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Guest Post: Why The Left Misunderstands Income Inequality

Tyler Durden's picture


Submitted by Azizonomics

Why the Left Misunderstands Income Inequality

There is a widely-held notion on the political left that the key economic problem that our civilisation faces is income inequality.

To wit:

America emerged from the Great Depression and the Second World War with a much more equal distribution of income than it had in the 1920s; our society became middle-class in a way it hadn’t been before. This new, more equal society persisted for 30 years. But then we began pulling apart, with huge income gains for those with already high incomes. As the Congressional Budget Office has documented, the 1 percent — the group implicitly singled out in the slogan “We are the 99 percent” — saw its real income nearly quadruple between 1979 and 2007, dwarfing the very modest gains of ordinary Americans. Other evidence shows that within the 1 percent, the richest 0.1 percent and the richest 0.01 percent saw even larger gains.


By 2007, America was about as unequal as it had been on the eve of the Great Depression — and sure enough, just after hitting this milestone, we plunged into the worst slump since the Depression. This probably wasn’t a coincidence, although economists are still working on trying to understand the linkages between inequality and vulnerability to economic crisis.

I mostly agree that income inequality is a huge problem, although I believe that it is a symptom of a wider malaise. But income inequality is an important symptom of that wider malaise.

Here’s the key chart:

However it is just as important, perhaps more important to identify the causes of the income inequality.

I have my own pet theory:

The growth in income inequality seems to be largely an outgrowth of giving banks a monopoly over credit creation. In 1971, Richard Nixon severed the link between the dollar and gold, expanding the monopoly on credit creation to a carte blanche to print huge new quantities of dollars and give them to their friends.


Unsurprisingly, this led to a huge growth in the American and global money supplies. This new money was not exactly distributed evenly. A shrinking share has gone to wage labour.

However the dominant explanation on the left is that this is down to the tax structure. I can’t falsify this theory, because the data supports it:

But why has the government chosen to tax corporations less, and payrolls more?

Who owns the government? Political donors — they finance the political system. Before one vote is cast candidates tailor their platforms to meet the criteria of donors. Who are political donors? Well, they are people with spare capital to expend in the name of getting politicians elected.

Here’s a side-by-side comparison of the presumptive 2012 Presidential nominees:

(Even bigger money flows through the Super PACs. A full breakdown of Super PAC donors can be found here; the same donor profile emerges).

So who are the biggest donors? Banks & large corporations: the very people who have benefited most from the post-1971 tidal wave of fiat credit creation.

So not only has an exorbitantly high proportion of new credit gone into corporate and financial profits, but the beneficiaries have used these fruits to buy out the political system, thus ensuring that they keep an even higher proportion of their incomes, while making up for this slump with greater borrowing, and greater taxation of payrolls.

The political left — epitomised, I suppose, by the Occupy movement — often call for “taking the money out of politics”. By this, they seem to mean holding elections that are not funded by private money, where all candidates are given the same resources. The reality of this, of course, is that such a measure would require a change in the Constitution, as privately-funded political advertising is protected speech under the First Amendment.

But let’s assume — just for the sake of argument — that a law “taking the money out of politics” could be enacted by simple majorities in the House, the Senate, and a Presidential signature (after all, President Obama’s legislative program has not maintained much respect for the original intent of the U.S. Constitution). Even under those implausible circumstances, why would Congress pass such a law when the entire political system is dominated by financial donors who want their money to very much be in politics? After all, it is not just for the sake of tax avoidance — government largesse produces lucrative contracts for contractors. The more money the government has to redistribute, the more incentive there is to spend money to get your people into office redistributing it, and government has more money to distribute — both in absolute terms, and as a percentage of GDP — than at any time since World War II.

The other (and simpler) proposed solution from the left is raising taxes on the rich, so that they pay a “fair share”. There are two problems with this. Firstly, that raising taxes during an economic depression is contractionary, and will (like the misguided and destructive European austerity programs, which of course include tax hikes) depress economic conditions further. And even if this was a good proposal (it isn’t), the political class will fiercely resist such proposals. Today, the Democratic-controlled Senate voted down the so-called Buffett Rule, that would have imposed a 30% floor on taxation for incomes over $250,000. (Buffett — as a top recipient of Federal Reserve bailout cash — would have no problem paying such a rate, unlike those far poorer than him who never took a penny of bailout money. Buffett would do well to spend less time in the bath thinking about Becky Quick, and more time using his capital to create jobs, to end this depression.)

Income inequality is a symptom of a grave problem: corporatism.

From Professors Ammous and Phelps:

Now the capitalist system has been corrupted. The managerial state has assumed responsibility for looking after everything from the incomes of the middle class to the profitability of large corporations to industrial advancement. This system, however, is not capitalism, but rather an economic order that harks back to Bismarck in the late nineteenth century and Mussolini in the twentieth: corporatism.


In various ways, corporatism chokes off the dynamism that makes for engaging work, faster economic growth, and greater opportunity and inclusiveness. It maintains lethargic, wasteful, unproductive, and well-connected firms at the expense of dynamic newcomers and outsiders, and favors declared goals such as industrialization, economic development, and national greatness over individuals’ economic freedom and responsibility. Today, airlines, auto manufacturers, agricultural companies, media, investment banks, hedge funds, and much more has at some point been deemed too important to weather the free market on its own, receiving a helping hand from government in the name of the “public good.”


