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Income Inequality: Not An Accident

So I got nothing but grief over this meme that I created several months ago;

Tax Distribution copy

It caused a lot of consternation from people who just didn’t want to believe it, despite the fact that I cited every source I used and explained that when I found differing numbers, I always used the lowest number I could find. I enumerated a list of corporate subsidies I left out because they were either too hard to calculate (since they were buried in hundreds of bills), or because they were subsidies that come out of your state taxes.

I’ve posted hundreds of articles discussing the income inequality in America, complete with data and sources. Some people just don’t want to believe in that data. I’ve posted data (and as always, sources) showing that the six heirs to the Walton (or Walmart) fortune, who have done nothing in their lives, other than to win the birth lottery possess the same wealth as the bottom 40% of Americans. Still, there are some that don’t want to believe.

I have to say that unless your last name is Walton, I find this desire not to believe completely perplexing.

Well, here’s some more data for some to reject out of whole cloth. Oxfam just released a report on global income inequality. That report finds that the richest 85 people in the world, possess half of the world’s wealth. That wasn’t a typo. I didn’t forget to include any zeros or Ks after 85. It’s not 85,000 own half of the wealth. It’s eighty-five people that own half of all of the wealth in the world.

Why did I start the post by referring to my meme? Because that kind of inequality doesn’t happen organically. That kind of inequality happens because the game is rigged. Nobody is blessed with the kind of talent, brains, and good looks that earns them the wealth of the next 8.2 million people. That is not fucking possible, and the burning desire to believe that, is inexplicable. This kind of income inequality is only made possible by what I showed in my meme. You’re not voluntary giving your money to people whose products you want to buy. It’s being taken from you by people you’ve never done business with.

This happens when Bush and Pelosi decide that the best way to mend a failing economy is to give a barrelful of money to the banks, instead of to the homeowners whose property value was intentionally and systematically fictionalized by those banks. And it’s compounded by the "oopsie" that didn’t require those banks to lend that money back to you at a low interest rate. It’s rigged when your city pays to build a new Walmart store, and then lets that story keep the sales tax they collect for several years. You think that the 6 people that possess 40% of the country’s wealth can’t afford to build their own damned stores?  It’s rigged.

Income inequality is not necessarily a bad thing. Some people are more talented than others, and should earn more than others. Nobody is advocating for equality of outcome. Frankly, if you believe that, you’re the kind of willfully ignorant asshole who can’t be reasoned with. But equality of opportunity is essential to the growth of a healthy society. Everybody should have the opportunity to prosper from their intelligence, innovation, and yes good looks. That isn’t what’s happening here. A vast majority of the population will never have that opportunity. Not because they’re not talented, brilliant, or innovative, but because they’re being shut out of the system.

That’s what I’m against. I’m against shutting 40% of Americans out of the prosperity ladder, and you should be too. This kind of income inequality is toxic for a society. I always say that millionaires are great for America, but billionaires aren’t. Millionaires put a healthier percentage of their incomes back into the economy. Billionaires can’t possibly do that. When 40% of Americans can’t buy anything other than food and gas, that hurts all of us. We need a population with more disposable income than we have. Jobs aren’t created in a country where nearly half of the citizens have no purchasing power. It just doesn’t work.

What we’re seeing today is very close to pre-Great Depression era income inequality. It didn’t work then, and it isn’t going to work now. We can, and have to change this trend. From the report;

This dangerous trend can be reversed. The good news is that there are clear examples of success, both historical and current. The US and Europe in the three decades after World War II reduced inequality while growing prosperous. Latin America has
significantly reduced inequality in the last decade through more progressive taxation, public services, social protection and decent work. Central to this progress has been popular politics that represent the majority, instead of being captured by a tiny minority. This has benefited all, both rich and poor.

This is exactly right. Comically, the report gives some recommendations on a pledge they would like the billionaires to take when meeting at Davos for the World Economic Forum. The recommendations are as follows;

  • Not dodge taxes in their own countries or in countries where they invest and operate, by using tax havens;
  • Not use their economic wealth to seek political favors that undermine the democratic will of their fellow citizens;
  • Make public all the investments in companies and trusts for which they are the ultimate beneficial owners;
  • Support progressive taxation on wealth and income;
  • Challenge governments to use their tax revenue to provide universal healthcare, education and social protection for citizens;
  • Demand a living wage in all the companies they own or control;
  • Challenge other economic elites to join them in these pledges

 The idea that the people who have been mercilessly fucking you out of your wealth or any opportunity to get some wealth, will miraculously decide to stop is comical. Fortunately, we don’t have to wait for them to grow a conscience. We can do something about it.

