I read an article in USA Today yesterday that made me very sad. When so many people struggle for life's basic necessities (food, clothing, shelter), it is very disappointing to learn where their hard earned money went. Here is part of the article on the worlds richest people:
Buffett's fortune jumped $10 billion to $47 billion on rising shares of Berkshire Hathaway (BRKB). He ranks third.
The Oracle of Omaha shrewdly invested $5 billion in Goldman Sachs (GS) and $3 billion in General Electric (GE) amid the 2008 market collapse. He also recently acquired railroad giant Burlington Northern Santa Fe (BNI) for $26 billion.
In his annual shareholder letter Buffett wrote, "We've put a lot of money to work during the chaos of the last two years. When it's raining gold, reach for a bucket, not a thimble."
Many plutocrats did just that. Indeed, last year's wealth wasteland has become a billionaire bonanza. Most of the richest people on the planet have seen their fortunes soar in the past year.
This year the World's Billionaires have an average net worth of $3.5 billion, up $500 million in 12 months. The world has 1,011 10-figure titans, up from 793 a year ago but still shy of the record 1,125 in 2008. Of those billionaires on last year's list, only 12% saw their fortunes decline.
It's almost as if they knew.
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21 comments:
Someone once defined "Puritanism" as the persistant, nagging suspicion that someone, somewhere, is having a good time.
Likewise, after reading your post, I think we can now define "Liberalism" as the persistant, nagging suspicion that someone, somewhere, is being prosperous.
Your post is a perfect tutorial on how Liberals completely misunderstand economics and what wealth is and how it is created.
"it is very disappointing to learn where their hard earned money went" Brilliant;that sums up the Liberal confusion in a single phrase: Liberals view the pie as finite, so that by definition, if one persons slice is getting larger then someone else's must be getting smaller. Conservatives understand that the pie is not finite, but potentially ever expanding, so that there is no reason why everyone's slice can't get bigger at the same time.
The practical implications of these two conflicting visions is observable in the different societies that embrace them: those countries whose economic policies are directed towards more equitably dividing a static pie end up making everyone equally poorer (except of course for the enlightened rulers, who always seem to exempt themselves from their own dictates...they always manage to get richer). Conversly, those societies which veiw the ceation of wealth as open ended invariably see a continuing rise in the material standard of living of all it's members. Even the most cursory look at the history of the world in the last hundred years confirms this thesis.
Last time I checked,Berkshire Hathaway, Oracle, and General Electric, were all publicly traded companies, which means that anyone could have choosen to participate and benifit from their success simply by buying stock in those companies. Anyone can still do that today. That those people who had the vision and initiative to participate should be punished (by increased taxation) to reward the people who choose not to participate is simply perverse. We should reward and celebrate success, not punish and bemoan it.
Failure is not, in and of itself, a sin, but niether is it a virtue.
What's that you say? You don't have the $80,000 or whatever amount it is it takes to buy a single share of Berkshire Hathaway? Well, then get together with a group of friends and pool your resouces and buy a single share together (Damn! I wish I had thought to do that 20 years ago!)
For most of my life I have worked as a carpenter in the San Francisco Bay Area. During those years I've worked for a lot of very wealthy people (with names like Getty, Ellison, "Metallica", etc.) and you know what I've noticed over those years? The richer these people got the busier I've been and the more money I've made. "A rising tide lifts all boats" as they say.
At the same time I live in a city full of disgrntled Leftist ( I used to be one)who sit around all day stewing in envy, bitching about how much money everyone one else is making, and trying to figure out ways to get the Goverment to seize more of it and give it to them. They also view the world economic order as some kind of vast conspiracy designed to keep them ina state of serfdom. What they can't ever seem to grasp is that it is their own politics, the politics of envy, which keeps them in serfdom. Those are the people that make me very sad.
Andre - you are quite a character. I can't believe you think it is fair - and in fact a right, for CEO's to make billions in compensation when those that work for them struggle to survive. It seems a giant pyramid scheme to me.
If capitalism worked the way it should then the wealth should be spread out a bit more evenly and more people could find financial success. As it is, corporations buy up other businesses until they have an unfair advantage (we call it a monopoly) and then rape the public with overpricing. Those few at the top have more money than they could dream of spending and the rest lose their mortgages.
