Protecting the Rich: the Employment Future?

A noted political scientist Sam Bowles (The Santa Fe Institute) has estimated that one third of employed Americans are working to protect private property and that means, inevitably, of the very richest Americans. June 12 the New York Times (“For Executives with Everything…”) reported just how arcane and extreme this protection business can get. Harrison Prather trains very high end guard dogs, so high end that top price can go to $230,000, which is what Julia, one of his German shepherds, sold for. Julia is now guarding John Johnson in his Minneapolis and Arizona homes (he has five other protection dogs). Johnson was, until recently, the CEO of the Northland Group, a debt collection company in Minneapolis. Julia now has a part time trainer, Jeremy Norton. Norton, also works as a firefighter, and ruefully admits Julia cost half the value of his house.

If he were alive, Charles Dickens would no doubt have rubbed his hands in glee at the idea of “Mr. Johnson” for a novel: just how well you could make out with a business built on squeezing those poor, or the about to be poor; just how to teach government employees like firefighters know how little they count for their public service. Training killer dogs, yes, saving people, no.

Also on June 12, the Times Magazine carried an article on the extreme upscale Las Vegas mall, “Crystals”, and on its eerie emptiness, the reporter being one of three humans in a 23,000 square foot Prada store (the other two being a security guard and a saleswoman). The reporter was assured that the fact that the store was empty didn’t mean no one was buying. Personal shoppers for the very rich were sent before the store hours to scoop up, say, a $21,500 chinchilla bolero shrug. The saleswoman shows off some $8,000 gowns to the reporter: “The casino owners buy (them) for their wives”.

In his research and writing Bowles concludes reducing inequality does not compromise efficiency or economic growth. Also against conventional wisdom, the religion of self interested action does reduce the altruism of the individual which Bowles says, on the contrary, must be harnessed and recognized. We don’t know whether Sam Bowles has done research on the gaming industry as a percentage of GDP. But we would not be willing to bet against the chinchilla shrug. The empowered rich show every sign of bidding up the guard dogs.

 

Democrats vs. Republicans on the Budget: a Clash of Morals.

Democrats use the phase “paying their fair share” to justify rolling back Bush tax cuts on the wealthiest Americans and bringing in significant revenue to set against deficit reduction. This is the wrong sales pitch because it implies that the wealthy should be encouraged to decide on their own that it is “fair” to “give” money to help with the deficit, rather as they make decisions on charitable contributions.

Recall that early in the first Bush Administration then Senate majority leader Trent Lott claimed that taking away more than 30% of an individual’s income for public purposes through taxes was “immoral.” In Lott’s and Republicans’ worldview, the individual has a moral right to keep what he gets, and the moral right to make the decision, as a free choice, to use what he gets for “doing good”. Liberty is the highest value for Republicans for moral reasons.

The Republican ideal is not so much small government as “exclusionary” government. What is excluded out – at least ideally – is any area of public policy where individuals are to be treated equally, any degree of redistribution whether through tax policy, welfare, health or even education spending. The social Darwinism ethos is challenged any time an individual who cannot afford a particular benefit lays claim to it as an entitlement. In right wing ideology, that individual case must be located in a sector where help cannot be presented as a claim, but rather as an appeal to another individual’s or private institution’s inclination (or not) to help out. It is key that the giving be a matter of private choice.

No one has an absolute right to wealth they earned because getting it is so dependent on preexisting institutions and norms, which in a democracy have theoretically been created with the participation of the citizenry as a whole, in many areas with moral justifications. This is precisely the idea of government the Republicans seek to constrict and delegitimize and that Democrats must support. So let’s not appeal to the Republicans sense of “fairness”. Just roll back the tax cuts. Remember, according to a Washington Post poll, 72% of the public support raising taxes on people who make $250,000 or more.

 

Shared Sacrifice and the Obama tax cave-in:

When President Obama announced a freeze on the salaries of federal government employees, he said that Americans should understand that everyone was going to have to make sacrifices. Clearly he wasn’t serious about the “everyone.” The federal employee in the Social Security Administration or the Passport Office is going to see their $60,000 salary frozen (and remember that the income of the middle class has been going down for decades) but the hedge fund manager whose after tax income is $100,000,000 (it’s important to look at the number of zeros) income isn’t going to be frozen. It is a sick joke to talk about “shared sacrificed.”

 

Over the weekend, the New York Times challenged readers to “Fix the Budget.” Here’s how Stuart Brown, Chair of the Public Policy Committee Task Force on Budget and Economics, would turn the projected shortfall into a surplus:

Answering to no constituents, 85% of the projected 2015 shortfall and 44% of the 2030 projectd shortfall would be eliminated by rolling taxes back to the Clinton rates, adding a 5.4% on income above $1 million and subjecting some income above $106k to payroll tax.

Eliminating farm subsidies, reducing the federal workforce by 10%, reducing spending on nuclear arsenal, taking the military to pre-Iraq size, reducing our military presence in Europe, and Asia, delaying some weapons programs, and noncombat overhead more than eliminates the 2015 shortfall and cuts the 2030 projected shortfall by 71%.

Increasing the Social Security and Medicare eligibility age to 68, and reducing Social Security benefits for those with higher incomes, tightening eligibility for disability and using some undisclosed alternate measure for inflation for calculating Social Security benefit cost of living increases, eliminating loopholes and having banks pay into a fund to offset their size and risk taking turns the projected shortfall into a surplus.