The fact that 40% of American adults can’t put their hands on $400 in cash tells me, as it should tell everyone, that the rich, however you want to define them, aren’t the problem. The American people have become stupid, wasteful and totally ignorant when it comes to finance, even at an elementary level. It amazes me that any of these people can find their way home at night.
37
People in this country...so...underestimate the power
Of unrestrained captalism ...that it's almost too late for us
We underestimate the power of greed...of "self " and only self.."gain"..that comes at the expense of most of most people around them...
Capitalism and self gain...are akin to Animal Spirits
That have been present in out societies ..since our beginnings...
And the power ...of money...to make more money...until it progresses at an exponential rate...
Are as basic as the laws of gravity...the bigger an object is ..the more it attracts what is around it..(ie: 'Capital')
The biggest problem in our country is a failure to recognise...and restrain (see regulate)...these animal spirits
Nay...perhaps the biggest problem is...
Our top politicians..do not only ..fail to regulate it
They worship at it's altar...
We all realise that fire is a good thing ...that has contributed to the civilization of ourselves.....
But do we let it rule us unrestrained ??
It's time to wake up
8
What's Bernie worth? One, perhaps two million dollars...maybe three. The snowflake whiners try to make it into a big deal but we all know it isn't. Bernie is about as wealthy as an Iowa farmer.
16
Hedge fund managers do not "make" money. They suck money out of the system like clever gamblers do at the blackjack table.
25
Sadly the otherwise odious Peter Thiel had it right when he highlighted the plight of the poor American "single digit millionaire". They are shut out just like the rest of us. Only the oligarchs to whom PK refers have true access to our political and legal systems.
14
While Krugman's article is about how extreme wealth means oligarchy, it overlooks how income and wealth inequality result in some having more political power than you, resulting in an evil illegitimate political system.
Hence, the above average wealth and income of Sanders and other politicians, while vastly less than, say, Bill Gates', is quite relevant. Sanders' argument -- "If you write a best-selling book, you can be a millionaire, too." -- sounds a lot like Ayn Rand, but it doesn't address the illegitimacy of political inequality.
This illegitimacy is worse than the unequal voting power between big and small states -- which is recognized as illegitimate.
Here is a link about how the inequitable wealth distribution affects elections. https://www.theatlantic.com/politics/archive/2016/10/campaign-finance-fundraising-citizens-united/504425/ Yes, Virginia, "It's all about the Benjamins."
When krugman opposes inequality in a column, but seems to be defending Sanders' wealth in this column, we should ask about Krugman's wealth and income. I'm certain that the NYT has extremely strict policies regarding gifts to a journalist, but we need to know if something hidden is biasing his columns about inequality. Self-interest?
4
The hypocrisy charge doesn't stem from the money Bernie and his wife made, but from them taking advantage of the legal tools available to minimize their tax payment - deductions and the like. Since paying the tax rate he wishes to impose voluntarily while no one else will is as futile as spitting on a forest fire, that still doesn't rise to the level of hypocrisy. But it's an omitted detail that changes the nature of the story that maybe, didn't fit the point you wanted to make. Weak writing, Krugman, never serves a strong argument.
2
And the truly wealthy can readily avoid American taxes, returning nothing to the country that enriched them
14
Bernie Sanders wants to raise taxes on the wealthy. When Martha MacCullum told him that he could pay higher taxes if he wished, he dodged her comment. Why? It is all right for other wealthy people to pay more in taxes as long as he does not. This is the height of hypocrisy.
5
Another aspect that is rarely spoken of is the Darwinian philosophy of many of the richest. It goes something like: we are smarter, stronger, more capable, more aggressive, ergo our success. Poorer folks are dumber, weaker, less capable, less aggressive, ergo their lower economic status. This philosophy justifies opposition to fair taxation and other redistributive systems like welfare. When they avoid paying their fair share, they don't see it as getting away with something, they see it as a justified defense of their superior status.
15
If you are super rich, like the Koch brothers, you can bribe entire state legislatures and get the state gerrymandered for better GOP Congress results. That’s what they have been doing for decades, with each census.
Then, with the US Congress in your pocket, you can block laws that limit pollution and carbon fuel — protecting the Koch’s multibillion dollar monopoly in gasoline refineries.
This is the top 0.0001 percent.
This is the real Game of Thrones.
21
"And whining that $200,000 a year isn’t really rich is unseemly."
Makes me think of a line from John Guare's "Six Degrees of Separation", where the art dealer Flan Kittredge demurs when told he's rich by insisting "It's hand to mouth at a higher level."
3
You ACELA Corridor people don't get it. We don't care if Bernie is off by a percentage point or not. We want someone who's for the non-millionaires like FDR was. Bernie is; Hillary wasn't. It's that simple.
12
For most people most of the time loyalties of race are stronger than loyalties of class.
The growing income gap should be a winning issue for the Democrats. It is not because most whites associate the Democrat Party with the defense of black interests and they associate blacks with low intelligence, crime, and illegitimacy.
1
I completely agree with this article, Paul hit the nail on the head. There is an en difference between the affluent and the ultra wealthy. I have no problem paying a lot of taxes because that means I made a lot of money and so I'm ok with doing my part. And I would be ok paying more if it would help provide financial security for others,despite the fact that it would probably alter my lifestyle some. My problem is that many of the ultra rich have a sense of entitlement, and don't feel like I do, despite the fact that many could have their entire networth taxed at 80% and would never even know it if someone didn't tell them. It just doesn't make any sense to me that people have that kind of wealth when the majority of the country can barely make ends meet. For one it's morally wrong, and two it's illogical in a consumer based economy to not have people able to participate.
25
That 40 percent of U.S. adults don’t have enough cash to meet a $400 emergency expense isn't an income problem its a saving problem. $400 is between 1 and 2 % of the annual income of families in the 20th to 40th percentile of family income. If you can't figure out how to save 2% of your income you need to rethink how you are spending your money.
I went to the least expensive college that acepted me, lived in 10 by 14 room with two roomates in the dorm at college (was cheaper), slept in my car for most of a summer so I could save what I was earning to pay for school, learned that a 20 Lb bag of rice and 5 pounds of beans along with a crockpot goes along way. I had a black and withe TV till 1992 didn't get ride of the tube TV untile 2014, used an $8 flip phone up until 3 years ago, killed the cable bill over ten years ago (you can check out e-books from the library for free), bought my first NEW car for my 50th birthday.
Guess what my net worth is now over $3 million, not bad for a kid who grew up on a pig farm in the midwest and paid for most of his college by working in the rendering room at a packing plant.
Its a matter of priorities.
21
@JJ
So your advice to young adults in the wealthiest country on earth would be to accept to have to sleep in their car in they want to get an education, whereas all the other, less wealthy Western countries manages to give them a very good education - and healthcare, and housing.
My question to you: why?
What's your problem with fair redistribution of wealth - apart from the fact that in the current system, once people like you become millionaires they've had to sacrifice so much that they don't want to pay some additional taxes anymore ... ?
28
From Wikipedia:
"The causes of the French Revolution are complex and are still debated among historians. Following the Seven Years' War and the American Revolution, the French government was deeply in debt. It attempted to restore its financial status through unpopular taxation schemes, which were heavily regressive. Leading up to the Revolution, years of bad harvests worsened by deregulation of the grain industry and environmental problems also inflamed popular resentment of the privileges enjoyed by the aristocracy and the Catholic clergy of the established church. "
6
There is no myth of the of the 1 Percent
They are the one that have more than the 99%
The 1% include Paul Krugman, who owns three residences, one on Riverside Drive in NY, one one in Princeton , and one on the beach of St. Croix , playground of the rich.
About $ 4 million in real estate alone
Far more than Bernie
7
@John Well, in that case just who does he think he is advocating for the 99%?
3
The irony is that ii was Bernie who made a big deal about other people's money. Ii was Berine who labeled any Dem who disagreed with him a "Corporate Democrat", and who mercilessly harped on the Clinton's wealth, though they came from very modest backgrounds.
Lucky for him, he's a "media darling". Just as the media has never really pressed him for details on his more generous proposals, they now rationalize his wealth. Suddenly it's just not an issue.
9
The Soul of Money, by Lynne Twist, provides an ethical, heart-connected path away from money controlling our culture. Through her 25 years of global service to end hunger and protect the Amazon and its reverent native people, she offers ideas that are essential to our healthy survival as people who care about, help and nurture, as well as re-balance our endangered planet and it’s billions of occupants (plants, animals, oceans, forests, and humans).
The oligarchy controls a vicious and distorting media that continues to mislead vulnerable frustrated people & enlist an army of hate. It’s time for sustained, patient loving change.
3
First off, folks should recognize that 400 grand 30 years ago would be like 800 grand today. Not sure what the top tax rates were exactly at the end of Reagan's presidency and the beginning of Bush, but I'd guess that 800 grand is more like a million.
And 200 grand ain't a lot of dough today. Not comparing that to minimum wage, or to someone making that in a state with low housing costs and low taxes. But in places like NYC, LA, SF after you've paid your taxes and your rent or mortgage, what's left over doesn't put one on Easy Street. There's a wide spectrum between those 40% who can't come up with 400 dollars in an emergency (a factoid I've always been a bit suspicious of), and those who earn substantially more but can't really save or invest much after the bills are paid.
in a few kids, a wife, a relative with chronic medical issues whose bills aren't fully covered by insurance, they're scrambling just to make ends meet too. Oh and sometimes private school is a necessity, not quite a luxury. Thanks to our abysmal public schools in far too many states and school districts.
It's funny though, how the most expensive places to live in the country tend to be dark shades of blue. 200 grand goes a long way in rural areas. A year's salary could buy you a large home with 5 bedrooms, acres of land, and a pool in the backyard. But then you're stuck in the boondocks, good luck finding decent private schools, let alone public ones.
6
We have not taken steps to restrain CEO pay and we could. We have lowered taxes on the extremely wealthy and we can raise them again. We can fix some of the issues of income inequality without destroying the American Dream. We just need to work together and solve problems instead of finding who we can blame. Please let’s try to avoid comprehensive reform and work on practical reforms.
9
The father of a college friend had this explanation: « A little rich is when you can fly whenever you want, but you must always go on coach. Middle rich, you can fly whenever you want, and first class fares are fine. Big rich, you have private planes. » Sounds about right to me.
8
"...contrary to popular belief, billionaires mostly (although often stealthily) wield their political power on behalf of tax cuts at the top, a weaker safety net and deregulation"
Contrary to what popular belief? No one I know believes anything else. Of course the mega-rich want to stay that way at the expense of everyone/everything else. That's likely part of how they got there to begin with.
11
According to Bureau of Labor Statistics CPI Inflation Calculator $400,000 in 1987 (when "Wall Street" was made) is equivalent to about $914,000 today.
6
We have to tax total wealth on an annual basis, just like property tax. Drop the income tax, cap gains, and dividends and just tax total wealth. Trust fund babies would have to pony up like the rest of us, and people who do not work to keep up their wealth would see it drop. It would be fairer and bring in much more money.
4
@Ylem
Theoretically interesting, but it would only work if it were easier to accumulate wealth. As it stands today, we're too willing to accept the notion that a human being effectively has no right to exist if s/he doesn't 'work'. However, I don't believe a human being has been born that truly doesn't WANT to contribute positively to the community, it's just that our 'community' (ie the economy) defines compensated 'work' too narrowly. If we were able to expand the definition of compensated labor, making the accumulation of wealth easier, your idea of taxing total wealth annually makes more sense. A lot of the economic distortions we live with today, to compensate for inadequate wealth by too many, would disappear, allowing a wider variety of lifestyles and life choices to still enable a decent income while still being both personally and socially fulfilling.
4
@Ylem
So say I make $150,000 per year,
Scenario 1: I spend it, 4-week vacation in Tahiti, rent a really expensive condo with 24-hour concierge and two pools, lease an Audi R8 and I owe nothing under your tax system.
Scenario 2: I pay down the mortgage on my house, buy a Camry, and put 10% of my income into a retirement account, now I owe taxes on the house the car and my retirement account.
Sounds good to me.
6
@Ylem
Sounds great nightmare to implement.
Assets will leave country...attempts to keep them here will result in police state ala Venezuela and Cuba.
No thanks.
Just stop the envy and enjoy what you do have. Life is waaay to short to get hung up on this stuff.
2
There was a time when I was in the 50% tax bracket. I was comftable, but couldn't afford to fly on pribate jets or pqy for heart surgery. I certainly didn't have tthe money to shape political policy.
6
Sanders played a part in painting himself into this corner by running against the “millionaires and billionaires” in 2016 instead of just the billionaires. But the plutocracy has a lot of upper middle class fellow travelers (people who perpetuate ruling class narratives and marginalize voices for real change) among the chattering classes. Obviously, Paul Krugman and Bernie Sanders are not among them.
1
The only advantage of extreme wealth that I covet is that the elected and appointed officials of my country work for them not me. In general elections I can vote liberal or conservative and get different results on many social issues. It always amounts to another win for the super wealthy on economic issues at my expense.
7
As we live in a capitalist economy - unlike communist or socialist which have failed to motivate people to work hard - rewarding hard work is good. Yet, rewarding birth to wealthy parents is a different story. The root cause of the unstable world is the fixed pattern of rich get richer while the poor stay poor. Why fixed? Because of inheritance.
Higher pay for hard work is good. The real issue is what follows – that is, when we pass away. Inheritance rewards even those who are less productive as long as their parents are wealthy. On the contrary, children of the less fortunate families rack up debts like student loans.
Loving your child is indeed a wonderful feeling. However, if that love is reserved only for your child without regard to others, then it’ll shape into an act of selfishness.
In lieu of monetary wealth, leave your child a wealth of heartful memories from the highs and lows of life shared together.
And then, as for the monetary wealth that remains even at the end of your life, return it to the wider society for the benefit of those who are less fortunate. The best would be in the form of donation to those who need it the most.
And, whether we own a huge estate or feel that our life savings are modest, no matter how modest it may be, the accumulation of our inheritances is the sustaining force behind the Despair beyond generations, across time, and throughout the world. So, let’s not just blame the rich. We all should stop our stubborn habit of inheritance.
2
@BLOG joekimgroup.com
What you prescribe is not human nature and will not happen. Why would you leave your wealth to those you do not love?
2
There’s a bit of arithmetic that brings home how much a billionaire really is worth.
Take a billion dollars and divide by 365. That’s how much a billionaire could spend per day for a year. The answer is $2,739,726 per day. Now divide again by 100 to get $27,397.26. That’s the amount a billionaire could spend per day for a century—without, of course, including any interest or other investment income.
You can play with this. In the 220 years since George Washington died, a billionaire could spend $12,453 per day through the present, again with no investment gains, and not run out of money.
I say this because it’s so easy to lump together a net worth like that of Bernie Sanders and that of the truly wealthy. A millionaire (and yes, that person is still rich, compared to most Americans) can spend $274 per day for 10 years. Then he or she is broke.
A company valued at $1 trillion, as Apple was, could spend almost $300,000 per day for 10,000 years.
Across the Bay from Apple, schools are doing fundraisers for band instruments.
Do the math.
27
@GP Let's go further with the 1 billion example - at only a 4% annual return, that income amounts to almost $110,000 per day - FOREVER - and the capital remains intact.
9
Let's go further with the 1 billion example - at only a 4% annual return, that income amounts to almost $110,000 per day - FOREVER - and the capital remains intact.
1
@GP: If you saved 20K per month with no interest but no loss either, to save a billion, you would have had to start some time near when Jesus was alive.
3
Thank you Mr. Krugman, for a sorely needed and informative piece. It’s a shame that the vast majority of Trump’s economically struggling supporters would never read this and if they tried wouldn’t appreciate its significance to their having better economic welfare.
6
Thank you for this article, Paul.
Unfortunately, those who need to read it most will never see it.
I was glad the Bernie finally released his taxes and sad at the grief he got for it.
Some people thought they got him in a gotcha moment because the Socialist is a millionaire.
But that millionaire is asking that the millionaire class be taxed ever higher. That is something that melts a lot of brains.
And your point about the difference between Oligarchic levels of wealth and regular millionaires should be easy enough to comprehend, yet isn't for some.
If I knew they were trolling, it would make their comments easier to read.
10
There has been a concerted effort over the past 4 decades to obfuscate the reality that greed is bad and is actually highly anti-social and detrimental to our country. There are many ways this has manifested - that wealthy people are job creators, that they are great philanthropists, that they provide us healthcare, that what is good for them is good for us. With the Supreme Court ruling that money is speech, white collar criminals being virtually impossible to indict, and perversions like the prosperity gospel, everything has been turned on its head. It doesn't occur to anyone that the millions of dollars invested by the Kochs in our elections have probably returned them billions especially after the Trump tax cuts. That investment in our elections were for their benefit solely and warps entirely the power structure of our government from "we the people" to "me the wealthy". For millennia it has been known that greed is bad and we have become largely blind to this fact because most of our media is owned by a few extremely wealthy corporations.
The greatest thing this country could do is limit the money any family is allowed to accumulate and that these people should have their own IRS agents assigned to them. This country was founded for the betterment of society by allowing the people to have their say in how they are to be governed. This has been perverted into the idea that this country is the land of opportunity with the freedom to make all that you can make.
197
@Lucas Lynch
Steve Jobs and Steve Wozniak, sons of middle class parents, created a company worth almost a trillion dollars. We should assign an IRS agent to hound them and burden their efforts to move their company to success, to create 40,000 jobs in just one company?
"...greed..."
Is it greed to want jobs for the:
1. 13 million discouraged workers sitting at home degenerating into drug addicts;
2. 75 million dissatisfied and unproductive workers who want a better job and a better life;
3. 4.5 million released jail and prison inmates on parole and probation;
4. 10 million college students who are drifting and their 1.5 million professors;
5. 5 million part-time workers who want full-time jobs?
6. the 200 million illegal aliens organizing their trip to the U.S?
This year, an all-time record 3.5 million people were able to quit their jobs and move to higher paying and more satisfying jobs. Is that greed or simply the desire for a better life for one's self and one's family?
8
@Lucas Lynch
Agree, wholeheartedly. And if I had to put the 'blame' on any single individual of the past 80 years for such a stark turnabout in average American's understanding of the nature (and harm) of greed, I'd have to call out AYN RAND, author-cum-philosopher of the 1930s and 40s, darling of a certain anti-FDR Hollywood set, and proselytizer of her own Objectivism theories.
Long before the movie "Wall Street" existed in the 1980s, she wrote her mediocre novels, that sold millions of copies just when the book industry went into cheap, 'pulp' paperbacks, that featured heroic industrialists battling nefarious, corrupt, Big Government bureaucrats that just wanted to confiscate the hard-won earnings of hard-working 'entrepreneurs' who had a vision and just wanted to be left alone to work their magic in a capitalism that was being destroyed by those who wanted the power to 'redistribute' the profits of those who assumed the most risk.
A careful analysis of much of the current Republican party leadership--particularly those from the Tea Party and members of the Freedom Caucus--freely admit their deep and lasting boyhood influence by Ayn Rand.
She had an outsized effect on a great mass of the rising American middle class of the 1940s - 60s, where she was lionized in glossy magazines and early television.
Ironically, as a Soviet emigre and refugee from communism, she did more to turn 'love thy neighbor' into 'beggar they neighbor' than any American oligarch ever could.
35
Some people act as though they don’t have very much - but one child is going to a private college - a second going to a private high school - sure they probably have a four bedroom house - sounds to me that they have more than 95% of the U.S. population - more than 99.9% of the people on this planet. Don’t spend so lavishly and you will have plenty. Lots of people make far less and live very comfortably.
6
The Sun Valley, ID photo on Krugman's page of the lineup of private jets is reminiscent of a similarly disgusting spectacle twice a year at Monterey Regional Airport for the AT&T Pro-Am and the Concourse d'Elegance. For anybody unfamiliar with the carbon footprint per passenger-mile of one of these aircraft and its impact on the globe compared to that of commercial air travel, watch PBS' history of the recent ozone hole near-catastrophe (https://www.pbs.org/video/ozone-hole-how-we-saved-the-planet-ttwe2l)
as a microcosm of the impending climate change crisis we now face.
Who are the these ultra-wealthy, uber-privileged 1%-ers who feel they are too important to be bothered by living as the rest of us do so that our lives can continue to be tolerable? AOC may be wrong in contending that we can ban commercial air travel, but she is dead on in insisting that we need to ban private personal jet travel. Forty years ago, it was inconceivable that banning individual cans of aerosol sprays was necessary to save the planet from calamity, until none less than Ronald Reagan and Margaret Thatcher recognized that necessity and acted on it against their capitalistic instincts.
Sadly, they have been replaced today my their mere shadows, Donald Trump and Theresa May, while the ozone hole's offspring, global warming, looms as a far more ominous, and arguably more immediate threat. For we who are grandparents, our children, grandchildren, and great-grandchildren, ultimately are at threat.
4
“Why should we care about the very rich? It’s not about envy, it’s about oligarchy. With great wealth comes . . . great power . . .”
Q: So what is Mr. Krugman’s solution? A: Fork that money over so that we now have a government monopoly on power.
Brilliant. No thanks.
5
@Hanoch
In a liberal democracy, a society of laws, it is the power of the government that protects the individual from the power of those with great wealth. It is only in the authoritarian state that the power of the government is to be feared, because then it becomes another weapon to be used by the wealthy against the rest of us.
3
Most people don't realize how wealthy the people at the very top really are. I know a guy who spent months poring over the specifications of various business jets until choosing one that he, his wife and his kids all liked - and then proceeded to personalize every detail of the interior. The final cost was close to 50 million dollars - what he told me was his "big family purchase" for this year. And then there's the 2M per year maintenance, the pilots and crew at 400K per year, and so on... he's a really nice guy, but a million light years away from most of us.
Still, rather than taxing their income into oblivion, I would be in favor of a higher tax on capital gains from investments. Because let's not forget that behind every yacht, behind every private jet, behind every exotic car there is the work of thousands of highly skilled people: engineers, designers, architects, skilled craftsmen, all the way down the myriad of companies in the supply chain.
So every time I see a private jet or a big yacht I cheer - that's money being recirculated into the economy and providing jobs. A higher capital gains tax will encourage rich people to spend more money and to leave less parked in some investment account forever.
5
I’m not sure you are correct — higher capital gains taxes encourages holding onto real estate assets as well as money in IRAs and 401Ks.
1
@Andy
You are spot on to say that “behind every yacht, behind every private jet, behind every exotic car there is the work of thousands of highly skilled people: engineers, designers, architects, skilled craftsmen, all the way down the myriad of companies in the supply chain.“
But you are wrong to favor higher taxes on investment capital gains. Those investors are the very people who took the significant risks to finance those yacht, plane, and automobile companies. If they are excessively taxed when their investments pay off — and many do not — you will decrease the available capital for the entrepreneurial enterprises you correctly praise.
4
All three branches of our government are made up of pretty well off folks.
Is it any surprise that things are only getting worse for most Americans?
Our current government supports only the rich.
Money is speech, but it shouldn’t be.
6
I had to come up for air and read this article. Well said Sir and Thank you.
4
I'm among the many who remember to when Mr. Krugman seemed to be following someone else's playbook and writing (in his own lovable wonky style) in a way that inescapably boiled down to "Hillary knows her stuff. Bernie doesn't."
It had an effect, I'm sure, and what's worse, op-ed-ers didn't learn the lesson. There are times when they "put their finger on the scale," and it's just as odious in the pages of the NY Times as it is on Fox - forgetting for a second how much more extreme (and wrong-headed) it is on the latter.
And now we have borderline absurdity - Mr. Krugman presumes to tell us that we shouldn't focus on people like him and Bernie - talented people, for sure - who've gotten to the 1%. I suspect he'd balk at the top 1/2 %, because too many Times-men&women make that cutoff, too.
If it is obscene - and I agree that it is - for the average CEO to earn 300 times what the avg worker at his/her company does - it is ALSO obscene (perhaps less so) for Mr. Krugman's agent to negotiate periodically for 10% more.
And it gets worse. YOU CANNOT - even with a man apparently as upstanding as Mr. Krugman - read their many columns on things like healthcare without recognizing just how big a hit they would personally take if, say, medicare-for-all were enacted.
No, I'm not asking for Mr. Krugman's tax returns. But unless he's a great deal more charitable than Bernie & other Dem. bigs who've let us peek, he's definitely "part of the problem" here.
6
I haven't read all the comments of course, but in case the point has been overlooked I would like mention that a windfall in publishing royalties is not the same thing as massive inherited wealth or even hedge-fund robbery.
7
Krugman had me nodding my head in agreement with his arguments until the last 2 paragraphs. This is what infuriates me about progressives - they are justifying the increased taxation on affluent people with the argument "we can afford it", and then in the same breath saying the uber rich are very different and avoid taxation as much as possible through strategies that are not available to the rest of us.
Affluent people (those earning more than $200k) already pay more than their fair share of taxes, and the liberals seem to want to soak them more and more. It is for this reason that I am very happy about the Trump tax cuts ... my tax bill dropped significantly in 2018.
I agree the very rich should pay more, but the income levels where additional taxes are levied should reflect the incomes of the very rich, not the affluent upper middle class. Until progressives start adjusting their message, they will not be getting my vote.
3
At some stage enough ordinary liberals will understand that a perfectly fair taxation system would be one that taxes all income the same and at the same rate with a supertax for the vastly wealthy. The IRS would send individuals a communication every year specifying their income and the taxes deducted with a notice that they should file form 1040 if they disagree. The whole cumbersome process we see before us today is a xmas tree with presents arranged at its foot for various naughty interest groups. I say replace it all with a computer that can multiply income by 25%. Kids could get accounts (with their birth certificate and ssn) which receive an annual bonus from the IRS and are owned by the parents (guardians) and expire at 18 and include their health insurance.
I wonder how many wars we'd be in if the corporate tax were tied to the defense budget.
3
The U.S. is a corporate state masquerading as a democracy, an Inverted Totalitarianism of the 1%, for the 1% and by the 1% through the Republicans as their hosts.
Statement on Visit to the USA, by Professor Philip Alston, United Nations Special Rapporteur on extreme poverty and human rights, Washington, December 15, 2017
“The United States is one of the world’s richest, most powerful and technologically innovative countries; but neither its wealth nor its power nor its technology is being harnessed to address the situation in which 40 million people continue to live in poverty.” – “In the OECD the US ranks 35th out of 37 in terms of poverty and inequality.”
“An imbalance between rich and poor is the oldest and most fatal ailment of all republics” Plutarch, Greek Biographer (46 – 120 C.E.)
Louis D. Brandeis (1856 – 1941), Associate Justice on the Supreme Court of the U.S. (1916 -1939): “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both.”
6
Sanders made his money from government service. His book would be worthless without his political clout. Even though the uber wealthy should pay a lot more, the multitude of millionaires have to be the backbone of Bernie's (and Krugman's) socialism. So, it is fair to attack his wealth. Per his economics - he shouldn't have it.
3
@Alan. I have read investors are going into rentals because the housing market is not going upward.
I decided to rent. Of course, I did not factor in the population surge in California or the greed of the investors.
Rents in Sacramento area (as a reflection of Bay Area) are going up 30--50% from 2014 (they were stable for over 40 years!!!!!). My rent went up 57% 2014-end 2016.
50% rent increases are"""""" illegal""""" in Spain, Germany, France.
Countries with not 10% of the homeless population here.!!!!!
Just a note.
6
reply to Mel G: your comments illustrate what is wrong with our country; I live in the San Francisco Bay Area, never made 200K a year and was able to raise three children and send them to colleges; yes, it was hard but I am so lucky that I had a job; but what about the thousands my fellow citizens who don't have jobs and live on the streets; Please wake up; 200k is way above what is needed to survive; you and I and the persons making much more should more than willing to pay for programs that can help persons in need; wake up! We are all in this together; begin to share the wealth not for more senseless wars but to bring about a fairer and just society.
3
@peter s
We aren't all in this together. The people on the street may have made decisions that led to the street. I am not going to bail them out. What happened to personal responsibility? Oh and 200,000 isn't that much money.
2
Ponder this: has there ever been a nation or a culture that survived with a fabulously wealthy upper, upper class — one that was indifferent to and ignorant of extreme poverty at the bottom of the economic ladder?
Only one comes to mind: Britain, which is now on its last legs.
We seem headed in the same miserable direction.
5
@Paul Bernish. Well, ancient Rome made it for about 500 years. Just kidding....
Remember how lousy a year 2010 was, economically, for many, maybe most Americans? This is from Wikipedia:
John Alfred Paulson (born December 14, 1955) is an American investor, hedge fund manager and philanthropist. He leads Paulson & Co., a New York-based investment management firm he founded in 1994. He has been called "one of the most prominent names in high finance" and "a man who made one of the biggest fortunes in Wall Street history".
His prominence and fortune were made in 2007 when he earned "almost $4 billion" personally and was transformed "from an obscure money manager into a financial legend" by using credit default swaps to effectively bet against the U.S. subprime mortgage lending market. In 2010, Paulson earned $4.9 billion. The Forbes real-time tracker estimated his net worth at $7.8 billion as of December 2017.
Political party: Republican
https://en.wikipedia.org/wiki/John_Paulson
What a hero of unbridled American capitalism, huh? If I recall, he had a 15% tax rate as a result of "carried interest." I don't know what it takes to be labeled a "philanthropist" but you can read about his own philanthropy further on in the article. Then compare those numbers to his wealth. (That said, I'm sure he's more generous than some in his income group.)
The average teacher in 2010 made $55,202 (in constant dollars, they make less now than in 2010). Paulson's 2010 "earnings" would have funded about 89,000 teachers.
Isn't that GOP a Great Old Party?
6
But Paul, the very paper for which you wrote this piece has, in the past weeks or so, had at least two "news analysis" pieces that have at least tried to imply that there was something hypocritical about Bernie having amassed a comparatively modest amount of wealth. There was not, of course, but that didn't stop the Times from trying, in an oblique way, to trash his candidacy (as indeed this paper did throughout the 2016 primary campaign).
4
of the rich, for the rich, by the rich
trickle down economics is a bad joke and a cruel lie -- it's just stealing from everyone else to give to the rich
4
Identifying Sanders as being in the top 1% of earners isn't stupid unless you are using 1% to really mean the top .01%
Words matter. Use the right ones to convey your meaning.
3
France has money for free schools and colleges, subsidies for unemployed and the unemployable, subsidies for vehicle usage, and subsidies for commuting and families. Do the French really want to leave Notre Dame unrepaired because gas taxes hit different economic strata unequally? Ok, if that’s what they really want, a pile of burned timber in the center of their most precious city. I wonder how much tourist money they would lose?
1
I think it'd help to illustrate this with a graphic.
Krugman is wrong. Sanders is just as bad a one percenter as all the others Krugman has always railed against. In one sense, Sanders is worse than some of the others.
At least some of the other one percenters got their money from businesses that successfully compete in a free market (most of them didn't got their money by other means, but not all). But it appears the substantial income Sanders got was from book royalties. Book royalties are profits from a monopoly, not from competing in a free market. The monopoly which benefited Sanders so handsomely was created by the US government (that is what patents and copyrights do....they create a monopoly for the recipients of the patents and copyrights). Congress, of which Sanders is part, created the overly generous provisions of US copyright law from which Sanders so richly benefited.
2
If someone works hard and invests wisely and doesn't spend foolishly, by the time they are in their 60s, they can be a millionaire. Why is it OK for someone to complain about having no money, but they've lived a life beyond their means? Sure, some people get bad breaks, but c'mon. So Sanders has a little money. Big deal. Good for him.
9
"It's not about envy, it's about oligarchy."
Well, yes Professor Krugman, it is about envy. Poor kids who clawed their way out of Brooklyn into the US Senate [Sanders] or who bowed to the King upon receipt of the Nobel [Krugman].
You can take some of the kids out of Flatbush, but you can't put all of them in the Hamptons. The worst view in the world is from the cramped apartment on the UWS looking up at the penthouses overlooking the Park. Green with envy.
Yes, it is about oligarchy, also. Or, rather, who gets to be the oligarchs. It is not fair - a social inequity - that a Nobel Prize or a permanent sinecure on Capitol Hill doesn't entitle one to rule the world. Why are the Masters of the Universe down on Wall Street, when the real Masters sprang forth east of Manhattan?
It's all about envy and oligarchy.
4
Financial and political power can be exchanged for each other. We would never countenance political power being handed down from generation to generation (Billy gets to be Senator because his mom was Senator) but we are more than happy to see economic power amassed and handed down over generations. Unless and until we grapple with the process whereby money and political power are exchanged for each other, we will be leaving our Union very imperfect indeed.
The US needs a revolution. And only Sanders and alike can make it. Jails are ready for those who don't do their share.
3
I think it is misleading that the ultra rich are most Republicans. I think the ultra rich tend to be party neutral, and they want to have influence on both Republican and Democratic party. Otherwise, if the president is a Democrat and congress are dominated by Democrats, wouldn't the ultra rich be doomed? So if I can think of it, I am sure the ultra rich can think of it too.
5
Exactly why we need a Warren & Sanders ticket in 2020.
They may not be the choice we want now, but they are the leaders we need now to correct the course to work to leveling the playing field.
The youngsters in the current field will have their chance to run again. Sanders and Warren will pave the way for a more fair America, one that not too long ago seemed a sure thing, but now is an election away from being lost for a century or more.
4
@WI Transplant
What bothers me about the "youngsters" -- if that includes Gillibrand, Booker, Klobuchar, Harris -- is their rather belated and possibly insincere turn to progressive causes and their continued reliance on big money donors.
If your "youngsters" are Buttigieg and O'Rourke, well, they simply don't have anything beyond their youth to recommend them, politically. I wish I knew what they stood for. I don't think they know.
5
Some readers fail to see the forest in this article and furiously object to the imperfection of a few trees.
The cancer in our democratic society with an unrestrained capitalist system is the billionaires class and the super rich. They have an insatiable appetite for money, power and influence which they use to subjugate the aspirations and needs of the rest in society at whatever cost. What this article failed to discuss is the role of the "corporation" as an institution in this very important topic.
3
I can't imagine Krugman being quite as forthright during 2016 - and we all know why. Glad to see times have changed. I might even start reading him again regularly.
2
I don't think Bernie should be attacked because he has 2.5 million. Or because he has 3 homes. This is his perogitive and he made his money 'honestly.' He's also pretty old, older people that saved and planned will have what appears to be a lot of money to those in their 20s and 30s (the ones most vocal about 'fair taxes' and attacks on the rich. I know for a fact he did not have wealth before entering politics as he lived off welfare.
Krugman too has about 2.5 million and is rich in the eyes of many. But, I don't think he's evil either. If you work, save, and continue to seek opportunity to make money you will likely have more than most once you're in your 60s or older.
But the question regarding the super rich and their taxes needs to really be - did they make their money legally? why are there so many multi-billionaires today? Is it because of 'unfair taxes' or is there another driver? That's worth the discussion.
5
One handy and relevant classification that addresses some of the difference between the (lower levels of the) affluent and the very affluent is the distinction, most famously outlined by Marx, between the bourgeoisie and the petty bourgeoisie.
The bourgeoisie are the owners and holders of capital, with tremendous influence over, and ownership in, the means of production. Their income and wealth are a result of profiting from the labor of non-owner workers employed by the capitalists and their companies rather than mostly through their own labor.
The petty bourgeoisie, meanwhile, mostly earn their income and wealth through their own work. They are the professional class who produce and profit mostly from their own efforts. In the old days, it meant doctors, lawyers, accountants, artists, etc. who didn't depend on the efforts of a whole group of workers supporting them who weren't owners or principals in those work efforts and product.
Sanders fits the petty bourgeoisie model: He earned his big money from his writing, not by profiting from the labor done by others. That's true of many of the "affluent"--but not the very affluent, though it's more complicated in contemporary times than in the 19th century with many present-day professional working for corporations and wealthy partnership-based organizations.
The distinction holds: (Mostly) Making money from one's own work vs. (mostly) making money as an owner from the labor of workers who are wage-earning non-owners.
4
This is a great Krugman article.
After years of Krugman's flipping back and forth between supporting centrist, corporate Democrats, like Hillary Clinton, and supporting, on occasion, a true progressive working for the working class, like Bernie Sanders, it's encouraging to see Krugman offering support more often to Bernie Sanders and the progressive left.
Now if he could only give up his tendency to label something as the best solution (eg, Medicare for All) and turn around and disparage it as not politically possible, Krugman could make real contributions to the progressive left. Krugman may some day realize that the "best solutions" are worth working for, even if that task is not easy.
2
thank you for reminding us. It is not just that the top .3% earn so much it is more that the money from them and from the top 1% corporations goes OUTSIDE our economy. It is not reinvested in the US. Amazon pays nothing in taxes but would not even be in business if it wasn't for the infrastructure of the postal service, airlines/airports, and the internet made possible. All those things are paid for by taxes. Taxes that used to be distributed fairly well between incomes and consumers and corporations at the very beginning of Amazon and are now only paid for by the 99% of consumers - not corporations and not the .3%.
I wish the older generation (or anyone making tax laws) would realize that the professional class of doctors, lawyers, etc. today who are paying 30% or more in taxes, are also starting their professional lives with loads of debt. We started with about 1.5 million in educational and business debt. We are saving for our kids' college expenses while still paying off our own, and we will be for many more years.
3
When did centrist-Krugman go back to being lefty-Krugman? I love it!
2
Bernie- the millionaire socialist......a walking contradiction.
3
@There Socialists don't by definition believe that no one should be a millionaire, even if Fox News tells us that they do. They just believe that those who have profited the most from this society should be paying a sufficient amount of taxes that there is a functioning safety net for those who are not as fortunate.
2
@BlueAbbot
Those less fortunate need to work to be fortunate. Why am i responsible for all the people who made bad decisions? Forget it.
1
So you don't think society should take care of the handicapped, the mentally ill, the elderly or children? Being poor is not always a condition resulting from bad choices. You can work 2 jobs and still not be able to afford housing. Or you could be saddled with student loans that only seem to escalate. I worked 30 years as a legal secretary and accumulated money in 401(k) and profit sharing plans. But when the economy crashed in 2008, I lost my job and ended up having to live on those savings because no one wanted to hire someone in their 50's. Now, I have no retirement savings and am totally dependant on social security to survive. There are a million different stories like mine -- people who did all the right things to be self supporting having something happen to ruin that for no fault of their own. Sometimes life is not fair.
