Zillionaire Nick Hanauer to his Fellow Zillionaires

Re: Pitchforks

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.

Repentance and change is always possible through our Lord Jesus Christ. But it won’t come for a culture as obsessed with punishing the weak and exalting the powerful as ours is.

I hope we wake up before it’s too late.

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  • Dave G.

    Our country is rapidly becoming less a capitalist society and more a feudal society.

    Well, no. Feudal society had a series of gives and takes. Even if the serfs came up at the losing end of the deals, there was some level of obligation a lord had to his subjects. I’m seeing fewer of those things today. Otherwise, some good observations and fair points in that statement. The question is, what to do and how to do it.

    • Andy

      I agree, We are movie to a new Gilded Age and not towards a feudal age. And our “government” sector to prevent this movement has been bought and paid for and now is acting like the good puppet it is.

    • Tami Gregory

      Sure, slavery had its gives and takes, too. The slave owner had an investment in an asset, so the wise slave owner made sure they had decent housing and were fed enough to continue to be productive.

      • Dave G.

        Technically slavery and serfdom were not the same thing.

  • Mark S. (not for Shea)

    I agree with pretty much everything Mr. Hanauer wrote. The super rich aren’t super rich because golly-gosh-durn-it they just work harder than the rest of us. They’re super rich because the cards are stacked against the rest of us. He’s right. Policies have to change. And for those who refuse to give up their Mammon worship, they need not look at it even as repentance. It’s sheer self-preservation. No system can survive for long that it this top heavy.
    .
    But Dave G. makes a good point. In many ways, feudalism was far more humane that what we have now.

    • Mark S. (not for Shea)

      Actually, having read more of Mr. Hanauer’s article, I see he already made my point for me:

      “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.

      Read more: http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014.html#ixzz374DuVwfw

    • Andy

      I’m just thinking out loud here. I certainly don’t see most of the rich working harder. I see a lot of the working poor working harder. And I think… To sound a bit callous but… So what? Were we promised a life free from hard work? Is it unjust, or is it only “unfair”?

      • HornOrSilk

        It’s a lack of justice, as per the saints, who point out the rich have the rich for the sake of being stewards to the poor. That is their obligation with the wealth. So, breaking that obligation, and disrupting the proper flow of the economy, it is unjust.

        The issue is not whether or not we will be free from hard work, but whether or not we will be given and give basic human dignity. Nonetheless, it is also the “you must work hard” excuse which is given to the poor, acting as if they are not working hard. So that is a part of the problem. Then there is the change technology has had on the economy which must finally be recognized. We don’t have to collectively work as hard as the 19th century, but the job situation does not reflect this because the rich collect it for themselves instead of distributing it in fair proportion.

      • Mark S. (not for Shea)

        Hard work is great! But a just wage should come with it. The Law and the Prophets had a whole lot to say about that.

      • Andy

        This sort of sounds like a blame the poor – if they worked harder they could do better, Hard work is part of life – no doubt about it – however, what is your definition of justice – should a person who works hard – two jobs perhaps – be denied basic human dignity and rights? The issue is not the rich working less – although I want to know what a person who makes 270 times the minimum wage worker in his business is doing to earn that many – the issue is justice and dignity for all of us.

        • Andy

          I tend to agree with all you guys. But what “basic human dignity and rights” are being denied anyone in the US, just because they work a lot of hours? I can think of having to work Sundays, but beyond that?

          • thisismattwade

            To answer your question: whereas the family is vital cell of society, as per Catholic Social Teaching and good common sense, I can see long hours and little rest time as severely detrimental to family life. That in and of itself is enough to call the situation evil, a sort of “structure of sin” to quote CST.

            • Andy

              I could not have said it better.

          • http://robertfking.wordpress.com/ Roki

            Even without a family, the human person is more than a laboring machine. If someone has no time or resources for leisure – for prayer, for relationships, for enjoying the fruits of his/her labor – then this is contrary to the dignity of the human person. A person who is held to mere survival is held to a sub-human standard of life.

      • Tami Gregory

        “Working harder” is a misnomer. Who cares how “hard” someone works. If you are digging ditches, you are doing something almost any able-bodied person can do. If you can lead General Motors into being a company that can make a desirable and functional car and pay their bills, that apparently is a very rare and unique skill. It deserves a sizable salary.

        • http://bloggoliard.wordpress.com/ Blog Goliard

          I’m pretty sure that you or I could have run GM into the ground just as competently as most of its recent leadership.

          • Tami Gregory

            I sure wouldn’t be stupid enough to accept the job of CEO of GM for a few times more than the worker who is one tech development away from being replaced.

            • HornOrSilk

              Yes, we all know, the CEO is worth a million people. Yes, of course.

              And Dives was a million times the man of St Lazarus.

          • Peggy

            On a few topics in this vicinity:

            1. The Fed Govt ran GM from about 08 or 09 until the newest CEO came on board.
            2. It’s not a question of harder work, but of experience and responsibility level. The guy on GM’s assembly line is responsible for the screws he tightens. He can punch out after 8 hours. He has union protections.

