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Number of billionaires double since finacial crisis.

Discussion in 'Tilted Philosophy, Politics, and Economics' started by Aceventura, Nov 17, 2014.

  1. Aceventura

    Aceventura Slightly Tilted

    Location:
    North Carolina
    I do not dispute that rich people have been getting get richer. My issues are with the conventional liberal arguments why this is true - and as a result what is the best social response to address the growing wealth disparity. The financial crisis has been an interesting phenomenon to me, starting with Henry Paulson, Bush's Treasury Secretary and former Goldman Sach's CEO, and his proposal to save his favorite Wall St. buddies from excessively risky, poor investment activity. From the beginning, I felt we should let failed businesses actually fail. Given two sides of a derivative type investment, it is a zero sum game, one loser and one winner in equal measure. However, with the bailouts and irrational responses to the "financial crisis" the end result is rather than fixing too big too fail we get bigger institutions with less competition - we get taxpayers picking up the costs - we get consumers incurring higher costs and fees - we get small business frozen out of capital markets when they needed access the most - we get this:

    Number of billionaires doubles since crisis - Oct. 29, 2014

    Government policy intended to fix a crisis, in my view contributed to this problem and exacerbated the recession, slow economic recovery and stagnate wage growth. We would have been better served if the governments (global, many worked in in unison emphasizing the same failed financial economic policy) had done nothing.

    I know many here will point to the Bush tax cuts. But, if we actually look at the Bush tax cuts, all working people across the board got taxation benefits, even those who had no tax obligation. In addition these were tax cuts not undone by Democrats when they had control of the House, Senate and the WH.

    When is it time to rethink economic government policy as it relates to wealth (more accurate than saying income inequality) inequality? I think now is the time.
     
    Last edited: Nov 17, 2014
  2. Levite

    Levite Levitical Yet Funky

    Location:
    The Windy City
    The real issue is not that we did not let failed businesses fail, it's first off that we did not aggressively utilize anti-monopoly legislation to break these financial conglomerates apart into more manageable sizes, and second that we permitted them to run amok with virtually no oversight and minimal regulation of what amounted to essentially massive fraud on an unprecedented scale.

    As for cleaning up the aftermath, the bigger problem than bailing out institutions at the moment of crisis was that there was virtually no follow-up investigation, no significant prosecution of the corporate officers and board members who perpetrated these actions, no instigation of massive regulation, no recourse to anti-monopoly legislation, and minimal financial penalties to the corporations that permitted these kinds of activities to go on. What is more, rather than simply dribbling a little drizzle of extra financial help to the working poor and middle class, there should immediately have been massive debt forgiveness, and automatic rehabilitation of loans and mortgages across the board. There should have been new regulations written for all kinds of loans to indviduals and families, to ensure fair treatment, reasonable rates, and preventing ludicrous financial speculation with the capital those loans generated.

    It would also have been a good time to, rather than inventing new ways to for the rich to get richer, instead create true public healthcare for everyone, create far more public student grants and low- or zero-interest student loans, give a serious rise to the Federal minimum wage, and improve social welfare programs to really aid poor people and lower-middle-class people who are desperately trying to get out of poverty or are teetering on the edge on financial disaster.
     
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  3. redux

    redux Very Tilted Donor

    Location:
    Foggy Bottom
    With CEOs now making more than 300x their worker when it was less than 100x in the 80s and 90s, there should also be tax reform that restores the progressive nature of the tax system so that those billionaires pay more rather (no, not all the way back to the pre-Reagan rates) rather than having the working class bear the burden of debt reduction.

    And there should be a higher percentage of GDP committed to social programs (like those identified above) as opposed to having a lower percentage of GDP for social programs than most other industrialized countries. At least half of the additional revenue from raising the tax rate on the top designated to these programs and the rest to debt reduction.
     
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  4. Levite

    Levite Levitical Yet Funky

    Location:
    The Windy City
    Agreed, except I do think they should pay at least pre-Reagan rates. If you're a billionaire, you can afford it and you should pay.
     
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  5. redravin

    redravin Cynical Optimist Donor

    Location:
    North


    But that would be class warfare.
     
    Last edited: Nov 18, 2014
  6. Levite

    Levite Levitical Yet Funky

    Location:
    The Windy City
    There's already class warfare. The poor and the middle class are losing badly.
     
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  7. cynthetiq

    cynthetiq Administrator Staff Member Donor

    Location:
    New York City
    We still haven't done anything to address the size. Too big to fail is still the size du jour.
     
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  8. rogue49

    rogue49 Tech Kung Fu Artist Staff Member

    Location:
    Baltimore/DC

    There is a fairly new office at the Dept. of Treasury that I just had a project at, Office of Financial Research.
    It's mission is to analyze these huge international firms to assist in "risk management"...or basically prevent the Too Big to Fail entities from failing.

