Tuesday, November 09, 2010

Atlas Mugged Us First, Then He Shrugged

Just ran across two eye-popping numbers that speak volumes about our country's direction. $22.6 million and $1.1 trillion.

The first comes from the national Institute on Money in State Politics, which issued a report this week showing that the 20 richest Americans and their companies donated $22.6 million from 2005 through 2008 to influence state-level elections. That number doesn't even begin to account for what they spent on federal elections.

The second has to do with the redistribution of wealth in America. Looking at IRS data and calculating the percentage of total income for each income class, you can see how dramatically the middle class's share of the nation's income has declined and how the percentage claimed by the wealthiest in our society has skyrocketed. In fact, from 2001 to 2007 more than $1.1 trillion in income was shifted from people who make less than $100,000 to people who make more than $100,000. The people at the very top really cleaned up, as almost a third (29%) of that $1.1 trillion income transfer over the six-year period went to those making $10 million or more.

The second number is no accident or coincidence. It happened by design. It is the result of a whole series of public policy decisions made in places like Washington and Madison. And those decisions have everything to do with numbers like the first.

Ayn Rand and her 53-year-old novel Atlas Shrugged and its money-is-everything, greed-is-good ethos are in fashion these days. The book's title refers of course to the titan in Greek mythology who held up the heavens on his shoulders and went on to serve as Rand's metaphor for captains of industry and men of means who she claimed are responsible for society's productivity.

When the Atlases of Rand's mind felt put-upon and overburdened, they shrugged and shut down the engine of the world, leading to the collapse of civilization. The moral of the story was, as Rand wrote, "Until and unless you discover that money is the root of all good, you ask for your own destruction."

Well, if modern-day Atlases are doing any shrugging, it's only because they are so unrepentant for their rape and plunder.

And what has the embrace of Rand's vision as national policy and the realization of her dream world done for us? Our economy has plunged off a cliff. Millions saw their jobs shipped overseas. Even more saw life savings vanish almost overnight. Home foreclosures are epidemic. Our natural environment has been badly damaged, threatening the health of both our planet and the people who inhabit it. Families are more stressed than ever. Our culture has grown more violent.

You know, not a single new state university campus has been created in Wisconsin since 1968. But since 1994, our state has built eight new prisons and purchased a ninth that was built by a private company on speculation, added hundreds of beds to existing correctional facilities and shipped inmates to five different states to deal with overcrowding. We got tired of investing in success, and started paying more and more for failure.

There is only one way out of the mess that's been made. And it involves doing something about those two eye-popping numbers.


Tom McCann said...

In Atlas Shrugged, we also see that some of the people with money are not the brilliant and productive ones. They are the children or the grandchildren of the individuals who originally built the businesses.

The character Jim Taggart is running the railroad (into the ground) primarily because his grandfather built it. Ron Johnson ran a plastics manufacturing company primarily because his father-in-law built a huge plastics empire. Wealth does not always equal brilliance nor does it always equal productivity.

Anonymous said...

Good Grief, the just-completed election was "rape and plunder" by cartoonish Gordon Gecko characters? Several deep breaths are in order. Not necessarily a Rand apologist, but I did read the novel and find the left's recent misrepresentations of it wearisome. I was hoping the hysterical rhetoric would die down after Nov. 2, and it just seems to be getting worse.

Anonymous said...

Perhaps should let the author of this post speak for himself, but I didn't see anything saying it was the Nov. 2 election that was the rape and plunder. I took that as a reference to the trillion dollars taken from the middle class and given to the rich in recent years.

Anonymous said...

Correct. No mention of 2010. The post makes a reference to the period from 2005 to 2008 in one instance and from 2001 to 2007 in another. It also mentions what's happened since 1994 with prison construction and what hasn't happened since 1968 - no new colleges opened.

And if you don't like all the talk about Atlas Shrugged, maybe it wouldn't have started up in the first place if not for the tea party candidates around the country, including one right here in Wisconsin, who made a point of saying it was their guiding light. Of course people are going to take notice of that and take a closer look at exactly what the author was telling us. And it's not a pretty picture.

Anonymous said...

I don't know how you are coming up with the $1.1 trillion Mike. I looked at the data and I don't see it. What the data show are that while there were about 11 million filers with incomes above $100,000 in 2001, there were nearly 18 million in that group in 2007. I'm not sure if that would be a "transfer" of income, but rather a lot of people earning more and moving up over the $100K mark.

Anonymous said...

It's not hard to see. But you can't just look at the number of filers in each category. You have to look at the percentage of total income attributable to each income class for each year. It looks like what Mike is saying is that if the percentages that we saw in 2001 had stayed constant through 2007 then people earning less than $100K would have had $1.1 trillion more of the total '07 income and those above $100K would have had $1.1T less.

Mike McCabe said...

I didn't want to make the post excessively wonky by miring everyone in mathematical methodology and make it unreadable, but am glad to comment on it in response to questions. First, look at the nation's total adjusted gross income. (In 2001 it was $6,170,603,942. In 2007, the total AGI was $8,687,718,769.) Then add up all the income earned by people making less than $100,000 in '01 and '07. If the distribution of income across income classes had stayed the same in 2007 as it was in 2001, people making under $100,000 would have earned just over $1.1 trillion more in '07 than they did.

There are many factors that affect distribution of income. One factor that needs to be considered is that more people reported making over $100,000 a year in 2007 than in 2001, and there was a drop in the number of tax filers reporting earning less than $100,000. Another significant factor was tax policy changes. It's difficult if not impossible to tease out just how much of the redistribution can be attributed to one factor or another, but tax changes were unquestionably a major factor.

Anonymous said...

Saw another very similar redistribution analysis in a New York Times column. See http://www.nytimes.com/2010/11/14/opinion/14rich.html.

One of the things it says: "The top 1 percent of American earners took in 23.5 percent of the nation’s pretax income in 2007 — up from less than 9 percent in 1976. During the boom years of 2002 to 2007, that top 1 percent’s pretax income increased an extraordinary 10 percent every year."

Anonymous said...

I still wonder how having more people earning more than $100,000 is an income transfer. Also, this is pre-tax income, so how can tax policy be a "major factor?"

Anonymous said...

"...this is pre-tax income, so how can tax policy be a 'major factor?'"

Simple. A lot of the income of the wealthiest tax filers is not earned. It's capital gains and other forms of unearned investment income. If tax policies are skewed to tax the most well-to-do less and less, then their accounts are going to get bigger and bigger and their pre-tax income in subsequent years is going to be larger and larger. Tax policy has everything to do with the pre-tax income of the very rich.

Anonymous said...

Another look at income disparities...see http://www.nytimes.com/2010/11/18/opinion/18kristof.html. The U.S. puts the banana republics to shame when it comes to concentrating wealth in the hands of the richest of the rich. The top 1% owns more of the nation's net worth than the bottom 90%.