I hinted at this in my last post, and The New York Times’ Paul Krugman made note of it in his recent column, that the Occupy Wall Street crowd and the 99 percenters are actually shooting too low in their criticisms of the rich. The income of the top 0.1 percent of the working population rose 400 percent between 1979-2005, according to an earlier report from the Congressional Budget Office (adjusted for inflation), while the same statistic increased only 21 percent for those in the middle income bracket, and I suggested in the previous post that the top 0.01 percentage also make up a significant percentage of the income share. The recent report from the CBO didn’t look at income brackets higher than the top 1 percent.
Krugman elucidates the basic gravamen of the disgruntled poor and middle class against the super rich and why the latter contribute little, other than capital gains taxes, to the public coffers or to the economic well-being of the nation:
Given this history, why do Republicans advocate further tax cuts for the very rich even as they warn about deficits and demand drastic cuts in social insurance programs?
Well, aside from shouts of “class warfare!” whenever such questions are raised, the usual answer is that the super-elite are “job creators” — that is, that they make a special contribution to the economy. So what you need to know is that this is bad economics. In fact, it would be bad economics even if America had the idealized, perfect market economy of conservative fantasies.
After all, in an idealized market economy each worker would be paid exactly what he or she contributes to the economy by choosing to work, no more and no less. And this would be equally true for workers making $30,000 a year and executives making $30 million a year. There would be no reason to consider the contributions of the $30 million folks as deserving of special treatment.
But, you say, the rich pay taxes! Indeed, they do. And they could — and should, from the point of view of the 99.9 percent — be paying substantially more in taxes, not offered even more tax breaks, despite the alleged budget crisis, because of the wonderful things they supposedly do.
Still, don’t some of the very rich get that way by producing innovations that are worth far more to the world than the income they receive? Sure, but if you look at who really makes up the 0.1 percent, it’s hard to avoid the conclusion that, by and large, the members of the super-elite are overpaid, not underpaid, for what they do.
For who are the 0.1 percent? Very few of them are Steve Jobs-type innovators; most of them are corporate bigwigs and financial wheeler-dealers. One recent analysis found that 43 percent of the super-elite are executives at nonfinancial companies, 18 percent are in finance and another 12 percent are lawyers or in real estate. And these are not, to put it mildly, professions in which there is a clear relationship between someone’s income and his economic contribution.