Plutocrats of the People - Why are America's superrich suddenly fretting about income inequality?

Slate ^ | Jan. 19, 2007 | Daniel Gross

[neverdem]

Why are America's superrich suddenly fretting about income inequality?

What's hot for 2007 among the very rich? A $7.3 million diamond ring. Safari in Tanzania. Oh, and income inequality.

Sure, some leftish, Democratic-leaning billionaires like George Soros have been railing against income inequality for years. But increasingly, centrist and right-wing billionaires are starting to fret about income inequality and the fate of the middle class.

In December, Mortimer Zuckerman wrote a column in U.S. News & World Report, which he owns. "Our nation's core bargain with the middle class is disintegrating," lamented the 117^th-richest man in America. "Most of our economic gains have gone to people at the very top of the income ladder. Median income for a household of people of working age, by contrast, has fallen five years in a row." Channeling Barbara Ehrenreich, he noted that "Tens of millions of Americans live in fear that a major health problem can reduce them to bankruptcy." Unbound, Zuckerman concluded with a plea for universal health insurance.

Wilbur Ross Jr., No. 322 on the Forbes 400, has echoed Zuckerman's anger over the Dickensian struggles faced by middle-class Americans. "It's an outrage that any American's life expectancy..." --snip--

In other words, if middle-class Americans continue to struggle financially as the ultrawealthy grow ever wealthier, it will be increasingly difficult to maintain political support for the free flow of goods, services, and capital across borders. In addition to Lou Dobbs Democrats, we'll have more Lou Dobbs Republicans. And when the United States places obstacles in the way of foreign investors and foreign goods, it's likely to encourage reciprocal action abroad. For people who buy and sell companies, or who allocate capital to markets all around the world, that's the real nightmare.

[yankeedame]

If you think government health care is a good thing, go spend a day at the DMV.

Or a VA hospital!

[Uncle Ike]

" Why are America's superrich suddenly fretting about income inequality? "

Perhaps some very few of the more literate of them are starting to go to sleep at night with visions of torchlight and pitchforks and guillotines dancing in their heads.

There's certainly no lack of Robespierre wannabe's out there...

[Check6]

A company's only responsibility is to its shareholders.

Apparently this is the case. And apparently, the shareholders reflect the culture in general: no regard for protecting the sovereignty, power, and security of the United States of America. This being the case, say goodbye to America. I loved it and enjoyed it. And I will miss it.

[elmer fudd]

We are not in a depression. What we have to worry about is socialized medicine. If you think health care is expensive now, wait 'till it's free!

Honestly, I think we're almost there now. Unless you're one of the few people with the cash to pay for good medical care out of pocket, the tab is already being picked up by either the government or your insurance company. There are two problems with this. First it means that you get substandard care since the person who pays the bills gets the final say in decision making and insurance companies and the government are interested in the bottom line rather than what's best for you. Second, it inflates the price of medical care and creates two tiered pricing. Insurance companies don't keep costs in line via competition. They do it by denying payments and limiting treatments. Next time you get a chance to look at a hospital bill notice the difference between what the hospital charges and what the insurance company actually pays. Usually the insurance company can write off between 1/2 and 2/3 of the bill and even after doing this the hospital makes money. Hospitals also have no incentive to compete with each other since the government and insurance companies will be paying a predecided ammount for their various services. Of course this kind of thing makes insurance a necessity for most of us and puts bureaucrats in charge of our healthcare since even the reduced bill would be a serious hardship.

[durasell]

You say "apparently" like this is a surprise to you. If you want different policies then look to elected politicians and not private companies who choose to put an American flag in a TV commercial to sell a couple thousand more cars.

[Chickensoup]

I think a basic, no frills form of socialized medicine is probably inevitable at this point,

We have that now.

[lentulusgracchus]

How about this?

That means my high-school friends who did not sacrifice partying and travel [children and private schools] are falling further behind ....

Family formation, and finance charges and interest, knock the hell out of net worth.

Of course, an adept investor, huddled in his candle-lit basement out in the woods with his copies of The Chartist and The Prudent Speculator like Silas Marner is probably saving and making money faster. But is he actually accomplishing more actual "good"?

It isn't all just arithmetic.

[lentulusgracchus]

What we have to worry about is socialized medicine. If you think health care is expensive now, wait 'till it's free!

The operational significance of nationalized health care isn't cost or delivery of services. Its function is to give the political class a (another) life-and-death control lever on the People.

It's all about controlling the People, and making them heel like a dog.

[Caipirabob]

I'm coming for ya!

""Many of you are well enough off that ... the tax cuts may have helped you," Clinton said, according to the Associated Press. "We're saying that for America to get back on track, we're probably going to cut that short and not give it to you.

"We're going to take things away from you on behalf of the common good."

[Soul of the South]

If the nation and our government belong to the people, then the economic system also belongs to the people. Corporations are chartered by the government (i.e. the instrument of the the people) and corporations are regulated by that same government. The "free" trade policies contributing to the destruction of our manufacturing base are also negotiated by the government in the name of the people.

As long as the government continues to pursue one-sided "free" trade policies with slave labor nations such as China, continues to permit open immigration from third world nations, and persists in running an education monopoly that puts political correctness ahead of providing skills the culture and the middle class will continue to decline.

I once headed the division of a large corporation that decided to outsource in Asia. We shut down US factories providing good middle class jobs in mostly rural communities. Almost all of those communities were devastated by the loss of the factories and still have unemployment rates approaching 20% a decade later as the trickle down impact on other local businesses was harsh.

