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Posts Tagged ‘Income Inequality’

Yesterday I heard some statistic that the richest 15 people in the United States have more wealth than the bottom 100 million combined.

Donald Trump is not one of those 15. On the Forbes list he is at rank 121 with his $4.5 billion. He always says he should be ranked higher and claims $10 billion, but be that as it may, objective observers put him at number 121.

I am sure I am part of the 100 million on the bottom. And so are likely you, my hardworking reader. What I don’t get is this:

When Obama was first running for office, some eight years ago, everyone called him the great “redistributer” even though the redistribution was well underway, starting with Reagan and going on through the Bush years. And the redistribution was not what we all were talking about. It was a redistribution of wealth from the pockets of workers like me and you to the pockets of the billionaire class like Trump. And Obama hasn’t slowed it down. It’s still going on.

What I also don’t get is this:

How in the world does Trump collect supporters among the 100 million, workers like you and I, and convinces them that he, one of the billionaire class, has our best interest in mind? Do Trump supporters really think he will do the right thing for the middle class and start stemming the tide of redistribution that has been going on for decades, so the wealth of the workers stays with the workers?

They really believe that he understands what it’s like to live paycheck to paycheck?

They really think he would even care?

So I sent another thirty-five dollars to Bernie Sanders today. Call me crazy.

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Scrooge

Bernie Sanders and his followers have been blasting billionaires and CEOs for their greed. They insinuate that the blight America is in is the fault of the billionaire class. They vilify CEOs for their greed. They say that they don’t deserve to make that much money, as compared to the middle class.

Based on this list at PayScale.com, the CEOs of the large corporations make salaries of 83 times as much as the average employee in their companies.

So, if the average employee makes $60k a year, the CEO makes about $5 million a year. I hate to say this, but if you “only” make $5 million a year, you’re not going to become a billionaire. Billionaires are not where they are because they live frugally, save their money, and get regular raises. If you make $5 million, as the average CEO of a large company in this list makes, you have to spend nothing and save all your salary for 200 years to become a billionaire.

So bringing up CEO salaries, and how they compare to average workers, does not make sense when talking about billionaires. To become a billionaire, you either have to inherit a lot of money (like the Walton clan did), or, as it is the case with most billionaires, you have to create a very unique and highly successful company, make it take off, make it grow, and then either sell it, or take it public. It’s not easily done, and it won’t happen if you’re mostly interested in a paycheck. I just wrote a post about some prominent billionaires and what I think about Bernie Sanders’ comments about them here.

I don’t know what exactly Sanders wants to do about this problem of CEOs making more money than average workers. Do they deserve it? I don’t know. It’s the jobs of the boards that put the CEOs in place to decide, not mine, not Sanders’, and not the government’s. The government cannot dictate to companies what they pay their employees, within some limits. Yes, there are minimum wages, and I have outlined what I think about minimum wages here. But there are no maximum wages.

The only thing the government can do is tax. I agree with most people: taxation should be fair. I do not believe that a CEO should pay less taxes than his secretary. Why is the tax code so complicated?

If Sanders suggested that everyone pays the same percentage, I’d be all for it. What is that rate? 17%, or 25%, or 34%? Pick a number.

The guy flipping burgers pays that rate, I pay that rate, Bernie Sanders pays that rate, and the CEO of Disney pays that rate. I’d have no problem with that, and I’d say that most people won’t.

But here is the rub: Many low-income people pay no taxes at all. Why? Churches are tax exempt? Why in the world do we allow that? The government should make up its mind how much money it has to extract out of the people in income taxes as a percentage. Then the tax code, which everyone says is so complicated, gets really simple:

  • How much money did you make last year? ______
  • Multiply this by 0.XX, where XX is that number we all agree on is fair.
  • Send that money to the government.

The entire tax code is three lines long.

