For generations, Americans, who rejected liberalism, were trained to screech and run out of the room whenever the topic of inequality was raised. After all, anything other than a natural distribution of wealth was socialism and if nothing else, conservative means not being a socialist. It’s fundamentally the problem with all reactionary ideology and why Buckley Conservatism has degraded into a shabby libertarianism, lacking anything resembling a coherent worldview.
The issue of inequality is a perfect example. That French economist wrote a big book on the topic and the response from the Right was to dismiss it without having read it. The libertarian wing thumbed through some reviews so they could pretend to have read it, before dismissing it in a shower of platitudes. They have to pretend inequality is not a real issue because to do otherwise means confronting the contradictions in their ideological safe space.
The fact is, having a small number of people or corporations controlling the nation’s wealth ends in tyranny. This is the lesson of history. If one man owns everything then you have Africa. If a cabal of men control everything through a bureaucracy you have China. The West figured out that a broad distribution of ownership cultivates human capital and maximizes individual liberty. It’s not perfect, but there is a reason we never speak of the African Renaissance.
Part of why both parties are being swamped by what they like to call the fringe is stories like this one.
The rising cash holdings of U.S. corporations are increasingly in the hands of a few U.S. companies, with just five tech firms having grabbed a third of it. And nearly three-quarters of cash held by non-financial U.S. companies is stashed overseas, outside the long arm of Uncle Sam.
Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Cisco Systems (CSCO)and Oracle (ORCL) are sitting on $504 billion, or 30%, of the $1.7 trillion in cash and cash equivalents held by U.S. non-financial companies in 2015, according to an analysis released Friday by ratings agency Moody’s Investors Service. That’s even more cash concentration than in previous years, as these five companies held 27% of cash in 2014 and 25% in 2013. Apple alone is holding more cash and investments than eight of the 10 entire industry sectors.
Corporate America’s rising pile of cash is becoming increasingly important to investors as profit growth and the stock market stalls. The amount of cash held by U.S. companies rose 1.8% in 2015. Unfortunately for U.S. investors, 72% of total cash held by all non-financial U.S. companies is stockpiled outside the U.S., up from 64% in 2014 and 58% in 2013, as companies try to avoid paying U.S. tax rates.
There was a time when Democrats would make an issue of this based on old school appeals to class. “Look at these fat cats robbing the working man!” The Right was not mute on this stuff either. Wholesale tax avoidance was not always a conservative principle. Conservatives would also note that these firms are run by progressive, nation wrecking wackos. But, that was when conservatives still thought countries were real things.
The reason Faceberg gets to summon media whores like Glenn Beck to his lair and demand they stop talking about his censoring of opinion is because he has 40 billion dollars. He is also allowed to have free access to the internet by the state. The reason for the gross corruption of the popular media is that those concentrated billions can be funneled into operations that buy news reporters and outlets, in addition to politicians.
It’s something I’ve been repeating for a while now, but I enjoy repeating it. Buckley Conservatism was always about anti-communism first and foremost. The whole point of their ideology was to shape the defense of the West against Soviet communism. Reagan is a perfect example. He was willing to concede domestic policy to the Democrats in order to have a free hand on foreign policy. The result was a continuation of the welfare state in exchange for a military buildup.
The problem for the Buckley types is the Cold War ended. Generations of conservative “intellectuals” have been trained to cede cultural issues to the Left. Their default response on domestic issues is to surrender so they can get back to talking foreign policy. It’s made them incapable of fighting a culture war. Those principled conservatives are too busy planning the sack of Carthage to be bothered by the Left’s assault on decency.
It’s why they are being swamped by what we’re calling the alt-right. Talking about special treatment of carried interest to a guy who is watching his town be overrun by foreigners is insulting. That’s why Trump was able to shove everyone aside and win the nomination. Watching those debates, I was reminded of the movie Pleasantville. In this case, Trump was the only guy in color and the rest were in black and white.
Conservatism used to focus itself on maintaining and defending the culture and traditions of the country. Allowing a handful of financial buccaneers, who got rich plundering the economy while riding a sea of credit money created by the state, is the antithesis of conservatism. It conserves nothing. Dealing with these extremes is something the Right cannot cede to the Left or you end up like Venezuela.
I don’t – can’t actually – disagree with any of this, because I simply don’t know enough yet to draw any firm conclusions. It seems to me, however, that this post points without actually pointing towards an advocacy of the policies of “distributism” which I just learned about. This doesn’t seem like a very good option either – it kind of smells like the plan to make millions by the Underpants Gnomes.
Nonetheless, an interesting post that makes things more complicated not less.
This post is an intellectual mess.
The title is inequality.
