similar vein, pharmaceutical companies wouldn’t exist without money from the taxpayers, who have provided support for decades through the National Institutes of Health, and who still pay for most of the basic research for new drugs and vaccines. Yet both the tech and pharmaceutical companies claim patents on the products paid for and developed by the American people.
Overall, in the U.S. today, the federal government continues to be the largest source of funding of basic research.
We Need a Wealth Tax
Stock growth represents American prosperity driven by 75 years of shared effort. Everyone should benefit, probably by receiving a guaranteed income. Just a two-percent tax on total financial wealth would generate enough revenue to provide an $18,000 annual stipend to every American household (including those of the richest families).
With typical overreaction, the Wall Street Journal laments that “A tax on securities trades would…create large economic and societal distortions.” We already have economic and societal distortions. Taxing stock ownership would be straightforward and fair-minded, while barely disrupting the portfolios of the millionaires and multi-millionaires who own close to 90% of all stocks.
Perhaps, with a tax on the effortless accumulation of stock market wealth, average taxpayers would finally receive a return on 75 years of American prosperity.
