Are the American people obsolete?

A Salon magazine writer asks, Have the American people outlived their usefulness to the rich minority in the United States? A number of trends suggest that the answer may be yes.

It's a tongue-in-cheek article, but I thought some of the points he was making about a breakdown in the modern American social contract in light of globalization were interesting.

Funkenpants wrote:

...a breakdown in the modern American social contract in light of globalization...

Sounds like an essay question from college. I'm looking forward to reading this!

Polliwog wrote:
Funkenpants wrote:

...a breakdown in the modern American social contract in light of globalization...

Sounds like an essay question from college. I'm looking forward to reading this!

Hopefully that isn't your way of being dismissive of it. I read this yesterday or the day before and I found it worthy of discussion. The country is quickly barreling towards a future where not only is the middle class being squeezed out, but the hyper-wealthy believe the social contract doesn't benefit them any longer. And maybe they're correct. Maybe they're above the social contract. In that case I think it means that the other 99% of the world should start working together on their own social contract. I would gladly take a year or two working in India, Central America or someplace else where I could find gainful employment and experience a new culture if globalization were as free labor-wise.

What I first read: "Are the American people Obese?"

Answer: YES!

DSGamer wrote:
Polliwog wrote:
Funkenpants wrote:

...a breakdown in the modern American social contract in light of globalization...

Sounds like an essay question from college. I'm looking forward to reading this!

Hopefully that isn't your way of being dismissive of it. I read this yesterday or the day before and I found it worthy of discussion. The country is quickly barreling towards a future where not only is the middle class being squeezed out, but the hyper-wealthy believe the social contract doesn't benefit them any longer. And maybe they're correct. Maybe they're above the social contract. In that case I think it means that the other 99% of the world should start working together on their own social contract. I would gladly take a year or two working in India, Central America or someplace else where I could find gainful employment and experience a new culture if globalization were as free labor-wise.

Your idea of the "social contract" is a modern idea. The middle class is not being squeezed out, they hold most of the wealth. what we have is a regressive tax culture that punishes the middle class and rewards the uber weatlhy and the people who don't pay anything. There is this myth that the rich are not paying their fair share when it comes to the country. The simple fact is the rich are paying more than their fair share.

In every industrial democracy since the end of World War II, there has been a social contract between the few and the many. In return for receiving a disproportionate amount of the gains from economic growth in a capitalist economy, the rich paid a disproportionate percentage of the taxes needed for public goods and a safety net for the majority.

Disproportionate in relation to what? To their input? I’d argue the democratic socialism model that this writer believes in is bunk. The whole belief is based on the fallacious idea that if I make $20,000,000 a year that I haven’t created far more wealth then I take home. It is very rare for someone who is wealthy not to have created other wealthy people along with him, not to mention just wealth in general.

The point is that, just as much of America's elite is willing to shut down every factory in the country if it is possible to open cheaper factories in countries like China, so much of the American ruling class would prefer not to hire their fellow Americans, even for jobs done on American soil, if less expensive and more deferential foreign nationals with fewer legal rights can be imported. Small wonder that proposals for "guest worker" programs are so popular in the U.S. establishment. Foreign "guest workers" laboring on American soil like H1Bs and H2Bs -- those with non-immigrant visas allowing technical or non-agriculture seasonal workers to be employed in the U.S. -- are latter-day coolies who do not have the right to vote.

This belief is wrong and incredibly racists and nationalist. Workers on H1Bs tend to be paid less than their domestic counterpart (due to the costs absorbed by the firm to obtain the visa) and for many jobs we do not have enough qualified domestic labour to fill. We have many Americans who decided to go into University and get a liberal arts degree. There is nothing wrong with this. But, if someone doesn’t want to obtain the degrees that are required by the modern world to prosper, they have no right to complain that firms are willing to hire people who studied what is needed for that firm to conduct business. Too many American kids are lazy and do not work hard enough. We shouldn't punish people who come here and work harder and take college seriously. Even here on the forum we had a thread not to long ago about college and we had posters saying that college is an "experience" and should be about fun. I'm sorry, no, college is work. It should be about learning and working hard. If you want to have an experience take $20,000 and spend a year partying that's less expensive than going to school. We shouldn't punish the people who work harder, longer and take it more serious because other people decided to go to some frat/house party and have fun.

