What if the 99% got ALL of the 1%'s money?
I am still stuck on this Occupy Wall Street (#OWS) phenomenom. I listened to a bit of Randi Rhodes on XM Radio today and Nicole Sandler was filling in for her. Nicole was talking to John Nichols of The Nation magazine about the growth of the Occupy Movement. It was quite funny listening to them talk about how the "Occupants" are willing to stay out there throughout the winter. These people are so righteous that they are willing to suffer to make their point. Awwww.....
I thought about starting my own Occupy movement, but then I remembered that I have to work the rest of the year. Damn...
So, they talked more and more about the income inequities and how the 1% have all of the money and the two of them actually said that the reason that the 99% are so bad off is because the 1% took all of the money. Seriously, they said that on the air.
Rather than discuss macro-economics and how wealth is both created and destroyed by the whim of the market, I was curious if I could be wrong about how the 1% has sucked all of the oxygen out of the corpus economi of the 99%.
I went searching for statistics on the internet. Median income is a number that jumps out, but is pretty much a useless figure for what I needed. Median means that half the people make more than this number and half make less. If 99 people made $100 and one made $1,000,000, then the median income would be $100. That is an extreme example, but useful.
So I finally found this chart on the Financial Samurai website:
SUMMARY OF FEDERAL INDIVIDUAL INCOME TAX DATA, 2010
I used these figures for my calculations. The numbers look about right, but I cannot vouch for the accuracy of them. If you find better numbers, let me know.
Here is what I pulled from these data:
Would that amount allow every American to have a significantly better life? You think? Seriously...
The unintended consequence of this equality is that the rich would no longer be compelled to pay most of the taxes. The bottom 75% would see their taxes increase by about 10% which would consume over half of the windfall.
Additionally, the myriad of things that the rich pay for because of our 'bought and paid-for' tax system would largely go away. Such things as art galleries, Nordstrom's, 5th Avenue in New York, Mercedes-Benz dealerships, almost all pleasure boating, exclusive resort destinations, medical research from foundations, huge numbers of service jobs, university endowments, museums, sponsorships for races, marathons and non-football, basketball and baseball sporting events. The list goes on and on and on.
No one would be able to invest enough to create dynamic businesses. Without the possibility of making big sums of money, many big ideas would remain just that... big ideas.
Don't get me wrong. I don't want to be seen as taking up for the fat cat hedge fund brokers. But, think about it. Could Steve Jobs have become so rich if people like me had not been willing in 1977 to purchase an Apple II for well over $2000 (close to $5000 in today's value)? I really couldn't afford it, but actually I could, because I did. That was back when NO ONE young had credit. That computer was paid for by my wife and I with cash, the cold, hard variety. (If I had not purchased that computer, I probably would not have created a business that is almost 30 years old, either...)
Those iPads and iPhones that all of the #OWS Occupants have that allow them to amplify their impact and importance brings Apple a 40% profit margin. Do you think that is enough? I should hope so. By comparison, Big Oil makes about 9%. Who is ripping off who? Plus, where is the iPad and iPhone made? China, of course. Why not in Cupertino? I think you know the answer to that one.
Back to the bankers and Wall Street types, the ones that attract the ire of the Occupants. If these big money guys want to buy and sell real and unreal products, let them. It is almost all gambling anyway. Derivatives, hedge funds, CDOs, all of these instruments are just the financial version of building a new kind of slot machine in Las Vegas. Let the federal government build a huge wall around it and let the boys play. Let them win big and let them lose big. No one bails out losers in the casino and they shouldn't on Wall Street either.
Just make sure that wall is tall enough to keep legitimate retirement funds and 'inexperienced' investors out.
Wait, didn't I write a blog post about that last year? Yep, here it is (and it is a good one, too.)
Nothing frosts me more than hypocracy and inuendo. These #OWS protestors (at least the ones that kicked it off in the beginning) I believe are really frustrated and hurt by what has happened in the past two decades. These people fundamentally had more in common with the Tea Party than they care to admit. But once the fruits and nuts took over, it became Bizarro Woodstock, losing all legitimacy.
Unless a seller is cheating by price fixing, no buyer needs to pays more for a product than it is worth to them. It is just that simple. $499 iPhone? $139 jeans? $89 Oakleys? $149 Ecco boots? No one put a gun to anyone's head to make them overpay for these products. Wal-Mart has similar products for 1/3 the price. And if anyone of the Occupants bought a $499 iPhone or paid $90 for a share of Enron stock (before it plummeted to $0), remember; it was because they WANTED TO.
Sometimes free will sucks.
I thought about starting my own Occupy movement, but then I remembered that I have to work the rest of the year. Damn...
So, they talked more and more about the income inequities and how the 1% have all of the money and the two of them actually said that the reason that the 99% are so bad off is because the 1% took all of the money. Seriously, they said that on the air.
Rather than discuss macro-economics and how wealth is both created and destroyed by the whim of the market, I was curious if I could be wrong about how the 1% has sucked all of the oxygen out of the corpus economi of the 99%.
I went searching for statistics on the internet. Median income is a number that jumps out, but is pretty much a useless figure for what I needed. Median means that half the people make more than this number and half make less. If 99 people made $100 and one made $1,000,000, then the median income would be $100. That is an extreme example, but useful.
