We're in for a wild ride. Exponentially accelerating technological, cultural, and socioeconomic evolution means that every year will see more developments than the previous one. More change will happen between now and 2050 than during all of humanity's past. Let's explore the 21st century and ride this historic wave of planetary transition with a confident open mind.

Saturday, June 20, 2009

American oligarchy and taxation

Increasing percent of budget funded by richest 1% shows dramatic growth in the power of the oligarchs. Key data by conservative "think tanks" hides a call for increased government involvement in plain sight. 

Over the past 3 decades we have seen systematic creation and funding of dozens of prominent "foundations", "institutes", "universities", and "charitable organizations"(in reality being clusters of hired ideologues organized as so called think tanks) that promote reduction of government influence on American oligarchs. Many of these organizations serve as disinformation/public relations propaganda factories to divide and conquer scientists, politicians, economists, and intellectuals as a whole. They are funded by numerous oligarchs (a person rich enough to have extra money to spend on influencing political structures to make even more money and having the psychological will to do it consistently) and have been an effective propaganda arm of the social movement started during Reagan's ascendancy.

Many of the financiers of these propaganda factories are second and third generation oligarchs such as Richard Mellon Schaife. Schaiffe is credited as one of the founding fathers of the Reagan conservative movement and he single-handedly took it upon himself to fund character assassination of Bill Clinton in the 1990s. Schaiffe isn't even an oligarch rich enough to be in the top 100 Forbes list and yet he was able to (through spending enough money on ideological public relations) get millions of foot soldiers and believers for the conservative movement. Whereas some of the original titans of industry, like John D. Rockefeller, sometimes came from humble backgrounds, the children and grandchildren of the tycoons are pure bred aristocracy. Mr. Schaiffe, as such, lives in a social bubble even more isolated from daily realities of most Americans than a French nobility in the 18th century (due to ease of international travel and greater technology gaps between the classes). The heirs see the government as the only organization with enough potential force and legitimacy to influence and stifle the expression of their desires within the world. Many had grandfathers who had their fortunes and organization split or partly suppressed by early 20th century government trust busting and FDR regulations. Instead of dedicating all their energies to aggressively growing the mega businesses from the ground up, the heirs just needed to prevent reversals and hire competent managers. This allowed them to have enough free time to play around with influencing government policy for further enrichment.

Buying out thousands of intellectuals and scientists by giving them salaries in ideological organizations proved to be an effective and relatively cheap way of doing so. The sheer amount of propaganda literature churned out, convinced many college educated and people much poorer than the oligarchs (those making less than 100 grand a year), that government really is the problem when it comes to helping most citizens. Many of the educated whites in America saw themselves as having the potential to make it as big as the oligarchs and thus began to preemptively attack the government. They counted the chickens before they are hatched and said to themselves, "well I will work hard and be successful like those people and nobody better take any of my income to help those uneducated lazies".

The people calling themselves middle class saw the hyper rich as role models. This psychology contributed to the incorrect perception and belief in the idea that it was the uneducated poor who holding the middle class back financially by leeching through the government. The "middle class" thus sided with the small amount of oligarchs when it comes to influencing the government to not interfere in the economy too much. They directly contributed to the poor falling further behind. The oligarchs however, saw the middle class as knowledgeable multitudes trying to get into the oligarch boat, and consistently prevented that by using the uneducated poor through irrelevant wedge issues like abortion and gay marriage.

We saw an absurd scenario develop where the oligarchs relax on a boat and encourage their envious middle class lapdogs (holding on to the edge) to kick the drowning poor still in the water. The rich then yell at the drowning poor to pull at the legs of the lapdogs holding on to the edge (because the lapdogs are no good godless liberals or some other nonsense). The government here are the crew members assisting with prying fingers off the edge and firing cannons at other ships. The blacks and the Hispanics would be those who already drowned through the efforts of the white poor angrily struggling in the water. We now see many ships joining together through globalization with some high rise planks connecting them and the rich mingling and enjoying each others company. The struggle in the water becomes even more violent and desperate.

