Tuesday, March 17, 2009

Eating The Rich: Not so Tasty as One Might Think

All pay limits do is serve to incite class warfare.
This is also known as “Eat The Rich”

Why do I say this?

  1. Because these are specific rules that will be capriciously applied to everyone except those in the Government. Therefore their published intent is not the actual intent behind the move. Ergo, one must question the initial premise.

  2. The money we’re talking about (money ‘saved’ through exec pay limits) is a spoonful of sand at the beach. We’re doing Trillions in bailouts and the government is worried about Millions? Yes millions is a lot of money but again, that’s not really going to help the overall problem is it now. Really. I mean, c’mon.

    a.) supporting evidence: circa 8800 earmarks in the last omnibus bill totaling to billions.

    b.) supporting evidence: the postmaster general. See below.

Postmaster General John E. Potter received a compensation package totaling more than $800,000 for fiscal 2008

(Source: Allison Shelley/Washington Times Feb 25th 2009)

Funny... I don’t hear anything about HIM getting a paycut.

But I hear about cuts in my services, possibly no Tuesday mail.


This is why I say these pay limits are a red herring. It just encourages the “eat the rich” attitude. Oh, and who’s “the rich” ??? Here’s the results from the most recent poll question: At what point is someone “Rich” ?

25% says rich= $501,000 and over
20% says rich= $250,000 to $500,000

13% say rich= $151,000 to $250,000
18% say rich= $76,000 to $150,000
9% say rich= Under $75,000

So it's a pretty even spread really. It's a pretty even spread almost all the way across. Really, we're all rich except those under $75,000. Only 9% say that. But almost 20% say at everything else.

Now you tell me, when the ‘tax the rich’ at 250k doesn’t work, do you think for one single minute that the ‘rich’ threshold won’t be lowered, lowered, lowered?

This inciting of class warfare is a dangerous thing. Watch for it. “The rich” are not the root of this problem.

This problem comes from those who have been dishonest, told lies, stolen, cheated, those lacking ethics, those willing to do “whatever it takes” to get ahead. And yes they made their bucks on the backs of the less fortunate and less aware, probably the more ethical. But remember, it wasn’t the wealth that made them crooked, it was their crookedness that made them feel entitled to taking liberties with others’ money.

You know, most people I know call this stealing.

Ok, if this is true then answer this: Why would the government want to incite class warfare? How does it benefit them?

It’s quite simple: When people get hungry and scared, bad stuff happens. The French learned that the hard way. The US learned too, and would rather avoid that kind of situation. This is a good thing, the French Revolution was horrible in many ways. So the strategy of directing public opinion is subtly different. When it’s time for this tidal wave of discontent to hit the shore, Washington sure doesn’t want it to be in its way. So, the politicians have made it clear that those ‘villainous fat cats’ are to blame. It’s a sleight-of-hand, a minor misdirection for the politicians to point to those other guys. [FDR did exactly this back in the 30s. He did it to Mellon and others. And it didn’t work. (more on this further down)] So when the proverbial “S” hits the “Fan” and the national mantra has already been ‘eat the rich’ then Uncle Sam who’s running all the government handouts and social programs is not the problem, he’s trying to help... he’s the new hero. Look... he’s trying to help the downtrodden... what a nice Uncle Sam. And the projects get bigger and the hole deepens. The problem is that in order to continue to fund the lifestyle of expectant dependency (really a form of social heroin in my opinion) and massive welfare, social programs, and even socialized medicine packaged as ‘progressive’ programs, it has to consume, consume, consume its source till the source is gone.

This because the government keeps trying to expand. The boys in charge with their powerful positions want to keep them and keep getting re-elected. This will only work if people are fooled into misdirection of their ire. And the politicians are already doing a great job of their PR campaign against the ‘rich.’

Like I said, the “Pay Limits” legislation is a red herring.

So where does this take us?

Ayn Rand addressed this in Atlas Shrugged. She identified Producers, Moochers, and Looters and explained the dynamic between them all.

There’s just one problem with the way things are run, which will be its unwinding. The politicians are their own worst enemies. Everyone knows that they’re crooked. Everyone. And one look tells everyone how these guys live such insulated and strange lives that they truly cannot realize how out of touch they actually are...