It references a book by Pikety which suggests an implausible wealth concentration formula almost universally dismissed by all economists.
It warns that concentrated wealth leads inevitably to tyranny and hopes the readers just nod along.
Then it pivots to cash holdings of the some of the most highly esteemed companies of the past decade.
Huh?
Using “intellectual mess” to mean “I don’t like the points being made” is getting old. Find a new set of catch phrases.
And conveniently redefining my argument to mean something other than I specifically said is a bad rhetorical trick. I actually agree with some points and disagree with others.
“While paupers change possessions
Each one wishing for what the other has got”
Bob Dylan, Gates of Eden, borrowed from T.S. Elliot.
What is wealth? In a free market society it is deferred consumption, capital. The goal of wealth, a fiduciary responsibility, is to grow. How does it grow? By investing in productive enterprises. It grows by producing goods and services that attract consumers. Its success is measured by “return on capital”. Those who invest wisely win while others who are not as productive lose. Thus capital, wealth, flows to those who make people happy.
The question then becomes who’s in charge. Is it better to have the largest part in the hands of the one percent, some three million people, who make good use of it or instead in the hands of 535 elected officials in Washington, D.C. who style themselves the Vox Populi? Venezuela is an exemplar of the latter.
All governments are, at base, oligarchies. Ya gets ta pick your poison. Do you want the robber barons or the snake oil salesmen?
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And yet the topic of “income inequality” is essentially nothing but a thinly veiled call for communism. As they see it, any degree of “inequality” is unjust. Therefore, the only just solution is some kind of complete equality, i.e communism (these days the politically correct term is socialism).
Americans are different from other groups: they do not suffer from envy. Which is why American socialism is so weak among the 99%. However, the 1% in DC are, I think, awash with envious folk. Trump is popular with the 99% because they are not envious of his wealth. Europeans cannot understand this. Neither can George Will.
The dirt people, what james Wilson calls joe public conservatives, have been insulted for too long. You have articulated something they have felt in their gut for a long time. I don’t think they envy the rich so much as they’re tired of getting bled from above and below. Their culture and traditions are ridiculed every day. They believe Donald Trump speaks for them. I’m starting to think he does, literally, e.g. Crooked Hilary, lying Ted, Bill the rapest and much more.
Very good post. I’ve been calling this new Globalist Reich, neo-feudalism. All the world’s power and money is being re-concentrated into the hands of a small elite. Corporate America has become an enemy of the common good. Remember when the old line Marxists would rail against big business? Well to some degree they were right. This is something to which ‘Conservative, Inc.’ has been blind.
“Wholesale tax avoidance was not always a conservative principle.”
Yes, it was, and it still is.
Perhaps you mistake tax avoidance with tax evasion.
If you report your actual income then rely on and accept all of your genuine personal expenses and deductions you are avoiding tax. If you lie about them you are evading tax.
Tax avoidance is adherence to the law. Tax evasion is breaking the law. The cash that these corporations have “stashed overseas” is tax paid money earned outside the USA on which the corporations do not wish to pay truly absurd US tax rates, as Lorenzo points out. America and Americans have fuck all claim on it unless they are shareholders. If these “fat cats” are robbing anyone, which they are not, they are robbing Germans, French and Brits et al.
Jesus you’ll be calling them revanchist, bourgeois, counter-revolutionary, running dog, imperialist, hoarders and wreckers next.
A disorganized, populist, wreck of a post.
You should probably have that reading disability checked out.
Conservatives used to understand that taxes were necessary to the functioning of country. Insider deals so that plutocrats can avoid paying taxes is antithetical to civil society. Libertarians never manage to get this because being a libertarian means having a low IQ.
And is there no limit? No limit till even you might say that is damn well enough? No limit if Johnson Controls can make $150M/yr more as a foreign co and that $150M/yr can be used to do everything from sell at lower prices, invest more in R&D, research, easier to raise capital for expansion, paying more to key employees of competitors, marketing, etc to beat US owned competitors? Pfizer’s trying leave expecting to be able to keep $1-2B/yr more by being foreign domiciled, which can be used against competitors.
Fred_Z is basically right. Lower corp taxes & the money comes home. Rich Norway just lowered Corp taxes to 22% to encourage investment their to broaden their revenue base beyond oil.
We just don’t tax the rich enough, eh?
You’re are not answering your own questions. If 1,000 control 90% of the assets, is that enough? Can they control 95%? 99% What happens when they do?
The problem with Fred_Z is all of his ideas have somewhere embedded in them the words “something magical happens.” As in “Lower taxes and something magical happens and the super rich stop pillaging the economy.” As I keep saying, Buckley Conservatives have been trained like poodles to worship the super-rich and global corporations. History shows that it is dangerously destabilizing to allow great concentrations of wealth, which is why the Founders were so strongly opposed to it.