    At the end of the project, I did a dump of some of my toolkit and knowledge base to them...since I was mentoring them and setting best practices for their Big Data/VLDB environ.
    Someone asked me why I was taking the effort and giving them it.
    And I said, because I want them to succeed.

    And I don't care if I give I show my works...if it can help them...and help prevent another Great Recession, then I feel I've done my job for myself, as a citizen and a taxpayer.
    Not only for the nation, but the world. (since they also work with foreign firms with US connections)

    *BTW...I'm not saying anything secret, the description I gave you is on their website.
     
    • Like Like x 3
  9. Levite

    Levite Levitical Yet Funky

    Location:
    The Windy City
    Hence the need for vigorous anti-monopoly enforcement. You break up those giant financial conglomerates, and the institutions that are left afterward are not too big to fail. For that matter, we should be doing the same thing with media corporations, power corporations, airlines, agribusiness-- pretty much everything now controlled by a handful of giant conglomerates. Monopolies create "too big to fail" businesses, and they also fuck the economy and society by eliminating competition. Capitalism without competition not only creates product stagnation except for the very few things guaranteed to make huge money, it reduces job opportunities, and it also fosters all kinds of social oppression since too much capital and power is held in the hands of a very few people who want nothing more than to retain and/or increase their own capital and power.
     
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  10. rogue49

    rogue49 Tech Kung Fu Artist Staff Member

    Location:
    Baltimore/DC
    But of course, the Too Big to Fail entities and their overlords will find this threatening to their power & pockets
    ...then they'll throw money at our politicians...so the concept will be labeled as "bad for business" or "socialist".

    Forgetting that we had these nice laws thru the 80's and early 90's...until Bill Clinton and GWB allowed them to slide.

    It's not ideological...it's just protecting your ass...
    y' know, common sense.

    It's so easy for big corps to get what they want these days.
    I'm actually surprised that the administration is finally going after the big banks with sizable fines.

    I want them to make money.
    I just don't want them flaming the house and the neighborhood to get it.
     
    • Like Like x 1
  11. Levite

    Levite Levitical Yet Funky

    Location:
    The Windy City
    Which is why ultimately, the real issue behind all of this isn't specifically regulation or anti-monopoly enforcement or prosecution or anything else, it's really getting corporate money out of politics, and ensuring fair elections.

    Which is why, as a first step to real reform, we've got to legislate Citizens United out of existence by any means necessary. Then we need to ban corporations from making political donations altogether. We need to make all elections mandatorily publicly funded. We need to ban all lobbying by corporations, and severely curtail the kind and amount of lobbying that PACs can do, to be sure that the PACs are not fronting for corporations. Accepting donations from corporations or from organizations fronting for corporations, or gifts from lobbyists of any kind should be an impeachable offense. We need to limit donations to political parties, political organizations, etc. to individuals only, and a maximum of maybe $250 a year per organization by any individual.

    And we need to limit paid political advertisements in the media to maybe 30 minutes per party/candidate per week per market, total for radio/TV, and maybe one print ad per party per week per market; plus ban all unsolicited political mailings, e-mails, live calls, and robocalls. And every political advertisement of any kind needs to include an explicit declaration of who paid for the ad (and if paid for by a PAC or political nonprofit or whatnot, who funds that organization).

    Once all that is done, we get rid of gerrymandered districts, and district the whole US on a grid system, without regard to political bounds or populace. We repeal all legislation that interferes with voting rights, including ridiculously racist laws demanding voter ID at the polls.

    And we should increase the size of the House of Representatives by at least double. The Constitution prohibits any Representative from representing fewer than 30,000 people; currently, with 435 members of the House, each Representative represents an average of about 690,000 people (over twenty times the Constitutional minimum). If we increased the size of the House from 435 to 1000, each Representative would still be representing an average of about 300,000 people (ten times the minimum laid out in the Constitution). But the larger size of the House, combined with impartial districting, should result in both much more competition for seats, and also more opportunities for independents and third-party candidates to get elected, breaking the two-party lock in the House, and effectively requiring that there be parliamentary-style coalitions to pass legislation, thus demanding compromise as a normal practice in the House, and ensuring that no one party is likely to utterly dominate the House and thus potentially stall all legislation.

    While we're at it, we should also make and enforce a code of ethics for Federal court judges, including the Supreme Court justices, that ban them from accepting gifts from lobbyists or corporations, and demand that they recuse themselves from cases in which they are related to, married to, or friendly with individuals actively working for or with the corporation(s), company(ies), industry(ies), political organization(s), etc. involved in the case. Transgressing of these bans should be impeachable offenses.
     
