Billionaires increasing Income Inequality is bad but Women Billionaires are Not

Posted by PITHOCRATES - January 26th, 2014

Week in Review

According to the left rich people in corporations are bad.  They’re evil incarnate.  That’s why they hated 2012 presidential candidate Mitt Romney so much.  He was a rich guy in the corporate world.  Who screw the people to enrich themselves.  Making rich people richer.  And poor people poorer.  Which is the new theme President Obama is using these days.  Income inequality.  Which just isn’t right.  Rich people having so much more than poor people.  Especially those billionaires in corporations.  They’re the worst.  Money-grubbing parasites.  These billionaires threaten human progress (see 85 people have as much money as half the world by Li Anne Wong, CNBC, posted 1/20/2014 on MSN Money).

The combined wealth of the world’s richest 85 people is now equivalent to that owned by half of the world’s population — or 3.5 billion of the poorest people — according to a new report from Oxfam.

In a report titled “Working for the Few” released Monday, the global aid and development organization detailed the extent of global economic inequality created by the rapidly increasing wealth of the richest, warning of the major risks it poses to “human progress.”

According to the report, 210 people have become billionaires in the past year, joining a select group of 1,426 individuals with a combined net worth of $5.4 trillion.

It added that the wealth of the richest one percent of people in the world now amounts to $110 trillion, or 65 times the total wealth of the bottom half of the world’s population.

Imagine that.  There are 1,426 of these money-grubbing parasites.  Who can only make the world a worse place.  According to the left.  For any one person having that much money is just wrong.  Unless, that is, she’s a woman (see Facebook’s Sandberg is now a billionaire by Chris Isidore posted 1/22/2014 on CNN Money).

A record high close for Facebook shares has made Sheryl Sandberg one of the youngest female billionaires ever, according to a ranking from Bloomberg.

Sandberg, who is the company’s chief operating officer, owns 12.3 million shares. That makes her stake worth about $720 million.

In addition, she owns 4.7 million options, which would net her $220.6 million at her exercise price.

She has also received stock awards which have not yet vested, the estimated value of which takes her over the $1 billion mark.

Female billionaires are still relatively rare. Bloomberg’s list of the 200 richest people worldwide shows only 17 who are women.

Forbes reported last year that there were 138 female billionaires worldwide, but that’s out of a total 1,426 billionaires worldwide.

And only 24 of the women billionaires on the Forbes list earned their wealth themselves; most inherited a significant portion of their fortune.

Not a bad word in this article about this billionaire.  For when a woman becomes a billionaire it is reason to celebrate.  For shattering yet another glass ceiling.  Not to lament that there is another good for nothing money-grubbing billionaire in the world today.  Who will only make that income inequality worse.  Funny how that works.

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FT164: “If the poor ever stopped being poor the Democrats would have trouble winning elections.” —Old Pithy

Posted by PITHOCRATES - April 5th, 2013

Fundamental Truth

There is no Greater Killer of Poverty than a Job-Creating Free Market Economy

A lot of people vote Democrat because of the perception that the Democrats are for the little guy.  The working man.  The poor.  The disenfranchised.  The sick.  The maimed.  Children.  Women.  Minorities.  Gays.  Lesbians.  Etc.  While Republicans are for rich white men, bankers, corporate executives, Wall Street investors, etc.  Democrats care about people.  While Republicans care about profits.  Democrats good.  Republicans bad.  At least, that’s the common perception in much of America.

The working man.  That’s who the Democrats are for.  The working man.  And what exactly does ‘the working man’ mean?  It means men who are working.  Obviously.  (We’re using the term ‘working man’ because it’s long been part of the lexicon of the Democrat Party.  But we include both men and women when using the expression ‘the working man’.)  The Democrats champion unions to protect the working man.  And to show their gratitude the unions put all their financial support behind Democrat candidates.  So putting people into good jobs is a very important mission for the Democrat Party.  At least that is the perception.

Jobs.  They are important.  For there is no greater killer of poverty than a job.  Countries that have advanced free market economies have plenty of good-paying jobs.  Where much of the populace lives well above poverty.  Like in Chile.  After Milton Friedman and the Chilean economists known as the ‘Chicago Boys’ ignited free market principles in Chile starting in 1973.  Countries that don’t have advanced free market economies have few good-paying jobs.  Where much of their populace lives in abject poverty.  Such as in Haiti.  And these prosperity/poverty levels impact more than just day-to-day life.

The United States has a High Standard of Living because of a Business-Friendly Environment

Chile suffered a magnitude 8.8 earthquake in 2011.  One of the largest earthquakes ever to be recorded in history.  It claimed approximately 525 lives.  Haiti suffered a magnitude 7.0 earthquake in 2010.  Less powerful than the Chilean earthquake.  Yet the Haitian earthquake claimed approximately 220,000 lives.  The difference between these two death tolls?  More people have good-paying jobs in Chile than they do in Haiti.  Giving Chile a more advanced free market economy.  And better building codes and standards.  Allowing them to survive a stronger earthquake with less loss of life.

This is what jobs give you.  Working people have money to spend.  And working people have money to pay taxes.  Which can lift people out of poverty.  And lift nations out of poverty.  Which is why the United States has such a high standard of living.  Their economy became the number one economy in the world because they had so many jobs.  Thanks to a very business-friendly environment.  The Americans encouraged entrepreneurship.  And supported it with a sound banking system that encouraged capital formation.  Thanks to all those workers saving some of their earnings for the future.  Savings that provided the capital that built America.