7
I don’t k ow whether you get to choose the titles for your articles or not, but you could have written it without mentioning Bernie and your obvious antipathy towards the best person out there running for President.
As a matter of fact, after reading your piece, I wonder why you don’t support him? Time to start using those grey cells again. It has been a long time since your brilliant days at MIT.
2
@Blunt
I assume this article is in support of Bernie: "Politicians who support policies that would raise their own taxes and strengthen a social safety net they’re unlikely to need aren’t being hypocrites; if anything, they’re demonstrating their civic virtue." I assume he's referring to Bernie, among others, as a non-hypocrite doing his civic duty.
Paul Krugman's best column, ever!
2
Thank you!
1
Thank you.
1
Amen.
1
I hope this essay is to be continued. Seems incomplete.
1
The super rich are afraid of brown and black people raiding our shores and taking all their money. Simple as that.
3
The burden is on those wealthy enough to be taxed at exorbitant rates but not wealthy enough to enjoy wealth after taxes. That is the difference between the real 1% and the 1% portrayed in the media. Presumably Mr. Sanders paid his taxes and would willing pay more to get out of the “1%”. I applaud his generosity but most of us would rather be able to pay our taxes and college tuition and still realize the legitimate fruits of our labor. I resent the constant characterization by the media that this attitude is somehow immoral. I oppose tax increases because 1. I would like to know why what I am paying is not enough ( congress cannot seem to manage with it) and 2. Any more and I will be one of those adding to, rather than alleviating, society’s burden.
4
Whenever I hear Senator Bernie Sanders derided as being himself a member of the one percent, I recall that FDR was wealthy, too.
5
Another excellent column from my candidate for 2020.
Paul. This is your time and we need you in Washington!
1
Yes, OK, it's really the 0.001% - the 75,000 families who own as much as 90% of Americans combined.
They is what republicanism is about.
2
@Tracy Rupp
Please check your math. 0.001% of the US population is about 3250 people, or maybe 1000 families.
The unimaginably rich are at the top of the food chain and the marginalized have no voice. I believe their priorities do not serve our country well, in fact they cause irreparable harm. The tax money that can be used to improve communities and help ordinary citizens are being used for funding pointless wars. As James Madison said, "Opulence of the minority".
To illustrate the terrible state of our country: I perused a recent article in another publication that wrote about colossal amounts of human fecal matter that is transported from locations all across the contiguous 48 to a small town called Jefferson, AL. Alabama apparently has the highest per-capita waste storage sites in the US. Majors exporters of waste include NY and CA because they don't have as many of these landfills.
These mountains of waste need to be covered with at least six inches of topsoil to mitigate the stench per EPA guidelines. Even then local residents (a huge proportion of them are below poverty and of African descent) have been suffering from the stench which some describe at "rotten eggs" and "rotting corpses". One person described how the odor was unbearable even three miles away from landfill and how there's been an increase in the prevalence of abdominal cancer in the local population.
3
Nobody has any voice except those who fund the US political system.
@Steve Bolger
I did not know that elections have been cancelled.
2020 is shaping up to be the most important election in at least 50 years. As much as we don't like Trump, we cannot allow the Democrats (the current field) to win the White House. AOC and her cadre are a danger and would only become stronger with a Democrat in the White House. Forget your personal dislikes and do what is best for the country.
2
@P&L
Agree
1
"Millionaires and Billionaires" are not the same magnitude of wealth. Even my undergraduate students understand this when I ask "How long is a million seconds versus 1 billion seconds?" 11.57 days versus 31.7 years respectively.
4
This is exactly why Bernie always refers to them as the 0.1% or the top one-tenth of one percent. Because of the difference between a successful surgeon and a hedge fund billionaire
3
I'm sorry to strongly disagree with you Paul, but as a Black Democrat living in the San Francisco Bay Area, $200,000 a year isn't really rich. You should know better as someone living in New York. Perhaps $200k qualifies as really rich if you don't have children in school, have student loans, have a car payment, pay rent on the average apartment, or pay a mortgage on the average home in California, or the West Coast, or the Eastern seaboard.
When we talk about taxing "the rich" more, perhaps you and our Federal government needs to give extra consideration to where "the rich" live and the cost-of-living for that region.
94
@Mel G."...if you don't have children in school..."
I'll give you the housing costs, since I used to live in Monterrey when I was an army private going to language school. But public schools are essentially free for parents. Sure, you might occasionally buy candy for a fund raiser or something, but nothing major if you're making $200k per year.
16
@Mel G. Agree that $200k is not rich in SF. But, SF has been very expensive for some time and is a gorgeous place to live (if you don't live in the city with the growing homeless).
However, it's your choice, and we pay for our choices. The benefits obviously outweigh the negatives. I left NY because it was too expensive and the benefits, for me, did not outweigh the negatives.
14
@crankyoldman My child is in daycare and the absolute cheapest place we could find is $1,400 a month. She starts kindergarten next year, so we'll finally have ended our 5 year payment for the cost of daycare, but over the course of 5 years we have paid just north of $75,000 post-tax income as universal Pre-K does not exist where we live.
Now we just have to figure out which after school program we will pay to enroll her in as the school day ends three hours before the work day...
23
The rich no longer care about the larger society they live in and can essentially purchase policies with political donations that ensure a cycle of further enrichment. That money is removed from and then degrades public services. Unless and until our powerful citizens, who by definition now are the rich ones, care more about having a country that helps develop an educated and healthy citizenry, this country will continue to decline. The god of unlimited greed rules America right now. Unregulated, unlimited capitalism has hollowed out our ideals.
4
I don't have any problem with anyone making a lot money writing best selling books; but I do have a problem with POLITICIANS making a lot of money writing and selling books, or making speeches, ONLY because they are politicians.
Or maybe that is just a perk, and/or fringe benefit for being politicians, I guess...!
3
I imagine book deals are in the future for every one of the Democratic candidates in this cycle’s race. I think we saw it in the Republican field last time around that many (I think Trump included) were not expecting to get the nomination, but working on their brands.
Think Ben Carson, who gets high speaking fees to tell his story of how he clawed his way to the top of his profession on his own. He originally turned down the position for Secretary of HHS because he didn’t have the executive experience it required - yet he had been running for President!!??
Book deals help impecunious politicians pay the bills of the trade.
I think Bernie opened himself up by relentlessly condemning the 'rich' as not paying 'their fair share.' The author avoids the question about 'fair share' completely, implying that the super rich don't have to worry about sending their kids to public schools or even driving on roads (they have helicopters).
But this piece ignores some very basic facts. While I'm not sure what 'fair' is (I was always taught life wasn't fair, get over it, by my parents; they were right and it's okay). But I do wonder what Bernie, this author, and others on the far left that really seek to divide thinks is fair.
The top 20% of earners paid 87% of the income taxes collected in 2018. The top 50% (certainly many fall into that bucket here) paid 97% of the income taxes collected. And, the top 1% paid more in income taxes than the bottom 90% combined!
So, clearly the rich are keeping the treasury in money. Whether it's the super rich (many progressives don't even think you should be 'allowed' to be super rich; clearly this author agrees) or the top 50%, 10%, 20% - all are certainly paying their fair share. Without them, the government would be flat broke.
5
I agree with this. The 1% is too broad as Bernie is now finding out.
A CEO/Prez who makes $4 Million a year gets $166,666 per bi-monthly pay check (gross) and that's just salary. Most make more. Something about the comparison on the 2 week paycheck brings it home for me.
I think it would be interesting to anchor CEO pay to the lowest man on the company todem poll. 50-100 times that benchmark is more than enough...and warranted, as some CEOs are on the front line of incredible scrutiny and responsibility.
1
Fun Fact: The world is filled with wealthy people that live in socialist countries. Norway has the world's largest sovereign wealth fund. Still, Nobel Prize-winning physicist Leon Loederman was forced to sell his medal for $765,000 to pay his medical bills. Go figure.
3
@If: Leon Lederman had to sell his Nobel Medal to pay his medical bills because he was born in NYC and died in Idaho, and not in Norway.
2
It's not cool or sexy to be a huge money hog. There should be deep shame attached to pointless moneyed indulgence while others suffer and want. Actually, that might be the part they like the most.
1
The GOP and its mouthpiece, Fox News, has poisoned the political discourse to the point that the average person in rural America thinks that THEIR freedom is limited by even just a simple discussion of taxing the rich. Insanity!
2
Those who earn 850 million a year who don't want to pay taxes but who financially support right wing hate groups are not just rich - they are morally bankrupt.
7
I am glad your dealing with the issue of inequality which
I somehow I may have missed.
Somehow I was under the impression that you and the
Kenseyans were not too much in touch with it
Please continue
2
Bernie.
A rich man who stands for the poor, not him of course, just the other poor.
The rest of us? Well we love us a rich man who stands for the poor, a man willing to redistribute the wealth, not his of course, but yea.
We love us rich white folk who tell us to be socialists and ‘share’, and socialists wearing 3k suits like AOC while telling us we should be taxed even more to pay salaries to those who refuse to work, like her few supporters. Socialism, American style seems to be ‘am rich, so you guys should like, share your stuff’.
What a wonderful defense of this guy and his hypocrisy by the always smart as a whip nobel winner economist who thinks AOC knows a lot about taxes.
4
I see no point in talking about how rich the rich are. All societies, even Communist ones, have different classes of people with different incomes. Elites always exist and they rise and fall from time to time. No society can be truly egalitarian. So let's stop this nonsense. Just try to raise your income to levels that are satisfactory to you and your family. You may succeed, you may not. Society owes you nothing.
4
@n1789
Could not agree more!!
For clarification: In American English, one billion IS a thousand million (1,000,000,000). The British English meaning used to be a million million (1,000,000,000,000). But British English has now adopted the American usage. (Similar evolution as to meanings of trillion, quadrillion, and quintillion). See en.oxforddictionaries.com
Feel the Bern! Bernie 2020! Tax the rich tax all CEOs tax all corporations tax all republicans and their voters and supporters out of existence immediately! More unions. Bernie 2020!
3
When will our nation face what's truly ailing us? The white male patriarchy is strangling everyone. They have robbed us blind, pay no taxes themselves, gut education and health care and infrastructure, bring millions of dollars into legislatures telling women they have no rights at all over their own reproductive systems. If you don't believe me, let's get photos of those 25 hedge fund managers that make $850 million a year. It's time for a French-type revolution, oui?
2
To put into perspective, consider the Billionaire with just $1B. Poor guy hadn’t made it anywhere close to the top when he died. Left each of his 10 children an equal share. $100,000,000 for each. Think you or your kids have an equal shot at winning the race against these silver spoon babies?
1
Seems like a strange headline for a piece that, if anything, reinforces the idea of the "1%" as wasteful vortexes of unallocated capital who contribute nothing (and I mean nothing) of value to society yet reap every imaginable reward for their influence and power. NYT Editorial, at it again I suppose. Y'all just love those misleading headlines!
1
“...Changed "Bernie Sanders" to "Paul Krugman" (6 instances) - and one where just surname used...
But – more to the point – as far as:
“...The Affordable Care Act was paid for in part by taxes on incomes in excess of $200,000, so 400K-a-year working stiffs did pay some of the cost. That’s O.K.: They (we) can afford it. And whining that $200,000 a year isn’t really rich is unseemly...
Just realize that a whiner earning $200,000 a year and living in NYC pays almost $8K more a year in NYC income tax, than someone living just across the river and working at the same job...
Just realize that a whiner earning $200,000 a year and living in NYC who bought a $1M condo – affordable because of a (declining, with time) property tax abatement – now faces the non-deductibility of what could be as much as $25,000 in annual property tax payments...
PS
For anyone making six figures or more and living in a long-term rent-stabilized pad in NYC – would advise against calling attention to yourselves...
Conceptually, there’d be no problem with Congress imputing an income – based on the differential between market-rate rent and the stabilized amount...
Watched askance as folks in complete denial regarding elimination of the SALT deduction...
Now will watch even more incredulously – as NYC grapples with population decline, instead of growth...
This is your city – on socialism...
3
None of them are our friends nor do we honor them. But they make no bones about their aloofness. Mouthy, wealthy, lecturing hypocrite columnists however are a different matter. We reserve our deepest antipathy for them; and any vote we can cast to upset their kale salad is a vote well cast.
1
@Marcia
Yessss! This hits the nail squarely on the head in terms of the collective chip on the shoulders of the modern media.
It may be that people here need the dream.
Why else is the lottery or any other form of gambling so popular with the so called working class aka the impoverished?
Most of us with two cents worth of smarts know we will never travel in a private jet or likely to even see one parked near the bus stop we use.
The guy now at the top of this steaming pile and those who back him, either openly on one side of the aisle, or surrepticiously on the other are lining their pockets while they still can.
At this level of perspective it is no wonder most Americans don't want anyone's hands on their guns.
It's great that the NYT is willing to print a column like this, saying that Bernie Sanders landing in the 1%, because of his book sales, is not a problem for him and his followers. The multi-billionaires mentioned here are a different animal entirely, as Krugman states so convincingly!
The NYT is being fairer to Sanders than they were in 2016 -- when they first ignored him and then made fun of him at times, and clearly wanted him to disappear. It's strange to think that for all we know, he might have beaten the dangerous oligarch we have put in power.
6
Yet another piece from Dr K putting together some wonderful facts and analysis in an effort to make a small point - in this piece that it is OK for Bernie to be rich. Hello! Would you please focus your brainpower which has been recognized as extraordinary to talk about some actionable ideas to fix this income inequality thing? @ Skutch, in a post published just now exhorts you to start a list
Here,here.
« You must try Comrade Zilkov to cultivate a sense of humor. » It is humorous that Bernie Sanders, who never tired of railing against « millionaires and billionaires, » turns out to be one of them himself. That’s not a terrible thing, but it is worth a chuckle.
1
There's another difference between Bernie Sanders and your run-of-the-mill super-rich: He's worked his butt off for decades, ALL of it in service to his fellow humans. So what if he gets sudden wealth from his autobiography? Wealth is not what he was seeking - if it were, he's more than smart enough to have made it big as a hedge fund titan.
Moreover, this book is probably a one-shot deal - if he becomes president, maybe he'll write another after he leaves the White House. But the thing is - he doesn't CARE if he makes some money from it. For him, money is not what life is all about. It's about the well-being of people. That's all that matters to Bernie Sanders.
The news media's focus on this flash-in-the-pan wealth is really shameful - "Gotcha!" But people see right through that dismal attitude, they see who Sanders really is - they see integrity, honesty, forthrightness. They don't see dollar signs.
2
Thank you Paul. But, it's worse than that. The fact is that this greed and exploitation have have transformed our health care system into, not care of the sick and dying, but exploitation of them for massive ghoulish profit. Likewise, our public education system has been high-jacked by these same vultures who have set up a student loan debt trap, obligating any poor or middle class American who wants a college education from a public university to a lifetime of unrelenting, unforgiving, crushing debt. I hope there is a hell, so that these people can own that too.
1
But how much money does a typical front page reporter for the Times make? How much do commentators like Dr K make? I am not casting stones but I point out that many writers for the media are very well paid and that many of them also publish occasional books and some may also be involved with teqaching and thus collect at least 2 separate salaries.
The incomes of these allegedly "left" wing writers is thus also high but no one thinks to ridicule them or to suggest their interests lie elswhere. Many people own "funds-like the S&P 500" which make them owners of large oil, chemical and mining comapnies as well as companies that make arms and poisons as well as drugs. This hardly makes them sinister conspiritors rubbing their hands over their profits as thousands of Americans suffer in agony from being addicted to what were erstwhile "safe" opioids.
It is important to look upon all sets of facts with a jaundiced eye-there will always be some way that the innocent actions of anyone may be seen as depraved or criminal. Look at President Trump, who now assures the world that everything released-redacted or not-"proves" him absolutely spit-n- polish clean!
It all depends on who is looking when it comes to defining what is seen.
1
What is deeply stupid is a socialist candidate, a member of the one percenters, who can only muster 3.5 percent of his income to be given to charity. A classic Democratic ploy, do as I say, not as I do.
2
The Republicans have found the secret to holding power indefinitely in this country. They understand that many Americans do not "vote their pocketbooks". Instead, they vote their prejudices.
This is precisely why Trump voters have remained in lockstep with him these past few years. They know his tax cut hasn't helped them at all. They know he hasn't made good on his promise to bring back their manufacturing jobs. And they know he and his party (because it is his party now) will never agree to an affordable health care plan for all Americans.
But they don't want any of these things, and Republicans have figured this out. So what do Trump voters want? They want to be able to discriminate against their brown-skinned neighbors. They want to discriminate against anyone who isn't Christian. They want to discriminate against the gay community. And they want to punish women -- these are the same supposedly "decent people" who want to force women to give birth to their rapists' children.
Yes, Trump voters want all of these things, before they want good jobs, affordable health care, or a more equitable tax structure. They will trade away their very livelihoods as long as they have a president who tells them that they are the "real" Americans and the rest of us must accept the scraps of second-class citizenship.
Trump voters swayed by economic concerns? Not as long as they have a president who says that the KKK and neo-Nazis are some very fine people. This is all they want.
1
The Republicans have found the secret to holding power indefinitely in this country. They understand that many Americans do not "vote their pocketbooks". Instead, they vote their prejudices.
This is precisely why Trump voters have remained in lockstep with him these past few years. They know his tax cut hasn't helped them at all. They know he hasn't made good on his promise to bring back their manufacturing jobs. And they know he and his party (because it is his party now) will never agree to an affordable health care plan for all Americans.
But they don't want any of these things, and Republicans have figured this out. So what do Trump voters want? They want to be able to discriminate against their brown-skinned neighbors. They want to discriminate against anyone who isn't Christian. They want to discriminate against the gay community. And they want to punish women -- these are the same supposedly "decent people" who want to force women to give birth to their rapists' children.
Yes, Trump voters want all of these things, before they want good jobs, affordable health care, or a more equitable tax structure. They will trade away their very livelihoods as long as they have a president who tells them that they are the "real" Americans and the rest of us must accept the scraps of second-class citizenship.
Trump voters swayed by economic concerns? Not as long as they have a president who says that the KKK and neo-Nazis are some very fine people. This is all they want.
1
What would we do without your thoughtful contribution. You bring statistics to a level I can use to separate facts from lies. Thank you
The latest Broadway musical? Watching Krugman tap dance his way through Bernie's status as a socialist millionaire.
Any fool who puts Bernie Sanders in the 1% after the score on a one shot book sale belongs in an insane asylum.
3
Who Rules America?
Spoiler: it's not your elected representatives.
Interlocks and Interactions Among the Power Elite
This document presents new findings about the American power structure based on the connections among 2,563 corporations, 6 business leadership and policy-discussion groups, 33 prominent think tanks, 82 major foundations, 47 private universities with large endowments, and 19 White House advisory committees for the years 2011-2012.
https://whorulesamerica.ucsc.edu/power_elite/interlocks_and_interactions.html
Do I detect some softening in Krugman’s inexplicable hostility toward Bernie Sanders?
2
Indeed most people are still uninformed about how deeply skewed the wealth distribution and how rigged the system are. Unfortunately the gullible crowds will still be easily swayed by politicians & propaganda machines whom can be easily influenced through money contributions and political chips accumulated by the few in the top behind the curtains. Remember Panama Papers? That's likely just the tip of iceberg.
I am exhausted reading about the moral and civic virtue of the wealthy who advocate for higher taxes "against their own interests" by the very same voices that criticize the poor for advocating for less intrusive government "against their own interests".
The narrative seems to be that the educated rich are making a wise decision, one that is stronger because it does not benefit them, while the uneducated poor are making a bad decision, one that is weaker because they are too foolish to realize that they are the very beneficiaries of the government largess they decry.
Why not at least acknowledge the strength of conviction required to advocate against transfer payments as a beneficiary is as moral a stance as advocating for transfer payments is as a net contributor?
Oh hypocrisy, where is thy sting...
30
@Andy Up until 1980, income gains from productivity were shared across every income bracket. This was because there was a 70% tax on any income over $4 million (after adjusting for inflation). As such, the people at the top paid out excess profits as wages or reinvestment in their companies.
Once Reagan cut that rate from 70% to 35%, this amazing thing happens. In the top 10% of earners, ncome gains stay the same for 9%, went up decently for .99%, and drastically rose for the 0.01%. Income gains have gone down for the bottom 90%. The wealth has been redistributed from the working class to the owner/investor class. This is all easily verifiable in economic data. There's no hypocrisy for questioning why people keep voting to let billionaires keep income gains from productivity that used to go to workers while advocating for more services to be provided for those workers.
49
@Andy - I'm not sure why this received a Time Pick. The situations you compare are apples and oranges. The poor who advocate for less intrusive government are usually doing so for ideological reasons--the rich who advocate for progressive taxation are doing it for economic reasons. It's perfectly consistent to have no respect for ideological decision-making but healthy respect for pragmatic economic decision-making that counters ones owns economic interests.
29
@Andy I'm pretty sure that poor Small Government Libertarians outnumber Unicorns but not by much.
Wealthy advocates for "transfer payments" [such a quaint phrase] are even rarer.
O' False Syllogism, where is thy evidence?
22
Yes- a fine distinction. Thx for sussing it out. A lot of people didn't have a father who taught math (like me)- that extra zero or two does hold a lot of weight.
I can't remember who did the study, but a poli sci paper released a few years ago found that both Democrats' and Republicans' policy positions, on government debt for example, more closely mirrored the opinions of the very, very wealthy than the voters at large.
The real myth is that taxing the few thousand people who are mega millionaires will bring that money into the hands of the working class. It will not.
Politicians are heavily taxing the lower and middle classes in other ways.
Such as lotteries, legal sports gambling, casino gambling, cigarette taxes, auto tolls, and the latest one: marijuana taxes.
All the above do not affect the top 1%.
My high school auditorium held 1020 people, so from many performances there I have a very good idea what 1000 people look like. Bernie has $1MM. Let's sit him front row center. Pack the house with 999 more Bernies. Have a barely-a billionaire walk out on stage. As much held by that one man as by the house.
If we wanted to do the same exercise in the Univ. of Michigan stadium, sit Bernie at the 50 yard line. Bring out Jeff Bezos. Fill the stadium with millionaire stand-ins (at $1MM per person). Oops, 107,601 is not enough, so let's add Citizen's Bank Park where my Phillies play, again full (43,500), and you get the idea.
That assumes we are not talking about family wealth around the world, in which case we will surely need a couple more stadiums. Or an internationally enforceable wealth tax system at, say, Sen. Warren's 2% level.
3
Scientists like to conduct thought experiments. Here is one. Imagine, for the moment, that the top 1% had never been born… And then consider how America would be different. Microsoft and Amazon would not exist… and neither would Trump. Tax collections would be down more than 20% with a concomitant loss of public services or investment in health, wellfare and infrastructure... and a lower national security margin. Some breakthrough inventions would never have occurred. The arts and private charitable, academic and research organizations would undoubtedly take big hits... or not even exist. Politics would likely shift to the left with the disproportionate absence of big donors on the right. You can undoubtedly think of many more consequences - what about the well-being of you, your family and your neighbors?
If you like where this is taking you recall that the top 1% is now gone... so there is a new 1%. Repeat the experiment and decide what you think.
1
Thank you...I'm perhaps part of the 5%, know many folks in the 1%, and a tiny bit know a few who are in the 1% of the 1%.
Paul Fussell in his book "Class" writes about the "out-of-sights' that is, people who are so incredibly poor that they live an existence on the street and seen by few OR so incredibly wealthy that they are hidden from public view via private tutors and private planes and elite resorts and all of the other ways that they are only seen by each other.
We are talking *very* rich.
1
A major concern is that politics has become all too dependent on money. Then first thing for a potential candidate does is collect money, not ideas. This means that the 0.01% have an immense advantage when it comes to picking the candidates.
1
One last argument for the ultra-rich paying higher taxes: they use more services than the rest of us.
Take that photo of private jets for example. A handful of people on a private jet needs the same support from air traffic controllers (paid for by taxes) as a cattle-car plane filled with economy-seat dwellers. That private jet emits pollutants, same as the cattle-car plane. Mitigating pollution is paid for by taxes through the EPA. Those private jets take up space at airports, built and maintained by tax dollars.
So when the ultra-wealthy don't pay their share - we - the other 99.9% are subsidizing them.
4
Paul, I wish you had given some numbers to illustrate your point. If you look at wealth distribution among the 1%, you discover that there's the 1% of the 1%, and there's as much difference between them and the ordinary 1%-ers as there is between the 1%-ers and ordinary folk. And even within that highly privileged group -- which after all, includes 30,000 people -- you find the same skew. (I wonder what it feels like to realize that you barely missed getting into the top .01%).
The distribution of wealth is even more skewed than the distribution of income. A mere 2% tax on net worth would hardly drive the billionaires into poverty, and indeed would be less than their annual return on capital.
Thomas Piketty, in "Capital in the Twenth-First Century", tells us all about it. The one small comfort is that battling gross inequality is a luxury that those rich folks can afford (think Warren Buffett).
1
Just remember that nothing of real value in your life can be bought or sold.
43
@dave What about decent health insurance, and medical care?
22
A noble thought but meanwhile, try not to get sick without either good health insurance or a few spare $million.
15
@dave Except for health care, which can save the lives of our loved ones. This is why good health care should be available to everyone, not just the rich or nearly rich.
7
OK, Bernie had a good year, he sold a book. Let's not all form a circular firing squad and take down our best chances of making Trump a one-term President. Look at Bernie's life in its entirety, his roots and history, his achievements coming from a middle-class background to become a Mayor, House Representative (8 times) and then a U.S. Senator. Contrast Bernie's accomplishments with our sitting President. Finally, average in what he made in all his other years before you castigate him for having the good fortune of selling one book.
1
Now your talking Paul.
100% of what the policy goals of the so called extreme leftest, recently elected by the people rather than the billionaires plus a few previously aware individuals, are, plain and simple, Common Sense.They support the Common Good. The persons such as H. Clinton and seemingly N. Pelosi and friends who are singing the "half-way" song, the too much we need to get re-elected song, are out of touch with Reality.
That tune is dead. The living are singing for the General Welfare, the Common Good, for Democracy, for government of for and by the People.
1
So where does Mitch McConnell fit into this? Calling out the super rich is fine, but here is their #1 enabler - and ONLY their enabler for he doesn't help those who elected him. Trickle down economics DOES work, but only for him and his fellow enablers; by enabling the super rich, he gets their very sizable crumbs directly into his bank account to keep himself as a very comfortable <1%er.
3
How rich is rich enough to talk down to fellow citizens and promise them "free" stuff?
2
Wealthy people from all over the world have come up with a billion dollars in a few days to restore Notre-Dame Cathedral yet if last week had they been asked to kick in a tenth of that in extra taxes to work on Notre Dame's infrastructure, they would have screamed bloody murder. So I find it ridiculous that Sanders is vilified because his book popped him into the "1%" for a couple of years. No doubt Bernie is sitting pretty but his choices are on the order of sending his grandkids to Harvard or a starter house in the Hamptons, not a mega yacht or a Presidential election. The majority of Americans have no idea what obscene wealth is. I am no Sanders fan but putting him in the same economic class as the Koch is insane.
2
Provo Paul for supporting Bernie rather than tearing him down and all in for Hillary which help to give us Trump.
2
"... Sanders got a lot of book royalties after the 2016 campaign, and was afraid that revealing this fact would produce headlines mocking him for now being part of the 1 Percent. Indeed, some journalists did try to make his income an issue."
It's fair to make the case that a person earning this kind of money can still be a dedicated public servant. The problem is, Bernie Sanders spent 24 hours a day, seven days a week, arguing the precise opposite when he accused Hillary Clinton of being tainted and corrupt merely because she, too, earned some money.
Your point is valid, but scrutiny of Bernie and his nasty tactics is also valid. His entire campaign against Hillary Clinton was based on demonizing her because she gave speeches for money. It's a little late in the game for him to suddenly discover that earning money does not by itself disqualify you from being an honest liberal.
2
There's no doubt that the very rich are, indeed, very, very rich. But Mr. Krugman leaves out a few critically important facts. #1: Yes, some of the very rich support extreme right wing causes, but some of them are also very big contributors to the extreme left wing agenda. Soros and Steyer come immediately to mind. #2: Many of the very rich may seek to minimize their tax burden, but one of the ways they do that is by being very generous in their charitable giving. Buffet, Gates, Zuckerberg and Bloomberg come immediately to mind. Why do they give massive amounts of their wealth to private foundations, universities, research institutions etc? Because they believe they can invest the money more productively than can a self serving government bureaucracy.
"At a recent event, my CUNY colleague Janet Gornick was greeted with disbelief when she mentioned in passing that the top 25 hedge fund managers make an average of $850 million a year. But her number was correct."
And keep in mind that almost all of that is taxed as long-term capital gains--that's half the tax rate for paychecks--using the "carried interest" tax scam.
2
This kind of extreme wealth results from businesses that grow to utilize significant amounts of the workforce and public resources while disproportionately funneling increased profits to a decreasing percentage of people. Simply raising taxes will not correct this. There has to be a progressive increase in regulations on how profits are shared throughout the workforce of a company in relation to it's size and influence in society. This is as basic as 1 + 1 = 2.
Nobody ever mentions that the very rich enjoy a disproportionate share of what the government provides. This includes airports, infrastructure, highways, and national defense. My modest income has me enjoying only minimal government infrastructure.
1
President Reagan famously railed against his imaginary welfare queens driving Caddilacs in Chicago. Actually, it is the rich both in the upper and very top rungs who are the real beneficiaries of the government giveaway schemes. Tax cuts are only a tip of the iceberg. Sweetheart deals in government contracts and favoritism by numerous other ways is another popular vehicle which pays for the rich folk's multiple mansions and private jets and helicopters. The foreign wars are also another attempt by this class to control economic resources beyond our boundaries. It has been reported that the top 5-6 gasoline producer-marketing companies, like Exxon, Sunoco, and Shell, make more money out of the Saudi oil than the natives.
This inequality was serious enough 25-30 years ago. Now with the advent of the internet and the social media, it's become more widely known and resented, and therefore more difficult to sustain on any rational grounds. While the corrupt politicians keep ignoring the problem, the discontent keeps building up. Unless the accumulating steam finds an outlet, the lid would blow up. Besides, it's in the interest of the privileged themselves to not only do the right thing but be actually seen to be doing so. Western populations are not like the listless, docile societies of Third World countries. Our people would not accept or put up with this inequality for long.
1
Indeed. I tell people about my prep school. It is now 65K per annum. It is nestled on 350 acres in the Connecticut Valley. They offer 9 languages, it has a private theatre, a dedicated art building, private art gallery ( most schools are lucky to have an art cart), 26 million dollar gym, hockey rink, a symphony and jazz orchestra, ballet lessons, boarding for your horse and dressage lessons and and it’s own organic farm, a partial list. I am not making this up. When I tell people about this, they think I am lying. Why should the ultra rich care about education when their kids go to schools like this?!
9
My wife and I have been solidly in the 1% for quite awhile, with some ups and downs over the last 25 years or so. Although I rarely agree with Krugman, I am with him here.
Not that we are struggling, but one might be surprised as how little incomes over $1 million can afford in cities such as NY or LA. I am not asking for pity, but just stating the reality.
We are not buying the ubiquitous $5 million + apartments sprouting in the forest of new glass and steel luxury high rises. Nor, are we taking helicopters to the Hamptons. We suffer the same everyday NYC indignities (ie, bad subways, dirty streets, vagrants, etc...) as everyone else. The only difference is that we pay a Marginal Tax Rate of 50% for the honor.
The recent Tax Reform bill was a horror show. Living in NYC, my taxes went up quite dramatically this year from an already high level as SALT pretty much disappeared. Those of us who are working affluent in major cities are taking a beating. One more increase, and we will just sell everything and retire.
Above our level, there are those who use the tax code to shield income. Passive Income is a weapon for the Private Equity / Hedge Fund / Tech types. I remain stunned that this obvious issue was never addressed. A simple line item which mandated a minimum 30% Federal Tax Rate would have done the trick. We all know why such did not occur.
CEO pay is also beyond the pale.
Something has to give.
4
If one is going to use a phrase that has a strict mathematical meaning, like the top 1 percent, then one has to accept the fact that some of us are going to take it literally. If one is using it as a catchphrase, then either changing the number to something like the top .1 percent or dropping the number entirely and referring to the super-rich would be a good idea.
Otherwise, there is no problem with referring to Mr. Sanders, who I greatly respect, as part of the 1 percent, as he is exactly that.
I like to explain wealth inequality like this: If we split our $100 trillion household net worth evenly, every family would have $800,000 or so. However, the median (50th percentile) family has only $100,000.
For income inequality, at pre-Reagan inequality the bottom 99% families would be getting about $7,000 more per year in income. This would go a long way towards that $400 emergency expense.
Voting for the top 1% against your own economic interests (a.k.a. voting Republican) is why we're in this inequality mess.
The ACA shifted about $20,000 from the average top 1% family to give $600 to the average bottom 40% family. Compare that to $7,000 for the bottom 99% and you see just how far we have to go just to get back to pre-Reagan inequality.
3
Right Dr. K:
There are people in a much smaller percentile of income than "the 1 percent"; that would include Obama and all 3 Clintons (and in some years Donald Trump), then there are people like the Koch brothers.
But how did it get this way, and what was Hillary going to do about it?
1
" financial support from the very rich is the most important force sustaining the extremist right-wing politics that now dominates the Republican Party" Krugman writes.
But for heaven's sake, it is also the secret of Hillary Clinton's campaign, and her DNC/Superpac machine to defeat Bernie Sanders. Anyone who doesn't understand that BOTH parties were in the hands of elites in 2016 will still be baffled by the Rise of Sanders and Trump, and attribute Trump's rise to admiration of his "fascist" personality. The so-called "populist" rebellion affects much of the world, and the rise of extreme inequality is behind it. Odd that Krugman doesn't understand this. But of course, he was a die-hard Clinton fan.
Think about how the very rich get away with so much when it comes to tax policy.
Currently, the top rate is 37%; 39.6% until the GOP rammed through its 2017 tax cut. Those top marginal rates--marginal rate meaning that they only apply to that portion of income OVER the margin--are probably about right for a family making about $400,000, the trigger for the top rate. That is particularly true now because Medicare taxes now apply to all types of income (not just wages) and --unlike Social Security--has no cutoff. A reasoned argument can be made for a somewhat higher rate, but the level isn't grossly unfair.
However, while the upper-30s rate is fairly reasonable for income above $400k, it certainly isn't for above $4 million--or $40 million. Yet that's where the top marginal rates end--impacting someone who is merely very wealthy the same way they impact someone who is unimaginably rich.
And, of course, the top rate only applies to income from work. There are people whose wages are over $400K; very few have salaries of many millions. Most of that kind of income is from capital gains and dividends--taxed at only a 20% top marginal rate.
Top rates should hit 50% on income over one million; 60% over 2 million. $5 million+, 70%; arguably higher over $10 mill. And tax all income equally--no more penalizing people who earn money by working.
Those at the very top should pay more not only because it's right, but because it prevents oligarchies controlling our society.
4
A million dollars great wealth? If you were a millionaire in 1929 you would need 15 million in 2019.
The millionaires that I know paid 15-60 thousand dollars for their homes now find themselves in 650 thousand dollar homes because of real estate booms. As the kids grew up their wives went back to work, both their incomes grew and they saved their money. These were children of depression era working class people so they still lived modestly. I've also met trust fund babies who smoked dope, lived in their country homes and did little else. Are they the 1%.
Should we start a credit system like they do in China? What value we have to society would be defined by mostly by people who have degrees in Social Justice (our version) who would determine the wealth you deserved. With the help of almighty apps snot nosed 20 something's get to create a new and just society.
Now let's go get them.
Paul's point is a good one. Most of us down here on the clay earth think "gee, I wouldn't want to pay more tax; it'll make it harder to retire, or to get the kids through school, etc.." We simply cannot conceive of having so much money that an increase in tax will have no effective impact on our ability to retire, or to help our kids prepare for life, or do anything else that we might want to do. This is a major mistake by Democrats. They forget that people of relatively modest means think that they are in the cross-hairs of proposed tax increases.
Actually a lot of people of less-than-sensational means found themselves in the cross-hairs of the Republicans' 2017 upper middle class tax increase. For my final year of working (2018), I earned about $230K gross. This is the most I ever earned in a year. Thanks to the Republicans' 2017 tax bill designed to stick it to residents of generally Democratic states, my deductions were severely capped and my Federal taxes increased. After withholding, I ended up paying an extra sum about 3 times what I paid to settle up in each of the previous couple of tax years. The dark irony of the so-called anti-tax Republicans being the source of this unmistakable tax increase was almost worth the ouch! of paying it.
3
I am NOT a Berner. That being said, I'm not going to begrudge anyone their book royalties. That represents money earned through work. That isn't the same as being part of the vampire economy in tech and on Wall St. I don't like Bernie at all, I'm not voting for him, but the man earned those book royalties and good for him, because he also made money for his publisher and his editor and maybe even a ghostwriter or two.
5
The cult of wealth in this country is widespread and deep, with those who are least informed the most enthusiastic. Wealth is instant credibility, undue influence, political power, total access and social deference not by merit but through acculturation that fetishizes wealth as a balm for alienation. Oh and don't forget racism because the whites at the bottom feel better looking up at the lily white percent that dominates at the very top.
A white one percent allows the white underclass the vicarious validation they need to feel part of the apex species at the top of the food chain. There needs to be a boatload of white billionaires as the exclamation point for white racial supremacy.
Trump is proof that poor white folks love rich white folks and believe that white billionaires are just like them: crass, cussin' and racist. White billionaires chase skirt and score, prefer burgers and well-done steaks drowning in ketch-up to fois gras and truffles. The white poor and white rich are family, a white continuum that runs from trailer parks to mansions and estates.
The self-loathing of the poor requires that they be played and betrayed by their billionaire betters. So they'll stick with Trump no matter how badly he hurts them.
It's Calvinism redux. The rich are god's elect who get a head start on heaven right here on earth. Wealth is a gift from god and proof of which side god's on.
The very rich are whiter than people imagine.
9
Hi Paul,
Truly talented individuals deserve every penny they have earned through their work and investments. Your resentment of them makes me sick to my stomach. We should be learning from their success and figuring out how we can invent more individuals to be even more successful.
5
@Alfred Francis Yes but how much more? 100 times, 1000 times, 10000 times the average income? There has to be some reasonable limit.