            3. The CEO is responsible for every screw on every assembly line. He does not punch a clock. He is also responsible for the company operating lawfully relating to employment, product safety, accounting and finance, and so forth. He must meet routinely with heads of all functional areas to ensure that each is doing its part to make the firm function effectively. He is responsible to BoD, shareholders, costumers and many govt agencies. There is a huge weight on his shoulders. The salary that is fair I cannot say. Depends on person and the requirements of the job.
            4. I think many people, like OWS and Obama himself, think that executives just vaguely listen to managers, tell them to deal with “it” and then hang out at the golf course all day. O’s own behavior seems to indicate so. Real work is involved.
            5. Re Poor and morality. I don’t know what kind of moral judgment one wants to make, but it is documented that the lower income groups have largely ceased to marry and choose to shack up instead. Or if they marry, they divorce often. Kids are born out of wedlock at high rates. Those rates have not abated. It can be argued that it has certainly led to further poverty and social problems in subsequent generations. The bottom has dropped out, folks. We need to help the poor get their lives on track, return to Church and adopt the structured life of their predecessors. There is no reason the poor have to abandon long-held morals and family structures of their forbearers and the rest of society. (See Charles Murray’s Coming Apart, folks. Lots of fascinating information.)

        • jroberts548

          Let me know when GM finds someone that can help them make a functional car and pay their bills.

        • http://chicagoboyz.net/ TMLutas

          Yesterday I partially funded a loan. I financed the rough equivalent of a quarter (in BTC) for a 1 month debt consolidation loan. I got the quarter by hitting pay to click sites denominated in BTC. The loan terms and interest rates are preset by the borrower. The funder only decides if they are acceptable or not.

          If all of the loans I help finance pay off within a very few years this income stream will dominate my yearly tax return. At the same time, I’ve been robbed multiple times, had investments of time and effort go sour and not pay off, and had money evaporate. In other words, the normal trials and tribulations of the capital holding class are in full flower in the wild world of BTC investment as are the potential for wealth.

          Even a homeless person could walk into a library and do what I did (though it might take them longer as free computer time is often rationed). Some of them already are.

          http://www.wired.com/2013/09/bitcoin-homeless/

          So why aren’t more moving away from labor and at least partially onto the capitalist side of the street?

  • Andy

    Isn’t there a difference though? How many of our “poor” are actually starving and dying in the streets? How many roaming beggars and gypsy colonies do we have? Shouldn’t we be okay with “inequality” if even the lowest have a very generous safety net (often advocated here)? Aren’t most of the American lower class’ problems the result of immoral behavior (crime, shacking up, etc)?

    To some, it seems more like envy than injustice. The rich are getting richer, but is definitely it at the expense of the poor?
    I really can’t decide where to land on this one. Both sides claim The Lord is speaking for them.

    • HornOrSilk

      The saints often take on this claim of “envy” and explain how it is the first excuse of avarice.

      • Andy

        Good point

    • Andy

      Aren’t most of the american lower class’ problems a result of immoral behavior? I find that a troubling – what statistics support that contention? I think that many of the problems of the poor come from the attitude implicit in that statement. I work with many poor folks and they do not envy the rich, they want a home – one that isn’t near condemnation, they want to be able to be with their families and friends, and they want respect.

      • Andy

        I can’t cite the studies exactly, but is it not commonly accepted that a stable marriage is the #1 thing to elevate families out of poverty? Two parents pulling on the same rope and keeping their children in school and out of prison. (Again, American “poverty” compared to poverty on other continents.) Crime, drugs, promiscuity. I hate to sound as if I’m blaming people for ending up in rotten circumstances, but hasn’t the gospel anything to say to them about cleaning up their lives?

        • Andy

          Crime, drugs, promiscuity – that is at all levels of SES, it just that the well-off can have it hidden – recall the kid in Texas who to got off because his parent were rich and didn’t teaching him right vs. worn – he killed someone. A stable marriage may be the accepted way to move out of poverty, however, those in poverty have to have a way to be trained for the jobs to support a stable marriage, to have access to appropriate child care and parent training,
          a wide range of factors. And the number one reason for non-stable families is money.
          The gospels of speak to “cleaning our lives, but the gospels also speak to meeting people where they are and moving them forward. It is not you do it to live like us, it is we do it together. THat is what seems to be mission – we want the “poor” to do it themselves and then we welcome them to our club.
          I agree that what we see as poverty in the US is not poverty compared to many other countries, However, few other countries have the possibilities that we in America possess if we worked together and did our fair share both privately and publicly.

          • Andy

            ——————————————–

          • http://robertfking.wordpress.com/ Roki

            Agreed. One major reason marriages generally are less stable than they used to be is that social structures (both formal and informal) have ceased to support marriage stability.

      • Marthe Lépine

        Would that attitude of condemning the poor a leftover from that Calvinistic attitude that was discussed a few weeks ago in this same blog. If I understood correctly, it goes somewhat like this: When a person is poor it means that person is not part of the elect and is not blessed by God, therefore when a person works hard and sees a reward in a good income, it demonstrates that the person has been chosen and is being blessed by God. Maybe God has now been taken out of that picture, but the habit of despising the poor as being unworthy has survived. That where the necessity of changes of heart becomes obvious, but again many people seem to make the mistake of thinking it is the poor that need changes of heart and conversion.

        • Andy

          I hadn’t thought of the Calvinistic attitude – I think that you are partially right – I also unfortunately think that some of this attitude comes from fear of the other. THe poor aren’t like me and thins not like me are scary and must change to be less scary. I think putting them both together leads to the toxic responses sometimes seen.

          • HornOrSilk

            You might find this presentation based upon McGrath’s understanding of Protestantism (and Calvinism) to see the various ways it could be influencing the current situation (it’s more than people might think). The presentation won’t win much in style points, but it’s a blog post, so what do you expect?

            http://vox-nova.com/2008/02/18/some-points-of-alister-mcgrath-on-calvinism/

            • Andy

              Thank you for sharing this – it was highly instructive and disquieting at the same time.

