We must move back from plutocracy to democracy
By Max J. Castro
majcastro@gmail.com
How would you like a 31 percent annual increase in pay? How about a 16 percent cut in taxes?
Should anyone need reminding of the way the administration of George W. Bush grew the deficit and systematically favored the wealthy, newly released IRS data for 2007 should suffice. The year before the crash the 400 richest Americans reported an average income of $345 million, a 31 percent increase from 2006. The average tax rate for these households fell 16.6 percent. That was about half of the rate they paid in 1993. And it was the lowest tax rate for the ultra-rich since 1962 when data began to be gathered.
The Bush years, during which the incomes of many working families actually fell, were a bonanza for the best off. From 2001 to 2007, the income of the top 400 rose from $131.1 million to $341 million. In 1993, the figure was $46 million. Thus the income of the top earners has grown by a factor of 7 while the incomes of average Americans have been nearly flat. It would be nice to think that the current crisis is a comeuppance for the greedy but instead it has been a disaster for unemployed Americans and their families.
This, and not the misguided grievances of the Tea Party crowd, is the real outrage. The obscene inequality of American life takes myriad forms. Wealth inequality, for instance, is actually much greater than income inequality. None of these forms are healthy for a democratic form of government, least of all now after the latest Supreme Court ruling giving big money free rein to invest in politics.
How unequal we have become is evident in the following. In the last three decades, only 15 percent of income growth has gone to the bottom 90 percent of earners while nearly 35 percent has gone to the top 1/10 of 1 percent of earners. The hollowing out of the middle class becomes most evident when a crisis of the current proportions strikes.
The inequality of the Bush years — and not only the Bush years — has been of epic proportions. And now anyone can see the flaws in an economic system that favored speculation over creation. But what of the misguided priorities of the “good old days?” A more systematic critique and restructuring of the system as a whole and as it really operates in the twenty-first century is required, not just a series of patches and tepid reforms.
It is really amazing that in a democratic society the kind of reality portrayed in the IRS figures can exist. But it did and, to a great extent, it still does. That needs to change. There is an enormous gap of unmet needs in this country — health care, jobs, even food — and it can only be addressed if we move back from plutocracy to democracy — beginning with the tax code. Political leaders, starting with Barack Obama, need to educate the American people on the realities of our economic system — and begin changing them.