20
@Alfred Francis I don't think anyone begrudges truly talented people the money they make. However, please tell me what Michael Eisner, or the current head of Apple or Microsoft are doing to justify their outsized salaries/perks/etc. The same goes for the heads of most pharmaceutical companies, auto manufacturers, and all insurance companies.
Please note that not everyone is brilliant, an entrepreneur, or extremely talented. Our current system is penalizing most of us and too many are unaware of that. We all deserve to make decent salaries and have decent lives no matter how lowly or average we are.
4/18/2019 10:33pm
31
@Alfred Francis
If I could only inherit enough to be one of these individuals, would that make me "truly talented" and someone you could learn from? Did I "earn" this through my "work" in your eyes? Your argument is seriously flawed, but if you would like to bequeath me some of this vast wealth I would be more than happy to allow you to learn from my success and figure out how you can "invent more" of me!
16
Professor Krugman continually advocates his redistributionist, collectivist philosophy. It is not Constitutional, and the expensive social programs designed to mitigate individual failings should all be put before the Supreme Court. Repeating the “we must share the wealth” mantra ad infinitum serves only to obscure the need for this test.
A point well-raised is that our intrinsically oligarchic society, not unlike most others, should avoid becoming an hereditary oligarchy. Enacting confiscatory taxation of great wealth to that end not only requires constitutional change, but will have severe consequences for our economy.
The poor are an even greater to our stability than the ultra rich. Giving sanction and sustenance to those whose behavior is irresponsible, antisocial, and parasitic only increases the numbers of the underclass. Moreover, there are those on the left, Krugman included, who want to import more third world immigrants to drastically enlarge the underclass.
A pol
2
@J.Jones
16th amendment to the constitution.
A pol? What's that short for? Someone who doesn't know what they're talking about?
3
@J.Jones "giving sanction and sustenance to those whose behavior is irresponsible, anitsocial, and parasitic only increases the numbers of the underclass." Not true.
1
Bernie Sanders' recent spike in income from his book sales, while impressive, hardly puts him into the 1% bracket. During his recent nappearance at a Fox News town hall, where he seemed to be showing embarrassment with his recent high annual income, I found myself wondering why he didn't take the opportunity to explain what Dr. Krugman is so eloquently pointing out. While his million-plus income might sound to normal folks like it qualifies for the one-percent club, it's nowhere close to what "real wealth" looks like.
It was also frustrating when he failed to correct one of the moderators who kept insinuating that the wealth tax he and Senator Warren are proposing is based on marginal income levels. Most people don't understand the concept, thinking that these proposed tax levels are based on full income amounts. It was back in the Eisenhower era when the marginal rates were over 90% that we were able to actually build infrastructure that benefited the entire society.
For more than 40 years, the supply side, "trickle down" nonsense has continued to be allowed to remain in place. The new crop of Democrats in the congress is doing a very good job of educating the public about this, and their voices must be allowed to continue to be heard loud and clear.
5
If we go back to 1980, one average, middle class salary could support a family of four. One parent typically stayed home.
Then came Reagan and major tax cuts for the wealthy. And cuts in Social Security and Medicare. And attacks on unions. And yes, CEO and corporate board member compensation soared.
The Reagan/GOP war on the middle class was in full throttle.
By the end of the 1980s both parents of that average family had to work out of necessity. College students began to be overburdened with debt and medical costs skyrocketed. Pension plans were either cut or eliminated. And, for those 12 years (Reagan-Bush), America's cities experienced something that they had never really had before: legions of homeless on their streets; many of whom were Vietnam vets
who were drug addicted and suffered mental illness stemming often from PTSD from the war we never should have been engaged in, in the first place.
Because Americans don't often know much about the rest of the world, few knew that the exact same things were happening in Margaret Thatcher's UK. She was in office 1979-1990 (Reagan/Bush as 1981-1992).
Her conservative economics had the same thing effects there as here: the rich got richer and the rest struggled.
In many respects I believe we should not want to go back to the 1950s except for one: taxation.
6
The problem with Krugman's analysis is that taxing the 1% never generates enough revenue to cover all the goodies Congress wants to spend on, so they start to tax the 3%, then the 5%, then the 20%, and pretty soon, everybody is paying a lot more than was originally intended.
Exhibit 1 is the AMT.
Until last year, just about everyone in Congress thought the AMT was unfair, but they refused to eliminate it because "we need the money". And it particularly hit people in high-tax states like New York, New Jersey, Connecticut and California, those already paying for more liberal benefits for the downtrodden.
1
It is not just Class Divide, it is Class Warfare! Hence the dangers of this war, impossible to win. History demonstrates it.
As latifundias (unconceivable wealth) grow and the putridly rich retreat in their world, their serving minions and sycophants( read politicians) are, in fact, waging war on have nots. Until have nots resort to pitchforks, as a matter of speech.
By then, it is too late. The class war has already done much damage and stacked lost opportunities.
Bernie should be more clear in his message. First, the very definition of "democratic socialism" is a ridiculously blurred one. He should use the term "Nordic Model". Scandinavian countries have written the book on this Nordic Model, one that proves to bring best results experienced by humans thus far. It is competitive yet fair, it promotes upward mobility and delivers the highest degree of happiness...It is predicated on dialogue and compromise between ownership of the means of production, labour, and the state.
So we are plagued not just by abhorrent understanding of what Socialism is which in Fox translation is(must be) Venezuela, we are being victims of improper, deficient language and phraseology.
"[T]hey may not even be that reliant on public roads (there are helicopters, after all)."
This would explain the poor condition of many of the roads in Westchester County. The potholes are terrible. Reminds me of my Peace Corps days on St. Lucia.
3
One-percent of world population is 75 million people, almost the population of Germany. I’m pretty sure that the people who are calling the tune in this world number much less than that.
One day there may be a reckoning. And it won't be pretty.
2
I don’t care how rich Sanders is. I only care about his ideology. Among those who championed socialism were people from affluent, often very affluent, families. Lenin was comfortably middle-class. This did not change the results of their policies: economic ruin, political violence, and a rotten society that collapsed under its own weight. The very rich in a capitalist economy wield disproportionate political influence. But the elite in a socialist society wields the power of life and death. Which one do you prefer? Sanders can call himself a “democratic socialist” but this is merely an oxymoronic ploy to disguise the true nature of his ideology. There can be no democratic socialism. The opposite of free economy is slavery.
1
I'm a teacher. My students are increasingly poor and homeless, despite earning scholarships and working multiple jobs.
I worry most Americans don't fully appreciate the impact of lowering taxes on the wealthiest, and effectively redistributing wealth into the pockets of the few, without considering where the bulk of our tax dollars are going: endless wars vs. investments in education.
Worse: we've grown inured to battles waged overseas, and those taking place against people at home. Equipment designed for surveillance and warfare has been re-purposed by domestic law enforcement agencies. It's used to spy on, and militarize, our neighborhoods, and harden the southern border.
Here in San Diego, video cameras were installed in streetlights under the guise of assisting with traffic surveys to develop a Climate Action Plan. Instead: the images are controlled by Police Department policy, without input from our elected City Council.
All this "investment" in foreign & domestic warfare leads to mass incarceration of immigrants in private detention centers, a disproportionate number of people of color in jails and prisons, and states paying more to incarcerate than to educate.
Students are drowning in debt, and taking out loans to pay for college vs. receiving the grants and financial aid that made it possible for previous generations to invest in themselves after graduation and buy homes or start businesses.
IOW: These tax cuts are just the tip of a massive inequality iceberg
484
@Lori Saldaña: "I worry most Americans don't fully appreciate the impact of lowering taxes on the wealthiest, and effectively redistributing wealth into the pockets of the few, without considering where the bulk of our tax dollars are going: endless wars vs. investments in education."
I worry most Americans have no clue as to what's in the Constitution and why it was designed that way. I worry most Americans have no problem spending other peoples' money and getting the government to be their instrument of plunder. I am concerned that most Americans think the federal government is supposed to take of us from cradle to grave. I worry most Americans are more concerned about what their group identity is than the fact they are a unique individual. I worry that most Americans are being fed hyperbole and lies on a daily basis from two political parties and their sycophants in the media. I am sure that most Americans are not getting their money's worth in services based on the taxes they pay.
12
@Lori Saldaña I have seen it. I have seen the teachers barely making it with their meager salaries. I have seen the students taking $ 40,000 loans to pay for studies that gave them a useless degree. Useless because it would not give them access to a job that would help them pay back these loans.
Then, when we all know where most the money is going, in the pockets of the few or in Defense (which I believe is used more often used for Offense), anyone with a bit of sense would have to see that this is a sick society, bound to fail in many ways.
My only question at this point: are we ever going to correct this mess?
I see so many young people able to do things, eager to enjoy life to the fullest, with lots of dreams, they are such a pleasure to talk to. But then, when I leave them, my thoughts go back to the darkness of what this society is going to do to them. And it's not a pretty sight.
8
@hm1342 - you characterize the proposal to raise taxes on the very rich as a desire to spend "other people's money." OMG, give me a break. You do know, don't you, that money is an abstract concept. Economic structures are set up to enable some vs. others to accumulate units of that abstract concept. The economic structures are set up in such a way right now that a ridiculously small number of people acquire and are able to hold on to a ridiculously large number of those units. No amount or type of work any single person does justifies owning the vast majority of a nation's monetary units.
Vastly rich people got that way through lots of luck, possibly inheritance, possibly hard work (although millions of Americans work extremely hard and barely ever rise above minimum wage), and through the use public roads, public schools (which educate their workers), the CDC (which keep us safe from epidemic disease), and a hundred other public services.
When three or four members of the Walmart family own more money units than the bottom 40% of the entire population of America, there's a very big problem with the way our economic structures are currently organized and balanced.
"Other people's money" my left foot. Get a grip, and educate yourself on what "money" actually is.
18
This level of grotesque inequality isn't a simple matter of rich and poor. It is impacting every area of our lives since these elitists too often see climate change as an inconvenient truth to belittle; urge deregulation that affects our planet, health, and fair competition; influence politicians to needlessly bloat military spending while ignoring our crumbling infrastructure, which truly drives our economy; choke off spending on healthcare and public education; and fund media outlets that brainwash the masses so they think all of this is just fine.
149
@LauraNJ
Do those with ungodly wealth think they can buy clean air and water?
5
No, Mr Krugman, it's about envy. If someone makes more money than you and is not violating your rights, that does not make it right for you to violate their rights. This is tiough to understand for some, but liberty is not always welcomed. There's many temptations to violate liberty. We must resist them. Mark Zuckerberg did not steal from you, not your wealthier neighbor. Do not covet. Or in secular terms, do not confiscate.
3
It’s about the power to dictate the legal code, amass power to itself, and prevent power from developing outside the oligarchy.
When conservatives no longer hold power by democracy, they do not abandon conservatism, they abandon democracy. Massive wealth enables legal electoral bribery to dictate a legal code to perpetuate oligarchy.
1
@mainliner
It isn't a violation of their rights.
Taxes are written into our Constitution.
Article I, section 8 of the U. S. Constitution grants Congress the power to "lay and collect Taxes, Duties, Imposts, and Excises, to pay the Debts and provide for the common defense and general Welfare of the United States."
SCOTUS sustained the old-age benefits provisions of the Social Security Act of 1935 and adopted an expansive view of the power of the federal government to tax and spend for the general welfare. In Helvering, the Court maintained that although Congress's power to tax and spend under the General Welfare clause was limited to general or national concerns, Congress itself could determine when spending constituted spending for the general welfare.
Sorry, if you want to live in our civil society you will pay a share.
Don't like it? Take it up with our Founding Fathers and the SCOTUS.
4
This is an excellent column. I disagree however with Krugman's point that some democratic voters exhibit a "failure to understand what hypocrisy means" when looking into Sanders' tax returns. What this small but vocal minority wants is purity and authenticity, and this is a reflection of identity-based claims that prioritizes being something over thinking or advocating for something.
60
@WT
I think the hypocrisy Krugman refers to is from the right. I believe he means the people on the right who claim that Sanders is a hypocrite for earning so much while campaigning against the wealthy.
15
@Tor Krogius sanders is willing to re-label himself to achieve his personal goals. He has gone from "I am not a Democrat! I am a socialist!" and then running as a Democrat, when he was listed as an Independent on congressional roles.
Now, he has actually forced himself to join the Democratic Party to again run for the nomination. Watch how quickly he'll drop that, when Democrats don't choose him again.
3
@Norma I'm reasonably sure he never actually said any of the things you've put into quotes or implied in the subsequent paragraphs.
We run over things so many times trying to understand an outsider like Saunders that we start to make false attributions on the basis of what we have come to think they intend.
3
That Bernie made a lot of money is not what we should be talking about. What we should be talking about is his Medicare for All proposal, which won't pencil out, even if most of Americans wanted it. Bernie's own state, Vermont tried Medicare for All, and determined that they'd need to increase both corporate and personal taxes by 10%, neither of which was feasible, so they cancelled it. Bernie knows this, but isn't honest enough to discuss it. The mythical savings he talks about, incurred by government fiat, even if legal, won't materialize either. If everyone wants more in government services, the middle class, not just the super rich will have to pay much more in taxes, as they do in Denmark, Sweden, France, etc. Look it up. Let Bernie enjoy his money, just make sure he doesn't try to spend everyone else's on votes for himself.
64
@Ask Better Questions
As a citizen of Vermont, and as a physician I must add more information to your characterization of our efforts to have single payor insurance here in Vermont. We are already an overtaxed, small state with not many millionaires to pay into this kind of health care system. We do not have the economies of scale to pay for such a system. However, I contend that on a national level the money is most definitely there. Medicare works quite well on a national level and extending this to the rest of the population seems like the next step. Bernie is on the right track.
74
@Ask Better Questions
"Pencilling out" isn't the issue. Every other developed country provides universal healthcare to its citizens at a lower cost per citizen. So can the wealthy United States of America. It's a question of priorities. And cost controls.
Vermont is a poor counter-example. The state is a net recipient of federal funds, so no universal healthcare would be affordable without federal subsidies from wealthier states. But, yes, taxes of the middle class will probably go up with universal healthcare. Check out indices of health, well being and personal satisfaction in miserable, overtaxed, universal-health-care-providing Denmark, Sweden, etc. They are higher than ours... Look it up.
40
@Ask Better Questions
States cannot spend indefinitely the way the Federal Government can, which makes this point about Vermont mute. There also wasn't enough of a communication in terms of the gains vs losses. It also puts Vermont at a higher price floor when it doesn't have the sort of leverage that California or NYC have.
This needs to be done at the national and federal level for it to be viable. Even without invoking MMT, it is clear that only the Federal Government could afford such a project.
19
I hate to say it, but if you don't have a net worth over $1 million, you're not in the middle class. If this sounds preposterous, just look at what things cost today compared to what your parents paid. How much is your parent's house worth today? Can a single wage earner today afford that same house in today's wages? House's that cost $60K in the mid-1960s cost 10x that today.
122
@Skip Bonbright Perhaps, but we have riches that our parents didn't, from technology, communications, travel options, medical procedures, variety of food, etc. Most parents' homes are much smaller than typical homes today.
6
@David Oh really? And how much do those "typical homes today" cost, vs. what our parents' homes cost, relative to annual income?
THAT'S the point. Wages have stagnated, while actual inflation has inched upward.
14
@Skip Bonbright
What is true in Pasadena may not hold for rural areas of the country. The perception by many that all the money is being made by coastal elites is exacerbated by comments such as yours. I agree that a million is not what it once was and will generate approximately $ 40K/yr in retirement (trying living in a city on that), but to someone working for wages in Des Moines it sounds like a fortune.
7
The wealth gap between people with a lot of capital (stocks, real estate, etc.) and those that rely on their labor to obtain wealth can only get larger without some type of wealth tax. The reason is obvious: The person with a lot of capital profits from the person's own labor AND from the person's invested capital. The rest of us can only profit from our labor. We need a wealth tax to prevent the gap from increasing.
On top of that, capital gains are taxed at a lower percentage than labor. Capital gains should be taxed at a much higher percentage. Conservative economists will argue that more taxes on capital gain will reduce investment. But what is a billionaire supposed to do with all that money - put it under the mattress? They have no choice other than to invest.
One other big issue is taxing foreign entities. The US income tax should be based on the simple formula: US Sales / Divided by World Sales X Multiplied by World Income = US Income. This is similar to how many US states apportion income. It would end gaming of the system by putting shell companies in low tax countries. It would also remove a lot of the reason for moving corporate headquarters overseas.
2
The most meaningful figure I"ve read that gets to your point is this: The 3 wealthiest Americans (all white males: Bezos, Gates, Buffet) together have as much wealth as 50% of the US population.
175
Why is their skin pigmentation relevant ?
14
Because it’s important to acknowledge that the discussed socioeconomic class is disproportionately populated by white males. This imbalance both a) exemplifies a system that often hinders the socioeconomic advancement of people of colour, and b) means that the massive amount of power these men yield is less likely to be used to support people of colour (not out of malice, necessarily, but because those issues are just not a part of their identity).
26
@elotrolado
The have that much _paper_ wealth [if they tried to cash out the stock holdings in their own companies, it would be public information, and the stock would lose a good portion of its value]. Also, the value they maintain is 16, 1.3 and 6% respectively of the value of the companies that they founded, and which they grew into the large corporations they are today.
Sure, they had advantages in life, and perhaps the law overvalues and over-preserves the contribution of capital to the companies they created, but just citing this statistic doesn't mean anything immoral has happened.
You could also point out that I have as much wealth as 17% of Americans, since my own net wealth is above zero and one in six Americans are under water. That does not make me an oligarch.
8
It might seem like a small thing, but my various pets bring me great joy. I’m married to a staff veterinarian for a large corporate clinic, and I have a good job. I am beyond horrified at the cost of veterinary care. If a pet owner doesn’t have $400 for an emergency, the pet will not survive. Very few simple problems can be treated for under $400. At least if you are poor you can present to an emergency room and probably get help for yourself or a beloved family member. But your urinary blocked cat or your dog that got hit by a car is going to die unless you go in very deep with Care Credit. That’s a nice sounding phrase for crazy bad debt. I can pay specialists for major problems, so I get long wonderful relationships with my animals. But if you aren’t wealthy you will probably have to let them go and just get a new cheap one. If you want to try for a long relationship, definitely buy pet insurance.
10
@Kate Flaherty, Go to a veterinarian in a rural area. We do. The prices are half that where the pets are my "children".
2
My family's income, for many years, has consistently been in the low six figures (that's 100,000-150,000). And because I am frugal to a fault, and was able to take advantage of raised real estate prices by downsizing, we've saved up several times that in normal bank accounts.
That makes me "affluent", I suppose, but hardly rich. Still, I don't have to worry where my next meal is coming from, or if I can make the utility payment next month.
I do worry about being able to afford a long retirement, given the health care system in this nation. I suspect that I will never retire fully, but will continue to work to some extent as long as I am able.
And I say that I can be taxed at a somewhat higher rate then I am now if it will be used for a better social safety net. If it will be used to overhaul our health insurance system, I'm willing to be taxed at an even higher rate. (Currently, I do not do itemized deductions, though that would probably lower my taxes--I do not feel comfortable doing so given the blatant unfairness of our taxation system.)
It's not about the money being made by the super rich. It's about what they are allowed to do with it--rig the system, have ridiculously untoward influence on our politics, avoid paying what they could easily afford. (I constantly write about how we need publicly funded elections with low three digit limits on individual contributions to each race and no organizational contributions at all, but that's another comment box.)
223
@Glenn Ribotsky Yes, it's corrupt politicians that do the bidding for the donor class that is the problem more than there is a class with money to donate. Make it more fair before you worry about soaking anybody that just leads to more factionalization and more interest in the donor class controlling things to their benefit.
4
@Glenn Ribotsky
The uber super duper rich did not get there by themselves. They got there on the backs of others. When you have more money than you can spend in many lifetimes and you cheat to keep or get more, how can you be truly happy with yourself? This is why camels have an easier time getting through the eye of that tiny needle.
7
@Glenn Ribotsky 'Started counted # of times you used "I". But then got tired & stopped.
3
I would suggest the distinction between the very rich and the rest of us is whether you can afford to buy a politician (or at least give them enough money so that they will listen to you). My net worth is substantial, but I cannot buy one. I can't even get one to give me the time of day.
156
@Adrian Citizen's United put the nail in the coffin of Democracy. It was supposed to be a free speech issue. But it's not. Speech is very expensive.
46
@Adrian I’ve bought Bernie for $20, and he listens to everything I say. And I listen to everything he says too.
12
And while Bernie's not-all-that-outrageous income is being debated, Republicans continue to take over the federal courts with jurists who believe that the .01 percent and their corporations have rights far superior to those of the other 99.9 percent of us.
168
@backfull And that's the whole point of this fake story about Bernie's wealth. Deflection from the oligarchy which he correctly eschews.
6
@backfull
that's "the other 99.99 % of us."
1
If working and middle class people realized how very different their lives were from the 1% there would be blood in the streets. It would make the French Revolution look like a Puritan picnic. I’ve seen people spend millions, tens of millions of American dollars on birthday parties for teenage children or second or third weddings. Most people seem to think these things are exaggerated by Hollywood and TV news media, exploiting their “huge” budgets to create discord among classes. Trust they are not; every extravagant party you’ve seen on Billions or in Wolf of Wall Street is dwarfed by the reality of the excess of the new American aristocracy.
Look at it this way: in the late 1890s, Frederick Vanderbilt spent 400x the average annual American income to purchase a third mansion in Hyde Park, NY. They called that the “Guilded Age” and condemned families like the Vanderbilts for being “robber barons.” Just this year, a NYC penthouse sold for over 4000x the average annual American income, a third home for a modern robber baron who won’t even live there most of the time while real estate and rent prices drive people out of the city in droves. People have no idea, none.
236
@Mike
Just an example. A copilot of mine, operated a biz jet down to the Caribbean for a wealthy family. They were on standby down there waiting with the aircraft.
The matriarch of this family, dropped her reading glasses in the ocean.
The crew on standby, with this multi million dollar jet were instructed to fly back to the city, where this family lives, pick up her extra pair of reading glasses, then fly them back to the Caribbean island where the family was escaping a cold winter.
A true story.
23
I'm not a Bernie Sanders supporter, and I am far, far from wealthy. But even I know that nowadays a million dollars is not that much money. It's small enough that he probably paid a good chunk of taxes on it.
107
@Madeline Conant $1 million is a lot of money. It clearly isn't the same as being ultra wealthy but you can definitely pay all of your bills, and experience pretty much anything in life you want.
2
C'mon give Bernie a break. I don't seeing him buying a $238 million dollar condo in NYC just for the investment. Compared to the real fat cats, Bernie and his wife are paupers...As a former veteran of the book biz, I am delighted Bernie actually got those kind of royalties. But let's not lose sight of the real income inequalities going on today.
269
@Chip Lovitt
Agree.
I thought Bernie missed an opportunity to redirect the conversation about his income by not providing a comparative calculation of how much he would have paid each year if his tax plan had been enacted. The comparison would have been enlightening.
7
@Chip Lovitt
Ummm, that's the entire point of Krugman's article.
5
@Chip Lovitt I'm fine with Bernie making money on book deals. That's not where he made it all, but any means, but being a politician has made him rich (his books would never have sold without that title). However, he does own 3 homes and lives pretty well. He also demanded private air fair when working on Hillary's campaign. I've no problem with him being rich, owning multiple homes, etc. I did have a problem with him living off welfare during his pre-politics days even though he had a college degree from a good university and was perfectly capable of working. Just didn't want to.
2
Paul: can you explain to me a mystery that has troubled me for many years.
Why is it that the incalculably rich are so obsessed with lowering their taxes?
If I’m making $850,000,000 a year what would I care about an increase in my income tax rate, even a relatively steep one?
Really: where does this fear come from?
It’s not based on financial reality, surely.
Tell me why?
4
@David Berman, MD It's not fear that motivates the super-rich to oppose taxes increases on them. It's pure greed and a belief that by their cleverness and drive they have earned the right not to share that wealth with the less affluent and poor.
3
There are the financially affluent, the bona fide wealthy and the rest of the American population. The rest being a shrinking middle class besieged with lifetime debt and the always with us impoverished. Ever since income tax became the law of the land in 1913, the upper tier earners, those with inherited wealth, have found ways and means to prevent the true dimension of their financial assets from being disclosed and their fare share contribution kept out of the US Treasury. And not without the assistance of the US government itself providing the mechanisms to do so. So Bernie Sanders reportedly earned $500,000 in one year from book royalties. A substantial amount of money for most Americans. For a career politician of 50 plus years like Sanders, a markedly meager return. Bottom line, Bernie Sanders did the honorable thing as an elected government official. HE disclosed HIS tax returns.
7
"One survey found that Americans, on average, think that corporate C.E.O.s are paid about 30 times as much as ordinary workers, which hasn’t been true since the 1970s. These days the ratio is more like 300 to 1." One way of putting this into perspective is that a corporate CEO earns more by 2PM on Jan 2nd than the average employee makes all year.
1116
@pmbrig
True, but at a pay ratio of 30:1 (which is considered much more equitable) that date would just change to about January 12.
25
@Blue Moon
The point is that the difference between Jan. 2, 2 p.m. (Jan. 1 doesn't count) and Jan. 12 is huge, much greater than we imagine.
50
And the average of the 25 hedge fund managers makes more in less than 1 working day than a teacher will in more than 50 years!!!
145
We ought to start with insisting that tax loopholes such as those giving hedge fund managers and the "investor class" lower tax rates than "working stiffs" be closed permanently. Ia lso believe that the top tax rate should go back to the 70% that existed when we could pay for education, infrastructure and a social safety net. It's ridiculous that the top income for contributing to social security is so low and would someone please explain whether or why those not pulling in a paycheck do not pay into social security and medicare? Am I wrong in believing that the middle class bears the brunt of contributing to these essential programs?
1
@fg Tax the rich tax the corporations tax all republicans out of existence. Feel the Bern. Bernie 2020!
"So if you have an income high enough that you can easily afford health care and good housing, have plenty of liquid assets and find it hard to imagine ever needing food stamps, you’re part of a privileged minority."
Actually, it's probably a slim majority. Around 60% of Americans own homes, have employer provided insurance, have cash for an emergency, etc.
And many of these people would hardly consider themselves privileged, but rather hard workers who have made good choices with their lives.
This reality is why progressive social programs, particularly on housing and health care, have such a hard time getting off the ground. Far more Americans have a stake in maintaining property values and the quality of their community than in affordable housing. Far more are concerned about health care rationing under a single payer system than affordability.
These Americans may be underrepresented among the urban progressive cool kids who drive conversations on Twitter, but they are vastly overrepresented among those who show up to vote and in the parts of the country that swing elections.
You can talk all day about the evils of the "1%", but for most middle class Americans, if they have to choose between tolerating David Koch's big yacht or an affordable housing complex and all its ills moving in next door to their own home, they are going to go with what is behind door #1.
5
We are in a new gilded age with family business and political dynasties; consolidation of business and political power; fear of immigrants and tycoons who use tax loopholes to enrich themselves.
4
@Maureen See the rock band Rush song "Big Money" from the 1980s. Just as relevant today as then. Tax the rich tax the CEOs tax all the corporations tax all republicans and their voters and supporters out of existence. Bernie 2020 Feel the Bern.
Krugman may be right about the average C.E.O. being paid as much as 300 of his workers, but his example of hedge-fund managers averaging $850 million puts them at more than 10,000 times as much yearly income as the average working family of four earns in a year. $850 million divided by 300 works out to something like $2.8 million per worker, which sounds high, unless we restrict our definition of "worker" to a hedge fund manager's top 300 employees.
Other C.E.O.'s may earn much less than hedge-fund managers, but remember that they are compensated in large part by stock-options, which they can redeem whenever their company's stock has risen enough in value to make it profitable to do so. Then, when they sell some of that stock, they'll pay only 15% capital-gains tax on their profits, one of the biggest income-tax dodges there is.
Incidentally, this explains the corporations' recent mania for buying back their own stock. Instead of investing their liquid assets, some of it government-donated, they drive up the price of their own stock by buying a lot of it, and then the executives, who own stock options, can sell their stock at a profit, paying only half the taxes they'd otherwise pay on that income. What a racket - and perfectly legal!
11
Krugman is right that "regular people" cannot even begin to imagine the kind of wealth that the truly rich enjoy. When Mitt Romney ran for President, he reporting his annual income at about $14million. Did not sound like much to most people. But translate that to daily income - $38,356/day - and most people can relate to that. How could Mitt and other truly wealthy people possibly spend all that money? They don't and they thus continue to accumulate wealth. What about the $850 million/yr CEO salary that Krugman quotes. That comes to $2.3 million/day. Surely such salaries have no possible justification in reality. Who deserves and hourly wage of $291,000/hr. These are the kinds of numbers that "regular people" can understand and they should be used more often.
10
People don't realize that when Charles Koch spends $25 MILLION (like he did to get Brownback elected Governor in Kansas); that is the equivalent of a person who earns $100k a year spending $50.
8
I sure liket to know exactly what do they mean when people talk about the 1%?
The net worth is in the top 1% or the annual income (which can change faster from year to year than net worth) or either or both?
Hoping that Dr. Krugman will write a column that explains how the damage done by highly concentrated wealth goes far beyond distorted political power. As an economist the good Doctor needs to explain how much of concentrated wealth is sequestered in a shadow economy of asset ownership and its accompanying access to profits, in riverboat gambling on commodities futures, in emerging economies overseas and in tax shelter countries, and most definitely NOT in the Main St. economy where contractors like me do business.
13
My family is not in the 1 percent but I am sure we are somewhere in the top 5 percent. We are Bernie supporters. Recently we had to pay for health insurance through the network. We did not qualify for subsidies and the premiums were exorbitant. Mind you we did select a policy that was similar to the policy we had previously but we do have preexisting conditions and were afraid that it was a situation of pay now or pay more later. The experience demonstrated to us that the Affordable Care Act has serious flaws and that Medicare for all is the way to go. Everyone must be in the same boat for healthcare otherwise the measles epidemic will be nothing compared to the coming plague. Income inequality will not protect those at the top for long unless they stay locked in their bubbles.
10
I have my Social Security, retirement savings in the upper six figures and a paid for condo on the beach in paradise. My annual income is modest, but in the United States it is obvious that I am comfortably well off. But here in Mexico I am extremely rich and I try hard to never forget it. Everything is relative.
2
@Chuck Burton Sell your condo! It will be underwater within 15 years.
Our economy is like being in a cruise ship at sea, where one single passenger manages to get control of 90% of all the food. It's way more than he can eat as it was meant to serve thousands, so it rots in his stateroom while the other passengers fight over the remainder, and some approach starvation.
The hoarder is able to hand out snacks to a few hungry loyalists, to entice them to serve as his security guards. Larger meals are offered to buy the loyalty of the Captain. Amazingly, nearly half of the hungry crowd will laud this as "creating jobs". Those people are what we would call Republicans.
35
@Jomo
Nicely put, Sir, as the ship approaches Dickensian standards of social squalor (opioids, anyone? more credit cards, anyone? living out of motels, anyone?)
1
Valid points. Too bad the current Trump dystopia is intent in de-regulating our financial system (capitalism), fully knowing that poverty in such a rich country (economically, that is, poor in spirit) constitute an institutionalized violence more proper of a pluto-kleptocracy, with a rising economic inequality we ought to be ashamed of. Sanders' wealth cannot possibly be compared with those billionaires head of industry and commerce tha keep the rest of us hostage to their whims, buying our politicians to do their bidding and cheating on the poor by not paying their fair share in taxes. Besides, what's the social value of the dubious financial tricks being played to amass fortunes at our expense? This 'complaint' has nothing to do with envy, with social justice instead. And without justice, societal peace shall remain a distant dream.
7
It's about paying taxes. wasn't it Warren Buffet who had said his assistant paid more taxes than he did?
10
@Gangulee Not more, of course. Just a higher percentage.
You have hit the nail onto the head. It isn’t so much they have all that money, or even that they think they deserve it. But money makes the holder think they are smarter than everyone else. They try to reshape the country into what they think it should be, invariably to benefit them. That’s why we need to oppose them.
9
I think the idiocy of those who believe that it is hypocritical to be both wealthy and believe higher taxes are a good thing are a victims of their own projections.
They cannot fathom why anybody without a psychological disorder would want to be taxed more, ever.
Accordingly, the only way square these two facts is to believe something underhanded is afoot -- the wealthy tax advocate really just wants to tax other people and thinks he/she will get away without the increases applying to himself/herself.
5
It may not be totally analogous but what comes to mind is oligarch, as in Russia and revolution, as in France.
6
@sarai Almost seems like they are begging to have their heads fall into baskets.
This is a pathetic sleight of hand from an alleged scientist. Bernie Sanders, a socialist, got rich the good old fashioned capitalist way--by writing a book, selling it, and keeping most of the proceeds for himself. You forgot to mention that he owns 3 homes. He is wealthy man. If he were a capitalist, an Obama/Clinton-type democrat, then he would not be a hypocrite. But he is a socialist. You know, Paul, two things can be true: 1. The mega-rich are way too rich. 2. The plain-old rich Bernie Sanders is a hypocrite.
5
@tanstaafl What is the hypocrisy? Did Sanders say at some point that people shouldn't earn money? Or is the act of calling him a socialist twice despite the fact that you know very well that he's a democratic socialist a bit of misplacement on your part to try to pull together an argument that would not work otherwise (and that still doesn't if you take it at face value)?
@tanstaafl
What tortured logic. You are using the word "socialist" as a damning label, a skull & crossbones. I'm not sure what a "democratic socialist" - Bernies term - is, but I suspect it's pretty much along the lines of European "Social Democrats," whose countries by and large have regulated capitalist economies with GNP's very similar to ours, and market returns very similar over time.
@tanstaafl: It's consistent with Sanders' behavior since he fled, er, moved to Vermont from Chicago. I guess "back to the land" gave progressives a fig leaf when they moved to overwhelmingly white areas.
Power to the people and all that!
The other idiocy from the Fox town hall was the suggestion that if Sanders wanted more taxes on rich people like himself he should just pay more taxes (and leave the more sociopathic 1%'ere alone). A single person at the million dollar income level would not make any difference if they donated all their income to government. Only when all of them are forced to pay more to government, will we be able to correct the injustices and deficiencies of our society.
9
Most people fit into the classifications under what I list as middle class yet claim to be middle class.
Poor- you are financially in trouble at all times even with a full time job and welfare. In fact welfare interferes with your ability to get ahead by restricting what you can do to do so.
Working Poor- You are in trouble in a month or less after losing a job. Layoffs are a regular occurrence at least a couple times a year. (Layoff means the work ran out or was finished for now not being fired)
Working class- You can make it 3-6 months if laid off.
Lower Middle Class- You have savings. You can make it a few months without income if you have to and you take vacations where you and your family travel every few years.
Middle Class- You are secure for up to two years without income. You have or could have a second home or cabin. You have investments and you can vacation travel at least once a year.
Anything above middle class and you are pretty much financially secure for life unless you do something very stupid.
I'd say Middle Class is where Bernie fits in to give you all an idea of what wealth really is.
5
We are living in another Gilded Age with a President who, despite his demagogic populist rantings, cares only about protecting his personal financial wealth and desires to gain the support of both the affluent and 1% with policies that will decimate both the social safety net and the Middle Class.
2
@Dr B (who thinks $24 Billion a year is not too much money — the sum he calculates we may collect from a Warren proposed 1% tax on wealth for amounts over $50 Million)
First, $24 Billion is a pretty big “blip”. Second, the income tax increase on the same people will be another’s lovely blip. Third, corporate tax rates going back to what they were with most deductions taken away (Amazon paying zero taxes last year!). Fourth, estate taxes redesigned to hinder automatic generational class structures maintenance.
It willing all add up.
What i am after is Rawlsian Justice. Maximize the welfare of the “minimum” of society before you optimize the welfare of the rest. This way you will be indifferent to who you wake up as after going to sleep as yourself.
2
People do not have enough money to buy stuff. We have just have 2 studies that showed if the typical American family had a real emergency & had to come up with some money, they couldn't do it. One said 40% the people couldn't come up with $400 & the other that 2/3rds couldn't find $1,000.
Now businesses are not going to produce stuff people can't afford to buy. So they have to keep prices low, & they can't pay workers well & still keep the big profits they have become used to. If wages were higher, people would have the money to buy stuff, but that's a chicken & egg problem.
BUT we have a way to break out of this circle. Its called the federal government. It can create as much money as it needs out of thin air. It can then get the money to the people who need it & will spend it by simply doing stuff that needs to be done, e.g. fixing roads and bridges, helping with education, research of all kinds, a new power grid, efficient transportation, etc., etc., etc. Thus we can break the circle & improve our lives at the same time.
What about inflation? Prices are proportional to the amount of money in the economy (times its velocity), but INVERSELY proportional to the dollar value of the stuff we can produce. So if the money is spent doing good things, it will produce enough stuff to soak up the money. Excessive inflation is caused by something that prevents us from producing stuff, like shortages (oil embargo) or reducing the value of the stuff we produce (Venezuela & oil).
2
I don't care if Bernie Sanders is part of the 1%, the 99% or whatever we call the bottom 20%.
He is not fit to be President. Not only is he too old, he is the liberal version of Donald Trump. A dog whistle to the fruitier side of our party.
5
Bernie is a staunch Independent, and refuses to identify with the Democratic party. After saying how horrible Dems are, he wants to use my party ID to run for president? I wonder if he even understands why I am not excited by his candidacy.
8
Imagine having enough pocket change to blithely hand over half a million dollars to get your kids into your school of choice. I suppose the tuition was no problem.
2
The election of Ronald Reagan was the watershed moment when the United Sates and its principles died. It was the first time a foreign rule (Ayatollah Khomeini) put his thumb on the scale and successfully controlled the election of an American president (the kidnapping and release of Americans).
Thus was born trickle down economics, the me generation, The savings and loan scandal and Iran Contra. All leading to the evolution of the super rich and the downward future of the middle and working classes.
The election for the presidency is more valuable than name recognition and charisma.
6
As a side note, your technical books in the USSR could have been a best seller. A book on Quantum Electrodynamics was a best seller there. The reason is the government subsidized technical books to make them easier to get. However the peasants would buy the cheap books, rip out the pages, and use them as rolling papers for cigarettes.
