The self-styled “progressives” and Occupy Wall Street crowd, better called the CPUSA wing of the Democratic Party, are continuously railing against the top 1% and the top .01%. Have they stopped to consider the following eight points that challenge their assumption that wealth disparity is the cause [sic] of our economic difficulties?
1. The left has been in control of our cities for many decades -- Philly, New York, Detroit, L.A., Chicago, and many other cities. So, why hasn't there been more economic progress for the poor? Is it only the big corporate earners that are giving the cities the shaft? Are they the enemies in each and every scenario? Aren’t the governments of these cities venal, inefficient, and corrupt?
2. Under Jimmy Carter, the top tax rate was 70% for the highest earners, but we still had a recession. Why is that? Then, starting with the Carter years, and going into the Reagan years, we had stagflation, low earnings and high unemployment coupled with high inflation, plus high oil prices
[sounds a little like today's economy]. Interest rates on credit cards during the early Reagan years were running around 25%. What caused that? The richest of the rich? Then when the top tax rate was lowered with only two dissenting votes in the Senate the economy rebounded significantly, prompting the even bigger "internet boom" of the nineties (cash was generated to fund many new web-based businesses).
3. There is also that famous Laffer Curve which even received a seal of approval (as a valid conception) from John Maynard Keynes himself, which noted that higher taxation reaches a point of diminishing returns. Thus, for Laffer, 0% taxation and 100% taxation both produce 0 dollars. Therefore, using various formulae, one should be able to calculate, and in fact can calculate, the optimal level of taxation after which point the revenue produced by the income taxation begins to decline. Thus, taxation as public policy is not a cure-all; it has its limits.
4. Then, how about this situation? After WWI, the top income tax rate (remember, the graduated income tax only began being implemented in 1916) was 77%. Sec’y of the Treasury Mellon anticipated the Laffer Curve by getting the tax rate lowered, and guess what (?) there was a tremendous expansion of the economy until the Smoot-Hawley tariff hit which completely decimated the agricultural sector. That sector vulnerability combined with speculation by banks using depositor funds (later remedied by the Glass-Steagall Act that was repealed during the Clinton years in 1999).
5. Why this search for the rich bogeymen—the so-called top 1%? Even if there is some truth to the evil effects of wealth disparity, it obviously is only one of a complex of factors that have detrimental effects on the economy. Haven't manufacturing jobs been exported by the U.S. to an incredible degree for forty years? We no longer build merchant ships, railroad or subway cars, no longer have machine shops, have outsourced toy making, many pharmaceuticals, clothing and shoe manufacturing, sneaker manufacturing, etc. etc. Hasn't this shift away from domestic manufacturing productivity caused a lot of the increase in wealth disparity?
6. Why is it that under Obama as well as under Bush, not one person at Standard & Poor's, which gave AAA ratings to mortgage bundles that were essentially worthless, not one person in banking, not one person at AIG, not one person who has speculated in derivatives or bundling of secondary mortgages has gone to jail? Government auditing mechanisms were completely ineffectual. The SEC failed totally. And what about the Fed? How is it that vast sums were given out under TARP by the Fed without public oversight as to which institutions received the money, what debt it paid down, and the extent of the repayment that has taken place? Progressives and Republicans agreed on these bailouts. They agreed on the secrecy of the bailouts. They agreed that to receive the money institutions would only have to sign one single-spaced typewritten page, with no conditions on the use of the money, which lack of conditions in the bailout led to some of the bailouts being used for, incredibly, bonuses!!
7. If one is prone to believe in conspiracy theory, why not look at the secret membership and backdoor dealings of the Fed, a limited body where the members are clearly known to each other though not to the public, than to the top 1% or even top .01% who might sometimes know each other, but are not necessarily working together on common industrial or financial projects. It's interesting that D. Kucinich (Socialist) and R. Paul (Libertarian) both were co-sponsors of a bill to require a complete audit of the Fed (under present law there are many areas of Fed activity and communications that are not open to review). However, a complete audit of the Fed like that given to all other financial institutions is still disallowed.
8. Further, as every community organizer knows, and the Occupy Wall Street/CPUSA crowd should know, Saul Alinsky taught that one cannot demonstrate against a percentage (like 1%). You can only demonstrate against a person or persons or against a particular institution, e.g., a government agency, legislative center, court, or business. So why can't we get down to brass tacks, fix blame where it ought to be fixed, investigate what needs to be investigated, simplify that which is overly complex (including the tax code and the rules governing the vast game of derivatives and mortgage secondary markets [they're still there]), and stop pointing fingers at some super-rich class that among its members may have various culpabilities in the difficulties faced by our present economy and by society on an ongoing basis? Justice needs to be promoted, and not destruction of a class.