Johann Wagener 10-11-13
Here's how capitalism works in America today (or, I should say, doesn't work)
The richest 1% own nearly half of all global wealth.
Only a tiny fraction of the roughly 7 billion people in the world accounts for 46% of the estimated $241 trillion in money, property and other material resources available.
The richest 10%, meanwhile, can claim 86% of global wealth, leaving 90% of the world's population to divvy up whatever's left.
Here's an example of how free market capitalism worked when Henry Ford was around. As one of the titans of capitalism he understood how it works when you're not addicted with a lust for power and money.
Henry Ford recognized this. In 1914, he more than doubled factory workers' minimum pay to $5 a day ($117 in today's dollars). In part, this was to halt costly employee turnover. But it was also to provide workers with enough cash to buy the cars they were making.
"It is our belief that social justice begins at home," said James Couzens, Ford's treasurer at the time. "We want those who have helped us to produce this great institution and are helping to maintain it to share our prosperity.
"We want them to have present profits and future prospects," he said. "Believing as we do that a division of our earnings between capital and labor is unequal, we have sought a plan of relief suitable for our business."
U.S. chief executives made an average of $12.3 million last year, or 354 times what the average rank-and-file worker pulled down, according to the AFL-CIO. Thirty years ago, the average CEO was paid 42 times what ordinary workers received.
If Henry Ford were alive today he would be ashamed to be called a capitalist which is now made up of a very small number of very small minded individuals who value very little other than their over inflated egos and would like the rest of us to believe that they, they they alone, created their wealth. They also like to remind us that they are the job creators and hang that over the heads of anyone who would dare to take them on.
So, my advice to these despots of capitalism is take a lesson out of Fords handbook before they completely destroy this country.
Being successful, obviously, isn't a bad thing. There's much to be said for the whole land-of-opportunity idea, in which people are rewarded for a job well done.
But that's not what's actually happening. The rich are gaming the system so they can accumulate a greater share of wealth to the detriment of others.
They do this by using their financial (and hence political) clout to reduce their share of taxes, thus placing a greater burden on the rest of society to fund government programs and the public sector's investment in economic growth.
The top marginal tax rate for much of the 1920s was 25%. It was 35% in 2007. At both times, wealth inequality was at record levels.
Compare that with the 1950s when, under then-President Dwight Eisenhower, a Republican, the top marginal tax rate was 91%. Were the upper classes barely scraping by with such an onerous tax load?
Hardly. This period was one of the most prosperous in American history. Not coincidentally, wealth inequality was at a low as almost everyone shared in the economy's and the country's good fortune.
In contemporary terms, job creators were paying much higher taxes than working stiffs, and — guess what? — there were still plenty of jobs being created.
"I'm sure the rich in the 1950s would have preferred a 10% tax rate," said Gregory Clark, an economist at UC Davis. "But there's no empirical evidence that taxing the rich slows down economic growth."
Just the opposite. Since consumer spending is required for growth, placing more money in the hands of consumers would seem crucial to fueling economic expansion, which, it goes without saying, has the ancillary benefit of helping the rich get richer.