Wednesday, July 11, 2007

True Democracy and Economic Wealth

Dear Thomas Jefferson,

These are some definitions:

Government by the people, exercised either directly or through elected representatives — The American Heritage Dictionary

a state of society characterized by formal equality of rights and privileges

political or social equality; democratic spirit

the common people of a community as distinguished from any privileged class; the common people with respect to their political power —
If those definitions are anywhere close to reality, then a true form of democracy would not allow for the perpetuation of unlimited control, by one set of individuals, of our most valuable life resources. The American form of democracy is failing, slowly but surely, and tumbling into some form of post-modern classed aristocracy because of an untoward and malignant commitment to private property. We are beset as a nation by an underlying and pervasive notion that those who own property are graced with some form of the Divine Right of Kings to hold that property and pass it on as royalty to, not just the third and fourth generation, but ad infinitum.

Our nation is peppered with individuals who swear allegiance to democracy and then wrap themselved in a motto like that of the British monarchy, "Dieu et mon droit." We might say, "Terre et ma droite."

Thomas, here are some statistics you might find interesting. Look at them and then tell me what you think. It's not me who's the crazy one here is it? (Full data)

The top 10% of Americans control 68.8% of the wealth. The top 20% control 81.6% of the wealth. The average wealth of the top 1% of the nation is over 10 million dollars. The average wealth of the bottom 20% of the nation is almost NEGATIVE 10 thousand dollars. A fellow named David Chandler developed this little "L Curve" to demonstrate how skewed the control of resources in the United States has become. It wasn't like that when you were thinking about democracy was it?

Here is my simple recommendation, based on the principles of democracy. Wealth must be redistributed. That redistribution need not be done during the lifetime of the earner. Certainly, people deserve to experience the fruit of their labor. They should also be able to pass on a reasonable amount to their children. However, there should be limits to the amount of money that can be passed from generation to generation. OK, you heard me say it and I wanted to say it to you first.

Well, I've got to go to work now. My pile of money lies along the space in the middle of the football field, so I must spend my time working hard. But then, that is what makes democracy great. Work is a great gift. I just think that the descendents of the very wealthy deserve to engage in the American democratic struggle, just like the rest of us.


P.S. I don't think you've heard the last from me on this. I have some thoughts on Social Security Tax that I'd like to run by you.


Dan Trabue said...

That's a big whoppin' stack o' money.

Dan Trabue said...

You know, one could make the case that this is a significant idea of the Jubilee Code in the Old Testament. Returning land to the original owners every 50 years, releasing debtors on a regular basis, etc, would serve the purpose of keeping money from accumulating in a few hands.

It's not anti-capitalism, strictly speaking. Rather, it's anti-huge-accumulation. There'd still be incentive to work hard and make money, if that's what motivates you. But keeping and passing on ever-increasing amount of stuff wouldn't happen under the Jubilee Code.

Have you brought this up to your congresspeople?

brd said...

Your perception and restatement of what I'm trying to say is clearer, I think than what I said. Yes, yes, yes.

And no I haven't raised this idea with my congresspeople. This is my trial balloon.

Dan Trabue said...


Just helping prepare you...

Anne G G said...

Mom -- not that it's directly related, but you should really get to the theatre and watch "Sicko," the new Michael Moore film. Moore's perspective is always a little skewed, but his condemnation of the American health care system is extremely damning (and his advocacy of socialized medicine fairly convincing).

I guess taxation is always the way redistribution of wealth happens, and I think if we increase the tax/decrease the estate potential for people at the far end of the football field, I'd like to see that money go to socialized medicine.

Anne G G said...

Oh, yeah, and dan trabue is right. . . you're a commie. ;-)

brd said...

I don't know about commie, but definitely soccie. (That is a soccer mom turned socialist.) Meanwhile, I did write my Congressperson about this one, crop subsidies and the Farm Bill.

Cate said...

