A socioeconomic theory:

(Big shout-out to "Ishkur" at FARK.com for this - Spot-on, IMO)

I have a theory. A socio-economic theory. This theory explains all the crime, all the corruption, all the social and moral decay, all the ills and pitfalls in a system that plague us daily, from crooked cops to white collar criminals to homeless drug addicts on the street. I call it Ishkur's General Theory of Inequitable Distribution of Affluence.

It's a basic premise. In every system, there are rich people, and there are poor people. And there is a gap between these two. The wider this gap, the more problems you have. Everything evil, immoral, degrading, corrupt and criminal stems from the size of this gap. The smaller this gap, the better everything is.

Now, that doesn't mean the goal is to eliminate the gap completely. You can never get rid of the gap, and for economic prosperity's sake you don't want to get rid of it. That's socialism/communism, and it leads to stagnation, misery and despair. We've all been there. Likewise, you don't want the gap to get too large. That leads to feudalism, human property, and more misery and despair (except for a chosen few). We've all been there too.

The trick is to find a happy medium by which the rich can stay rich enough to foster investment, growth and employment, but not too rich that they suck up all the money and the poor are literally dying of starvation in the streets (see France, 1789).

Now, the poor: They may be poor, but they need to have money. In fact, poor people should be as well off as possible without driving up the prices of things. When Henry Ford built his first factories, he did something crazy: He paid his workers $8/day, which was an incredible amount of money in those days. His friends in the business sector were aghast, and threatened him to reduce the wages. They feared that he would drive up the median income of workers in all factories across the board, and that just didn't sit well with them. At the next business summit Ford calmly told them, "Gentlemen, if I do not pay my workers $8 a day, there will be no one with any money to buy my cars."

Henry Ford understood that poor people need money to buy the consumer crap the rich people hire them to make. So you want affluence on both sides of the divide, and only the way to do that is to have a really fat middle-class.

In economics, it doesn't matter who has the money or where it's going, so long as it keeps moving. The purpose of money is to change hands; it's supposed to be spent. When money is not spent, it stays in the same place and doesn't do anything useful or help anyone, and that's bad.

This is why supply-side economics (aka Reagonomics) was such an abject failure: The belief that if you give money to rich people, they will use it to build factories and hire labor and make everyone around them wealthy via a model insultingly referred to as "trickle-down". That didn't happen, for a number of reasons. For one thing, money does not create jobs -- demand for work creates jobs. If there is no work to be done, no employer will feel compelled to hire more labor no matter how much money he has (and besides, if the work is out there, no employer has ever not found the money to hire. Even if they are flat broke. They will take out loans, raise venture capital, apply for grants and subsidies, sell shares, or do whatever it takes to find the money to hire, but just giving it to them will not make the jobs magically appear). And secondly, none of it trickled down. Instead, the rich only spent it on each other, re-investing in their own companies, capitalizing in others, and driving the stock market through the stratosphere (contrary to popular belief, a roaring stock exchange is not entirely an indicator of overall economic health; it's only an indication of the wealth of its participants, who number comparatively few to the vast majority of Americans who have little to no net worth or savings to speak of). This widened the gap, which, according to Ishkur's General Theory of Inequitable Distribution of Affluence -- IGTIDA for short -- is bad.

When there's a lot of money at the top, that means there is less money at the bottom -- really the best place where money can do some good and make a difference. There is no change in a person's standard of living between 1 billion and 2 billion dollars. But the difference between $10,000 and $20,000 can completely change someone's station in life.

(and before you interject, yes, I know that wealth creation is not a zero-sum game, but it also doesn't exist in a vacuum either. If someone makes a lot of money really quickly, that means people elsewhere lost some money, especially after inflation sets in)

The truth is the poor in America don't have any money at all, and haven't had any for several decades or so. The rich solved this problem by lending out credit to the poor so they can continue consuming at their current rate, essentially replacing money with plastic, racking up record amounts of debt. This has been happening since the 80s, and it's going to collapse sooner or later (especially after the Boomers retire, en masse, within the next 10-15 years).

If you want to solve society's ills, stop crime, fix the economy and end corruption, one thing needs to be done: The rich must get poorer, and the poor must get richer. The gap must get smaller. I know that is never going to happen in America, though. Not without some torches and pitchforks.

Gap. Disparity. An inequitable distribution of affluence. The money is in one location for too long, and it is not moving. All problems stem from it."

Just to illustrate the point...

Remember the other day when I said "we don't have a spending problem, we have a REVENUE problem"?
Well this illustration will show you what I'm talking about when I say you and I are being made to pay for GE and ilk:

As David Callahan writes:

But I doubt that there is a single top tax attorney or chief financial officer in the country who was all that surprised. You see, these people are denizens of Loophole Land – a very different place than W-2ville where most Americans live.

