The End of Oligarchy

“The oligarchy in this country, whose greed is insatiable, is destroying Jefferson’s and Lincoln’s vision of America, and is moving us in a direction of the few, by the few, for the few.”

My concern here is wealth distribution; it deserves much attention.  During the 2016 presidential primary campaign, Senator Sanders talked about this issue at length, but unfortunately his ideas have been swept aside.  He most importantly called it correctly when he said that today in America we do not have a democracy, we have an oligarchy.   Let us look at just what he meant by his statement.  There is no shortage of wealth generated every day in this country, nor has there ever been a shortage, even during the great depression.  The same is true for every country in the world, even the poorest countries.  However, here and worldwide, the wealth is abysmally distributed and there is a profound lack of will to correct this. Wealth comes from two sources, not one, first from the entrepreneur and second from the millions who purchase the product of the entrepreneur.   This absolute fact is always either forgotten or denied.  Without the entrepreneur there would be no wealth, and without the consumer there would be no wealth.  A friend once posed a question to me.  He asked what I would like to see the founder of Amazon say and think about his success and wealth.  My response was that I hoped he would come to the same conclusion that Andrew Carnegie did, “there are three stages to life, 1. Education, 2. Accumulation of wealth, and 3. Distribution of that wealth.”

Sanders meant that wealth in this country rules, and is only interested in furthering its power and influence, with no regard for the millions beneath.  How ironic, when those very millions fuel the wealth!

Earlier in America, particularly during the 50’s and 60’s after WWII, the wealth distribution was very much greater than today.  Even then, however, one quarter of the population was left out of this wider distribution, the African Americans, not to mention the Native Americans, who are always left out of the conversation. Prosperity is not wealth, it is the wide distribution of wealth.  Several factors contributed to the prosperity of the 50’s and 60’s.  Yes, the economy boomed, but labor unions demanded higher wages.  The wealthy paid 51% in taxes, and the corporate tax rate was 50%, and the economy grew at almost 4% annually.  The corporations which vehemently opposed the unions’ demand for higher wages, actually ended up benefiting hugely from the members’ greater spending power.  But since then wealth has gradually managed to eat away at this prosperity and accumulate more for itself by lobbying congress to pass legislation favorable to it and unfavorable to the lower and middle class.  This is politically driven by the Republicans. I will have a lot to say about the Republican Party later.  So we have arrived here in 2018 an oligarchy, not a democracy.

Let’s stop here and talk a little bit about the history of wealth and wealth distribution.  Wealth generation is possibly the greatest genius of man, even greater than his genius for art.  As man began to work the earth’s resources and create and accumulate goods (wealth), the notion of distribution was nonexistent.  Lord and slave became the structure of evolving mankind. To illustrate how man’s empathy and awareness can evolve about wealth and myriad other issues, I suggest the following.  If one had suggested to the lord that the slave deserved a better share, he would have had you whipped or worse.   If one had suggested to Henry VIII that drawing and quartering was barbaric and would someday be discarded, he would have had you taken to the tower.  If you told a southern bigot in the 1930’s that someday blacks would vote and send their children to white schools, he would have spit tobacco in your face.  If, in the 1950’s you told a chronic chain smoker that he would someday have to go outside his office building to have a cigarette, he would have called you a fool.  And today, if you told Carl Icon that someday he would want to share his wealth with the unfortunate, he would indignantly ask you “why would I?” But just like the slave master, and King Henry, and the southern bigot, and the chain smoker, he would be dead wrong!  Such is the evolution of empathy and awareness in the human animal.

There are those, many, who would say I am suggesting socialism.  Foolishly, they would be wrong.  Capitalism is the savior of mankind, because it creates in the best way the wealth that is essential to man’s wellbeing and progress.  Lenin was wrong in his derision of capitalism, but he died before he could realize his profound mistake. I am talking about how the wealth generated by capitalism is distributed. 

The following is an imaginary conversation with an American oligarch, Carl Icahn.

Carl thank you for agreeing to talk with me.

Carl: You’re welcome, my pleasure.

Carl, can you give me an idea of the amount of your wealth that you have accumulated over your lifetime.

Carl: I would guess it is somewhere in the neighborhood of 50 billion dollars.

Alright, I assume you have accumulated this wealth involving various business enterprises and financial investments.

Carl: That is correct.

Do you feel you are solely responsible for amassing this fortune?

Carl: No, absolutely I had help from many people, advisors and associates along the way.

On average, what percentage of your wealth over the years have you paid in taxes on your fortune?