              • HornOrSilk

                You’re welcome. I think more people are slowly seeing the connections, though of course, this is not to say everything within Calvinism is wrong, either, just often unbalanced due to where it did go wrong.

        • cfae

          “Job’s friends had descendants”.

    • http://robertfking.wordpress.com/ Roki

      Also, note that when the wealth of the rich is threatened, as in the 2008 crash, the first emergency measure is to cut the jobs that keep most people out of poverty, and to bail out the wealthy so that their wealth continues to increase.

      As Chesterton said, the problem with capitalism is not that there are too many capitalists, but that there are too few. One of the benefits of having a broadly distributed base of wealth is economic resilience, so that bubbles and crashes are more localized and have lower overall impact, driving fewer into poverty and allowing more immediate recovery.

      • thisismattwade

        Excellent point.

    • jroberts548

      To take one specific example: The poor do shack up, and that makes them worse off in the long term. The government effectively pays them to do so. Because of the way income is calculated for means-testing and for taxing purposes, 2 married poor workers will receive much less in benefits than the same 2 workers living together without marriage. Even though the stability of marriage can be vitally important to getting out of poverty, the availability of means-tested programs can be even more vitally important to medium-term financial well-being. The immoral act of shacking up is a result, not a cause, of the poor’s plight.

      To take another example: The poor do go to prison for crimes. However, for drug crimes (which constitute about half of federal prisoners, and roughly a fifth of state prisoners), the poor and minorities are virtually the only people the cops enforce those crimes against. Middle class white people use drugs at about the same rate (or higher, for some drugs) as everyone else, but go to prison at a vastly lower rate for it. The correlation between poverty and criminality is at least partly created by our courts.

      • Andy

        With you on the drugs thing. Can’t quite agree with “The immoral act of shacking up is a result, not a cause, of the poor’s plight.” These are not stable and healthy marriages-in-all-but-name, kept off the books to score bigger checks. These are mostly uncommitted, promiscuous, short-term couplings. There is grace in a sacramental marriage that, I believe, would surely help people out of the most dire circumstances.

        • jroberts548

          The median for cohabitation is about 22 months. http://www.usatoday.com/story/news/nation/2013/04/04/cohabitation-families-pregnancy/2050073/ That’s not long-term, but I wouldn’t exactly call that short-term and promiscuous either.

          When you ask people why they’re cohabitating and not getting married, they say it’s because of their lack of financial security: http://www.vox.com/2014/6/20/5824594/marriage-an-upper-class-luxury When this conflicts with the desire to have kids, they just have kids while cohabitating – “I can’t see marriage coming up anytime soon and I’m not willing to put off having children. Having a kid is something I can do now.”

          Even though marriage in the long-run aids financial security, why would the poor put it off because of a lack of financial security? BECAUSE THE GOVERNMENT PAYS THEM NOT TO GET MARRIED. If there’s any immorality here, it’s the immorality of congressmen and women and their constituents.

          ETA: You know who else engages in short-term, promiscuous relationships? Rich kids in college. Why aren’t you demanding that rich college alumni also be poor? Why do you only expect poor people to be moral?

          • Andy

            I would call 22 months exactly that.

            • jroberts548

              That’s almost two years! You don’t spend two years of your life with someone on a lark. No one would do that if they didn’t think it was reasonably likely to last for much longer.

              We’re talking about people who choose to put off marriage because of financial insecurity. They enter into cohabitation relationships, rather than marriage, because the government would penalize them for getting married, and cohabitation lets them pool resources. When their less stable relationship, which the government paid them not to stabilize, breaks up, you then blame a lack of morality, instead of the government which paid them to enter into a less stable relationship.

              • Andy

                The older I get, the less impressive two years sounds. We’re both making a lot of assumptions about their motivations.
                With that, I do have, praise the Lord, a job to focus on the rest of this day. Thanks for the discussion.

                • jroberts548

                  When you’re young (i.e., in your twenties), you only have a finite number of years in your twenties. I’m no math expert, but 2 years might even be about 20% of your twenties. It’s all downhill after that. I don’t know why anyone would waste two of those good years shacking up, unless they were literally paid to do so.

                  When you’re old, you have a finite, but unknown number of years before biology takes its toll and you die. Again, I don’t know why anyone would waste two of those years shacking up, unless they were paid to do so.

              • ThereseZ

                I don’t get the “financial insecurity.” If you have two incomes under one roof, you have a better chance of affording the roof, so join forces. And if you think you won’t be able to keep from having children, then each parent should think that having the other there, bound legally, committed publicly, to be the best thing.
                What is so freaking expensive about marriage that living together solves? It’s not the “marriage penalty” because we’re talking about people whose incomes are so low in this example that they probably get all their taxes back.
                I think people insist on the big blingy fancy wedding and then say they can’t afford THAT, so let’s not get married.

                • jroberts548

                  It’s a chiefly a penalty in means-tested entitlements. WIC, SNAP, TANF (in some states), SSI, EITC, etc. all have marriage penalties; i.e., two single people each receive more than the same two married people.

                • Rebecca Fuentes

                  There’s also that sniggling doubt planted by society: if we get married, and I get tired of him, if things go wrong, if if if, I can’t just walk away. Conversely, it becomes an excuse for doing things destructive to the relationship: I can see other guys, it’s not like we’re married!
                  I’ve had these conversations–there’s no value put on marriage. It’s just another hassle.