So jobs are good.  And providing jobs for the working man is even better.  Because that’s what a working man wants.  A job.  So the Democrats, then, should be all about job creation.  If they are for the working man.  As is the perception.  But is this perception correct?  Well, if you determine that by the number of jobs they’ve created, no.

The Obama Policies are Business Unfriendly to Keep People Poor so the Democrats have Someone to Champion

Before George W. Bush became president in 2001 there were 210,743,000 in the civilian non-institutional population (see Employment Situation Archived News Releases).  Basically those who could have a job.  Of those who could have a job there were 141,489,000 in the civilian labor force.  By the time Bush left office there were 154,587,000 in the civilian labor force.  An increase of 13,098,000 to the civilian labor force.  Which is an increase of 1,637,240 annually.  Or 136,438 monthly.  So this is what a Republican did for the working man.  Now let’s see what a Democrat did.

Before Barack Obama became president in 2009 there were 154,687,000 in the civilian labor force.  At the end of March 2013 there were 155,028,000 in the civilian labor force.  An increase of 441,000.  Which is an increase of 103,765 annually.  Or 8,647 monthly.  The Bush economy created more jobs in a month that the Obama economy created in a year.  In fact, for every job the Obama economy created the Bush economy created 15.8 jobs.  So if you determine who is for the working many by who gives the working man more of what he wants, jobs, it is clear that the Republican is for the working man.  Not the Democrat.

No, President Obama’s economic policies are not business-friendly.  They are decidedly unfriendly to business.  Even punitive.  Which is why there has been no real job creation with the Obama economic policies.  Wall Street may be doing well.  The stock market may be doing well.  But the working man sure isn’t.  In fact, those who are doing well in the Obama economy are rich white men, bankers, corporate executives, Wall Street investors, etc.  So if the Democrats are not for the working man who are they for?  Poor people.  In fact, they love poor people so much that they work hard at keeping them poor.  Giving them a meager government handout instead of a job.  Which is how they win elections.  By giving poor people free stuff.  And if the poor ever stopped being poor the Democrats would have trouble winning elections.  Which is why the Obama economic policies are so business unfriendly.  So there are always poor and impoverished people they can champion.

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FT149: “Poor people don’t hate rich people; they envy them and buy lotto tickets to become one of them.” —Old Pithy

Posted by PITHOCRATES - December 21st, 2012

Fundamental Truth

People don’t hate the Lifestyles of the Rich they just hate the Rich because they’re Living it Instead of Them

Overweight and less beautiful women hate beautiful women with toned, firm bodies.  Overweight and less handsome men hate more handsome and muscular men who get all the beautiful women with toned, firm bodies.  They may hate those who are more physically attractive than they are.  Until they start dieting and going to the gym to become one of them.  Once they are one of the beautiful people they no longer hate the people they once did.  In fact, they now enjoy being part of their world.  A world where their physical appearance gets them the attention they didn’t know when they were less attractive.  But for some dieting and working out is hard work.  Especially if they have to work harder than others who can eat and drink anything they want without putting on a pound.  So if they falter from their new healthy lifestyle and put that weight back on those old feelings of hatred will return.

People fear cancer.  They hate cancer.  And may adopt a healthier life style to avoid cancer.  By eating healthier.  And exercising.  They may quit smoking and cut buck on drinking.  And they may add certain foods to their diet they understand will help prevent cancer.  Even if some of these foods aren’t delicious.  After adopting a healthier lifestyle they don’t change their position on cancer.  They still hate it.  But staying on a healthy diet and making time to exercise is hard.  Because the delicious, less healthy foods are hard to give up.  And going to the movies is a lot more enjoyable than going to the gym.  Once their healthier lifestyle lapses their position on cancer does not change.  They still hate it.  As they always hated it.

There is a difference between hate and envy.  You may hate people you envy.  Because they are, or have, everything you want.  And you covet what they have.  But what you hate is that they are living the good life instead of you.  They don’t hate the good life.  Whereas you don’t envy what you truly hate.  No one has ever complained that someone else got cancer instead of them.  No one has ever complained about the unfairness of cancer that way.  Usually the complaint is more along the lines of ‘why me and not someone else’.  For the hate of cancer is a pure hate.  It is not relative.  It is absolute.  Whereas someone’s hate of the rich is relative.  It will disappear the moment a person comes into money.

People in the Public Sector exploit the Taxpayers to pay for their very Generous Pay and Benefit Packages

Kids may go on to college and take courses in the social sciences.  Where they learn about the unfairness of capitalism.  The evil of corporations.  How businesses exploit their employees.  How they put profits before people.  By the time they leave college the word ‘profit’ is a four-letter word to them.  And they believe we should shun anyone pursuing profits like those exploitive business owners.  Raising taxes on them is a good thing.  For by doing so we can help redistribute the wealth from those hoarding it to those who don’t have enough.  To produce a fair and egalitarian society.

They also learned how socialism is better.  That the Soviet Union only failed because of the Americans undermining a superior economic system.  They believe so strongly that they vote Democrat to try and do something about making America a fairer place to live.  They go on to get jobs in the public sector to do their part in making America fairer.  By redistributing wealth.  To help those who have little.  And they exploit the taxpayers.  Forcing them to pay for their very generous pay and benefit packages.  While those same taxpayers never live a life as fair or as equal as the public sector workers they support.