There is a real anger among people who are in the middle/upper middle class who have graduate degrees (or certifications like a CFA/CPA) and earn good money but they aren't rich. They are hit the most by taxes, get less in return from government programs and basicly are burning at both ends. They did everything they were supposed to do they went to school worked hard, most have graduate degrees and they are not going to get any of the beneifts of being poorer or richer.

If much of America's investor class no longer needs Americans either as workers or consumers, elite Americans might still depend on ordinary Americans to protect them, by serving in the military or police forces. Increasingly, however, America's professional army is being supplemented by contractors -- that is, mercenaries. And the elite press periodically publishes proposals to sell citizenship to foreigners who serve as soldiers in an American Foreign Legion. It is probably only a matter of time before some earnest pundit proposes to replace American police officers with foreign guest-worker mercenaries as well.

The American investor class is over 50% of the population. The American elite also serve the country (not in the same proportion because the military is a great conductor of economic mobility). Wealth created is not wealth stolen and anyone who beleives that is objectively wrong.

Ulairi, to some degree you're correct, but remember that we had some of the strongest economic growth this country has ever seen under a 90% tax rate on incomes over a million dollars. Soaking those with very high incomes didn't seem to do that much damage.

I think you're overthinking this. I really do. The point is that the reason the social contract even exists or even works is because of mutual self interest. The rich benefit from a stable society as it provides a productive and happy workforce to not only consume their products, but also to help create these products at wages far below what they make. This is a stabilizing force in society when balanced well and it's the only way the wealthy can stay wealthy.

Ulairi wrote:

Your idea of the "social contract" is a modern idea. The middle class is not being squeezed out, they hold most of the wealth. what we have is a regressive tax culture that punishes the middle class and rewards the uber weatlhy and the people who don't pay anything. There is this myth that the rich are not paying their fair share when it comes to the country. The simple fact is the rich are paying more than their fair share.

The middle class doesn't hold most of the wealth. What's your definition of middle class. What's your definition of "most".

Ulairi wrote:

This belief is wrong and incredibly racists and nationalist. Workers on H1Bs tend to be paid less than their domestic counterpart (due to the costs absorbed by the firm to obtain the visa) and for many jobs we do not have enough qualified domestic labour to fill. We have many Americans who decided to go into University and get a liberal arts degree. There is nothing wrong with this. But, if someone doesn’t want to obtain the degrees that are required by the modern world to prosper, they have no right to complain that firms are willing to hire people who studied what is needed for that firm to conduct business. Too many American kids are lazy and do not work hard enough. We shouldn't punish people who come here and work harder and take college seriously. Even here on the forum we had a thread not to long ago about college and we had posters saying that college is an "experience" and should be about fun. I'm sorry, no, college is work. It should be about learning and working hard. If you want to have an experience take $20,000 and spend a year partying that's less expensive than going to school. We shouldn't punish the people who work harder, longer and take it more serious because other people decided to go to some frat/house party and have fun.

Wow. Where do I start.

#1 - As someone who has a liberal arts education and parlayed that into a successful software career I think you know not what you talk about. The job of education isn't to produce worker bees. It's to educate people. That's why *I* owe $40,000 in loans. Because I went and got an education and not training for a career.

#2 - Who are you to say that having a good general education means that that person "doesn't want to obtain degrees that are required by the modern world to prosper"? You honestly believe that not going into a specific field at 18 years old means you should be destined to failure? Seriously? Seriously, so you really believe that? At 18 I didn't know which way was up. I needed a complete education to be able to live a successful, productive, happy life. I wasn't seeking training, nor do I think that should be the goal of education. You can always get training. Becoming educated is equally valuable.

