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April 23, 2014

The answer to the “why” question posed at the end of Part I answers itself. As America’s two biggest employers in their respective eras, GM’s payment of $50 an hour and Wal-Mart’s payment of $10 an hour on average and in today’s dollars to their employees prove beyond question that the capitalists among us, undertaxed and underregulated, have hogged all the new wealth generated by our economy, and then some. It started circa 1974 and gained tsunami force after the election of Reagan, whose trickledown economics, slash and burn tax cuts and wild west end of meaningful regulation told Wall Street capitalists what they wanted to hear, i.e., that they could get by with anything so long as they framed the issues as those of “free market” and “private enterprise is good and government is bad” propaganda catchphrases, meaningless words designed to control the agenda.
How to measure Reagan’s reckless policies? When Reagan was elected the United States was the world’s leading creditor nation; when he left office the United States was the world’s leading debtor nation. His massive tax cuts, which further enriched the already rich, brought us from surplus to deficit. The policy outcome, simply stated, was this: The rich got the money, the rest of us got the debt.
The greedy among us, thus politically encouraged, proceeded to institutionalize the hogging of all new wealth produced by our economy by effectively rewriting our bankruptcy and internal revenue codes to favor treatment of capital over labor, and in one celebrated example of just how far they have gone with this grotesque exercise, we have found that Mitt Romney’s 2010 aggregation of “carried interest” and other investment income, which amounted to 21.7 million dollars for the year, was taxed at a rate of 13.9 percent, a lesser rate than was paid by those who trimmed the flora on his estates. When our first income tax came into being a hundred years ago last year, the idea from its outset was that the tax was to be administered progressively, that the more you made the more you paid. That is clearly not the case today, where political influence now dictates that the more you make, the less you pay.
Median family wages have either been stagnant or declining for decades. (You cannot use “average” wages as a statistical method today, as Republican apologists for Wall Street like to do, because averaging in compensation paid to Bill Gates and Warren Buffett and their ilk plainly skews the overall numbers. Averages during the postwar WW II GM era, on the other hand, before Gates and Buffett and the explosion in executive overcompensation, are fair measures of relative compensation.)
So what does all this have to do with the disappearing act of our middle class now in progress? It has a lot to do with it, especially when the greed of our investing class additionally finds new and better ways to destroy that class beyond the theft of formerly shared new wealth in our domestic economy, like seeking out and financing new sources of cheap labor offshore (TPP treaty?) to even further profit from cost differentials; like having its campaign contribution-hungry people in Congress reduce its taxes and regulation of its excesses; like effectively taking over writing trade agreements and their protocols and enforcement mechanisms; like coming up with new and esoteric securitization paper to peddle world-wide in a crapshoot in which you and I remain poised to bail them out, like, well, you get the idea.
Buffett was right; the billionaire said that the class war is over and that his side won. What to do? Re-regulate business in the public interest and tax the investment class at pre-Reagan rates. GERALD E

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