Americans are desperately in need of economic education.
The latest reminder of this is the marginal tax “debate,” where creeps like Scott Walker are able to lie and convince people that a 70% marginal tax means everyone will be paying 70% on all their income. Alexandria Ocasio-Cortez did a great job of calling him out, see. e.g., Ocasio-Cortez schools GOP’s Scott Walker on the 70% marginal tax rate. But popular though AOC is, she obviously doesn’t reach a large portion of the people Scott Walker et al. lie to, let alone tens of millions more. So more education through schools, on-line and the MSM (Ha!) is essential.
I propose a joint effort at economic education (“KEEP: The Kos Economic Education Project”). Here’s my modest attempt at a beginning.
Wealth begets more wealth and enormous wealth
Another area lacking in widespread knowledge is how wealth accumulation works to create grotesque inequality.
Paulina Tcherneva, today.
2018: the richest 26 people owned as much as the world's poorest half.
2017: 42 people owned as much as half of humanity.
2016: 61 people owned as much as half of humanity.
2015: 80 people owned as much as half of humanity
The Bezos billions are not only because of the growth of Amazon stock. It’s because their initial wealth enabled them to acquire Croesus-like unimaginable fortunes.
As we condescending coastal elitists know, non-millionaires vote dramatically against their economic interest. There are several reasons for this: trickle-down and other propaganda on Fox, Rush etc.; non-economic issues like abortion and guns; and of course, faux economic anxiety, i.e., racism.
But many believe, through propaganda or otherwise, that billionaires earned all of their fortunes through hard work and innovation. They don’t realize the fundamental principle:
The more money you have, the easier it is to get even more money.
So we have millions of people making $25,000, $50,000 or $100,000 deeply opposed to taking even a cent more from the Waltons or the Mars candy family because it’s “confiscatory,” or “they earned it,” or “they’re working hard for it.”
People need to know this is false. Though It’s certainly true that many people first became rich through building a business or inventing something, or making wise and lucky investments, once you’re rich, no matter how you got it (whether through your own efforts or gifts or inheritance), you can catapult yourself to way above the working stiff’s compensation. Why?
1. Risk tolerance: Once you have a certain amount of millions, you can take greater investment risks with greater returns. If you can afford to lose a million or two and still be comfortable for the rest of your life, why not take those higher risks. It’s not a “win-win,” but it’s a “win-well I’m still OK” situation. Private equity and hedge funds are common vehicles for this type of investment.
2. Types of investment (a): The middle class typically has most of its investment in its homes, yielding lower returns because of mortgage debt and fluctuating housing prices. According to NYU economics professor Edward Wolff, the differences between the middle class and wealthy reflect ”the greater share of high-yield investment assets like stocks in the portfolios of the rich and the greater share of housing in the portfolio of the middle class."
3. Types of investment (b): The wealthy are able to shift wealth into capital gains investments, paying lower tax rates on often passively earned income. Some, like hedge fund managers can get all their income taxed at capital gains rates through the carried interest scam, which was lovingly preserved in the 2017 GOP tax bill (despite Trump’s explicit promise to get rid of it). Turns out Mexico is not going to pay for the carried interest loophole either.
4. Advisors: Once you can pay high fees to fancy accountants and lawyers, they can figure out how to keep more (or even all) of what you’ve earned.
5. Tax laws: David Cay Johnston (now a leading MSNBC Trump-trashing talking head) has written several excellent books about tax scamming, including Perfectly Legal and Free Lunch.
6. Political Influence: The Kochs and the Mercers and the Waltons make themselves even wealthier by buying politicians and having them enact policies like the 2017 Tax Cuts to make them even wealthier.
The above doesn’t even consider wealth accumulation through lax regulation, paying poverty wages or even fraud.
None of this is crazy radicalism either.
Your assignment:
1. Please correct and/or add to my list above, in the comments.
2. Suggest other topics for KEEP (the Kos Economic Education Project).
3. Write a diary on an area needing economic education.