a thread on systematic economic inequality

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  • July 7, 2019 at 11:27 pm #102762
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    The Pitchforks Are Coming… For Us Plutocrats

    NICK HANAUER July/August 2014

    https://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014

    Memo: From Nick Hanauer
    To: My Fellow Zillionaires

    You probably don’t know me, but like you I am one of those .01%ers, a proud and unapologetic capitalist. I have founded, co-founded and funded more than 30 companies across a range of industries—from itsy-bitsy ones like the night club I started in my 20s to giant ones like Amazon.com, for which I was the first nonfamily investor. Then I founded aQuantive, an Internet advertising company that was sold to Microsoft in 2007 for $6.4 billion. In cash. My friends and I own a bank. I tell you all this to demonstrate that in many ways I’m no different from you. Like you, I have a broad perspective on business and capitalism. And also like you, I have been rewarded obscenely for my success, with a life that the other 99.99 percent of Americans can’t even imagine. Multiple homes, my own plane, etc., etc. You know what I’m talking about. In 1992, I was selling pillows made by my family’s business, Pacific Coast Feather Co., to retail stores across the country, and the Internet was a clunky novelty to which one hooked up with a loud squawk at 300 baud. But I saw pretty quickly, even back then, that many of my customers, the big department store chains, were already doomed. I knew that as soon as the Internet became fast and trustworthy enough—and that time wasn’t far off—people were going to shop online like crazy. Goodbye, Caldor. And Filene’s. And Borders. And on and on.

    Realizing that, seeing over the horizon a little faster than the next guy, was the strategic part of my success. The lucky part was that I had two friends, both immensely talented, who also saw a lot of potential in the web. One was a guy you’ve probably never heard of named Jeff Tauber, and the other was a fellow named Jeff Bezos. I was so excited by the potential of the web that I told both Jeffs that I wanted to invest in whatever they launched, big time. It just happened that the second Jeff—Bezos—called me back first to take up my investment offer. So I helped underwrite his tiny start-up bookseller. The other Jeff started a web department store called Cybershop, but at a time when trust in Internet sales was still low, it was too early for his high-end online idea; people just weren’t yet ready to buy expensive goods without personally checking them out (unlike a basic commodity like books, which don’t vary in quality—Bezos’ great insight). Cybershop didn’t make it, just another dot-com bust. Amazon did somewhat better. Now I own a very large yacht.

    But let’s speak frankly to each other. I’m not the smartest guy you’ve ever met, or the hardest-working. I was a mediocre student. I’m not technical at all—I can’t write a word of code. What sets me apart, I think, is a tolerance for risk and an intuition about what will happen in the future. Seeing where things are headed is the essence of entrepreneurship. And what do I see in our future now?

    I see pitchforks.

    At the same time that people like you and me are thriving beyond the dreams of any plutocrats in history, the rest of the country—the 99.99 percent—is lagging far behind. The divide between the haves and have-nots is getting worse really, really fast. In 1980, the top 1 percent controlled about 8 percent of U.S. national income. The bottom 50 percent shared about 18 percent. Today the top 1 percent share about 20 percent; the bottom 50 percent, just 12 percent.

    But the problem isn’t that we have inequality. Some inequality is intrinsic to any high-functioning capitalist economy. The problem is that inequality is at historically high levels and getting worse every day. Our country is rapidly becoming less a capitalist society and more a feudal society. Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution.

    And so I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds: Wake up, people. It won’t last.

    If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.

    Many of us think we’re special because “this is America.” We think we’re immune to the same forces that started the Arab Spring—or the French and Russian revolutions, for that matter. I know you fellow .01%ers tend to dismiss this kind of argument; I’ve had many of you tell me to my face I’m completely bonkers. And yes, I know there are many of you who are convinced that because you saw a poor kid with an iPhone that one time, inequality is a fiction.

    Here’s what I say to you: You’re living in a dream world. What everyone wants to believe is that when things reach a tipping point and go from being merely crappy for the masses to dangerous and socially destabilizing, that we’re somehow going to know about that shift ahead of time. Any student of history knows that’s not the way it happens. Revolutions, like bankruptcies, come gradually, and then suddenly. One day, somebody sets himself on fire, then thousands of people are in the streets, and before you know it, the country is burning. And then there’s no time for us to get to the airport and jump on our Gulfstream Vs and fly to New Zealand. That’s the way it always happens. If inequality keeps rising as it has been, eventually it will happen. We will not be able to predict when, and it will be terrible—for everybody. But especially for us.

    The most ironic thing about rising inequality is how completely unnecessary and self-defeating it is. If we do something about it, if we adjust our policies in the way that, say, Franklin D. Roosevelt did during the Great Depression—so that we help the 99 percent and preempt the revolutionaries and crazies, the ones with the pitchforks—that will be the best thing possible for us rich folks, too. It’s not just that we’ll escape with our lives; it’s that we’ll most certainly get even richer.