Again, free markets cannot exist when a single company controls the market. Self-government cannot exist when a handful of players controls the economy.
I’m going to take a small stab at this. The Founders elevated Adam Smiths understandings of human nature, pitting ambition vs ambition (in both public and private affairs) to replace the historical method of good vs bad (in defect of other motives). The job of government was to tend to that understanding, not to become the biggest gorilla in the room. Now ambition is Washington, and all roads lead to Rome once again. Pharmaceuticals have a lock on their industry because the 900 billion dollar price tag for new drugs is typical of the regulation which Washington lives for and at the same time which preserves the pharmaceutical monopoly. And so on.
Globalist tax avoidance schemes are a different issue. The correct corporate and business tax is zero.
I’ve long argued for a zero tax on business. It’s just a hidden tax on employees and customers.
In my view, taxes are primarily to fund government. Ideally, they are transparent and efficient, favoring no groups over another. We live in the real, not the ideal, so taxes will always warp society by altering incentives. There’s no avoiding it. The question is how to put that thumb on the scale to good use and that means causing the least harm. There’s no perfect system.
That does not address the concentration of wealth, but you can use tax policy to address the problem after the fact. That’s what happened after the Industrial Revolution. Great fortunes were slowly dissolved and trust busted up. Regulations prevents the sorts of things we see in banking and finance today.
I have no issue with rich people. My issue is with oligarchy.
The Pareto Principle, 80/20 rule, named after an Italian economist. Long ago Pareto found 80% of the land was owned by 20% of the people & it applied across many countries. It is a power function, not a fixed 80/20, could be 80/30, 80/10 depending upon a parameter. Quick check: 2014: 67% of income to 25% of people. Probably forever, a few have owned the most.
Entrenched?
Chetty, Hendren, et al: The likelihood a child with parents in the top 1% will be there is 9.6%.
Hirschl & Rank: 61 of 100 households will break into the top 20%, 39 of 100 into the top 10%, 5 of 100 into the top 1% for 2yrs or more.
Forbes 400 richest %Self-made: 1984: less than 50%; 2014: 69%. The most recent: 9% from poverty vs 7% inherited.
Pillaging?
Lord, pillage us some more! Per capita sqft of housing is increasing. In my hood, there is constant replacement of old 2-3 BR small houses by new 4-5 BR 2-stories selling for $800K & up, bought by docs, lawyers, ins & investment house workers, professors, a hus/wife K-12 school teachers, etc. Nordhaus complains wage & GDP do not accurately measure as they do not consider quality, quantity & price. Appliances taking 100s of hrs of avg wage work decades ago take much less at current avg wages. “Stagnant” wages do not reflect the vast increase in real, though unmeasured, value of consumption.
Few of the Fortune 500 decades ago exist today. Monopolies gone: A&P Groceries, NCR Mech Cash Registers, IBM Mainframes, Kodak film, Microsoft & Apple may yet wither. Gov controls the law, courts, police & the big guns. That is power. They do such as ACA to expand the Company Store in support of their customers, the rich (for a while) guys.
I don’t worship wealth, any person or Corp. But it is gov who can break my door down, lob grenades & shoot me with impunity, not rich guys. Without gov power, the rich can’t do a damn thing to me.
The trouble here is I think you’re confusing income with wealth. Or, you think I am confusing the two. Sure, top earners are a temporary phenomenon. The heirs of Bill Gates, however, will be rich beyond our imagination long into the future, just as the Kennedy clan has remained in the elite. As labor declines relative to capital, concentrations of capital in the hands of a few is a replay of first century Rome.
Now, you want the government to just leave you alone and that’s fine, as long as the rich guys running the government agree. When they stop agreeing, you’re screwed. That’s the reason for avoiding the concentration of wealth we are seeing. Mark Zuckerberg can influence government in ways the voters cannot because he owns Faceberg, colludes with cable companies and news outlets and buys off guys like Erick Erickson. That’s before he bribes politicians. A billion can buy a lot of clout, which is why we have a disastrous immigration situation. A Handful of rich guys want it that way.
There are no perfect answer. Conservatives eschew ideology for that reason. A just government maintains a healthy tension between the claims of authority and the claims of liberty. That’s going to mean, from time to time, busting up concentrations of wealth and power.
Wealth & income are 2 measures with similar analysis. You mention Gates & Kennedy. But globally as opposed to a few:
“Chetty, Hendren, et al: The likelihood a child with parents in the top 1% will be there is 9.6%.”
“Forbes 400 richest %Self-made: 1984: less than 50%; 2014: 69%. The most recent: 9% from poverty vs 7% inherited.”