These public sector workers envy the life of the rich.  They don’t hate that life.  They just hate the people who are smarter and more talented than they are who were able to achieve that life.  It’s not fair that these people had talent.  And worked hard for success.  So it’s only fair to take their money away from them to make society fair.  And so they can enjoy a lifestyle that neither their talent nor their ability could ever provide.

Poor People voted overwhelmingly for President Obama to Punish the Rich for Winning Life’s Lottery

President Obama won reelection with a campaign of class war.  Getting the people to believe that the rich weren’t paying their fair share in federal income taxes.  Despite the top 10% of income earners paying 70% of all federal income taxes.  Early on Occupy Wall Street agitated the people against the 1%.  Which grew into a bitter character assassination of Mitt Romney.  Because he was rich.  People hated him for that.  Not for having money per se.  For the people wanted everything he had.  They just hated him because he had the talent to earn what they couldn’t.  For they lacked the talent to achieve the success of Mitt Romney.

President Obama enjoyed the support of rich Hollywood stars and musicians.  And the president enjoyed hobnobbing with them.  Even the suffering masses enjoyed seeing the president hobnob with their idols.  Even though they had wealth just like Mitt Romney.  But for some reason their inequality was okay.  And these superstars, incidentally, all went into their chosen field to become rich.  To live in mansions.  And to have more money than they could ever spend.  While the people castigated Mitt Romney for having money the people looked on in awe and reverence at the lifestyle of the rich and famous they so admired.  And all the rich and famous had to do to get this pass on having obscene wealth is to attack other people with wealth.  And publically support Democrats.  You do that and they will leave you alone.  No matter how much money you shelter in the Cayman Islands.

No one hates rich people.  They just envy their lifestyles.  And covet what they have.  They hate the fact that they weren’t born with the passion, drive, ability or talent to become rich.  And hate these people for being able to do what they cannot.  Become rich.  Though it doesn’t stop them from trying.  Especially poor people.  Who voted overwhelmingly for President Obama.  To punish the rich for winning life’s lottery.  While they themselves spend every last dollar they can buying lotto tickets.  For they may have voted for President Obama to punish the rich.   But that’s only because they envy the rich.  And want to become one of them.  Should they win the lotto their position on hating the rich will quickly change.  Perhaps going so far as to start voting Republican.  To save as much of their winnings from the taxman as possible.

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President Obama’s EPA Policies are Causing High Food Prices and Global Hunger

Posted by PITHOCRATES - August 18th, 2012

Week in Review

President Obama says he cares for poor people.  But his actions clearly show that unless there’s something in it for him he doesn’t care for poor people.  Even if they are going hungry (see White House offers drought relief, feels heat to waive ethanol mandate by John W. Schoen, NBC News, posted 8/13/2012 on Economy Watch).

President Barack Obama announced emergency measures Monday to ease the impact of the worst drought in half a century, but stopped short of waiving the government’s requirement that a large portion of the now-shriveled corn crop be diverted to make ethanol…

As the lowest yields in nearly two decades squeeze feed supplies, livestock producers are asking the government to waive a five-year-old requirement that gasoline sold in the U.S. contain roughly 9 percent ethanol. Because most ethanol in the U.S. is made from corn, roughly 40 percent of the corn crop, in a good year, is purchased by the biofuel industry…

With the rest of the world’s food chain already strained, the competition for each kernel of corn is going global. Last week, a United Nations food index jumped 6 percent, and the UN’s Food and Agriculture Organization warned against the kind of export bans, tariffs and buying binges that worsened the price surge four years ago. The U.N. food agency stepped up the pressure on the U.S. to ease its biofuel policies…

Ethanol production had already begun slowing before this summer’s drought, as fuel suppliers have approached the limit of demand for the biofuel. Though higher concentrations are sold in a few stations, most gasoline formulated with ethanol is limited to a 10 percent blend.

Cutting production, though, could produce a bigger political backlash from another key contingency in an election year: American drivers. Since other additives have been phased out over the past five years, gasoline refiners have overhauled their plants and rely on ethanol to produce high-octane fuel that burns cleanly enough to meet air quality standards.

Save the planet.  Kill the people.

You know food prices are rising when the UN is asking the U.S. to ease its biofuel policies.  These are, after all, the same people pushing for economy-destroying environmental policies on the entire world.  Particularly on the advanced economies of the world.  So this food crisis is serious.  Which is why they are urging President Obama to stop using 40% of the corn crop for fuel.  And to use this food as food instead.  To save starving children in the less economically advanced parts of the world.  But President Obama’s answer?  “No.”  Why?  Does he not care for the starving children of the world?  Apparently not.  For he apparently cares more about the campaign donations from the ethanol lobby.

President Obama has shown he has no problem using executive orders to overrule the Constitution.  So he clearly could use his executive powers to change policies he has the legal authority to change.  Such as relaxing his EPA requirements during this hot and dry summer.  Let the cars pollute for a year until this crisis ends.  Then he can re-cripple the economy with his punishing EPA requirements later.  He can do it by executive order.  But he won’t.  Because the ethanol lobby is too well connected.  Besides a lot of his rich Hollywood contributors are all environmentalists who will never have a problem putting food on their tables.  But they will have a problem putting campaign cash on President Obama’s table if he rescinds any environmental policies.  So people will starve.  So the president can please his cash-contributing friends.

Never before has one man caused so much suffering to so many for the benefit of so few.  Well, actually, there have been a lot of people who have done this.  But they were usually warmongering dictators.  Not the leader of the free world.  Which makes this especially sad.  Unlike his republican rival for the presidency this fall, our president clearly takes care of his rich friends while poor people suffer in the United States from high food prices.  And poorer people throughout the world suffer hunger.  Because of President Obama’s EPA policies.  Something that even the UN says are harmful to poor people everywhere.  And is begging the president to stop willfully hurting these people.

