By Robert Frank
By Richard E. Noble
This book, written by a Wall Street Journal senior writer, consists of a small selection of super wealthy individuals who suffered substantially from the economic crash of 2008.
Some went from billionaires to millionaires, some multi- millionaires to lesser status millionaires, and some went bankrupt.
“The year 1982 marked the year of the high-beta wealth.
“For nearly thirty years after World War Two, the American wealthy were a small, quiet, financially conservative group … There was plenty of wealth created in America during the postwar years. But it didn’t pile up at the top the way it did after 1982. Wealth was more broadly shared, thanks to high taxes on the wealthy, strong unions, New Deal programs, protectionist trade policy and the nations manufacturing power … From the wealth perspective, 1947 to 1982 was a sturdy bridge built by the working class.”
Most of the millionaires and billionaires in this book were certainly not geniuses.
The author’s main thesis has to do with the rotation in the ranks of the top 1 percent and the perilous volatility created in a world or society dependent on this class for its revenue.
He accepts the inevitability of this scenario which is that our nation is and forever will be a country dependant on the erratic and extremely volatile income of a super wealthy class of gambling casino junkies.
At the conclusion of the book he offers possible alternative solutions available to the U.S. government and the state governments as well.
This book is, on the one hand, a political statement and on the other hand a presentation of entertaining stories. It is my opinion that the one has nothing to do with the other.
The stories are good. The political statement by the author is in my opinion confused.
The author makes reference to “The Gilded Age” throughout the book. I think it must be understood that the Gilded Age was a satirical phrase thought up by none other than Mark Twain. He coined it to describe a period in American history marked by deceit, corruption and exploitation of the poor and working class by the wealth mongers and greedy and “gilded” with a thin veneer of gold by the press, media and political propagandist of the time to give it the appearance of a proper and righteous prosperity.
The author’s political statement is:
“DON’T TAX THE RICH AND THE SUPER WEALTHY.”
The author never says this outright. In fact, he would deny it, I’m sure. But this is the basic message I get and it would be consistent with the general dogma preached by writers from the Wall Street Review.
I think his suggestions at the end of the book on how American government is to manage are tongue in cheek. If the author is truly sincere, he is clearly severely confused by his own research.
Let me make my case.
To deal with the author’s message, skip the stories about the lives of the rich and famous entirely. They are interesting and entertaining but have little to do with the author’s underlying message.
Read the introduction and then skip to the back of the book and start reading the chapter entitled “What’s Wrong with California.”
Before we do that let’s have a reality check:
Taxes are necessary.
Everyone must pay taxes.
The rich are required to pay taxes and they should.
Now we move onto the author’s elaborate contention.
The top 1% of America’s wealthiest people are no longer a consistent, stable group of people. There is rugged competition for the top earner positions and the names of those in the ranks of the top 1% change every year. The lives and incomes of these individuals are precarious and extremely “volatile.” Therefore the money coming from these individuals in taxes is also extremely “volatile.” An individual from this group may make a tax payment of 100 million dollars one year and be bankrupt the next year and send the government nothing. This puts the government in a boom or bust situation according to the author.
Well, it seems to me that if we are talking about consistent income changing hands in the upper 1%, the government’s income would remain stable and consistent. It would be collecting equal amounts of money but from different people each year. If this is not the case, then we are dealing with other factors here that must be analyzed. Money simply changing hands should not affect government revenue.
The volume of money that is changing hands must change to affect government revenues.
If it is the volume of money that is changing then we are looking at another problem.
If the volume is changing then money is disappearing.
The money could be disappearing for a number of different reasons. If the volume is disappearing then money is leaving the state or the country without being taxed or the money being taxed each year is from one time liquidations of capital goods, services or businesses.
In other words businesses are liquidating their assets and disappearing from the various states and the country.
We have known this has been happening for a long, long time. This is nothing new. Huge amounts of money are also being secreted out of the country and into offshore accounts or put into approved tax shelters with no taxes being paid.
The author does not address any of the above and concentrates on the “volatility” of the situation.
It may not really be all that volatile. The volatility may be a temporary factor resulting from the continuing abandonment of moneyed interests from American shores.
The solution would not be to adapt to the temporary volatility being created via the abandonment and liquidation of assets by more and more American companies, millionaires and conglomerates but to institute policies that take action against this ongoing bankrupting of American wealth and the American people.
In the beginning of this review I quote the author on his understanding of how we maintained prosperity and stable growth in the hands of a strong working class from 1947 until 1982.
The formula seems simple enough … why not work to reestablish that situation on those basic principles once again?
Rebuild our middle class, increase the wages and earnings of the poor, and the middle class, re-establish viable and futuristic industries that will supply the energy and material needs for us and the world, establish jobs with a future here in America and guarantee their longevity. As the middle and bottom earn more they will then pay more and be once again the breadwinners and the stability of our country and government.
Make the wealthy pay their dues but wean ourselves off a dependency on this group of spindly legged gambling casino junkies and put our burdens back onto the strong shoulders and burly arms of our stable working class. Improve our education system, retrain our workers and pay attention to the foundation of our home base. Rebuild America, its roads, highways, bridges, factories, and its working class.
Come on America there are choices here and good ones.