Another article re some economists I don’t recall to blame: Most $Billionaires are self made. Vietnam’s first fem $Billionaire when VietJet goes public. The $Billionaire founder of Spanx couldn’t get into law school & was turned down for a job as a Disney Character at Disney World. JK Rowling, et al.
I admit being on a limb, mostly alone, but it is not the rich bribing the gov, but the gov in the business of harvesting the rich. The gov with its power is in charge, not the 1% whose members change (& grow in numbers with a richer world – China, Asia, etc) regardless of Gates. Yes, you can see weaklings trying to earn their stripes up the power chain such as wet nose, Marco Rubio pleading for Rich-aid. But, the real power are those who demand tribute. Such was done by gov to Bill Gates who ignored politics until he ignored warnings to “get involved” & was punished. Similar with Apple who put Gore on its board – like an Italian Restaurant putting the God Father’s nephew on the payroll. Chuck Schumer is a top dog. The Hedge Funds were growing big & only 1 contributed to gov. SO, Schumer held a luncheon in NYC, Jan, 2015 (2014?) telling (warning) them to “get involved.” Roosevelt (as I recall) was asked why he favored BigCo vs small & replied: “Who would you rather pull our wagon, 6 big Ox or 10,000 cats?”
The interface of characters & circumstances between gov & the rich is blurry & mutually beneficial. Most blame it on the rich. At its core; however, is the institution & power of the gov, the enabler, the seller. Long ago in a speech, M Friedman said the reason for the complexity of the tax code & the reason the politicians will not simplify it, is that it is a cash cow for them. The Rich don’t demand such an expensive-to-comply code, but do pay to benefit at the Company Store. The pols create such in their own interest. They cannot create wealth (the takers) & so cultivate the fields for those who can (the makers) & proceed to harvest.
It is the tail wagging the dog. Our difference (confusion?) is not wealth vs income, but who ultimately holds the power, gov or rich guys. If you succeed in laying the scythe to the rich, the pols will applaud you with their bounty, and soon enough, plant a new crop for the next harvest.
B. Harrison (a forgotten but interesting president) and the first Roosevelt ushered in the era of “progressive” Republicanism when it became widely perceived that immense concentrations of private wealth had become a threat to constitutional liberties. Note that the GOP of that era understood its first duty as protecting the Constitution and the liberties enshrined there, and not to a set of abstract principles.
Today, we seem to have inherited the worst of all possible worlds: the second Roosevelt (the Soviet-inspired “New Deal”), Truman (the “Warfare State”) and Johnson (the “Welfare State”) created a monstrosity that knows no constitutional limits. While one of our parties unabashedly represents the interests of that state and its various parasites to the exclusion of all else, our other party represents those so-called “private” interests who seek only to curry favor with it – in essence, leaches and parasites by another name. That private wealth, which is at least as immense and concentrated as it was in the 1890’s, is now allied with the behemoth state in an assault against both middle-class prosperity and the individual conscience, a project in which they are enthusiastically assisted by both political parties.
The lesson of the 0bama years, culminating 2016 primary season, is that the facade of the GOP has slipped and the pretense – the lip service paid to such things as middle-class well-being, “conservative” values and constitutional liberties – has dropped. In a fit of hubris, the GOP and its hangers-on decided this year to make very public the concealed hostility and contempt in which the party has held its base for years. The base has now returned the favor, and there will be no going back to what was before.
Just follow the money…it is always where the current tyrants behind it all lurk. That is the seat of tyranny.
The human extinction movement is comprised of these components:
Liberalism is a philosophy of consolation for Western Civilization as it commits suicide.
Under Capitalism, the rich become powerful. Under Socialism, the powerful become rich.
Under Socialism, government employees become powerful.
Under the State there lies the free shit army and useful dupes, who are the little totalitarians among us.
Under these systems, the dirt people eventually revolt, because they are the dirt people, and are the only people who have ever changed anything for their betterment and liberty.
So you’re saying Trump is a tyrant lurking behind his money? Odd thing to say.
A lot of the overseas cash owned by US corporations is stuck there because of the high US tax penalty for repatriating it. There is no way to bring home the proceeds from foreign profits without incurring more US tax, even after having already paid foreign taxes.
It is more the American government’s insatiable lust for tax money than corporate greed that keeps the money offshore.
That said, Zman is absolutely correct about the corrupting effects on governance inherent in wealth concentration.
Let’s see…
It’s cheaper to borrow money, and pay interest, that to repatriate it, and pay the tax.
What to do….what to do…..
Z-classic.
Agreed! Who is our Zman, anyway? How’d he get so smart — he thinks just like I do 😉 — but truly, he does.