Yes, Making the Rich Poorer Would Make Everyone Else Richer

[xchrom]

http://www.commondreams.org/view/2013/12/20-6


The math, in fact, is very straightforward: When huge fortunes at the top are more heavily taxed, it does pay for public goods like pre-K or prison incarceration that can increase life chances for the poor. (Public domain/Tumblr)


Conservatives like to argue that curbing the outsized wealth of the top 1 percent wouldn't do anything to increase economic mobility or reduce inequality. Rich Lowry of the National Review nicely summed up this thinking in a column the other day:

Mark Zuckerberg could be stripped of all his wealth tomorrow, and it wouldn't help anyone further down the income ladder. It wouldn't increase wages, or reduce out-of-wedlock child rearing, or lead to less incarceration or revive the work ethic, all of which would enhance mobility and lift more people into the middle class. It would just make Mark Zuckerberg poor.
Before getting to Lowry's larger point, let's actually look at the math regarding Zuckerberg. His wealth is fluctuating because he's about to dump a bunch of Facebook shares, but as of September 2013 he was worth $19 billion. So to engage Lowry's thought experiment we need to ask whether $19 billion could improve life prospects for those "down the income ladder?"

Obviously so. For example, $19 billion would be more than enough money to provide universal pre-K education for a year to every four-year old in America who now doesn't have this opportunity. Or that money could provide pre-K to every four-year old in Texas who doesn't have it for the next twenty years, with money left over to cover pre-K for every needy four-year old in New York City for the next decade.

Maybe Rich Lowry doesn't think that pre-K makes any difference in life chances, but the majority of parents and social scientists would beg to differ.

[phantom power]

1. I don't think it can be said too often: they'd still be rich.

Less rich, by some amount. But still rich, FFS.

[Jamaal510]

2. +1

[Courtesy Flush]

6. Imagine if Zuckerberg's wealth were cut in half overnight.

Let's say his "people" are worried about how he would handle the news. They decide not to tell him that his net worth has dropped from $19 billion to a mere $9.5 billion.

For the rest of his life, they lie to him, and tell him he is worth $19 billion. His lifestyle would not suffer in the least. He could easily believe he's still worth what he used to be. His spending level would be the same. His homes would still be secure, and his prestige would not diminish.

When you're worth billions, you literally cannot benefit by accumulating more. It's just high-stakes dick-measuring.

[Egalitarian Thug]

8. 1% of a billion is still one hundred million. I think that the numbers we talk about

have grown so large that few people can retain a sense of scale.

[oldhippie]

12. <sigh> a perfect example .......

You make your point, though I suspect you didn't mean to.

[DrDan]

13. lol - yep, exactly right . . . well said

[Egalitarian Thug]

15. Indeed. n/t

[Electric Monk]

14. Your math is off by a factor of 10. A hundred million is 10% of a billion. 10 million is 1%. nt

[Egalitarian Thug]

16. See?

[geckosfeet]

3. Can't really add much but I do want to express my disgust at conspicuous opulence.

It's like masturbating with money. In public.

Gross.

[7962]

5. Ouch. That would hurt!

[jtuck004]

4. Depends on how you spend it. Oklahoma, for example, has near the highest, if not the highest, number

of kids in pre-K.

And look at all the good stuff they are learning...

[edhopper]

7. According to Oxfam

one quarter of the annual income of just the 100 richest people in the World would end global hunger.
Think about that.
Money that would not change the lives of these 100 individuals, would end the suffering of billions.
That is income inequity.

[hughee99]

19. That doesn't sound right.

I don't know what the annual income of everyone in the world is, but I believe the highest annual income in 2012 in the US was CEO John H. Hammergren's $131 million dollars (salary and stock).

Assuming that's "in the neighborhood", 100 x 131 million dollars is about 13 billion.

Is my math off? Are there people with an ANNUAL SALARY that is that much over 131 million dollars that this number I've come to isn't even close, or has oxfam figured out how to end global hunger for only $13 billion dollars?

I could believe "net worth" but not "annual income".

[edhopper]

20. Here is the Oxfam page

http://www.oxfam.org/en/pressroom/pressrelease/2013-01-19/annual-income-richest-100-people-enough-end-global-poverty-four-times

Here they say end extreme poverty, though i have read it elsewhere as end hunger.

[hughee99]

21. Makes more sense.

Obviously my calculations were WAAY off if $240 billion (not 13 billion) is the total, and I'm not sure exactly what "extreme poverty" but I'm sure it must be far less than the total "world hunger" so it's probably accurate depending on how the define their terms.

[edhopper]

22. still a eye opening example of

inequity.
And they are saying income, probably 10% of the wealth of the top 100 people would end hunger.

[BelgianMadCow]

9. But, to "the rich" one has to add the rich & undertaxed corporations

and THEN you're talking trillions all of a sudden. I refer to the offshore leaks.

It's rather obvious who our politicians and media work for, when in a time of hardship, austerity is the recipe and not going to get the money where it very obviously is.

Corporate tax is 33% in Belgium. Effective taxation of the hundred biggest, some 5%. Many pay close to 0. It's really that simple.

Yet all reasoning is thrown aside to spend billions in a global effort called the War on Terror. How about a War on Money?

[hunter]

10. I think taxes should approach 100% of some multiple of minimum wage...

... some multiple of 20 or less.

If anyone wants a higher income they need to press for a higher minimum wage.

The Defense Department ought to be funded 100% by wealth taxes on any assets exceeding a moderate home, family farm, small business, or retirement investments.

In short, I think the sort of wealth that can buy politicians or muscle giant corporations around in undemocratic ways ought to be taxed out of existence.

If the wealthy choose to leave, tie knots in their pointy red tails so they exit screaming.

[bvar22]

18. If the RICH were forced to PAY for the Wars,

.....we wouldn't have any.

[Igel]

11. The article doesn't match the headline.

Making the rich poorer would do nothing.

Giving the poor money or resources would make them less poor.

The article assumes that one is the same as the other, because the precise means of making the rich poor that the author wants--as though that were the only possible means--is taxing and using the wealth at a programmatic level to help the poor. This is a limited imagination, leading to very leaky, sloppy arguments.

In 2009 the rich became quite a bit poorer. The top few % of households took a financial hit that was over 50% of the total wealth loss. It did squat for the poor. The vanished wealth wasn't anything that could be given to the poor--but the basic argument, "making the rich poorer," was entirely satisfied and the assertion falsified.

Engage in heavy deficit spending or merely increase tax revenues across the board (progressive or not) to fund some of the activities that have long-lasting and important consequences for the poor and you've helped the poor without reducing the wealth of the rich or without reducing it by much. The source of the $19 billion is pretty unimportant. Spending levels and programs, not funding source, is what's key in the author's argument.

BTW, most of the EC academic/day-care programs help kids academically, sometimes a lot. But by middle school the "help" is pretty much entirely statistical. By high school there remains a statistically significant effect on high school graduation. But "statistically significant" does not mean "large." Most of the benefits of those programs are lost by 5th grade, and continue throughout high school. Parents disagree; parents are embedded in anecdotal information.

[CrawlingChaos]

17. Huey Long's amazing speech from 1934

To the surprise of no one, he was killed by an assassin's bullet the following year.