#3 - How can you personally stake a claim to the value of a given degree? I know far more good software engineers with liberal arts degrees than Comp. Sci. degrees. The people with "training" tend to be prima donnas who are impossible to work with on a personal level and thus are often LESS productive than people who got a general education and then trained in a specific field later. There is value in broad education. We're not Alphas and Betas like in "Brave New World" yet.

Ulairi wrote:

There is a real anger among people who are in the middle/upper middle class who have graduate degrees (or certifications like a CFA/CPA) and earn good money but they aren't rich. They are hit the most by taxes, get less in return from government programs and basicly are burning at both ends. They did everything they were supposed to do they went to school worked hard, most have graduate degrees and they are not going to get any of the beneifts of being poorer or richer.

Wait.... So if I choose to get an education at a liberal arts school and the economy crumbles beneath my feet through no fault of my own, then I'm an idiot.

However, if the businessmen with the advanced degrees gamble on derivatives and otherwise play the economy like a casino and then bring the economy to it's knees, they're the real victims because they get taxed more? I know, there are plenty of wealthy not responsible for the collapse of the economy, but this article is talking about the uber-rich. The uber-rich helped get us in the mess we're in. And yet bear no responsibility? And in fact deserve to harbor righteous anger at us? At me? Wow.

Ulairi wrote:

The American investor class is over 50% of the population. The American elite also serve the country (not in the same proportion because the military is a great conductor of economic mobility). Wealth created is not wealth stolen and anyone who beleives that is objectively wrong.

You said one thing I agree with. Had to point that out. Wealth created is not wealth stolen. However, wealth hoarded is wealth pulled from the system. Of course, I probably have no clue what I'm talking about as I'm one of the peons with a crappy degree.

I should stop wasting my time on this message board. Any moment not spent making wealth is wasted time.

The economix blog responded today to a Michael Barone article arguing that the American people are rejecting modern redistributive policies in favor of being a "republic of property owners." Economix looked at income and asset data and sounds unconvinced.

...the bottom eight deciles of the population, arrayed from low to high in terms of wealth owned, own only about 15 percent to 16 percent of the national’s total household net worth, while the remaining wealthier 20 percent of the population own 85 percent or so of the nation’s total household net worth, and so on.

If we repeat the exercise, but draw the vertical line to the curves labeled “income,” we infer that the bottom eight deciles of the population, arrayed from low to higher incomes, receive roughly 38 percent or so of total income, while the remaining 20 percent receive slightly more than over 60 percent. Thus, it appears that total income in the nation is quite unevenly distributed, but not nearly as much as is the net worth of households.

...half of the American population does not have any net worth to speak of

I think where DSGamers comments and Ulairi's response are too narrowly focused on the case of foreign workers on American soil. I work for one of the major consulting companies. And the other end of the burning rope is the global workforce.

It is neither racist nor nationalist to acknowledge the reality that the American worker, depending on career choice, now enters a global workforce and must face an expanded level of competition. This affects both job opportunities and salary, and its impact is felt from the 'green' graduate to the seasoned worker. I think it is a little too much acceptance of propoganda and spin to always lay blame at the feet of the American student, as there are other extremely powerful market forces at work on a global scale.

A US graduate with an engineering degree is going to go toe to toe now with lower cost resources across the globe. When globalization first began, the pitch was focused on production and operations focused jobs. More technical workers felt insulated because they were the 'boots on the ground' and they had 'the knowledge' that at that point could not be transferred to overseas. Well over the past ten years a lot of focus has been placed on transferring that knowledge (whether it be services (like supply chain or financials), industrial (say consumer products) or IT (SAP configuration/coding etc), commoditizing consulting services and solutions and increasing efficiencies of regional delivery centers that can service clients across the globe. This transfer of knowledge went hand in hand with a redirection of education and training resources from say US workforce to those positioned in global delivery centers. It becomes a self-fulfilling prophecy just on the level of investment that you are obsoleting a portion of your high cost workforce in order to bring the more lucrative new workforce up to speed. The ability to source lower cost researchers, consultants, engineers and IT specialists globally is now a much more efficient value proposition and reality.

