Sunday, April 10, 2011
New York the New Namibia Redux? & What's the good of rich people if you can't tax them?
It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran.
WHEN I MOVED BACK TO NEW YORK after graduate school, the city was poor, about 3 years away from almost declaring bankruptcy (only prevented by the Federal government bailing the city out). One weekend I went to see the only Louis Sullivan building in New York, at the head of Crosby Street on Bleecker. At the time, there were no occupied storefronts until you got over to Broadway, where the stores were all low rent, selling cheap junk. Going the other direction on Bleecker was downright dangerous.
Today, all the storefronts are full. You can buy $12 Mast Bros. chocolate bars and new $200,000 tables - and in the current environment, $200,000 tables sell more quickly than the $1,000 tables.
That's because in recent years there have been more riches and rich people in the city than at any other time in its history. And yet at the same time we act like a poor city, cutting subway services and slashing the city budget.
When I moved back, many of the middle class were getting on the highways Robert Moses was building and moving out to the suburbs, and the city ranked 17th among the nation's counties in what the Brookings Institution calls "income inequality" - the spread between the richest and the poorest. Many neighborhoods were taken over by the poor, but today the super rich live in many of those same neighborhoods, and we are number one in income equality. The 20% at the top of New York City's money tree make 52 times what those in the bottom 20% make, a disparity roughly equivalent to the current situation in Namibia, which until 1990 was part of South Africa.
The top 1% in the United States now control 24% 40% of the income wealth in America, and of course many of those live in New York - and are behind the lobbying to lower their tax rates.
What good are the rich if you can't tax them?
PS: Fran Lebowitz says the rich are making New York City boring.
PPS: Warren Buffett says he and his rich friends should pay more taxes.
PPPS: The New York Times says corporate profits have never been higher - but that the companies are not creating jobs.
PPPPS: The New Yorker says Wall Street has no social value.
PPPPPS: JPMorgan CEO Says Rich Should Pay 'Lion's Share' Of Taxes
Please note, unlike New Urbanists, Warren Buffett and the New Yorker have never been known for their Marxist philosophy.