Archive for the ‘Let Them Eat Cake’ Category

The Atlantic‘s Derek Thompson dished up this handy graph (drawn by The Atlantic‘s Matt O’Brien) to demonstrate how capital gains “absolutely dictate the wealth of the richest Americans.”

Capital gains are just profits realized from the sale of certain investments, and the S&P is a Big Three credit rating agency that measures the performance of the stock market. Notice how closely they align. In 2007, when the financial crisis hit, the average salary of the 400 richest Americans was $30 million. Their capital gains take was a smidgen more: $228 million. In 2009, those averages had fallen (life is hard at the top) to $22 million and $92 million, respectively. Between 1992 and 2007, Thompson notes, the average capital gains income for the top 400 increased by 1200%.

Now compare this data to last month’s Fed report on family finances. As reported in the Washington Post,

The median net worth of families plunged by 39┬ápercent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992 […] Over a span of three years, Americans watched progress that took almost a generation to accumulate evaporate. The promise of retirement built on the inevitable rise of the stock market proved illusory for most. Home ownership, once heralded as a pathway to wealth, became an albatross […]

The very rich have the power to manipulate the market. The rest of us are just along for the crash.

Here are two more graphs.

The first one shows, again, how “capital gains and dividends… supplanted wage inequality as the primary driver of the growing income gap.” (The bottom 20% refers to anyone making less than about $20,000/year. The middle 20% fall into the $40,000 to $60,000 range, and the top 20% kicks in at around $100,000.) The second graph shows, in the starkest terms, the exponential explosion of wealth at the very top.

What do our out-on-the-stump presidential candidates have to say about all of this? Obama continues to blame Bush for the mess and wants us to know that the economy “grows best when everybody gets a fair shot, and everybody does their fair share, and everybody plays by the same set of rules.” It would be a pretty song if I hadn’t heard it so many times before, if he didn’t play it for $40,000 a plate.

Romney blames Obama for the mess and wants us to know that he would continue not to raise taxes on himself and his friends (they’re creating tons of jobs!), continue to shrink government (but only after adding himself as head of said government), and continue to spare the rabble the headache of having enough money to save or invest. Romney, you’ll remember, made a combined $43 million in 2010 and 2011, almost all of it from capital gains, and exactly none of it from working. Because long-term capital gains (assets held for a year or more) are taxed at 15%, his tax rate was the equivalent of someone who makes between $8,000 and $34,000 a year.

At least Romney devotes his energy and somewhat shadily-gotten fortune to what he thinks (albeit delusively) is the public good. There comes a point at which the amassing of wealth for its own sake becomes not just pathological but villainous, and the identification of this pursuit with the American Dream is, at best, a consummate and tragic failure of imagination.

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