Many of the thinks tanks (thought only dedicated to evolution of specific propaganda) hide under the umbrella of philanthropy that makes a mockery of actual physical philanthropic efforts of early 20th century tycoons who built hospitals and universities for the poor. This Reaganite "philanthropy" consists of promoting an idealogy of trickle down economics and reduction of government interference in the oligarch's mode of action. Undoubtedly there is some real charitable philanthropy going on as well that serves as an effective public cover. From utilitarian perspective however, the sheer damage done by propaganda tanks to poorest 50% of Americans through PR (and corresponding reduction in government services for education, science, medicine, and consumer protection) vastly outweighs the benefits for the poor from some token scholarship grants and other physical help. For example, George C Marshal "Institute" was funded by entities like ExxonMobil to give money to actual scientists to betray their field and lie about climate change and carcinogenic properties of cigarettes. Many of the propaganda tanks cross link their funding and pass money through chains to avoid direct responsibility. The Schaiffe family is responsible for starting 4 propaganda tanks. One of them, the Sarah Scaife "Foundation", contributed to the same George Marshal Institute that is fighting against consumer warning labels and clean air.

There are hundreds of such examples of propaganda tanks around the world masquerading themselves by various degrees of actual scientific and charitable work. These perception factories have been very effective at co-opting thousands of American intellectuals, researchers, and scientists by paying them to either do meaningless work to hurt the poor or by outbidding their labor and smarts away from genuine organizations that try to be as empirical as possible.

Sometimes however, the actual research done for the purposes of propaganda can backfire by showing in incredible detail the opposite of what's being promoted.

Returning back to the actual title of this article, lets take a look at some of the data provided by the Heritage Foundation. Heritage Foundation is one of the more powerful propaganda tanks for the American conservative movement. It also receives a bit of the Schaife octopus money (although Schaife is one of thousands of people rich enough to give substantial amounts to ambitious politicians who then promote minimal government and who dont care who they need to make an alliance with for money) and actively collaborates with printed media arms of the Republican party such as the Wall Street Journal.

Heritage Foundation has a number of graphs on their website that tries to sell an idea that the rich are being disproportionately burdened by government taxation. The graphs show the richest 1% having paid an increasingly greater share of the total annual revenue collected by the government compared to the poorest 50% of the people. Lets look at one such graph (click graph to enlarge):

It says that the richest 1% paid close to 40% of the tax revenue collected in 2006 while the poorest 50% of the people paid 3%. That is supposed to elicit outrage in the reader in that progressive taxation makes the rich pay many times more and thus unfairly singles them out while many of the poor not only don't pay taxes but get tax refunds. The trend of the top 10% and 1% of richest Americans contributing an increasing % share of the tax revenue (since the early 1980s when Reagan and propaganda tanks took over by the way) is supposed to demonstrate that not only is economic inequality not increasing, but that the fairness of the system is actually decreasing with the rich being singled out for burdens.

The sheer impudence of such argument is best demonstrated at a glance by the same IRS tax revenue reports that is being used. In 2006, the government collected 2,178 billions of dollars from all income receipts to fund its budget and function. The Heritage Foundation 40% figure of the total receipts is 871 billion dollars of the total budget.

The top marginal percent for income tax was 35% in 2006 (for those making over 350,000 grand a year and thus falling into the top 1%). 871 billion includes money collected from capital gains. Only the top 1% is primarily effected by capital gains taxes since their incomes are the most dramatically augmented by capital gains money generation (through stocks and such).

In 2006, the top 1% made 1,844 billions of dollars from all their taxable activities (if they did contribute 40% as claimed by pro-capitalist think tanks). As you see above, a large chunk of that money was generated from capital gains (that the bottom 90% of the population virtually don't come into contact with as part of their annual income). However, the total income was not taxed at 35% throughout since various capital gains (short, long) have taxable limits that are lower than 35%. If all their income was taxed at the same top rate of 35%, it would be very easy to calculate the total wealth that the top 1% made in a year ( total of 871 billion dollars as 35% of the whole).

If the richest 1% ( around 1.5 million people out of the 150 million taxable workers in 2006) made a total of 1,844 billion dollars (23% of all the taxable income money in the society for a year) and gave away 871 billion dollars of it to the government to make that 40% of the total 2,178 receipt contribution, that would mean they gave away 871.2 billion dollars (47% taxed in total) to the government, funding almost half of it. And this is according to the propaganda tank defending them and playing with data as much as possible.