    July 9, 2019 at 4:04 am #102788
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    Sorry ‘Washington Post’—Bernie Sanders Is Right About Economic Inequality
    The senator should not be taking heat for using “numbers that add up” to make a point about economic injustice.

    John Nichols

    https://www.thenation.com/article/washington-post-bernie-sanders-2020/

    Bernie Sanders has, for a very long time, been complaining about economic inequality in America. He has made it a theme of his speeches, his books, his congressional service and his presidential campaigning. During last week’s second Democratic presidential debate, no one was surprised when the senator from Vermont declared, “We have a new vision for America. And at a time when we have three people in this country owning more wealth than the bottom half of America, while 500,000 people are sleeping out on the streets today, we think it is time for change, real change.”

    This is where Sanders, a democratic socialist who has sometimes been accused of focusing too intensely on economic issues, is coming from. Voters can agree or disagree with the vision. But it is hard to disagree with the basic premise of the argument, which is based on facts and figures.

    Unless, apparently, you are a fact-checker for The Washington Post.

    Then, you can dismiss the argument that Sanders is making as “not especially meaningful.” That’s what the Post’s Glenn Kessler and his team did in an otherwise useful fact-checking of the second night of Democratic debating. Here’s how the complaint was presented:

    “Three people in this country own more wealth than the bottom half of America”—Sen. Bernie Sanders (I-Vt.) This snappy talking point is based on numbers that add up, but it’s also a question of comparing apples to oranges. Sanders is drawing on a 2017 report from the left-leaning Institute for Policy Studies, which said that three billionaires—Bill Gates, Jeff Bezos (who owns The Washington Post) and Warren Buffett—had total wealth of $248.5 billion, compared to $245 billion for the bottom 160 million of the United States. The wealth of the three men has gone up even more since then.

    But people in the bottom half have essentially no wealth, as debts cancel out whatever assets they might have. So the comparison is not especially meaningful.

    Kessler’s an experienced reporter who ably covered the State Department during the Bush-Cheney years and then wrote a fine book on the era, The Confidante: Condoleezza Rice and the Creation of the Bush Legacy. I’m not inclined to gripe about him or his colleagues as much as I am concerned the general failure of major media outlets to “get” the discussion of burgeoning economic inequality in America. Presidential candidates such as Sanders and Massachusetts Senator Elizabeth Warren know exactly what they are talking about when they raise this issue. They were on top of the story long before most of the media. Yet, they are often treated as if they are promoting dubious theories—even when they slather their statements in data.

    Case in point: the complaint about Sanders. The senator, we are informed, delivered a “snappy talking point,” which, despite the condescending tone of the assessment, is what candidates are expected to do in debates. The point was based on what are acknowledged to be “numbers that add up.” If anything, Sanders was circumspect in his assertion. As a savvy Post analyst, Christopher Ingraham. recently noted—in an article headlined, “Income inequality is rising so fast our data can’t keep up”—“Increases in wages at the top are outpacing economists’ ability to measure them.” With that said, however, Ingraham explained in February that “the available data paints a clear picture of broadening disparities between top earners and everyone else.”

    Around the same time, Ingraham ably examined research by University of California at Berkeley economist Gabriel Zucman, which determined that “U.S. wealth concentration seems to have returned to levels last seen during the Roaring Twenties.”

    The concentration of wealth worries Sanders, as it does a lot of Americans—many of them Democrats, but also more than a few Republicans; many of them democratic socialists, but even some of the same rich people referenced by the senator. (As a column published last year by the Post explained, “The pope has deplored it. It’s shifted Chinese economic goals and helped fuel populist political movements around the world. Even some of the world’s billionaires fear what might happen if it continues to rise.”)

    So what made this particular presidential contender’s debate statement so meaningless? We are informed that the problem with what Sanders said is that a staggeringly high percentage of Americans have “essentially no wealth.” While three very rich people have stockpiled hundreds of billions of apples and oranges (or, if we are going to be precise, the resources to buy all the fruit and housing and education and health care and luxury goods they could ever want), roughly 150,000,000 Americans are having a hard time accumulating apples, oranges, and the money to send their kids to college and pay their insurance premiums and deductibles.

    That, of course, is the point that Sanders has been making. Far from being meaningless, it goes to the very heart of a discussion that the Post’s news and opinion columns suggest must be addressed. It is by comparing the numbers, which add up, which are so scant for the many and so great for the few, that Sanders, Warren, New York Mayor Bill de Blasio, Ohio Senator Sherrod Brown, Wisconsin Congressman Mark Pocan, Michigan Congresswoman Rashida Tlaib, and a growing number of political leaders have led millions of Americans to understand that “inequality” is another word for “injustice.” And this injustice is meaningful for all of society.

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