1
A peculiar feature of the 2016 race was the persistent attacks of Mr. Krugman on Mr. Sanders culminating in
"Sanders over the Edge "
( NY Times 4/8/2016)
whereas declaring , again in his NY Times Column
Trump is Right on Economics
(NY Times 9/7/2015)
Mr. Krugman history in discussing Mr. Sanders is depressing
A much better analysis is today's column by Mr. Stiglitz discussing Mr. Sanders and the meaning of Socialism
1
@Woof
Krugman’s position in 2015 to 16 regarding Sanders was surely troubling.
Especially when you consider that Sander’s positions were practically ripped from Krugman’s book “The Conscience of a Liberal.”
We can see that the NeoLib Dem Elites, such as CAP had a plan to ram rod Hillary into the presidency. They took great offense at Sanders taking truth to power - the reality of most Americans living under flat wages since 1972 - which they basically were positioning themselves to perpetuate.
Hillary still could have won if she made Bernie her VP and got those extra 100k votes in rust belt states. Reagan faced the same dilemma and put Bush Sr on his ticket to make sure that wing of the party had reason to show up on Election Day. Hillary did not & in doing so demonstrated that she’d rather lose to Trump than give progressives a seat at the table.
Hillary lost to Trump (a very flawed person). This proves beyond a doubt that Dems cannot win w/out progressivism in our current times.
I’m guessing Krugman was up for high office, saw the tea leaves and found himself position opposite of his beliefs and so forcefully advocated against them.
Well, let’s hope he has moved on. And its increasingly looking as if he has, as this column seems to demonstrate.
1
The problem doesn't lie with the !% but with us; we were asleep at the switch. Or bribed by material wealth and/or assurances that we were better than them, whoever 'them' might be from poor to 'affluent', heavily pigmented to pale. Democracy (having a say, an oar in the water) regards continuous vigilance as the saying goes. And it should begin in grade school. And the 1% and their deluded overseers know this. And if we rest on our oars, they and their overseers will steer the boat where they will.
2
Nice Op-Ed Mr. Krugman.
We have a long way to go in these primary's; please keep that long knife, hidden behind your back in its sheath this time.
Thank you.
Oh, not my 1%ers, they're different. Yeah, OK.
1
What is missing from this discussion is HOW those Hedge fund psychopaths are "earning" their $850 million p.a.
They are the people who hollowed out the American working class and continue to erode our manufacturing base. Drug (medication) profiteering, excessive construction of luxury housing, private prisons, you name our social ill, there is hedge fund money in it.
3
"...extremist right-wing politics that now dominates the Republican Party." Unfortunately it's not just the Republican Party, but that ideology is running the country even though it is a minority opinion. That's why the future looks so dim.
2
I think I'll become a real socialist calling for income equality. Why should a hedge fund manager average $850 million when I find that the people who pick up my trash are much more meaningful to my lifestyle.
7
@hd, Do you know how hedge funds work? They're taking form the already rich.
@Ryan Not true. It eventually hits retirement funds and the funds of the 99%
@RyanGeezzz! Pension funds. The subprime home buyers. This money does not belong to the rich. So the poor and middle class are the ones at risk.
The problem, as I see it, is that most of the “a little rich” in Bernie’s class, spend too much time reading the NYT and tut-tutting about the “super rich” while doing little else. I give Bernie enormous credit for speaking out even while quite “comfortable” himself. In that aspect he is a model for me.
2
The rich mostly made their wealth from the labor of everyone else. Often by slave labor labor in third world countries.
4
@Jose, Good for them for taking the initiative.
If you have a billion dollars, and retire, and wish to spend it all before you die, and never get any interest on your money, and you live for thirty more years, you would have to spend over $92,000 a day to accomplish that!
5
The craziest thing about all this is how on earth the GOP manages to convince so many relatively poor US citizens to vote against their interests and support all this absurd inequality. Truly nuts!
10
Thank you, Mr.Krugman, for writing this article.
As some "severely" affected by the greed of the real estate investment world. I am aware of the financial tools being develop for investment in renlals in Northern California.
Investors are making billions a year and putting thousands of lifelong retirees in the streets. They are here in Sacramento California. Anyone can come and see them they are now citywide. The sheriff dept has a helicopter service to survey the "suburbs" where the upscale neighborhoods are located, such as GoldRiver, for deterrence.
After a 33-yr full time work life, 2 B'S, 5 languages etc etc my housing situation is very unstable- I have moved 5 times in 2017.
I was aware of the economic disruptions coming up but I would have never imagined the"level" of greed that I have first hand witnessed.
These real estate invest
ors are only contributing to destroy society. I bet some probably could not pass the courses I have taken.
6
Are Democrats willing and able to fight for upping taxes on the super rich, those whose yearly earnings are in the millions, and whose net worth is many multiples of that? Earning triple million salaries should be yielding taxes, but those managers know how to shield their income in myriad ways. That is truly unfair to society.
BTW, earning 200K in the NY area, especially if married with a family, is hardly wealthy. That might have been true 10 years ago, but not anymore. Depending upon rent, or mortgages/taxes on a decent house (which costs a million, or more), you aren't left with much, if any, discretionary spending money.
Right on about the 1%. Realize that anyone with a paid off mortgage on most modest properties in NYC is a millionaire, of sorts. However, should a catastrophe occur and you need to spend down the equity, your alleged wealth has just evaporated.
4
@Rosalie Lieberman
"Are Democrats willing and able to fight for upping taxes on the super rich, those whose yearly earnings are in the millions, and whose net worth is many multiples of that"
Yes, but they only can do this if enough people vote for enough Democrats
https://www.hillaryclinton.com/issues/a-fair-tax-system/
and see p. 11 here:
https://democrats.org/wp-content/uploads/2018/10/2016_DNC_Platform.pdf
1
Prof. Krugman, It seems so many folk can't disentangle wealth (assets, capital) from income. $250,000 is a lot of income by the standard of income under which most American families live, but chump change for the uber-wealthy.
And an author, like Bernie Sanders, hitting the publishing jackpot may rake in some real riches. Great.
But the people who fly into the Allen and Company conference in Sun Valley, Idaho don't just have some real riches. They are rich and richer, and richest beyond most Americans' dreams or even comprehension.
That picture of the private jets, some of them costing $65 million EACH, reminds me that the latest Trump tax cuts - thanks, Mitch McConnell - allows the superrich to *write off the entire cost of such a purchase in a single tax year.*
Imagine Congress passing a law that allows a self-employed house cleaner to write off the entire cost of a 10-year-old Toyota Corolla in one tax year -- you know, that car that allows her to get to her 14 jobs in 14 different houses each of the 7 days a week she works. Yeah, right! Wait. She doesn't have any lobbyists working for her.
Oh, and about half of my net wealth is in my house, not very liquid. And if I sold it, I'd have to figure out whether to buy again or rent and invest the proceeds. The uber-wealthy are above these petty calculations.
14
That 400k working stiff is loyal to the class above themselves, not to the people who make less. That's how these hierarchies maintain themselves, by making sure that everyone feels superior to the people below, and that all loyalty is upwards. If you get caught saying otherwise, your upward rise is ended.
10
I think an underestimated element is daily freedom and flexibility. That aspect already sets the upper middle class apart.
People with the good jobs can leave work for a couple of hours to attend a PTA meeting, work from home if they don't have meetings or if one of their kids is sick, show up for work earlier or later depending on the day etc.
It's much more stressful to have to show up at an exact time every day and have very little flexibility in terms of managing unforeseen or inconvenient events. Lower jobs also tend to be more micro-managed which increases stress.
13
Thank you for standing up to the crowds blighting and besmirching Bernie. Fake news like that of my State's late Lee Atwater are examples of how to beguile the peons to favor their enemies. The current Republican Party has become enthrall to money and the very, very well to do. In the next few days my fellow Americans will be engaged in common religious mythology and and our common gathering of our rituals (some of one sort and and some another with different ways). Please use the media to counter the fake news and let us work together for the benefit of all instead of the worship of men of vast money.
6
@Brent J: Fake news is how aristocrats get peons to march off to war too. It's been that way since the beginning of recorded history and probably longer. Maybe someday we'll become truly civilized, but we aren't there yet.
2
It's astonishing the number of people terrified of "Big Government" who worship the idea of "Big Money" - or at the least have no problems with it. They fail to make the connection to the very real and present danger of government by and for Big Money.
14
This is a very confusing editorial. Is Mr. Krugman giving a pass to the merely affluent, or not? Both Mr. Krugman and (at least in the last couple of years) Mr. Sanders are members of the 1%, but not the .001%. Is Mr. Krugman advocating for higher taxes on himself and Mr. Sanders or not? There’s no mention on what Mr. Krugman thinks is the appropriate tax rate on Mr. Sanders’ windfall income increase the year he published his book. And Mr. Sanders didn’t give away much of his windfall income. So he’s not averse to being in the 1%.
Yes, we can all agree that the really rich, the .001%, are unimaginably wealthy. But most of the really wealthy got that way because they own businesses. Their wealth comes from ownership, not salaries or book royalties. And more importantly, the tax revenue that could be generated from taxing their income or even their assets at punitive levels isn’t sufficient to pay for all the proposed spending plans that Mr. Sanders advocates. So the only arguments for higher taxation of the ultra wealthy are “fairness” ie envy, and the specious claim that imposing higher taxes on the ultra wealthy curbs their ability to influence society.
The last claim is spurious. No reasonable person would conclude that a hedge fund titan has more political clout than Mr. Sanders or Ms. Elizabeth Warren (another 1%er).
So I reiterate: I’m confused? What is Mr. Krugman proposing in this editorial?
1
@Shiv: As my old electronics teacher used to say "if you're not confused, you're not paying attention." It's a complicated situation with many moving parts, and many things can be true at once.
The only reason that Sanders and Warren have more clout than the hedge fund manager is that they are politicians, and clout is their business. If that hedge fund manager is willing to invest some of that money, he (she) can buy clout and wield it unseen.
1
@mlbex
If you don't think politicians, including Warren and Sanders, wield unseen clout (separate from their seen clout) with their back-room deals then Shiv is not the only one not paying attention.
@Shiv ".... the specious claim that imposing higher taxes on the ultra wealthy curbs their ability to influence society. No reasonable person would conclude that a hedge fund titan has more political clout than Mr. Sanders or Ms. Elizabeth Warren"
1. Consider: The ultra-wealthy can buy several politicians.
2. But here is the most important part of the article:
"The very rich don’t need Medicare or Social Security; they don’t use public education or public transit; they may not even be that reliant on public roads ..."
Taken further, this means that the ultra-wealthy don't care about maintaining public facilities. They have their own firefighters, security forces, garbage collection, schools, security nets. They barely need U.S. residents as a workforce.
The idea that ultra-wealthy financiers should not have to pay their share to strengthen public facilities security nets is not logical--they make use of the U.S. banking system, the military, and our rule of law to build their empires. Let them try doing it in Columbia.
Last, I am not poor. Not ultra-rich, but certainly not in need. Still, I feel it is wrong (and a dangerous herald) that the ultra-wealthy bankers in our country are those who don't discover anything, build anything, or make anything (except money). They don't heal anyone or protect anyone. They don't help maintain the rule of law. They promote a winner takes all society with flimsy arguments about bootstraps and opportunity for all in America.
2
The rallying cry of "$15 an hour" underscores how desperate a situation the working poor endure. Do the math. That's a bit north of $30,000 a year (less taxes and contributions to healthcare if available from the employer). Those are poverty wages in nearly any city in the US. And remember, that $15 an hour is a goal, to be achieved perhaps sometime in the future. Today over 40% of all workers earn less than $15 an hour.
When a national economy writes off a majority of workers (those earning under $25 an hour for argument's sake), the outcomes become obvious and the future bleak. Politicians of both stripes who equivocate on fair wages for all workers might want to consider more thoughtful responses than "let them eat cake" as they enjoy the fruits of those workers' labor.
6
"the very rich are different from you and me"
Nice new twist on an old slogan. Maybe no one will notice.
2
@Jp
Not a new twist at all; this is the original formulation:
"Let me tell you about the very rich. They are different from you and me." --F. Scott Fitsgerald, "The Rich Boy," 1926
To which Hemingway famously replied, in another short story:
"He remembered poor Julian and his romantic awe of them and how he had started a story once that began, 'The very rich are different from you and me.' And how someone had said to Julian, Yes, they have more money. But that was not humorous to Julian. He thought they were a special glamorous race and when he found they weren’t it wrecked him just as much as any other thing that wrecked him."
3
I laughed when the newspaper headlined that Sanders is a millionaire. I live on Long Island. If you own a home here or in Westchester or Northern NJ, you're at the very least halfway to being a millionaire and if you've saved/invested at least modestly during your most productive working years, you're a millionaire. I am a millionaire and I'm betting that just about anyone I know is as well. Not one of us would be regarded as "wealthy." But we certainly are as contrasted to those with income insecurity, those whose wages often do not allow them to meet even basic shelter, food and health needs.
8
For clarity on the subject please go to: bit.ly/EPI-study
Scroll down to the 2nd graph. It shows the rise in GNP & median wage since 1948.
From 1945 to 1972 GNP went up about 100% & the median wage in lock step w/ it. That means everyone’s wages doubled w/ productivity.
Since 72 GNP went up another 150% but the median wage has remained flat. As some workers saw wages go up (Health/Tech) then most workers have seen 47+ year decline in standard of living/expectations/hope. If hope is the best of things, hopelessness is the worst. “poverty is a kind of violence, the worst kind”-Gandhi.
47 years since Americans have had a raise even when they have created the most productive society in history.
A 47 year trend means the inflection point of 72 is a hard inflection point.
A 47 year unjust trend running against the interests of nearly all Americans cannot be sustained w/out complicity from elites on both sides. They’re on the take.
Figuring out how to ‘break’ the inflection point of 72 should be ever single politicians opening statement. The fact that for 46 years it had not for most demonstrates complicity.
Bernie Sanders saw these trends. He advocated reasonable policies used in other countries to hammer on the inflection point. When polled they had 70-80% approval. So in 2016 he ran to test its political efficacy & it worked.
The push back from folks like CAP is from the elite on the Dem side who have been complicit for 47 years & is expected. It will be overcomed too.
12
@Tim Kane
The suppression of wages inside of an economy that is clearly thriving is an interesting phenomena and needs to be explained.
Here’s an attempt.
America (& most of the West) has 1 governing principle: Free Contract. In such a system what you earn is a function of your bargaining power. That means everything that goes on around us has to do w/ people/groups trying to enhance their bargaining power wether that’s ads on TV, personal grooming or lobbying in DC.
The Rich retain the GOP to pursue their interest.
The GOP has 1 prime directive: the ever greater concentration of wealth&power on behalf of the wealthy&powerful.
They’ve been very successful @ this.
How?
By undermining the agencies of other groups bargaining power (unions=Workers; affordable quality higher ed=mid class; ACORN=The poorest) - while enhancing the agency of the rich, the Ltd liability corp, 80 owned by 0.1% (Citizens United).
So while the distribution of wealth is the concern, the real issue should be the distribution of bargaining power.
The GOP can fan the flames of “wealth distribution” as a kind of Calvinistic immorality but they have much much less leverage in advocating for an unfair distribution of bargaining power.
After all, what is exchanged in bargaining is the “virtue” of 1 party w/ the “virtue” of the other & such exchange doesn’t occur unless both virtues are manifested: You don’t get paid unless you work (virtue), the amount you get is a function of your bargaining power.
3
@Tim Kane
The consequences of concentration of wealth needs to be understood as well.
Here’s an attempt.
In 2002 I studied “History of Property” rights from Nobel Laureate Econ Historian D. North. We had to read his book “Structure & Change in Economic History.” Pages 100-115 attempt to explain the collapse of Rome.
It went:
Wealth&Power had become highly concentrated. 6 senators owned half of N. Africa. The wealthy&powerful used their influence to avoid paying taxes. The Roman Legion still held a tactical edge but it had thinned. So Rome needed to increase the size of its armies to control their borders. Rome singularly lacked the political will to raise the necessary resources to enlarge its armies, even while it controlled all the resources of Western Civilization. A 500 year dark age ensued.
Then I studied Japanese law & learned a similar thing happened to medieval Japan. No invasion just 200 years of anarchy & warring states.
Then I read a similar thing occurred in Byzantium between 1025 & 1071 & the battle of Manzikurt which lead to the loss of Anatolia & crusades. Byzantium never fully recovered.
Then a documentary showed the same in Ancient Egypt; A reformation history told a similar story of the decline of Hapsburg Spain; then other histories on Bourbon France, Romanov Russia & the Great Depression.
Concentrated wealth is the destroyer of great civilizations.
The rich know this but can’t help themselves; maybe you don’t because they don’t want you to.
4
@Tim Kane
Please note that in most Western societies, roughly 32% of workers in private employment are represented by unions. In the U.S. it is only 7%.
In Japan they have truly unique institutional arrangements.
In Japan they have “company” unions. They never worked in the west, but they do there because workers have tenure - which means they can’t be dismissed w/out cause. So it is easier to fire a CEO than it is to fire enough workers to affect company performance.
Tenure means the company must be run to ensure future employment. That means pursuing a strategy of long term market share growth as the only way to ensure employment.
IN the U.S. companies pursue short term ROI. Quite often, as with Sears, this means undermining workers welfare while undergoing a long term retreat from market share until bankruptcy.
U.S. companies do this because Execs have ascendancy. Usually an Exec becomes CEO just before he retires. His goal then is to pad his estate. He does this by tying his pay to short term rise in stock share price. Then pursues a very short term ROI strategy to force a pop in the share price of stock. The consequence of this arrangement is the sufferance of American workers, which captures no envy from the rest of the world’s workers.
Life in the American workplace, consequently, is a dystopic acid bath for more and more workers as wealth continues to concentrate and the current social contract provides very nice indeed retirements for their former bosses.
2
Although Prof. Krugman has drifted away from the single payer model of Medicare for All, today's commentary provides the basis for why it is an imperative.
At nearly one-fifth of our economy, with much of the money at the top, the majority cannot afford to pay the per capita costs of health care. Progressive financing is required if we are to include everyone. The current system is fragmented and inadequately progressive. With the various models that assign premiums and cost sharing to individuals, rather than equitable taxes, and with unstable employment (66 million leave their jobs each year), we can never get the financing right. Millions will remain uninsured or underinsured.
With single payer Medicare for All, financing is automatic through the tax system, and everyone is automatically covered. The higher (but fair) taxes that would be paid by the very wealthy would make this possible.
8
"The very rich don’t need Medicare or Social Security; they don’t use public education or public transit; they may not even be that reliant on public roads (there are helicopters, after all). Meanwhile, they don’t want to pay taxes."
Thank you for this statement. This is the clearest, most straightforward declaration of the basic fundamental issue threatening American society today. Everything else - climate change, failing infrastructure, no health care - you name it - it builds upon what you state above.
All of the explaining and defining to date has only served to obscure the obvious, and the most serious - the rich don't want to be one of us. They want all of the benefits, but none of the costs and responsibility - and what they want, they want at the expense of the rest of us.
Until we realize this, and address this fundamental assault on our democracy, we'll never get any better than we are now. Actually, we'll only get worse. And worse. And worse.
32
Too many Americans believe the lie that our corporations and wealthy are taxed more than any other country in the world because our published tax rates are higher. Who pays the published rates besides Bernie? This allowed the GOP to put in place more loopholes, exemptions and lower tax rates via the 2017 Tax Scam. At the same time we're supposed to accept that 40-60 million Americans are living in poverty because they're lazy, and we pay the highest costs of meds because this is how capitalism works. Really? Vote for social and economic justice.
17
@Saxmantf
The middle class in western Europe is also shrinking, and their incomes/buying power declining. That is what started the yellow vest revolt in France, and that is with the benefits of universal healthcare and early retirement.
The really poor in France are typically immigrants with very large families, poor command of French, and little to no higher education. Often goes together with criminal lifestyles, in their banlieues. Not unlike what happens here in America. But we have more unwed teen moms, an illicit drug culture which promotes gang violence/incarceration, and together burdens future adults with little education or the ability to earn a legitimate income. It may not be laziness, but this underclass barely existed before Lyndon Johnson's Great War on Poverty, which actually made it worse for later generations.
Poverty outside of maladaptive lifestyles certainly exists, typically related to chronic disease, mental illness, and occasionally just poor luck. I wonder, though, how much of it is really due to poor choices.
Thanks Krugman for keeping your eye on the ball. Though it is clear from Muller's report that the Trump campaign indeed actually did collude with the Russians (routinely sending them poling data), and we should not keep quiet about that, the real issues, the winning issues in 2020 are income inequality, The Green New Deal, healthcare, etc.
10
100% utter nonsense about the origin of the term "The One Percent." No one except maybe Krugman -- and I even doubt that -- had in mind college education. The term simply referred to the rich as opposed to the simply middle class well off and lower. Sanders is more than just middle class well off. The question is whether socialism should allow that. As for the One Percent, yes, a better category would be the One Tenth of One Percent, slightly less euphonious.
2
The irony of all this is, the people who need the social programs the most, helped put the people in power who were chosen by the wealthiest amongst us.The brilliance of the Republican strategy is that they have managed to get people to vote against their own best interests by appealing to racist, misogynistic, xenophobic, and homophobic instincts. Not to the better angels of people.
Many of the wealthiest in this country have no allegiance whatsoever to country nor fellow citizens, that is pulp for we the masses. We are the ones who fight their wars to enrich them, and take whatever crumbs from the table we can scrounge. We are kept busy and distracted by earning a living and worrying about bills. We have very little power except in the voting booth. With elections becoming more and more controlled through tactics like gerrymandering and other restrictions, that power is under siege and being weakened. Further, foreign adversaries are now becoming players in determining the outcome of an election.
2016 was a turning point in this country, and unless we can take back control of Congress and the presidency, we will continue the slide into becoming an oligarchy. The scare tactic Republicans are using right now is the word "socialism". Democrats need to own that word and plaster television with ads which explain that Social Security and Medicare are a form of socialism and that business and socialism can peacefully co-exist to the mutual benefit of all, like it does elsewhere.
18
@Diana:"The brilliance of the Republican strategy is that they have managed to get people to vote against their own best interests by appealing to racist,"
Dead wrong. A seminal event in the liberal abandonment of the old line FDR coalition occurred in Detroit in 1972.
In 1972 a desegregation order to the Detroit Public Schools, forced busing was implemented in Detroit, Judge Roth (appointed by JFK, no price to great to pay and all that...), who ruled on the case wrote in part:
“Transportation of kindergarten children for upwards of 45 minutes, one way, does not appear unreasonable, harmful, or unsafe in any way. ...kindergarten children should be included in the final plan of desegregation.”
This was a weaponized judiciary aimed at working class folks by liberals who for the most part had no skin in the game.
Fortunately the cross-district scheme was reversed by the SCOTUS.
Unfortunately Detroit Public Schools were still forced to implement busing with a total white student population of about 26%. The scheme was have the student population in each school that reflected the overall student population.
George McGovern spoke out in favor of this sort of plan in the Michigan presidential primary of 1972. George Wallace spoke out against it and won the Michigan primary that year.
From that point on many working class folks understood they could no longer trust liberal Democrats to watch out for their interests.
It'll take a long long time to repair the damage.
This focus on the evils of great wealth divert our attention from the real problem :the extent of poverty and near poverty in this country . redistribution only deals with symptoms of poverty such as the need for an economic Safety-net . what if we focus our attention on redesigning our economy so that a typical worker could earn enough to support himself , send children to college and have enough left over for emergencies? Let’s ask Professor Krugman how to design a system that avoids violence but restores shared prosperity
5
@Ronman
If you don't think "the evils of great wealth" have anything to do with "the extent of poverty" you haven't been paying attention. Just who do you think has been riding the poor--not to mention the rest of us--in this country and keeping them that way?
10
@Ronman he’s not an economic Procrustean. If you assume that motivation and ability are more equally distributed than wealth, then equalizing opportunity tends to prevent deprivation. That’s why health care, child welfare, education, housing, and transportation and communication infrastructure tend to raise the floor while strengthening the economy in general.
Unless our economy is critically short of capital, my one-millionth thousand dollars of wealth contributes less to economic output than will a family’s last thousand.
2
I’ve often wondered why we don’t tax high frequency trading. As I understand it, it’s computerized trading in large lots when the prices give a fraction of a cent per share in profit on the trade. Why not have a $1.00 per trade tax, so that the margin would have to be $1.00 plus a fraction of a cent for the trade to be profitable? The hedge founders will still profit, and I doubt the tax would cut into their profits very much, but it could benefit the common good.
6
@Diane That was a National Nurses Union proposal a few years ago.
Interesting that the stock exchanges haven’t institute per-trade charges like that.
The few people I know in the super rich are good people who have created jobs and give back to society in other ways on top of paying taxes. Often they contribute in ways that more directly benefit society than paying taxes to the federal government. Seems like a reasonable debate vs. equating wealth with morality as Mr Krugman almost always does.
4
@Dave
They might be good people and philanthropists, but they participate in a wealth defense industry that is all about shifting their tax burdens on to the merely affluent. There is no reason whatsoever for anyone to make a nine-figure yearly salary--it should be taxed out of existence to provide for our crumbling public sphere. That's what Americans, organizing together, were willing to do in the past.
9
@Dave So are, and have, the super-poor, I’m my experience.
In your experience,though, are the super rich free from the tendency to believe the super rich are a better class of people than you and I? Are they tempted to think their taxes should be reduced even if the rest of us will have to pay off the resulting debt? Are they comfortable with low social mobility when it means their family wealth will be passed on regardless of merit?
If not, they are truly better people than am I.
1
Are entertainers Bryce Harper, Beyonce, Kevin Durrant, Tiger Woods, Johnny Depp, etc also part of 1%? They were also gifted with talents that enabled them to achieve extraordinary incomes!
1
@Donna Gray
Did you read the column? This is not about the one percent, and it is not mostly about anyone who does anything useful for a living.
it’s the difference between thinking Harvard - at $50k a year - is expensive, and the nonchalant willingness to throw in $500,000 bribes, or $2.5m gifts to sweeten the pot and assure admission. It’s the difference between one yacht and 10. The faciley named “1%” live off the charts. It has been observed that, globally, they are more like each other than their own countrymen. That disenfranchisement makes them like the plastic in the ocean - a miles-long floating bog that poisons everything, yet is out of sight. It’s not that “the rich are different from you and me.” (Or, me.) It’s that the mega rich aren’t the 1% of this world, but 100% of their own world, acting as if the 99% are alien life forms; unequal and unworthy of consideration, participation or contribution. An oligarchy is not a society of equals joined and enriched by the fellow-feeling of love of country. Beyond the gravitational pull of caring they - and we - are unmoored from a democratized human society. We all are the worse for it, but it was no accident. The Powell Memo and Koch history shows their systematic plotting to stop the expansion of freedoms that were hard won through civil disobedience. Seeing their lessers as too educated, too wealthy and too healthy - at great cost to them - they’ve ramrodded us with fake austerity, radicalized conservatism, voter suppression while they buy a government that pollutes the world on their behalf. We will die while they fight for every last dollar.
19
Thank you, Dr. Krugman, for emphasizing this valid and important distinction. If only more people were going to hear you! I'm not on social media, but I hope that someone who is will link to this column.
3
There is one sole problem: the Republican Senate will not allow Congress to rescind the Reagan and Bush tax cuts. The Democrats need an Eisenhower, maybe the Republicans do too. In fact, we all need an Eisenhower!
5
Each of those jets represents millions of dollars in high scale wages for workers across the country and millions more in other economic impact.
6
And the rest of us have to ride the subway which the rich guys who ride in those jets don’t want to fund, which is one of the points of the article.
10
@NativeBos
and environmental impact too!!
@NativeBos; true. They also represent an unconscionable level of environmental pollution. Strip mining produces jobs too.
1
would love to see the support mr. sanders - or others of his ilk - would get if they were not offering free education, healthcare, reparations, income. or at least how they'd pay for it. mr. sanders is thick on rhetoric and thin on details/accomplishments and that typifies his political career. it's proven every four years that people vote based on their pocketbooks.
3
@pierre Trump and his party promised us the average tax cut would be $4000. Instead, the Trump tax cut sent over a trillion dollars to the richest people and corporations in the US.
Do you think that money might be better spent on education or healthcare?
9
Thank you for this eye-opening commentary. Night-after-night, we watch MSNBC & CNN and get the constant regurgitation about the fate of the Mueller Report. You, however, have hit the jugular: 25 hedge fund managers make an average of $850 million a year and 40 percent of U.S. adults don’t have enough cash to meet a $400 emergency expense. I was gratified that I wasn't alone: a group of economists didn't know it either.
But why don't we know it? Does it relate back to another column of yours, many years ago? The one that told how you'd suggested that one of your students who was good at writing go into Journalism, but he replied, "I can't: I have to go to Wall Street because I have too many student loans."
I think we suffer in unexpected ways when those kinds of students don't take jobs with The Media.
16
"But we should be able to understand both that the affluent in general should be paying more in taxes..."
But, aren't they?
In 2017, we reduced the taxes of all families of four making $53,000 or less to zero.
Despite that, tax revenues for calendar 2018 increased 3% over those of 2016. So, by definition, it appears the rich are paying more, a lot more.
In 1980, the top 1%, those with an AGI over $80,000, paid $47 billion in personal income taxes, 19% of the total at an average tax rate of 32%.
Adjusted for inflation, $80,000 is $237,000 today. In 2018, taxpayers with an AGI of $237,000 or more paid $900 billion in personal income taxes, more than 55% of the total, at an average tax rate of 24%. This seems to prove that you can get much much more revenue at a lower tax rate.
Every year, like Professor Krugman, Warren Buffet goes through a public protest that his taxes are too low and supports increasing personal income taxes.
But, is Buffet really supporting the idea of increasing his taxes or is he playing a game, conning us? Every penny of Buffet's lifetime earnings, all $100 billion, is in the form of unrealized capital gains and none of it is subject personal income taxes. Under Ocasio's 90% rate (70% plus state, local) Buffet wouldn't have ever paid a penny.
But, Ocasio's tax rate would have wiped out 16,000 smaller business competitors to Warren Buffet, businesses that employ 20 million people. And, her rate wouldn't have raised an extra penny.
6
@John Huppenthal - there are lots of things wrong with what you've said here, but I will only address a few.
"Every penny of Buffet's lifetime earnings" is NOT in the form of unrealized gains. I guarantee he has had to spend money, probably lots of it, and whatever he takes out should be taxed and probably was. And what makes you think he is insincere? He seems to be honorable, unlike the occupant of the oval office.
Regarding whether wealthy people pay their share of taxes, you make a big deal over families of four making $53k or less not paying taxes. You cannot really compare the situations of people in that tax bracket to those in high brackets. To someone making $53k, $1k is worth far more than $5 million to someone who makes $10 million. As Dr K points out, once you reach a certain income level, life gets very easy indeed.
Your assertion that AOC's proposed tax plan would wipe out 16,000 businesses is nonsense. You are ignoring the fact that companies losing money DO NOT pay taxes and, in fact, taxes are assessed on PROFITS only. This means that after all the company jets and company dinners and company golf tournaments are paid for, then taxes are assessed on what's left over. You know the drill.
Please don't write what you should know is complete rubbish.
1
@John Huppenthal: Assuming your numbers are correct, you have just made a case for tax reform. (Republicans generally conflate "tax reform" with tax cuts). Like so many issues confronting us, and immigration comes to mind, the political demagogues and many in the media will not permit an honest, civil and transparent national discussion of these issues. So we are left with ineffective, outdated and dare I say STUPID laws that are tearing apart our beloved country. I look across the pond and see that the UK parliament is a mess and I say to myself: Hey, just like us.
The existence of a class of super-wealthy individuals is incompatible with Democracy.
These members of our modern-day aristocracy will buy the regulatory state and bend it to their needs, regardless of the will of the people.
The weakened inheritance tax structure means that this aristocracy now has the means to perpetuate itself intergenerationally.
Increasing taxation is only part of the solution. Much of the massive inequality we see today results from measures taken to shore up the economy after the asset bubble crash of 2008.
The Fed and other central bankers around the world had no idea what to do in a world of negative interest rates. Monetary policy was no longer effective while fiscal policy was the domain of politicians in thrall to the super-wealthy who opposed public sector spending.
In spite of that, QE created trillions of dollars out of thin air and pumped into a banking system that could not use it.
That QE money has been slowly seeping into the economy via maintaining inflated asset prices. Those being enriched are those that exist at the boundary of the real economy and the QE asset bubble economy. i.e. hedge fund managers, REITs, and those holding debt on inflated assets.
This enrichment of the few happens at the expense of everyone else as the economy slows and inflation on real assets is not measured incost of living indexes.
Richard Koo and Adair Turner have created informative and accessible information on this subject.
3
First, there's the issue of how you made your money. Steve Jobs and Bill Gates became fabulously wealthy by creating something that people wanted and used. An 805k per year hedge fund manager just manipulates money. They might make money for their clients, but the end result is not something useful, it is just more money, mostly for more people like themselves. Meanwhile, as proven in 2008, they can do a lot of collateral damage to the rest of us.
Next, there's the difference between numbers in a ledger, and control of resources. Envy notwithstanding, who wouldn't rather fly first class, or in their own jet? But the question of who controls the resources that you need to live is far more important. These fabulous fortunes will be put to work buying things like rental properties, food systems, water rights, and whatever else people need. Then the owners of the wealth get to decide who has access to them. In a dystopian future, we will all be beholden to them.
To cap it off, let me offer a number. As Mr. Krugman says, it isn't the 1%, who are surely doing well, It's the .0001% who control the big money, and who could very easily end up owning everything, including the government, if that isn't already the case.
15
@mlbex, I like your points, but I also hope we can change the idea that most people would prefer to fly in their own jets. Change also comes from changing minds about what's desirable for one vs. what's desirable for the planet.
4
@Mrs. McGillicutty: Point taken. You've identified a duality that I am well aware of, but didn't deal with in this particular post. Yes it would be more pleasant, but no, it is bad for the Earth and I know it. I avoid flying at all for that very reason; I'd enjoy being in Hawaii or even Europe, but getting there will contribute to something very harmful, even if I fly tourist class.
1
I am impressed that Sen. Warren, while making a more modest income, donated a larger percentage to charity then the rest of the presidential candidates who have released their returns. She puts her money where her mouth is and doesn't brag about it. But, the real fear is how easy it is for those making $850 million yr. to buy elections and perpetuate their free ride.
24
As always there are numbers, and then there are numbers.
The hyper-rich making tens to hundreds of millions might upset some. But according to IRS data from 2015, the top 0.001% of all federal income tax returns, with a minimum of $57 million in adjusted gross income (and average of $152 million) amounted to 1412 individuals.
We could impose draconian anti-inequality rules and confiscate their income for redistribution. Doing that would give the rest of us a bonus of about $1500 each (but also a federal income tax bill of $360 each). Not that would make a significant difference to some families, but would not really change the financial status for most of us.
The question for the redistributionists is how far down the income scale you want to go?
1
But there is still good reason to worry about Democrats who seem to want to cater to the ultra-wealthy, and thus join their club, while pushing away the working class to whom they are supposed to owe their true loyalty. Bud Fox, like Nick Carraway before him, came to learn the folly of trying to join them, and each Democrat running for President needs to learn that lesson, too.
5
I am surprised that Krugman did not jump on the DNC/CAP (Center for American (only the chosen few) Progress) bandwagon and bash Bernie for having been successful with his books. Didn't he get the daily briefing on how to undercut the current front runner?
The CAP/DNC will try to stuff another radical incrementalist down our collective throats while trying to kneecap Bernie or Warren. They prefer cuties like Mayor Peter or Beto or Booker who will do what the elites want: social identity policies with Repubilcan-lite economics. Don't fall for it.
8
@nora m
That path to the White House is through several blue collar states (Michigan, Pennsylvania, Ohio, Wisconsin) that Bernie and Warren will have a very hard time winning.
1
@MarcosDean: Bernie won the Michigan, Indiana, Wisconsin, and Minnesota primaries. So much for the Midwest.
Michigan is kind of a wild card. Jesse Jackson won the Michigan primary in 1988.
1
I generally admire Krugman but he has repeatedly unfairly smeared Bernie Sanders in the past. Unfortunately he's very much a neoliberal Democrat and admirer of the worst elements of the party like Robert Rubin and Larry Summers. Too bad he's at it again.
1
The wealth distribution is exponential.
Most people think the income and wealth distribution is a linear function, because linearity is how we interact with the world in our daily lives. Most people, even college educated, do not understand exponentials, and very few have a visceral understanding of exponential functions. It is the reason that there are a very few people who are unbelievably, and insanely rich, and a very large number who have almost nothing at all.
This is why the public does not understand wealth and income inequality, because they cannot wrap their head around exponential functions. This is why our laws will never catch up: we apply linear tax rate schedules to exponential income accumulations, and society inevitably is the loser.
14
@Scott It is Pareto distributed, not exponential. Just google it.
@Scott Too right! I think the best explanations for this are available from organizations like Politizane and Vox, whose short videos like "Wealth Inequality in America" and "How wealth inequality is dangerous for America" have visuals and uncomplicated scripts addressing this in a straightforward manner.
https://www.youtube.com/watch?v=QPKKQnijnsM
@Scott
I don't think you need to get that deeply into it. Suffice it to say that income distribution is not a symmetric distribution (such as a bell shaped distribution). It is highly skewed. From the shape alone one can see what is happening (and, e.g., why it is misleading to talk about average income with such a distribution).
Please post a graphic illustration of the difference between a million and a billion. Most of us cannot even visualize a million, even though it has becoming a routine level of wealth (as opposed to annual income) in the top housing market where I live. Citizens need to better understand how much wealth/income billionaires really have.
10
@Nancy Knop There's a great graphic in this article: https://mathbookmagic.com/2017/10/16/the-magic-in-wondering-about-a-million-billion-and-trillion/
It's mind-boggling!
What bothers me the most about this is that we are all paying part of the obscene $850m salaries of the top hedge-fund managers. Because our pension funds and savings funds and so forth invest with their hedge-funds and pay their ridiculous commissions.
We need to stop this. It's not hard. Talk to your pension fund manager or anyone else managing your savings. Find out if they are giving away 1% or even 2% of your money every year to someone else who will just invest it in the stock-market. Find out if they are giving fund-managers a share of the profits but not insisting that they pay a share of the losses.
If this method or rewarding a fund-manager for investing your money on the stock-market seems reasonable to you, let me sell you some real-estate I just bought in Alicante.