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  12. rogue49

    rogue49 Tech Kung Fu Artist Staff Member

    Location:
    Baltimore/DC
    I agree with what you said @Levite ...to a certain extent.
    We don't need to ban ALL lobbying by corporations...we do need to limit or curtail it.

    I don't believe corporations are "people" or should have any more leverage...but they deserve their say too.

    And the way it's getting, I'm sure even many of the politicians would like some limit and discretion...because they're spending all their time fund-raising and having to compromise their own agendas. (much less another's)
    They're stuck between a rock and a hard place...getting hit for doing nothing...or catering to big funders/lobbyists...but need to keep it "up" to just stay elected.

    But then again, many of them are just plain greedy too.

    The problem is "all of the above"...I think we need to put the brakes on and slow down...not guillotine.

    However, many of the suggestions I want, like you, will require Amendments.
    That's a big load to lift...and pass.
    I don't think our politicians have the spine currently to do it.
    They can't even get a friggin' law passed and signed these days.
     
  13. Aceventura

    Aceventura Slightly Tilted

    Location:
    North Carolina
    Competition is the most effective means to address monopolistic/oligopolistic industries. Excessive regulation restricts competition. In my view more legislation is the last thing we need from legislators who do not understand the consequences of their actions. Simplification of the laws, regulations and rules that govern the financial industry would be more effective. Being a bank is not complicated. Being an investment firm is not complicated. Being an investment bank, where the institution can make risky investments with customer funds is where it got overly complicated. In 1999 congress repealed significant controls in the Glass Stegal Act of 1933 (regulating banks and restricting banks from risky forms of investment activities), the repeal allowed investment banking activity. In my view, this is the root cause of the financial crisis.
    --- merged: Nov 20, 2014 at 2:50 PM ---
    There is no tax system that is going to solve the problem you outline. Tax avoidance strategies will be employed and CEO's are going to get the net benefit of their labor one way or another.

    The problem you describe, in market terms, is one of productivity differences. If a CEO controls an institution with total capital, assets, and reserves over $500 billion (thousand of employees, in scores of countries, overseeing complex regulations in each country...) and a janitor controls a mop what kind of ratio in pay would you expect? The answer is for the janitor to have an investment in the bank - so that the janitor is compensated for his labor and participates in the success of the institution.

    What percent do you suggest? Should this be mandatory or voluntary? Where do you determine the level of need and who would qualify and under what conditions? Why would you get to determine these things and not me? At one level I agree to a safety net for the elderly, children and the disabled, outside of that would it be better for you to do what you choose to do and I do what I choose to do?
    --- merged: Nov 20, 2014 at 3:01 PM ---
    Rich people tend not to pay top marginal tax rates. The top federal marginal tax rate pre-Reagan was 70% (add in state, local and perhaps FICA and it went well above 70%), nobody paid that rate until they ran out of options. Real effective tax rates are always going to be significantly lower than the top marginal rate, so you can set the top marginal rate as high as you want - people who own and control capital will find a way around it. The best tax policy should be designed to collect the most tax dollars. That rate may be as low as 10% - 20% and I would argue it should be a flat tax rate - with no deductions, unless we design the system for deductions based on necessities like basic food, shelter, and medical expenses at the individual level.

    Where do you cut-off the application of this logical argument. If I am walking down the street and I have $20 in my pocket, can I afford to give the panhandler $10? Why not? In my view it is because the $20 in my pocket is my money and if I want to give the guy a $1 or nothing it is my business.
     
    Last edited by a moderator: Nov 27, 2014
  14. redravin

    redravin Cynical Optimist Donor

    Location:
    North
    There is a big difference between what you choose to give in charity and what you give to support the government.
    The money you make doesn't just come from the sweat of your brow, it comes because you live in a country where it possible to make the kind of money you do and live the life you do.
    I'm not going to get into the long list of services and supports, like not having to worry if the food you eat is poisoned, fire protection, roads, etc.
    For that you have certain obligations.
    Paying taxes is one of them.
    Unfortunately, the rich and powerful have decided they can avoid that social contract even while they make use of the lions share of the services.
    The middle class, once the back bone of this country are being squeezed out of existence and soon there will be no support for the important functions of government.
     
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  15. redux

    redux Very Tilted Donor

    Location:
    Foggy Bottom
    All true about the pre-Reagan tax rates, but the effective rates were still higher than the marginal rates of the lowest 3-4 brackets.

    Now I pay a higher effective rate than Mitt Romney and Warren Buffet's secretary pays a higher effective rate that Buffet himself.

    A regressive flat tax is certainly not the answer.

    Roll those top rates all the way back as Levite suggested!
     
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