          • Rebecca Fuentes

            I am reminded of a conversation I had with a nephew’s girlfriend. They had been together for nearly ten years and had six kids together. They apparently loved each other and were committed to one another, so I asked why they hadn’t gotten married. Turns out, if she married him, she would lose her WIC, because she would have to declare his income.
            When things got tough in the relationship, the lack of marriage became an easy out. No one had to file for divorce, and she could threaten to claim the kids weren’t his because he wasn’t married to her. I’m not excusing the frankly nasty behavior on both sides of the break-up, but I think being married would have given them both a reason to slow down the relationship’s destruction. Certainly the thought of a formal custody battle would have.

        • http://janalynmarie.blogspot.com/ Beadgirl

          “There is grace in a sacramental marriage that, I believe, would surely help people out of the most dire circumstances.”

          Really? My sacramental marriage didn’t keep my husband from losing his job last year, it’s not helping me find affordable daycare so I could go back to work, and it is certainly not helping us manage on an income that is only 2/3 of what we need to pay our bills.

          • Marthe Lépine

            Sure, but by the grace of God you are still an intact family. Breaking up would certainly not help your situation, and be very costly, both emotionally and financially. Keep hope.

            • http://janalynmarie.blogspot.com/ Beadgirl

              Right. It’s just that I have noticed a disturbing trend among some Catholics who seem to think that if you do everything you are supposed to, and have a sacred and Godly marriage, then nothing will go wrong and you will not truly suffer. Not only is that not true, and dangerously close to Prosperity Gospel, I can attest from personal experience that sometimes doing the right thing can directly cause suffering.

              • Marthe Lépine

                Agreed, I have had some experiences along those lines. Sometimes to do the right thing it is necessary to do a major sacrifice and trust in God, but we don’t necessarily see the results immediately and the situation seems grim. In my experience, though, looking back over the last number of years, I have often been surprised to realize that what seemed a problem was in reality a blessing in disguise. But it is still hard to go through such a situation. As I got to see it, Prosperity Gospel is dangerously close to Calvinism…

  • http://robertfking.wordpress.com/ Roki

    Hanauer notes that extreme economic inequality has historically led to revolution. Fair enough, from my cursory knowledge of history. But I’m curious: has any other method than revolution (or invasion/being conquered) successfully redistributed social and economic goods from higher concentration to broader distribution?

    Hanauer mentions FDR’s policies during the Great Depression. my understanding is that those policies are what set the U.S. on the big-government and big-business course that led to our current crisis. In other words, those policies at best kicked the can down the road.

    Let me be clear: I do not want, nor do I advocate, any violent or illegal revolution. But I see our government as “bought and paid for” as others put it, and no incentive for business or our current government to make any significant structural changes.

    A friend of mine suggested forming “consumer’s unions” that would, with targeted boycotts and shopping campaigns hold out both stick and carrot for the bigs (both government and business) of the world to change policies. I suppose with social media, there is the technological possibility of forming such a thing. The trick is getting enough buy-in from enough people who agree on core principles that it actually has an impact.

    • Marthe Lépine

      A more effective way would be to form co-operatives of consumers, and that is feasible. It may not seem to be a big enough step, but it is not a reason not to take the first step, and more might follow. Social media could probably be a good tool to bring interested people together. And it seems to me that when such a movement, or any other useful movement, would get started, God will help all of us make it grow (but God cannot start such a movement Himself, He always leave us free to choose what we want to do).

      • http://robertfking.wordpress.com/ Roki

        I’m interested. I think your “consumer co-op” and my friend’s “consumer union” may be similar ideas under different names. The basic idea is to gather enough “little people” to act and speak together that we can A) become less dependent on the bigs by becoming interdependent on each other, and B) our words and actions have an impact in the world of the bigs. Is this the sort of thing you’re talking about? Or am I on the wrong track?

        • Peggy

          There are lots of consumer unions. People don’t pay much attention to them. Consumer groups exist in most states, for example, to counter the interests of regulated utilities before regulatory agencies. They are usually funded by a combination of state funds and contributions from consumers themselves.

        • Marthe Lépine

          I do not have a lot of time to describe this, but if you look up the “Antigonish Movement”, first in Wikipedia, then by following some of the links that they list, plus some of the other links offered by those in the first list, you would find an interesting story about the way to start bringing people together through cooperatives, even if that actual example is from a few decades ago. And yes, you are on the right track.

    • jaybird1951

      The New Deal did not end the Depression. WW II did.

      • http://robertfking.wordpress.com/ Roki

        No argument here. But I’d rather not keep relying on wars to bolster a failing economic system.

  • jroberts548

    As long as we’re all agreed that this is caused by some amorphous, unquantifiable problem like “society” or “moral decay,” and therefore can’t be mostly fixed by relatively minor, technical changes like slightly raising the top marginal rates for income, raising the capital gains tax, fixing the marriage penalty for the poor, or an improved social safety, then we’re safe. We can just give our jeremiads and our “O tempora, O mores” speeches and move on.

    • http://robertfking.wordpress.com/ Roki

      I agree that, as long as we get stuck in abstractions, we’ll make no changes. But I’m not an economist. I am, however, very interested in taking significant steps toward a more just economic system. So…

      Could you point me to explanations of how these suggestions work, and what we can do to implement them?

    • http://chicagoboyz.net/ TMLutas

      The rich have access to certain investment opportunities that the rest of us do not. This can be fixed by eliminating 17CFR230.501(1) through 17CFR230.501(8) and replacing that with an exam requiring the demonstration of sufficient knowledge to reasonably handle the issues regarding these investments.

      The rich should not have preferential access to investment opportunities.