I completely agree. I have some other suggestions for the (re) distribution of wealth. Let's get rid of golden parachutes. How about this--CEO's who ruin companies should not be rewarded. How about CEO's, corporations and sports figures making incomes a little less outrageously insane? Yes, I believe in income caps, ungrateful capitalist that I am (I think that makes me a socialist.) How about leveling the playing field so smart, but not insanely rich, people can run for president? Perhaps our choices would not be so disappointing. How about we start seriously calling big oil on their lies. We pay high gas prices because oil is expensive and gas is so expensive to produce? Anyone notice the record profits of the oils companies? If it's so expensive to produce, how come they have record profits?? My personal experience suggests that when things become more expensive, my profits decrease--just as my savings account. I guess my experience is an anomally. Why do we allow them to get away with this stuff?
And what about education? It is becoming harder and harder for the middle class to afford higher education. I think this is one of the bigger threats to our democracy. I believe our Founding Fathers went out of their way to extend the availability of education beyond the wealthiest among us. Another privilege, like so many other rights and privileges currently in retrograde.
And what about social security? I'll wait hear your thoughts on this.

cadh 8 said...

OK, get ready for disagreement.

Firstly, a statistic. 60% of the people in America recieve more services (in dollars) from the government then dollars paid in taxes to the government. Also, in 2006, the top 5% of wage earners paid 50% of all taxes. The top 50% of wage earners paid 96% of taxes. We definitely already have a socialistic aspect to our system.

In these discussions, and mom and deb you already know this, I tend to call myself a "worker bee". This is not because I am so great or anything, but this is because each quarter I send in my self-emplyment taxes. I send my estimates, in the thousands. Then I prioritize health care and send that check off. I don't run to the ER anytime I want to or to the doctor for no reason, and sure, I am overall pretty healthy and take care of myself...but shouldn't I get rewarded for that? For exercising and eating right?
Of course, I am happy to help those in need who are down and out, but why should my hard earned money go to people whose behavior I can't control? Why should my money go to the health needs of smokers, when we all know what smoking does to a body. Why should criminals (ie. politicians) be put in charge of such a system?

But anyway, I digress. Everything the governement touches goes to heck. You think oil companies waste money and the men at the top get rich? What do you think the salaries of the administrators of this so called socialized medicine would be? While we'd all be waiting in line to get a blood test, if there were any doctors left who would work under such a system. Have you ever tried to get any one any kind of decent care under TN Care? Decent care is impossible. ANy care at all is least if they have developmental disabilities.

Anyway, this world is NOT a Christian place. Don't expect goodness from people as a whole. Expect goodness from individuals, maybe. We have to be good to each other. This is the only socialism that will work. Give to one another. And guess what, the rich do give. Ever heard of the Gates foundation? It is just that once you get into the billions, their money has so much earning power. And of course, some could give more. All I am saying is that hoping for a government fix will only lead to disappointment. I too am anti-huge accumulation, but it is just that I don't get to control everyone else. I can only control myself.

What I hope for myself is to make reasonable choices day by day so that I will have money to give to others. I want to be able to say "no" to myself enough times that I can say "yes" to others when they ask for help.

That is just how I feel...

brd said...

I love this conversation.

I got this comment from someone via email. Thought it added to this dialogue.

"I do think that taxes should go up a bit for the more wealthy, but I
think that should be kept in check so that it doesn't negate the
"profit motive". But, I really believe a flat tax is the fairest
proposition (as far as an income tax). That way it's less for the poor
and more for the rich, but they are all paying the same percentage. I
really think a VAT/sales tax is the very best option. You only pay tax
when you buy or exchange something. Since wealthy people tend to buy
more, it would be a subtle way of taxing them more. But, if you didn't
spend or exchange anything you could save your money. I also think
that's more fair, since the government is involved with the
infrastructure of commerce. So, they should exact a fee for use of
that infrastructure. I always feel like taking part of my income is
not fair, neither is forcing me to pay for other people's retirement."

brd said...