I am not complaining about myself in this post. I've worked hard my entire life, currently work multiple jobs and manage to pay my bills in these difficult times. I'm lucky. Many are not. And I know what you are thinking - those that are poor are unmotivated socialists. But I can tell you, as someone who has processed payroll in a corporation, that those who work the hardest (often executive assistants) make next to nothing, while their bosses enjoy their 3 hour martini lunches. Don't even get me started on the workers in the un-air conditioned factory making minimum wage.
The Republican theory is that if you support business - then the business will support the people. It is a nice concept but clearly that is not the case. Supporting business means supporting a few billionaires. I'd rather support the people by regulating business so that the wealth is shared throughout the company. Not a popular Republican idea.
I believe in a free society, and, yes, in a free society it actually is a "right" of the Board of Directors of a Corporation to pay their CEO and other officers whatever ungodly amount of money they want. It's their business,and they are free to run it however they see fit. It's none of your business (unless you're a shareholder in that company), it's none of my business, and it's certainly none of the business of some goverment bureaucrat, or some career politician looking to score cheap political points.
Now, granted, it seems that lots of these guys seem grossly overpaid. Some of these clowns seem like total idiots. But if a company wants to waste millions of their dollars on some idiot, fine;let them. That will just put them in a competitaive disadvantage with their rivals who hire more talented and effective leadership, so they have strong market incentives to be very discerning in these matters (of course, any particular Board of Directors may be composed of idiots too).
I also think that lots of athelets and entertainers are grossly overpaid...should we put caps on their incomes also? Where does it end?
We have plenty of examples in recent world history of countries that have taken that approach and they all ended up as total economic basket cases, whereas the freer economies continue to prosper and everyone benefits. No, the wealth does not get spead out evenly, it never does...their will always be those (under any system) who through temperment, skill, or just plain dumb luck (most often probably a combination of all three) will do far better than their neighbors...that's just the way the world works (even Marx recognized that)...sitting around bitching and moaning about it doesn't help anybody (except of course people like Micheal Moore who parlay their envy and bitterness into lucrative careers...I think he's an idiot but I don't begrudge him the millions of dollars he's made, nor would I want to see the Goverment limit his income level). Inevitably, those societies that made serious efforts at that kind of equality only end up making everyone poor and miserable at best, and at worst they lead to the Gulag and the Killing Fields.
I don't think that the working poor are "unmotivated socialists ". As a matter of fact, I think that it's much more likely to be the opposite: the hard working people generally have more common sense in these matters (historically, the most fanatic advocates of socialism have come from the upper classes: Lenin, Mao, Ho Chi Minh, Castro, Che Guevara, Pol Pot - none of them came from the "working class"),Socialism, and other utopian schemes, unvariably arise from the bourgeoisie intellectual class - the children of priviledge with too much time on their hands (it's an insightful joke that the only place in the world where Marxism is still considered a viable theory is in the faculty lounges of American universities).
Free enterprise, low taxes, low Goverment interference and regulation ( not the same thing as NO goverment regulation - another silly straw man!) have helped us create the wealthiest, freest, and most succesful civilization in human history; let's not screw it up!
Not sure how relevent this is to our current conversation, but I just discovered this site and I immediately thought of you. Here's the teaser:
"Income distribution in the U.S and Sweden
We know Americans do better on average. But how about the distribution? After all, the left like to claim that in the U.S only a few hedge fund managers and the like are well off, while the masses live in poverty."
Bottom line: "It is a myth that only a few at the top do better in the American system compared to even arguably the most successful of the European welfare states."
Chek out his methodology and statistics sources and read more at:
http://super-economy.blogspot.com/2010/03/income-distribution-in-us-and-sweden.html
This volley is better than the final match at wimbledon, I must say.
Political debates aren't my forte but after reading the first response I had this thought: If conservatives understand that the pie is not finite, why do they seem so vehemently opposed to sharing the wealth or paying more in taxes?
Please treat this as a rhetorical question. The last thing I want is to get caught in Andre's crosshairs. ;-)
What me? I'm a pussy-cat.
I'm sorry, I can't resist (yes, it is an illness...STOP ME BEFORE I POST AGAIN!)
Thohea (cool name):
I shall honor your request to treat your question as rhetorical by responding with a purely rhetorical answer (anyways, I long ago realized that when liberals ask questions they rareley are interested in an actual answer).
