President Obama's Leveling Response

I'm talking about his response to the Republicans detailed in my last article, Paul Ryan's Express, in which massive tax cuts to the vastly rich were a part of his Republican Proposal for 2012, called the Path to Prosperity.

President Obama hit a high mark in terms of maintaining his base by declaring that basically the Bush tax cuts were no longer on the table ever again, and as a $4.2 Billion dollar set of unpaid tax cuts every ten years, mostly of which the rich receive, I agree.

Raising taxes to a reasonable amount is necessary because tax cuts aren't paid for, which means that we actually send more people into the poverty level.

And there is a reason for this.  When 400 people in this country actually have more money than the next 150,000,000 people the economy is out of whack.  Now I just wrote about this yesterday in a comment on the NYTimes, but the fact is that 400 people cannot manage that much money and contribute to the economy.  At best they can only take a few very thin slices off the economic pie and try to apply that towards making more money.  There are a number of ways to do that, but mostly we're not talking about investing in Wall Street because, while they might create wealth, they don't create value.

Value is real measurement by which all must be judged.  Productivity is basically an increase in the dollar value of a company without increasing the ability of the people to get jobs.  The greater the productivity the smarter the worker in a sense, but certainly more tools that supplant additional workers.

Wall Street, and in particular, Goldman Sachs, makes Millions of dollars per minute based on computer based trades for pennies and nickels per second.  This only increases the dollar value of Goldman Sachs, but produces nothing of which this country can use to grow jobs.  Multiply that by numerous Wall Street financial institutions, and the money is being leeched away from the people and continually placed in the hands of others whose investments only enrich themselves rather than enrich America.

Four hundred individuals/families control more money than the next 150 Million people.  This is insane, and it actually leaves no money for the rest of us.

Now I'm not saying that people shouldn't be able to become rich, nor that they should beholding to the country that allowed them to become this rich.  However, the fact is that wealth, at some point, no longer has any meaning because the people will have to start dealing with a different means that applies to themselves, such as barter for services and a means to survive.

Right now there are over 46 Million people who somehow survive below the poverty level of $22,000 per year with a 4 person household, but that is a 2008 report, so who knows just how many more there are?

We do know that there are some 75 Million people who don't pay taxes, which means that 40% of our population doesn't make enough money to qualify for paying taxes.  There's also 7% of the very wealthy who don't pay taxes, and they are the ones with so much wealth that they can buy their way out of paying taxes, whether it is through off-shoring dollars or philanthropy that only serves the interests of the rest of the very wealthy.

Not all of the wealthy act this way, such as Warren Buffett, whom, after making certain his family was well taken care of, donated $33 Billion to the Bill and Melinda Gates Foundation, which does very good work around the world.  But Mr. Buffett has already made all of that money back.

The point is that so much money is concentrated in so few hands that the truly wealthy cannot possible use that money for much of anything in terms of our economic health.

If Warren Buffett or Bill Gates gave away $1 Million per day it could not possibly hurt their wealth.  They'd be making more per day than their expenditures based on their stock holdings and dividends, not to mention returns on their investments in startups.

If all 400 of the most wealthy in the country were to give away $1 Million per day for a year, there would be $146 Billion dollars in the economy, and by the end of the year these people would have their money back based on their other endeavors and earnings.

You cannot throw billions of dollars away.  You cannot spend billions of dollars.  And most important, you cannot manage billions of dollars as an individual.

The capital of the United States is lying wasted in the hands of the few.  Capital, unfettered, is like fertilizer on a garden.  If it is spread evenly across the field, all the crops can grow.  If it is concentrated in specific places it not only burns and kills the crops, it also depletes the soil from the other crops that need the fertilizer to grow.

The overall result is anemic, to say the least, and that is what we are seeing now, an anemic growth of prosperity for all.

I'm not saying that the truly wealthy are doing anything wrong in terms of making their investments based on their desire to continue to make a profit, but the fact is that there needs to be an almost reckless disregard for investment requirements in terms of profit taking.  Without getting enough capital out to the marketplace to build the economy, business will not grow, job opportunities will remain stifled, development of new businesses will wither and new technologies will not be developed at a time when just such an idea is imperative.

However, it is pretty hard to dissuade the wealthy from using reasoned investment based on the greatest possible return.  But it must be done.  We need to have our wealthy invest across the board.  They need to take chances on prospects which provide a less reliable return on investment knowing that the dollars they invest will create businesses they didn't imagine, jobs that weren't available before, and even if the hit of profitability is only one out of one hundred, the likelihood is that that one hit will provide a massive return.

Capital cannot be tied into the hands of a few any more than only one person can be allowed to have a green lawn whilst the rest of the yards are eroded.  There are rules which apply to all whether the very wealthy want to acknowledge them or not.  If everybody else's yards are eroded unsightly messes, then the valuation of the property of the wealthy goes down, regardless of how good it looks.

And that is today's financial sheet for America.  All the yards are eroded, terrible looking properties bringing down the value of the few who have the green lawns.

Now its true that you can confine yourselves to gated communities where all the lawns are perfect but the fact is that no matter what direction you drive out of those communities, you have to drive by dilapidated houses with eroded lawns.

How far do we take this analogy before the wealthy simply stay in their compounds and never come out to see the devastation?  Does everyone of the wealthy order in catered lobster because they can't stand to see the eroded society right outside their own doors?

Who becomes the imprisoned at that point?  Even a helicopter doesn't exclude one from perceiving the view.

The point being that the very wealthy can't be a part of the recovery of the economy simply because they become taxed at a higher rate.  They have to become a force in the economy by spreading all of that capital around just like a farmer spreads fertilizer around evenly to promote the growth of the year's crop.

And we can't just simply continue to cut spending and giving the wealthy more tax cuts because that gives the wealthy less places to invest their money, and further erodes the neighbor's yard.

Look, no matter how conspicuous a wealthy person spends their money, whether it be on expensive cars, more mansions, yachts, or what have you, they can never spend enough money to increase the economy.  They have to become a part of expanding the economy by investment, and if they really think of themselves as Americans, they need to do it right now.

Comments

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