Thursday, 7 June 2012

The Debate About The 1%

Ah, the poor one percent.  They’ve been sliced, diced, analyzed, and vivisected repeatedly in the media in the nine months since the onset of Occupy Wall Street.  While the range of opinions in the media about these people’s role and responsibility varies, there is no denying that they have attracted more attention in the past year than any time I can remember in my twenty-or so year cultural reference period.  Attention I’m sure they would be just as happy to do without.

There is irrefutable evidence that this 1/100th size slice of the population has seen both its income and its overall share of the economic pie (assets/income streams) significantly increase over the past few decades.  And they have experienced a marked increase since 2000, even as most people’s real wages have stagnated or declined for thirty years or more.  Yet everything is more expensive.  Not hard to see, then, the reasons for the increasing scrutiny “the 1%” has increasingly come under.

If you want a grisly play-by-play of the runaway gallop of the 1%’s income, you should read the uber-heavyweight Princeton professor Joseph Stiglitz’s columns in Vanity Fair.  Unfortunately, Professor Stiglitz’s research and observations are not informing the North American debate.  What we have there instead is a bunch of noisy rhetoric that is impossible to sort through, and while we’re bickering and arguing, the 1% is slipping out the back door under our noses, hoping to duck into their mansions and Muskoka spreads and hoping this whole anti-rich trend will get blown over by tuition protests, the playoffs, high-profile murder cases, etc.

It won’t.  Even with all the flaws in the main arguments you hear which I am about to enumerate.

At NDP conventions, union rallies, and V-for-Vendetta conventions resembling demonstrations, we hear one strident and easy to understand battle cry over and over again:  “TAX THE RICH”.  Ah yes, if it were only that simple.  Upon further investigation, we do not find a smoking gun of a few idle fat cats, middle-aged balding fat white guys drinking cognac and smoking cigars on the golf course, their Aston Martins and Bentleys are parked out front, laughing about the plant closures and outsourcing their hedge funds caused, avoiding lonely wives who are pacing the floors in Victorian and Georgian mansions a few kilometres away, awaiting their old boys' return from golf and admiring pink bow-tied little white dogs after afternoons at the plastic surgeon’s.

Yes, some rich are obnoxious and such easy people to caricature that they do deserve all the derision they get.  But what if they are caricatures?  Reality is hard to come by when we speak in abstraction and rhetoric.  That botoxed woman drinking a grande latte in her Range Rover with the purse-sized dog sitting shot you saw in midtown Toronto last week was just a mirage.  She wasn't, but obvious symbols do no good for the rich's case.  Country clubs, luxury cars, mansions, and plastic surgeries are subjects astutely avoided by the rich’s defenders on the right.

 On that end of the spectrum you have comment board trolls and politicians who talk about “hard work” “innovation” and “job creation”.  These people got to the top because they are “the best and brightest of our society” and “it’s not fair” to penalize them.

There is only explanation for this.  These people either are members of the one percent themselves (and thus have no credibility since their only argument is arguing their inherent right to their own vested interests) or they idolize and aspire to be like them, but aren’t.  I’m betting on the latter.  These “one percenter wannabes” are more brainwashed by ideology than in possession of a coherent argument about a level playing field and meritocracy.  They are so preoccupied decrying “lazy entitled lefties to bitch and moan about the 1 percent” that they don’t see the 1%’s interest has nothing to do with theirs, the 1% could care less about them and the free service they are providing it, and they themselves have zero chance of ever belonging to the 1% (What does a 1%er do all day? Hint. He does not post on Globe and Mail and Toronto Star comment boards)

Lost in these oversimplifications of the pro-1% ilk are the advantages these 1% people started out with, not available to ambitious people today: lower costs of living, less competition, middle-upper class backgrounds, cheap education, and sustainable demographics.  A recent census of Canada’s one percent found it to be overwhelmingly white, middle-aged, and educated.  Now that these people have their fortunes, which continue to grow, the democratized public is being told to brace for austerity and the gutting of already cut back social programs.

A few rich people, like Warren Buffett, are demonstrating empathy and understanding of the situation.  Most seem to be counting on the right wing politician/media myth making machine to convince a critical mass of people that the wealth has all been earned by the sweat of their brow.

In the United States, you literally cannot run for office without belonging to the 1%.  Too many barriers to entry.  In Canada, you can still snag a $157,000 a year seat in the house of Commons being a 27 year old bartender who’s never set foot in her riding 200 km from where she lives.  Okay, don’t ask.  The point is that the jig is up in the States, and it’s a naked game of by the 1% for the 1%.  The Republican Party is not shy about the fact that that is who they are and that is whose interests they defend.

In Canada it’s not quite at that stage.  And returning to my earlier point, the anti-1% crowd is looking for a captive, dormant, boogeyman pile of ill-gotten wealth that does not exist.  Money and wealth are just too amorphous of things to punitively come down on.  Yes, the top one hundredth has experienced gains overall.  But be not fooled by ostentatious displays of wealth.  I guarantee you there are 1 percenters who drive Honda Civics and live in 1 bedroom apartments.  There are also people with all the toys and status symbols destroying fortunes every year.  Often the wealth was not actually earned by them.

What if I told you I make very little money but eat gourmet very well thank you whatever I want, travel to foreign countries, get around how I wish to get around, have no trouble paying my bills, and save and invest significant portions of my income every month.  Do I sound like a 1%er? I don’t even make the average industrial wage.  Meanwhile, there are thousands of households in the GTA with 200k combined income that can’t save 2 cents and are in debt up to their eyeballs.  When I have a higher net worth than these people (sorry, I’ll take a modest amount of hard assets over a bunch of peak housing bubble equity that is heavily borrowed against), serious flaws are exposed in most 1 percent theorem.  We’ve got to talk about the way wealth is created in our society, the values of what is important to people who hold this wealth, the destructiveness consumerism and keeping-up-with-the-joneses syndrome is wreaking on our whole economy, before we get down to making wealthy people shake in their boots.

It doesn’t matter how much money I make now or if someone hands me 5 million dollars tomorrow – do you think I would ever spend $2,800 on a first class plane ticket when a $600 ticket on the same plane gets me there with the same risk? Do you think I would spend any money on a car when I can get everywhere I need to go using bike, motorbike, walk, transit and rentals?  Do you think I want a massive sprawling mansion when I everything my family needs fits into a two bedroom apartment?

Money doesn’t buy happiness.  And the 1%ers, who made their own money, who came from humble origins, and who don’t bother other people with their obnoxious ostentatiousness shouldn’t be penalized.  Inequality in society needs to be addressed, but Canada (still) has progressive taxation that ensures 1%ers pay much more than the loophole-ridden joke of the U.S. tax system does.  They still avoid paying tax here.  Well, why shouldn’t they? If you don’t want to waste money on the BS I already mentioned, are you inclined to waste it on Bev Oda’s orange juice and Peter Mackay’s helicopter rides?

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