In Loophole Land, nothing is quite as it seems. Yes, there is a top corporate tax rate of 35 percent, but it is well understood that nobody actually pays that. On the contrary, many companies pay nothing at all.

How can this be?

For starters, Loophole Land has no national borders and so it is easy to shift money around in ways that avoid taxes. General Electric works all over the world, and under tax law, it isn’t taxed on its foreign profits as long as it says that it is reinvesting those profits abroad. Many companies become expert at shifting profits abroad to foreign subsidiaries in low-tax or no-tax nations. In 2008, Goldman Sachs, had 29 subsidiaries located in offshore tax havens and reported profits of over $2 billion. It paid federal taxes of just $14 million on those profits.

Loophole Land is also a place where past business losses are never, ever forgotten. So, for instance, if you run a giant conglomerate with a profit-hungry credit division that makes a lot of stupid loans to people who can’t pay them back, fear not: you’ll be able to write off those losses – in effect getting ordinary taxpayers to subsidize your gambling debts. General Electric is widely seen as a manufacturing company. But up to half of its profits during the Bush years came from its large consumer lending business, GE Capital, and that business suffered huge losses during the crash – reportedly $32 billion. Now we are all helping GE foot the bill for that unlucky streak.

So, if you're feeling like you're barely able to keep your head above water financially, and you don't have as much money as you used to, you're right! Tax policy over the past 30 years has been designed to shift the tax burden off corporations and the wealthy, dumping it onto - you guessed it -

US.

Now consider that GE got $4B of OUR money in subsidies.

With all this, if you DON'T think our tax structure needs radical reform - YESTERDAY - then I can recommend a good Psychologist for your delusional disorder.

This from ...FOX?!?!

See it here:

"There’s a reason why it’s illegal to unjustifiably yell “Fire!” in a crowded theater. Motivated by fear, crowds can do very dangerous things.

And yet here we are allowing Congress to dangerously cut federal spending on which we all rely because, when Wall Street lobbyists yelled, “Fire!” about the state of our nation’s budget, we believed them. And now we are letting Congress literally trample on our future.

There is no Social Security crisis. And the extent of the federal budget crisis as a whole is being wildly overblown to scare us toward drastic measures rather than rational solutions.

We are being manipulated to give government handouts to the very same big banks and corporate scam artists that crashed our economy in the first place. We are told that what is good for big business is good for America. But these so-called “job creators” are only creating jobs for yacht manufacturers and maids. Check the math. The profits of our nation’s (and the world’s) largest corporations are rising, as are the salaries and bonuses paid to executives. Are they creating jobs? No.

Well, that’s not exactly true. I think Wal-Mart is hiring if you’re willing to work for $7.78 and hour.

Yet big corporations and their lobbyists have literally been manipulating our government --- both Republicans and Democrats --- to grease the wheels for big business while putting up more and more obstacles for working families, small business owners, homeowners, etc. Yes, working families’ taxes are too high and yes, small business owners struggle under too much bureaucracy. But not big business and the super rich. No, our government is literally designed for their advantage.

And so, at their behest, politicians of both parties --- as well as the media owned by the very same big businesses --- tell us that the government is broke and our debt level is unsustainable and, therefore, we’re going to have to cut things like unemployment benefits and funding for public school teachers. Wall Street doesn’t care. They can afford private schools. But what are you going to do when your child literally doesn’t have a classroom?

There’s a reason the Founding Fathers designed things so that the federal government can borrow money and carry debt --- because, at times like these, that’s precisely what’s needed. When the economy recovers, the debt is resolved. For instance, economist Dean Baker writes:

"In spite of the deficit hawks' whining, history and financial markets tell us that the deficit and debt levels that we are currently seeing are not a serious problem. The current projections show that even ten years out on our current course the ratio of debt to GDP will be just over 90 percent. The ratio of debt to GDP was over 110 percent after World War II. Instead of impoverishing the children of that era, the three decades following World War II saw the most rapid increase in living standards in the country's history."

Instead, big business interests lobbied for the extension of monstrous tax giveaways to the super rich, which literally starved the government. And then they turn around and say government is broke and can’t afford to help poor and working families who are really struggling. It’s like Wall Street took a bat to our collective head and then turned around and said, “Oh, you look hurt!”

Similarly, Social Security isn’t in crisis. If you ignore the “sky is falling” fear-mongering long enough, you’ll quickly learn that Social Security is fully paid for through the next 30 years and considered sustainably solvent beyond that based on current revenue levels. If revenues go up (meaning, if the economy improves), Social Security will be in an even better position.