Seriously, do the math! A very good hedge-fund beats the market by a couple of percent at most over a long period. And even this is often down to luck and/or survivorship bias.
Now, if a fund-manager does a good job and creates the kind of risk-profile you like, by all means pay them for that service. But first do a quick calculation to compare how much you're paying them with how more they earn for you vs. what you could get by investing in, say, the S&P 500 ... probably you're losing money!
Net, the reason these fund-managers earn so much is down to the lack of numeracy of the vast majority of the population. This helps explain why there is so little will among the elite to invest in education.
9
"Politicians who support policies that would raise their own taxes and strengthen a social safety net they’re unlikely to need aren’t being hypocrites; if anything, they’re demonstrating their civic virtue."
Ancient Athens made the rich fund civic events--theater festivals, athletic games, public architecture.
Generosity depends on wealth. A gift from a student might be generous; the same gift from a rich man proves he's a piker. But when the rich do public service--with a big splash--that's more than generosity; it's magnificence (Aristotle). Taxing yourself counts.
The idea is to really raise all boats. As mentioned below the rich need the safety net to enjoy civilization. The not so rich need it to survive adversity--often no fault of their own.
6
@Michael Kubara: One of those ancient Greeks also said that no man should have more than four times as much as any other, but he cautioned against trying to make that happen as a fool's errand. I don't remember whether it was Socrates or Aristotle.
I have no problem with Sen. Sander’s income from a book he wrote. He chides only the rich who: have become wealth by lying or taking advantage of loopholes in the system. He has not accused those who are wealthy and, in fact, pay their fair amount of taxes. Capitalism infers the bettering of oneself monetarily. It doesn’t advocate poverty.
7
Upper middle class people must not worry about socialism, because when socialism speaks of "socializing property", it is talking about the means of production, i.e. the infrastructure that produces things for human consumption. Nobody is going after your personal things.
5
Thanks, Paul for a most enlightening article. I know that most employer provided family healthcare plan comes with $1,000 deductible. And I read a number of years ago that 75% of American families could not come up with that $1,000 in a family emergency -- truly staggering.
When I was in graduate school in the late 1970's, mean and median incomes were both tracking a bell-shaped curve. It was shocking to me that this is no longer the case -- or that those in the lower half of incomes carry more debt than assets. Yet the marginal tax rates for the extremely rich continue to drop. And it is even worse in corporate America.
I recently learned that those working 40 hours per week, earning minimum wage, cannot afford to rent a room in most American cities. This is obcene.
13
@Marc Wagner I believe many employer health insurance plans have $2K or even $5K deductibles and then pay 80%. Take a $30k medical procedure and many can’t even pay for that. Thanks to our government that works for corporate profits and not The People. That said, Bernie wants to fix this huge problem that drags this county down.
13
Let's wait and see if the "Bern" manages to talk about his own wealth in the same just and honorable manner that President Obama always has. Obama always talks about his own income as part of the group who "need to do more" for the system that has treated them so well.
If the Senator does this - then no one will feel inclined to tease him at all.
7
@Mark The Obama's are multi-multi-millionaires who have had several new York Time's Best Sellers and give those pep-talks to hedge funds costing hundreds of thousands of dollars... I am a member of the church of Obama just like most liberals but you can't equate their affluence to that of Bernie Sanders, who has always been a public servant (rather than a corporate lawyer, ngo president, etc...)
Once again Paul ignores the true extent of Bernie’s wealth—the $300+million in campaign contributions flowing into Bernie’s discretionary account in just four short years. Of course Bernie worked very hard for 40+ years to this end and in true capitalist fashion will enjoy the rewards of hard, lucrative work.
1
@Scott G Baum Jr: You've pinpointed exactly what is wrong with our system. In order to have a voice in the debate about this situation, Bernie must accumulate staggering amounts of wealth.
I'm not so sure how 'discretionary' Bernie's money is either. Breaking campaign finance laws can derail a campaign and land you in jail.
2
Think about your own circumstances, even affluent ones, and then think about someone who 'gets' (because 'earns' doesn't seem to apply here) 850 million dollars a year and only pays 15% in taxes, if that.....850 million dollars annually, folks. Not your dollar store kind of guy (or gal, I doubt)…..such wealth should not be condemned unless they use their influence and wealth to avoid paying anything back into the commons...but 1% or less becomes the percentage of their elective income they pay for roads and police/fire and a general safety net for all...what percentage of your elective income goes to the IRS?
5
Professor Krugman has made a key point with this column. The power of the very wealthy aligned with the current GOP elected officials at every level of government and with an increasingly sympathetic judiciary is fueling our country's descent into an oligarchy and a totally corrupt society.
Rebuilding an equitable society from the grass roots up is the only way out. We must fight corruption, inequality and racism every day by our actions and deeds. Backing public servants and candidates that will help is critical.
Our brave experiment does not have to end in a cesspool of corruption. If we stand up for integrity in all our institutions we can still save the day.
Working in our communities for public benefit, withholding donations to and support of corrupt institutions, shopping with a conscience and voting for good candidates can turn this tide of dominance by the very powerful back into a 'for the people, by the people' country for our children and grandchildren.
11
The super-rich need the social safety net in order to live in a civilization rather than a nightmare.
18
@Bruce Williams They don't seem to understand that yet, but with their resources, they can move to a country that is still civilized enough to care for all its citizens, while America becomes the garbage dump for the world.
Dr. K, another fine column. But you contradict yourself when you (a) spend most of the column making the very good point about the gap between comfortable and ultra rich, then (b) scold anyone else as being “unseemly” when they note that $200k does not buy a rich-and-famous lifestyle, which is your point. It’s easy to show a breakdown of expenses in costly coastal cities and some others, to get to the same conclusion, especially when federal tax rates make no differential to take COL differences into account.
I hear no one claiming that $200k is no better than $20k, so that’s a red herring. Especially these days where many in the workforce must play for their own retirements and take care of family members in bad physical or financial help, you do them a disservice to dismiss the legitimate points middle or upper middle class Americans make about fairness.
@Anonymous
Krugman's point is that $200k is still way above the mean and median incomes in this country and complaining is unseemly even if that amount doesn't make you "rich" as compared with the people raking in truly obscene incomes and paying almost nothing back to society.
I am surprised and pleased to see Dr. Krugman defending Bernie Sanders. This is a welcome change from 2016, when Dr. Krugman, the rest of the New York Times's writers, and writers at the Post and most other major news outlets attacked him at every turn, often very unfairly.
But one thing is clear when one examines the trend in wealth disparity and the trends in our overall economy: When our wealth is more evenly shared, our nation is most prosperous.
n 1960, the average CEO pay was 20.1 times the average worker's pay. The top marginal tax rate was 91%. Our growth rates dwarfed those of today.
In 1978, the average CEO pay was 35 times the average worker's pay. The top marginal tax rate was 70%. Our growth rates were not as strong but still robust.
In 2010, the average CEO pay was 234 times the average worker's pay. The top marginal tax rate was 35%. Our economy was struggling to maintain any growth at all.
It is worse now.
And our so-called "conservatives" think that increasing tax rates on these rich guys is somehow unfair, and that it's fairer to cut Medicare, Medicaid, Social Security, food stamps, and other programs that benefit those of more modest means. They vow to punish American workers, families, seniors, and our disadvantaged most cruelly if we dare to raise income tax marginal rates, even slightly, on these top earners who have snatched more and more of our nation's wealth at the expense of workers and those dependent on social programs.
32
@Dr. Planarian When the marginal rate was 90% a successful small business owner could hire for $0.10 on the dollar, as overhead was, and is, deductible.
2
@wg owen: This is something that the "low taxes create jobs" shills don't want the general public to know.
Employee wages and benefits are among the many costs of doing business deducted from a company's revenue before income taxes are calculated. No matter what the tax rate, hiring more people or paying them better reduces a company's taxes.
2
Let's see if we can understand why income and wealth inequality, is bad for the economy. Economists have a concept called the velocity of money. It is the frequency, how often, that money changes hands in domestic commerce. It is a measure of how useful money is.
Here's an example. Suppose the government gives Scrooge McDuck a Billion for advice on the comic book market, If Scrooge puts the bucks in his basement, and forgets about it, that doesn't help the economy at all. That Billion has a velocity of 0. Also, if Scrooge loses a financial bet to Daddy Warbucks, and the Billion moves from Scrooge's basement to Daddy's, that is a change, but the velocity does not change because it is not a useful change. It doesn't affect commerce.
Money going to the Rich has a lower velocity than money going to the non-rich. The Rich spend a lower percentage of their money. What's a guy or gal who already has so many houses he can't remember how many & an elevator for his horse gonna spend his money on? The answer is he is going to use it to speculate.There is a correlation between inequality & financial speculation. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1661746 Speculation is bad for the economy. That money has a very low velocity. AND it increases risk which we have seen in 2008 ain't a good thing.
Since 2007, the velocity of money has plunged. https://fredblog.stlouisfed.org/2016/04/a-plodding-dollar-the-recent-dec...
1
Being wealthy may not be the problem in and of itself. The real issue is oligarchy and the drive to become even richer for its own sake. It seems the 1% can be defined by those who impulsively compete to be the richest person in the world. It's all about themselves first and others are just competitors to be defeated. Ironically, these people have destroyed our capitalistic system while stoking fears of socialism and anger.
15
My father, who was born in 1901, before the 16th Amendment enacted the Income Tax, always reminded us to "pay Uncle Sam his due." In other words, "Render unto Caesar."
For us, paying the tax or being pleasantly surprised with a refund, was less onerous than the annual process of reviewing our paystubs and filing the return on time. Roads, bridges, dams, NDEA loans in college, the military who fought so bravely in World War II... we had driven across country and had had cousins in service. We knew we much to be thankful for and did not begrudge the small portion we paid to the federal government.
23
@Fran B.
You are so right in your comment and not just because my father, a first generation working poor man shared your dad's experience.
It was our fathers' generation that endured the Great Depression and won WWII who seem to have understood this better than most.
The reality is that taxes enable civilizations to advance the quality of life ... so long as the rulers do not confiscate everything for themselves.
@Fran B. There was a time when paying one's taxes honourably was considered one's patriotic duty. But times have changed to where "Greed is Good" and not paying taxes is being a "smart business man"
The original sin is that economics is now a religion rather than a science. Therefore, blind faith trumps facts. The end results are that many do not fully understand the magnitudes of wealth and income equalities and more importantly cannot truly understand the causes. The defenders of the orthodoxy exploit the ignorance born out of faith to demonize the non-believers. The believers understand all reason and analysis by the non-believers to be heresy. Also, the believers view the non-believers as false prophets. And the religion lives another day.
8
In 1952, as a 9-year-old faculty brat, I hear Eisenhower give a campaign speech at Carleton College. Ike was the last good Republican president. Under his administration, the top tax bracket was around 92%. We got an Interstate Highway System, and the average middle class wage-earner could support a family of 6, pay a mortgage, and buy a car. Any high-school graduate could pay the tuition at a state university with the income from a summer job. There were no millionaires among the coaching staff at any American college or University, and any tenure-track teaching staff could take the family on a summer vacation.
No longer. Today, in 40 states, the highest-paid public employee is a university team coach, while adjunct faculty qualify for food stamps.
Our country has become a brothel of Mammon, and we in the "middle class" are merely the bedding.
67
@William Burgess Leavenworth great last paragraph and your point about coaches is well taken.
9
@William Burgess Leavenworth, To repeat, ad nauseum, no one paid 90%. There were tax write-offs that you could use to actually subtract from the amount you owed, that survived well into the 80s.
1
The top 25 hedge fund managers make an average of $850 million a year. And thanks to the carried interest loophole their tax rate is 24 percent a year, much lower than the 40 percent or so a year paid by Bernie Sanders and the rest of the people in the "top earner" tax bracket.
38
Wealth inequality is a serious problem not just for the United States but for the world. I recently read that just eight men own the same wealth as half the world. Six of them are Americans. Sanders' million is barely on the chart.Then my thoughts turn to Walter Scheidel's book "The Great Leveler," in which Scheidel describes the persistence of economic inequality throughout history. What he reveals is that it took violent wealth- destroying events such as war, revolution, state collapse and plague to upend the political and economic systems that produced such inequality. I realize that each of these catastrophes was in the context of unique sets of variables and that history is not necessarily predictive of the future but it is a reminder that societies must decide how much wealth inequality they are willing to tolerate and then seriously work toward fair solutions. Democratic societies must not elect leaders whose actions only serve to exacerbate this problem.
18
@MDV I agree that this may become untenable. The super rich may have to buy the army and police to keep power and send every enemy to prison or death. I worry about my children and grandchildren, Change, otten by violence, is coming.
4
Shame on them and all the others of us, corporations, individuals, all the others that evade paying taxes, causing destructiveness to the poverty stricken, and to those who are struggling to get by, as well as to the nation's infrastructures.
Tax avoidance as well as tax laws based on selfishness and greed create pain, heartache, and serious illnesses, as well as horribly stressful conditions for other people.
No one needs obscene and totally unnecessary amounts of money. And without obscene and unnecessary amounts, there still would be some of us who live noticeable luxurious existences.
It is clear that this greediness, so basic to human nature, - - but capable of being controlled and eventually bred out of us - causes the aforementioned horrid conditions of illness, dying and death.
Consequently, since these are the facts, and we know these as the facts they are, we are committing a crime against humanity, as "crime against humanity" is defined.
Insuring that no household has less than $40 thousand American dollars is the way to go. And this economic plan would regularly stimulate the American economy.
Of course, we, the wealthiest households and those households with $40 thousand, would need lessons in developing and each week managing effective realistic and frugal budgets. Of course, if people physically could, and the work for pay or as volunteers existed, oh, by the way, being a parent is work, all adults would be doing some kind of this work.
6
@Lenny
Thank you for your post. What you say is true. However, the working poor (and those who cannot work) need no lessons in frugality. They could teach the rest of us needed lessons in the wastefulness that is typical of American life. They are not poor because they are wasteful; they are poor because they cannot earn enough to met their needs.
As for hard work, in many ways people who are homeless are very hard workers. I see them begging on street corners and traffic islands. They are there in the scorching sun of summer, cold autumn and spring rain, and in the freezing temperatures and snow of winter. More often than not, they are ill-equipped to be out in those conditions and will walk some distance to find shelter. Their lives are shorter than ours, frightening, and full of pain from numbed extremities to heatstroke.
These are not personal choices. These people are beyond desperate. We are the ones who should be ashamed. That we allow other human beings to merely exist on the borders of society is a result of OUR choices and we have much needless suffering to atone for.
This is Easter weekend. At least for the Christians among us, our treatment of the poor and vulnerable flies directly in the face of the teachings of Jesus. As Pope Frances shows us, we are judged not by what we say but by what we do.
Act with compassion and realization that the differences between us is tiny compared to the ways we are one.
11
@Lenny You will notice that few if any of the country's wealthiest people ever spent a nanosecond in uniform protecting this brothel of Mammon. Their drivers conduct their limousines on roads paved with the corpses of the middle class.
@nora m
Thank you for your thoughtfulness. One doesn’t need to be a Christian to see how compassion is our greatest need, greed our evil.
The merely affluent are able to invest in the stock market, driving the power of big business and the hedge funds. This puts them at odds with less wealthy citizens on fair taxation, the social safety net and deregulation.
So it takes an altruist to divest from the fossil fuel industry in order to do the right thing about climate change. It takes an altruist (if you are merely affluent) to follow Bernie Sanders and attempt to turn the Titanic of entrenched interests for the benefit of the less wealthy and the health of the planet.
Hopefully the latest allegations against Trump et al will show the 1% for what they really are and be a wake-up call to the merely affluent.
4
@betty durso
It's not just the 1% . The main problem is the 0.01% like Amazon that pay 0 taxes.
As my kids would say, 'totally.'
Part of the perception problem is that the '1 percent' label covers up vast differences. The 'lowest' of the 1 percent, those who just made it over the line, had annual incomes of about $480,000. The wealthiest of the 1 percent, those in the top 99.9 percentile, had annual incomes of $35 million. The top of the 1 percent makes 73 times more than the bottom of the 1 percent.
It's hugely different in other parts of the income distribution--for example, a worker who just reaches the 50th percentile had earnings of $39,500 and a worker who just reaches the 49th percentile had earnings of $38,000. The difference between those at the top of the 49th percentile and the bottom of the 49th percentile is less than $1,500.
The 1 percent label may have been useful for some purposes but perhaps has outlived those purposes.
9
"In 2009, the 400 wealthiest Americans took home an HOURLY 'wage' of $97,000."
-- Robert Stiglitz, "The Price of Inequality"
I don't mind the rich getting richer; however, I do greatly mind the poor getting poorer.
11
@Jim Muncy During the French Revolution, some of the oligarchy had the dubious pleasure of watching while their children were nailed to the walls of their churches. It could happen here, if we don't bring our oligarchy back into the upper middle class.
3
This column makes me wonder about Trump's income and why he won't release his returns. Maybe Trump is reluctant to release his tax returns because he is not as rich as he likes to say. Perhaps he knows that his income is lower than Obama's. That would be one comparison Trump could not stand.
15
Thank you for putting proper perspective on these obscene levels of wealth. Citizens United was the icing on the cake for these multi-billionaires seeking to subvert democracy to grow and protect their unimaginable fortunes. Bernie Sanders' (relatively) paltry royalties are derived through his own intellectual property, not the unearned, inherited wealth that sustains such inequality.
16
The financial sector used to be about ten percent of the economy; it is now twenty percent. How has the rest of the economy benefited from this increase? Not at all, that I can see. The great financial crisis nearly plunged the world into another great depression. The rescue of the financial sector by governments caused a backlash that has put right-wing populists into power all over the world. Mr. Krugman admires the "accommodative" interest rates and "wealth effects" of the central banks. I would enjoy reading his thoughts on how these policies have contributed to the huge inequality that he so rightly condemns.
8
I am despairing already that the Democratic primary field will leave income inequality obtrusively absent enough that they leave the issue to Bernie Sanders once again. Yes, Elizabeth Warren does her part but then becomes distracted with a myriad of other policy wonk details. Income inequality is the the one unifying issue that Democrats and previous Trump voters can both agree on. Please Democrats, instead of supporting a Presidential campaign that is nothing more than Hillary's Identity Politics 2.0 lets get behind the pertinent issue that can unites us all.
14
@Robert Pohlman, it seems you neither listened to HRC herself nor read the Democratic Platform in 2016. That puts you in the majority, and that's too bad. I would hope you'd have learned from that error, yet here you are writing about a campaign which never happened.
I trust Krugman supports Bernie Sanders, since he is the only presidential candidate credibly addressing the grotesque level of economic inequality in this country.
2
@Carla
You are incorrect. Warren and others also would take significant steps in this direction. Please be more open to learning about other candidates.
12
@Carla
The only one? Did I miss the part where Elizabeth Warren dropped out of the race, or something...? 🤔
Every large, complex and comparatively wealthy nation is ruled by an oligarchy of sorts. Every one. Doesn't matter whether the ruling class is dictatorial or uses democratic processes through which to project its power.
In a dictatorship, power is ostentatiously derived from the use of military and police to quash dissent.
In a capitalist denominated socio-economic system, the power is derived from wealth that can buy or influence outcomes.
In both situations, the incumbent rulers work to reinforce their power, to ensure the generational strength of their members and, depending on the rulers, to safeguard their country's people and institutions.
Safeguarding is vital since the country's systems combined with the talent and judgement of the rulers is what enables both power and wealth. The oligarchs have a vested interest in the system.
So in some respects, it doesn't matter whether Bernie is a millionaire or Trump is a billionaire.
It only matters if the people involved in selecting their rulers believe that the rulers have their best interests at heart. That belief is either strengthened or weakened by the policies and actions of the ruling class over time.
The US is the wealthiest and most powerful nation on earth. For the most part, its ruling class has been permeable so that those of exceptional capability can enter the class. The combination of permeability and improving quality of life as compared to others is what enables the system to chug along.
3
@TDurk Are you sure it is "exceptional capability" rather than "exceptional luck" and "raw greed" that puts one in the top 1%?
One other point Dr. Krugman might have made in this perceptive comment. The $400,000 middle-class rich, who certainly, are not poor do not have the certainty that their family wealth will keep their children wealthy, especially if they have more than three children. A "comfortable" middle-class $400,000-income lifestyle does not carry any assurance that parents will be able to cover their children's educational and health expenses, or that their children will be able to afford their own house. The 1 percent on the other hand are able to pass on houses and college degrees with ease to their entire family. Especially when they tweak the laws to make it easier to pass on inherited wealth and eliminate or lower estate taxes. With great wealth comes great political power and tax laws can be and have been changed.
6
@shimr
Sorry, but including families with incomes of $400k as "middle class" is a bit of a laugh. Not only do those families get close to the top 1% threshold, they have incomes nearly 10 times that of the median US family.
Sure, some making $400k might feel strectched if they live in a hyper-expensive location, and indulge some extravagant choices. But they cannot hide behind a middle class label, while castigating "rich" people.
13
The thing missing in this conversation is the Estate tax. The wealth tax may do somewhat the same thing but I have always thought taxing estates is a pointed effort to slow down financial aristocracy. If the poor need to work harder to achieve then why do the children of the rich achieve simply by signing their name.
18
Very valid observations, however much of this wealth is hidden away in tax havens or is in the form of shares with a massive underlying unrealised capital gain.
The focus should be on taxing income but on the capital/wealth whether realised or unrealised and wherever it is located.
A public spirited billionaire should be able to help
devise such a tax (s) as a penance.
4
Remember Pikkety discussing the French Revolution? If gross inequality is not corrected, and fast, the rich in this country need to watch out. Remember "The pitchforks are coming"? Well, that could happen in America unless things change dramatically.
13
@Bobcb, They'll merely move to Monaco.
1
But what bothers me most is he appears, once again, someone deeply out of touch and it's all about Bernie.
Charitable deductions in most recent year are under $19k - a very small amount for someone earning as much as he did.
6
@SuburbMom
Not everyone gives of their money. Many of us give of our time and efforts.
Safe to guess you haven't listened to him on the floor of the House and Senate; his time as Mayor; or his time as a student activist. The man has spent his career working for We The People. Most often for those disenfranchised, needy and poor.
His whole campaign slogan is NotMeUs.
Same as it ever has been.
"Out of touch"? Much less "deeply...?!
I'd guess it isn't him Kettle.
Students at my university just voted to pay someone $95,000 for a one-day visit. That's about 1000 times what the food service and custodial workers get, 600 times what the teaching assistants get, and 200 times what the best paid faculty get.
The students claim to be concerned about inequality, but they are using their own fees (that they will later have to pay as student loans) to create more inequality.
18
Hypocrisy is saying one thing but doing the other. Bernie Sanders railed against the Trump tax cuts but then employed them in his tax return which he wasn't required to do. That's hypocrisy in my book. Why am I not surprised by a politician being hypocritical. BTW I abhor the Trump tax plan.
7
Exactly put. It's not about wealth. It's about a hugely disproportionate distribution of power that is toppling any hope of a government of, by and for the People. To the Kochs and Murdochs, we are all contemptible, easily manipulated or defrauded serfs.
22
I guess it is not criminal to make outlandish sums of money ($850 million per year) and then to work to make sure nobody shares any of it. But actually to me it appears worse than criminal. (By the way, what good are hedge fund managers doing for the world?) It is immoral; it is indecent; it is narcissistic; it is greedy; it is disgusting.
Would anybody of reasonably good character actually want to make $850 million per year and then hoard all of it for themselves? I think I would rather be dead than be of such disreputable character. There are many things in life that are more precious than boatfuls of money. Certainly, having a character that is not only concerned with the self is one of them.
25
@Tom Krebsbach
Among those making $850 million plus per year are the hedge funds that directly control all the Pay Day Stores we see around the country. Their predatory loans make huge profits for their hedge fund. Think of how many university endowments are invested in such hedge funds. So the blood of the poor further enriches the well-to-do. Additionally the current destruction of the CFPB destroys checks and balances and enhances those making the $850 million per year. As they say, "Life is fair!"
4
I think the people who are that "rich", fly their private jets, have a massive footprint of carbon emissions (yes, that's true) want to pretend they live in a rarified atmosphere of class, but that isn't class.
Their carbon footprint is only one aspect of the harm they do.
Nobody with an ounce of self esteem would behave the way they behave. They are vacuum cleaners of dis-satisfaction and emptiness. It's tempting to joke about how they are in person, but it's not funny. They are very dangerous.
7
The claims that Sanders is a hypocrite demonstrate another failing in our public discourse - the inability to separate good policy from personal interest. I accepted the Bush tax credit because it was in my interest. I was against it as policy. Political maturity means occasionally standing for policy that isn’t in your personal interest.
Krugman is correct, as usual. I would add that most lower income and working Americans don’t have the exposure to law and business to understand the extent that things are stacked against them. They aren’t sophisticated enough to understand the forces that prevented their kid from getting into Ivy League schools (legacy students), or from becoming a partner in a law firm (family connections that bring in business).
Bread and circuses in the form of the NFL and smartphones, and nothing changes. We are all hooked up to the matrix, baby.
16
Correct. That is your Kant 101, @Stephen Pazan: the distinction between the personal and the public use of reason. Once one gives the thought a minute, it becomes clear how common this misunderstanding is, and how damaging to public debates.
2
Not a specific fan of Bernie (I was "with her"), but another way this line of critique against Bernie is stupid is that it completely missing Bernie's point about wealth. Bernie is a democratic socialist which means he's concerned with excessive exploitation of labor by capital. Writing your own book does not even allow room for exploitation to take place. If anything Bernie may have has his intellectual labor exploited by publishers, editors, or agents. Yes, critiquing Bernie for being part of the 1% is stupid, to say the least.
21
Bernie will be here today. Two meetings. He was in neighboring town yesterday. My concern w Bernie is his lack of concern about racial issues. Perhaps I missed when he tackled racism. Racism, besides the horrific attack by the entire bunch who advocate murder and torture, is a huge issue in income.
@Peg
Sen. Sanders has heard this, and has made strides to correct this impression. One that belies the truth of his work and efforts on behalf racial issues.
https://berniesanders.com/issues/racial-justice/
https://feelthebern.org/bernie-sanders-on-black-rights/
https://jacobinmag.com/2018/06/bernie-sanders-civil-rights-movement-activism
1
@Dobbys sock Thanks! Will read these. Any info on his stance on why he is independent.
1
@Dobbys sock Oh, wow! Excellent articles!
1
Right on!
See " The Rich and the Super Rich" Ferdinand Lundberg; " An Economic Interpretation Of the Constitution of the United States" Charles Beard ; " The Wretched of the Earth " Frantz Fanon.
What should embarrass and shame Americans is what is legal.
The federal income tax code provides deductions, credits,subsidies and lower tax rates. But only for certain industries and individuals,transactions, sources of income, business structures, contracts and securities favored by special interests lobbyists.
7
@Blackmamba
When you're right, you're right. This time you're right. ... on!
1
Thank you Paul.
Bernie rails against the wealthiest 1%, but he makes it pretty clear it is actually the wealthiest 0.1% and the wealthiest 0.01% (and truly just the particularly selfish and greedy of their number) he is more concerned about.
Bernie is branded "a socialist", calls himself "a democratic socialist", but is really "a social democrat". FDR was a social democrat and he was much, much richer than Bernie in today's money. Teddy Roosevelt was much richer again - and though a Republican - held beliefs that place him much, much closer to Bernie, than today's Republicans, ideologically.
Criticism of Bernie's policies, because he made more than US$1 million in one year, because of the sales of a book he wrote, is really very stupid.
12
Just to clarify, professor:
Last time around you led the charge of the anti-Bernie liberals. But now you seem a bit more conciliatory.
What changed, was it that Bicycle tour in Denmark?
6
Those who trash Bernie for using his consistent and powerful voice to promote a fair and sustainable economy are all hypocrites. They know perfectly well that no matter how many books Bernie Sanders sells, he will never, ever be part of the Mara Lago crowd, or the Clinton crowd. Bernie has worked has tirelessly for the rights of those who will never have economic security without huge changes in our priorities, as well as for those who are victims of racial and sexual discrimination and violence.
The most conservative Democrats, as well as the entire Republican party will be trying to confuse and mislead voters about Bernie, but when people see, hear, and meet him they will know that he really is a man of the people.
12
So glad to see Paul supporting the right candidate: this time.
10
This has needed saying, in this clear fashion, for quite some time. As the elections heat up, this needs to be a major topic.
First, there is, "This line of attack is, however, deeply stupid."
It is my impression that there is a lot more "deeply stupid" going on than when I was younger. I suspect two major causes.
First, cynical lies. They know it is a stupid thing to say, but they don't care. It carries an emotional load that tested well in a focus group for a target audience. This is a studied, calculated, deliberate stupid. That is pure insult.
Second, there is emotion. As emotion rises, people's brains turn off, and they are prone to do and say stupid things. Sometimes it is a good tactic to make the other guy upset, in a courtroom or in a potential fight. Sun Tzu listed that as a strategy of generals, writing about 500 BC. It is still true. As we see emotions rising all around, we must expect stupid to rise with it.
Nobody ever calmed down because they were told, "Calm down." Still, "use your head" is needed for at least our own side.
As for the cynicism, we need to move past "fact checking." We need to call it out for what it is, for the insult, and for the calculated manipulation. Put them on display for what they are, which is something far worse than merely stupid.
Next, there is the separation of the rich from the rest of us. When you've got helicopters to your private planes to shuttle between your multiple homes, you're an alien life form.
10
It is no longer about wealth creation by these super wealthy. That 1% is about the power to control your destiny unfettered, regardless who is in government - democratic, dictatorship, royal sovereigns.
4
I suggest new terminology. Forget 1%. It was never any good anyway. There are "the rich" - folks like Bernie. And then there are the "Stinkin' Rich". Hedge fund managers and the like.
"Stinkin' Rich"
2
Stop 'splainin'. Start SHOWING. This badly missed an opportunity for graphics to put things in perspective. Getting the public's mind around $850M per year vs. $400K isn't so hard when you use the tools at hand.
6
@808Pants
Ha! Good point. Immediately, Robert Reich and his many video talks comes to mind.
@808Pants
One power point presentation away from utopia.
This is hardly the first instance of trying to make someone appear to be a hypocrite. The right does the same thing regarding gun control, where it will say something like, if X celebrity uses body guards, how can he support gun control. Similarly, Al Gore was disparaged as being an environmental hypocrite because he travelled in gas guzzling jet planes.
2
If the Democratic Party cannot use this issue to gain control of the Senate and the White House, then that Party is grossly incompetent.
5
That the super rich hang out with each other should make them easier to find when the final reckoning comes.
2
The Gekko rich, signifying the Greed Elite of Kochtopus and Kremlinbud (and mcKinsey etc.) Oligarchs, are the real problem indeed, as they suck up all remuneration's rewards out of hard working people from the middle class down, all life quality and breathing space out of essential societal structures, out of affordable education, housing, anything, out of the actual provision of healthcare toward enriching insurance and provider CEOs, out of governmental institutions providing basic needs, safeguarding life-protecting standards etc. plowing it (right through) into guns, arms, walls, big pollution, and luxury resorts and yachting only. We've experienced unhalted dire inequality abyss expansion for 50 years now, and we so badly yearn to go the other way, not the Putin (and other Big Oil and Wall
Street fix is in) way.
Sanders, Warren, Williamson and others offer another path to go. Of course we need a supermajority free of blue dogs, and restacked courts to actually get there. But supporting them is where we'd begin.
Claims of achievable 5% growth may be near-bogus, the percentage of our growth ending up with the population instead of with the Gekko rich solely is more important, as is sacrificing some growth to climate and habitat protection.
With Biden an electoral hazard when last-minute creepy videos will haunt everyone and your aunt's online timeline, and a moral disaster as a historical Anita Hill nemesis (where's Gillibrand on this?), Sanders will be the candidate.
4
It is not so much that the 99%ers don't understand about the uber rich, but it is the uber rich who ignore how a prosperous nation without income inequity improves their own well being as well as their descendents.
From a social view they miss opportunities to hobnob with people who possess lives that break the boring sameness of their lives. Their non participation in assuring a healthy, more informed country can only lead to further isolation and a distorted world view that is not beneficial to the planet.
They too will have families with problems whose solutions will be delayed by poor financial support. There is also the anxiety that keeping their riches is the only means to keep freedom and independence intact.
I suggest viewing the following film by Jamie Johnson, a Johnson and Johnson heir, as he provides a window into the rich's caged world.
https://www.youtube.com/watch?v=eiInW0DYw_A
1
The only thing more disturbing than reading about the political and economic corruption of this country and the disgraceful yawning of wealth inequality is reading comments from fools that support these modern day monstrosities with anecdotes about being able to afford a pair of jeans making them "feel rich" while they're one major expense from being dependent on food stamps. What's most disgusting is not that there are such undeserving greedy selfish pigs that support extemism to divide the political will of this country, but the electorally empowered imbiciles that don't realize is that it is their support of these monsters that causes all the pain and suffering people in this country needlessly endure.
I have lived on and off in a South Florida since 1980, I have bicycled up and down A1A from Ft Lauderdale to a Palm Beach more times than I can count. This stretch of road contains a massive amount of east coast winter weekend money. I say winter weekend because that is the only time the majority of these houses are occupied. I have watched the same house torn down and replaced multiple times. I also travel to the south of America and observe Trump signs in front of a falling down trailer. trump and republicans call these people their base that just might be their biggest con of all.
When I was a young pilot in the area back in the 80’s the small airport in Boca Raton was filled with single engine aircraft owned by the working rich doctors and lawyers. It’s now filled with jets that start at 25 million a pop. The true Republican base does not ride in first class on American. The massive transfer of wealth from the many to the few over the course of my working life has been astounding.
I always wonder as I ride my bike along A1A if I could bring that trailer living trump supporter with me would they still think republicans and trump actually care one iota about them.
11
How does shuffling money around (hedge fund) do any good for anybody except a handful of people who are obscenely wealthy, talk about parasites. They are such parasites, that not only do they add nothing to society they don't even think they should pay taxes.
3
Taxation without representation is effectively what most of us are living with now, thanks to the electoral college, citizens united, a rigged supreme court, on and on to our now game show host "leadership"... We're getting the best government the oligarchs can buy... Time to storm the castle...
3
Basic hardwired human trait: profit earned in all legal ways. Arguing against that will get you nowhere, no matter what accolade/prize you collect.
1
So, name names and tell us who you want to go after. Bezos, Gates, Buffett, Koch, Bloomberg and Zuckerberg have to be on your list. Instead of talking about the 1%, name the people whose assets you want to tax or confiscate.
2
A necessary clarification. The 0.01 per cent are often the problem not the merely ordinary "rich." It still hasn't filtered down to the ordinary guy what a scam the financial industry and CEOs are and how government has colluded with them beginning with Reagan, Clinton, then Obama and now--no surprise-Trump.
2
I hope to find out what a roasted mega wealthy person tastes like before I die.
1
"And whining that $200,000 a year isn’t really rich is unseemly."
Except that in many part of the country, this income really is not rich, particularly if you have a family and one or more school loans. In making such a blanket dismissal, Krugman seems to making the same "lumping them all together" mistake that his column unpacks for the 1%. Odd.
3
I don't know why you felt you needed to write this piece? Is it because you live in one of the insular areas of America, where the rich can live without ever mingling with the lower classes? Even though I live in Connecticut, this state has 3 of the 50 cities in America that are practically bankrupt. CT is a perfect example of America - vast wealth to a few, while all the rest struggle to find crumbs.
Middle-class Americans like me cannot imagine having 1.6 million dollars. This means it may as well be 1.6 billion. Middle class in America is VERY poor. It means making choices on what to spend the few pennies you have. Rich people are those who have over 5000 dollars in savings, to the average American. I know that is not rich at all, but this is America, land of poor and mostly dirt-ignorant people...like every other country in the world...
1
What this country needs is cheap biz jet and yacht seeking missiles. Like Harbor Freight cheap.
1
Boy, are you off base! Try raising a family in NYC. Or San Francisco. A $200,000 income will not get you very far. No American dream, that's for sure. Maybe in places where you can actually buy a house for less than $50,000 it's another story. If you don't have a grasp of even basic details, you lose credibility.
1
@Mike Allan
Speaking of credibility, where can you buy a house for $50,000? I understand and support your point, but that figure doesn't fit. In addition, I get Krugman's point, too, and he of all people should know better than to throw out that figure with out geographic differentials. These slight errors don't impact my view of credibility of Krugman or of you, though. What bothers me more is that he didn't support Sanders in 2016. Sanders has made this issue his main campaign point for years.
A millionaire socialist?! Marx is turning over in capitalism's grave.
1
As a nation, we're awash in money..... and the waves are wreaking havoc....
1
Their influence is also having profound effects on education, as our governor Bevin's chumminess with Trump and Betsy deVos while he guts retirement for teachers and would gut every safety net if he could. Only 16% of Kentuckians voted for him because the turnout was so low. In an adjacent column, David Brooks points out that we no longer believe in our government or our country. We wave flags, and some will even put on uniforms and go to war, but there is no understanding that the Preamble to our Constitution also gave government the responsibility to "promote the general welfare." The American dream is dead because we have killed it.
7
Googling the question of how long it would take to count to one billion: So visualize one dollar for everyone you speak: The length of time it would take to count to a billion depends on how fast an individual counts. At a rate of one number per second, it would take approximately 31 years, 251 days, 7 hours, 46 minutes and 40 seconds of counting nonstop. I think for most people, it is hard enough to wrap your head around the enormity of that number, much less multiple billions of the uber-rich.
When the Reagan campaign said 'it's morning in America' I always felt the target of that statement was a very small, very select group of people. Those people, the very wealthy, are the 'real Americans' in Republican eyes. The rest of us are just renters.
6
@JD Ripper
"The rest of us are just renters."
They'd probably use the term "moochers". Moochers that should get down on their knees in gratitude for the jobs provided by the rich, i.e. the job creators.
What higher tax and tax bracket is there than wounded or killed in combat? How many of the rich and famous survived a combat wound? Or died fighting for the nation? Even risked such a fate.
Those ever hard working and productive souls atop the economy count neither their children nor themselves among the frontline troops. Might they not then be expected to not only pay their share of government expense but also thank the nation, pay taxes, for their freedom to avoid front line military service? Not everyone can buy his way out of combat by hiring a helpful bone spur detector.