However, the short answer as to why Republicans oppose tax increases is that high taxes hurt the working poor (and those aspiring to be working) much more than the middleclass or wealthy by destroying jobs and inhibiting the creation of new jobs.
Example: January, 2010; low tax Texas adds approx. 37000 new jobs to it's economy while during that same month, high tax, big goverment California simultaneously looses aprrox. 17000 jobs.
I refer you to the link below; an article by Michael Barone (a highly respected main-stream analyst,author of "The Almanac of American Politics", not some "crazed right winger") entitled "Low Tax Texas Beats Big Government California":
http://townhall.com/columnists/MichaelBarone/2010/03/08/low-tax_texas_beats_big-government_california?page=full&comments=true
I'll shut up now...
"anyways, I long ago realized that when liberals ask questions they rareley are interested in an actual answer."
- jab, jab, PUNCH!
True. Raising taxes on the wealthy hurts job growth because the multi-billionaire finds it much easier to part with a lowly employee than pay a few extra dollars in taxes. The idea of losing any of those billions is unthinkable - rather you cut more employees and actually make money in the process. That's how they got billions in the first place.
Liberals don't complain about the success of others. We also believe in the American dream that everyone has the right and the ability to find success. We only complain about those who abuse this right, stomp on others for personal gain, horde their wealth and don't pay a fair share back into society.
Conservative = ME
Liberal = WE
Thohea,
Yeah, you're right. That was a totally gratuitous slam on my part (but not untrue; that HAS been my experience...)
But come on, what do you expect? In your first post you basically said 'I'm going to take a shot at you but I don't want you to hit back at me."
Not bloody likely.
(ah, my blue-collar Boston Irish roots come out!)
denbec:
OK, but it sounds like you're willing to cut off your nose to spite your face: you admit that raising taxes will cost jobs but you seem cool with that as long as a few billionaires take a hit too. Sounds like the workers are going to get the bum end of that deal every time; raising taxes might keep some rich guy from expanding his business, but he's still going to be sailing around on his yacht while the all the potential new employees from that curtailed business expansion are left unemployed. That helps the little guy how? Six extra weeks of unemployment benifits? Whoopee.
It's a dumb argument anyways because (again with the straw men!) the vast majority of employers in this country are not billionaires, but small business men. When higher taxes and goverment over-regulation force them to cut their payroll, it's not so they can stuff more money in their pockets, it's more often than not just so they can try to keep their business afloat for another year. I know; I've been there.
"Conservative = ME
Liberal = WE"
Cute. You should put that on a bumper sticker ( all the rich liberals in Marin county will put in on their BMW's right next to their obligatory "Free Tibet" sticker).
It would be funny if it weren't for the fact that the policies that come out of that mindset do so much real damage to real people's lives. But heh, at least we're sticking it to the fat cats, right?
Andre – I see I need to be very specific with you. I’ll try to make my latest response more clear. Raising taxes on a very profitable business should in no way affect employment. What should happen is the business pays the tax. Period. Taxes are a cost of doing business just like electricity or wages. Since we are talking about successful profitable business here, a slight tax increase should not be reason to cut wages or jobs and would likely not even affect profits to a noticeable degree. Like a sales tax it should be a minor manageable increase in the cost of doing business. If jobs do get cut then I think Management has more interest in their own pockets than those of their employees. Surprise! My previous statement was indicating that this is exactly what is happening now – when it shouldn’t be.
Democrats are smart enough to know that you don’t raise taxes on small companies struggling to survive. That undoubtedly would kill jobs.
I’ll agree with Thohea that if the pie is unlimited as you say (I don’t own a printing press but I know some Feds that do) then paying a fair share of taxes shouldn’t be a problem. Just do it.
Dang Denbec! You're almost starting to sound reasonable (are you doing that just to screw with my head?).
What you propose would probably be OK....about forty years ago! The problem is (and this is the heart of the honest debate between the Left and the Right)when do you stop? Tax just a little more this year, regulate just a little more next year, and then tax just a little more the year after that, and on and on and on until you arrive at situation like you now have in California, the largest, wealthiest state in the Union on the verge of bankruptcy.