The costs of corporatism are visible all around us: dysfunctional corporations that survive despite their gross inability to serve their customers; sclerotic economies with slow output growth, a dearth of engaging work, scant opportunities for young people; governments bankrupted by their efforts to palliate these problems; and increasing concentration of wealth in the hands of those connected enough to be on the right side of the corporatist deal.

A realistic program to  ”take the money out of politics” — in other words, to return America’s form of government to its original constitutional intent, like the program advocated by Ron Paul — would do a lot to decapitate corporate power and the military-industrial-financial-corporate complex, who are mostly dependent upon government largesse, favourable regulation, bailouts, and moral-hazard-creating fictions like limited liability — for their very existence. But that won’t fly with either the political kingmakers, or the welfare-loving hordes of  voters (and often for good reason — many of us have paid taxes toward welfare all our lives, and don’t want to lose out of something we have paid for).

The real conclusion of this is that the status quo is not sustainable. Corporatism and oligopoly is almost never sustainable, because of the dire social consequences. Today, almost 20% of young people are unemployed, wasting on the scrapheap. The median net worth of the young is lower than it was 30 years ago. The number of long-term unemployed has spiked to an all-time-high. Prison populations are at all time highs — and the highest in the world, both proportionally, and in absolute terms. America’s former industrial belt rusts; American manufacturing (what’s left of it) has often been reduced to re-assembling foreign components. America is heavily dependent on foreign oil. The American imperial machine is suffering from a lack of manpower. America’s strengths are melting away in a firestorm of misguided central planning, imperial waste, and corporate corruption. America’s social culture is fiery and combustible and individualistic. Young people denied opportunity by a broken system will do something about it. Occupy Wall Street and the 2012 Ron Paul Presidential campaigns were the first manifestations of the jilted generation dabbling in politics.

The political left misunderstands the causes of income inequality —confused by the belief that government can somehow challenge the corporate and financial power it created in the first place — and thus proposes politically unrealistic (non-) solutions, particularly campaign finance reform, and raising taxes on the rich and corporations. Yes, the left are well-intentioned. Yes, they identify many of the right problems.  But how can government effectively regulate or challenge the power of the financial sector, megabanks and large corporations, when government is almost invariably composed of the favourite sons of those organisations? How can anyone seriously expect a beneficiary of the oligopolies — whether it’s Obama, McCain, Romney, Bush, Gore, Kerry, or any of the establishment Washingtonian crowd — to not favour their donors, and their personal and familial interests? How can we not expect them to favour the system that they emerged through, and which favoured them?

In reality, the system of corporatism that created the income inequality will inevitably degenerate of its own accord. The only question is when…


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Fri, 04/20/2012 - 12:51 | 2361518 AurorusBorealus
AurorusBorealus's picture

I agree with much that is written here.  Keep in mind, however, that just as the debt-based fiat monetary system has distorted price-discovery mechanisms for equities and commodities markets (and especially derivatives markets), the debt-money system and globalization has also created distortions in the market for the value of labor -- overestimating the value of some labor, by spewing debt-money into those professions (Specialized surgeons in the U.S., corporate CEOs, professional athletes, and government employees of every stripe, for example) and undervaluing the value of the labor of others (Cooks, for example).

Also, one cannot discuss income inequality, without discussion of globalization and outsourcing of labor.  To allow those who demand labor complete control over the supply of labor grossly distorts the market and has all but destroyed the real U.S. economy.

Fri, 04/20/2012 - 15:14 | 2361519 Stuck on Zero
Stuck on Zero's picture

I see one of the biggest causes of the corporatocracy the invalid concept that Government can "regulate" behavior.  Every regulator the U.S. created started out by championing the health and Constitutional rights of the citizens.  Every regulatory agency grew in power and then became the target of special interests to the point that the Regulatory Agencies are now the champions of the rich and powerful and the enemy of the ordinary citizens.  Need I name names: HUD, FDA, TSA, FAA, ...  and all manner of three letter agencies. 

Fri, 04/20/2012 - 12:51 | 2361520 flyingpigg
flyingpigg's picture

I don't get Buffet's logic. Why would it be fair to pay the same % over your income as your personal assistant? If someone who makes a million pays 20%, income tax it would be 200 k. Compare that to someone who makes only 50 kt paying 12.5 k in tax at a 25% income tax rate.

Fri, 04/20/2012 - 13:03 | 2361550 rosiescenario
rosiescenario's picture

For what ever its worth, I just got through paying my state and Federal taxes (including self employment tax) and the total added up to exactly 40%. So I worked about 5 months for other people who have done their best to try and make sure that I earn even less with each passing year....the more they get paid, the les earning potential I have.


I am sure that my experience is not like anyone else's otherwise our system would certainly implode.



Fri, 04/20/2012 - 13:44 | 2361717 donsluck
donsluck's picture

Live simply, earn less. I am self-employed and work maybe 1 day a week. Living just fine. I read that the average corporation makes $250K to $350K per employee, so I just started my own company and, sure enough, the $250K is about right. One day a week bitchez!

Fri, 04/20/2012 - 14:12 | 2361847 WillyGroper
WillyGroper's picture

Doing what? Weeds?

Fri, 04/20/2012 - 17:42 | 2362487 The Alarmist
The Alarmist's picture


Fri, 04/20/2012 - 13:10 | 2361581 Dr. Engali
Dr. Engali's picture

You're missing the big picture. Tax policy is chump change and just keeps us divided. The real money is made through inflation. Those close to the money printers recieve the benefits of fresh printing before the money trickles down to us schlubs. By then inflation ate away any benefit from the new currency. Inflation my freind is where the real money is at.