Those who truly support the nation in peril pay the highest tax while being ignored by the strategic bone spur set. Krugman missed a class of overtaxed Americans. The power Democrats fail to note the same.
2
@stewart bolinger
I am not sure what you mean by "The power Democrats fail to note the same."
Both sides do it impedes progress because both sides don't. The Republican party has become an international crime syndicate in service of oligarchy foreign and domestic.
2
The reality of american life is that they for a long time have had a love affair with the very rich , imputing to them greater virtue, intelligence and holding them up as role models. The result of this has been a willingness to hand over to them the power of government even when it is clear that the really rich tend to defend their own interests before the interests of the less fortunate...that being the rest of us !
Corporate tax cuts while attempting to destroy Obama-care is but one example of how the wealthy serve themselves, but even more telling is how the wealthy manage to escape public criticism, how the public discussion is managed so that an oligarchic structure is never challenged in discussion or at the voting booth. Bernie Sanders in this sense is a breath of fresh air.
Bernie Sanders knows that if he runs for president he will be running against someone who will have the backing of the very wealthy and thus very powerful. His winning will depend on getting americans to wake up and vote in their own interests and to stop them from electing people that already powerful and wealthy wish to eliminate any democratic opposition to their total domination ... The stakes could not be any starker or clearer and the choices more profound for the future of this country.
7
Er….it's not the millionaire status it's Sanders' denial that the normal processes of capitalism had anything to do with his enrichment.
3
@John
When did Sanders ever deny that "the normal processes of capitalism had anything to do with his enrichment"? He didn't. He said he made money the past couple of years because he wrote a best-selling book. You could do that, too, @John. Why haven't you done so?
It's not just that the wealthy steer public policy away from spending on things the rest of us desperately need, like: "public education or public transit; they may not even be that reliant on public roads".
It's also about what they do direct spending on. We spend trillions on sophisticated military equipment, most of which will never fire a shot in anger.
1
"With great wealth comes both great power and a separation from the concerns of ordinary citizens. What the very rich want, they often get; but what they want is often harmful to the rest of the nation. There are some public-spirited billionaires, some very wealthy liberals. But they aren’t typical of their class."
And even those people have sharp limits to their liberalism.
Exhibit A of this would be the Starbucks CEO, who got lots of rave reviews because he gives his employees a certain limited safety nets and because he's generally socially liberal. But the threat of having his taxes raised is so offensive to him that he's now running a third party campaign that's happy to continue to throw most Americans under the fascist bus, as long as it preserves his taxes.
We saw this about a century ago when a few public-minded aristocrats like Teddy Roosevelt arose. They were better than the Gilded Age tycoons by a long shot, they wanted to help the poor, but only up to a point and on their own terms. Which is why when the Great Depression rolled around, people overtook them and created something more radical than a lot of them were comfortable with.
TL/DR: even when they mean well, it's hard to trust that rich people actually know how best to help people whose lives they have no conception of.
2
The idea of "the one percent" has always been silly. That would be around 3 million people. There aren't 3 million people with real political power - power which in our country now "proceeds directly" not "out of the barrel of a gun", as Chairman Mao famously said, but out of off shore bank accounts. This country is ruled by the one one hundredth of one percent.
2
@Joe Runciter
I'm afraid you're neglecting "in numbers there is strength." I'll admit it, senior citizens have it a little too good (vis a vis their children in their 30's & 40's.)
Similarly, try getting a school budget through some of the thousand townships in NJ when most taxpayers no longer have kids in them.
I'm sure there are some very wonderful people working at insurance companies and pharma cos, but there won't be too many $1000 donations to Liz or Bernie from either of those.
It's NOT because the head of Merck preferred Trump to Hillary - he probably didn't. It IS because the likes of the Clintons want a Democratic Party that has plenty of room for bankers and hedgies.
As I heard a New Yorker columnist say about the Muller Report, "In Russia, the economic oligarchs work hand-in-glove with the pol. oligarchy."
One wishes there WERE pearly gates, and somehow Mitch McConnell were asking for admission! I'll use my 2nd wish that that fantasy becomes reality real soon!
Why is it that Mr. Trump's appointee--William Barr--has access to the full Mueller report; but NOT duly elected Americans such as members of the House of Representatives?
We, registered voters are NOT interested in a Mueller report that has been 'redacted' by William Barr, who works at the pleasure of Donald Trump.
We want to see the whole report.
This is supposed to be a democracy, in which the people are ''in charge'.
4
A family member, living a successful but lonely upper-middle class life married a retiring professional man, with property and retirement fund able to sustain an excellent life style. Unfortunately, his search for excess wealth and poor judgement lead to overreach and eventual bankruptcy. Fortunately, his parent had great resources and sustained them for about 10 years in a lifestyle much higher than that of the 5%. She still feels the underclass should work for themselves and refuse dreaded "welfare" and "Food Stamps". The disconnect is bracing, but unfortunately common. The misfortunes of the wealthy when they struggle to pay for the Country Club dues seems devastating to them, I suppose. I defend them only to the degree that they don't understand how those below some line cannot get a good job, not being lazy, just no good jobs, and yet struggle on sustaining their families and loving their kids. Some are real hero's not moochers.
7
There was an article in the Atlantic magazine a few months back that made the point (very well I think) that the problem isn't just the top 1% but the top 10%. Focusing on only the top 1% allows the remaining 9.9% to feel absolved of any responsibility for social inequality. I would agree (and generally do) with what Mr. Krugman says but I think that there are more of us who have a need to recognize the pain and difficulty of others. We are in this together. While an oligarchy would be damaging to our democracy so would a one party state resulting from from a majority of people who have no ability to choose between competing visions of our society.
1
I totally get this column. For years I dreamed of being a limousine liberal, with a driver and an insanely luxurious limo to drive me to anti-war demonstrations and the like in DC. But I've become resigned to being an Acela liberal. It's comfortable, but not the same. I've also given up my plans of buying a United States Senator. Or two.
5
We always seem to focus on the ability to obtain health care. But lets also not forget about retirement. If Bezos, et. al were not allowed to "earn" another penny, what would retirement look like for them in 25 or 30 years? Americans are saving very little. Salaries may be up a few percentage but that hasn't made up for the fact salaries have been flat for years while Bezos and company have been amassing nauseating fortunes. So I ask what will retirement be like for the average American? If Social security will cover less and less and people don't have the disposable income to save? What will America say to them: Sorry, you should have saved all this time. There's a soup kitchen downtown? Social Security was intended to pull seniors out of poverty. Republican orthodoxy is to have you do that on your own. With no means to do so. And if you don't, that's just tough luck.
13
@Walking Man
When I was a child (1960s) people had company pensions (my father was in a union). Then the CEOs decided pensions were too expensive so 401Ks were invented (mostly to tie up our money for 40 years so wall street could play with it before we cashed in). The company would match what we put in. Then The CEOs decide that too was too expensive so now they just cover the fees if that. The whole time our retirement money has been decling, the CEOs pay has been going up. THIS IS WHERE THE MONEY HAS BEEN GOING. Now they want to get rid of the safety net. They don't seem to realize if they do not take care of us, WE WILL TAKE CARE OF THEM!
1
By all appearances Bernie Sanders keeps a very grueling schedule for a person in his late seventies. It would be interesting if that were calculated into an hourly wage and compared to the hour wage of some of the hedge fund managers. Besides the fact that he did well on his book, Sanders message is still on point. It would still be on point if he earned ten times what he does now. I like his message and most of his proposals, but it is far too early for me to decide on a candidate. If an opposition camp is going to try using his income as a form of disparagement, instead of championing equally positive ideas, I will no longer consider them a viable candidate.
14
A marvelous exposure of greed in the US and how it has taken over our economy since 1970. This has been done while the leaders of the Democratic party have been indifferent, nay, have themselves supported, such a policy right up to the end of the Obama administration. The disastrous figures Mr. Krugman quotes here had been emphasized by Bernie Sanders in his 2015-6 program, and restoring a more equitable distribution of income is again a priority of his agenda.
13
During President Obama's tenure Republicans held the nation hostage and demanded a tax rewrite. In order to keep the government open Democrats accepted some of the Republican demands. The negotiations between the Republican House under Bohner and the Democratic Senate under Reid ended up redefining and classifying the middle class as people making up to $600,000 a year. Republicans had been demanding it be set at $800,000 but settled for the $600,000. I found this outrageous when the average income was less than 10% of that.
13
If the wealthy want tp enjoy their wealth they should be on the pitch help saving the earth so they and their heirs can enjoy it for as long as their wealth lasts. They get that don't they?
14
@jazzme2
Nope. They don't.
1
@jazzme2 Obviously not.
1
In his recent town meeting on FOX, Bernie fumbled the question of his own wealth, as well as mishandling the laughably snarky challenge from the much richer FOX moderators (voluntarily pay more taxes if he felt so strongly about the inequities of the Trump tax cut).
I am by no means a moderate or centrist Democrat. Frankly, I support Warren or Mayor Pete. Why? Because they actually explain exactly what they want to do and why that flows from the sort of numerate analysis Krugman provides here.
This brings us back to the venerable old warhorse, Bernie, who, seems to be startled when confronted with unscripted spontaneity and then can only fall back on bumper-sticker sloganeering about “the 1%” and “revolution”. His time has passed, just like Joe Biden’s.
It ought to be acknowledged that Bernie’s candidacy has pushed the Democratic Party in a much needed new direction. But his supporters ought to re-consider their romantic attachment to the heady days when it was all fresh and abandon their narrative of the conspiratorial rigging of the selection process by the Clinton-wing of the Party.
Consider the congresswoman from California who recently schooled Jamie Dimon in the simple arithmetic of living expenses vs. a $16 per hour wage faced by one of his bank tellers.
Its this sort of explaining the American voter needs to counteract the cynical reliance of the Republicans on the innumeracy of the American voter.
18
@John C
My support of Bernie isn't born out of a "romantic attachment". It's because he's honest, authentic and trustworthy. He's been fighting for the common man for decades and, despite his age, he's sharp as a tack. He does an excellent job of explaining what he's for and why. I thought he did an outstanding job in his town hall on FOX "News". (BTW, my next two most favorite candidates are Mayor Pete and Elizabeth Warren, but I think Bernie has the best chance of galvanizing America and beating Trump.)
5
@John C
I 100% agree with you!
Hmmm... Paul, for the first time in my memory, has written a column that mentions Sanders without attacking him.
That’s quite an electoral bell-weather.
13
@Objectively Subjective
I thought Krugman was going to tell us how great Hillary Clinton is, and why Bernie isn't really a Democrat.
1
Funny, the Obamas made a cool 65 million for their book deals. Erin Burnett wasn't grousing about that. They then took to the yachts of their mega-rich friends after leaving the White House.
I don't begrudge them, but it is interesting to me how Bernie is attacked for writing a $15 book, becoming a so-called millionaire after so many years in the Senate (where multimillionaires abound) yet the centrists Obamas get a free pass. Of course, Obama did not emphasize income inequality when he was stocking the White House with the very Wall Street geniuses who were responsible for deregulation and the 2008 debacle.
People will use any excuse to take Sanders to the woodshed.
17
@TM
Of course, Krugman strongly supported Hillary and her multi-million dollar purse, while criticizing Bernie at every turn in 2016.
3
Krugman is right, though like most economists he also pretends that income is income, when it isn't, 200k a year in rural Alabama is a fortune, 200k a year in Silicon Valley or some other areas is almost lower class, based on cost of living and also other salaries.
That said, the real problem is the 1% is a meaningless number, and here is why. The real explosion in income and salary growth has been among the top .5%, the CEO's, hedge fund managers and the like, and because they are part of the top 1%, it makes it look like everyone in the 1% is thriving. It is kind of like a village where 2 people in the village get most of the food, and are severely overweight while the rest of the people are malnourished, and saying "that village has the highest weight per capita in the area, the people there are all well fed", it is statistical noise in other words. If you look at the top .5%, the realm of the Koch Brothers and the like, they are seeing their wealth and income rise in double digit percentages, while the other people at the bottom half of the 1% are seeing modest gains, but the top .5% is so outsize it makes the whole range look rich.
11
I'm always uncomfortable with arguments premised on the assumption that followers of political opponents just don't understand the facts. Let's assume they do - that, regardless, the anti-union anti-graduated tax wage-earning supporters of policies that result in vast income disparities feel more successful, higher status, more important, through their identification with the increasing economic dominance of their leaders. What to do about that? This kind of self-interest is divorced from the marketplace, regardless of rhetoric, but is more evidence-based than assuming vast numbers of people are blind to the obvious fact that wages were higher when labor had rights and taxes were reasonable.
4
Well thank goodness Democrats are standing up to the oligarchs. I can't imagine any of their presidential candidates ever taking $675K from Goldman Sachs for a few speeches because "that's what they were offering." To be fair, Republicans are just as thoroughly corrupt but at least they're not hypocrites about their greed and subservience. In contrast, Bernie Sanders made his money by producing a good or service that customers willingly paid him for. He also didn't take political bribes from campaign donors. That's why I supported Bernie in 2016 and still think he's the best choice (with Tulsi Gabbard as his veep) among the current slew of Democratic candidates.
11
Gimme two numbers Paulie:
1) The amount (Percentage) of total income taxes paid by the top 5%
2) The number (Percentage) of "citizens" (I use the term loosely) who pay ZERO federal income tax
Now go away.
3
@RJThe people who pay no federal income tax pay all kinds of other taxes to the point that the percentage of their wages spent in total taxes are higher than the 1%. For instance, they pay FICA on all of their wages while the 1% only pays FICA on a little over $100,000 of their wages.
12
@RJ
Silly specious argument, there RJ!
I'm reminded of the Johnny Mercer lyrics in a Paramount musical released in 1942 entitled "The Fleet's In." It was a time when most Americans knew we'd be getting involved in a world war--and soon--and that the money to defend ourselves came from a strengthened, progressive tax code (with exemptions/deductions for useful spending such as defense plants, worker training, worker health, etc.) enacted in 1940 and made stronger in 1942.
It also came from borrowing from all Americans in the form of defense/war/victory bonds and extending down to children, who contributed in the form of buying stamps that could add up to bonds. And then there was mostly-shared hardships of rationing.
This has been turned on its head by a developing oligarchy and the policies of one political party to serve that oligarchy at the expense of the nation, its voters, and its Constitution. We have now seen in the Mueller Report that the GOP can be seen as up for sale to the highest bidder, domestic and, now, foreign with a successful Russian infiltration into our 2016 election.
13
So, Sanders is paying the price for his past lack of transparency. If he had released his taxes back in 2016, and then again in 2017, it becomes obvious and connected in time that a book he authored was a best seller and therefore he was collecting royalties.
1
To state the obvious, a millionaire is not the 1%. Secondly instead of concentrating on taxing the 1% lets change labor laws to benefit the working class instead of making it harder for them to organize and fight for better working wages and benefits.
the other issue is corporations not paying taxes. that is nonsense.
13
@Roger
Haven't you heard? Amazon: zero taxes last year, & a rebate to boot. Oh, the inconvenience of real facts...
1
I have come to see this as more a pathological personality issue than primarily a monetary issue. Let's face it, after a few million, let alone a billion, money is not the objective, except perhaps as a means of "keeping score" in some twisted game, participation in which is itself demonstrative of disease. As you say, there are many wealthy people who demonstrate a keen sense of civic responsibility, perhaps not as prevalent as in decades past, but still many. But then there are the others who seek not ever more money for money's sake, but for ever greater power and control. And that is, at some point, pathological. The recent NYT expose on Rupert Murdock and his media empire was instructive in this regard. We are well into oligarchy, hurdling headlong into a kleptocratic kakistocracy. And the likely ending is to be much feared. The fabric of society is unraveling before our eyes.
24
@Michael
Right, but the pathology has been encouraged by a society structured to allow it to function. Install some needed safe-guards into our constitution and laws daily practiced and the pathology will be eliminated.
2
So what is your point sir? The 1% is just a matter of degree.
From a policy perspective one might wish to look at it differently. There are two types of people - those that work for money and those for whom monies work. The policy priority needs to be to make that hump lower so that the people on one side might go over it easier and sooner.
2
@Solomon
There is a way to do that, but it isn't going to happen, because the top .5% for the most part live in the delusional world they earned their money, that they are the elite of this world, and will do everything they can to make sure others don't achieve this, and more importantly, do everything they can to make sure of it.
For example, CEO income these days is more than 90% based on the stock grants they get as compensation, a typical CEO cash salary and bonus is pretty much at the 30 times worker salary (roughly 1.5 million a year), but the rest is all stock that makes up the 300 times. Stock based compensation is tax favored (in the end, they pay 15% tax on it through various things, including long term capital gains), so it increases wealth even more.
Workers thus get the shaft in 2 ways 1)workers in general get very little or no compensation from stock, so while stock prices have soared in the last 10+ years, workers didn't see that; meanwhile salary based compensation didn't grow at the rate of inflation 2)with CEO's and rich shareholders obsessing about stock price, worker compensation in terms of wages have lagged, because rising labor costs cause analysts to slam stocks, pure and simple.
1
He who has the gold makes the rules.
He who makes the rules gets the gold.
17
Can we take this article’s wisdom and get specific? We got into this fix as, Elizabeth Warren points out, over 70 years of incremental rejiggering of financial and tax laws. Each year capitalism has been reworked from a merit based system into an oligarchy. Let’s make a list of those things and undo them. Newt had a ten point list that he offered America. It was an affective move. It gave people something to discuss and focus on. Someone start a list?
18
@Skutch
Someone might be an opposition party were it not complicit in the same scamming.
As a socialist my goal is fixated on the poor and the middle class. Socialism means moving the lower class into the middle class, the upper middle class into the lower "millionaire" class. The 1 percent must be reduced to the latter status by obscene taxes on their obscene wealth. Those taxes will help pay universal healthcare.
24
Taxing labor rather than profit underscores how the inequality happened.
What would happen if taxes were reduced for wages earned and increased for non-earned income such as profit (especially profit from speculation) inheritance, and dividends.
63
The standard of wealth has been a millionaire for generations and the concept of being a Billionaire is hard to envision for most of us, but let’s try by drawing a picture. The Forbes list of 400 wealthiest Americans estimates that the richest person at the end of 2018 was worth 160 Billion or 160,000 million dollars; a truly mind boggling amount. If you were to draw a simple bar graph with one inch representing one Billion dollars (1,000 million) it would be 160 inches tall, or 13 feet 4 inches. Using this scale of 1 inch equaling 1,000 million, a millionaire would only be 1/1,000th of an inch, or about the thickness of a human hair! If a millionaire is little more than a speck where does that leave the rest of us? We are truly invisible; except to candidates like Bernie Sanders and Elizabeth Warren, who have been trying to point out the problem for quite some time.
66
The very wealthy are simply not statistically significant. They don't have either the votes or the influence to have much impact on policy, and if they disappeared tomorrow, little would change.
Who is significant? Try the 10 million households with financial assets of more than $1 million. They are the ones running the country, and they're the ones who don't want be taxed out to support everyone else. They've got the votes, the education, and the connections to run the country. Sure, some of them are rich liberals, but liberalism only goes so far. If affluent urban professionals were told they'd have to give up their houses, cars, and money, and live in small apartments and ride bicycles for the good of society, you'd see a powerful reaction.
This accounts for the centrist, Clintonite wing of the Democrats. Yeah, we're nice people, but don't mess with us. We have control, and we intend to keep it.
8
@Jonathan. I disagree with your first paragraph. The Koch brothers, the Mercers and the like have significant impact on policy. Their numbers may be insignificant but their money magnifies their influence in a way that overwhelms everyone else’s. That is not the definition of a republic and that is why we need campaign finance reform more than ever.
23
@Jonathan
I think that's a great analysis. There's an acronym which defines some of your "assets of more than $1 million", HENRY -- high earners, not rich yet -- people with secure, high income positions with a very high level of comfort but who nevertheless aren't rich enough to sustain those lifestyles indefinitely solely on their assets, and need to continue some kind of ongoing employment/work.
I think these people often actually have earned what they have through some measure of work, skills and education and this colors their analysis of others' apparent need as "lack of trying". After all, they got it, why can't you? And this mindset winds up perpetuating the bootstrap myths as well as greatly downplaying the role of economic advantages many had growing up.
It's great they made their money curing cancer after a slog through 8-10 years of college and graduate school, but they don't want you to know that mom and dad got them into the good schools, paid their bills while they studied and then opened career doors through their connections. It spoils the myth.
Paradoxically, the few never-have-to-work "1%" rich people I've met have often been quite genuine, generous and empathetic people. Quite often it's the HENRYs who are arrogant and selfish, assuming that everyone is out to take away their "hard earned" luxuries.
6
@Jonathan I think you're half right. The Koch brothers have changed their focus from the national level to the local and state level; changing and influencing policy from the bottom up, nurturing candidates that in the future will become conservative senators, governors and presidents. They provide "boilerplate" pre-written right wing legislation to red states that want it, and provide the networking infrastructure to connect it all together. They are libertartians when it's convenient, and liberal capitalists when they need the government to protect their industries. Contrast that with a Sheldon Adelson who throws 30 million behind a single national presidential candidate. He happened to win when he hopped on the Trump wagon, but his primary choices, not so much.
So, both Fitzgerald and Hemingway were right about the super rich.
7
@James R. Filyaw.
The Marxes were also mostly right—both Karl and Groucho.
1
Bernie Sanders personally benefited from the Trump tax cuts. Although he voted against the Tax reform bill which he knew was not going to make a difference in the passage of the bill he could have donated to a not for profit charity just like president Trump does of his entire US presidential salary.
This is America where opportunity to make money and rise to the 1 percent was Bernie's to avail and no problem with that but it is hypocritical of him to expect average working class Americans to consider him as one of us who cares for our welfare while at the same time has a plan to cut spending somewhere and pay down the sky high national debt.
No I do not think Medicare for all including those who have not reached 65 will be economically feasible nor appropriate for all ages but to continue with medicare for all only for those who have contributed to it as is until turning 65 or above. I am quite content with private health insurance which satisfactorily and optimally covers my health care needs along with my own self imposed lifestyle and compliance with medical advice that does not inflict any self harm to my health. Many of the seniors in US are very sick but they have paid into medicare all their lives and have earned the care and diluting that care by shoveling residents of all ages will seriously and irreversibly harm the functionality of medicare for all for all ages as proposed by Bernie Sanders and some others running for president.
I cannot support Sanders.
3
@Girish KotwalThe sickness of the aristocracy has now arrived in the US. It took 200 years but it is now possible for offspring of the Oligarchy to live a life without work, loaded with the privilege of being first in line for everything. Are we prisoners to the primate hierarchy we inherited? It seems we cannot overcome this trait even though we recognize it is as harmful as our desire to consume as much sugar as possible. We are unable to progress to a more moral plane and so we have chosen to have “royalty” and diabetics live side by side. Human tragedy continues.
@Girish Kotwal - POTUS charities are self-serving enterprises and you're suggesting that if Bernie did likewise you would love him for that?? You're suggesting that Medicare for all is bad because US seniors are very sick and that all of them have paid into medicare all their lives!! Wow - there is much alternative reality and facts here. It is time the ultra-rich paid their fair share
We can spend all day bickering and defining who is rich, what is excess, tax laws that benefit the rich, and who pays not enough taxes, but it all boils down to the fact America has drifted for a long time away from what is fair as to wages, taxes, etc. Today, the working class of America is working for or paying for the outrageous wealth of a few individuals and businesses. The 'system' is structured so we see the low/middle income people are providing for the wealth of the few. It has to change or we are going to see people wearing yellow vests in the streets.
33
Time to wake up. These self-important, shockingly rich people, add no value to society. When they threaten to leave, please clear a path for them, we're better off without them. Especially if they are hedge fund managers or basically anybody whose job is to make money from other peoples' money.
Entrepreneurs are a different class. But guess what? Never has a single entrepreneur ever said to themselves, "Huh - I have a great idea for a company, I think it will be great, I think I can do it! Oh but wait, the tax rates are too high, I don't think I will." That is another classic self-serving right-wing myth. Many of the great, historic US companies were founded when 90% tax brackets were in effect, and besides, entrepreneurs (they good ones) are not motivated by money. The ones that are create enterprises like facebook, and "find my cat" and other damaging companies that are slowly destroying the fabric of society.
So whatever you do, stop worrying about rich people. They can take care of themselves, and ONLY themselves.
Instead, raise taxes on the rich A LOT, invest way more in regular people, invest in the future of the planet.
36
The ongoing myth that people like Krugman keep selling is this:
If we take more taxes from mega millionaires (which is only a few thousand people nationwide) the rest of us will somehow get all this money.
If you make $40k and those mega millionaire’s taxes are raised, you’re not getting any of it.
4
That’s too simple. The slow 70 year rejiggering of our financial and tax laws has slowly driven America into a ditch. It’s made us discouraged and angry. Inequality is our most serious problem that influences everything we confront as a nation.
18
@Tuco The most important issue by far is to remove legal bribery, money in politics. Once that is removed everything else would take care of itself.
8
@Matt Thr "refund" people are getting is not a government handout. It is the return of excess funds withheld from their paychecks. The government has interest free use of the money while they have it. While interest is not a significant income producer, people can finer tune their withholding throughout the year to be more in tune with their tax obligations and take some of that money and put it in a savings account to cover any unanticipated shortfall in their tax payments. If their withholdings were accurate, the savings account would equate to a refund already in hand.
"Meanwhile, they don’t want to pay taxes."
This is the crux of the issue. Personally I wouldn't want to live the way they live, but they are free to do so in our society. But that wealth comes with responsibilities, not just the "right" to do whatever they want. Just pay your fair share of tax in a civil society to keep it civil. But I guess the ones buying citizenship in bolthole countries like NZ don't think that way......
16
With whom do the ultra rich hang out? Other ultra rich of course. This includes the oligarchs from what other counties? Well, Russia and the Middle East of course. Russia (and Saudi Arabia) interfered in our election and Republicans encouraged it and supported it. Protecting Trump is protecting Russia. World oligarchs unite.
20
I live close to an airport that's busy with private aircraft serving wealthy part-time residents. Then there's the local nonprofit theater that's ending its season with a $1.3 million production, produced and opened here, then moving its main run at Philadelphia's Walnut Street Theatre. It's rather nice to have local donors who make this, orchestra concerts, and a nice local art museum possible in a county where the public schools have lots of hungry and often homeless children.
10
I look at Bernie Sanders and agree with virtually everything he says - and also, importantly, does.
That said, there is only one quality that will cause me to vote for a particular Democratic candidate in my state's primary: Can s/he beat Donald Trump. I don't believe anything else matters.
27
@MS -- The only candidate in the 2016 Democratic Primary that could consistently beat Trump according to the polls was, of course, Bernie Sanders, who drew crowds of 10,000 to 40,000 to rally events all across the country. Meanwhile, Hillary Clinton's average crowds were 300 to fewer than 5,000. It's really unfortunate that the DNC turned over operations to Clinton campaign insiders and coordinated a smear campaign of Sanders from inside the DNC. More than 1/3 of all registered voters are no-party-affiliation voters aka independents. Many were adamantly against what they considered "lousy" trade deals like NAFTA and Clinton's push for TPP. Clinton did not even bother to campaign in Michigan and gave very few interviews that were not fluff pieces to favored journalists. The corporate-wing of the Democrats aka "New Democrats" introduced by Bill and Hillary Clinton are an inadequate "opposition" party and do not represent ordinary people. They (like the Republicans) take their marching orders from the 1% of the 1%: The Wall Street CEO global investment crowd! If the Democrats can not bring forward a Bernie Sanders candidate, willing to push for economic, social and criminal justice for EVERYONE, then expect Trump to stay in place because he is the Not-Hillary 2.0 candidate.
25
A wealth tax, along the lines mentioned in the book "Capital in the Twenty-First Century" by Thomas Piketty may help prevent concentration of wealth by a tiny minority.
The wealthy, unlike wage-earners, have many ways to avoid paying taxes. Unless that is addressed, the inequality between the haves and have-nots will widen, ultimately resulting in the have-nots challenging the "democratic" forms of government that failed to address such inequalities.
22
A good start on the subject, Prof. Krugman, but why leave the argument unfinished? Using Sanders as your example, his income over a ten year period shows that Sander's income was typically his salary from Congress or the Senate, plus Soc Sec. The Senate salary - the same for all Senators - ranged from @$170k to $174K over the past ten years. The Sanders' file jointly and their combined incomes range between a high of $315K in 2009 and a low of $205K in 2014. In 2015 it as $240K. In 2016 and 2017 their income increased hugely to $1.1M based on sales of Sanders' best-selling book. So for 2 years out of 10 Sanders income made him a "millionaire'. In 2018, however, Sanders' income fell back to $561K with $393K of that being book sales royalties so for 2018 I guess that makes him a "half-millionaire". Can Sanders still call himself a "socialist"? Yes. Why? Because he is not a Marxist. Marx did not invent "socialism". Milliions of European "social democrats" have seen the wisdom of a "social/economic safety net" that they adopted after WW2. They have "mixed economies" with a Capitalist base, a social safety net, and regulation of banking to prevent another 2008. High taxes? Yes. But those taxes buy freedom from anxiety re: healthcare, education, disability and pensions. Europeans consider that a fair trade. So does Sanders. Income from book sales for 3 years is a fluke in a lifelong context. Sanders is not a millionaire - that takes years of consistent income.
50
A generous hedge fund manager who makes $850,000,000 per year can afford to donate $849,000,000 and still be a millionaire... but I'm thinking that most of those extraordinarily high paid hedge fund managers would say that $1,000,000 is not enough to live on...
21
@WFGersen - I'd say a millionaire is somebody who has a total of $1,000,000 in assets. The $850,000,000 is money the hedge fund manager gets year after year after year. If he would put one year's income into a CD, he'd get $19,000,000 - nineteen million dollars - per year for doing nothing
2
If we're not talking about the work-a-day doctors, lawyers, bankers (i.e., labor), then politicians and journalists should specify. "Billionaires" should have no hesitation to impose greater income taxes on labor as it leaves the real culprits (corporate tax, capital gains, estate, 'opportunity zones', abatements) alone.
As fun as it is to say, 'the 1%' includes your pediatrician paying off her student loans but may not include DJT if he's limiting himself to his public service income.
9
I had been aware of the super-rich for years, but not the actual figures that Krugman presents. It is even more obscene than I thought. Not sure what the answer is, even if there is an answer. The problem is well and truly embedded in the capitalist system. It's not going away soon.
17
Paul,
For most of my life as an engineer, receiving a W2 form, making a (rough) lifetime average of $100,000 a year I have paid something in the neighborhood of 40-45% total tax rate including NY and Federal taxes.
This includes property and school tax on my home.
At the same time, Trump, and, most people like him pay nothing or next to nothing.
And, the poor pay nothing or next to nothing.
A long time ago I realized the US government swapped out slavery for W2 slaves.
That is why I have encouraged my offspring to become landlords. Landlords pay essentially no tax on their income from property rent.
And, tax rates on rental income just went down further with the newly created QBI (Qualified Business Initiative) that Trump granted to himself with the new tax law.
Paul, the trick is to not ever get a W2. Ever.
42
Now that our most well known socialist, Bernie Sanders, is in the 1%, we're now moving the goal posts to, say, .05%. Is that what I'm reading here?
7
@Joanna Whitmire - No, not moving the goalposts.
As far as I'm concerned, and for many years, I have understood "the 1%" to be a shorthand for the very, VERY rich, and not to be taken literally. In fact, I have left more than a few comments on the NYT in which I've pointed out "the 0.01%" might be more accurate.
Anyhow, it's a silly thing to debate. Instead of getting all fussy about whether Sanders said "milliunaihs" or not, what matters is what he is promoting in the way of POLICIES, or in this specific area, tax policies.
He is not trying to PUNISH people with assets of $1 million. That is a simplistic view. He has much more to say - raising the top brackets for very high earners, eliminating tax shelters, inheritance tax on very large estates, etc. And what he has been proposing for many years has remained consistent, even as his own personal financial situation changed.
Too much to go into in 1 small comment here.
11
@Joanna Whitmire
Has Bernie changed any of his positions in order to exempt himself? If not, then what goalposts do you see being moved?
1
Nope. That’s not what it says at all.
Here’s the thing: if I were making 850 million every year as a hedge fund manager (or whatever), why would I NOT want the roads, bridges and other infrastructure in my state/area to be good, the schools and hospitals to be fully funded and open to all? Why would I NOT want all children to have a warm home and enough to eat? After I’ve got the first 850 million stashed away under the matress, what do I do with the next 850 mil? Purchase a president so I can make even more dough next year? For what purpose? The Gordon Gekkos of this world need to educate themselves. Read some Spinoza. Cultivate their minds.
56
@Rose You might get a hedge fund manager to read Spinoza, but only if they saw money in it.
3
So, Bernie is a millionaire.
And, according to some, a hypocrite.
But not so fast.
This is not a defense of Bernie Sanders.
It’s a defense of many, including applicable Republicans.
Being a millionaire used to be something quite special.
People would buy tickets to the Irish Sweepstakes in hopes of winning a fraction of a million dollars.
During the late ‘50s, TV offered “The Millionaire,” where a random person would be given a million dollars as well as a changed life.
Even as late as 2,000 there was a reality TV show…Who Wants to Marry a Millionaire?
( This was before billion with a ‘B’ was discovered.)
However, a millionaire refers to net worth, not income.
For starters, there’s a broad range between a person with a life-long net worth of $1,000,000 and one worth $900,000,000…millionaires both.
Let’s consider the basic, low-end millionaire…
Using simple logic and basic math, we are swimming in a society of millionaires…many who struggle to pay their bills.
An uneducated guess is that faculty rooms, precincts, and many businesses are peopled by millionaires.
So take a couple who’ve been married for 20 years. The equity in their home likely runs into the hundreds of thousands of dollars. If both invested in an IRA or a tax-sheltered annuity, they’re well on their way.
So, when a politician…Bernie or anybody….says they don’t support tax cuts for the rich or for millionaires…they’re talking about income…not net worth.
15
Mr. Krugman, thanks, very interesting and thought provoking.
"The 1%" is certainly a short hand for the vastly wealthy, and not a very good one. As you point out, the problems are with a much more elite group.
Thank you also for this - "None of this means that the merely affluent should be exempt from the burden of creating a more decent society. "
The college admissions scandal comes immediately to mind. Unfortunately, some who make their way up into the "merely affluent" also seem eager to pull up the ladder behind themselves. We need to fight this strongly as well, just as we fight the Kochs and the Waltons.
18
It is always a most gratifying and calming experience to read Paul's insightful and perspicacious articles.
It is so reassuring to be reminded that not all Americans are as crazy as their President and so many of his supporters.
18
I always assumed you were officially rich when you could pay someone else to worry about your money. And if you’re that rich, and even if you’re socially minded, your advisors are going to do their job and work to preserve your wealth so that you can spend it as you see fit (and because you can afford the best advisors, they are going to do a good job.) Your wealth is proof that you can make those decisions better than some bumbling government, and if they don’t like it, you can also afford to take your money elsewhere. So if they try and go after your money, you will.
For example (in France), when the government imposed a super rich tax, many just moved to Belgium. On the other hand, if money is needed for something you support, like repairing Notre Dame, you are happy to write a €100 million check.
What I’m trying to say here is that we might be more successful at getting the rich to participate in our society if we didn’t treat them like the rest of is peons (because they just aren’t). Why don’t we instead provide them with investment opportunities they would support? They might run for the nearest tax haven when hit by a tax bill in the hundreds of millions, but happily sign a check when asked to fund the Mr. and Mrs. Gottalot Education Overhaul.
It’s a bit like when you or I get to check the ‘round up to nearest dollar’ box for our favorite charity, except times 1000000. We like that choice too.
1
@jm Nobody at that level invests in anything that doesn’t increase their pile of cash. Betsy DeVos, for example, doesn’t visit troubled schools, she beats the drum for privatizing schools using the Charter School design, so rich investors can take a nice rake off before the first child enters the building. Despite the abysmal results of Charter Schools in Michigan which she did so much to establish. It wasn’t about education, it was about getting public dollars into the pockets of people like her.
Or look to the exchange between US Representative Katie Porter and Jamie Dimon last week about how struggling low level workers can survive on the income Dimon pays them. It wasn’t that he had no answers, he simply wasn’t going to acknowledge that a problem existed.
I’m afraid the Oligarchs have the upper hand at the moment and, with Trump for at least a year and 8 months, they may be in charge for good. And, with a second term it’s game over.
"The Affordable Care Act was paid for in part by taxes on incomes in excess of $200,000, so 400K-a-year working stiffs did pay some of the cost. That’s O.K.: They (we) can afford it. And whining that $200,000 a year isn’t really rich is unseemly."
It's one thing to say "they (we) can afford it," if you make $400,00 year in and year out. It's an entirely different thing if you happen to make $400,000 once (say you sold a business) after taking out $80,000 or $90,000 a year for ten years.
Where ever we draw the lines to "tax the rich," I hope we are wise enough to look at income over many years so that a one-off spike does not get snagged.
Even Bernie should get to keep most of his income.
8
@Karl Making 400k from selling a business wouldn't be taxed as income. It would be capital gains and would probably be subject to the 'carried interest' rules.
It's income taxes on income for the 0.5% that need to rise - and a lot of the loop holes used by people in that income bracket.
10
@Karl
The tax is not imposed on capital gains.
3
People with W-2s will always get snagged. It has always pained me to see how many people who do not receive regular wages (well heeled landowners, small business owners, etc.) pay next to nothing in taxes while people who get a paycheck pay every last dime. Newsflash nonW-2 tax avoiders — your kids go to school too, you drive the roads, take the train, use airports, etc. Then you want to tinker with my social security because you never put enough in to make it matter for you. If everyone would just pay their fair share there would be plenty to go around.
8
The true unfairness is that the uber-rich can buy legislators who will do their bidding in regard to taxes. The "Trump tax cut" is a classic example. The uber-rich got a tax cut, but the rest of us got a tax increase. My taxes will rise, so I can say that I am not a member of the uber-rich club.
This article is really an argument in favor of world government, since the uber-rich can park their money in some out-of-the way place where numbered back accounts are the rule. How to get such a level of fairness is not clear (to me), but is certainly needed.
15
@toom they don't need to park their money offshore. The US is a tax haven!