Carl: Of course, I have always tried, like anyone, to pay as little tax as possible, and my accountants have been very good for me in that respect.  So I would say on average about 10%.

I am sure you are aware that in the 1950’s, 1960’s and into the 1970’s the highest income earners were actually paying 51% after all deductions and loopholes. And the corporate rate was at 50%.

Carl: I am old enough to remember that, and I am delighted that congress over the time since then has lowered the rates substantially.

With our national debt at 20 trillion dollars and climbing, do you bare any responsibility with your paying such a low rate over the years?

Carl: No.

Do you think it would be a better Idea for the wealthy to pay more to help with the debt?

Carl: No.

Why not?

Carl: It is not my responsibility.

Whose responsibility is it?

Carl: You are asking the wrong person.

Who is the right person?

Carl: I don’t know and I don’t care.

How do you feel about the corporate tax rate?

Carl: I believe it should be as low as possible to encourage investment.

How do you feel about corporations being permitted to off-shore profits to avoid paying taxes?

Carl: It is the law.

Do you think that law is a good law?

Carl: I do.  I think any law that benefits corporations is a good law.

Even though it does not benefit the common good?

Carl: The common good be damned!

The common good be damned!  Can I quote you on that?

Carl: Absolutely!

I think that with your attitude, Carl, you are cutting your own throat.  If this were France, May 5, 1789, you would be cutting your own throat because you would be headed to the guillotine.  Let me explain how you are cutting your own throat today.  Right now in America you say you had some help, some help in amassing your wealth, but you do not mention the main contributor to your wealth, the millions of consumers who either buy products from you or buy from industries you invest in.  You completely discount their contribution, in fact you probably have never given them a second thought.  In a recent interview, Harry Belafonte said that if wealth inequality is not truly addressed, America will self-destruct, the poor will burn the place down.  This is how you are cutting your own throat.  If the situation, which is only getting worse, is allowed to continue you will not have a country in which to practice your sacred ‘free enterprise.’  This is reason one to alter your attitude about your wealth.  Of course, you think the worse will never happen, but that is what the aristocracy thought in France in 1789.  There are other reasons; let me elaborate.  Think of the millions of children in America who do not have access to any decent education to speak of, without which they have absolutely no opportunity to move up the ladder, no opportunity to realize their potential.  Without billions put into education in poor areas and communities, this dire situation cannot change.  The idea that the wealthy, like yourself, would continually lobby our corrupt congress to keep their taxes as low as possible is a criminal outrage.  Let me take you to one of those poor rural neighborhoods that I have a personal connection to.  The town is Earl, Arkansas, a small town in eastern Arkansas.  It has one school house, and our family lived outside of Earl in 1945 and 1946.  My older brother attended 1st and 2nd grade there and I (3 years younger) vividly remember the two story brick school building.  Recently my wife and I had occasion to pass through Earl 71 years later and we drove through the town and came upon the old school building.  It appeared totally unchanged except for the obvious effects of the years.  We parked and went inside, nothing was different, it had not been updated in the years since, the same wooden desks, the same blackboards the, same bathrooms, the same windows. Everything was as it was 71 years ago.  Now this is 62 years after Brown vs the Board of Education in 1954, 52 years after the civil rights act of 1964, and 48 years after Martin Luther King and the Civil Rights movement, and not one iota of improvement in the school was evident!  What is more, the town and school had no whites, only blacks were evident, all the whites had long ago left.  As we rode around we saw children and teenagers, all black, aimlessly playing in the streets.  I tried to imagine what Dr. King would have thought if he could have witnessed this scene.  I guess people like you don’t think the children of Earl deserve better.  Well, there is only one way to fix this abominable situation and that is to make people like you (who have all the money in the world) see how abominable it is and see that only they can help.  The way to do that is to transport you and those like you to the location and force you to live there, without access to your billions, for one month.  If this were to happen, not only would you feel the hopelessness, but the creative part of your mind would begin to analyze the situation and start thinking of solutions to the problem and those solutions would inevitably involve money, and the money would inevitably involve people like yourself.  Low and behold you would have arrived at the very concept that I am arguing for all by yourself, only by placing you in the shoes of the very people you currently have so little regard for.  And you would not be able to stop yourself from coming to this conclusion.  The great irony is, and I repeat, there is and never has been a shortage of wealth in this country, and the same can be said for every country on the planet, even the ‘poorest’ country in Africa.  The shortage is the distribution of the wealth.  It is the stupidity of the conservatives, like yourself, that they think the progressive left decries capitalism; it does not, it champions capitalism, but it demands fair distribution of the wealth it creates and it demands sensible regulation of the wealth creation.  Now, having had a glimpse of the real problem first hand, can you see the only solution staring you in the face?  Don’t answer, I know you must. To think that this problem can be solved by a ‘booming’ economy is sheer folly. 