Fri, 04/20/2012 - 12:56 | 2361533 rosiescenario
rosiescenario's picture

Shocking to see just who tops Obummer's list.....that is a huge surprise to me as well as seeing other universities there....guess they want to get first call on research grants, whether deserved, or not.

Fri, 04/20/2012 - 12:57 | 2361540 Clowns on Acid
Clowns on Acid's picture

Show the GDP Per capita and the Median family income graph including thr Fed spending DOE, Dept of Housing and Urban Development, and other Great society programs.

They were all establsihed around 1965, it only took the hustlers 10 years to monetize the programs. 

Also add to the graph Fed gov't deficit spending. Those who find ways to monetaize the "social developemnt" laws....leave the median class behind.

Now with exponential printing / debt creation....the linear projections of the graph will be maintained,

Fri, 04/20/2012 - 13:02 | 2361547 LawsofPhysics
LawsofPhysics's picture

"Now with exponential printing / debt creation....the linear projections of the graph will be maintained,"


We have a winner!  However, the affects of real inflation will not.

Fri, 04/20/2012 - 12:59 | 2361543 William113
William113's picture

Other then money and power what could possibly be the common denominator other all those wonderful bankers. HMMM that's something to think on. I wonder if they have friends in the media.

Fri, 04/20/2012 - 13:03 | 2361551 KnowIDontKnow
KnowIDontKnow's picture

"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini

Fri, 04/20/2012 - 13:04 | 2361553 silverserfer
silverserfer's picture

this has to be the biggest piece of shit article this year on zerohedge. The RIGHT worships these corprate elete. They actualy think we live in a capatilist society. This article is misguided. The super rich have POWER they are induviduals. Corporations are their vehicles of power. When you have attained that power you have money which is the muscle of your power to attain your objectives. The left gets this. Fucktard azizonomics lay off the blow.

Aparently Zerohedge is being equal opprotunity by letting any dipshit to post articles. I need to post an article on how most people who are in the financial sector are fags and need to fuck off. Go plant a tree bitchez. 

Fri, 04/20/2012 - 13:04 | 2361562 spiral_eyes
spiral_eyes's picture

Looks like I hit a nerve...

Fri, 04/20/2012 - 19:38 | 2362735 goforgin
goforgin's picture


Fri, 04/20/2012 - 13:04 | 2361559 Gringo Viejo
Gringo Viejo's picture

I've never questioned the intellectual capacity of those on the left. That being said, I've found without exception that they have the emotional make-up of adolescents  It's as if they're singing "We Are The World" to the North Korean Army as they land on the beach in Santa Monica.

Fri, 04/20/2012 - 13:47 | 2361735 XitSam
XitSam's picture

The North Korean invasion will be in Washington state

Fri, 04/20/2012 - 13:08 | 2361576 divide_by_zero
divide_by_zero's picture

The Progressive movement was born of the banking cartel families; Rothschilds, Rockefellers, Roosevelts etc and they always used the traditional left (socialist, communists) to push their agenda. They have at the same time corrupted what used to be the Republican party(as well as the MSM and educational/indoctrination system) and thus you get progressives like, Romney, McCain etc spewing forth with MSM pushing them from what used to be the traditional right (Bloomberg a Republican, why not?) . Rather than the left misunderstanding income inequality they have enforced it thru great society and like entitlement programs to keep the debt serfs in line. Even now the traditional left proposes ever more reinforcing regulations like Frank-Dodd which gave the Fed virtually complete regulatory (captured) control of the financial system, the proverbial fox guarding the hen house.

Fri, 04/20/2012 - 13:25 | 2361643 Jim in MN
Jim in MN's picture

And the global elite pedigree/control of the far right?  Or are you just a fool?

Fri, 04/20/2012 - 14:33 | 2361939 divide_by_zero
divide_by_zero's picture

If you read it, I said they corrupted what used to be the right and so you get progressives, the progressive elites like Romney and Bloomberg running as repubs. The right as a whole is not as much in the tank but the Republican Party is run by the elites. There are even progressives posing as "Tea Party" candidates although there is no true Tea Party.

Fri, 04/20/2012 - 16:06 | 2362228 Jim in MN
Jim in MN's picture

I read it and asked about the far right.  Still waiting.

Fri, 04/20/2012 - 13:12 | 2361582 verum quod lies
verum quod lies's picture

Of course most cannot "handle the truth", or try to remain in basic denial in cultural Marxist la la land. For example, during this round of economic malaise two key drivers of income inequality have been (and continue to be):

1)      On the politically correct side, debt is a driver. Increasing levels of debt, especially relative debt on a relative basis (i.e., wealthier people tend not to need as much and as debt accumulation proceeds the relative discrepancy increases as those with the least means tend to take on more debt to fill any gaps in income); and

2)      On the politically incorrect side, immigration (legal and illegal). In short, as you import more from the Third World you become, by definition, more like those you have imported. Import 100 million Japanese and you become more like Japan, import 100 million Central American mestizos and enjoy the spike in drunk driving deaths, lack of technological innovation, drug crime, wages driven down and resulting increase in income inequality, etc., etc.

Those two drivers alone will destroy any attempts toward narrowing income inequality. Solution? Just as the solution to too much debt isn’t more debt, so the solution to too many low wage immigrants aren’t more low wage immigrants that tend to identify more with their country of origin. Want to narrow incomes (and possibly save the country), stop importing the Third World and, of course, encouraging debt creation.