I wouldn’t mind paying taxes if I weren’t paying 2.5k a month for health insurance (30k plus deductible) plus 35k for babysitting and I didn’t already feel guilty about leaving children deep college debt. That and a total lack of job security and not knowing if I will even be employable or healthy until social security and then fears of outliving whatever savings I manage to have. This is the upper middle class dream.
16
@Allright Move to Sweden. You'll end up paying about 5% more in taxes, but that includes healthcare, sickness benefits, childcare and months of parental leave.
Overall EU economies aren't taxed much more than the US economy - it's all what you spend it on.
12
@Andy Yes, here in the U.S.A. we spend most of our tax money on the military, (About as much as the next eight countries combined.) Without that expense we could have all the social amenities that they have in Sweden.
8
@Allright UMC instability and the lack of a social safety net fuel opportunity hoarding. No one can relax in a country that fails to provide for the poor, the sick, the young or the old.
The very, very rich “wield their political power,” through financial support of marketing that serves their private interest,of course. Obvious. It’s political marketing that gains them governmental support for unfairness in taxation. Also obvious.
So, why does the marketing work?
Voter gullibility toward marketing, which expresses a proper public need to trust that the political market isn’t predatory. But the market IS predatory, of course. So, why does THAT work?
Low market literacy, due to starving public education across generations through devaluing careers in teaching, underfunding school systems, etc.
If the average education level of Americans was 4-year college graduation, the power of money to steer predatory political marketing would become impotent.
If the average American was highly educated, we wouldn’t need top-down notions of distributive justice. Democratic power would ensure that, bottom up.
Educational excellence, sustained over generations will cause the good arguments to be convincing, the predatory marketing to be defanged, the opportunistic duplicity be disrobed, etc.
But we live in a market society, not a democratic one. Money buys voter opinion, and buying weak support for public educational excellence is a no-brainer for Big Money catering to impulsive voters.
24
You seem to be saying that Bernie should have been saying "the .01%"; then he wouldn't look quite so ...awkward? But it IS a mistake to focus on Bernie - we should ask if the really high salaries discussed in the article are earned - they might be - and whether or not they are adequately taxed; probably not - and who we want in congress to address this with a new tax law.
10
I find it amazing how people always make "being rich" a matter of income, not a matter of wealth.
If you have an income of 200k, you aren't rich, but you have a high income. If this income is generated from your assets, not from your work, then might be rich. But the really rich will tell you, that to be rich, you need to be able to live from the interest on these capital gains, not the capital gains themself. Because otherwise their wealth would shrink, and how absurd is this?
13
Which is why capital gains (and all other income) should be treated as ordinary income so that the very wealthy actually pay their fair share of taxes. And while we’re on the subject of taxes on the rich, forget about the “death tax” (which no one pays anyway) and concentrate on eliminating the automatic step up on basis.
12
Great points. But we should still scrutinize even those who aren’t “absurdly wealthy”.
The people working in tech, finance, consulting, corporate law making 300k-multiple millions — many operate with little concern for the social consequences of their “contributions”. They sustain the extractive corporations that funnel wealth to the already rich.
There are two criteria every person has an obligation to consider:
1) is the wealth / salary I earn commensurate with the social value I generate
2) even if the answer to (1) is yes, do I actually deserve this much wealth?
James Salk gave away his polio vaccine. Where is that sort of charitability today? So many of us take as much as we can get without considering where money actually comes from — from the billions of others in society and from the consumption of natural resources.
Even doctors are not above question. Does anyone (consider private practice cardiologists or dermatologists making 1m+) really deserve so much wealth? In the case of medicine, ultimately it’s coming from taxpayers (Medicare) or from society in general (overall price increases via the transfer of employee premiums). Our economy has been distorted when individuals can earn far beyond the value they generate, when cigarettes CEOs and people like trump are million or billionaires. The professions most needed and most valuable (teachers, family physicians) are vastly underpaid.
The criteria for excessive wealth isn’t numerical. It’s moral.
24
@JR Consideration 1) is over-simplistic. It ignores qualifications needed for the job, risks of the work and the rarity of the talent needed for that job.
While there is much wrong with how to ascribe a monetary value to those other factors (Hedge fund managers, CEOs and certain sports and media personalities are vastly over-valued in some of those factors) they all contribute to how much someone should earn.
Wow. That pretty much sums it up. When we start getting into millions of years, or millions of dollars, humans just can't grasp those kinds of numbers.
But as Krugman says, the real problem is how that amount of money can buy a lot of politicians.
16
A common argument from the Right—and including a few of the commenters here, even—is that all the rest of us are just envious of the wealthy. While I’m sure there are a few for which that applies, it’s mostly a trope. I don’t care if a hedge-fund manager makes $875 million/year...right up to the point where it means my Congressional representative stops answering the phone when I call because they’re too deep in said hedge-fund manager’s pocket to hear the phone ring.
Case in point: Over the past several years I’ve repeatedly called and written letters (maybe two dozen times in all) to Senator Corey Gardner (R-CO) on a variety of issues. And, yes, I’m a constituent. I’ve never once—not a single time—gotten a call-back or other personal reply. Nothing more than a form letter, if anything. Why? Because Gardner takes millions of dollars from wealthy donors and corporations (same thing, according to the Supreme Court) and doesn’t have time for “little people” like me. Therein lies the problem.
85
@David Walker FYI, Senator Gardner is not the Senator of France.
2
Time to overturn Citizens United?
3
The lack of response has less to do with Gardner and more to do with how Congressional office work.
A 20-year old whose dad plays golf with a donor to a congressman is sitting at a chair, for 8 hours, talking to the equivalent of your worst Twitter follower.
They will duly note your issue, check a box in the spreadsheet saying "David, at address x, called about this issue" and then you'll get a form letter thanking you for calling about that issue.
This is how Congress works. Literally no difference between D and R offices.
I don't know whether its heartbreaking or darkly funny (probably both) that so many citizens believe their congress person is going to care about THEM.
Each member has about 400k constituents. Senators have more by a power of 10x to 100x!
Michael Bennet (D-CO) is not getting a note every time someone in Steamboat Springs calls about Obamacare.
The sooner we leave behind our Mr. Smith fantasies, and see these people (from AOC to Steve King alike!) for the ambitious narcissists they must be in order to climb to such a strata, the better.
2
I think that one big difference between the fabulously wealthy (and maybe even the less fabulously wealthy) and myself is that I have been bearing the blame for my own financial predicaments. I am not convinced the rich would fault themselves for personal downturns. Maybe they don't experience these.
As for my family, we have not recovered from the Bush Recession of '08. We are getting by, but we are not getting ahead. It's only been recently that I actually put into words that the Bush Recession is the reason we feel constantly pinched. I guess I was thinking that I just couldn't manage my money anymore, and I didn't know why.
Ten years after the event, it's nice to realize I may not be as inept as I thought.
28
I’m not supposed to mind that the CEO of my expensive for profit health insurance company makes more than $23 million a year. Earned by denying healthcare.
122
England is little different, where less than 1% of the population owns half the land:
https://www.theguardian.com/money/2019/apr/17/who-owns-england-thousand-secret-landowners-author
7
Well, Paul has got it clear. He now has only to point out clearly the effective disinformation machine run by a few of these billionaires, the ones out to dismantle democracy and every government effort to mitigate the Country’s problems. The ones presenting a reality of “alternative facts” and rabid religious “Christianity”.
35
Folks, as Yogi Berra used to say “it’s getting late early “-only the election of Bernie Sanders is even going to give us a chance to save America !
26
@Ron Marcus A President is not an emperor and cannot rule by fiat. It is much more important that Elizabeth Warren and other progressive minded people be elected to local, state and Congressional office. Sanders will not be able to change all that much if he is saddled with regressive Troglodytes controlling the legislative branch. This "President = Savior" thing has to stop.
@Ron Marcus Please,I have worked in the actual Congress in my 20’s and have taught Public Administration at the College level . I know the gruesome reality of getting legislation passed. I love Senator Warren, but I am hoping Bernie will win. Then the hard work begins. Thanks
3
I'm happy to see a defense of Sanders by Paul Krugman on the crassest attack on Sanders yet, by Think Progress and John Podesta and Neera Tanden's CAP PAC.
Sanders voters poll as being willing to vote for Biden if he wins. Biden voters poll as voting for Sanders if he wins. The consultants, high dollar donors and lobbyists are afraid of Sanders - to the point where they may again get together to stop him.
It's almost as if they are willing to risk four more years of Trump. Make sense? Only if you work for the oligarchy..
Don't let them turn you against your own interests. Take it from Paul.
---
Things Trump Did While You Weren’t Looking [2019]
https://wp.me/p2KJ3H-3h2
38
@Rima Regas
"The consultants, high dollar donors and lobbyists are afraid of Sanders - to the point where they may again get together to stop him. It's almost as if they are willing to risk four more years of Trump."
I just read an article about just that:
‘Stop Sanders’ Democrats Are Agonizing Over His Momentum
https://www.nytimes.com/2019/04/16/us/politics/bernie-sanders-democratic-party.html
1
Keep in mind, while parts of the media and some individuals sneer at Bernie for being a "millionaire", that Amazon.com, owned by the richest person in the HISTORY of the world, paid zero taxes for at least the last two years......
32
So what if someone is very rich.
We all have different talents, skills and drive.
Some of us will be very rich, very poor and in the middle.
This does not mean we cannot lead happy meaningful lives.
4
@Unhappy JD Do you really think it's as easy to be happy when you are on the verge of homelessness due to a medical issue as compared to the person who owns her own home, has excellent health and life insurance, and makes 400K a year? It's pretty hard to "lead happy meaningful lives" when you're worried about buying food for your kids and paying the electric bill. One cannot have self actualization if basic needs, such as food, shelter, employment, security etc. are not first acquired.
69
@Unhappy JD Talent, skills and drive are not all that determine a person's income. Geography, education, race, family etc. all play into it. If I happen to be born to wealthy parents, I'll probably be OK; if not my odds are not that good.
1
@Sue Salvesen
Bern-dog is a neoliberal, 'social democrat', capitalist who wants to tax poor and rich people more like in Scandinavia. He wants to raise minimum wage to $15 an hour. Does it feel pretty good to make $15 an hour at a fast food restaurant? Compared to doctors and stuff who make $400000 a year? Is that any kind of fairness? Bern-dog is the same as the rest of them who just wanna give a little relief too stave off the revolution.
All this envy. All this arrogance about how some commentators want to pay more taxes.
I could care less how much a hedge fund manager earns in a year, I don’t think these people are harming those with less. Probably the ones they harm the most are their children. Few of the super-rich of today are frugal with their children the way John D Rockefeller was. In fact, it would not surprise me is some of the children don’t squander much of that wealth - the old dirt-to-dirt in 3 generations,
As a nation and as a people, we have been living beyond our means now for several decades. We truly believe that we “deserve” bright shiny new things. We spend rather than save. Those getting tax refunds rarely put it in savings, instead they treat themselves to something new. I blame TV for some of this - after all, kitchens on TV rarely look like ours and why can’t we have a nicer one?
All this deciding how much one should earn/inherit is a very slippery slope and has NEVER ended well in any country where it was practiced.
When I see construction workers standing in line to pay $5 a pack for cigarettes and they do this daily, I don’t feel very sorry for them when they can’t afford a $200 repair on their truck.
The super wealthy are not taking food out of the mouths of the poor, or anything from me, either.
3
This is incorrect. By not paying taxes, not paying living wages, but benefiting from infrastructure, services for their workforce, they absolutely privatize profits and socialize expenses, at our loss.
57
@India
I think I'm understanding that you don't care how much a hedge fund manager makes and all the negative impacts on society at large.... but .... you do care about the unwise purchase of a pack of cigarettes by a construction worker whose choice impacts him by far the most until he might need health care which would be a cost to society.
I'm afraid I don't see those two as being anywhere near comparable. Enormous wealth in the hands of a few concentrates power in ways we see all around us. That cannot be denied. The evidence is mountainous. It is not envy but disgust that our policies are so skewed that we have the greatest inequality since the gilded age which means that people cannot afford homes, daycare, education, cars, children, etc. ...And while plenty of people make bad choices that aggravate their condition, I think that pales in comparison to the bad choices our government makes when it creates polices at the behest of their corporate masters that stacks the deck against the rest of us.
I'm all for personal responsibility but the playing field has to be level.
19
@India. The super wealthy ARE taking food out of the mouths of the poor. Workers no longer considered stakeholders who should share in the prosperity of the companies that use their labor. The fruits of the workers' labor is sucked up by the super-wealthy.
The top 1% of earners paid 39% of all income taxes, more than the combined total of the bottom 90% at 29.4% (https://taxfoundation.org/summary-federal-income-tax-data-2017/) Seems like they pay way more than their share.
3
@Dr B The superrich probably pay their accountants more than they pay in taxes--in fact, a lot of them probably pay no taxes at all, like so many major corporations. They pay Republican politicians to keep trimming down their share and regard the responsibility of citizenship as merely to amass fortunes and spend money. Why should they have to sacrifice a few millions to help America thrive, when they need another yacht?
14
@Dr B
The top 1% own about 90% of this country's wealth, as such they should be paying 90% of the taxes and not 39%.
30
@Dr B
Someone earning $850 million a year can afford to pay half that in taxes - and still have over $400 MILLION to live on. Instead they pay $1mill (maybe more) to a big-name accountant, with result - NIL tax
We poor mugs on less than $200,000 (and esp those under $50,000) are left to carry the load for funding a functional govt: roads, airports, schools, hospitals, etc etc etc.
All of which that non-taxpaying 1% still expect/use/rely on for their biz, or biz-as-usual lifestyle.
21
"Why should we care about the very rich? It’s not about envy, it’s about oligarchy."
Of course it's about envy, Paul. The argument that somehow it just isn't right or fair that some CEOs earn 300 times the amount if the average worker. You don't come up with what you think is a "fair" earnings ratio, Paul - why is that?
As for an "oligarchy", Paul, you don't mention the other players in this game - the career politicians on both sides of the aisle who have crafted the tax code to help those in the top earnings bracket. Tim Cook, Jeff Bezos and the Koch brothers don't write tax laws. And don't think this is only a Republican problem; there are plenty of Democrats who over the years have contributed to our convoluted tax code. They are in this up to their necks. This is a good reason to advocate for term limits for members of Congress.
"But we should be able to understand both that the affluent in general should be paying more in taxes, and that the very rich are different from you and me — and Bernie Sanders. The class divide that lies at the root of our political polarization is much starker, much more extreme than most people seem to realize."
What we should understand is that you always push for a redistributionist state, and that your boogeyman is always the wealthiest people in the country. What you should acknowledge, Paul, is that there's too much power in Washington and a big part of that is crony capitalism. Simply put, you keep missing the target.
1
@hm1342
Do you really think that the executive that makes 300 times more than the average employee in their company produces 300 times more than that average employee?
Paying your fair share of the taxes is not redistributing of resources.
16
@George M.: "Do you really think that the executive that makes 300 times more than the average employee in their company produces 300 times more than that average employee?"
What's your recommendation as to what the optimal ratio is and how exactly did you arrive at that number?
"Paying your fair share of the taxes is not redistributing of resources."
Quantify "fair share" as a percentage of income or wealth. Krugman has never done that. Of course it's redistribution:
"Central tenet of most modern economies whereby a nation's wealth is channeled, from those who have more to those below a certain income level, through taxes that pay for welfare benefits."
Source - http://www.businessdictionary.com/definition/redistribution-of-wealth.html
The danger of oligarchy is so starkly expressed by the current Republican party. What is the *one* thing that they managed to pass: a huge tax cut for the wealthy and corporations. The only other thing they focused on was repealing the ACA.
We have de facto oligarchy now; we're back to the gilded age in terms of warped distribution of income. But the impact on our politics is clear: if the Republicans main in power, they will chiefly serve the interests of the very rich, while using racism and xenophobia to keep their base secure.
It's quite an ugly, malicious thing, our American oligarchy. Hopefully we can do something about it.
17
So the issue isn't the one percent against the rest of us but the one percent against the .1 percent or the .01 percent? That's silly.
1
I don’t think anyone’s begrudging Bernie Sanders for earning royalties from his book. It was his bootstrappy comment, “when you write a bestselling book you could be a millionaire too”. It was a toned-deaf and cruel thing to say to the American public and deserves scrutiny.
4
@NG Yes, many are begrudging him because of the royalties such as Erin Burnett on CNN or pretty much the entire Republican Party. About the comment Bernie made, what he meant is "if you work in the house and senate for many years, run in a primary and are very successful, then you write a book you can make money too." It wasn't tone-deaf, he was completely right about what he said. Issue is, most Americans aren't going to be in government and write a book about it. Bernie knows that which is why he said the comment the way he did. He knows not every American can write a bestselling book which is why he's fighting for every day Americans to also achieve the American Dream without having to publish a book or win the lottery to do it.
7
i wonder is anyone still counting. mostly i see envy
1
@worker33 What you see is need.
Winds have shifted, which our political hack, Krugman noticed, and hence this soft piece on Sanders?
Maybe with the loss of Clinton/ neo-liberals, the only way Krugman can stay relevant is by aligning with the Sanders wing.
2
This article feels utterly contrived if only because it’s an attempt to mask the inconsistency of Saunder’s message. Just say it—he’s a socialist when it’s convenient and the rest of the time he has a normal appetite for the fruits of his own labor. But what’s that got to do with oligarchs and the like?!
3
@Jonathan Nothing inconsistent. The idea of Bernie owing extra taxes to the govt because he favors higher taxes is contrived It's like saying if Trump hates the national debt so much why doesn't he donate money to the IRS to pay it off if he's such a billionaire. I don't believe that argument and anyone that pulls that on Bernie is a total dolt. About his wealth, think about this: “When I was poor and complained about inequality they said I was bitter; now that I'm rich and I complain about inequality they say I'm a hypocrite. I'm beginning to think they just don't want to talk about inequality.”
The problem, Paul, is that we live in a generally functioning democracy. Given that one-man-one-vote remains pretty much true, it is simplistic to say that 18,000 or fewer billionaires can 'control' politics in the US or of even one political party. A huge number of "not so rich" folks are pulling those levers and casting those ballots for politicians who seem to be serving the interests of these 18,000 rather than the millions who elected them. Liberals HAVE to recognize this mathematical problem because it leads to two conclusions: the voters are either stupid dupes of the 18,000 or we Liberals simply do not understand a huge number of voters in the country. Either case does not look good for Liberals who then wonder why they lose elections.
2
But it’s not one person one vote in the US. Not at all. Because of how our constitution is designed, if you live in a sparsely populated state your vote for president and your influence in congress weigh considerably more than if you live in a state with a large population.
18
@Susan: "Because of how our constitution is designed, if you live in a sparsely populated state your vote for president and your influence in congress..."
The Electoral College is designed for states, not people, to elect the President. Larger states have more electoral votes. There is no mention nor was there any intent by the framers that the winner of the popular vote for president in a state was to receive every electoral vote in that state. Yet that's what both Democrats and Republicans have accomplished through legislation in 48 states. In my view that's a major problem.
As for influence in Congress, each state gets two votes in the Senate, which means equal representation. Unequal representation is in the House. That's why it was called the Great Compromise when it was implemented.
1
Mr. Sander's ideas are ridiculous and will bankrupt the country.
I do not begrudge Mr. Sander's his wealth nor do i take issue with those who are extraordinarily wealthy. Why shouldn't they keep their money? They were not put on this earth to take care of me. I am able bodied and should support myself.
I am embarrassed that so many people in this country want a hand out.
2
@Driven I'm embarrassed that so many people in this wealthy country desperately need help, when other nations manage to keep their citizens healthy, well fed, well educated, and well housed. It's hard to support yourself on a low-paying job with no health benefits, especially if you have children to support as well, which is the situation for too many Americans.
18
@carrobin
Why do people have children they cannot support? Their poor decisions and lack of planning are not the fault nor the responsibility of other people.
One look at the feckless Left, the silly Occupy Wall Street encampments without an agenda, the imploded Women’s March riven with wildly opposed oersonalities and agendas, the 20 or so Democratic Presidential would bes trudging through Iowa touting 101 varying sure to please platform planks, the splits within splits in the House held together only by Nancy Pelosi’s skill, and not hard to understand why an older, white male monolith funded by oligarchs can hold power. Say what you will about Republicans, they stick together.
3
“Gamblin’ man is rich
And the workin’ man is poor.
And I ain’t got no home
In this world anymore”
“As through this world I’ve traveled,
I’ve seen lots of funny men.
Some rob you with a six-gun,
Some with a fountain pen”
Woody Guthrie
13
"...(there are helicopters, after all)."
The professor's subtle humor is such a joy.
2
I agree with all of this except I take exception to the part where you can read Bernie's mind... You don't know why Bernie didn't release them sooner. It's STILL so early in the campaign that it's possible that he planned on releasing them on Tax day all along, not expecting a few others to release them so soon. Remember, the majority of candidates did not release theirs either, some who were much richer, preaching the same and yet weren't called out... AT ALL. Perhaps he already had his town hall on FOX scheduled and he thought it good timing to say, "Hey Trump, how much did you pay in taxes?" We don't know and you shouldn't act as if you do. Otherwise, great article. I wish more people understood what the word 'inequality' really, truly means and how much power these people wield because of it. That's why I like Bernie, he's already shown he WANTS to go after those who use their money to get power - he ain't havin' it. He WANTS to give power back to US!
6
“How rich today’s rich are”? When John D. Rockefeller was at the pinnacle of his empire, his wealth, in today’s inflation-adjusted dollars was worth more than $400,000,000.00. Compare that to the recent counting of Jeff Bezos’ value of “just” $130,000,000.00 (before his divorce settlement) barely more than a century later. We have so dumbed down, deflated, punished, taxed, regulated and vilified success that today, the richest person has attained but a quarter of the rewards that such a title once conveyed. Liberals pointedly refuse to accept that the freedom they profess to love equally allows people to become immensely successful or experience utter and catastrophic failure. It’s a natural occurrence that for every Bezos, tens of thousands will be homeless. For every Bill Gates, millions will live in deep poverty. And for every Warren Buffet, tens of millions will go hungry or be “food insecure.” Capitalism is like nature itself: cold, harsh and brutal. Only the strong survive.
2
@From Where I Sit
A Modest Proposal?
@From Where I Sit
Silly me. I thought government policy and the economy were for the benefit of all.
There is no freedom as such. We are regulated by government policy that ensures that the rich get richer and the poor stay poor. Bezos and Gates would not be so wealthy if there were true freedom in trade and commerce. Their monopolies are protected by laws that prevent competition.
If we are going to revert to the law of the jungle, let's not bother at all with taxes, or government for that matter. I suspect that then the truly wealthy will be the most ruthless killers, drug dealers, robbers, kidnappers, etc. Today's wealthy will be their victims and there will be a new order. The law of the jungle will will literally be the law of the jungle just like in some countries whose governments so very weak that the wealthy are the organised criminals and corrupt government officials.
@From Where I Sit Oh, boy. Massive poverty is a "natural occurrence", is it? No wonder you are so up to date on Rockefeller era statistics - you are still living in it. Humans don't have to live helplessly with cold, harsh and brutal conditions. That's what civlization is all about. But you are definitely cold, harsh and brutal.
1
Under the new Tax "Reform" bill, those lower 1%ers will see a jump of 8% in their tax rate for income from about 161,00 to $204,000. The next bracket is 3% higher, (to $510,000). The next, TOP bracket is only 2% higher, which means all income over $510,000 is taxed at the same 37% rate, whether a few thousand or many billions. What a working/middle class rip-off and transfer of wealth to to the uber rich! (At least for the few that don't stash their wealth in the Cayman Islands or use dubious deductions to avoid taxes altogether like Trump.) You think maybe the 94% top rate of the past was why we used to have actual political democracy, less inequality, and way less corruption?
2
@djs: Probably more the other way around: because of more democracy we could impose significant taxes on the super-rich. But the economy of those days was unsustainable for other reasons. Not just random that those days led to these days.
Finally, Paul Krugman has something good to say about Senator Bernie Sanders and his policy ideas. It's about time.
7
Yes, it is silly to pillory Sanders for his wealth or his book. Most U.S. Congressmen are millionaires, and many have written books, so he's merely following in their footsteps. And I'd rather have an author for a President than someone who watches Fox News instead of reading.
From F. Scott Fitzgerald: “Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different. ”
The best, most recent example of this is recent college admissions scandal, where wealthy parents paid others to take their kids' tests and/or create a false identify for them that included excellence in a sport. It is as a much a violation of our supposedly meritocratic admissions system as is admitting legacy students, but far more blatant.
The rich suffer from affluenza, and the only cure is a cashectomy, followed by an IV infusion of 70% top marginal tax rates.
11
Good, keep it coming. Here's my another contribution to Sanders!
3
The part that is missing from this brief piece about Bernie's bucks, is the difference between income and wealth, the sources of the income of the wealthy, and how high income turns into wealth. People have no idea about the extent of income inequality in the US (and world), and there is not even a word for how much more extreme is the inequality in wealth, when most people have what little wealth they have as their house in which they live.
In a recent survey most Americans thought we had the wealth inequality that Sweden actually has, and thought we should be considerably more equal than that. People have no idea and no way to conceive what it means for a mere handful of people to actually own almost all of America's non-housing wealth. It is not that this is hidden from people deliberately, it is just not seen to be as politically relevant as the shenanigans of one's neighbors cheating on unemployment or healthcare insurance. That is cheating, while who knows anything at all about the wealthy.
https://inequality.org/facts/wealth-inequality/
7
The near destruction of Notre Dame and the rapid reconstruction donations of nearly $1 billion from 4 wealthy French families makes your point quite nicely. How many of them do you think were regular Sunday parishoners at Notre Dame? I would guess zero.
5
Mr. Krugman hits the proverbial nail on the head. He is absolutely correct.
1
Millionaire ... count to a million in ~week
Billionaire ... count to a billion in ~32 years
ps Forget the money thing with Bernie, just don't forget he's really arrogant and equally hard to deal with and he's never wrong. Bad combination.
1
@MSZ Funny, he doesn't look that much like Trump's mirror image.
@MSZ Could be worse, though. Suppose he was wrong a lot!
The numbers are hard to explain. For example, the nation's 540 billionaires are one ten thousanth of 1% of the population, and they own 4% of the national wealth. That doesn't sound as outrageous as it actually is. It doesn't convey the extent of their outsize influence.
1
Well Paul so you are making sure Bernie Sanders doesn't take too much political damage. That's fine. The issue is that middle class America needs to be able to meet cost of living expenses and can't. There have ALWAYS been Oligarchs in American society. No one would care what defines an Oligarch if households could afford their daily bills, food, housing, health care, etc. A basic universal income is one idea, but moving away from private ownership and contracts for everything ( like internet for example) doesn't make sense. We collectively as a society need to focus on life affordability. The super super wealthy with helicopters and all of that can simply pick up and leave and that isn't going to help any one of us. Remember that. The days of seeking " a pound of flesh" was proven foolish long ago. Let us wisely help ourselves.
@Mark
If the super wealthy want to leave then "good riddance".
They'll do us all a favor.
We are certainly not super rich, but would probably fall into the category of "affluent". When I total up what we typically pay in taxes every year (federal, state, social security, medicare, real estate) it comes to around one third of our income. I'm not looking to pay more, but I also am not pushing for any tax cuts for people like me.
The problem with our tax system is that income for people like us is primarily from wages. We can't take advantage of all the tax shelters and tax deferral strategies available to the super rich whose income comes from investments, dividends, business ownership, etc.. And these folks, with incomes in the millions or tens or hundreds of millions, are paying way less than one third of their incomes in taxes.
So why don't the Dems push for a system where above a certain income level (say $1mm), you pay 1/3 of your income in a flat tax, no loopholes, deductions, tax breaks etc..., rather than talking about top rates of 70%, or wealth taxes, which opens them up to accusations from the right of "socialism".
8
Please give us the numbers - how rich are the very rich and how much are they spending on GOP puppets?
The NYTimes reported that 158 families alone contributed about half of the campaign funds in the early part of 2016 -and they overwhelmingly support the right.
The rules of their game is simple:
1.Campaign on anything - guns, God, gays, race, immigration, you name it,
2. So long as you govern on tax cuts for the rich and deregulating business.
We're in trouble here - those oligarchs are applauding while McConnell and Trump take the USA apart.
6
@russ
Nailed it. ( but I'll expand it a little )
GOP procedure manual:
1. Campaign on anything , (creating fear and loathing as required ).
2. Tax cuts for the rich, deregulate business.
3. Hang in there, maybe get a war started if things look a bit iffy.
4. If you get voted out, hammer home that it's a budget emergency now. Block as much legislation as possible.
5. Repeat.
1
"It's not about envy, it's about oligarchy."
That's the best line in your column, Professor K.
We all know that Russia is run by "oligarchs" - and that they are "above the law" in their total choke hold on the obscene distribution of wealth in Russia.
But somehow most Americans have no concept that America is just as much of an oligarchy as Russia. We revere our oligarchs as "tycoons", "entrepreneurs" and "job-creators" - when in reality the vast majority of our oligarchs are just as ruthless, self-serving and venal as oligarchs in Russia and around the rest of the world.
And our government is a Potemkin Village, a puppet, a mirage - which we are taught to believe in as "our representatives" - when in reality they are bought and paid for by America's oligarchs. And they slavishly do the bidding of their puppet masters - to the great detriment of most Americans.
Thus "We the People" are merely pawns of the oligarchs. We're the serfs, the cannon fodder and the "unwashed masses" who matter to the oligarchs only as contingent labor, passive consumers and as putty to be molded (via Fox News and talk radio) to reliably vote to put more money into the oligarch's pockets.
And it's working. That's why 90% of America's wealth is held by the richest 10% of Americans and our Gini co-efficient is on a par with nations we disdain as "banana republics".
America is simply the world's largest banana republic.
Or the largest oligarchy.
Take your pick - they mean the same thing.
14
If the country is to recover from its growing inequities, it is going to take more than the upper 1%: https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/ . From what I've read to date, the odds of a peaceful or painless fix are slim.
From that essay in "The Atlantic":
"The meritocratic class has mastered the old trick of consolidating wealth and passing privilege along at the expense of other people’s children....
...the kind of change that really matters is going to require action from the federal government. That which creates monopoly power can also destroy it; that which allows money into politics can also take it out; that which has transferred power from labor to capital can transfer it back. Change also needs to happen at the state and local levels. How else are we going to open up our neighborhoods and restore the public character of education?"
5
How do some hedge fund managers receive such exorbitant compensation.
Consider what Mitt Romney did when he was at BAin.
Bain took over Dade Corp. and forced Dade to borrow heavily.
The borrowed money was used to pay Romney and his cronies huge compensation.
Dade was forced into bankruptcy.
Workers lost jobs and pensions because Bain stole the workers' pension fund assets to pay them selves more money.
What can be done.
Workers' pension fund assets should not be stolen.
Consider the Toys R Us bankruptcy.
Take over artists prevented Toys from modernizing.
Then sleaze bag attorneys handling the bankruptcy were paid huge salaries.
If the attorneys were paid just 80% of their salary [which would still be exorbitant] there would have been enough to pay the workers' deserved severance.
5
The key is not whether you are a winner in the current imbalance of wealth (and Sanders's book royalties hardly put him in the top rank), but whether you are satisfied with this imbalance and are working to maintain it. It is inane to say that Sanders is some kind of hypocrite because he made money, because his politics have not changed - fairer taxation and health care for all. The whole bowl of nonsense reminds me of how desperate righties used to insist that Al Gore was profiting from environmental issues he didn't believe in, because he flew in jets.
4
Affluent Housewife: "I just love my gem collection. When my rubies get dirty, I wash them with red wine, and I wash my pearls in milk."
Really Affluent Housewife: "When mine get dirty, I just throw them away and buy some more."
3
Unfortunately, I see the current situation becoming more untenable and ending with a repeat of the French Revolution, replete with tumbrels and guillotines and the heads of these would-be oligarchs mounted on stakes. It's not what I wish to see happen, but it is what I believe will happen if nothing changes.
2
@Doug
Exactly. I regret to say that sometimes this is the only solution. We are getting there faster than anyone thinks.
Plenty right with the article but most of the billionaire hate was hand waving. The issue is a lot more complicated than transmutation of money from one people into utopia for everyone else. For instance most of the wealth is sitting as a number in a computer allocated as ownership of some enterprise and associated dividends. It doesn't actually do much except have some moderate impact on that enterprise's ability to finance itself or finance acquisitions. Money really is information more than magical nanotech goop that turns into what we want directly. I am as offended by absurdist lavish spending in the face of poverty as anyone else, but that's not the bulk of what is going on. It is just the cudgel to inflame unthinking envy. The cure usually ends up worse than the disease when this line of thought is pursued.
1
As a former New Yorker and Bay Area resident, I do know who the 1% is. However, there’s greed on all levels of affluence.
Down here in rural Ohio, people think that the one percent is their “rich” neighbor who is happy that his 401K is going up—justifying his vote for Whatshisface.
Nothing is going to change unless the 1% take to the streets en masse and demand that their taxes are increased.
So, the reality is that nothing is going to change,
1
Income inequality along with global warming are the two biggest issues we confront. Billionaire Donald Trump persuaded working class voters in Pennsylvania, Michigan and Wisconsin that he was the real agent of change and won a minority victory in the Electoral College. Obviously, a candidate's wealth is not the issue, but how s/he appeals to the voters. Hillary failed that test miserably and now we're all miserable. I'm not sure Bernie has a persuasive vision of how to deal with income inequality or the environmental calamity we're now entering. As a progressive Democrat, I may be "waiting for Godot," but if s/he doesn't show up soon we're all toast.
2
To me at least, a particularly distasteful aspect of both the Clintons and the Obamas is their monetization of the Presidency.
Both Obamas have huge book deals. To his credit, Obama did donate his $1 million Nobel Peace Prize winnings.
The Clintons, well, they made the monetization of the Presidency into a new art form apparently applying Bill's brilliance to the task. Hilary, for example, charged Goldman $675,000 for 3 talks or about $225,000 -- nearly a quarter of a million dollars -- per talk.
This is in direct contrast of Jimmy Carter, and George Bush.
Truman, also did not have much money, but he did not monetize the Presidency after he left office.
Sanders gives the appearance of monitoring his candidacy of the 2016 Democratic primary. He might find it better for his 2020 candidacy to donate the money to a charity.
2
@David MD I've never understood why the Goldman Sachs speech payment was such a big deal--should she have told them she'd settle for less? Don't they pay Republicans enough? Envy? And there are always books about presidents; any ex-president who doesn't take advantage of writing his side of the story (especially these days) has no sense of history. I'm looking forward to Trump's, whomever he chooses as ghostwriter. (Too bad Stan Lee died.)
Corrected :
One Percent sounds like a tiny fraction of the population but obviously it is 1.3 million households or 3.3 million people.
It is the 0.1 or even the 0.01 percent we are talking about. Those guys should be taxed at 70 percent as AOC is suggesting on their income AND 1 percent of their wealth above 50 million as Warren is suggesting.
Supporting both is sound economics. The kind that will keep the sans culottes from storming the Bastilles of today.
4
@Blunt Taxing so few households at such high rates would do little to fix income inequality. 1% of the wealth of all billionaires is 24 billion dollars, a small blip in the entire budget.
@Dr B
First, 24 Billion is a pretty big “blip”. Second, the income tax increase on the same people will be another’s lovely blip. Third, corporate tax rates going back to what they were with most deductions taken away (Amazon paying zero taxes last year!). Fourth, estate taxes redesigned to hinder automatic generational class structures maintenance.
It willing all add up.
What i am after is Rawlsian Justice. Maximize the welfare of the “minimum” of society before you optimize the welfare of the rest. This way you will be indifferent to who you wake up as after going to sleep as yourself.
1
How gracious, Dr. Krugman is welcoming Bernie into the millionaires club. The recent rise of the "very rich' in America is a perverse and separate phenomenon from the more deeply established, two-tier society in this country that is based on education level and/or zip codes - and they are not mutually exclusive. On the contrary, the separation of wealth within the majority of the country seems to have increased along with extreme wealth at the top end (which could probably be modeled mathematically). BOTH phenomena need changing - like two full diapers.
I’m at the epicenter of the Koch universe. After the installation of their supreme puppet AKA Brownback, this State was decimated. “ Let them eat Cake “ was aspirational. We’ve been here for Twenty Years. Time flies, when we’re elsewhere. Here, not so much. It will probably take at least Ten years to repair the damage, and return to the usual middling baseline. And folks refuse to understand why College Graduates leave, and rarely return. Look in the mirror, folks. And VOTE.
7
@Phyliss Dalmatian
I just read up on Brownback.
Words fail me......, though I did feel sickened by what he has done , and that he is an " ambassador " now ?
Please keep writing in Phyliss, and I hope you are hard at work on your book, whatever it may be about.
Kudos to Krugman for articulating the difference between affluence, say $1-$10 million of net worth and oligarchs and plutocrats.
7
Krugman consistently avoids making the following point clear. The Democratic Party financial elite are fundamentally just as anti-democracy as their republican counterparts. They may have some nominally Liberal views on specific social issues, and they may have strong differences of opinion from their Libertarian counterparts in the financial elite. But the fundamental thing NONE of them advocate for is Ending the power of wealth in politics. (Nick Hanauer is the perhaps the closest exception to this).
That was the Actual Meaning behind the notion that it was 'Hilary's turn'. She had paid her corporatist dues and while spouting rhetoric that sounded tough on the elite, her essential policy positions were to retain the power of extreme wealth in forming national policy and in running the Democratic party. The party Financial Elite anointed her.
The real battle going on in the democratic party is Not about Single Payer, or Free college or the green new deal. The real fight is about ending the power of wealth, of the financial elite, to dominate politics and effectively thwart democracy within and through the democratic party.
The democratic party would be far more popular if it threw off the corruption of the financial elite. It could throw off the taint of hypocrisy, of limousine liberals and be solidly behind policy that most voters and citizens want. A new class of un-pre-corrupted candidates could emerge and truly meaningfully transform policy and politics itself.
13
Let's not forget that money also has declining marginal utility. Once you go beyond wealth of about $10 million everything additional you can buy is more or less frivolous and adds very little if at all to happiness. In fact, the main purpose of additional wealth may be to show off to the other guys. I have often thought that my extremely wealthy friends would be just as happy living in a cave, so long as they had two bear skins whereas the other guy only had one.