I disagree that the American student is lazy. The American student needs to compete against lower cost engineering resources across the globe. If skills are equal, but costs are less then the value proposition is now higher for the lower cost option of course. That proposition only gets better if you generally feel that a foreign educated engineer is stronger than an American educated one. This applies to both the company billing that resource (say in a consulting scenario) as well as the client organization if they are embedded. There is downward to static pressure on these type jobs in the US because globally the number of available and trained resources that are available continues to grow. We either have or will reach the tipping point where American students are either over-schooled (for continuing their education in lieu of finding jobs) and or not seeing a return on their high dollar investment in that engineering degree.

There are whole businesses now around low cost country sourcing of labor and migrating those labor needs to new regions as the paradigm shifts. Indeed no corporation will be overly married to its labor sourcing region and there are whole algorthms designed to help companies now shift their labor to lower cost regions as the numbers adjust. Take an India, China or BRIC region, low cost labor centers. As competition for resources goes up, they become less 'low cost' in comparison to untapped regions that can be brought up to speed and sourcing will shift again. This is not unique to America, our workers and economy is built up enough that we are 'expensive' in comparison to many regions and so we are losing out across a long spectrum of jobs these days. Also, I think we tend to have less protections in place compared to EMEA or the UK for our workforce. What might be interesting is to see how such dynamic economies like India and China position protections to solidify their role in the global economy against even lower cost delivery centers (regions) in the future. My guess is that they will put their own protections in place that America could never legislate.

Unfortunately, just from what I see happening over the past 10 years, I do feel that each unit of American population, looked at very simply as a unit of production and consumption is probably being obsoleted from a global perspective. We are in a decline, though that's not to say that things can't change. Who knows what the future holds?

My concern is less globalization. In truth for the close to 7 billion people in the world, that is the best way to redistribute wealth.

My greater concern on the home front is how anti-competitive and incestuous American business has become. You look at info like how 50 years ago the CEO of Wal Mart made 10 times the cashier, he now makes over a hundred times more salary. Our recent crisis was caused by trust fund babies monkeying with pension funds and mortgages for their personal wealth. Corporate bonuses are no longer based on achievement. And we have elected officials as top 2 percent earners. Was it LA where the treasurer was drawing a 800k salary, and now a 800k pension?

We have had riots and wars for less.

In fairness, there may be riots about that treasurer, and there have been news stories about how ridiculous that the small town named had officials who were the highest paid in the country. Still following that story.

KingGorilla wrote:

My concern is less globalization. In truth for the close to 7 billion people in the world, that is the best way to redistribute wealth.

Same here. I actually support worker visas. I just think that these should be conducted like any trade agreement. If someone can come to America to find work it should be just as easy (as relative as that is) for me to go to another country and find work. I would love the world to be more fluid, transparent and available. My wife and I spent some time in Costa Rica this spring. Given the state of the US economy I would gladly unplug, uproot and go work for less wages in Costa Rica just for the fun of it. To give it a go and see what happens. I'd love to spend a year in India. Who knows. I'm not against globalization. I'm against globalization purely as a lever to bust unions and to push wages down so the rich get richer.

But what do I know? I'm just a dupe with a liberal arts education.

KingGorilla wrote:

My concern is less globalization. In truth for the close to 7 billion people in the world, that is the best way to redistribute wealth.

My greater concern on the home front is how anti-competitive and incestuous American business has become. You look at info like how 50 years ago the CEO of Wal Mart made 10 times the cashier, he now makes over a hundred times more salary. Our recent crisis was caused by trust fund babies monkeying with pension funds and mortgages for their personal wealth. Corporate bonuses are no longer based on achievement. And we have elected officials as top 2 percent earners. Was it LA where the treasurer was drawing a 800k salary, and now a 800k pension?

We have had riots and wars for less.

What gives you the right to redistribute wealth? Bonuses are based on achievement. Have you ever worked in a field that is bonus heavy? Usually a worker will take a lower upfront salary in return for a higher bonus. Steve Jobs earns $1 salary each year but he makes billions in bonuses. There is a market for wages and someones skills and experience allows them to earn more from that market. The average CEO has their job for about a year. Now, I think there needs to be a push for a more independent board of directors. There is a big problem when the person running the company puts into place people who are supposed to be there to manage the company and look after the interests of shareholders (but, officers of the company are supposed to do that as well).