Fri, 04/20/2012 - 13:29 | 2361664 AnAnonymous
AnAnonymous's picture

This is how the US of A grew into a republic: by importing Europeans living under monarchies.

Fri, 04/20/2012 - 13:41 | 2361708 verum quod lies
verum quod lies's picture

At the time of the American Revolution, which countries in Europe, aside from say Switzerland, were not monarchies with Europeans living there? Is there supposed to be some point buried in your statement?

Fri, 04/20/2012 - 14:38 | 2361957 AnAnonymous
AnAnonymous's picture

Probably the point you felt it addressed.

So yeah, there was a point. And the point was US citizen cheap propaganda as usual.

Sat, 04/21/2012 - 09:17 | 2363468 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

So yeah, there was a point. And the point was US citizen cheap propaganda as usual.

Hoohaa, made me laugh bigtime.

"As usual" is correct.

"As usual" your purpose is to spread US citizenism propaganda, while "as usual" trying to act like you oppose US citizenism.

What is transparent to the more than casual observer is that you are the biggest proponent, the biggest supporter, the biggest advocate of US citizenism on this entire site.

As usual.


Fri, 04/20/2012 - 13:18 | 2361611 pslater
pslater's picture

Four out of Obummer's top thirteen donors are universities?  WTF???  UC is raising tuition rates by record amounts but they find almost $1.7 million to contribute to the worst President in American history's re-election campaign?

There is no clearer statement as to how F$%^ked up things are...

Fri, 04/20/2012 - 13:19 | 2361618 spiral_eyes
spiral_eyes's picture

Student loan bubble.... they wanna keep it going... and get bailouts when it bursts.

Fri, 04/20/2012 - 13:22 | 2361632 Jim in MN
Jim in MN's picture


Better post would be

How the Left and Right Misunderstand Their Own Obsolescence

Or, how about

How the Left and Right Betray Our Society By Continuing to Exist

Fri, 04/20/2012 - 13:24 | 2361640 fuu
fuu's picture


Sat, 04/21/2012 - 06:12 | 2363370 TheFourthStooge-ing
TheFourthStooge-ing's picture

Jim in MN said:

Better post would be

How the Left and Right Misunderstand Their Own Obsolescence

Or, how about

How the Left and Right Betray Our Society By Continuing to Exist



How the Left and Right Dance at the Ends of Strings Held By the Same Puppeteers

Fri, 04/20/2012 - 13:23 | 2361636 SheepleLOVEched...
SheepleLOVEcheddarbaybiscuits's picture

I'm sorry to all the libertatians out there(I am one), but this tax scheme does have its benefits. First we must address the fact we are seeking capitalism. We must first be put into this context. Capitalism does not care about equality, it is irrelevant. All other taxes aside, and inflation persistently positive, a gradual increase in payroll taxes could be seen as a way of signaling workers that they need to be more innovative and either A) get more education in order to get a higher paying job or, B) they need to create entrepreneurial ideas in avoidance of low wages and increasing payroll taxes, thus faciltating the capitalistic goal.

Fri, 04/20/2012 - 13:52 | 2361748 donsluck
donsluck's picture

You do not have to seek Capitalism, it is the natural law of economics. Unfortunatly, Capitalism is "red in tooth and claw" as Margaret Thatcher once said, and needs regulation to prevent it from crushing all but the elite. It is the removal of regulation that spawned the financial collapse of 2008 (remember?).

Fri, 04/20/2012 - 14:03 | 2361802 SheepleLOVEched...
SheepleLOVEcheddarbaybiscuits's picture

I don't really think capitalism is a natural law per se. I think it is more of an economic system.

Fri, 04/20/2012 - 13:27 | 2361654 Joe Davola
Joe Davola's picture

Young people denied opportunity by a broken system will do something about it.


Not if we end the war on drugs!


Vote RP 2012

Fri, 04/20/2012 - 13:29 | 2361661 AnAnonymous
AnAnonymous's picture

US citizen middle class has grown out of certain conditions.

Those conditions, resources linked conditions, are waning.

While the charts are not the proper ones, take a look: one follows its normal growth rate, the other drops jaws. One corresponds with its extrapolated prediction, the other not.

The upper class is leaving the middle class behind because there is simply not enough resources to keep the same enrichment rate for the middle class as for the upper class.

US peak oil and its consequences bore more weight than any financial policy.

Middle class could not see its standard of life rise for ever. The Earth is down to its knees due to middle class aggregate demand.

Not the case of upper class and wont be the case for a long time as the upper class tends to shrink and shrink, following the pattern of wealth concentration due to US citizen economics.

Fri, 04/20/2012 - 13:45 | 2361716 WTFx10
WTFx10's picture


Fri, 04/20/2012 - 14:31 | 2361934 LFMayor
LFMayor's picture

LOL, some ChiCom robot is going to educate us on the middle class.

Now, on to something that you know about: What really happened to that British MI-6 guy that got 86'd?

Fri, 04/20/2012 - 14:50 | 2361989 AnAnonymous
AnAnonymous's picture

Now, on to something that you know about: What really happened to that British MI-6 guy that got 86'd?

You are going to teach it to me. Hard not to know more about US citizen middle class when you know nothing about a MI6 agent story.

Now I happen to know of a MI6 agent story.

It is back to South Africa under apartheid.