Americans aren’t used to a theocracy or a monarchy. So politicians running the country like a monarchy (creating their own ‘upper class’ through destroying the wealth of the private sector) isn’t sitting well with those who are responsible, hard-working, american-dream-pursuing folks. This accounts for pretty much the entire middle of the USA, every small business owner and farmer in this country. These are the producers. They pay their bills, work hard, and don’t overspend, and they’re mad as hell over the bailouts.

Then there are the moochers. Unfortunately, these are those who have decided to partake the social heroin from federal sources. The more they have, the more they want. And it’s the producers who supply the funding. But since the producers are the evil rich and the moochers are constantly told they need help and can’t get ahead, they feel entitled to this form of reparations.

So the politicians, the looters, who take a bet that there are more moochers than producers and the producers will always want to produce. Meanwhile, the looting continues. It’s the looters who come up with these social programs for the moochers and are given more free rein and the dance continues.

Remember, the money to run these programs comes from somewhere. Either taxes (again parasitizing the productive) or the printing press. Both lead to nowhere. Deflation. (happening) Depression. (starting.) Hyperinflation. (soon to start, I estimate 1.5-2 yrs.) Actually, all three. These two items will come to a head when people are hungry, scared, and angry enough. I just pray that it’s handled differently than the French handled it.

But the government programs create jobs.

Yes, they do. But those jobs don’t produce anything. That’s how we got to where we are now. By in large, America doesn’t MAKE anything anymore.

[Except food. We feed the world. But when our farmers are broke and can’t get loans for seed, equipment and fertilizer, or they can’t get their food shipped to other parts of the country because the trucking business have gone under due to massive taxes on small companies, that will take a hit too. Don’t believe me? Ask a few farmers. I sure have. No joke, it’s worrisome. They’ll tell you all about how fertilizer now costs such a massive percentage of their crop yield because the manufacture of it has become too expensive to do here in the due to business-unfriendly union legislation, taxes, and crazy legislation controlling shipping, amounts, and tracking. The government has gotten so far into the fertilizer industry that it’s been priced out of the reach of the farmers. They’ll have to pass that cost onto you. And won’t that be great, food prices skyrocketing while unemployment does too?]

As you are aware, these programs are run like everything else government. Case in point: The Division/Bureau of Motor Vehicles. The Social Security Office. Their trademark employee is not the picture of efficiency or courtesy and diligence. Why not? Because people don’t get fired. The good ones get fed up and leave, tired of doing 10x the work of everyone else for same pay. Heck if you could work your hardest and get paid for what you produce wouldn’t you go to a different job? You betcha. It’s called the private sector. Or your own business. That’s why the good ones leave. Really, these government jobs that are ‘created’ don’t make things that we can eat, sell, or trade to other countries. They simply delay the recovery while compounding the financial debt. They don’t make anything at all. It's like the bridge-toll-taking guys whose jobs only pay their own salaries and don't even cover the maintenance of the bridges. (See post: City of Brotherly Love, a Microcosm of DC)

Therefore, those jobs are no more than spinning tops that will eventually slow down as the funding for them, the inertia of the system, leaks money through multiple hands, inefficiencies, substandard work ethic, and layers, slowing the velocity of our money.


...till it falls over. Our tax structure is currently as follows: the top 50% of the earners pay all the taxes. The bottom earning 50% pay *nothing*. The top 1% in earnings pay 40% of the taxes collected. 5% of our society pay 65% of our taxes - which go to the government and whatever they choose to spend those dollars on - well, you do the math. One can only squeeze that top 1% so long before that 1% is gone. Imagine taking a 40% pay cut. That is exactly what will happen when the top 1% or those ‘evil rich’ are taken down. Then who is going to fund all our government programs? The next 1%... and then the next 5%... and who is the next 5% at the top to get squeezed...? As you can see, it keeps going and going as the planned ‘evening of the playing field’ or ‘redistribution of wealth’ happens to make things ‘fair for everyone.’ When that is complete, we will have all have a tremendous tax burden. With more to boot, because we’ll be paying off the trillions of dollars of debt that we’ve loaded onto our national balance sheet. This being said, wouldn’t you (probably not in the top 1% earners reading this, let’s be honest) let the rich continue to earn enough to pay the way for the others? This is why class warfare is dangerous. Because it topples our tax structure, our national funding, and our entire way of life here in the US and eventually, will but such an undue stress on the rest of the working class that it will flatten us all with the financial burden as we pick up the burden currently being carried by the uber-wealthy. It’s not like taking them down will make your paycheck bigger... get real. It will make it smaller. A lot smaller.