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FT120: “Give a man a fish and he can eat for a day; give him a job and he can have an obesity problem.” -Old Pithy

Posted by PITHOCRATES - June 1st, 2012

Fundamental Truth

In Warfare Starvation and Famine are the most Potent of Weapons

Starvation and famine has plagued mankind since the dawn of time.  It was the driving force in evolution.  Those who took control of their food supply lived.  Those who didn’t disappeared from the evolutionary path.  Like Neanderthal.  And those who came before him.  Our earliest civilizations massed their populations to farm.  And the masses lived in cities.  Setting down roots and saying goodbye to their hunting and gathering ways.  In the Wei River valley.  In the Indus River valley.  The valleys of the Euphrates and Tigris.  In the Nile River valley.  Where modern life took root.  Produced our first food surpluses.  And gave birth to urban life.  And the middle class.

The rise of the middle class allowed civilization to flourish.  For every person that didn’t have to produce food could do something else.  Build better tools.  Create a better government.  Create art.  In general, think about other things.  Those other things that made humans different.  By giving us a more interesting life.  And more sophisticated ways to express ourselves.

But this growth was a double-edged sword.  For large urban populations that made life more enjoyable was also a great threat to the food supply.  A cool and wet summer could destroy crops.  Poor food storage could spoil the food surplus.  A war could see an enemy purposely destroy your crops and your food surplus.  Causing famine.  Where half or your city population could easily die before the next harvest.  Or more.  Especially if the famine resulted from an act of war.   As an act of genocide.  To clear people off land that others want to use for their own food needs.  Which was Hitler’s plan in Russia.  To take the food from the Ukraine.  Kill the indigenous population.  And replace them with Nazis.  Thus creating more living space for the Third Reich.  Or Lebensraum.    Because in warfare starvation and famine are the most potent of weapons.

History has shown that the most Food-Abundant Countries are the most Capitalistic

England led the way in agricultural advances.  Increasing crop yields such that small tracts of land could support greater populations.  As well as produce such huge food surpluses that they had food to export.  As the British Empire spread across the globe so did their advanced agricultural ways.  During the 19th century starvation and famine were becoming rarer in the technologically advanced West.  The 19th century Irish Potato Famine reduced Ireland’s population by up to 25%.  A tragedy of epic proportions.  But it was an exception to the rule.  For food was growing so abundant in the advanced Western World that rarely did people go hungry.  Or feared famine.  And when mechanization and chemistry hit the farm our crop yields exploded.

During the Twentieth Century the Western World produced so much food that food prices plummeted.  Causing the Great Depression.  There was so much food available that farmers couldn’t sell their food at a high enough price to service the debt that they incurred mechanizing their farms.  But not everyone was producing bumper crops in the Twentieth Century.  Both the Soviet Union and the People’s Republic of China set records for death by famine.  As they shunned the ways of the West.  And the state took over their agricultural sectors.  States that were so inept at good farming practices and things economic that crop yields plummeted.  North Korea to this day can’t even grow enough food for her own people.  And has recurring famines.  Because they hold on to the communist ways of Stalin and Mao.  While the Russians and the Chinese have long abandoned them. 

History has shown that the most food-abundant countries are the most capitalistic.  Countries whose agricultural sectors use the latest in technology.  And/or have a rich and vibrant economy that can buy all the food they need if they can’t produce their own.  Like Hong Kong.  Basically a rock off the Chinese mainland.  It has little arable land.  Few natural resources.  But what it does have is low taxation and free trade.  And laissez-faire capitalism.  The Chinese lost Hong Kong to the British Empire (who have since given it back).  And the British used laissez-faire capitalism to make Hong Kong the gem it is today.  Where people are free and in want of little.  And in this island nation that can’t grow enough food to feed their population famine is unheard of.  Why?  Because they have the wealth to trade for all the food they desire.  In fact, while Mao gave the people in the People’s Republic of China famine Hong Kong were doing just fine.  Because they were wealthy and could trade for what they needed.  And they had the Royal Navy protecting her.

In America our Food Supplies are so Abundant and so Cheap that Poor People are becoming Obese

Poverty is the biggest killer.  Famine is prevalent in poor countries.  Like Haiti.  North Korea.  And sub-Saharan Africa.  People suffer in these countries unlike they do in the West.  Despite the amount of aid the West pours into them.  And it’s not because Western nations were blessed with natural resources.  Hong Kong doesn’t have anything other than laissez-faire capitalism.  Protected by the Rule of Law and minimal government interference into the private sector economy.  The very things that are missing from Haiti, North Korea and sub-Saharan Africa.  Where corruption rules supreme.  There is little regard for human rights.  Or property rights.  And no one can protect their people from the abuses of government.  Or from warring neighbors.  Like the Royal Navy protected Hong Kong.  And pretty much the rest of the world during the 19th century.  Just like America’s military might made the world safe for capitalism in the Twentieth Century.

Third world nations are not a victim of first world nations.  They are a victim of themselves.  Where corrupt rulers collect Western aid and live well while their people suffer.  Especially the nations that eschew capitalism.  And embrace socialism.  Like the Soviet Union did.  Like the People’s Republic of China did (the current Chinese regime is enjoying economic growth by allowing some capitalism into their still communist country).  And like North Korea still does.  These socialist utopias were a living hell for their people.  Where they live in fear of their government.  And of famine.