And in the spirit of Cate's comment, another email commentee said,
"I wouldn't go so far as socialism, just because of the taxes that
arise from social programs. But, I do believe that CEO's at companies
above a certain size should have more accounability. If your company
employs enough people that your decisions could have far reaching
economic ramifications at a federal, state, and/or local level you
should have to answer for your actions."

Josh Stock said...

My Fiscal Conservatism is about to show. Prepare yourself. (And sorry for the length that is longer than the original post. I ask your forgiveness!)

There is much I could say, but I will try to keep it to 3 main points: 1) Capitalism vs. Democracy. 2) Distribution of wealth vs. who pays income tax. 3) Personal vs. Government-demanded redistribution of wealth

1) Capitalism is NOT synonymous with democracy. Democracy is a political system--the people vote on laws (either directly or indirectly) and have equal rights under the law in regards to the law. Capitalism, on the other hand, is an economic system, which says that the government (by and large) allows people to buy, sell, produce, and consume goods and services as they please and in exchange for what they are willing to give, pay, trade, etc.

It is entirely possible to have a socialist economy that is also a democratic government. (The people would vote and have laws, but the government would Command what gets produced and what it sells for, etc). It is also entirely possible to have a capitalist economy in a fascist dictatorship.

Please do not say that Democracy necessitates socialism (or that it necessitates capitalism, for that matter). Both are possible within a democratic system, and you need only look to Europe to see examples of both. It is a false correlation to say that "Equal rights under the law" means that redistribution of wealth must occur. Democracy is beside the point, other than it allows us to express our opinions and vote as we choose--either in a socialist or capitalist direction.

2) A quick search on Google led me to these stats on income tax:
Top 1 percent ---- 33.7 percent
Top 5 percent ---- 53.8 percent
Top 10 percent ---- 65.7 percent
Top 25 percent ---- 83.9 percent
Top 50 percent ---- 96.5 percent

So from Mr. Gates' 50 km stack of money, he (and a couple others) pay over 1/3 of the US Income Tax. Not to mention, they do a heck of a lot of charitable giving as well (See Mr. Buffet's donation of some $20 Billion...)

In a capitalist economy, there will ALWAYS be someone who makes the MOST money and someone who makes the LEAST money. What is the proper income disparity where we can say "We are equal enough?" If you cannot answer that a priori, then be careful how far you are willing to go down the purely socialist road. (And don't forget: All animals are equal, but some are more equal than others...)

3) After all that, I still agree with the point. Income disparity in our country (let alone our WORLD) should give many of us pause. After all, my guess is that most of us reading this are to the right of the 50 yard line.

The question I pose is, do we want the government to handle redistribution of wealth through bureaucracy and law and politicians, or should people be encouraged to give in ways that are more visible, can be held to a higher accountability, and have a more direct impact on the people they should reach. After all, how much of Mr. Gates' income taxes go to pay the government workers that fall above the 50 yard line too?

No, we cannot count on every person to overcome his/her greed and give. But radical generosity is (in part) what should make us as Christians stand out as a city on a hill. The call to action comes first to us (and I should be first to heed that call too!).

Thanks, BRD, for bringing up such a great topic.

cadh 8 said...

I like the comment about those whose companies and buisnesses are so large as to affect our country on the federal level should have to live under stricter regulations. The oil companies would certainly fall under this category. Also, there is by nature less competition allowed in certain buisnesses due to government regulation. Again, this warrents more governement control of profits. That way, government is as a whole more out of our pockets while still being able to police the things that affect us most.

I like Josh's comments and agree with a lot of what he said...he must have found the same stats page I did. I think there is certainly room for compromise among us all when we are willing to have the discussion.

brd said...

Josh made an important clarification. I can be a socialist and pro-democracy at the same time. However, for me to say that unbridled capitalism undermines true democracy is not logically off base. And if/when an economic system runs amok to the extent that the constitutionally established political system is undermined, it is time to tweak the economic system.

In a society in which economic wealth is skewed so heavily to one small segment of society power too gets skewed. The New York Times yesterday said, "Only twice before over the last century has 5 percent of the national income gone to families in the upper one-one-hundredth of a percent of the income distribution — currently, the almost 15,000 families with incomes of $9.5 million or more a year, according to an analysis of tax returns by the economists Emmanuel Saez at the University of California, Berkeley and Thomas Piketty at the Paris School of Economics."