  • Tami Gregory

    This explains gun control and welfare. Gun control to make sure the unwashed masses can’t kill (as easily, anyway) the zillionaires, and welfare to keep them docile and watching reality TV. Punishing the weak and exalting the powerful, no. Celebrating success, yes.

  • MarylandBill

    Lets keep in mind that the poor are not the only ones that are being negatively impacted by wealth inequality in this country. When adjusted for inflation, the middle class is making less now than they did 30 years ago. That also ignores the fact that corporations have often cut benefits to those same middle class workers.

    Our current corporate system, where CEO’s are judged almost solely by the stock price essentially rigs the system towards inequality.

    I know that ultimately the poor and poverty will be with us until the end of history, but our current system of despising the poor and then making the middle class poorer so they can be despised as well is a train wreck waiting to happen.

    • http://outsidetheautisticasylum.blogspot.com/ Theodore Seeber

      And in fact, that if wealth trickles down, poverty trickles up.

  • quasimodo

    The economy is not a zero sum game. Just because one man makes a thousand times what I make does not take a single dollar away from me … unless he got it through corruption, thievery, crony capitalism, etc. When Bill Gates made his billions, many millions of other people got good paying jobs. When the government gave GE billions, their competition was put at a disadvantage and people lost jobs. When Bernie Madoff stole his billions, people suffered. What matters is how you got the money and what you do with it.
    I hope never to whine that someone has more than I – if they got it by building something valuable. If they got it through corruption, then pitch forks are a suitable response.
    Class warfare and envy are blunt instruments that cannot produce the desired results.

    • Peggy

      OMIGOSH! Stop the madness of stating facts! My income level is no one else’s fault. We all have a part to play in how our lives go. Yes, there are broader economic trends, some bad businessmen, and some harmful public policies that affect us all (today there are, indeed), but we still are not entirely powerless over our own situations. We are not puppets or mere victims of circumstance.

      Yes: There is lots of new wealth created every day, by newly-minted wealthy people. In fact, the people who are the wealthiest change each decade or so. In my opinion, the biggest factor in creating an increasing gap in income is explained by Charles Murray’s book, “Coming Apart.” It explains that we had 2 major phenomena since the early 60s: 1. The rise of the college-educated, a “new upper class” (yuppies, etc) and 2. the bottom dropping out in the lowest income groups. This has caused a major bifurcation in what was once a broad-based middle to working class society. These trends have been going on for a few generations now. It is a very fascinating book, loaded with statistical analyses. There is a whole lot to say about Murray’s book. The new upper class are generally snobby and have isolated themselves from how the rest of America lives, indeed; but have been highly productive. Further, suddenly in the 60s the lower income groups stopped marrying, began to cohabitate, and bear children out of wedlock. They stopped doing some fundamental things that “made America work,” it is posited. Murray says the family is so fundamental to the foundation of America that its absence in the lower income groups has been fatal to those groups as well as to society at large.

      As MD Bill says below, the great middle income earners have had stagnant to negative income growth for a few decades, but our costs go up. [We’re feeling it with Obamacare premiums as well these days.] This stagnant middle is sitting between the “new upper class” and the collapsed bottom of society, expected to help fund the plight of the poor, while nearing that state themselves.

      • Alma Peregrina

        “OMIGOSH! Stop the madness of stating facts! My income level is no one else’s fault.”

        You lost me right there… 2nd and 3rd sentences don’t compute.

        • Peggy

          Then you must be missing something yourself.

          Honey, no one stole your income to boost their own.

          • Alma Peregrina

            If you keep saying that nobody is stealing incomes to boost their own, it is you that is missing… a lot.

            But then, to see what you are missing you’d have to take your head out of those ideas and statistics that your itchy soul wants to hear… and start looking at reality.

            Everytime that a millionaire doesn’t pay a living wage to earn a million more in his deep pockets, he is in fact, stealing income to boost his own. And that’s not rare, rather it’s commonplace.

            I’ve seen it.

            I’ve lived it.

            You can fool yourself and all your tribe, but you’ll never fool me… nor God. Just ask the pope.

            • Peggy

              I really don’t know how one can judge whether a wage is not a “living” or “just” wage frankly. It is very subjective. Different life situations require different income levels. What level of comfort are we seeking to provide at various skill/experience levels?

              I did my time in fast food and retail. We have to work our way up or stay there.

              • Alma Peregrina

                We can’t really judge if an unborn child is “living” or “human” frankly. It is very subjective. Just like anyone that wants to practice evil would say.

                If you’re so confused how a living wage or just wage is defined, just read “Ethics and the National Economy” by Father Heinrisch Pesch, one of the sources in which Pope Pius XI inspired himself to write Quadragésimo Anno.

                And no. We can’t ALL work our way up. Some of us need to be down. If we were all entrepeneurs, who would you hire? Without labour, with capital only,businesses would be inviable.

                No, we can’t all be up and stay there. Some of us just want to do their work well and receive a just income for what we are doing. That’s it. And it’s fair. If you don’t pay that and you stuff yourself with fortunes, you are, in fact, stealing incomes to boost your own. Only someone with an ideological blindfold would not see that.

                Furthermore, crony captalism, by deregulating everything in the market, allowing every strategy as fair, allows a kind of “scorched land” strategy that doesn’t allow working yourself up. People need money to create businesses and you keep money away from them. You smash little businesses with dumping strategies. You keep the financial monopoly and gloat over the ones you impoverished, as if it was their fault for their misery.

                And FYI, I’m a self made man, just like my parents. And I keep standing by what I said, regardless.