Meanwhile in the Western capitalist nations what do they suffer from?  Especially the poor people in America?  Obesity.  In New York they’re passing laws restricting the size of sugary beverages because they are dangerous to your health.  While they pass out free condoms and birth control as sex is far less risky behavior than a delicious carbonated beverage.  Apparently.  Yes, in America our food supplies are so abundant and so cheap that poor people are becoming obese.  Because capitalism has made those food supplies abundant and cheap.  And capitalism gave people jobs where they could afford to buy so much food that they can give themselves an obesity problem.  A problem they just don’t have in Haiti, North Korea or sub-Saharan Africa.  Because they can’t grow enough food.  Or earn enough money to buy enough food.  For they don’t have an environment conducive to creating jobs.  Which is why these nations are still impoverished and/or suffering famine despite all the aid the West gives them.  Food aid will run out.  And then they’ll just be starving once again.  If they have jobs, though, they’ll be able to buy food whenever they’re hungry.  Because it’s like that old saying.  Give a man a fish and he can eat for a day; give him a job and he can have an obesity problem.

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Starving Poor People to Save the Planet from Global Warming

Posted by PITHOCRATES - February 4th, 2012

Week in Review

To save the planet we’re going to stop burning fossil fuel in our cars.  Instead, we’re going to burn food.  And what could possibly go wrong with that?  I mean, what other uses does food have (see Beef prices set to soar by RANDY SHORE posted 1/31/2012 on The Vancouver Sun)?

Soaring feed prices across North America and drought conditions in the United States are pushing the cost of meat — beef in particular — through the roof….

The commodity price of corn is another factor driving the price of popular meats skyward, say meat producers. The price of corn grown for animal feed has doubled since the summer of 2010, driven in part by rising demand for corn as a source of ethanol fuel…

Increases in the price of corn in response to the U.S. push to use the grain for ethanol production has also affected the price of pork…

“[U.S. energy policy] did motivate producers to grow more corn, but it wasn’t nearly enough to meet the increase in demand,” said Rice. “That increased competition drove up the price of corn and that was a huge hit [to pork producers].”

Rich people will still enjoy their tenderloin.  As they always will.  High price or not.  But we make something else out of beef.  Hamburger.  The staple of low-income family dining room tables everywhere.  Meatloaf.  Hamburger Helper.  Things I’ve enjoyed as a child.  And I’m not ashamed to say that I still enjoy.  Cholesterol levels be damned.

So we’re saving the planet (from the man-made global warming bogeyman that was created by big world government ‘scientists’ at the University of East Anglia) by making it harder for poor people to have their protein.  Of course, the environmentalists are okay with this.  As they don’t much like people to begin with.  Especially meat-eating people.

Think about this the next time you go grocery shopping.  While you decide what not to buy.  So you can afford your beef and pork products.  To save the planet from a man-made phenomenon.  The man-made fear of global warming.

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FT97: “The poor may hate the rich yet that doesn’t stop them from trying to be rich.” -Old Pithy

Posted by PITHOCRATES - December 23rd, 2011

Fundamental Truth

Politicians use Class Warfare to Blame Others for their Economic Destruction

Class warfare is on the rise.  Which is typical during a presidential election season.  Especially when a president’s policies haven’t exactly improved the economy.  When your policies give Jimmy Carter’s misery index a run for its money you have to find something else to run on beside your record.  So you blame the rich.  Which tends to go over well for those who aren’t rich.  Because while they’re cutting back to stretch what little they have to last in the face of record unemployment, the rich aren’t.  It doesn’t help the un-rich.  But somehow having someone to hate brings them some comfort.

So they listen to the class warfare.  And like what they hear.  The rich aren’t paying their fair share of taxes.  Rich people paying millions in tax dollars isn’t enough.  They should pay more.  But they try not to.  Because they’re selfish.  Evil.  They hate poor people.  Hungry people.  Children.  And they really hate poor, hungry children.  For it is the rich who always oppose paying more taxes to help these people.  The poor never do.  They are always in favor of taxing the rich more to help other people.  To help themselves.  Because the poor aren’t selfish.  Or greedy.  Like the rich.  The rich have more than enough.  Everyone knows this.  So they should pay more in taxes.  After all, fair is fair.

At least, this is the thinking of class warfare.  It’s sort of like magic.  Magicians use misdirection to take your eyes away from what they’re really doing.  A little sleight of hand.  Doing something with one hand while they have you looking at the other.  You’re amazed.  And feel entertained for being fooled.  You like it.  And asked to be fooled again.  Politicians have picked up on this human desire.  And use it to their advantage.  To get us looking at something completely different.  And not the economic destruction they’re causing.  And then, like magic, we blame the rich for all the ills in our lives.

Poor People know one thing for Sure, it is Better to be Rich

So the rich are greedy, evil and selfish.  The scum of the earth.  We have nothing good to say about them.  Because money is the root of all evil.  And anyone who has money must be evil.  A classic American novel set during the Great Depression, The Grapes of Wrath, epitomized this when the mother wanted to treat her men to some sugar in their coffee but couldn’t afford it.  She asked for just a little free sugar.  The clerk said she couldn’t.  Because she wasn’t the owner.  And would get in trouble if she did.  But she gave her a little sugar anyway.  And slipped some of her own money into the till to pay for it.  A rich person wouldn’t do this.  Only a poor person would help another poor person.  Because the poor are good.  And the rich aren’t.