A legitimate question might be whether concentrated wealth can exist without concentrated power. Perhaps it can, but not without a lot of checks and balances in place. One check would be, as I mentioned to limit the amount of money that can be passed on to direct descendents.

Be generous to those descendents, but it is not necessary, I think that the wealth of small kingdoms be passed on to others at the demise of the individual who is productive. Suppose the kids get a couple million for their "starter home." Then they could go out and get a job. (Life time seat in the Senate not included as a real job.)

Democracy is not only validated on election day. It can thrive only in a system that is concerned with legitimate equality in the distribution of power. If that includes redistribution of wealth in a fair and reasonable way, then so be it.

In regard to the stats. If 20 percent of the population earns 80 percent of the wealth, then it is only right that 20 percent of the population pay 80 percent of the taxes. That isn't even a graduated tax, is it. Where are the statisticians when we need them.

DGP said...

Hi. My wife showed me these comments, which I have found thought-provoking, and I love the civility among disagreeing parties. These are my two cents: When I was in graduate school in the '70s, a young man (a close friend of my wife's brother)stayed overnight and, over dinner, let us know that he was part of a movement to role back social programs until Franklin Roosevelt's social network would be erased. He felt that churches and individuals would take over the function of providing for those in need. We considered him an intelligent, privileged, naive, idealistic young man whose beliefs had no chance of coming to pass. Carter was in the White House and the country had just experienced the Nixon years, government wiretaps, the enormous contributions, in cash, solicited from corporations by the Republican Party, etc. The nightmare was over; who could forget it? Since then, regulations have been rolled back not just to pre-Roosevelt (Franklin) but to pre-Roosevelt (Teddy); the trust buster and founding ecologist. Corporate heads now make 500 times as much as their workers rather than the 50 times of thirty years ago, there are essentially no limits to mergers and companies make money by shipping jobs to countries with no worker rights or benefits. The United States hemmorhages wealth through it's lopsided balance of payments. Those who insist on a quality product and fair treatment more often than not are beaten out by those who spend largely on executive pay. Chainsaw Al, the legendary company buster, made millions in bonuses by cutting jobs. Does anyone really think that a ten million a year ceiling to executive pay would be socialism? Or that extending the social security tax so that there is no longer a ceiling to deductions, which would take care of almost half of the yearly deficit for the country, is grossly unfair? Somebody does; that bill reportedly has no chance of coming to a vote. It's always possible to make more money by cutting pay, cutting benefits, deregulating, not enforcing safety standards, firing watchdogs and generally taking the short view that at this point appears to be ruining the world for our grandchildren and their grandchildren. Controlling the press is even better. Slander works; it's a tradition. That's how Nixon got rid of Ed Muskie (an attack on Muskie's wife caused Muskie to cry publicly during his defense of his wife, a kiss of death for a presidential candidate), and it was the tipping point for the last presidential election. Swift Boat tactics work, and a genuine war hero (who was anti-war) was outshouted for patriotism by a draft evader wrapped in a flag. Simply put: the health care system is worse than ever and 90% of doctors will agree, the United States appears to have gone from paragon to villain in public opinion polls in the world's democracies, morality is used as an issue to help the wealthy get wealthier (Calvinism, anyone?) and it appears to be okay to be financially greedy as long as you're not sexually greedy. I could not believe the results of the last election, but I've come to believe it. Sure, government is inefficient, but privatizing appears largely to have been a way to pay fabulous sums to those companies, such as Honeywell, that have replaced government employees with unregulated contractors. Has anyone followed the disastrous results of private contracts in Iraq? Shoddy workmanship is cheaper. Anyway, you can tell which side of the discussion I'm on. I think giving a third of my money to the common good is getting off cheap, but right now that third is being distributed to Cheney's cronies. I'd rather have a program for the poor, thank you.