Even though America had grown considerably richer over the decades, what has changed is not the affordability of the social programs that benefit the middle class and the poor, but the intransigence of the nation’s elite to paying taxes.
“The so-called “carried interest” loophole enjoyed by hedge fund and private equity managers raises the larger question of whether capital gains — even real ones — should ever be taxed at lower rates. On the face of things, the lower rate seems patently unfair. Why should someone earning income by investing their fortune be taxed at a substantially lower rate than those earning income from the sweat of their brows or from using skills they’ve spent years acquiring? The fairness argument has essentially been set aside, however, as business has relentlessly promoted the notion that such preferential treatment is necessary to coax those with capital to invest it. But do investors really need coaxing? Warren Buffett, one of the world’s savviest investors, doesn’t think so. “I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain,” Buffett argues.
“Our business culture tends to portray investors as modern-day heroes who put their hard-earned capital into worthy high-risk ventures that lead to path-breaking discoveries that enrich the lives of all of us. Sadly, the vast majority of investments don’t fit into this category (and those that do qualify for additional tax incentives). Rather, as former mutual fund manager John C. Bogle notes, “most capital gains are made from gambling in the stock market.” So the ultimate function of the special low rate on capital gains is to save our wealthiest citizens billions of dollars a year on their winnings in the Wall Street casino.”
The Heritage Foundation has become an influential promoter of radical pro-capitalist ideas as well as “the Judaeo-Christian moral order, but has failed or intentionally dismisses the notion that what needs to be adjusted is the opportunity to produce, and instead focuses on enriching those who already own productive capital and eliminating the redistribution of income after it is produced.
The continuing poor performance of the economy, initiated with the 2008 financial crash, has resulted in a brutal aftermath of economic struggle. This has raised the possibility that the political pendulum might swing back, once again diminishing the wealth and power of the elite. This hasn’t happened yet, although the Occupy Wall Street demonstrations point to a building storm, even though the movement has no political or economic reform platform.
The privileged elite have demonstrated that their aim is to protect and even enhance their financial position, using the Wall Street crowd’s clout to derail attempts to raise their taxes. The very rich seem poised to dismantle programs that are vital to the well-being of millions of ordinary Americans and that for decades seemed politically untouchable.
Such is the deplorable state of the union.
The federal government should acknowledge its obligation to make productive capital ownership economically purchasable by capitalless Americans using capital credit, and, as binary economist Louis Kelso states, “substantially assume financial responsibility for the economy through establishing and supervising the implementation of an economic, labor and business policy of democratized economic power.” Historically, capital has been the primary engine of industrialization. But as used, as Kelso has argued, has, as well, “been the chief cause of the institutional deformities that have created and maintained two incompatible classes: the overcapitalized and the undercapitalized.”
Once this goal becomes the national political focus we will see an unbelievable discussion of workable plans to realize the goal. Remember that planning begins with a vision and a goal. This is not rocket science but it does require national leadership. Implementation requires amending a few laws that basically authorize the transactions that will broaden capital ownership paid for with the future earnings of capital investment. Allowing such transactions will provide incentives for profitable opportunities to employ unused capacity and promote stable economic growth.
This is a win, win platform that both the Republicans and Democrats can support. This is a growth strategy that could restore the economic productiveness of the American economy. The growth strategy I have presented is not new, but it has not yet registered in the minds of leaderless politicians and their advisors from the left to the right of the political spectrum and a population of people who have been mis-educated and mis-led by conventional economists from all the conventional schools of economics.
It is imperative that leaders seeking new solutions cease the opportunity presented by the 2012 presidential election to implement effective programs for expanded ownership of productive capital, and address the problem of education on this subject.
America must rethink the meaning of democracy and set about within its borders to rationalize its economic policy into one that synchronizes the shift from labor intensive to capital intensive production, with universal capital ownership and the payment of the full wages of capital to capital owners, so to restore economic democracy to our economy.
http://www.salon.com/2012/04/01/how_billionaires_destroy_democracy/singleton/