This is why class warfare works.  But there is a fatal flaw in it.  The poor people may say they hate the rich and want them punished, but it’s the poor people who are predominantly buying lotto tickets.  Why?  To become rich.

Rich people don’t buy lotto tickets.  Poor people do.  In hopes of a Cinderella rags to riches story.  Because poor people know one thing for sure.  It is better to be rich.  And they will spend their meager wages on lotto tickets for that gazillion in one chance of becoming rich.

More Government Benefits paid for by the Rich is the Ultimate Goal of Tax and Spend Class Warfare

Of course, a person’s definition of ‘rich’ differs from another.  And for the most part it’s relative.  To their own wealth.  Anyone who has more than them is rich.  And because someone always has more than they have they are not rich.  Simple.  So class warfare works.  Despite its fatal flaw.

But class warfare isn’t about fairness.  It’s just misdirection.  A little political sleight of hand.  To help a politician escape blame for the economic damage they’ve caused.  By tapping into a base human trait.  Greed.  That insatiable desire to get-rich-quick.  By spending their meager wages for that gazillion in one chance.

Or for more government benefits paid for by the rich.  The ultimate goal of tax and spend class warfare.  Something the poor are all for.  Because fair is fair.  Until, that is, they do win the lotto.  And these people see what it’s like to have more than others have.  As people crawl out of the woodwork to ask for some of their new found wealth.  Because they have more than enough.  And should share.  Because fair is fair.

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FUNDAMENTAL TRUTH #75: “Lower income tax rates generate more tax revenue by making more rich people who pay more income taxes.” -Old Pithy

Posted by PITHOCRATES - July 19th, 2011

The top 1% of Earners pay close to 40% of all Federal Income Taxes

Poor people pay little income taxes.  Rich people pay a lot of income taxes.  Everyone else pays somewhere in between.  The tool to make this happen is the progressive tax system.  Government designed it so that people with more income pay more taxes.   Via progressive tax brackets.  And the current (2010-2011) brackets (for head of household) are:

  • 10% on first $12,150
  • 15% on income from $12,150 – $46,250
  • 25% on income from $46,250 – $119,400
  • 28% on income from $119,400 – $193,350
  • 33% on income from $193,350 – $379,150
  • 35% on income over $379,150

If you earn $8,000 you owe $800.  Simple.  If you earn $83,600 you owe $15,668.  If you earn $450,000 you owe $131,435.  If you earn $2,500,000 you owe $848,935.  See the pattern?  Earn more.  Pay more.  Almost as if you’re penalized for being successful.

Of course, low-income people often don’t pay any federal income taxes.  In fact, a lot of people don’t.  About half.  Thanks to tax credits, deductions and exemptions.  But when you’re a rich CEO earning a multimillion dollar salary there aren’t enough tax credits, deductions and exemptions to avoid your taxes.  That’s why the top 1% of earners pay close to 40% of all federal income taxes.  Something we should thank them for.  Instead of demonizing them.

The higher the Top Marginal Tax Rate is the more the Rich avoid paying Income Taxes

There are no Mom and Pop hardware stores anymore.  The big box home improvement stores like The Home Depot, Lowe’s and, for those of you old enough to remember, Builder’s Square put them out of business.  Because of greedy consumers like you.  And me.  Who want to get the best value while shopping.  And if we can buy something of equal quality at a lower price we do.  We work hard for our money.  We spend it carefully.  Wisely.  And we don’t pay more for something when we can get the same for less elsewhere.

It’s the same for rich people.  When they shop.  And when they invest their wealth.  Or their ability.  They look at their options.  Create a new business?  Work at an established business?  If you’re highly skilled you can earn a lot of income.  Which rich people take into consideration.  But there are costs.  Payroll taxes.  Employee compensation and benefits.  Compliance and regulation costs.  And, of course, the progressive tax system.

The higher the top marginal tax rate the less incentive they have to start or run a business.  The less incentive they have to create jobs.  And the more likely they won’t start or run a business.  Instead they’ll invest their money and pay the simpler and (so far) lower capital gains tax.  And this is what happens.  The higher the top marginal tax rate is the more the rich avoid paying income taxes, leaving the middle class to pick them up.  Just like you avoided that Mom and Pop hardware store on your way to The Home Dept.  And with an abundance of government debt available, the rich can invest and live on interest.  Sitting on the sidelines.  Watching the rest of us struggle to find a job.

You don’t need Employees to live on Interest Income

So, the progressive tax system is a way to make rich people pay more.  To transfer the tax burden to them.  And it does.  To a point.  But if you try to tax them too much they’ll just drop out of the economy.  And take their jobs with them.  Which is a double whammy.  We lose some of that generous 40% of income taxes they pay.  And we lose who knows how many thousands of jobs.  And taxpayers.  Thus transferring the burden the other way.  Away from the rich.  To those less able to afford it.

The progressive tax system is supposed to make paying taxes easier on the poor.  The less you earn the less you pay, leaving you with more money for the necessities of life.  Whereas the rich can afford to pay more so they do.  But a flat tax is a progressive tax, too.  The more you earn the more you pay.  For example, going to a 15% flat tax, our sample earners above would change their taxes owed as follows:

  • $8000:  $800  →  $1,200
  • $83,600:  $15,668  →  $12,540
  • $450,000:  $131,435  →  $67,500
  • $2,500,000:  $848,935  →  $375,000

It’s still progressive.  And, yes, the rich will pay less individually.  But there will be more of them.  For this lower income tax rate changes the dynamic.  It will be more profitable to get off of the sidelines and get back into the economy.  Because a flat 15% income tax rate will beat or equal the capital gains tax.  And the profit from creating or running a business will blow away the earnings on a portfolio of treasury bonds.

