Populist Daily

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The Communist Fallacy

March 2nd, 2010 · No Comments · Media, Politics

You might want to take everything you know about our country and have a second look.

We all used to participate in the defense of our country. Now we have young people, mostly poor, trying to get ahead, who risk their lives for a college education while others, not risking their lives, go to college first.

We used to take pride in our benevolence. We see the remnants of that attitude in the remarkable outpouring of support by firemen and cops who traveled from all over the country to New York City and by all kinds of people who simply picked up and went to New Orleans, when they were needed. We all gave money to those efforts, to those areas where government wasn’t enough, and we did and still do the same for Haiti, and now Chile. But we have at least a dozen tent cities all over the country and one Republican Senator holds up unemployment benefits for 15 million Americans.

We collect clothes and toys at Christmas and collected food in stores and businesses and schools to send to Ethiopia and other far off places. We have always done our best to respond, even to the quake victims in Iran. Yet 40 Republican Senators have held up millions of jobs in legislation they have blocked for their own political gain. They literally double-crossed many who sent them to Congress to support a legion of lobbyists who contribute hundreds of thousands of dollars to their campaigns.

We have changed. A lot. And not for the better.

In small towns, in the heartland, in the south, and the dry, shadow-towns of the southwest, in those areas where we often looked for down-to-earth common sense, we now hear ridiculous comments from ignorant, polarized, often hate-filled citizens who stand up and shout and vote against their own best interests. You cannot have a daily diet in the media of lies and racist attacks, couched in propaganda and survive as a decent, caring community.

There is always…always…a grain of truth in propaganda. It is designed to make you think that…yes, those Jews do own all those stores…they do seem to get a lot of their students into university. Had you been a German in the 1930s, poor or working hard in a low paying job you didn’t like, you might, just might, have said–yes, that part makes sense. And you would be on the road to disaster, and never know it until it was too late. Remember, Hitler was not hated; he was loved. No one knew the truth. They only knew what they were told.

Before we go any further, we must stipulate that Barack Obama is not the anti-Christ, not Hitler, not Stalin or Pol-Pot. He’s not even Richard Nixon. In fact, Democrats want him to be a combination of TR and FDR, with a touch of LBJ and “Give-em-Hell” Harry Truman thrown in. He is far too mild, too pandering, too centrist for most of us. We don’t like lobbyist-led Obstructionist Neoconservatives. We don’t want to get along with them. We want legislation on health care, jobs, energy, transportation and unions. We voted. We won, and we want it now.

Many Americans are on that Right Wing propaganda path. We hear it every day, following the same old line. Not against the Jews this time, but that could come, probably would come eventually. These are the old segregationists who never got over integration and the affirmative-action people who resent Blacks and Hispanics.

Some of it is justified. There are some people who get ahead because they are black but they don’t stay that way unless they’re good. And there are Hispanics who are here because they snuck in, maybe got a leg up to become citizens. Both seem to get free stuff. They go to the free clinics or they go to the emergency room. And they may have a nice car.

The fact is that very few people gain the system. There aren’t a lot of people sitting around saying that they wished that could only find a $7 per hour job so that they could have the opportunity to get free health care by waiting 8 hours in an emergency room. Everyone, virtually everyone, wants a better job, a better place to live and a better lifestyle to live in it. We all know, or should know, that in this country it is all about wealth accumulation. You own things. That is the opposite of Communism.

People really need some facts. This is no Communist or Socialist society…not even close…never was…never will be, certainly never under this President. Anyone carrying a sign that says anything about this Administration trying to turn the country Socialist or Communist is stupid. We live in a country where 1% of the people have about 35% of the wealth, the top 20% have over 85% of the wealth, and that is up almost 4% since 1983.

In general, the distribution of wealth in this country looks something like this. About 1% of the people own about a third of all assets, actually about 35%. The rest of us, the bottom 99%, own about two-thirds, actually 65%. That has fluctuated up and down a few points over the years, but has not changed appreciably since 1922. Since 1983, however, the rich have been getting richer. The top 1% has gained about 6% of the country’s wealth over the last 30 or so years. That’s a lot.

