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THE RICHEST ONE PERCENT
October 31, 2011 - Ray Hall (Archive)
If Adam Smith were alive today he would be as proud as punch that one-percent of Americans achieved a whopping 275% increase in personal wealth while ninety-nine percent achieved only a modest increase. That, he would conclude, is the ultimate achievement of unfettered, free-market capitalism.
Free marketers agree that for capitalism to perform at optimal efficiency and provide the highest profits it must exploit resources, raw materials, or labor. And like water or electricity capitalism follows the path of least resistance. As a resource is depleted scarcity drives up costs, decreases profits and increases the pressure to reduce labor costs.
We experienced that shift when factories fled the northeast for the allure of cheaper wages in the south where so called “right-to-work” states discouraged labor unions and suppressed collective bargaining. From late 1980 to the present many companies that migrated to the sunshine states have subsequently relocated to the Pacific Rim and points around the world for even lower wages and higher profits. But according to free-market capitalism that is the expected norm.
The astonishing success of free-market capitalism cannot be denied. That economic concept has created more global wealth than any other, but the underlying assumption of free-market capitalism is greed. If an individual can create or sell a product for as much profit as possible to another individual willing to pay the price then the needs of both have been satisfied. Subsequently, the built-in check and balance against greed is the “willingness” of buyer and seller to agree upon a price. But what happens when need and greed collide?
Our founders thought of that and granted the government power under the Constitution to regulate commerce. If the price for an essential product becomes so excessively greedy, that it would be harmful for society to pay the price then the government can insert itself into the process through litigation, price regulation or direct cash subsidies to the consumer. Then, that begs the question; why do we have such income disparity?
Obviously free-market capitalism has not worked as well for 99% of Americans over the past thirty years as it has for the top one-percent. Simply stated, the system is rigged. In Washington D.C. corporations and wealthy individuals took the path of least resistance and used K Street Lawyers (lobbyists) to lavish politicians, even Judges, with gifts, trips, cash and campaign contributions in exchange for favored tax treatment and deregulation. America’s masses are victims of a sick and twisted marriage between unfettered capitalism and a political system fueled by power and prestige.
The Occupy Wall Street Movement has spread because it represents Americans that have been deliberately left behind. Young people who can’t find work and college graduates who will be in debt until their mid-forties, all tech savvy people that grew up in a technical world appear to make up most of the occupiers. However, the sentiment that embraces the movement has struck a chord that runs deep into the core of the country.
People who are fifty and older who have lost their jobs realize that they have little prospect of ever finding a meaningful job. The movement touches people who have or soon will lose their homes to foreclosures are part and parcel of that movement. These are people that find conservative compassion lacking in presidential candidates and their audiences who fervently attest that the protestors have no one to blame for their circumstances but themselves. And that message is reinforced when Social Security is branded a criminal enterprise and Medicare and Medicaid is jeered as welfare for the shiftless.
However, politicians of every political persuasion should take heed. Just last week the Associated Press reported that Occupy Wall Street protestors took on Gov. Andrew Cuomo for fighting the states “millionaire tax” and ordering demonstrators be evacuated from a park across from the Capitol. But Albany’s Mayor Jennings pushed back and allowed the demonstrators to stay.
Some protestors angrily dubbed Cuomo Governor One Percent “because that’s who he chooses to represent. We’re not going to stand for it,” said Victorio Reyes, a local community organizer. Others have criticized Governor Cuomo for not investigating and prosecuting Wall Street firms engaged in nefarious practices when he was Attorney General with the same vigor as Eliot Spitzer his predecessor.
Our free-market capitalism system will remain just what it is, it will not change. Regardless, politicians should understand the breath and depth of our national betrayal and extend a hand to the beleaguered.
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