DSGamer wrote:
KingGorilla wrote:

My concern is less globalization. In truth for the close to 7 billion people in the world, that is the best way to redistribute wealth.

Same here. I actually support worker visas. I just think that these should be conducted like any trade agreement. If someone can come to America to find work it should be just as easy (as relative as that is) for me to go to another country and find work. I would love the world to be more fluid, transparent and available. My wife and I spent some time in Costa Rica this spring. Given the state of the US economy I would gladly unplug, uproot and go work for less wages in Costa Rica just for the fun of it. To give it a go and see what happens. I'd love to spend a year in India. Who knows. I'm not against globalization. I'm against globalization purely as a lever to bust unions and to push wages down so the rich get richer.

But what do I know? I'm just a dupe with a liberal arts education.

Why don't you do that? You have said that twice. Move to India, Costa Rica or any other country. It's not that hard to do. If you have engineering experience and a college education finding gainful employment in those countries is very possible. Hell, go teach English overseas and travel. It is much easier for an American to go abroad and find work that for a foreigner to come here and find work. I could move to Taiwan next week and find a job earning more than a local Taiwanese doing the same exact job. International firms (meaning firms that operate in other countries outside of the United States) earn a lot of face by having foreign workers there. DS if you really want to do that, go ahead and do it. When you decide to return you'll be more in demand because of that experience.

And stop being melodramatic with my point about liberal arts educations. When you are speaking about a 10 trillion dollar economy we must speak in abstracts. If you earn a liberal arts degree it is a simple fact that your ability demand higher wages and jobs (especially right out of school) is lower than someone with a mathematics, engineering or science background. I'm not saying someone who wants to study literature isn't any less of a person. Some people put different values on different things. But, I am tired of people who didn't think that because they choose to do X or learn Y that somehow they have the ability to regulate the success of someone who is more marketable.

I disagree that the American student is lazy. The American student needs to compete against lower cost engineering resources across the globe. If skills are equal, but costs are less then the value proposition is now higher for the lower cost option of course. That proposition only gets better if you generally feel that a foreign educated engineer is stronger than an American educated one. This applies to both the company billing that resource (say in a consulting scenario) as well as the client organization if they are embedded. There is downward to static pressure on these type jobs in the US because globally the number of available and trained resources that are available continues to grow. We either have or will reach the tipping point where American students are either over-schooled (for continuing their education in lieu of finding jobs) and or not seeing a return on their high dollar investment in that engineering degree.

The increased competitiveness and ease of a modular workforce has effected the ability for a domestic engineer. But, there is still a lot of demand for those jobs in the states. Now, will you be doing the same type of work for the same firm in the same city your whole life? Realistically that won't happen anymore. Does anyone here know the unemployment rate for someone with a technical degree ? (Engineering, science, mathematics, and accounting)

When you say you're a consultant do you mean for one of the big 4? Hell, when you work in that field and have the government handing you more business it's a lot easier to find work.

Ulairi wrote:

The average CEO has their job for about a year.

I'm going to have to ask for a source for that factoid. That sounds way too low.

Ulairi wrote:

When you say you're a consultant do you mean for one of the big 4?

Yes I think we are referred to as one of the Big Four from a consultng services perspective (not auditing/accounting).

I'm just one small cog in the machine. You can hold your breath till your blue, I wont say which one.

Irongut wrote:
Ulairi wrote:

When you say you're a consultant do you mean for one of the big 4?

Yes I think we are referred to as one of the Big Four from a consultng services perspective (not auditing/accounting).

I'm just one small cog in the machine. You can hold your breath till your blue, I wont say which one. ;)

No need to know. Auditors are evil.:)

Ulairi wrote:

Bonuses are based on achievement.

Oh man, I needed a good laugh today.