My prediction: Just you wait till after April 15. Maybe the 30th. Then you’re *really* going to see some strange things from Washington. That’s because that’s when the IRS will see how little money actually has come in from those top 5% from fiscal 2008. Then the wheels are going to start to come off of a lot of things. California Style.

What’s wrong with Socialism?

For starters, It doesn’t work. It can’t stay like it is. Over time it turns into something else because the system of Socialism isn’t self sustaining, it is self-draining. (spinning top, remember?) When it crumbles, other systems move in. And no, it is not Capitalism that moves in. Again, you want to see the future, read history.

That’s not true. There are plenty of socialist countries that “work.”

No, there aren’t. Which socialist country right now is doing better than the USA? And, if Socialism is the answer, then why aren’t the socialist countries immune to this financial crisis? Why aren’t their banks solvent? Why aren’t their companies thriving? Heck, the EU has enough countries and capacity for production that it could stand alone. But it isn’t. The EU is having some big problems. Germany has just refused to pay extra to help the other EU nations. The EU refused to help Eastern Euro nations (Hungary is one) who is in big trouble. If capitalism is so bad and horrible and evil, why isn’t the US the only country that’s crashing and burning?

Well smarty-pants, if Capitalism is the answer, why is the US having so much trouble then?

There are 2 parts to this answer.

First, we have a lot of socialist policy that has become part of our country’s workings. [Newsweek Cover in March Celebrated: “We’re All Socialists Now”] Sadly, we actually are rather socialist at this point. How does one identify a socialist program? It’s something that is government-run, bleeds money, relies on taxes, keeps growing and doesn’t work the way it’s supposed to. There’s a lot of things that fit this bill: Medicare. Medicaid. Unemployment. Social Security. Our tax law & the IRS (they paid their collection agents last year more than they were able to collect from audits.) Department of Education. Here’s the thing: all these are a *drain*. They’re not adequately funding themselves, they keep growing, they’re run by the government, and no matter how much money we’re throwing in there, they’re still losing ground. Also, none of them were in the Constitution until rather recently, historically speaking.

Second, Our founding fathers saw this coming and they have provided us with the answer. They wrote that only a religious and moral society can thrive under the US Constitution. And with the concerted and constant attack of religion in our society, it’s no wonder that we are where we are now.

Aside: The fuel for this problem is actually central banking and fiat currency. The two problems above simply serve to set it ablaze. But that’s a separate essay and I’m still formulating that. Central Banking is the restaurant, so to speak, where all the sick patients have eaten. Fiat currency that is manipulated by governments, and going off the gold standard... that’s the biggest problem but one that could be contained under different societal circumstances.

That’s ridiculous. FDR saved the US from the Great Depression with his New Deal. Exactly what so many conservatives call ‘Socialist’ programs. Everyone knows that. It’s in every history book.

Well, okay, let’s look at Roosevelt’s view on taxes in regards to the Socialist theory of the benefit of redistribution of wealth. Then we’ll look at how well all these “progressive” social[ist] programs went. I’m not even going to get into the specific problems associated with every single public works initiative, there were so many it would take a book to list them all. Actually- that’s already been done.

  1. The Forgotten Man by Amity Shlaes does a fantastic job chronicling each one and what happened. And lest you think it’s a propaganda piece, the back 25% of that book is entirely bibliography and sources, footnotes everywhere. It’s as factual and vetted as you can get.