So, if you think of Communist countries like Cuba or North Korea, I don’t think you get the picture of the United States. People don’t own anything in those countries. In the United States, capitalism flourishes with about 90% of the financial assets in the hands of about 10% of the people–very wealthy people. We have many governmental departments that provide valuable services from military to health care to national parks. But so does every other capitalist country in the world.

After WWII, we were trying to pay down huge debts from the war and tax rates were at 90% on the top incomes and later 74%. The share of wealth owned by the top 1% in income actually climbed from 27% up to 34% by 1965. In other words, from 1945 to 1965, the rich got richer right in the middle of the highest taxes we ever had. Millionaires and billionaires seem to find a way to make it. Perhaps because that is how they get to be millionaires and billionaires.

But how much power does this give the top 1%. Well, if the top 1% has 35% of the wealth, they have some multiple of political clout, and it could be as much as 35 times, as someone who has none. If the top 20% of Americans have roughly 85% of the wealth, which they do, including most, about 90% of the stocks and bonds and business ownership, it makes it very hard for someone in that bottom percentile to make waves. Yet we do.

So we are much, much more highly concentrated than any other country, and even a huge adjustment, which might be something like 20%, which would be immediately noticeable, would not even bring us down to the level of–one might say–benevolent capitalist countries. “Benevolent Capitalism” is what Archbishop Fulton J. Sheen the great Catholic philosopher and orator said that we should strive for. I doubt he was a Communist.

It isn’t merely an option between totalitarian capitalism and socialism. There are stops in between. For example, in Switzerland, which has many social services, wonderful national health care, a strong security system, the top 10% owns 71% of assets. In the United States the top 10% own only 68% of assets. In Sweden, hardly a country that the Right Wing would call, strongly capitalistic, the top 10% own 58% and in Denmark, 65%. So you can be a decent human being without hoarding billions of dollars. And you can be Capitalist and have health care.

What about our deficit problems? Well, actually, between the day Ronald Reagan walked through the door to the day George W. Bush walked out, the Republicans spent approximately $10 trillion more than we had in revenues, Bill Clinton probably dumped another $1 trillion before he could get surpluses going, which he did. And Barack Obama inherited a disastrous economy and a $1.3 trillion deficit from Bush. So, yes, we’re in trouble.

On the other hand, we probably have something like $75 trillion in assets lying around, in corporations, financial assets and all kinds of enterprises going on in this country. Yes, we do have obligations stretching far into the future, but those are like utility bills you budget for and you can cut those bills by conservation measures. We will all be paying more taxes, getting slightly less in services and cutting out excess in government.

Still, before we start talking about cutting meals for the homeless, let’s ask ourselves, do we need 49,000 troops in Japan, or do we need 700 military bases around the world? Do we need two wars to find and kill 19 people when we already have too many prisoners to indict and possibly convict? And should someone who has made $5 million a year since Bush came into office, had two tax cuts during that time, and is now a part of that top 1%, should that person think of contributing a little more now that we are in trouble?

Let’s suppose we did this, just as an example. What if we raised income taxes at the top level to 40%, on people making a million or more a year. And let’s say we kept it at 40% for the first $5 million. After $5,000,000 you would have an option. You could pay 75% on the rest, or you could invest it in a manufacturing business here in the U.S. and pay no tax this year on the amount you invest, and pay capital gains of 15% on the invested amount, just as with any other capital gains. Not real estate. Not stocks or bonds or derivatives. Manufacturing or, perhaps even services, like restaurants or dry cleaners. Your tax would go back down. You would pay nothing this year on that amount that you invest, but you would pay the other as a capital gains tax on the business, at 15%.

Confiscatory tax or investment planning and job builder? You decide. Communist plot or capitalist strategy? Well, who has been making out well in this society and who has not? It is still an after-tax income of between a minimum of $600,000 and $3,000,000 ($50,000 to $250,000 a month) which should be sufficient for most people.

If we only taxed anything over this at capital gains rates, it would be a great incentive for wealthy individuals to invest in jobs in this country. That would generate far more income than the 75% we would gain from the extra tax on this individual. Yes, some of these people would become vastly more wealthy as a result. But taxes are not meant to be some kind of punitive measure.