I read the other day that there are less jobs in California today than there was ten years ago! TEN YEARS AGO! Do you have any understanding of what that means? Business's have been fleeing this state for years. Chased out by taxes and over-regulation, they have been relocating to lower tax, more business friendly states (or out of the country all together). Greed is the root cause of it all; but it is the greed of politicians, unions, and the whole welfare state dependancy culture we have been creating in this country over the last fifty years. We have an evergrowing percentage of the population that is dependant on the goverment for a paycheck, if not a direct handout, and cynical politicians (yes, including some Republicans)geared towards keeping them that way, and a shrinking productive segment of the society bearing ever more and more of the burden, and now a President who wants to dramatically expand this dynamic. Talk about a pyramid scheme!
You are correct when you say that taxes are a cost of doing business, but what you completely overlook is that when you raise taxes on business, that tax gets passsed on to the consumer (you and me) through price increases. In that sense you could say that businesses don't pay taxes, consumers do. Once again, the law of unintended consequnces; Michael Moore isn't going to notice if his grocery bill (which I can only assume must be quite substantial) goes up a hundred bucks a month, but the guy who washes Michael Moore's Porsche at the car wash, with four hungry children at home, you can bet he is going to notice.
"Democrats are smart enough to know that you don’t raise taxes on small companies struggling to survive."
Hello? My dude friend...I don't really know much about you...I've made some assumptions (maybe some are accurate, probably some are not), but in all sincerity I have to say that if you can type a sentance like that, then I do know at least one thing about you, and that is that you have not paid ANY attention to Washington politics for the last few decades!
Goodnight, and God Bless America (we're going to fuckin' need it!)
I dare you to look at this...I super double dog dare you (there, is that childish enough?)...as a matter of fact, if you go take a look at this I'll promise never to darken your door with my rabid right-wing ravings ever again! (how can you say no to that?)
http://www.usdebtclock.org/
Strap in your seat belt...over the next few years the President is going to put the pedal to the metal and these numbers are going to start rolling over faster and faster (and, needless to say, not in the other direction).
We are quite familiar with the debt clock. It was started when President Bush put us in 2 wars and decided to leave the extreme costs of those wars out of the budgets. Now, cleaning up that mess and the mess they created here at home is - without a doubt - going to be costly. The debt clock works for both parties because the debt belongs to all of us.
I said I would stop haranguing you and I shall keep my word, but if you will be so generous as to indulge me a few parting observations:
1)Rounding off the numbers, even if you minus the $712,000,000,000. spent so far on the Iraq war, that still leaves a national debt of $11,867,000,000,000. So obviously your implication that it all has to do with Bush and the war is totally bogus (I've left the cost of Afghanistan ($260,000,000,000.) in because Obama campaigned on the theme that Afghanistan was the proper front for the fight against radical Islam).
2)President Bush presided over a $2.5 trillion increase in the public debt through 2008 (for much of which he was consistently criticized by Conservatives, including yours truly). However,setting aside 2009 (for which Presidents Bush and Obama share responsibility for an additional $2.6 trillion in public debt), President Obama’s budget would add $4.9 trillion in public debt from the beginning of 2010 through 2016.
So:
2 Terms of Bush: 2.6T increase.
2 Terms of Obama: 4.9T increase And bear in mind that is using Obama's own projected estimates; that's what he openly admits to wanting to do. I don't think it would be unduly partisan or unreasonable of me to assume that his numbers probably significantly downplay the actual debt increase we shall inherit from him.
How about this: I'll bet you $1000 (or whatever amount you'd like) that by the end of the Obama Administration (assuming 2 full terms - ugh!) that he will have increased the national debt MORE THAN DOUBLE what Bush did in his two terms(that would be over 5.2 trillion dollars!)
How about it?
I think you left out the financial ruin the Bush Admin policies put us in. Putting out fires isn't cheap. The Bush admin added a lot to the debt trying to put out their own fire by handing out cash which didn't stop the downward spiral.
I cannot argue that the national debt isn't a HUGE problem. It most certainly is! But, it's only been a little over a year - let us get the fires under control and then we will address the damage.
Was that a Yes or a No?
That last question wasn't rhetorical.
I don't make bets Andre. And, I've moved on - there are other important things to discuss, like why I may not be gay anymore (according to the Census).
Fair enough.
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