Better still are the jobs.  You don’t need employees to live on interest income.  But you need them to run a business.  More jobs mean more taxpayers.  So more rich people are back in the economy earning income and paying income taxes.  And more employees are working.  That’s more payroll taxes.  And more personal income taxes.  In the end, the numbers win.  More jobs.  More GDP.  And more federal tax receipts.

Keeping People Poorer and more Dependent on Government

If the goal of government tax policy is to raise tax revenue, the logical thing to do would be to design a tax code that creates more rich people.  A lower top marginal tax rate does this.  So does a flat tax.  Such a tax policy will create incentives to earn income instead of living on capital gains from investments.  Each rich person will pay less income tax individually but there will be far more of them paying income taxes overall.  And they will create jobs.  The more jobs there are the more payroll taxes and personal income taxes there are.

History has shown that cutting tax rates has done just that.  The Mellon tax cuts of the 1920s.  The JFK tax cuts of the 1960s.  The Reagan tax cuts of the 1980s.  The Bush tax cuts of the 2000s.  So if the record shows that lower tax rates produce more tax revenue, why are we always trying to raise the top marginal tax rates?  Simple.  Politics.

Being in politics is the closest you can get to being part of an aristocracy in the United States.  Unless you’re born a Kennedy.  Whether its ego or the graft, people aspire to be in the privileged few.  Life is better there.  If you have no talent or ability.  Other than being able to tell a pretty good lie.  So you use class warfare to get the masses to support you.  And the progressive tax system.  Which keeps people poorer and more dependent on government.  Like it used to be in the old days when there was an aristocracy.

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The Anatomy of a Subprime Mortgage Crisis

Posted by PITHOCRATES - October 17th, 2010

Old Time Politics – Buying Votes

There’s a lot of lying going on about the subprime mortgage crisis.  How it happened.  Who was responsible for it.  Was it the banks and their predatory lending?  That’s who Barney Frank blames.  Well, them and Republicans.  Or was it some more of that irrational exuberance that led to a real estate bubble?  It created a dot-com bubble in the 1990s.  Which in turn caused a recession.  Was it just a little history repeating itself?  Perhaps they both played a part.  But if they did, they were minor supporting roles.  They weren’t the star of the crisis.  For neither could have done anything had it not been for their enabler.

The Boston Globe’s Donovan Slack writes about one of the enablers backpedaling on his previous rosy statements about the two companies at ground zero of the crisis (see Stance on Fannie and Freddie dogs Frank on boston.com).  Fannie Mae.  And Freddie Mac.  Frank is running for reelection.  And his words are coming back to haunt him.

America is a center-right nation.  To counter that, the Left courts a coalition of special interests and single-issue voters.  Federal workers, teachers, unions, gays & lesbians, pro-choice feminists, environmentalists, socialists, minorities, etc.  Each taken by themselves is a very small percentage of the voting population.  But taken together it’s a sizeable percentage.  Then add in one more very important Democrat constituency.  The poor.  Now with all of these firmly in the Democrat’s camp, it’s just a matter of getting enough of the moderate and independent vote to win an election.  Of course, this is a moot point if they DON’T lock in the Democrat base.  And they do this by giving away as much free stuff and favorable legislation as possible. 

Give Me Your Tired, Your Poor, Your Huddled Masses Yearning for a House They Can’t Afford

The key to locking in the base is, of course, the poor.  There are a lot of them.  So the Left courts them.  Engages in class warfare.  They paint the Republicans as rich fat-cats who want to take their welfare, social security, food stamps, etc., away from them.  That they want to keep them in slums or throw them onto the street.  In contrast, they, the Democrats, want to provide for them.  To help them.  And they give them a lot of things.  To earn their gratitude.  And their votes at the election booth.  And the grandest of all the things given to them?  Affordable housing.

Poor people don’t have a lot of money.  That’s pretty straight forward but it needs to be said.  Because people who don’t have a lot of money can’t afford to buy a house.  Again, that’s pretty straight forward.  But it needs to be said.  Now, when these people apply for a mortgage and get denied, why do you think they got denied?  Here’s a hint.  Re-read this paragraph.  They get denied because they don’t have a lot of money.  You see, if you don’t have a lot of money, you can’t buy expensive things.  Again, straight forward.  But it needs to be said.  Again.  And often.

Now, what do you think a politician thinks the reason was for these poor people getting their mortgage applications denied?  Red-lining.  Racism.  Classism.  Unfairism.  (Yeah, that isn’t a word.  But it works.)  A large percentage of those denied mortgages are from the inner city poor.  And because of previous white-flight, that inner-city poor also happens to be primarily minority.  Hence the charges of racism.  And that’s just gold to a political party who needs poor minorities to vote for them.

The Siren Song of Affordable Housing

Now Barney Frank is running for reelection.  His Republican challenger is using Frank’s own words in his campaign.   And they’re causing some damage.  For Frank sat on the House’s Financial Services Committee (the oversight committee for Fannie Mae and Freddie Mac) throughout the time the crisis built.  And now he’s answering some very uncomfortable questions (this and all quotes are from Stance on Fannie and Freddie dogs Frank).

Frank, in his most detailed explanation to date about his actions, said in an interview he missed the warning signs because he was wearing ideological blinders. He said he had worried that Republican lawmakers and the Bush administration were going after Fannie and Freddie for their own ideological reasons and would curtail the lenders’ mission of providing affordable housing.