The poor babies.

After taxes, a handful of the crybaby parasites (less than half of 1% of total American population) have half as much money to play around with as the entire American federal government with all its nuclear submarines, millions of workers, and agencies. They have almost as much money as the government of a "superpower" before taxes. Heritage Foundations data actually broadcasts this to the world trying to sell this as some sort of injustice to people much poorer. The taxes collected from the top 1% bring 2.5 more money than the funding of the entire Russian federal government.

It's remarkable that the biggest demonstration of rising inequality (oligarch's increasing tax burden in absence of rising top income tax rates) is shown as the opposite of what it is. If for example, the top 1%'s share of the budget contribution grew to 70% by 2020 instead of 40% (using same top 35% income tax level), it would mean they doubled their income at the expense of everybody else. The poorest 50% contributing less to income tax burden is not a sign that they are becoming more parasitic but that they are becoming increasingly destitute.

Right after World War 1, the top income tax rate was over 70% to help pay for the conflict. In mid to late 1920s, the top rate fell to 25% with consequences that perhaps should not be used by economic libertarians as a social success story. Throughout the 1950s-1970s period, the richest paid up to over 80% in income taxes. What do we remember about that period? A husband could go to work and support a stay at home wife and children with one paycheck as well as have a house and 2 cars. The middle class was growing rapidly and people felt so wealthy, empowered, and secure that they actually decided to help the poorest members of the country through Great Society. Money really did trickle down back then, with the IRS making it trickle down from the oligarchs to most of the people. Majority of the population was not over taxed as much as today, did not resent IRS as much ideologically, and weren't as fearful of the future and other Americans. One of the most corrupt oligarch backed presidents, Richard Nixon, (who began to destructive campaign against the poor with the drug prohibition) was even forced from office by the educated Americans. The decade of 1960s, with the richest paying over 70% in taxes and the bottom 50% having a larger contribution to the IRS, was one of prosperity compared to today.

(click graph to enlarge)

Heritage Foundation actually states that the US system is highly progressive (maybe they're comparing us to the role models of South America instead of hells on earth that are Germany and Scandinavia). Billionaires like Steve Forbes actually ran for office on the single issue of having a flat income tax. Sure, the flat income tax was a good easy way to fund budgets in Eastern Europe in recent years with corresponding social side effects of creating enormous income inequality in the former socialist space. When applied on an existing incredibly unequal society such as United States, the flat tax would just dramatically accelerate oligarch ability to influence the government structures since their money versus the government would grow. There are plenty of superior tax schemes like Land Value Tax that focus on real moneyed interests like land lords to create a more equitable and efficient economic system.

People who don't have enough money to buy politicians and policies must not allow themselves to fall for propaganda organizations (many of which actually get tax free status as "non-profits") that are becoming almost as socially detrimental as organized religion. It is very hard for educated people to side with poor rural whites, blacks, and Hispanics against the oligarchs due to vast cultural differences. Strategically however, an alliance against the

oligarchy makes far more sense for middle class and national survival. Modern Internet fund raising allows mass small donation funding of anti-oligarch propaganda tanks (any education that has a social/political goal motive, influence seeking, and self interest based rather than purely empirical is propaganda).

That is already happening to a degree with left-center organizations emerging. People making less than $100,000 a year still do not have as much money as the rich to spend on anti-oligarch PR but their message would have more effect in Hispanic and black demographics that are resistant to conservative propaganda tank economic messages in the first place. Religion and nationalism are diminishing as wedge issues for the rich to exploit so there is opportunity for majoritarian push to get the top income tax brackets back above 50%. The argument that the rich and their businesses will be driven abroad is a false one since that that is happening anyway and since social networks of government control take time to build. If 100 of the American rich decided to escape to Germany to escape the higher taxes (but still lower than in 50s and 60s), they'd have even more of a hard time influencing and getting to know German political elites. If they decide to emigrate to South America, then perhaps they'd be in their proper place at last and rid American society of bad rubbish.

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