Yet there are some who want to manufacture a crisis to ram through an ideological agenda. Wall Street has wanted to privatize Social Security for years --- not because they give a damn about improving our quality of life in retirement but because they want to get rich off the fees they could charge. For decades, big business has wanted to gauge workers of wages and benefits and undermine the right to collectively bargain. From Wisconsin to Ohio and elsewhere, they’re using the “fiscal crisis” as a fig leaf excuse to do so.

It’s a simple formula: Make a big fuss that the system is broken and that “reform” is needed to fix it. But in case after case, monied interests are using that formula to actually break things that were never broken --- to help themselves and hurt you.

Wall Street could tell the truth --- that they royally and recklessly screwed up and are too busy continuing to hoard profits rather than stimulate growth, and the only way to recharge our economy is with robust, public spending that creates demand. Ah, but that would only help people like you and me, who could get small business loans or jobs repairing roads, who could send our kids to good public schools and maybe even pay less to private health insurance companies. In other words, government actually doing what it takes to spend money and fix the economy would cut into the power and profits of big business.

If at this point you are arguing with me in your head, please note that you are literally siding with Wall Street fraud artists and against the interest of not only yourself and your neighbors but your children and your grandchildren for generations to come.

Those who are trying to convince us that our government is broke and cannot afford to borrow more are, consciously or unwittingly, reinforcing the vastly unequal society that we have become, where the size of the silver spoon in your mouth when you’re born matters infinitely more than how hard you work.

Yes, our level of national debt is in the long-term untenable. And yes, the fact that large swaths of that debt is owned by China and Saudi Arabia is deeply problematic. The solution, however, is to use government spending on innovation and new industries not only to kick start a private sector that has been reluctant to create jobs but also retool the American economy so we actually make things again and have a broad middle class with good wages and benefits who can afford to buy the stuff we make, creating the kind of demand we need for long-term sustainability. But Wall Street and big business lobbyists don’t want you to own your own business, make a good salary and have a nice house with a reasonable mortgage. How would they make money on that?

After enough times running scared, maybe soon we'll figure out big business is really just crying wolf.

"

The USA does not have a spending problem -

it has a great big screaming REVENUE problem.
Why do I say this? I say this because my wife and I, (with our low 6-figure income)paid MORE in taxes in 2010 than GE with it's $5.1B in profits (US-based); not only did they pay SWABO in taxes, they got $4B in tax subsidies. Guess who pays for that?
As Chuck Collins puts it:

"Our communities are enduring mammoth state and federal budget cuts because we have, in large part, failed to sufficiently tax America's millionaires and billionaires or prevent aggressive tax avoidance by multinational companies. The rest of us are paying to pick up the slack. (emphasis added)
Congress has blown holes in our tax code, losing hundreds of billions in revenue. Worse, lawmakers have averted their eyes as corporate lobbyists drill new tax loopholes and extract new corporate welfare subsidies."

This is a society that has its priorities seriously bent, as proven by proposals before Congress to cut services for children and the mentally ill while leaving these tax loopholes in place.

Collins proposes $400B/year in new revenues that would impact just under 2% of the nation:

:"There are four revenue raisers that Congress could institute tomorrow that would generate $400 billion a year--or $4 trillion over the next decade. Such programs would restore greater fairness to our tax system and reduce the extreme levels of inequality polarizing our society.

Congress could levy a modest financial transaction tax on the transfers of stock, currency, and speculative investments that do little to strengthen the real economy. This would generate $150 billion a year while exempting smaller investors.

Lawmakers could reduce corporate tax dodging by closing overseas tax havens and requiring companies to pay U.S. taxes on the profits they actually earn in this country. This could generate as much as $100 billion a year.

Congress could establish new top tax rates on households with annual incomes over $1 million, which could generate another $100 billion a year. Under our current tax system, a person earning $374,000 a year pays the same top tax rate as someone earning $10 million a year.

Lawmakers could institute a progressive estate tax on fortunes over $5 million, with higher rates on billionaire estates. That would generate $45 billion a year."

Harry Truman - a man of foresight...

He said this in 1948:
"Republicans approve of the American farmer, but they are willing to help him go broke.
They stand four-square for the American home--but not for housing.
They are strong for labor--but they are stronger for restricting labor's rights.
They favor minimum wage--the 'minimumer' the better.
They endorse educational opportunity for all--but they won't spend money for teachers or for schools.
They think modern medical care and hospitals are fine--for people who can afford them.
They consider electrical power a great blessing--but only when the private power companies get their rake-off.
They think American standard of living is a fine thing--so long as it doesn't spread to all the people.
And they admire of Government of the United States so much that they would like to buy it."
Amazing how it's still 100% truth.