                • Peggy

                  I am a generally unemployed housewife and mother. We now have a cute dog that takes a lot of my time. (I don’t know what I was thinking besides of the kids.). I don’t make crap substitute teaching. I don’t resent any one else for that. I seek fulltime employment in my field in the meantime.

                  • Alma Peregrina

                    And even with your life, you still can’t see it. That’s really sad. (sigh)

                    Well, good luck with your employment, I honestly hope you get a fullfilling job with a just wage, just like the Church says you should have.

                    • Peggy

                      You’re right. I’m a victim. Kept down by “the man” in some mansion some where. I have a part to play in my life. Don’t you? Are you a puppet? A mere victim of circumstance?
                      I’m not looking too hard for fulltime work b/c I don’t want to pay for childcare or leave the kids with any one else in general. They’re my kids. I like being home often to clean and to get to the market during weekdays. I guess I could complain about the public school district paying crap while the teacher’s union gets all it wants. But that doesn’t fit your narrative. My profession and training is economics.

                    • Peggy

                      P.S. Are you a radical feminist who thinks I should be out making six figures and dumping my kids into daycare? What kind of Catholic family life is that?

                    • orual’s kindred

                      ? I’m not sure what prompted this question.

                    • Alma Peregrina

                      “I’m not sure what prompted this question”

                      Ideological need to dicothomize everyone into “good” (Peggys and peggy-like people ) and “bad” (feminists).

                    • Peggy

                      Wow! You saved me hundreds in potential therapy bills. Praise God for you!

                    • orual’s kindred

                      I found your question about whether Alma Peregrina is a feminist to be odd, as she never mentioned feminism. Clearly she disagreed with you, but she made no mention about sexual or gender politics. To imply that her comments imply any such thing I think is a bit of a stretch, so I asked for a clarification. Now you refer to ‘needing therapy’, which I don’t think she suggested either. As far as I know, just because the word ‘need’ is used does not mean that therapy is immediately required. This may be wishful thinking on my part, but I think intelligent arguments can help identify and address ideological blind spots, if there are any. I’m not sure, however, what there is in your reply that can help further this conversation.

                    • Alma Peregrina

                      You’re right! That’s exactly what I am! I could not be someone who was sympathetic to those words you’ve said about “I seek fulltime employment in my field in the meantime.”

                      No, I must be a feminist that thinks “just wage” or “living wage” means a six figure value (yup, you’re indeed confused about what a living wage is).

                      Talk about “narratives”! I guess Pope Pius XI was a feminist that thought female workers should receive six values and dump children in daycare. After all, Pope Pius XI talked about a just wage…

                    • Alma Peregrina

                      No, I’m not a puppet, but I am a victim of circumstance. Because I bust my a** off everyday and I’m on the brink of burnout, and I’m acknowledged as being very competent.

                      And still, I can’t advance with my life, because my income is being STOLEN by those who BOOST their own. Most of the times, people who are completely incompetent, but they manipulate the circumstances in their favor. But they control the money and the power, so there is nothing that I can do about it.

                      And I don’t care if you know much about economics, because you don’t know SQUAT about reality. Keep in mind that Marx was also an economist with a nice full-proof and scientific economic system (at least that’s what their acolytes said)… and… it was crap!

              • orual’s kindred

                I really don’t know how one can judge whether a wage is not a “living” or “just” wage frankly. It is very subjective.

                Well, I can’t say I’m surprised. Going by your statements so far, any wrongdoing cannot be said to have occurred as long as no one ‘takes’ anything. And if such a worldview is neutral with regards to how much people can lose what they ought to be justly paid, then I suppose no illegal or criminal activity can be said to occur with regards to job compensation. Salaries are based solely on skill sets, capabilities, existing frameworks, and purely technical matters; all of which operate within an immediate framework and larger systems free of injustice and corruption. And as such I’m not sure how anyone can really be said to have been shortchanged, or to ‘deserve’ their pay, whether it be nothing, a few dollars, or a billion.

              • Marthe Lépine

                I guess your studies in economics did not include Catholic church teaching like mine did in the 60’s. I realize it might be old fashioned, but at the University of Montreal in those days, particularly their school of business, called Hautes Études Commerciales, where I did my undergraduate studies in business and my post-graduate studies in applied economics, “Rerum Novarum” and “Quadragesimo Anno” were among our textbooks. There are plenty of definitions in Catholic Social Teaching to clearly indicate what is a “living” or “just” wage. Hints: It is not necessarily the wages accepted between a person desperate for a job and an employer (definitely more powerful) that is seeking to get “the best bang for his buck”, e.g. to offer the lowest pay possible. And it is not necessarily based on that mythical “market” either.

          • orual’s kindred

            I guess I missed something too. Since employees, managers and business owners are people, I’d think people affect other people’s income in some way or another. Surely we can agree that people are not always competent, not as honest and responsible as they should be with regards to their work and positions? That business systems can be improperly structured and improperly applied?

            I do note, though, that you went from saying “my income is no one else’s fault” to “no one stole your income to boost their own.” I don’t know that Alma Peregrina’s financial situation is similar to your own, but perhaps you have more information to both your employment circumstances than I do. I’d have thought, however, that people don’t need to actively take something just so they can supplement their own resources.

    • http://chicagoboyz.net/ TMLutas

      In the United States rule 505 and 506 of Regulation D reserve certain types of investments exclusively to the rich or to institutional investors above a certain size. Whatever benefits this may have conferred back in 1933 when the Securities Act was passed, the information revolution has rendered this a pernicious effect that is not corruption, not thievery, and not even crony capitalism as it is usually understood.