The Asian factories that now have the work look like something out of Upton Sinclair's epic novel "The Jungle". Employees work six days a week, 10-12 hour days with no overtime pay and no social benefits. They "live" in crowded dormitories packed 8 to a room. Many are under-aged with fake ID cards for the occasional inspection. The rivers behind the factories are filled with the toxins and human waste dumped into them without treatment. The air is thick with smoke belching untreated from chimneys as well as the exhaust of automobiles unregulated by the EPA. There is no OSHA to enforce workplace safety and no Social Security disability payments if a worker gets injured and can no longer work. Certainly no tort lawyers to sue when an employee is blinded by acid splashing out of an uncovered vat or has his hand cut off by a blade with no guard on the machinery. In fact the only "guard" an employee is likely to see is the soldier from the people's army who patrols the factory to make sure the employees stay orderly and don't steal anything at the end of the day.

I tried to save our US factories, pointing out that even with all of the direct labor cost and regulatory disadvantages, our higher productivity per worker allowed us to produce within 10-15% of the Asia cost. I argued that we had a moral obligation to our workers and communities and pointed out the social risk factors and possible future political risk factors of outsourcing. I lost my job for not playing ball and tens of thousands of Americans saw their middle class jobs evaporate. The corporate financial wizards who graduated from prestigious MBA schools and never walked a factory floor made big bonuses that year. The Wall Street financial institutions who speculate in the stock were pleased with the earnings. While the quality of the product decline, the company's major customer liked the additional promotional dollars it received as a result of the increased margin.

The most fortunate of the discarded employees were able to retire, the rest drifted away or remained in a state of underemployment as the communities had no equivalent jobs to provide them. To add insult to injury, the retirees received an unexpected Christmas (or should I say "Holiday") surprise from the parent company. The company was giving them 30 days notice of its termination of the retiree medical plan as it could no longer afford the cost. Unfortunately, these southern workers had chosen to remain nonunion in their "right to work" states. Their cheap labor allowed the company to prosper from the 1950's through the 1990's. However, they were easily discarded once the "free" trade policies of Clinton and Bush II gave the company access to slave labor in Asia.

From my experience, most American corporations are run by financial wizards who have never created or built anything tangible. To them, life is about numbers and their annual bonus. They move factories and companies around on a spreadsheet. They have no interaction with customers, employees, or the products the company makes. They worship Wall Street and win maximum bonuses by downsizing and restructuring in the name of efficiency. Factory shutdowns are "one time" charges that Wall Street forgives, even though the lower costs realized from the Asian factory will not offset the one time write-off for over a decade.

While the historical American titans of industry (Rockefeller, Ford, Carnegie) may have been ruthless businessmen, they did produce real products and real jobs that allowed this nation to develop a healthy middle class. Today's corporate leaders are just as ruthless and self-serving. However, they don't create anything, they earn mammoth salaries and bonuses by exporting the wealth creating industrial base that took over a century to build.

Once the factories are gone, America will be a third world nation. Factories are a vehicle for upward mobility for poor, undereducated people who have a strong work ethic. Many of my relatives were high school graduates who worked in factories and achieved the American dream by developing their skills on the job and increasing their wages through hard work. Today's high school graduate has fewer alternatives for upward economic mobility as the factories do not exist and the obstacles to starting one's own business have become almost insurmountable due to regulation, taxes, and high real estate costs.

Our corporate and government leaders are making the wrong choices with respect to the economy. Free trade with nations that do not share our values and do not respect their citizens will only result in short term financial gains for a few individuals and politicians while destroying our industrial base. With that industrial base goes our middle class, our common values, and our ability to defend ourselves. In World War II we prevailed because we were able to ramp up our industrial base to supply our allies and our own forces. Once that industrial base disappears, so does our ability to defend our freedom.

While free trade may be profitable in the short term, its long term implications are catastrophic. For those believers in the efficient market I might remind you. The company that closes a US factory and outsources the production to China does not incur the full cost of its economic decision. The displaced workers have a negative economic impact on the communities and government which are not borne by the company. The air and water pollution generated by the Asian factories eventually impact the health and well being of Americans. The loss of American's industrial infrastructure resulting from thousands of individual decisions is a burden on every citizen the company does not incur.

This nation is committing cultural and economic suicide.

[durasell]

The only obligation a company has is to obey the laws and make a profit.

If you're looking for regulation, then you have to look towards the gubmint.

[Lynne]

"We're going to take things away from you on behalf of the common good."


This quote with a picture of Hillary should be a bumper sticker.

[Freedom4US]

It might look like a suicide... maybe somebody should investigate.

[mr_hammer]

"Perhaps some very few of the more literate of them are starting to go to sleep at night with visions of torchlight and pitchforks and guillotines dancing in their heads."

Don't all revolutions start with the so-called middle class?

With the weights of educating their young, overtaxation, paying for health care and planning for retirement almost laughable. The stage is set for problems to develop. Just look at that fella out there in Vermont. The "G" is going to have to be careful...remember Ruby Ridge and Waco?

[ScholarWarrior]

Yes.
Excuse me, I have to go have a movement.

[freedomfiter2]

Factories are a vehicle for upward mobility for poor, undereducated people who have a strong work ethic.


It's not just the factory jobs. In many communities the job losses have drastically cut entreprenure opportunities. The internet has helped those who could make it work for them but not everyone can take that route.
You did touch on the collateral damage but I just wanted to make note of it as well.

[freedomfiter2]

The loss of American's industrial infrastructure resulting from thousands of individual decisions is a burden on every citizen the company does not incur.


There are military aspects to this as well that I don't here anyone talking about.

[BurtSB]

obama has a 90 % liberal voting record .
how the heck is that main anything ?

[mr_hammer]

Wow, well said! You got your flame proof suit on? Your going to need it. Wait till the pro-illegal crowd and the free-traitor's here on FR get a bead on you.

[Stallone]

Cute!