Let’s be clear about what we are after, what our ultimate goal is.  It is that every child on the planet has the opportunity to realize his or her potential and be able to look forward to a successful life, and this is all about money, lots of it, and money is all about people like yourself. As you are now, you are only concerned with acquiring more wealth, and enjoying your wealth in whatever childish ways you do, but wouldn’t it be really something to do something truly significant with your wealth and what would that look like?  As you were forced to stay in Earl for a month, after you got over the indignation and anger of being forced to stay there, you began to see what could be done to improve the situation, you would begin to actually think about the children’s plight, the poor rag tag black children, the likes of which you have never given thought to.  You would begin to realize that with your money there were myriad things you could do, like completely refurbishing the 100 year old school building, purchasing new desks, supplies and books, and computers, and most important of all creating a fund to increase the salaries of the teachers to a reasonable living wage, and hire new teachers to supplement the pathetically small current staff. Then you would hold meetings for teachers and parents (good luck with the parents), and hold an assembly in the school auditorium for all the students to inform them how serious education would be taken for here on out. Good luck with that!

Now, I know you are thinking that this is the job of the departments of education, federal, state and local.  But indirectly it is your responsibility in the taxes you pay or don’t pay.  You would be forced to admit that these departments have been doing a deplorable job over the last 70 years.  And that is due to insufficient funding and terrible management. Just multiply this pathetic situation by many, many thousands, and that is what we are faced with across the country.  So Carl, what is your response?

Carl:  My response is why should I do this?

My answer to that question is this:

  • You can very easily afford it.
  • Nothing else will work.
  • By doing nothing the poverty and ignorance will continue to increase until the country, your country, my country, their country self-destructs.
  • By doing it, you insure that these children will have a real chance at realizing their potential and being able to look forward to a good and successful life.  Multiply this by the many, many thousands of schools and neighborhoods just like this one, and just imagine the impact on our country in 18-20 years.  Imagine the explosion of creativity and invention and burgeoning of the economy that would result.  It would be the greatest investment in our country’s future ever made in our history.
  • The sense of personal satisfaction and pride in what you would have started. 
  • And finally it is the right thing to do.

Carl: But I don’t care about these children.

I don’t believe you. 

It is unreasonable to expect enough wealthy individuals to become personally involved, so it falls to the government to step in and address this problem, this massive problem of wealth, education and opportunity inequality.  However, in an earlier paper titled “The Lost African Tribe and the 50 Million Dollar Man” I talk about wealthy individuals becoming personally involved. 

So what is the likelihood that the wealthy will come to agree with my argument?  It is as likely as the Slave master coming to realize that the slave deserves a better life, it is as likely that Drawing and Quartering would come to be seen as barbaric and be outlawed and abandoned, it is as likely as the racism of the old south would be replaced by acceptance and inclusiveness, and it is as likely that smoke filled offices, airplanes, trains and theaters would be replaced by smoke free zones.  It will happen, it is a matter of time.

Now, here is a complete economic platform for the country going forward.  This must become part of our daily conversation.

  • Start to actually pay down the national debt, very slowly, but with payments monthly mandated by law.
  • Raise taxes on the wealthiest to 51% and the corporate rate to 50% for the wealthiest corporations, with a tiered schedule for both individuals and corporations.
  • Make it illegal for corporations to offshore profits.
  • Raise the minimum wage to $15.00 an hour.
  • Expand and extend social security.
  • Make public college tuition free, and absolve all student loan debt.
  • Invest billions in after high school trade schools for students who either don’t qualify for or don’t want college.
  • Triple the public education budget.
  • Eliminate vouchers for parents who don’t want their precious children to go to public schools with children of color.
  • Medicare for all.
  • Truly enforce welfare to work.  Congress has passed this law and the justice department does not enforced it.
  • Double the budget for health and scientific research.
  • Triple the budget for major infrastructure programs.
  • Reduce the wasteful and largely misused military budget.
  • Invest billions in wind and solar energy.

Once again, how will all this be paid for, with higher taxes on wealth.  To not acknowledge this basic truth is absolute folly.

Opponents will argue this is socialism. This is a stupid argument.  It is fairly and sensibly distributed capitalism!

For those who would say this is all naïve and oversimplified, I would say, spare me your wisdom, it is your complexity that has gotten us in this awful mess.

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