      We are in need of economic reform. It’s just not the redistributionist reform that the left is shouting about.

  • Michaelus

    …”there is no example in human history where wealth accumulated like this ” Let this sink in folks. The wealth inequality today is worse than it was under the Tsars or during the days of African slavery in the US or in the fabled gilded age – and it has gotten much worse under the leadership of the Democrat Party.

    • Marthe Lépine

      Sure, it is only a political problem and re-electing the Republicans will correct it! Give me a break!

      • Michaelus

        It is a political problem. The concentration of wealth is a result of our Government’s policies. Both parties like this and voting will not have any effect. There are already tens of millions of people who like the current system and millions more who are swayed by the lies told to them by the plutocrats. It really is a great system for the rich.

    • Andy

      It is not a democrat or republican party problem – it is a breakdown of what Christian ethos there was in the US – we have moved from worship of Od and attempting to follow his precepts to worshiping mammon and trying to twist the precepts of od to show how we still are following what Od has taught.

      • Matt Talbot

        Government action is the only thing that has worked in the past (well, other that revolution and guillotines…).

        Our own history gives a relatively recent example: the top marginal tax rate during the presidency of Republican President, noted Cold Warrior and Guy Who Was Probably Not A Communist, Dwight Eisenhower, was north of 90%. Yes, there were deductions so no one actually paid that amount, but those deductions were for doing economically beneficial things like building factories to employ workers and so on.

        Another factor: The 1950s were also the high water mark in union membership in the United States, and that acted as a brake on the greed of the oligarchy, too. Wage growth (and, for the record, total compensation, including fringe benefits) closely tracked productivity for 30 golden years after World War II – which is the basis for that old saw about “a rising tide lifts all boats.”

        What that old saw neglects is that compensation matching productivity is not intrinsic to capitalism. What’s happened since 1980 is that the benefits of increased productivity have instead been pocketed by owners as increased profits rather than given out as wage increases. This has made economic sense to the ownership class since the top marginal rates plummeted in the early years of the Reagan administration, and have not recovered since.

        • Andy

          I agree – I read somewhere and I am looking for where that one of the worst events for the US was the election of Republican President, noted Cold Warrior and Guy Who Was Probably Not A Communist, and the “women’s movement” Both put an emphasis on having what you want, both put the individual above all else, both placed a reader emphasis money as vital – Republican President, noted Cold Warrior and Guy Who Was Probably Not A Communist vilified the welfare queen, the wasted money on programs for the poor; while the other movement worked to break apart the traditional family.
          So many people who worship these movements refuse to look at history and see how this conflation was the starting point of most of our problems.

        • http://chicagoboyz.net/ TMLutas

          If compensation automatically matched productivity, the labor theory of value would be right and we should all be communists. The labor theory of value is not right and communism is an economic abomination (Communism also has other defects which leads the Church to condemn it regardless of its economic performance).

          What we broadly need is more investors and fewer laborers as we have a huge oversupply of the latter. Current law makes it hard to switch by limiting certain lucrative classes of investment to the rich.

          See here: http://www.sec.gov/answers/accred.htm

          Giving the rich exclusive access to certain investments in the information age is an abomination and a prime reason why the 1% are earning better than the rest of us. If we are to retain the concept of accredited investor at all, make a test and administer it online for free.

          • Matt Talbot

            I keep saying mainstream economic things in these threads, and you keep responding by addressing arguments I’m not making, TMLutas.

            I am not a communist. I do not advocate a complete takeover of the entire economy.

            Here’s my economics in a nutshell: I think the government ought to restrain (TO AN EXTENT WELL, WELL SHORT OF COMPLETE TAKEOVER OF THE ECONOMY) the tendency of capitalism to concentrate wealth and power toward the top of the income ladder. There is a continuum: too much government interference leads to stagnation; too little leads to plutocrats lording it over vast, unwashed peasantry, and ultimately to things like armed revolution and guillotines.

            It is a good thing to avoid both of those bad things. The middle way is using things like a progressive income tax, modest regulation and support for unions to restrain capitalism’s worst tendencies.

            • http://chicagoboyz.net/ TMLutas

              I don’t think that you’re a communist. I believe you when you say that you’re not. I think that your economic positions are long-term unsustainable and your defenses against communism are weak. There’s a difference, a big one.

              Ultimately, communists are on the other side and would prefer that I go to a re-education camp for brainwashing or that I’m killed. I think that you’re on my side but that you tend to be sloppy about locking the postern gate. The guy getting yelled at for doing that may think the person yelling at him hates him like an enemy. He is almost universally wrong though.

              The middle way is not using things like a progressive income tax et al. The middle way is an honest, persistent experimentation that looks at the present system and does tweaks in each direction, keeping those that make things better and not fetishizing any particular method. In following a middle road, we should never forget that all the tools are experimental and even proven ones from the past may no longer be appropriate for today.

              For instance, I believe in mediating organizations that help the worker. I carry in my head proto-plans to create a 21st century mediating institution. It doesn’t get taken out of my head very much and I have largely ceased to work on once it became very clear that the likely price for attempting to actually implement the thing is either hospitalization or death at the hands of union thugs. So I don’t fetishize unions and am largely against them in their present form in the US. They are, on balance, now a bane for the worker and are holding back the appearance of better structures such as the freemium model for worker assistance I have in my head.