This is highly dependent upon the company/industry. I can assure you that in my company, bonuses are not based upon achievement. They are based upon annual income and your boss (and their boss's) opinion of you, also based upon what budgetary restrictions were given for the department to hand out bonuses that year.

Farscry wrote:
Ulairi wrote:

Bonuses are based on achievement.

Oh man, I needed a good laugh today.

This is highly dependent upon the company/industry. I can assure you that in my company, bonuses are not based upon achievement. They are based upon annual income and your boss (and their boss's) opinion of you, also based upon what budgetary restrictions were given for the department to hand out bonuses that year.

Yeah. I've never gotten an achievement bonus. I've gotten a bonus based on a percentage of my income as pre-determined. My 70 hour weeks during programming death marches have never been rewarded.

Bring the entire global economy to its knees, though, and bonuses for everyone.

DSGamer wrote:
Farscry wrote:
Ulairi wrote:

Bonuses are based on achievement.

Oh man, I needed a good laugh today.

This is highly dependent upon the company/industry. I can assure you that in my company, bonuses are not based upon achievement. They are based upon annual income and your boss (and their boss's) opinion of you, also based upon what budgetary restrictions were given for the department to hand out bonuses that year.

Yeah. I've never gotten an achievement bonus. I've gotten a bonus based on a percentage of my income as pre-determined. My 70 hour weeks during programming death marches have never been rewarded.

Bring the entire global economy to its knees, though, and bonuses for everyone.

I've never received a bonus based on *my* achievement, but I've received one based on the company's performance as a whole. Which I find quite ludicrous given that it's termed the 'Employee Incentive Plan', and I'm one of 70,000 or so employees. I'd happily stop working entirely if it meant that my bonus was 1/70,000th smaller.

Ulari. "What gives me the right to redistribute wealth." That is a great philosophical conundrum. Clouding the answer are myriad problems of education, history, personal feelings.

And that answer to that is I know what happens when people, families are allowed to amass wealth, land, and thus power ascending often above the check of any one government. From what we can tell it is what happened to the Templars, to the Medicis, Rome. In the shorter term it was the power that the steel and rail barons held. What right does any person or group have to hoard, keep, and amass vast wealth and power to subjugate and wage war with others?

I think that recently in the US we are at a peak in a familiar cycle, that our country seems to bounce back from. One of the things that gave the poor and immigrants in the US so much power in the 19th century was the frontier. Your livelihood was determined by how much land you could claim and till. Irish, Chinese, Welsh, Scottish, Polish, etc farmers and ranchers thrived. In the latter part of that same century the quick rich of precious metals and later oil brought eastern aristocracy westward, carving a path of soot and blood through many of these farmers. The Pinkertons were worse than Blackwater in those days, often shooting cattle or ranchers for sport, bribing local and federal officials to get away free. This culminated, inevitably into wars being waged on coal and rail land, with Henry Ford turning Machine Guns onto striking workers. That spelled a time of reform of labor laws, health laws, racketeering.

You redistribute wealth as a safety valve, to preserve your nation. To ignore that lead to riots, massacres the likes of which we have never seen in the US, but were all too real in Russia, France and in modern day Africa.

How am I going to bounce back? I took Ulairi's advice and started looking for opportunities in Panama and Costa Rica. Not sure how easy it will be, but the US isn't the place right now.

i.e. I think the U.S. is f-ed if the class warfare continues and I've all but given up and decided that there is more freedom and opportunity in a second-world nation.

DSGamer wrote:
Polliwog wrote:
Funkenpants wrote:

...a breakdown in the modern American social contract in light of globalization...

Sounds like an essay question from college. I'm looking forward to reading this!

Hopefully that isn't your way of being dismissive of it.

Not at all, I had flashbacks to college history exams. I apologize for any perceived snark, it was not intended.

The thought I had was just articulated by KingGorilla:

KingGorilla wrote:

...Clouding the answer are myriad problems of education, history, personal feelings...

I find it interesting how much of the debate involves individual life experiences - schooling, profession, views of globalization, the amount of taxes paid - and the effect it has on the validity of the point someone makes. I haven't fully wrapped my mind around the discussion here, but I did have a few questions.