So I finally found this chart on the Financial Samurai website:
SUMMARY OF FEDERAL INDIVIDUAL INCOME TAX DATA, 2010
I used these figures for my calculations. The numbers look about right, but I cannot vouch for the accuracy of them. If you find better numbers, let me know.
Here is what I pulled from these data:
- In 2010, 139,960,580 taxpayers made $8.426625 Trillion in income.
- This number is reported income, not just wages, etc. Wealth, which is a measure of one's assets is not counted here. It is just the amount of money that individuals 'took in' last year.
- If you subtract the number of taxpayers in the top 1% and the amount of money they made from those two numbers you have the lower 99% making $6.741153 Trillion for an average of $48,651 per taxpayer. (Yes, there may be more than one taxpayer per household, but that doesn't matter for this illustration.)
- If you take the total amount from the top line, the average for all Americans was $60,207 in 2010.
- Subracting the 99%'s average from the 100% average, you get $11,556.
Would that amount allow every American to have a significantly better life? You think? Seriously...
The unintended consequence of this equality is that the rich would no longer be compelled to pay most of the taxes. The bottom 75% would see their taxes increase by about 10% which would consume over half of the windfall.
Additionally, the myriad of things that the rich pay for because of our 'bought and paid-for' tax system would largely go away. Such things as art galleries, Nordstrom's, 5th Avenue in New York, Mercedes-Benz dealerships, almost all pleasure boating, exclusive resort destinations, medical research from foundations, huge numbers of service jobs, university endowments, museums, sponsorships for races, marathons and non-football, basketball and baseball sporting events. The list goes on and on and on.
No one would be able to invest enough to create dynamic businesses. Without the possibility of making big sums of money, many big ideas would remain just that... big ideas.
Don't get me wrong. I don't want to be seen as taking up for the fat cat hedge fund brokers. But, think about it. Could Steve Jobs have become so rich if people like me had not been willing in 1977 to purchase an Apple II for well over $2000 (close to $5000 in today's value)? I really couldn't afford it, but actually I could, because I did. That was back when NO ONE young had credit. That computer was paid for by my wife and I with cash, the cold, hard variety. (If I had not purchased that computer, I probably would not have created a business that is almost 30 years old, either...)
Those iPads and iPhones that all of the #OWS Occupants have that allow them to amplify their impact and importance brings Apple a 40% profit margin. Do you think that is enough? I should hope so. By comparison, Big Oil makes about 9%. Who is ripping off who? Plus, where is the iPad and iPhone made? China, of course. Why not in Cupertino? I think you know the answer to that one.
Back to the bankers and Wall Street types, the ones that attract the ire of the Occupants. If these big money guys want to buy and sell real and unreal products, let them. It is almost all gambling anyway. Derivatives, hedge funds, CDOs, all of these instruments are just the financial version of building a new kind of slot machine in Las Vegas. Let the federal government build a huge wall around it and let the boys play. Let them win big and let them lose big. No one bails out losers in the casino and they shouldn't on Wall Street either.
Just make sure that wall is tall enough to keep legitimate retirement funds and 'inexperienced' investors out.
Wait, didn't I write a blog post about that last year? Yep, here it is (and it is a good one, too.)
Nothing frosts me more than hypocracy and inuendo. These #OWS protestors (at least the ones that kicked it off in the beginning) I believe are really frustrated and hurt by what has happened in the past two decades. These people fundamentally had more in common with the Tea Party than they care to admit. But once the fruits and nuts took over, it became Bizarro Woodstock, losing all legitimacy.
Unless a seller is cheating by price fixing, no buyer needs to pays more for a product than it is worth to them. It is just that simple. $499 iPhone? $139 jeans? $89 Oakleys? $149 Ecco boots? No one put a gun to anyone's head to make them overpay for these products. Wal-Mart has similar products for 1/3 the price. And if anyone of the Occupants bought a $499 iPhone or paid $90 for a share of Enron stock (before it plummeted to $0), remember; it was because they WANTED TO.
Sometimes free will sucks.
Comments
That, I think, is the point of the OWS protesters. The rules of Wall St demand Apple go for the largest profit for their shareholders instead of a reasonable profit that let's everyone benefit.
I truly feel that the market strikes its own price based on value, real or percieved. Why is the first something on the market always more expensive than the same device six months later? Value...
ICO Apple, it isn't Wall Street dictating Apple's prices or margin, it has been that way since Day 1, way before the first share of stock was publicly sold. I have ALWAYS felt that Apple never dropped prices to become more affordable. They kept prices high in spite of the egalitarian notion to lower them.
The fact that Apple could continue to sell products that should have dropped in price underscores that the value (as perceived by the consumers) was still there.
Gas companies make 9% profit while the gov't tax on gas is equivalent to between 20-30% profit. Go protest that.
There are many pension funds around the world that accept slightly lower returns because they are governed by another subset of rules - they call themselves "ethical investors". They avoid stocks like tobacco because they aren't good for society. They won't buy shares in mining companies that leave environmental damage.
Where I am tax on fuel is closer to 100% but at least the money comes back to me in the form of govt spending or lower taxes. Don't see the need to protest it.
Point is, big business is looking out ONLY for their own interests. The true capitalism model is cracking and the OWS movement is telling you that it might be time to look at priorities and see if we can do it better.