              I think that the broad results of worldwide economic experimentation have proven beyond a shadow of a doubt that there were a large number of things that have traditionally been done by the state which are better handled by private industry. The multi-nation success at providing private ATC compared to the plodding government system the US is saddled with is pretty clear, for example.

              The problem of crony capitalism, on the other hand, is more severe, and more urgent than I think a lot of free market people are treating it by the revealed preference of how much attention they give to it. Increased attention to standards debates and other subtle economic playing field tilting mechanisms is desperately needed. This is largely going to be a government process for the foreseeable future.

            • http://chicagoboyz.net/ TMLutas

              Sorry for the double response but fitting all I had to say in one response was impractical.

              Do you agree that there is such a thing as a market for work which includes both capitalists and laborers? Do you agree that like all other markets this one sends price signals as to what is more and less in demand? Do you agree that the price signals being sent should induce people to shift towards more capitalist type of work?

              Look at the solutions that Nick Hanauer is proposing. What do they do to the price signals? Do they help us get to market clearance or do they drive the market away from that point?

              Market clearing for this market is the lowest level of economic inequality that is sustainably possible. I believe Nick Hanauer’s solutions would drive actual market performance away from market clearing by reducing the number of new entrant competitors he has to fight in order to fund good business opportunities. Whether this is his purpose or it is a happy accident that benefits him personally is beyond my abilities to discern. I do not know the man.

    • http://chicagoboyz.net/ TMLutas

      You might consider the possibility that this is simply not true. It may be a lie or it may be hyperbole or it may, after all, be true. My understanding is that we’re approaching gilded age levels, not that we’ve exceeded them so I’d put it down to hyperbole, pointing at a real problem in exaggerated terms.

  • http://outsidetheautisticasylum.blogspot.com/ Theodore Seeber

    I’m not so sure his version is the wakeup call it appears to be.

    The last page is all about how increased wages brings increased business opportunity for the rich.

    • MarylandBill

      That is not necessarily a bad thing. A rising tide will ultimately raise all boats. Henry Ford got rich by paying his employees an unheard of salary at the time ($5 a day). Ultimately, unless we want the government (or a revolution) to arbitrate a redistribution of wealth, we must convince the upper class that they will benefit in absolute terms as well. Sure, they may control a smaller percentage of the wealth, but they will have more wealth over all. This is how capitalism is suppose to work, the act of making wealth benefits everyone.

      • http://outsidetheautisticasylum.blogspot.com/ Theodore Seeber

        I apologize, I gave the impression I disagreed with the point! I completely agree, this is how capitalism is supposed to work.

        Hardly ever does, but it’s how it is supposed to work.

      • http://chicagoboyz.net/ TMLutas

        Today, the fix isn’t to raise wages in one factory. It’s to fund a million factories and other enterprises that bid up labor price in a sustainable fashion across the globe.

        Today China’s labor price has been bid up to the point where work is starting to come back here because US workers are now competitive for a growing amount of work.

    • chezami

      He’s stating a fact. The folly of our present system was summarized by JFK, a rich guy with a sense of noblesse oblige, 50 years ago: If a free society cannot help the many who are poor, it cannot save the few who are rich.

  • cfae

    It’s documented. Since 1979, the rich have gotten richer, the middle class and poor are working harder for less. It’s grossly unjust. Trickle down economics has been a failure and socially destabilizing force.

    • cfae

      If this graph doesn’t post, I invite you to google” American productivity wages”. Sorry I’m not more technologically savvy.

      • http://chicagoboyz.net/ TMLutas

        posted fine.

    • http://chicagoboyz.net/ TMLutas

      The problem is that what “it” is. If you misidentify the problem, the solution is almost certainly going to be wrong. Trickle down economics is not the problem here.

      The problem is that we have a gross misbalance baked into the economic system as a kind of zombie legislation dating back to the 1930s and it’s kicking us in our economic rear and creating nasty side effects to one of the happiest economic stories in decades.

      For centuries, both China and India were underweight in terms of economic performance. The reasons for this are various and I’m not going to go into them here. But the historical underperformance of these two vastly populous nations is universally accepted historical fact. This led to a great deal of economic misery. For different reasons, both these nations (and most of the Soviet bloc as well) turned towards economic liberalization within a decade or two of each other. This has led to a historic increase in functionally available labor across the globe and tremendous downward pressure on wages worldwide.

      Better than 2 billion of our brothers and sisters have been been liberated from insane leninist/maoist economics and the regulatory raj. This is a great story. It also demands a great response to find work for all of those hands who are no longer economically trapped.

      It is the responsibility of those with capital, mostly the rich, to organize enterprises and create the jobs for those people. This is the real work of the capitalist and the entrepreneur. The free market signals the need for more people to earn their daily bread this way by increasing the compensation for this type of work until new entrants into the field rebalance things. This has happened to some extent but nowhere near enough which is why you see the price signals shown by the red and blue lines. People earn their money differently on the blue line and on the red line. If you are earning your money on the blue line, you need to work to shift your income to the red line style as much as you can. By doing so, you raise the blue line and drop the red line because you are bidding up bargain capital assets and reducing the oversupply of labor.

      Personally, I’m conducting an experiment to do exactly this in my spare time. It *is* possible to start earning investment income from very low levels and to get high interest percentages. The information revolution permits sophisticated investment research to happen and quickly. Blockchain based currencies are allowing people to escape the government shackles put on many conventional investment opportunities.

      The pieces are falling into place to correct the problem that your chart documents. They’re not all there yet. Pitchfork talk is not going to help. The problem is that shifting your work from labor to capital allocation is unnecessarily hard.


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