  2. UCLA (traditionally a very liberal-leaning educational institution remember) released a study that declared that the New Deal actually kept the USA in the Great Depression and made it worse here in the USA. Title: FDR’s Policies Prolonged Depression by 7 years. http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx?RelNum=5409

Okay, so back to looking at how FDR saved the USA from the Great Depression the same way that the current administration is looking to do:

Taxes in the Great Depression : Same ‘Eat the Rich’ rhetoric.
Roosevelt went stumping for his 1936 campaign with this statement: "You poor people are doing your share, but the rich are avoiding the taxes. We should make them pay."

In 1941, Roosevelt recommended passing a new tax on all income over one hundred thousand dollars. His recommendation was 99.5% tax on all income over one hundred thousand dollars. At the time, the US Budget Director said, "What?" Roosevelt's replied, "Why not?"

So then Congress refused to pass that bill. And Roosevelt was livid. So on April 27, 1942 he passed an executive order, essentially circumventing congress completely. Here’s what passed: 100% income tax on all income $25,000 or more.

How many of you knew about that? How many history books tell that part?

Okay, so let’s look at a bit more.

Hmmm... Rich Not So Tasty as Previously Thought but we're doing it again.

Here’s a quote from Henry Morgenthau, the Secretary of the Treasury as he admits that the entire New Deal was a total failure.

""We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and now if I am wrong somebody else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot."

-Henry Morgenthau, Secretary of the US Treasury.
May 1939 (Years after the New Deal was enacted).

Remember, this was right from the Secretary of the Treasury. This is the guy who was in charge of the money disbursement and statistics collection during the 1930s. Imagine Geithner making this statement years from now. That would be your modern parallel. But it's funny, isn't that *exactly* what the bailouts are supposed to accomplish?

So you tell me, do any of the programs we’re hearing about now, those “shovel ready projects” sound familiar?

Even FDR’s guys knew these Keynesian and Socialist items were *big* trouble, damaging, and failures.

Remember, right after FDR’s death, (FDR was a Democrat) a Democratic House and a Democratic Senate - the guys who purportedly were so in awe of his amazing leadership and so supportive of him according to the history books - then passed a 2-term limit on presidents. Seems kind of funny... that if FDR really was so great for the nation as the history books say, it seems a little odd that his own party quickly says, ‘We better not do THAT again!” after 4 terms of FDR. Thus was passed the 22nd Amendment. Hmmmmm...

Contemporary Fiction Tells a Fantastic Tale that Opens Eyes

Don’t want to read history? That’s fine. Read Ayn Rand’s Atlas Shrugged. That was written back in the 50s by an immigrant from Russia. It’s entirely fictional but there is a lot of social study and history put into its authoring. You’ve heard of it, there’s a reason. Pick up a copy. Or three... give them to your friends. I do.

People are starting to wake up to this.

[Side Note: Quite interestingly, Ayn Rand’s Atlas Shrugged has sold more copies in 2008 than it sold in the previous 50 years combined. On top of that, in the first 90 days of 2009, triple the number of copies of Atlas Shrugged were purchased than all of 2008. Apparently, the word is getting around.]

Step Away from the Hand that is Feeding You and Feed Yourself.

That’s the only way. Stop being a draw on the system. And stop supporting that system’s growth.

Today, 70% of America’s Millionaires are self-made. That means that they’re by a large majority not members of a family with generational wealth. They have made their own money. That’s the American Dream at work! You don’t have to be a millionaire to be a crook. Remember, there are plenty of dishonest people at all levels of income and in all walks of life. Therefore, eating the rich won’t solve our society’s ills. The root of this problem is the pervasive lack of morals and ethics in our society. It will take strength, self-education, and a lot of painful self-examination and tough choices to get ourselves out. But I feel that we can.

America will emerge from this new Depression stronger than before if we make the tough hard choices and return to our old morals.

Let’s start with “Do unto others as you would have others do unto you.”

If we can just apply that litmus test to every new package, deal, and ‘stimulus’ plan that is proposed, and consider who is impacted and how, we might look at these decisions from the top in a different way.

It’s time to stop going with our hearts and start following our Inner Compasses. They’re a little rusty but we still have them. Get ‘em out and start using them.

More on that in my 'Inner Compass' essay. (check archives)

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