If you’re reading this, you’ve seen my relentless pleas to get you to join me at Wolf Pac. I really believe that what Wolf Pac is doing is our last and only resort to fix this. Let me explain what we’re doing and why it’s our only option for fixing this.

Followers of my FB, G+, or Twitter pages understand that I call all politicians out on bullshit when I see it. I’m not a blind partisan or a "team player". I’m a liberal, which is why I find the democratic party increasingly unacceptable. Not totally unacceptable, but increasingly unacceptable. Republicans are totally unacceptable. Not because I don’t agree with them ideologically, but because they no longer have an ideology. There’s no "conserve" left in conservatism. This is no longer a party of small government. Republicans have become a wholly owned subsidiary of the word’s corporations. They don’t believe in anything other than serving their corporate masters anymore. They believe in giant corporate subsidies and giant government in your bedroom and in your home. The last place left where they believe in low taxes, is with corporations and their billionaire executives. For everyone else, it’s layer upon layer of middle class decimating fees (because a fee is somehow better than a tax?) and really damned big government. Democrats are moving in that direction in increasing numbers. That said, democrats still have a handful of legislators that actually advocate for your best interest. I’m not interested in playing a false equivalency game. Both sides aren’t the same, yet.

As I’ve watched democrats fall down the same rabbit hole or corporatism that republicans fell down decades ago, I’ve come to realize that the root of the problem isn’t in the individual people. It’s in the system, which has all the wrong incentive structures built into it. We have a system that incentivizes our politicians to serve the wrong people. They’re forced to serve the people and corporations that can afford to get them elected, and that can keep them in office. In America, the candidate with the most money wins an election 94% of the time. Their ideas don’t matter. Who they are doesn’t matter. Their platforms don’t matter. 94% of the time, the only thing that matters, is how much more money than their opponent they have. This doesn’t exactly inspire or promote creative or progressive governing.

It almost doesn’t matter who you vote for anymore. I say almost, because there are still a handful of issues where who you vote for makes a difference (marriage equality, marijuana legalization, etc) . But on issues that involve large corporations, your vote is meaningless. No president in America will ever deal with the Wall Street situation. No president in America will ever deal with the perpetually increasing waste in our defense spending. No president in America will ever deal with Monsanto’s takeover of our food supply. These are issues where the vast majority of Americans will always lose because the system is designed to put us on the losing end, regardless of who we vote for. Third parties are not the answer as long as the system remains as it is.

So what is Wolf PAC doing? We’re calling for an amendment to the constitution to get money out of politics. We’re not going through congress or the supreme court. We’re working on the state level to introduce a resolution calling for a constitutional convention. We need 34 states to pass our resolution. We have 10 states on the board right now. By "on the board", I mean that they have either already introduced, or are about to introduce our resolution. How did we do this? By working with legislators in our state. Why? For a couple of reasons. First off, we’re finding that democracy actually exists on a state level. When you call your state senator, on average, you can get a meeting with them in 3 calls. Since no one ever calls their local representatives, they seem to mostly be willing to meet with their constituents because they assume that if one constituent took the time to call, hundreds more are concerned with that issue. I personally met with both the assemblyman (woman) and the state senator who introduced our legislation here in New York. In one state (I can’t remember which), a Wolf PAC volunteer called their legislator, who actually personally answered the phone. He met that legislator for coffee later that afternoon, and had the resolution introduced the next day. In 3 states, the legislators introducing our resolution are far right wing republicans. This is a bipartisan issue, and we have a bipartisan group of volunteers.The second reason for doing it this way, is because we don’t trust congress to get it done. There’s way too much money being spent on a federal level, and our odds of crossing the finish line are exponentially higher if we work on a state level. 

