What is the 1% … and is it a big deal?

Monopoly

Parker Bros. Monopoly guy

Remember that lame OCCUPY movement? The one that attracted more homeless people than anything else … in Atlanta anyway. But I will say, at minimum, the “movement” created a worldwide domino effect for a brief moment in time. And I suppose that’s something.

But really, what’s the big deal? So people have a lot of money and stuff. I get it. And, in America, you can earn however much you want — and even stash the money in various places to avoid taxes. So is there a problem?

Of course, but this problem has probably always existed in some form.

Dig:


Wealth and Salary

First off, there is a difference between being wealthy, and having a high salary.

Wealth is when you have lots of stuff and money hoarded. Salary, by contrast, is when you get a big paycheck.

Wealthy people don’t really have to do much, because they can have their money making money through investments and such — in real estate, stocks, bonds, companies, CDs, mutual funds, trusts, and various other investment products.

People with high salaries aren’t necessarily wealthy. I know lots of people who made lots of money, and ended up with very little money, or even went bankrupt. So, wealth does not necessarily come from high salaries.

I think people get that the more-specialized a job is, the more specialized the training, hence there is a smaller employee pool, hence higher salaries. But I think people get mad when wealthy people hoard wealth, and concurrently gain power in the process (more to come).

But wealth comes from accumulating money, property, stocks, bonds, reaping dividends, and all that other boring financial stuff. So wealth can come from saving, inheritance, or, yes, high wages … but wealth preservation and continuation requires (at least minimal) smart investing. This means that all those people with lots of wealth generally understand what it is, how to get it, and how to preserve it. That’s a safe assumption.


So …. is there a problem?

Kind of, but kind of not. Someone who has built wealth all their life and passed it on effectually gives their wealth to family members, individuals, corporations, nonprofits, charities, or other organization. The idea is that the wealth continues to grow, and stays within the family, or wherever. Also, wealthy people could “give back” if they decide to do stuff like build a museum, public place, library, or do something else of the sort.

If the person inheriting wealth is at least minimally decent with it, then it continues to grow (unless they lived during 2008 — eek). And in American society, it’s safe to say that the more wealth you have — capacity to purchase or donate — the more power you have with people and organizations alike. So if you own 29000 shares of a company, it’s safe to say the owner of that stock gets to decide something about the company, which in turn has an effect on productivity, jobs, and lots the overall direction of the company (this assumes publically traded stock). Thus as your wealth grows so does your power.

There are also people who make lots of money from nothing; and really, they’re the ones who are REALLY good with money, and understand how wealth functions. This is different than some basketball player who becomes insanely rich only to be bankrupt within 2 years. So there are lots of people who make money from nothing, and concurrently their power grows as well (unless they’re closet rich).

So there are two types of wealth: Family-built (or inherited) wealth and self-made wealth, and I would say that family wealth is the kind that has potential to create irresponsible, reckless people.

Here’s the problem: If you’re attached to a wealthy family name (say, the Rockefellers), or are generally wealthy, do you receive preferential treatment? Do you get preference of jobs over others simply because of name status? Do you get into colleges because of the name or donation status? Do you get advantages that non-wealthy people get? If so, then that power derives from wealth, and that means the wealth is a problem because it privileges some over others. This, in turn, violates liberty to some extent — because the status derived from wealth privileges you over others.

I would say that wealth violates the liberty of those beneath it.


That Dream thing …

Remember the “American Dream” people keep talking about? … meh …

The idea is that EVERYONE is afforded a shot at owning stuff, making as much money as they can, and generally getting whatever they want out of life because of guarantees of life, liberty, and property (happiness in more-flowery language). The idea is solid (giving people life, liberty, and property), and there were lots of checks and balances implemented in the political sphere, but there exists no such mechanisms in the social sphere. While groups of people can check and balance one another in the political system, classes between people do not have any such mechanism.

First, we all know there are classes in American society (poverty, low, middle, high, higher, 1%). Second, we also know that the American political structure has checks and balances to ensure no one ruling ideology takes hold. However, in the American social realm, no such mechanism exists. This means that if one social class has the power, there is no mechanism to correct it. This then ensures that all those big-name families stay big name, and nobody else. The only real threat to wealthy people is taxes (more to come).

… In the United States, minorities (black, gay, Chinese, whatever) can fight majorities (white, male, whatever) for voting rights (political), but poor people don’t have an outlet to band together in order to overcome the privilege that wealthy people are afforded. Instead, parties are grouped together by slivers of interest groups in order to fight over policy. But, in the United States, there is no “Workers Party,” “Capitalist Party,” “Middle Class America Party,” or other group explicitly allied along class lines, and this is probably because Communism rendered that practice taboo … even though people like to stereotype that the Democratic party is the class of poor people while Republicans are the party of wealthy people. In reality, there is no party in the United States allied along economic lines, and if there is, it’s a no-name party.

