MAY 23, 2011
When I was young we called rich people millionaires.
“According to my calculations based on government data,” writes John Cogan, professor of Public Policy at Stanford, “starting next year, the typical couple, receiving the average benefit … will begin receiving monthly checks that will, on average, total about $550,000 after inflation. They will receive health-care services that, on average, will total another $450,000 after inflation. The benefactors will be a generation of younger workers who are trying to support themselves and their families while paying taxes to finance the rest of government spending.”
This million dollars is what the average retiree will get from his or her social security and Medicare benefits (far more than they contributed in payroll taxes during their working life—that money the government has already spent). In addition many retirees, especially many local, state and federal government workers, will get far more than this from pensions and supplemental health plans they contracted for in collective bargaining over the last few decades. For the next twenty to thirty years these fortunate folks will be not just millionaires, but multi-millionaires (would that qualify as super-rich?).
And, wouldn’t you know, they are often the most vociferous in complaining about rich people. See recent protests in Wisconsin and Ohio, as well as similar outbreaks in the UK, France, Greece, and other European welfare-state democracies.
Whether these bits of data raise your spirits or dampen them depends at least partly on how old you are, and where you work.
It highlights the serious ditch we have driven into in this country. Not only in this country, but in the entire social democratic world of Europe, North America, Japan and the Pacific rim. The good news is that ordinary people are healthier, living longer and are wealthier than any people have ever been in human history. The bad news is that people are healthier, living longer and are wealthier—and we can’t afford it.
The incredible prosperity is without question due to the thriving entrepreneurial culture in the United States. (We were the first. Our example has inspired other countries in North America, Europe and Asia during the second half of the 20th century and now they too are richer, healthier and living longer.) That entrepreneurial culture rests on three basic pillars: science, democracy, and capitalism.
Great as this achievement has been, it has not gone unpunished. Walt Whitman, put it this way: “O God, if I am to have so much, let me have more.”
Many people today take the cornucopia for granted and expect still more without paying attention to where the wealth is coming from. Worse, some even curse the geese that are laying the golden eggs—science, democracy and capitalism.
Intellectuals, literary and media stars, and heavy academics are often like spoiled adolescents in their disdain for profits, for corporations, for businesspeople, for producers of all kinds, along with their enthusiasm for more government control and more zero-sum benefits.
Some of these same luminaries not only attack capitalism but also attack science and technology (plastics, nukes, fossil fuels, genetic engineering, factory farms, chemicals, suburbs, auto-culture, IQ testing, etc. etc.) in the name of more “natural,” “local,” “fair”, “green” and “organic” lifestyles.
They claim to be devoted to democracy, but they are quick to dismiss Tea Partiers and Republicans (half the nation) as know-nothing dupes of the evil Koch brothers. Their solution to budget constraints is simple—soak the rich. Many claim we are turning into an oligarchic, fascist society.
No wonder the Tea Party is angry.
I can understand “if I am to have so much, let me have more.” That’s self-interest, the basic motive in capitalism, and in life itself. But where is that “more” to come from? The government is necessary, yes—but the great bulk of the new wealth is coming from old-fashioned profits created by the system so many enjoy condemning so vociferously. The more you tax the profits, the less wealth there is to distribute.
I could illustrate this with data from two hundred years of history (which I have done in my new book—see below) but for this News let’s try personal.
When I started my working career after WW II, Dwight Eisenhower was president. The income taxes on rich people were at the 90% level. The rich, the middle class, and the poor all had less wealth, and made less income than they do today.
The 1950s were a boom time. Jobs were plentiful, but wages were low. My first teaching job paid me $2900 a year. I worked at other jobs in the 50s, as a cab driver, a factory worker, in a construction company, as an engineer for Western Electric. My wages never rose much above that modest level.
I’m not complaining now and I wasn’t complaining then. We did the best we could and managed to live a decent if not luxurious life. Better than workers in the rest of the post-war world. Unlike most middle-class families today, however, it was pretty Spartan. Buying a house was not possible. Most years there was no money to take a vacation. We didn’t have computers, cell phones, credit cards or the Internet. New clothes and eating out in restaurants happened, but rarely. Travel abroad was never considered. Nor were trips on airliners or cruise ships. Some families had a car. We didn’t.
I didn’t think much about retirement in those days. When Roosevelt started the system in the depression the average age of death was 62.
We were not unusual. That was how the middle-class lived in the 1950s when income taxes took 90% of the rich family’s income. (Government revenues in the 50s were close to the same percentage of GNP as they are today.) Some leftists want to bring back those times. They imagine that if only we raised the taxes on the rich to 90% or more we could afford still more generous government benefits to the middle class and the poor.
Good luck. I don’t want to get into a futile argument about statistics—every partisan has his or her favorites—but I do know that over the past half-century tax rates have gone more or less steadily down and the economy has gone more or less steadily up. Income inequality has varied. In the 20th century it went up and down. It is greater today, but not even close to where it was in the 19th century and for many centuries before. The rich are richer today, but the middle class is also richer. And the poor are much richer. Not only here in the U.S., but all over the world. Yes there have been booms and busts. In the past two centuries the recessions have been brief (a year or two), clearing the way for another leap forward.
With one exception—the Great Depression of the 1930s. FDR tried to cure the economy then by soaking the rich and rhetorically damning them for their “greed,” just as leftists are doing today. He also increased by powers of ten the government’s role in the economy, as leftists are trying to do today. It didn’t work. That depression was by far the longest and deepest in U.S. history. It also reverberated around the world paving the way for Hitler, Mussolini and Stalin.
Do we want to go down that road again? Maybe it is time to take seriously the road to a new Tea Party.
Bill Stonebarger, Owner/President Hawkhill
P.S. You can find out more details in my new book The Road to a Tea Party—a Fresh Look at the Cold War, 9/11, and the Future of Free-Market Liberal Democracy at www.hawkhill.com or www.amazon.com. It should be available for sale on these web sites by the first of June.