If the suggestions by the author of this piece are accurate, the "American Worker" falls prey to the forces of globalization and the jobs are spread over the world. Eventually, would we see a new type of world that focuses more on the flow wealth and class and less on national boundaries and companies tied to particular nations? This trend wouldn't happen overnight of course, it would probably take decades or generations. If the poor workers are of the world are given jobs previously held by Americans, would this steadily raise their standard of living until they demand wages and benefits to improve their quality of life (like labor reform was passed after the Industrial Revolution)? Would we see a growing middle class (for lack of a better term) in areas that are currently mired in poverty and used as cheap labor, which eventually equalizes them with the American workers who were left behind?

Edit: Yes, I want to be Hari Seldon when I grow up.

Bonuses are often based on "achievement", but at the levels of senior management, the metrics for evaluating "achievement" are mostly of their own doing. So rather than incenting for actual growth or health to the economy, they incent for all manner of destructive behaviors as evidenced by the creation and explosive proliferation of junk mortgage backed securities.

Not to mention the ability to rewrite option plans so that executives always end up making money, whether the long-term shareholders win or lose. I don't know how often this is done, but that sort of thing always gets my blood up.

I’d argue the democratic socialism model that this writer believes in is bunk. The whole belief is based on the fallacious idea that if I make $20,000,000 a year that I haven’t created far more wealth then I take home. It is very rare for someone who is wealthy not to have created other wealthy people along with him, not to mention just wealth in general.
There is a real anger among people who are in the middle/upper middle class who have graduate degrees (or certifications like a CFA/CPA) and earn good money but they aren't rich. They are hit the most by taxes, get less in return from government programs and basicly are burning at both ends. They did everything they were supposed to do they went to school worked hard, most have graduate degrees and they are not going to get any of the beneifts of being poorer or richer.

I put it to you that you're both defending and attacking the very wealthy here. On the one hand, you're saying that rich people pull others up with them; on the other hand, you believe strongly that hard work and talent are not enough to take part in that. The obvious question is this - if the hard-working, intelligent, accredited Type A's are not getting positions with the wealthy which can make them rich, exactly who is?

And the rich are taxed less today than at any time since the late 50's. I've said it before and I'll say it again. The more you make in this country, the more you owe to keep it going and give others the same opportunity.

Steve Jobs earns $1 salary each year but he makes billions in bonuses.

Bzzt! Wrong answer. His income comes primarily from his Disney stock holdings, on which he receives around $48M a year currently. And he only pays 15% on that as investment income, whereas his secretary most likely pays 35% on the income she needs to live on. Are you suggesting that most people on bonus plans have a one to 48 million of salary to bonus? Or even one to 100,000? That's not the case. You'll find it's more like 1 to 2 or 1 to 3 for most bonused salespeople. And that of course is a successful year. AND they pay full taxes on it, unlike Jobs.

And do you really think taxing dividends as income would materially hurt Jobs? He's not creating new jobs at Apple to any degree that will affect the economy. He's accumulating wealth, and we are in effect subsidizing that by allowing him to pay less taxes on his income than we do on ours.

Robert Reich pitches in.

A final reason for allowing the Bush tax cut to expire for people at the top is the most basic of all. Although Wall Street’s excesses were the proximate cause of the Great Recession, its fundamental cause lay in the nation’s widening inequality. For many years, most of the gains of economic growth in America have been going to the top – leaving the nation’s vast middle class with a shrinking portion of total income. (In the 1970s, the top 1 percent received 8 to 9 percent of total income, but thereafter income concentrated so rapidly that by 2007 the top received 23.5 percent of the total.) The only way most Americans could continue to buy most of what they produced was by borrowing. But now that the debt bubble has burst – as it inevitably would – the underlying problem has reemerged.