Lawyers that tried to legally undermine Apartheid were sent to prison due to insider information.
Nobody knew at the time who the mole is.

Later, the story emerged. The mole was a lawyer woman who suffered from severely malformed hip. MI6 had sent an agent to seduce her, pillow talks and MI6 relayed the information to Apartheist members who captured the lawyers and tortured them.

Now this US citizen woman works a good job at the City.

See, that is a good story about MI6. US citizen gigolo sent to seduce a US citizen so she could give out her network, all this to preserve freedom, justice and truth in Apartheid SA. Tells about the priorities of US citizens.

Ah, side note, the tortured lawyers still do not understand why she betrayed like that.

Sat, 04/21/2012 - 06:36 | 2363380 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

The upper class is leaving the middle class behind because there is simply not enough resources to keep the same enrichment rate for the middle class as for the upper class.

More Chinese citizenism self-contradiction. Previously said such things as:

In US citizenism, the middle class is the king class.

US citizen middle class makes the calls. Corporate interests surf the middle class trend.

Corporations are a creation of the middle class, they are empowered by the middle class.

The self-contradictions of Chinese citizenism are apparent to all, except Chinese citizenism citizens. As is the running dog denialism and endless repeation,


Fri, 04/20/2012 - 13:42 | 2361710 Doomer
Doomer's picture

Wealth comes from two sources:

work (physical and intellectual)

the earth/sun (oil, minerals, crops, etc.)

(Note that capital is a product of both of the above.)

It is not right to tax the work of a person; therefore income and corporate taxes are not acceptable (note that corporate taxes are ultimately passed on to people in the prices of goods and services, or subtracted from profits.)

The only solution is to tax the earth.  All land should be community property, and leased by the government to the highest bidder.  This ensures that the land is put to optimal use.  The lease proceeds are used for the common good (minimal government, adequate infrastructure and defense, and rebates of what is left over to everyone who works, or is too old or infirm to work.)  There would be no such thing as the unemployed.

If you want to learn more, read Henry George, or David Ricardo, or Adam Smith for that matter.

Any other discussion is just a diversion from the truth.

Fri, 04/20/2012 - 13:49 | 2361734 spiral_eyes
spiral_eyes's picture

"The only solution is to tax the earth.  All land should be community property, and leased by the government to the highest bidder.  This ensures that the land is put to optimal use."

Sounds more like Marx than Smith. 

Fri, 04/20/2012 - 22:12 | 2362971 Doomer
Doomer's picture

There really is no exuse for ingnorance anymore (I guess this may be a little "wordy" for you, but persevere):

"Both ground-rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before. Ground-rents, and the ordinary rent of land are, therefore, perhaps the species of revenue which can best bear to have a peculiar tax imposed upon them." --Adam Smith

“A land-tax, levied in proportion to the rent of land, and varying with every variation of rent, is in effect a tax on rent; and as such a tax will not apply to that land which yields no rent, nor to the produce of that capital which is employed on the land with a view to profit merely, and which never pays rent, it will not in any way affect the price of raw produce, but will fall wholly on the landlords.” --David Ricardo

"Men did not make the earth. It is the value of the improvement only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds." --Thomas Paine

"The earth is given as a common stock for men to labor and live on." -- Thomas Jefferson

Fri, 04/20/2012 - 22:13 | 2362972 Doomer
Doomer's picture


Fri, 04/20/2012 - 14:07 | 2361822 Catullus
Catullus's picture

I didn't know anyone would even attempt a physiocratic argument.

The problem is you don't know how to evaluate the value of the land you're taxing. It's based on the market prices of the things that could be produced on the land. No one would know what to bid for the land without market pricing. What if you base the land value based on the market price for corn, you lease it, price of corn drops and you're fucked. Hence, taxing land is not the optimal land use.

Fri, 04/20/2012 - 22:10 | 2362984 Doomer
Doomer's picture

"No one would know what to bid for the land without market pricing."

What part of "leased to the highest bidder" did you not understand?  Do you have any idea how deep sea oil and gas, and electromagnetic spectrum are acquired?




Sat, 04/21/2012 - 03:12 | 2363285 Catullus
Catullus's picture

What part of you "wouldn't know how to price the land" don't you understand?  It'll go to the highest bidder, but how does one know what to bid?

Sat, 04/21/2012 - 13:35 | 2363756 blunderdog
blunderdog's picture

If you believe in the concept of a "market," you'll understand this is not a problem. The "market" is a constantly-occurring experiment to determine how something should be priced.

That's a pretty basic element to grasp in any discussion that relates to economics. all humility, I think we should be prepared to accept that you may be correct, ultimately.  The existence of a market MAY be impossible. 

It may turn out that "market" as a concept is as incoherent as a square triangle. 

I don't think so, myself, but I don't have a proof either way.

Fri, 04/20/2012 - 13:53 | 2361759 reTARD
reTARD's picture

People who spout income inequality also ignore or must be unaware of income mobility. They assume that poor can only stay poor and rich only stay rich. Not everyone stays in the exact income class.

Fri, 04/20/2012 - 14:33 | 2361910 karzai_luver
karzai_luver's picture

“…everyone but an idiot knows that the lower classes must be kept poor, or they will never be industrious.”

—Arthur Young; 1771



enough do that the outliers are meaningless.