Ideology trumped responsibility.  The Left cries foul when the Right doesn’t reach across the aisle, but the Left never reaches out when they have power.  It’s us against them.  Pure partisanship.  Even when there’s great danger brewing.  It’s their interests first.  Then the country’s.  So he protected Freddie and Fannie.  And enabled them to cause greater harm.

Freddie and Fannie are in the secondary mortgage market.  They don’t write mortgages.  They guarantee them (so banks are more willing to take risks with less credit-worthy people).  And they buy these risky mortgages from the banks.  This further reduces a bank’s risk in approving very risky loans to people who are not credit-worthy.  Which is what the Democrats want.  More affordable housing for people who can’t afford to buy houses.  Frank’s committee sets the rules Freddie and Fannie must follow to keep them from approving mortgages that are crazy-stupid.  But that’s exactly what they encouraged.  Subprime loans.  Adjustable Rate Mortgages (ARMs).  Interest only mortgages.  No documentation approvals.  Any bank that didn’t have enough of these mortgages on their books (i.e., risky loans to poor people who couldn’t afford to buy houses) was in trouble.  The federal government would investigate them for red-lining, racism, classism, etc.

The more mortgages Freddie and Fannie bought, the more cash banks had to make more risky loans.  They then dumped these risky loans onto Wall Street.  You see, before the day of subprime loans, ARMs, interest only mortgages and no documentation approvals, mortgages were very safe loans.  But these subprime loans weren’t.  But they looked safe when Wall Street sold them.  I mean, buyers didn’t see the mortgage applications.  They had no idea what a credit risk these people were.  They just knew mortgages were traditionally safe investments.  So they just bought them.  And Freddie and Fannie made it all possible.

Known as government-sponsored enterprises, they didn’t provide mortgages themselves, but rather bought loans from banks and mortgage brokers, freeing up cash so the lenders could make more loans. Fannie and Freddie held or bundled the loans and sold them to investors as mortgage-backed securities.

Investors bought these very ‘profitable’ securities.  This demand just fueled the crisis in waiting.  Because Freddie and Fannie could dump these on Wall Street, they wrote more and more risky loans.  This made everyone happy.  Everyone was making money.  And more people who couldn’t afford to buy houses were buying houses.  And this was, after all, Freddie and Fannie’s mission.  Affordable housing.

In an effort to increase homeownership, the Clinton administration in the late 1990s and the Bush administration in the 2000s pushed Fannie and Freddie to meet growing quotas for buying affordable home loans. Those pushes, combined with a drive for more profits at the enterprises, drove Fannie and Freddie to take on more risk and more debt. They backed subprime and other risky loans, including mortgages for borrowers without proof of steady income.

Even the Republicans got on the band wagon.  New homes sales drive the economy (because of the stuff people have to buy to put into those houses that they can’t afford).  And you make points with the poor and the minorities.  There was just no down side in affordable housing.  Or was there?

But the director of the federal office responsible for overseeing Fannie and Freddie, Armando Falcon, began noticing their expanding portfolios and increasing reliance on risky investments. In early 2003, Falcon warned Congress in a 118-page report of the companies’ potential for a catastrophic failure that could jeopardize the economy.

Okay.  Five years before the crash someone was taking notice.  And he warned Congress.  Thank god someone was looking out for America’s best interests.

But Frank and other Democrats still opposed tighter regulation, Frank most notably in his public statements saying there was nothing wrong with Fannie and Freddie. He and other House Democrats also sent a letter to President George W. Bush in June 2004, saying the proposed crackdown could “weaken affordable housing performance . . . by emphasizing only safety and soundness.’’

Frank and the Democrats were saying that it was more important to put people who couldn’t afford houses into houses than it was to provide oversight.

So he initially supported a Republican measure in 2005 that would have imposed stricter standards on the lenders. But he voted against it in the full chamber because it did not include funding for affordable housing, he said. The bill passed the House.

Frank came around.  He supported a Republican measure to provide stricter oversight.  But he changed his mind.  Once again, affordable housing was more important than the oversight he was supposed to provide.  Then, in the summer of 2008, Treasury Secretary Henry Paulson warned Frank again.  Now Frank chaired the House’s Financial Services Committee.  Now, more than ever, it was his responsibility to reign in Freddie and Fannie.  To provide the oversight that was his committee’s responsibility.  But he still didn’t.  Like Nero, he fiddled as the crisis burned out of control.

In July 2008, then-Treasury Secretary Henry Paulson called Frank and told him the government would need to spend “billions of taxpayer dollars to backstop the institutions from catastrophic failure,’’ according to Paulson’s recent book. Frank, despite that conversation, appeared on national television two days later and said the companies were “fundamentally sound, not in danger of going under.’’

A few months later, Freddie and Fannie would cause the worst recession since the Great Depression.  On Frank’s watch.  And he kept denying that there was any problem until the very end.

Lots of Blame to Go Around – On the Left Side of the Aisle

Barney Frank is not the sole cause of the subprime mortgage crisis.  He was just one of the leading players.  Ultimately, it was an ideology.  Affordable housing.  Putting people into houses who couldn’t afford to buy houses.  This is what caused the worst recession since the Great Depression.  And, yes, the Bush administration did partake in the affordable housing mania.  But if you want to assign real responsibility, ask yourself this question.  Which party do you think of when it comes to affordable housing for the poor and minorities?

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