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Sheila Bair

Grand Old Parity

I am a capitalist and a lifelong Republican. I believe that, in a meritocracy, some level of income inequality is both inevitable and desirable, as encouragement to those who contribute most to our economic prosperity. But I fear that government actions, not merit, have fueled these extremes in income distribution through taxpayer bailouts, central-bank-engineered financial asset bubbles and unjustified tax breaks that favor the rich.

This is not a situation that any freethinking Republican should accept. Skewing income toward the upper, upper class hurts our economy because the rich tend to sit on their money — unlike lower- and middle-income people, who spend a large share of their paychecks, and hence stimulate economic activity.

But more fundamentally, it cuts against everything our country and my party stand for. Government’s role should not be to rig the game in favor of “the haves” but to make sure “the have-nots” are given a fair shot.

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So, this man is in favor of a flat tax?
Government spending/ # adults. One lump sum payment each year.

astonerii on February 27, 2013 at 7:32 PM

Among other things, Mr. Saez examined how real family incomes changed in the United States from 2009 to 2011, the first two years of the recovery. The richest 1 percent of Americans, he found, saw their incomes grow, on average, by more than 11 percent. As for the other 99 percent? You guessed it: incomes shrank by nearly half a percent.

The phenomenon is hardly new. The yawning gap between rich and poor has been growing since the 1970s and reached a 90-year peak in 2007, just before the financial crisis.

At the risk of being understated, that is… distressing.

President Obama, who has rightly made income inequality a signature issue, cannot be pleased that the über-rich have gained under the policies pursued by his administration, while the bottom 99 percent have not. Unfortunately, his economic team, populated by acolytes of the former Treasury secretary Robert E. Rubin, has relied on the same “growth” policies that got us into trouble precrisis: generous treatment of the financial sector and easy money from the Federal Reserve. These strategies have done little to encourage sustainable economic growth, but they have worked wonders to increase Wall Street profits and inflate the value of stocks and bonds — which are disproportionately owned by the rich

Obama’s favoritism towards the rich in such regards has gone almost unnoticed due to his positioning on tax rates vs that of GOP leadership. It shouldn’t continue to go unnoticed.

Stoic Patriot on February 27, 2013 at 7:35 PM

this man

astonerii on February 27, 2013 at 7:32 PM

A boy named Sue, a man named Sheila.

steebo77 on February 27, 2013 at 7:39 PM

It has been noticed. Just not reported on. It will continue to go unnoticed by most.

Of course, the reason the 1% made out like bandits is because the FED is propping up the stock market and commodities by pursuing monetary expansion to a massive degree. It has absolutely nothing to do with taxes.

astonerii on February 27, 2013 at 7:39 PM

A boy named Sue, a man named Sheila.

steebo77 on February 27, 2013 at 7:39 PM

Person, my bad.
Thanks for the correction!

astonerii on February 27, 2013 at 7:40 PM

The comments in this thread will not make sense to you unless you recognize that the common conceit is that there is a version of pure capitalism in which markets manage themselves and the value of currency is as natural a phenomenon as the wind.

eh on February 27, 2013 at 7:42 PM

Big business loves themselves some big government.

What you need is a government that’s willing to look into the eyes of Lehman or GM and let them go bankrupt (and then not intervene).

What you need is a non-interventionist government of stable rules, where the sought outcome is equality of opportunity, not equality of outcome.

Where, if the middle class isn’t productive enough to deserve their salary, benefits or expectations, that reality is allowed to assert itself sooner than later. Where sacred (and semi-sacred- cows are not preserved from slaughter.

We need a society where people can discover price, and do so within a meaningful time. Where bas business decisions are not rewarded, where suckers who voted themselves the public treasury are not rewarded.

we’ll never have that society. Instead, well have totalitarian government where everyone will be entitled to a shrinking piece of cheese, which they believe is their due.

Revenant on February 27, 2013 at 7:45 PM

Do you know what else encourages income inequality? Open Borders…

Open Borders

1. lowers wages
2. reduces the social capital necessary for social reform
3. groups of people who are different genetically necessarily will have unequal income outcomes.

For #1 and #2:

aeonmagazine.com/living-together/peter-turchin-wealth-poverty/

The US, in short, was in a revolutionary situation, and many among the political and business elites realised it. They began to push through a remarkable series of reforms. In 1921 and 1924, Congress passed legislation that effectively shut down immigration into the US. Although much of the motivation behind these laws was to exclude ‘dangerous aliens’ such as Italian anarchists and Eastern European socialists, the broader effect was to reduce the labour surplus. Worker wages grew rapidly. At around the same time, federal income tax came in and the rate at which top incomes were taxed began to increase. Somewhat later, provoked by the Great Depression, other laws legalised collective bargaining through unions, introduced a minimum wage, and established Social Security.

The US elites entered into an unwritten compact with the working classes. This implicit contract included the promise that the fruits of economic growth would be distributed more equitably among both workers and owners. In return, the fundamentals of the political-economic system would not be challenged (no revolution). The deal allowed the lower and upper classes to co-operate in solving the challenges facing the American Republic — overcoming the Great Depression, winning the Second World War, and countering the Soviet threat during the Cold War.

It almost goes without saying that there was a racist and xenophobic underside to all this. The co-operating group was mainly native-born white Protestants. African-Americans, Jews, Catholics and foreigners were excluded or heavily discriminated against. Nevertheless, while making such ‘categorical inequalities’ worse, the compact led to a dramatic reduction in overall economic inequality.

#3: Lothrop Stoddard’s(a crime thinker for this age who helped pass the 1924 immigration law) The Revolt Against Civilization: The Iron Law of Inequality

archive.org/stream/revoltagainstciv00stoduoft/revoltagainstciv00stoduoft_djvu.txt

we see that evolution means a process of ever-
growing inequality. There is, in fact, no such word as
“equality” in nature’s lexicon. With an increasingly
uneven hand she distributes health, beauty, vigor, in-
telligence, genius all the qualities which confer on their
possessors superiority over their fellows.

ninjapirate on February 27, 2013 at 7:46 PM

I am a capitalist and a lifelong Republican…But I fear that government actions, not merit, have fueled these extremes in income distribution through unjustified tax breaks that favor the rich.

This individual is about as much of a Republican as Obama.

Redistribution of wealth through the tax code to address inequality, ie socialism, can maybe work in small pockets where you have a groups of culturally homogeneous individuals with common interests – think kibbutzes or Sweden (about as large as it gets successfully, if you want to live like that). This country is enormous and has a bazillion different cultures and special interests and was built on an idea 180 degrees from this ideal.

To wit, Phil Mickelson is now the minority partner with the gov’t in his labor. What incentive does he have not to emigrate to a more tax friendly country? Is that going to help income inequality here or hurt it?

crrr6 on February 27, 2013 at 7:56 PM

So if you contribute to economic prosperity u should get taxed little but if you’re a government worker or regulator u should be taxed heavily.

Mormontheman on February 27, 2013 at 7:56 PM

Actually, in his time, Stoddard was popular and well-received as a progressive eugenicist. It was after he went to germany to be Hitler’s Arthur Schlesinger that he became suddenly unpopular.

eh on February 27, 2013 at 7:58 PM