REAL WEALTH is unknown to 99.99 of the sheep.


whereas hunger is not only a peaceable, silent, unremitted pressure, but as the most natural motive to industry, it calls forth the most powerful exertions. . . . Hunger will tame the fiercest animals, it will teach decency and civility, obedience and subjugation to the most brutish, the most obstinate, and the most perverse.”(IE: U.S. imperial regime of the moment)


Thus you have it. The serf will not force the hand of the master once he is properly trained and will in fact ENJOY and WISH to live in the MASTER'S HOUSE.

hello serfs.


p.s. there are no class lines in merica, everyone know that.




Fri, 04/20/2012 - 18:20 | 2362591 reTARD
reTARD's picture

True, the American Dream as well as the true ability to move up in the rigged society is an illusion because of many things including laws and regulations which control income mobility. But there are still a very tiny few which have despite the odds against them from this rigged society, have risen from rags to riches hopefully honestly via real fair trade in which they have truly benefitted their society (albeit rigged against them) through a real good or service they have provided. Class lines or no class lines, people or perhaps only the government and the media still claim there are and talk about society as though there were. But again it's true that the world never ever had true capitalism and true free markets and have always been run by a ruling class of secret elites as we are all still just serfs paying tribute to our kings for the land they have allowed us to pretend that we own. The only difference today from our past history is only that the names have changed. Kings are now called bankers. Serfs are now called citizens. It just sounds better that way.

Fri, 04/20/2012 - 14:00 | 2361776 sbenard
sbenard's picture

Three things jumped out at me on the contributions chart in this story:

1) Wall St and the big banks are still overwhelmingly in Obama's camp. Even when they contributed to both campaigns, they contributed several to many times as much to Obama vs. Romney.

2) The smallest contribution on the chart for Obama is more than 30% larger than the LARGEST contribution on the chart for Romney. The contribution amounts aren't even close!

3) Universities are also overwhelmingly for Obama. Univ of CA -- ONE contributor -- gave to Obama more than nearly ALL contributors to Romney combined! What does that tell us about where academia stands?

Fri, 04/20/2012 - 15:04 | 2362034 Bear
Bear's picture

If Obama wins the 'Invest in our Future' Executive Order will wipe clean all studnet debt and start all over again

Fri, 04/20/2012 - 14:02 | 2361801 StockHut
StockHut's picture

We need mass anarchy asap.  We can only hope that more people come to these realizaitons and start to act.

Fri, 04/20/2012 - 14:17 | 2361838 Teamtc321
Teamtc321's picture


Chimps Throwing Poop And 29 Other Mind Blowing Ways That The Government Is Wasting Your Money

Why do chimpanzees throw poop?  The federal government would like to know and is using your tax dollars to investigate the matter.

#1 In 2011, the National Institutes of Health spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.


Look at this act our fine gubbernmint is under taking. 



"You can have fresh food of their choice, but not fresh food of your choice.

Take the recent slaughter of pigs in Michigan, for example.

The State of Michigan, through its Department of Natural Resources, has declared pigs raised on small farms “feral”, and, as of April 1, warned small farmers to destroy the pigs or the state will invade the farms and kill the pigs.

Failure to destroy the pigs would, says the order, result in a felony prosecution.

“Feral” is defined as:

a. Existing in a wild or untamed state or b. Having returned to an untamed state from domestication.

The word derives from a Latin word (fera) meaning wild thing. The pigs in question are not wild; they are domesticated.

Michigan has fallen prey to the whacky notion that there are “native” species as opposed to “invasive species.”

Pick a date (usually before the arrival of white settlers) and every plant and animal found in the area before that date is “native” and every animal and plant to arrive after that date is “invasive.”

This arbitrary classification ignores the whole idea of ecology. Plants and animals are constantly shifting habitat.

Plants and animals introduced by the pre-settler “native” Americans are “native.” Plants and animals introduced by the settler generations are “invasive.” Stupid.

Michigan’s Department of Natural Resources (DNR) has issued an “Invasive Species Order” (ISO) against so-called red haired pigs as invasive despite the fact that these pigs never lived in the wild in Michigan and are part of the DNA of small farm breed stock that are domesticated, not wild.

In other words, the small farm pigs do not “contaminate” the wild pigs of Michigan anymore than the large pig farms (who may have been behind the ISO) do.

Last week, small farms in Cheboygan County and Kalkaska County were raided by armed DNR agents who slaughtered the farmers’ pigs. In one instance the farmer was forced to shoot all his own pigs or face arrest."

Fri, 04/20/2012 - 18:11 | 2362572 The Alarmist
The Alarmist's picture

"Why do chimpanzees throw poop?  The federal government would like to know and is using your tax dollars to investigate the matter."

There is a connexion there ... throwing poop is the monkey equivalent to a Like-button.

Fri, 04/20/2012 - 14:12 | 2361839 Achilles
Achilles's picture

One way to take control of this government is to create a real democracy within the fake democracy we have now. has a nice idea that might work. I think it needs some work, but if they can get on seat in government, they might be able to create a real revolution. The more people realise they can have a real say, the more votes they get, the more powerfull we get.

Fri, 04/20/2012 - 14:23 | 2361897 karzai_luver
karzai_luver's picture

“…everyone but an idiot knows that the lower classes must be kept poor, or they will never be industrious.”

—Arthur Young; 1771


Seems true enough. Case closed. Plan is working as desired from the git go.


Fri, 04/20/2012 - 14:41 | 2361967 blunderdog
blunderdog's picture

"Taking control" of this shitshow is the wrong strategy.  The problem is institutional. 