Why make it worse? George W. Bush’s 2001 tax cut was a huge windfall for the wealthy. About 40 percent of its benefits went to the tiny sliver of Americans earning over $500,000. So rather than debate whether to end the Bush tax cuts for the top and restore the top marginal tax rates to where they were under Bill Clinton, we should be debating whether to raise the highest marginal tax rate higher than it was under Bill Clinton and use the proceeds to give the middle class else a permanent tax cut.

The American people are not obsolete. However, they have handed over their responsibilities to others who are untrustworthy, and then are surprised but quiescent when that responsibility and power are abused.

Robert Reich wrote:

A final reason for allowing the Bush tax cut to expire for people at the top is the most basic of all. Although Wall Street’s excesses were the proximate cause of the Great Recession, its fundamental cause lay in the nation’s widening inequality. For many years, most of the gains of economic growth in America have been going to the top – leaving the nation’s vast middle class with a shrinking portion of total income.

There's two problems with that comment - one, that Wall Street's excesses were the proximate cause of the Great Recession, and two, that most of the gains of economic growth have been going to top. We've discussed the first elsewhere, so we can leave that horse in its grave. The second statement, however, implies that this has somehow been some kind of natural progression. That simply couldn't be farther from the truth. What we have is a massive case of forced redistribution ... from poor to rich, from the middle class to politically favored companies and people. The people behind Top Secret America; large corporations like GE; subsidies for oil companies that are taking in record profits; subsidies for large agri-corporations that are taking in massive profits; protectionist laws for corn, rice, and hundreds of other commodities that make their producers rich; paying people to not farm land; running two separate wars, with the huge cost of lives and costs for materials that go directly to the connected defense contractors; financial laws that socialize losses while privatizing gains; healthcare "reform" that is a giveaway to large health insurers and healthcare providers; massive subsidies to education that produce no results; huge paychecks and benefits to government workers at every level; the list goes on and on.

The American people are not powerless to deal with this problem. We still have the ability to change how things work - see Bell, California. However, that requires putting people in charge of our government at every level that will remove the corporate favoritism while restoring our civil liberties. Unless and until people are willing to vote and work for actual change, we will continue to get what we vote for. Garbage in, garbage out.

For many years, most of the gains of economic growth in America have been going to the top – leaving the nation’s vast middle class with a shrinking portion of total income.

I don't see that that implies a "natural progression". In context, in a discussion of the lopsided power of the rich, you and Reich agree that through the machinations of Republican tax cuts and other actions (killing Glass Steagal, for one) the rich have gained far more than the middle class or the poor.

Robear wrote:
For many years, most of the gains of economic growth in America have been going to the top – leaving the nation’s vast middle class with a shrinking portion of total income.

I don't see that that implies a "natural progression". In context, in a discussion of the lopsided power of the rich, you and Reich agree that through the machinations of Republican tax cuts and other actions (killing Glass Steagal, for one) the rich have gained far more than the middle class or the poor.

Perhaps not, but he does not mention the role of government in the wealth transfer, and his recommendation is to add more government wealth transfer, so ... draw your own conclusions?

The tax cuts didn't cause the rich to gain, they let them keep more of what they earned - along with a lot of other people. There's a huge difference there. It was not the tax cuts that caused the wealth transfers, it was the profligate spending by Republicans and Democrats alike over the last decades that constituted the wealth transfer. Basically, everyone gets taxed, but the politically connected get the majority of government outlays, which results in a net transfer from bottom to top - not to mention stifling growth, increasing unemployment, and otherwise causing money to be spent on malinvestments.

Now Canada is the popular one!

I've got good news and bad news. The good news is more people around the world will be able to enjoy the Western middle class lifestyle. Transnational corporations can now market goods and services around the world. The growing middle class in China and India encompass more people than the entire population of the US.

The bad news is that America's poor will one day become just as desperate and disenfranchised as the poor in third world countries. A lot of my conservative friends talk about how America's welfare program will continue to expand until more people are milking the system instead of working. Actually, I see the opposite occuring. The federal government can't keep running tillion dollar deficits forever. Eventually there will be draconian cuts and those cuts will almost certainly come from welfare and social programs. The ruling elite really won't care because like in China and India their gated communities will be far removed from the urban slums.