The economy needs, we know, 100,000 jobs per month just to keep pace with population growth. We now have 15,000,000 people out of work…hard, solid numbers. That’s a lot. This is much worse than anything since the Depression and is not a Depression only because we saved the financial institutions right away and infused about $300 billion right into the economy in the first year.

Here’s where a little Communism would come in handy right now. Since 2000, and really since the early 1980s, we have seen more and more corporations do several things. First, they are bought up by an investment group. That creates debt which the investment group wants to pay off so they can get their money back. So they automate. Then they send jobs to cheaper labor markets. Who is doing this? That top 1% of our Capitalist society. They are the same people, by the way, who are paying for all that propaganda on the radio and television that says that we should not burden the rich with taxes nor should we have Social Security or Medicare.

Let’s have a structured set of taxes. Tax at port of entry those products being imported by American companies who make products abroad with foreign labor. Those excess profits that corporations are now making from cheap Chinese labor can go to duties that can be reinvested in American manufacturing for American products by American workers.

We’re not talking about raising duties high enough to make American workers at $16 an hour compete with Chinese workers at 50 cents an hour. But we have the most profitable market in the world. It shouldn’t be free to enter. How about a small, say 2%, cover charge to get in. That would generate a minimum of $30 billion a year to invest in new businesses right here in the U.S.A. We’ll put some profits back into the pockets of that 99% who do the work yet own only 65% of the assets.

Here’s the final kicker. If we are talking about power, wealth is very important because it gives people the ability to own some of that 64% of business equity that the top 1% own. Think of that. The top 1% own 64% of the business equity, the asset value of businesses, all businesses. But income is also important. If you are in the top 1%, you determine the pay scale for much of the rest of the workforce. The top 20% makes 60% of the income. That means that the top 1% pays the next 19% very well. They pay them the same amount as they take, except that it is divided up among others in that 19%. That leaves 40% of all income to be distributed among the bottom 80%.

Ok, so that bottom 80% group is a lot more workers, and a lot less money, but that is the way that it works. Here’s the thing. Far from being Socialist, we know that when income advanced about 30% or a little less since 1979, the top 1% again got about a third of all that increased income. And only the top 5% saw any real increase in income. By 2004, the top 5% made about $150 for every $100 they made in 1979. But the rest of the workforce saw no gain. They actually had wage decreases. Except for one group. The top .1%, the very top, had more income than the bottom 120 million workers in the United States combined.

No. We’re not headed for Communism or Socialism. But if we don’t begin to change tax laws and income distribution, we will be forced to make cuts of 5 or 10% or even more to Social Security and Medicare. In Europe CEOs make approximately 25 times more than the average worker. In this country they make 340 times more than the average worker and pay far less in taxes.

I don’t think we need to worry about Communism in a country where between 1990 and 2005, CEO salaries increased by 300%, while profits went up only 100% over that time and production workers’ salaries increased by only 4.3%. And that does not include the additional costs of health insurance.

On the contrary, we are sinking under the weight of the wealth at the top, but the political power they wield to distort the truth, attack the vulnerable and promote their own agenda. When you consider that the average CEO makes $3.9 million and the average worker makes $36,000 you should be able to make at least some arithmetical calculation of the problem. Ronald Reagan cut revenues in half, quadrupled the military budget and threw the economy into imbalance, where it has been ever since.

The Neoconservatives, like Dick Armey and Newt Gingrich have found an issue by using the Right Wing propaganda machine to lie about health care reform. The Neoconservatives in the Senate have found a technique by filibustering 112 times to delay needed legislation and then blame Democrats. Think about it. The only people who can benefit from killing health care reform, or killing job generating bills or killing our independent energy program or replacing the electrical grid or developing electric transportation are the very rich. They like the fact that prices and wages go down in a Depression, which is where they want us to go.

Because we are so ill-educated in this country, so many people believe the propaganda. Fox News commentators, hate groups like the Tea Party people and CPAC, who make no effort to conceal their motives, are making the case for the 1% and the 5% who own and run this country. Some are paid. Some are simply too dumb to know they are being used.

The 19%, those who make up the rest of the top 20%, the ones who are working for the oligarchy to lower your wages, take your house and keep you from getting health insurance—they are the propagandists of the Right Wing media. The average person in the bottom 80% had better wake up before it is too late.

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