Some smart well-intentioned folks could have taken control of the Titanic after it hit the iceberg, and it would still be sunk.

The better approach is for the "99ers" to simple BOYCOTT the government.  It's happening in plenty of places.  We've got tent-cities all over the country, and potentially as many as a few hundred thousand residents.

That's the revolution right there. 

Fri, 04/20/2012 - 14:27 | 2361922 ONO47
ONO47's picture

Where is MDB? I wanted to get a laugh.

Fri, 04/20/2012 - 14:41 | 2361966 percolator
percolator's picture

Call it what it is - FASCISM!

Fri, 04/20/2012 - 14:54 | 2362011 AnAnonymous
AnAnonymous's picture

That is US citizenism.

Both share commonalities but US citizenism has some specificities fascism do not display.

For example, it is natural for US citizens to claim that their system is not really US citizenism but something else (fascism, communism, marxism etc...)

Good article on US citizenism (masqueraded as Fascism) spreading in China

Fri, 04/20/2012 - 15:55 | 2362180 Teamtc321
Teamtc321's picture

Fuck off!!

Sat, 04/21/2012 - 06:42 | 2363384 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

Good article on US citizenism (masqueraded as Fascism) spreading in China

Not spreading as fast as opium sweetsmoke in your brain from Peoples Liberation Opium Parlor.

But hey, it is the weekend in Kwangtung and Chungking.


Fri, 04/20/2012 - 14:51 | 2362003 haskelslocal
haskelslocal's picture

Reports like these always go off path. Look at Campaign Contributions. You cannot compare the amounts on both sides. Obama's numbers include the fact that he's been around awhile and those corps. have been donating to him since 2007. Romney wasn't around then so to make the numbers balance, you'd have to add McCain's numbers to the mix but to do so would skew the scale, which is my point. Numbers here are irrelevant.

We all know corporations own the system so what does proving it do for ya?

Fri, 04/20/2012 - 15:21 | 2362089 Totin
Totin's picture

Perhaps you missed the discussion occuring over the last 5 years that says only Republicans are owned by Corporations?

Fri, 04/20/2012 - 14:57 | 2362018 plata pura
plata pura's picture

End corporate personhood, public financing of all elections, term limits including the supreme court, protectionism!

Fri, 04/20/2012 - 15:07 | 2362041 DosZap
DosZap's picture

SCOTUS slams OBummer Care,( all of it) and ANYONE drawing breath, except OBummer back for 4 more yrs to total Dictatorship.

Romney, even with his millions,and business savvy, has ONE thing going for US, that no other candidate that would face O with (other than Paul), that could help all concerned.(We peons)

That ONE thing is his Religion.Mormons, are known for their community, and serious prepper styles, and the way they see the world.

This "possibly" would be an ace in the hole for the he understands Capitalism, as does the current Commie n Chief, but I do not see him taking the same path for the country,as OBummer,as his END goal is total destruction of the Republic.

Damn near there now,four more.............high tail it to wherever,anywhere but where he will be running the show.

Fri, 04/20/2012 - 15:14 | 2362055 Walt D.
Walt D.'s picture

The Income Inequality argument  is by and large class warfare and election year clap-trap. One reason that there has been an increase is the ratio of top to median income is that the population has increased. Many billionaires and multimillionaires make their money by collecting a relatively small dollar amount from everybody. These days, a dollar from everyone in the US will make you $320 million. The internet and communications revolution has made it much more easy for people and companies to do this.

What the real problem is is the growing income and benefit gap between people working in the private sector versus people working in the public sector. The government regulation bubble has also been responsible for businesses closing down or moving overseas, and for new businesses not to come here. A good example is petroleum refineries on the east coast. They are closing down and moving overseas.


Fri, 04/20/2012 - 15:21 | 2362087 geoffr
geoffr's picture

You could look at the data two ways.

One is that prosperity causes income inequality and downturns cause income equality.

I honestly have never seen anyone logically link income inequality to economic problems in a convincing manner. Economics is not necessarily a zero-sum game. Someone having a lot of money doesn't mean I have to do poorly.

A more interesting question would be why have my wages stagnated, etc. It is perfectly possible that I'm doing better and someone else is doing even better than me.

Fri, 04/20/2012 - 15:55 | 2362176 malek
malek's picture

Now you got me confused with what you are trying to say.

If I take
America emerged from the Great Depression and the Second World War with a much more equal distribution of income than it had in the 1920s; our society became middle-class in a way it hadn’t been before. This new, more equal society persisted for 30 years.

I think I can reduce this to
America emerged from the Great Depression and the Second World War with a much more equal distribution of income. This new, more equal society persisted for 30 years.
without changing the meaning.

So the "equal society" roughly lasted from 1945 to 1975.

But then your "Source of Federal Income" has most of Corporate Income Tax reduction happening in exactly that same period - so how does that data support the dominant explanation on the left is that this is down to the tax structure?

Fri, 04/20/2012 - 16:00 | 2362204 Chaos_Theory
Chaos_Theory's picture

Look at all that University money flowing back into a political coffer...really puts in the context of why tution has far far outpaced the rate of inflation, and why student loans cannot be forgiven.  And the OWS crowd thinks the D team is on their side! 

Beware the Government-Banker-Educator-Media Complex!!!!! 

Fri, 04/20/2012 - 16:28 | 2362291 dolly madison
dolly madison's picture

Veto & recall power for the people are the most effective ways to fight corporatism, but there is no way to implement them until it all falls apart.