For those that believe it’s not fair that CEOs make millions of dollars I simply say that: Just become a CEO. Then you can make that kind of money. Get the education that it takes. Start with an entry-level job, preferably in the sales department and work your way up. When the CEO job opens, apply for it and get it. You can then earn the big bucks.

Oh, that’s a lot of work, huh?

Well, there you have it. That’s the difference between being the CEO and flipping burgers.

 

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Income Inequality

The six main Wal-Mart heirs, together the richest family in the world, have a combined net worth greater than the bottom 41% of American citizens! Wal-Mart also pays mostly minimum wage, causing its workers to qualify for food stamps and other public assistance. Essentially, our government is subsidizing Wal-Mart.

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We have all seen, especially lately, charts like this one:

income gap

[www.ccpp.org]

99 out of a 100 people reading this, including myself, are bunched up in the clutter between 40% and 65% growth since 1979. That year was approximately when my adult life started, so this chart shows my progress, or perhaps lack of it. Be that as it may, the rich make much more money, and have even more concentrated wealth, than everyone else.

I outlined this in another post recently where I discussed the distribution of wealth. Of course, that article is not about the 1%, it’s about the 0.0001%, or the superrich. Sometimes people are rich or superrich because they take things away from other people, they steal. Names like Bernie Madoff or Jordan Belfort come to mind.

Most of the time, however, people are rich or superrich not because they are taking anything away, but because we’re giving them the money willingly. If we want to stop the gap from widening, we can’t do it by taxing or dictating to business. J.P. Morgan Chase is going to pay Jamie Dimon more than $20 million a year in compensation whether we like it or not. And most of us are definitely not qualified to judge whether he is worth it. That’s up to the board of directors of J.P. Morgan Chase.

Today I came across this article showing that the Detroit City Council voted to sell 39 parcels of land to billionaire Mike Ilitch’s company, Olympia Development of Michigan, for $1. The land will become the site for a new arena for Ilitch’s Detroit Red Wings hockey team. It has an assessed value of around $3 million. Remember, Detroit is bankrupt. It just gave $3 million to a billionaire! Can I give any better example of how the 99% willingly give vast amounts of money to the rich?

According to the same article, nearly 60 percent of the cost of the new hockey stadium—some $260 million—is being funded with public money provided by the state government. This is at a time when the governor of Michigan and the bankruptcy court are demanding the gutting of city worker pensions and the selloff of public assets because the city supposedly has no money. The $260 million handout to Ilitch is more than enough to cover the city’s current cash flow shortage of $198 million. This money could be used to remove the city from bankruptcy! But they are giving taxpayer money to a billionaire!

VIP tickets at a Justin Bieber concert cost $400 to $600, and they usually sell out. This is what millions of people in the 99% group are willing to pay to an apparent juvenile delinquent with musical talent.

Last weekend we got to watch the Super Bowl. A 30-second advertisement cost $4 million. That’s $133,000 per second. Companies are willing to pay that much money, per second, because they know it makes us buy their products later and reward them and their CEOs handsomely. And all the while we enjoyed watching the commercials.

With football, it does not end there. Peyton Manning earns $18 million a year. I heard that he didn’t output that much during that game, but we’re willing to pay it nonetheless. The lowest price tickets at the Super Bowl were $500. The highest price tickets were $2,600. The game was the most watched TV program ever, with 111.5 million viewers. 111.5 million people, most of them in the 99% of income range, are willing to pay and watch a bunch of young millionaires and multimillionaires have fun on TV.

Tom Hanks is a great actor. He tops the list of the highest net-worth actors, at $350 million. He makes some $20 million per film, plus profit participation. Our highest paid actors can make that much money because millions of us line up to pay $12 at the movie ticket counter to see their movies. We’re willing to pay. We enjoy paying.

There is income inequality in America because Americans voluntarily pay a lot of money to a select few at the top of the pyramid. We can close the income gap by stopping the consumption – which of course would cause a recession, unemployment, and more income gap.

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