When I first heard Cenk (Uygur, from The Young Turks) announce the formation of Wolf PAC, I thought the idea was preposterous. The obstacles to getting an amendment to the constitution seemed insurmountable to me. But after a year of mulling it over, I realized that we don’t have a choice. There’s literally nothing else we can do to fix our problems. I concluded that spinning my wheels in trying to get someone elected, or in getting out the vote was pointless, since that person would have to work within the fucked up system before them. Amending the constitution started to sound far less preposterous a proposition than continuing to do what I’ve been doing.

If you’ve come to the same conclusion I have, you should help us to fix it. Sign up to either volunteer, or donate to Wolf Pac. Whether you want to get money out because your party isn’t conservative anymore, or liberal anymore doesn’t matter. We’re both facing the same issue. Fortunately, it’s an issue that we still have the power to fix. We can make this happen with a few thousand people contributing, and a few thousand people volunteering. This is my primary issue because dealing with this one issue fixes the vast majority of the problems we’re facing. Personally, I’m done with "us versus them" being framed in a way to distract from the real problem. The "us" and the "them" are not republicans and democrats. They’re the 85 people who hold half of the world’s wealth, versus everyone else.         


Greed Is Goooooood

So Boeing is dropping their pension plans and cutting salaries.

This would be a “just another day in corporate America” story, except that they’re not even pretending they’re doing it to “save the company”. They didn’t bother to shift all the pensions to a subsidiary company that they could then load up with the first company’s debt to “put it in the brink of bankruptcy” in order to dump the pensions.

As a society, we’ve gotten used to that practice. Remember when the appallingly named Patriot Coal did it last year? It really wasn’t even news because robbing workers by playing accounting tricks is just how we do business in America now.

Boeing is taking a new approach to robbing their employees. They’re just doing it without the pretense and the hassles that come with the shell game we’ve gotten used to. From the LA Times article;

For just as the company was wringing concessions from its workers, its board of directors approved a 50% increase in the company’s stock dividend and a $10-billion stock buyback that will richly reward investors and executives who get paid in Boeing shares.

Boeing’s excuse? They’re not the first company to dump pensions, so they’re just “following the market”. Well that’s true. Again from the LA Times story; 

In 1980, 84% of American workers at companies with 100 or more employees received lifetime pensions from their companies, and 70% got health insurance fully paid for by their employers. Today, fewer than 30% have lifetime pensions and only 18% have fully employer-paid health insurance.

Now remember, a pension is not a benefit on top of an employees salary. It’s deferred compensation. In other words, an employee agrees to a lower take home wage, in order to defer some of their total compensation into a retirement plan. I don’t have any experience in negotiating union contracts, but I do have a few colleagues that come from that world. When I negotiate salary with a candidate, I’m negotiating their annual salary and their annual bonus. When negotiations happen in a union environment, the whole package is negotiated. In other words, a negotiated salary of 80k for an employee encompasses everything; take home pay, pension contributions and health insurance costs. The union determines how that 80k is allocated. So that employee (for example) will take home a salary of 50k per year. 20k will go into health insurance (present and future), and 10k is diverted into their pension. So when a company (or the government) takes away someone’s negotiated pension, they’re retroactively cutting their salary for every year that employee has already worked.

Think about that next time you hear about a state, county, or corporation dumping their employee pensions. Would that work for you? Would it be okay for you, if your employer could retroactively take money out of your bank account to cut your pay for work you’ve already done? In my opinion, it’s never acceptable to go after pensions as long as there’s a single nickle left anywhere else. Assets should be liquidated, executives should retroactively pay back their salaries (since the fate of the company lies squarely in their hands), and a dozen other steps should be taken before fucking with an employees pension. But that’s just me, blindly protecting those fat cat airplane mechanics (and their kids) again!

Boeing has been fucking with its union workers for years despite the fact that in the past 10 years, they’ve reaped $35 billion dollars in profits and not paid a single dime in taxes. In 2011, 38% of Boeing’s revenue came from government contracts. In 2011, Boeing opened a plant in South Carolina, a “right to work” state. In case you’re not aware, “right to work” means “no rights to organize and negotiate”. Boeing pays its South Carolina plant workers 50% of what those same plant workers get paid in Washington state.

