Time Line When Income Inequality began to Rise
- In 1969 NASA put the first man on the Moon (maybe one of the government's last greatest accomplishments)
- Lewis Franklin Powell Jr. wrote his famous "manifesto" in 1971
- In 1977 the maximum estate and gift tax was 70% with an exemption of only $120,000
- In 1978 the capital gains tax rate was near 40% and the corporate tax was 48%
- Both manufacturing and union membership peaked in 1979
- In 1988 the corporate tax was lowered to 34%
- Kodak began offshoring jobs in 1989
- Bill Clinton signed NAFTA into law in 1993
- Bill Clinton lowered the capital gains tax rate from 28% to 20%
- Bill Clinton deregulated the banks in 1999
- The China PNTR trade agreement was signed by Bill Clinton in 2000 (the labor force began declining)
- George W. Bush lowered the capital gains tax from 20% to 15% in 2003 (aka "The Bush Tax Cuts")
- The housing and stock market crash happened in 2008 (the deregulated banks were bailed out by taxpayers)
- In 2010 the maximum estate and gift tax was only 35% with a whopping exemption of $5,000,000.00
- There were multiple record all-time highs in the stock markets beginning in 2013 to the present (no banker ever went to jail, they only got richer)
- In the 2014 mid-term election the GOP took control of Congress and now wants to lower the corporate tax rate and eliminate the capital gains tax and the estate tax.
- Ted Cruz, the architect of the government shutdown of 2013, will likely assume chairmanship of the Senate’s Space and Science subcommittee, which sets policy and funding caps for NASA via regular authorization bills (so expect more cuts to NASA, or cuts to food stamps to pay for NASA).
There are, I believe, two master keys to the distribution of wealth: the Inheritance system and the Profit system.
The ordinary millionaire capitalist about to leave this world forever cares less about what becomes of the fortune he leaves behind than we have been accustomed to assume. Contrary to a common opinion, he did not lay it up, at least not beyond a certain point, because of any wish to leave it to others. His accumulating motives were rather those of power, of self-expression, of hunting big game.
I believe that it is very bad public policy for the living to allow the dead so large and unregulated an influence over us.
The right of inheritance," says Chief Justice Coleridge of England, "a purely artificial right, has been at different times and in different countries very variously dealt with. The institution of private property rests only upon the general advantage."
And again, Justice McKenna of the United States Supreme Court says: "The right to take property by devise or descent is the creature of the law and not a natural right-a privilege, and therefore the authority which confers it may impose conditions on it."
The disposal of property by will is thus simply a custom, one handed down to us from Ancient Rome.
Lafayette comments at Mark Thoma's blog:
I have a renewed respect for Irving Fisher as a result of the above insight.
Far too often we think more about the consequences of our motives than their reasoning. That is, why do we do what we do as consumers, workers and, ultimately, hoarders of wealth (if possible).
Surely, there is an element of self-preservation. Look at any bird flitting about most of the time seeking food, and one understands its purpose-in-life. Simply to survive.
Yes, that too is an element of our own lives. But, since we humans are both reasoning and instinctive animals, we have the potential to amass much, much more than we shall ever need in our limited period of existence. And, as I.F. insists correctly, we care little about what it will mean to whom we leave our wealth - except for a bit of philanthropy that might earn us a plaque on a wall somewhere honoring our "charity".
Maybe we think that charity will get us through the pearly-gates?
A wee bit before I.F.'s presentation (1899), Thorstein Veblen wrote his book about Conspicuous Consumption titled, "Theory of the Leisure Class". From WikiP: (Veblen) proposes that the social strata and the division of labor of the feudal period continued into the modern era.
The lords of the manor employed themselves in the economically useless practices of conspicuous consumption and conspicuous leisure, while the middle and lower classes were employed in the industrial occupations that support the whole of society.
Beyond a certain level of income, there is no real reason to work. Capitalists live their lives watching over those who manage their wealth. They are therefore "non-productive", except to the aggrandizement of their personal Net Worth.
The amassing of wealth in the US has been rarely a subject of controversy in the US — despite both Veblen's book and Fisher's speech. It is taken as a "given"; both unquestionable and irreparable.
Which is not very different from many countries who are Newly Rich - as exist in the Far East. The singular most difference is indubitably Europe, and particularly northern Europe, where the unquestioned accumulation of Net Worth is indeed a matter of public concern.
Which results in heavy taxation in order to mitigate somewhat its proportion of total wealth that remains in private hands, principally by higher upper-income tax rates.
Of course, with Reckless Ronnie in the 1980s, we decided to go the "other way". Beginning in the 1960s with LBJ we reduced upper-income taxation from confiscatory levels to, under Reagan, a mere 30% (net after deductions).
We need look no further to understand how the American rich are so rich. The question nonetheless remains, "But, why are they so rich?"