10
@Michael Mendelson Actually, a study found that over $70,000 per year income does not convey any more "happiness", though even $5.000 more a year for someone who earns 30,000 a year makes a meaningful difference in happiness. It is hard to be happy when one faces the daily stress of survival. Conversely, we all know rich people who are profoundly unhappy.
4
@elotrolado
It depends where you live. In NYC, 70k doesn't go far, but 150k is a solid income in NYC.
I make between 150k and 200k. My life wouldn't be much different, with another 100k/yr (300k total). But 200k more would change things.
If I had 100k more year, I'd just stay at nicer hotels, buy a slightly pricier car, eat aged steak instead of non-aged steak, wear a more expensive watch, and rent a bigger apartment. It would just be a "better" version of my current life(style), but it wouldn't change my lifestyle. However, if my income doubled, I could afford to race cars, fly all over the world to see tennis and ski, wear bespoke suits, eat every meal out, and probably date women half my age. But that would require
a) doubling my current income
b) attaining an income over 400k/yr
I do think more income can improve one's life, but I think it's more about moving from one income bracket to the next one up. It's not about improving one's existing lifestyle, but moving "up" to another lifestyle (attending Wimbledon, the Aussie, and the French in addition to the US Open).
The 2011 movie Limitless (starring Bradley Cooper) is partially about this.
1
My employees all make more per hour than me. THAT keeps my taxes down.
4
You mean all of their incomes together?
3
@Owl
Before or after deductions and expenses ?
Im tired of paying more for ACA through my tax burden than for my own health insurance. That doesn't make any economic sense, yet I am compelled to do this. I am not wealthy, just a single guy who's the target of the Democrats.
3
@Jazzville You would pay less for ACA if the very rich paid more taxes. And the point of ACA is to help people who cannot afford insurance, obviously that is not your problem.
It makes perfect economic sense to those who do not have insurance from employment and find private health insurance a heavy burden.
1
@Jazzville
Huh? Your own health insurance costs you a WHOLE LOT more than the tiny portion of your income taxes that go to the ACA. If you are thinking that your employer-provided insurance only costs you the small amount that is listed on your paycheck, then you don't understand how much your employer is paying on your behalf. That money could be paid to you if there were no employer-provided insurance.
2
The truly rich are so wealthy far and beyond Bernie's cute million dollar year. That's what they had for breakfast.
Besides not paying a fairer share in taxes (through financial trickery, and paying off protective congress members), they actually use their (seemingly endless) money to support politicians and "influencers" to strip away protections and programs that help the poor and working people. A clear example is the dismantling of unions that helps those who make their money from actual commerce, such as the Walton family.
5
@Random There are an approximately equal number of rich on both sides of the political spectrum. This balances their influence and thus makes the argument that the rich run the country fallacious.
1
This drastic income inequality of extremely rich and extremely poor has gotten worse since the 1970s and all of the favorable tax laws (eg lower tax rates on unearned income, no estate taxes, etc). And we wonder what is the root of all of our problems and how nothing gets accomplished politically because their is an influence that is not visible.
The rich don’t need the commoners infrastructure, they own their own plane and chauffeur. They don’t need any of the ‘for the good of everyone’ services and amenities that we all pay.
Many people have that nostalgia for the good old days of leaving the keys to your car in the sun visor or your front door unlocked back in the 1960s. What changed? Did people all of a sudden become more evil/sinful? Can we blame it all on a minorities or foreigners that came into the USA?
Nope, it’s due to one thing: drastic income inequality has led to desperate times for those extremely poor folks.
5
Mr. Krugman,
I think your point is a good one, but you need to bring it on home. A family of 4 with an income of $200,000 living in the Northeast--although perhaps not "wealthy"-- is probably financially better off than a family of 4 with an income of $28,000 living elsewhere. But an income of $850 million per year is insane, especially since the income is made off of other people's money. Nobody needs that much money to live. A tax rate of 70 to 90% seems reasonable.
38
Let's also ditch the myth that it's just about envy or even power and equality. The very rich do in a very real way take money out of other people's pockets: It's in the form of housing costs. It is the presence of the insanely rich who have excess capital they can't do anything which except put it into second homes and investment real estate that has driven up rents and house prices for everyone else. That takes money out of people's pockets or wrecked their living standards through insane commutes.
39
@uxf
Not to mention gaming tax offsets to shutter small commercial properties.
I don't know if the letters page to the article " goodbye park slope " is still up, but it had a good explainer.
1
Your column is important and deserves praise for breaking through the alternate reality created by the President and the discussion created by his claims of no collusion.
My wife and I are not rich but we are 82 years old, healthy, subscribers to the home delivery of the NYTimes and the Washington Post and are able to buy any book that we choose to read. We have a home within walking distance of a supermarket, a hardware store, and a few restaurants.
I am embarrassed around our friends because we don't travel very much, I sort of got my fill of travel in the Navy. Professionally, I got involved in energy policy in the 1970s and somehow I have not been able to change my interests even though my wife wants me to not discuss energy policy socially.
I had no idea that I would be working at my age. Had I known I would have ran for elected office and inspired others to work on the problems of our time.
I have politically conservative friends but I don't hesitate to remind them of the joys of a more egalitarian, healthy society, where everyone has access to water, shelter, indoor plumbing, healthcare, and opportunities for personal growth.
The raging concentration of wealth is not good for humanity but I can't prove it. I can only read what others write and relate what others with sufficient knowledge of behavioral science bring to our attention, like you & Piketty.
My purpose is to promote very cheap non-fossil electricity that will be available to all humankind.
57
OK, Bernie had a good year, he sold a book. Let's not all form a circular firing squad and take down our best chances of making Trump a one-term President. Look at Bernie's life in entirety, his roots and history, his achievements coming from a middle-class background to become a Mayor, House Representative (8 times) and then a U.S. Senator. Finally, average in what he made all the other years before you castigate him for the good fortune of selling one book.
14
He is HARDLY the best - and certainly not the only - Democratic candidate who can give Trump a run for his (considerable) money. My (much smaller amount of) money is on a much younger candidate. Any much younger candidate.
6
@Debra Well good luck with that, Bernie is the only candidate who is flat out for Medicare for all, no half measures and he has been before anyone else was and he is for the things which will benefit everyone. He is the best and the most honest and for the sake of our nation I hope he wins. Imagine having an uncorrupt President. With the exception of Elizabeth, the rest I do not actually trust the others not be corrupted if they are not already. But if you prefer a younger candidate who of course will take big bribes and forget about the rest of us, well take your chances.
11
@Debra
Well let's hear it. HOW much younger? 20 years? 30 years? How about 35 years?
And since you don't care about policy I've got a few suggestions you're sure to love.
Let's start with Madonna.
Or Kanye West. Or Tom Cruise.
C'mon - hop on board.
My wife and I are a member of the “merely affluent” club. Three weeks ago, when we paid our taxes, it was a sobering realization how much it was. But I have always felt that taxes were the foundation of a civil society.
What really disturbs me is what we get for the tax we pay. The safety net is pretty threadbare by comparison with that in other industrialized countries. We paid an enormous amount beyond taxation to educate our two children, while my European friends see their children educated in good universities at little or no cost. Our healthcare is a giant ATM for a select group of businesses. Our military is so bloated that we spend more than the next seven nations combined.
I believe that however much I currently pay in tax, I ought to pay more. But seeing how we actually spend that revenue and how little of it makes the lives of people here and around the world better is a powerful disincentive to advocating for higher taxes. Bernie, AOC, Elizabeth Warren and others are right about raising taxes, but we also need to have a serious discussion about the priorities of government programs and how that taxation is appropriated.
279
@Ockham9 This goes for the state and local level as well. Living in Texas, where our elected official shun Obamacare and cut funding for special education and child protective services, the safety net doesn’t seem to exist at all.
11
@Ockham9 It's a self-serving position to take when you make a lot of money, but yes, I think any fear that pouring more money into social safety net, especially at the federal level, will yield a small return. Money for free tuition, for example, will eventually get swallowed up in salaries and pensions of those administering it.
2
@Ockham9 The wealthiest county in the US is located in VA, just south of DC. Most of the inhabitants work for the government. While many liberals believe that those in DC 'serve us' and are to somehow be held in higher esteem, I believe that they are over paid, over compensated, and continue to operate above the law where the legislation they pass doesn't apply to them. I'd also point out the there are over 2,000,000 Federal employees who make 79% more in salary alone than those in the private sector working the same job. All brought to you by public service unions. Is that a good direction? Can you really idolize the likes of AOC and Warren when that reality sinks in?
While this article is on point, the fact is that Sanders has taken the same approach that Trump did when Clinton said he didn’t pay his fair share of taxes: “that makes me smart.”
Sanders could have walked the walk and donated a significant amount of his income to charity, or simply sent extra funds to the IRS. It’s all well and good to say that he plans to pay more in taxes once he’s elected president and manages to get massive tax increases through Congress. But there is absolutely nothing stopping him from leading by example.
In the meantime, I make a fraction of what he does and donate much more of my income to charity. But Bernie’s supporters would call me a DINO, a conservaDem, a corporate Democrat, a corporate shill, or Republican-Lite. Something is very wrong with this picture.
9
This "so why don't you pay higher taxes voluntarily" point is a telltale sign that the person making it has missed the point.
I mean, why not ask supporters of congestion pricing why they don't just mail in $15 voluntarily every time they drive below 60th Street?
Taxes, like congestion pricing, are part of a broader system that depends on its applicability to everyone. The point is not that following the rules as they exist now is somehow exhibits a lack of virtue; the point is we need new rules.
11
@Anonymous My point is Bernie could do both. He’s demonized moderate Democrats like myself, but painted himself as especially pure, because he wants to raise taxes on the wealthy. Big deal, so does every Democrat running for President. None of the other candidates appear particularly committed to charity either, but they haven’t made a brand for themselves by attacking every other Democrat as a tool of big business. If Bernie and his supporters want to claim moral superiority, then they should demonstrate it. Promising to give more once you’re forced to is weak. Put your money where your mouth is. In this case, the US Treasury.
Why would he pay more to the Government that threaten to cut Medicare, Medicaid and SS? And charities? They are a poor substitution for the Government, with enormous potentials for fraud and waste. wouldn't it better if he spends it on his campaign to change the Government?
2
Ask people on the street; How many million is there in a billion? About one in ten will answer, a thousand. People have no idea how rich the really rich are. Until the man on the street understands this health care, education, etc. will continue to be a problem
20
The problem with taxes is not just numbers or even the realization of wealth gap. It’s about trust in the government. If I don’t trust someone to make the right decisions for me, why would I want to hand them my money?
11
Well said. It started with the lie Reagan told about the government being the problem. And the government can't buy ads to defend itself.
6
Because you trust them to protect you (police, fire department, Army), to provide you with security (ss, medicare) to provide you with infrastructure and with many other thing. And all these things cost money.
1
@GV
Do you trust corporate executives to make the right decisions for you? They have the power to do so, and they also get your money.
4
"...the top 25 hedge fund managers make an average of $850 million a year." Each?
13
@Miriam
Yes. And more than $1 billion earnings in any given year is not unusual for top hedge fund managers.
15
@Miriam: I googled. Yes, each!
1
@Miriam
Yes. Money making Money, on Money. Truly parasites upon our Society. And I’ll make a hedge bet that very few of them pay ANY taxes.
Disgusting.
Yes the class divide is much starker than we imagine...we are speeding down the road to oligarchy if we aren't already there. Keep reminding us, Mr. Krugman.
I once worked for a national corporation with tens of thousands of employees. The difference between the entry level full time employee and the CEO was a factor of 20 times. Employees participated in profit sharing also. Imagine...........
So many families had decent lives because of a steady reasonable paycheck and benefits. And a meaningful way to benefit from their efforts in the form of their profit sharing check. It wasn't perfect but beats being seen as chattle as employees are often now.
No wonder there is an drug epidemic.
25
For years the major news media outlets have been contributing to the confusion that Krugman cites here.
How?
By routinely and consistently using the words "income", "wealthy", and "rich" interchangeably.
Wealthy and rich are basically the same but income is not the same as either.
Take Sanders. He sold a book so for that calendar year he was in the 1%. Based on income. Only for one year.
"Rich" and "wealthy" means a large amount of accumulated assets. Cash, stocks, bonds, real estate.
You don't get "rich" by being in the 1% of income earners one time as a 70 year old.
So yes, Bernie Sanders had a good year but he's going to have to string a few of those together before it's really fair to call him rich.
55
The "1%" became a popular rallying cry in the wake of Occupy Wall Street, but everybody, including Bernie, knows that it is slogan to illustrate a larger truth that applies to the super-rich .1% and higher (or whatever the tiny fraction is).
11
Bernie Sanders is among the people who became wealthy by creating something valuable to people and to the economy (e.g., a book).
That's distinct from people who became wealthy through activities that enrich themselves but create nothing of value for anyone else. Some examples are private equity firms that buy and sell companies; corporate executives who buy back stock, increase their holdings through mergers or acquisitions, or buy out competitors to create a monopoly; algorithmic traders that profit from millisecond fluctuations in stock prices; or a pharmaceutical company that acquires a monopoly on an decades-old off-patent drug and jacks up the price to astronomical levels.
Our particular form of Shareholder Capitalism values the latter activities far more than the former. That's probably because purely financial transactions create "value" for wealthy investors, executives, and speculators more quickly and abundantly than producing and selling goods and services, which often does not produce immediate return on investment. And also because our system has evolved to serve and value Greed above all else.
That distinction is often overlooked or forgotten. Creativity and innovation that contribute to and benefit the overall economy should be celebrated and rewarded. Financial games that enrich only the players (often at the expense of the overall economy, as with layoffs that are an essential part of mergers) should be called out for what they are: Greed.
68
@Ted Great up to the conclusion. It should not be called out. It should be illegal. It is a negative utility on the productive economy and is effectively skimming wealth off of the productive economy. Ban that theft.
20
@trebor Up until the 1980's stock buybacks were illegal as they were considered stock manipulation
23
Yes, so please stop insisting we average people are
"happy" with our vastly inadequate, frightening, private health insurance, including the employer-sponsored kind.
The very rich are holding everyone else in thrall to our current
"system" of catch-as-catch-can health coverage. Start plugging for Medicare for all, Mr. Krugman.
31
I think Rep. Ocasio-Cortez and Sen. Warren understand Paul Krugman's assessment. Ideally, we correct the glaring imbalances so that even the wealthiest believe they are part of the solution.
18
We have a situation as Piketty shows of the world evolving toward the same wealth breakdown as in the Belle Epoch royalty. The fact that inherited wealth makes this situation permanent. The fact that these people hide their wealth through politicians and the political system. That wealth is hidden and moved with ease to places where it can be unmolested. That a vast majority of the people in world live on less than 5% of the wealth.
19
Apart from being the center of the vortex in the cyclone of plunder, the super rich are also a dreadfully misallocated carbon footprint. It's either a transparent, progressive taxation system or guillotines - the choice has now become stark.
16
@OneView(who is not sure about a wealth tax’s efficacy)
There are much harder questions mankind has solved OneView. Much much harder.
I pay taxes on my real estate holdings every quarter. The state knows the value of my houses and apartments pretty accurately. The paintings on the wall are insured, Chubb has a very good sense of what those are. Our Steinway, my daughter’s violin and the other daughter’s cello ditto. Do I care if the government knows what I know? Since they probably do know anyway, I don’t really care.
All I want is a fair and just Rawlsian society. If it takes to mark yo market my wealth annually and report it, sign me up.
6
Yes, Paul, you are correct. All the same, generally speaking there are a few pertinent points that should be noted here. Sanders would not have made nearly so much from his book had he not already been a senator. So it does illustrate one of his (and my) themes, namely, the rich grow every richer while the rest of us should feel grateful merely to survive. Also, Sanders getting paid for his views in the form of a book is the same as Clinton getting paid for her views in the form of a speech. He can't have it both ways. Finally, perhaps this book business could conceivably get him to stop with the "corporate elite democrat" schtick which is approximately as effective as it is dishonest and divisive.
13
@Robert Never has a $15 dollar book and it's access to everyone(including library's) been "the same" as a speech with extremely limited access.
"Also, Sanders getting paid for his views in the form of a book is the same as Clinton getting paid for her views in the form of a speech."
10
@Robert To address your other point, if you watched the Fox Town Hall, you are already aware that Bernie Sanders addressed the fact that his ability to profit from his $15 book was made possible by his stature as a US Senator. He stated clearly that he didn’t view this personal windfall as a vindication of capitalism but rather used his sudden success to explain that while it is not possible for everyone to be a US Senator or the author of a successful book, yet everyone still has the right to live in dignity.
14
@Robert
Sanders' book like Clinton's speeches? NO.
Sanders' book is available to anyone, for a small price. Clinton's speeches $325,000 per speech, were given to a very few, wealthy people, and to this day, their contents have not been divulged. Put simply, they were a way of legitimizing what would otherwise have been illegal campaign contributions.
7
Paul Krugman needs to write a few columns about this. What are the average incomes of the 1% (or .1%). What does their wealth consist of? How many families are included here? Where do they live? What are their daily lives like? How many homes do they have? How much do they really pay in taxes? How much do they generally give to candidates running for office? Who do they associate with? My guess is that these real figures and personal narratives would do more to enlighten most Americans on the inequalities in America than the generalities in this column.
57
@ES:
The Congressional Budget Office releases income distribution information and statistics every years based on the filed tax returns. Any person paying taxes in the US can amend their taxes within a duration of three years. So, CBO's data lags by three years. But, you can play around with the data that is available here:
https://www.cbo.gov/publication/54646
I browse the information and do some analysis for myself.
Here' some data gleaned by me from the above mentioned source:
1) Not adjusted for inflation, the top 0.1% of US households on average filed an annual pre-tax income of $1.89 million in 2015.
2) Inflation adjusted avg. (December, 2015 dollars) of all US households income in:
1980: 173716 (Dec, 1980 dollars: 65300)
1990: 131865 (Dec, 1990 dollars: 74500)
2000: 132600 (Dec, 2000 dollars: 97500)
2010: 96100 (Dec, 2010 dollars: 103788)
2015: 105100 (Dec, 2015 dollars: 105100)
3) To be in the top 1%, a 4-person US household needed to have a pre-tax income of $548,100 in 2015. To be in the top 10%, the same household needed to have a pre-tax income of $191,500.
Just study the all the relevant numbers to appreciate the level of contemporary inequality. Being in the top 1% is nothing special.
The wealthy won't voluntarily reduce their wealth, and governments aren't going to ask them to.
Until we force governments to act, with mass protest on the scale of Yellow vests, or Extinction Rebellion.
Inequality and climate breakdown are two sides of the same coin, which is capitalism.
We've been too scared to stand up to the wealthy so far, but enough of us are scared enough about climate change, and Extinction Rebellion will be the wedge that moves both these issues.
19
The vast majority of economist agree that increasing inequality is the result of globalization,
Wages for those in the US exposed to global competition can not rise, because the response of the owners of capital is to move the work overseas. This is not confined to manual work. It increasingly includes the college educated. GM moved its advanced research (batteries, A.I controlled automotive traffic) to China. Cummings Diesel its largest research center is now in India. Silicon Valley constantly argues for more one H1B visas, to hold US wages down by importing foreign labour willing to work for less.
So it is globalization.
Of which Mr. Krugman was the chief proponent, without understanding its distributive effects. He still needs to acknowledge that it is the very policies that he championed
( free trade, no tarriffs and free movement of labour a win win for all throughout his career) are the root cause of the problem.
He has not
Econ 101: In a global economy, wages must fall to the global average for those participating in it . That is, downwards in high wage countries (chiefly the US) up in low wage countries (China). Throughout his career he denied it
But it was a boom for the owners of capital that largely pocketed the wage differential. Nor did moving US jobs overseas significantly lower the costs of items in.
How got Apple $245 billion in cash on hand ? By pocketing most of the wage differential , not by lowering US sales prices.
23
Perhaps it's time to replace the income tax with something less offensive to the 1%. Surely the Tech Bros in Silicon Valley can come up with a way to "rake" electronic dollar transfers between corporations that presently pay no tax.
5
Question: what is the correct definition of "millionaire"? Is it (1) someone who owns assets (house, IRA or Keogh plan, savings, etc.) worth one million dollars or more; or (2) someone with annual income of one million dollars or more?
Please, someone answer my question. Otherwise, we may end up talking at cross-purposes.
10
@Fran
Millionaire has always meant a person worth one million dollars or more.
This once implied great wealth (and surely some more than comfortable amount of liquid assets and some income either from investments, business revenue or wages). One point of this piece is that today being a millionaire doesn't bring with it the ultra-wealthy life it once did due to decades of inflation. Merely having a million dollars isn't nearly the same as having wealth like the Koch brothers or hedge fund managers. Therefore because Sanders suddenly does have wealth in excess of $1 million doesn't put him in the class of the "1%ers" he and others talk about when they speak of the disproportionate extream wealth of the "moneyed class."
One doesn't need however to be a billionarie (with a B) to be part of the disproportionately powerful moneyed class. It begins somewhere between a million and a billion (no point to trying to fix an exact number). So 1% or .1% is just loose shorthand referring the the ultra-wealthy.
2
@Fran
I would -- considering what a dollar is truly worth today -- consider a millionaire someone who earns at minimum one million dollars after taxes each year. That would be the shallow end of the pool where whales would not even fit.
2
maybe all these "merely" affluent and the super wealthy will demand that the income cap on on Social Security taxes be eliminated, thereby solving (for the most part) the coming shortfall in SS...
16
As long as there is a cap on SS benefits, there must be a limit to withholding, lest SS will no longer be Old Age Ave Survivor INSURANCE, not just another welfare program.
4
The real economic divide in America today isn’t between the 99% and the 1%. It’s between people who have to content themselves with voting and those who have so much money they can buy the politicians they want.
132
@Richard
I suppose that's Krugman's point. It's between the 99.9% and the 0.1%.
7
@Richard
And they hire lobbyists to get the laws their lawyers write to their specifications into the hands of their puppet politicians. This is not a government of the people and for the people, it's a racket.
6
I have traveled through many countries in Asia and Africa and interacted with people who have no idea what wealth is. For many of them having $100 in the bank is being rich and wealthy.
The point I am trying to make is that even the middle class Americans, say those who make $250,000 or so, have no idea what it is to be rich. These "poor" high earners may see the ultra rich as those owning a Ferrari or a 100-foot yacht; nothing can be farther from the truth. Owning and using a private jet may be how these ultra rich are seen by the high earners, but their real power comes from their control of the process by which public policies are made.
In other words, the ultra rich strike at the very root of the governance process and write the rules in a way that helps themselves. Owning a Ferrari or a 100-foot yacht or flying in a private jet is the least of the benefits they seek; they seek to create a system that will help them and their class in perpetuity.
Once we see it this way, it ought to strike fear even among those who believe in an unfettered laissez-faire economy.
261
@chickenlover Middle class Americans do not make "$250,000 or so." That income would be in the top 2% of the income distribution. But your point is right: "rich" is a lot more than a few hundred thousand per year; rich is a few hundred million per year.
11
@chickenlover
Exactly. The hubris that people like the Koch boys and their gang have a right to distort our country to shape it as they see fit with their Ayn Rand philosophy is beyond galling.
They are a far greater threat to our society and - yes - freedom than any Islamic terrorist could ever hope to be in their dreams. They are dismantling our democracy brick-by-brick while McConnell crows about his end-run around the Constitution in denying Merrick Garland even a hearing, let alone a seat on the (formerly) supreme court. I guess Garland was not sufficiently corrupt for the GOP.
We must defeat them. We absolutely must. DNC/CAP get out of the way! No more Clintons.
7
@WZ, being rich is having assets, wealth, capital. Income is income. If I make $800 million in a year and lose it all away, say, gambling at my local casino, I am not rich - I have nothing, zero.
I know, that's not what most people do with $800 million in income -- they invest to make more!
1
There is no reason to care about the very rich.
They don't like paying half of their income in taxes.
Meanwhile, he real target of Democrat tax reform is the middle class, who as Krugman points out, while not poor, have plenty of financial stress. Particular as they pay their own way as well as picking up the tab for their less fortunate neighbors.
9
@Daphne
Krugman's point is that extreme wealth corrupts democracy. I think he is right, and so I think we should care about the very rich. I think the very rich influence (effectively) tax policy in a way that will allow them to perpetuate a class of ultra-rich. The founding fathers of the US recognized the dangers of extreme concentrated wealth. We should do the same.
Krugman's other point was simply that Bernie Sanders is not in the realm of wealth of the very wealthy.
8
One Percent sounds a tiny fraction of the population but obviously it is 1.3 million households or 3.3 million people.
It is the 0.1 or even the 0.01 percent before are talking about. Those guys should be taxed at 70 percent as AOC is suggesting on their income AND 1 percent of their wealth above 50 million as Warren is suggesting.
Supporting both is sound economics. The kind that will keep the sans culottes from storming the Bastilles of today.
65
@Blunt How can you measure "wealth"? Do we really want a tax agency with the power to enter our homes and appraise our assets? What is the value of a private company? What is the value of the art on the wall?
A wealth tax would be impossible to implement. A financial asset tax makes more sense.
6
@OneView
There are much harder questions mankind has solved OneView. Much much harder.
I pay taxes on my real estate holdings every quarter. The state knows the value of my houses and apartments pretty accurately. The paintings on the wall are insured, Chubb has a very good sense of what those are. Our Steinway, my daughter’s violin and the other daughter’s cello ditto. Do I care if the government knows what I know? Since they probably do know anyway, I don’t really care.
All I want is a fair and just Rawlsian society. If it takes to mark yo market my wealth annually and report it, sign me up.
7
@Blunt Real estate holdings are _one_ type of asset (of which most people hold, at most, _one_). Assessing the uber-rich's total assets is a much more daunting task and one that's sure to be ripe for all kinds of cheating. That's why only 4 countries in the world even try to do it.
2
The interesting thing about being extremely wealthy is that you need the rest of the world much more than it needs you. The wealthy need other people to literally give their money value, by accepting it as payment, being irrationally impressed by it, etc. But if you are wealthy, you must actively seek to make yourself of value to the world, lest it simply decide to reclaim its money and discard the (temporary) owner.
So even the wealthy find themselves indebted to others, and in need of a higher value system.
One of the best ways to undermine the primacy of wealth is by forming exclusive networks that function on an alternative currency, such as trust, competence, and the fair exchange of help and services.
10
@James
The more the extremely wealthy prevent governments from levelling the playing field, the more likely that society will break down and money will become worthless.
They are underwriting their own demise.
1
Mr Krugman: You are absolutely right. Most Americans think in terms of possessions, but it’s much more. If you have several mansions, a yacht, a jet, etc, you also need to pay lots of people to keep that stuff going. Also, you probably belong to country clubs, yacht clubs, and exclusive private clubs and social organizations. All that costs a lot. So even if someone owns an island, and I know of two who do, that is barely the tip of the iceberg. In essence, ultra wealth is WAY beyond the average American’s imagination. And some of the ultra wealthy don’t even work. They inherited it all!
11
Sanders may have gotten the 1% from the Occupy movement but I think more often he talks about the "billionaire class." So I think he and Krugman are on the same page with this. Progressives are very concerned about oligarchy. There are arguments about whether of not the US is already an oligarchy. I am not sure that concerns about oligarchy are important for working class swing voters in the Midwest who seem to at the center of the political battle for president. Whether the oligarchy issue can be used effectively remains to be seen.
6
Hopefully Mr. Krugman has finally seen the light and will endorse Bernie for President in 2020.
24
@Chris
And Warren for VP!
1
Sanders and Warren are still the only Democrats who speak about this explicitly; the rest are still hedging their bets, still coddling their corporate bundlers. If there was another crash like 2008 - and there will be - the former would be the only two in the field I would be confident not to give away the store, as did the sainted Obama. The others would hem, haw and ultimately cave.
I don't see anything wrong with demonizing billionaires, by name, since they are well equipped, as few are, to defend themselves and prefer to operate in the shadows. Despite the fact that the majority of Americans believe the wealthy pay too little in taxes, studies show just how uninformed most are about the level of income inequality in this country and it is only in the interest of the ultra-rich to preserve this ignorance. Unless the Democrats can stoke some real outrage, we're sunk in 2020. I was elated by the surprisingly congenial reception Bernie got from his audience on Fox. There is hope yet!
91
@stan continople
Bernie was a knockout, and the audience didn't seem like a Fox crowd. Such a shot in the arm to see Bernie back in the spotlight!
7
@stan continople His audience on Fox probably encouraged him because they feel he would lose if he is on the ticket.
2
Yes, the top 1% sounds like a tiny amount, but in a country of 130 million households, we're still talking 1.3 million households.
2
Here’s what’s really aggravating and saddening; some of these people do put money into destructive politics. Charles and David Koch have long funded organizations like ALEC and Heartland Institute. For a pittance investment on their part they block solutions to calamity scale problems — climate.
Their combined wealth $120B in 2018. Imagine they earn a modest 10% annually, and throw some of to politicians. For a couple billion dollars you can buy them by the hundreds.
25
Thank YOU! Pet peeve of mine, that my wife and I have been just in the 1% for the last decade, but that's because we are late career chemical engineers--two in a household. We give a lot of it away, and have supported some outstanding education for our children. Last year, I replaced my 13 year old minivan with a brand new VW Golf Sportwagen ($22K). Don't demonize us!
17
@Tim Nolen
Unless you have a net worth in excess of $15 million, you are not in the 1% despite having two well paying positions. For context, a $1 million net worth would put you in the 88th percentile.
5
@Tim Nolen You should not feel demonized. Paul and the Progressives are talking about the Big Dogs. The 0.01%. The Billionaires that have more and more control over our political process, our economy, and our lives. You can have wealth in the hands of a few or a Democracy, you can't have both.
Seems to me Krugman was doing just the opposite. Did we read the same article?
1
At the same time that consumer purchases represent ~ 70 percent of our economic product, the fruits of our economy have flowed overwhelmingly to a tiny fraction of households. How can a market-based economy possibly thrive when so many people have been relieved of the purchasing power to drive it?
Our system has devolved to a feral, two-fisted grab .. and barely resembles a working capitalism in its current form. Substantial, if not radical changes are necessary to make it more inclusive.
21
Krugman and fans assert that there is some level of wealth that they alone determine is beyond acceptable. One suspects that level is almost always more than commenters likely possess, and the excess of course should be distributed to those very same people, who through no fault of their own, they believe, are entitled to that redistribution.
3
@LTJ You must not bother reading articles you assume you'll disagree with. Nobody mentions unacceptable wealth accumulation here. He simply points out the fact that extremely wealthy people both have the power to set political policy and that their political agenda has nothing to do with the concerns of the majority of Americans. That is why the country is an oligarchy that does not work as well as it should for its citizens.
71
AOC specifically called the existence of billionaires “immoral.”
1
What is missed about the snide comments dismissing Bernie Sanders as a millionaire is that his income is based on the sale of books in which he presents his vision for America. These ideas are part of his contribution to the political discourse about how we can improve life for all Americans.
That he sold enough books to earn $1 million in royalties is a good indication that there is nationwide interest in his ideas.
Those making $850 million, on the other hand, are not contributing to much of anything other than their own overstuffed bank accounts. Big difference, and it's not just the scale of the money involved.
305
@avrds Why didn’t he publish it online for free?
1
@avrds It doesn't matter what his books are about. He still has lots of money. People who inherit it, or earn it legally, are just as able to be honest, upright people. What matters is that bernie likes to pretend that he is a middle-class underdog running against big-money opponents. That is as bogus as his running for the Democratic vote, when he has shouted out that he isn't a Democrat and then just recently joining the party until we reject him again.
2
@Mercury S
Why shouldn't he try to make money off his books? We're making a distinction between people who make more money to enrich their family's lifestyle and those who make more money than they will ever need. No one opts to have less. It's those that opt to have more at everyone else's expense.
2
The increasing power and corruption of the oligarchs and inequality worldwide are custom-made, encouraging the populism, fear mongering, anger and resentment of the "masses". What was prevalent in the 18th century by the French revolution and the 20th century by the Russian revolution all stemmed from the extreme differences between the wealthy rulers and the workers/serfs. We may not see similar national violence, but the atmosphere appears ripe for massive social disruption and attractiveness of extremisms of various kinds.
11
The ultra-rich live on an entirely different plane of existence than the rest of us do where they never walk our streets, fly commercial, buy their own groceries, mow their own lawns, clean their own homes unless they want to for some odd reason. There are a couple of super yachts that cost over a billion dollars not to mention fortress estates, private islands and resort playgrounds.
I've never cared about anything like that and I believe economists and others who assert the rich need to pay substantially more in taxes if for no other reason than to insure a healthy educated workforce who have disposable income to drive the economy not to mention to insure we don't end up an armed insurrection against a corrupt greedy oligarchy.
26
"And financial support from the very rich is the most important force sustaining the extremist right-wing politics that now dominates the Republican Party."
The shoe fits perfectly on the right foot. Now try taking it off and putting it on the left foot.
"And financial support from the very rich is the most important force sustaining the extremist left-wing politics that now dominates the Democratic Party."
It's not even close -- even with all the weird stories propagated about George Soros.
13
@R N Gopa1
Extremist left wing politics? Are you kidding?
I like to think of wealth in units of how many lifetimes someone could live well on what they have. More than a couple lifetimes' worth of wealth (say, $50 million) can give a person society-distorting powers, such as the ability to bankroll politicians who'll work in their favor. There's a great gap between the moderately wealthy and the oligarchs. I'm all for becoming the former, but as a society, we must stop the damage done by the hyper-rich. The money that is hoarded by oligarchs and their organizations is begging to be freed for activities such as curbing climate breakdown, providing universal healthcare, and generally allowing everybody to live with a high degree of dignity
17
@Ted B "More than a couple lifetimes' worth of wealth (say, $50 million) can give a person society-distorting powers, such as the ability to bankroll politicians who'll work in their favor. "
OR
Start a company to make electric cars and change the world.
OR
Start a database company that allows global commerce
OR
Start a company that can make the world's information available at everyone's fingertips
OR
..
Sorry, grew up in Africa, had a hard time making ends meet or realizing my potential in societies where capital was constrained and "allowing everyone to live in dignity" was a nice slogan to spew to motivate bankrupting everyone with social pressure rather than by trying to satisfy at least earn income by some semblance of meeting market demands ...
8
@fc123 The US is the richest country in the world. The entrepreneurs you imagine here would probably number in the hundreds. It's a false choice between allowing US residents to live dignified lives and allowing a handful of oligarchs to have society-distorting levels of wealth
7
@fc123
Do you really think people who start highly successful companies deserve to be dekabillionaire rich? Do you really think a person who develops a vaccine against malaria deserves only to get a well-paying job while the capitalist financier (you mentioned capital) gets hundreds of millions -- which is what actually happens?
16
Where was our Congress while they were amassing these fortunes? Both parties at one time or another have held enough power to put an end to some of their practices, but they never do.
19
“The class divide that lies at the root of our political polarization is much starker, much more extreme than most people seem to realize.”
Exactly.
And that is because, today, there is no media watchdog informing Americans of this reality. Except for focused media fascination with oligarch celebrities like Bezos, Americans seldom see or hear or learn about the rule of the oligarchs, who they are, and the damage they do to the country.
26
Every day I wake up in a house I own (jointly with a bank that lent me money), drink clean water, drive my car (the third new car I've owned in my life!), drop my son off at daycare, work, eat mostly organic food, pay for summer camp, and think about the road trip my son and I will take this summer. I just bought a new pair of jeans and some nice shirts. I am a single mom. I consider myself rich!
130
@lauren. Beautiful. I agree with so many on this, but I love seeing your appreciation and gratitude for what you have.
8
@lauren You are! And all of us are in the 1% when we compare ourselves to the rest of the globe.
4
We would do better to consider wealth instead of income. Wealth is far more skewed.
For most of us, we are advised to eventually reach the top percent or so of wealth in order to have a comfortable retirement. This is in the range of $1 or 2 million dollars, from which the commonly recommended 4% yearly withdrawal gives $40k to 80k a year.
The problem is the top 0.01% of wealth (hundreds of millions of dollars), only a few tens of thousands in a nation of over 300 million. They now dominate our political system.
23
@Saffron
You're basically right but probably slightly overestimate the threshold for wealth in the 0.01%.
6.5% of households have net worth more than $2 million. This includes home ownership. 0.5% have wealth over $16 million, which is dwarfed by the 0.01%, whose wealth started at $111 million in 2012 -- I could not find an updated number but I guess around $150 million, judging by the trendline.
5
I'd like to ask what good does a hedge fund manager do in order to make 800 million dollars? What value to society is their job that it should pay that much, as opposed to a doctor or an electrician? Our 'Meritocracy' is a joke when teachers barely survive but a high stakes gambler who has a penchant for higher math makes obscene amounts of money.
480
@JP: Thomas Piketty and other economists have the answer. Hedge fund CEOs have access to massive amounts of capital. The reasons are arbitrary and not related to brains or merit; mostly a matter of social networks and "looking the part." The returns to capital far, far exceed the returns to labor (work). The obvious response is to tax earnings from capital at a higher rate. We do the opposite. A massive industry of think tanks PR firms law firms and even some universities defend the current system -- all paid for by the .1 or .01 percent.
203
@JP: Exactly, and if that wasn't enough we're left with billionaire hedge fund manager Robert Mercer who funded the right wing propaganda machine to get Trump into office.
The root of the problem is money in politics. Those who hate paying taxes and want to shrink the government will happily pay millions to cut government revenue as much as possible. Then, the resulting budget cuts are always targeted at the social safety net, and not the military. This cycle won't change until we get money out of politics.
https://www.newyorker.com/magazine/2017/03/27/the-reclusive-hedge-fund-tycoon-behind-the-trump-presidency
34
@Cal Prof
Not sure who said this but the very rich are similar to Russian oligarchs. They control thousands of votes. Most of us have not the slightest idea how their money and propaganda machines control our lives from suppressing voting, gerrymandering and good old fashioned lobbying. The Russians threw a lot of time and money at the 2016 election. Look at how successful they were.
2
Thank you Dr. Krugman, for making the clear distinction. It was never about the 1%. Math is clearly very hard for almost everyone. And I'd like to add that focusing on income is also a distraction. We should really be talking about total share of wealth (assets), not share of income, and the passing of that wealth to heirs. Our founding fathers were onto this, and tried to create rules to prevent the creation of a nobility class. But where we are now, we are ruled by the nobility, if not in name.
32
@Incontinental
No, I don't think anyone would call them "noble."
2