Before you go all “free market” libertarian lunatic on me, let’s unpack what this means for you. Does earning 50% less make it more likely, or less likely that that line worker can send his kids to college? Does earning 50% less make it more likely, or less likely that that line worker can absorb a sharp decline in the housing market? Does earning 50% less make it more likely, or less likely that that line worker can survive a layoff and avoid having to turn to public assistance?

Let’s unpack how well this has turned out for Boeing. The South Carolina plant is where the 787s are being built. That plant is running far behind its production goals, and is less productive than the Washington plant. The stunning part is that Boeing knew this would happen, but they calculated that long term gain of busting the unions in Washington was worth the short term (wrong again, Bob) losses of moving to a less skilled state. Part of what unions do, is constantly train people. The costs of that training are baked into those union contracts. Employees without training are less productive cause they don’t know what the fuck they’re doing. On top of the dramatically lower productivity rates, the South Carolina 787 has a tendency to go up in fucking flames.

So well played Boeing, well played.

I’m sure this bold new move of simply telling us they’re greedy by not even trying to make a case for fucking over their employees will turn out equally well for them. Cause it’s not like there’s anger brewing in America over increasingly obvious income inequality. Keep doing what you’re doing, corporate America. I’m sure there won’t even be any consequences for turning this country into a giant pyramid scheme, where only a few people at the top walk away with all of the wealth. Cause we’ve never seen civilizations and countries fall under these circumstances.


Me? I’m Not Corrupt, I’m Just Incompetent

This is a refrain we’re all familiar with. It’s the old standby for politicians and corporate executives when they’re caught doing some really shady shit.

Angelo Mozilo (the former CEO of Countrywide Financial) played it when he was charged with massive mortgage fraud. He didn’t know that Countrywide locations across the country (oh the irony) were cranking out “liar loans” in high volumes. He didn’t know, he was just incompetent!

We heard Ron Paul proclaim his incompetence when we found out that newsletters bearing his name were really fucking racist. He naturally had no idea what the people he hired to write and edit the newsletters were doing. He was just totally incompetent and yet, wanted your vote for president because incompetence shouldn’t disqualify someone from holding the highest office in the land (or something). And some people did vote for him because the racism wasn’t real, and the self professed incompetence wasn’t an issue for them.

There are dozens of examples I can give but these two come to mind, and you get the point. In both of these cases, all you had to do was look at who benefited from these “oopsies”. Ron Paul got himself out of 3/4 of a million dollars worth of debt with those newsletters, and Mozilo got really fucking rich.

But you shouldn’t even have to go that far. Common sense should tell you that the “incompetence” defense is a load of crap. But for some reason, it’s still used all the time.

The latest inductee in the hall of incompetents is Chris Christie. He decided to proclaim his incompetence after derisively dismissing his little “oopsie” as being nothing to talk about. When asked about it, he originally mockingly said, “I worked the cones actually, Matt. Unbeknownst to everybody, I was actually the guy out there. I was in overalls and a hat….you’re really not serious with that question”. When his office was directly tied to the unnecessary bridge closure yesterday, he decided to go with a classic; I’m incompetent. The new statement is;

What I’ve seen today for the first time is unacceptable. I am outraged and deeply saddened to learn that not only was I misled by a member of my staff, but this completely inappropriate and unsanctioned conduct was made without my knowledge.

Translation; I’m just not competent, and I have no control over my own administration.

I don’t know why people think this is a good defense. I don’t know why anyone would say or write Chris Christie’s name ever again, without actively using the word “incompetent”. We should take him at his word, right? If you’re going to tell me you’re incompetent, who am I not to believe you?

But for some inexplicable reason, that’s not what we do in America. We let people get away with the incompetent defense. Ron Paul got away with it, Angelo Mozilo got away with it, and everyone else who has ever invoked “incompetence” has gotten away with it.

This has to stop. Incompetence is not a defense. Regardless of whether facts emerge that tie Chris Christie directly to this reckless and craven bridge closure, he should be driven out of office. He told us he’s incompetent. We should believe him. We need to stop letting people get away with this crap. You want to plead incompetence, fine. But you don’t get to keep governing the eleventh largest state in the country. The people of New Jersey deserve competent leadership. If that’s not you, get the fuck out. I’m fed up with the “I’m stupid” defense, and you should be too.