Fri, 04/20/2012 - 16:28 | 2362296 thurstjo63
thurstjo63's picture

The answer is to neuter the corporations and money politics, by the populace taking back its rights through a movement to allow for them to call binding referendums on any subject they deem important. Then we could have a referendum preventing any taxation, direct or indirect (including money printing) without a vote of the populace (Neuter the banks). Next laws are changed so that we can recall politicians again via popular vote. The technology is already here to allow for it, the population just needs to wake up to its potential.

It would ne

Fri, 04/20/2012 - 16:58 | 2362364 AchtungAffen
AchtungAffen's picture

And the whole post gives no solutions. Tell you what. Yes, for government to solve this would be almost impossible. But at the same time, nothing but government can put a stop on this. Law, tax code, constitutional interpretations (ahem, citizens united, buckley valeo, etc...). It all depends on the existance of the government. And you know historically what happens with the end of the state (e.g. fall of the western roman empire). So, what are you talking about? A fall back to the middle ages? Feudalism as the answer?

Fri, 04/20/2012 - 18:13 | 2362493 The Alarmist
The Alarmist's picture

That's nice ... but the real money seems to be in Congress.  I don't need to be Bill-Gates-rich or Warren-Buffet-rich ... I will settle for being John-Kerry-rich or Nancy-Pelosi-rich.

Fri, 04/20/2012 - 17:49 | 2362502 johngoes
johngoes's picture

This obsession with taxes having much to do with income inequality misses the boat. IMO Income inequality is directly related to the FI (of FIRE) expansion. The last I read the real value of all tangible goods is ~$60Trn, but the derivatives are running >$700Trn. All of that overhead fluff is just crap that generates massive income for FI which creates inequality simply by the scale of the bonuses and income they generate swapping derivatives around with plenty of slop left to fall into megacorp hands. Now if you could tax the crap out of each of those CDS/CDO transactions you'd solve the budget deficit in a year and give everyone a massive tax cut to boot!

Frankly, (and perhaps naively) I'd make 'em scrap the whole CDS shebang - null & void period. Then I'd tell everyone to mark-to-market and let the crap fall where it may - let 'em fail. Yep, it'd suck everywhere for a while but then we'd get to start with a clean slate. Any future CDS (it's not hedging I'm against) would be created in open markets AND no CDS can be generated without having skin in the game (that is you own a signficant stake in what you're hedging). No side bets. Also, get rid of zero hedge (not the site, the concept). Make hedges limted in some manner (perhaps by the tax on the hedge trading.)


Fri, 04/20/2012 - 18:39 | 2362631 dataanalytics
dataanalytics's picture

I truly believe we are past fixing it by the joke of what has become 'voting' and what amounts to minor, shouting and velvet protesting. It makes for great news stories and headlines but in the end...nothing changes.

Nothing will either. The only solution lies within the individual to muster the courage to fight, physically and mentally battle. As unpopular and regressive (as some might imply) as it may be deemed, war and full on revolt is the only path left to real change. It is a sad reality indeed, but those who think that ANY pos politician, who is beholden to corporate autocrats will change the system in favor of the majority of nations citizens is a fool and ignorant to the immense power of real wealth.

History does and will repeat itself, it is just a matter of time. All empires eventually fall, so too shall the corrupt, oligarchs of the world fall.

Sat, 04/21/2012 - 00:24 | 2363197 kedi
kedi's picture

Democracy reflects it's participants. Few are participating. It is absolutely ridiculous that 350 million people are represented by 2 political parties. What is represented is laziness in the majority and lack of real morals in the minority that do participate in effort and money. The key to reform of any kind in any part of this mess is people really getting involved and building the new choices to vote for. More parties, more independents to cause some real fights for change.

Fri, 04/20/2012 - 20:35 | 2362839 Justaman
Justaman's picture

I know I am late to the party on this but WTF.  Isn't California insolvent? How can a state university be the number one contributor AND get away with it? What a bunch of BS.

Fri, 04/20/2012 - 22:18 | 2362996 kedi
kedi's picture

In a completely static economic system that is also technologically stagnant, then income equality would mean the vast majority have little hope of advancing to a better lifestyle. To do it would require inflation which circles round and eventually fails.

We do however have non static technology. Money being basically a measure of labor. Labor to capture natural resources and manipulate them to products, means advances in technology can provide advances in lifestyle without inflation. When technology advances to provide a less costly product from resource and labor there is now a surplus of what was the cost. The cost savings can be returned to those who labor. Those who labor being everyone. Labor is bottom to top, 99% to 1%.

The advances in technology should have given us all a nice increase in lifestyle and quality of life over time. Our society through it's labor, producing products and education to keep advancing the benefits of technology to feed back into the loop. All could have benefitted equally. The rich getting richer as well as the rest.

Individual effort still rewarded to move one forward as those less motivated slide back. But overall a steady increase for all.

Income inequality is at base, greed. Everyone would have had improved lifestyle over the years with just the benefits of advancing knowledge and technology being distributed in a normal capitalist economic system. The problem is always those who wish a shortcut. To get ahead by going outside the reality and getting away with it by various means which ultimately fail because they violate the rules of reality.

We could all move ahead in a real capitalist system. But someone always wants to game reality.

Another problem with gaming reality, is that technology which we need to implement and improve as resources grow scarce and labor force increases ( with growing susrvival needs ) is that the best technology is not implemented. It is advantageous to the fewer gamers to play the labor for now.

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