Is this a problem?

The Libertarian would probably say, “Naw, people are entitled to do anything they want; if the smaller people want to get some of the pie, they better work for it!” The Republican would probably say, “Naw, we need to ensure the government functions as it should, according to the Constitution! All that social stuff will work itself out.” And, finally, the Democrat would say, “You’re dreaming if you think anyone can climb any social/economic class in this society; it’s essentially an aristocracy.”

I would say it’s a problem because the alleged “American Dream” assumes that everyone has a fair shot at everything, which they don’t. There are LOTS of people who can’t even afford a bus ticket or even know anything outside of their 4-block radius, let alone are able to fill out a college application, or even finish high school in order to get some kind of a decent job (the prospects of which are dwindling day by day). The Dream also assumes that everyone is treated the same way, which they aren’t. I know from personal experience that some college kid living on a trust fund going to a private liberal arts school will be treated differently, and have more opportunities and exposure, than a low-income kid from the Southside going to a community state school — even though the latter probably works WAY harder.

… So I’m not convinced that work alone translates into wealth, or even a salaried job. I know lots of kids who graduated college only to work at a sub shop. I’m also of the opinion that entrepreneurship alone won’t get wealth. I mean really, I know there are lots of self-made millionaires … but really, it’s probably a ridiculously small number from those who try to be millionaires. Preaching gospels of a “you-can-do-anything” attitude don’t always work out unless you have access to resources (credit, banks, transportation, education, etc.), are born into a wealthy family, or get ridiculously lucky.

This means that, structurally speaking, wealthy people have advantages that poorer people don’t. However, keep in mind that none of this is illegal, nor is it against the Constitution. Rather, it’s simply how the social and professional worlds developed, and nobody really saw it as a threat until very recently (like post 2008).

But, in reality, it’s a problem that has been with humans probably like forever — face it, people like to hoard and gain power.


Are there solutions?

There are always solutions.

Here are a few things to remember: 1) Nobody can take money away from people. So, the wealth people are going to stay wealthy, and will continue to gain wealth — unless they invest very poorly. Wealth redistribution would never happen here, so put it out of your mind. 2) Taxes are the biggest part of all this. 3) In contemporary times, people need not only general education, but financial education; if not, it’s like sending them into a den of wolves unarmed.

Hey all you extreme freaks: you can’t take people’s money away. However, you can alter the tax code, and this needs to be done. Taxes help pay for programs that allow poor and lower-class people remain at least minimally competitive in a world full of extreme competition. Education subsidies and grants, state and federally funded technical schools, and other forms of lower-class insurance are necessary in order for these people to have at least a small chance at moving up economically. There are lots of ways that poor people can remain poor, and the best way is to stay uneducated and oblivious to what goes on around them. Keeping poor people isolated, segregated, and information-deprived is a great way to ensure a “competitive” workforce for capitalists looking for cheap labor.

At the top, there are LOTS of ways to stash your cash and avoid taxes, and the opportunities only grow as your wealth does. Remember, wealth doesn’t necessarily mean cash, and it doesn’t always have to be liquid; so lots of wealthy people put there cash in lots of accounts so it can grow tax free, then put it in a trust so the taxes are incremental when it comes out. Charities and donations are a FANTASTIC way to reduce your income level to save on taxes. Also, they can afford ridiculously smart financial advisors who can write all sorts of stuff off so they effectually pay little to no tax. It’s safe to say there is a problem, and the government knows this.

Also, people NEED to understand how wealth works, and how to grow money if they are going to survive in today’s world. Keep in mind this is in addition to any education or training you need simply to get a job. The chances that any one person will move up a tax bracket in their lifetime is probably pretty minimal. However, if they understand wealth and money growth, then it’s possible to up income levels later in life; and it may also be possible to pass that wealth along like all those wealthy peeps out there.

At the end of the day, the 1% issue is a structural one, and wealthy people probably shouldn’t be demonized as much as they are. After all, some are genuinely interested in changing the world — but others are assholes. There are probably even some who want absolute power, and they can now get closer with the invention of Super PACS.

Regardless, the problem lies in taxes primarily. After all, you can only rely on the worker and middle taxpayers so long before the system breaks. For a healthy tax system to work, and after generations of wealth accumulation, it’s probably time some of those tax shelters are taken away in order for some taxes to come back to the system that allowed such accumulation.

… I know America is extremely individualistic, but if it wants to forge any form of a coherent community, it may want to think about running more efficiently, economically speaking. I’m not saying up the tax on the wealthy, but definitely cap the tax shelters a bit more as income increases. Right now, people can stuff there money in a multitude of places; and I’m confident that if a majority of Americans actually understood how taxes worked, they would see the problems as well.

… but then again, policies reflect the desired outcome; and recently (like all of American history) tax policies have favored the upper strata of social and economic groups.

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