Cross-posted from Spiritual Persistence SPlog
You probably heard John McCain complain on Wednesday night that Obama wants to "spread the wealth around." This, according to Mr. McCain, is a bad thing because it means that Joe the Plumber would have to pay more taxes and so couldn't afford that California spa retreat... I mean couldn't afford to hire another employee. What we should do, he went on to argue, is cut poor Joe's taxes (even though we now know he doesn't pay them anyway) so he can swoop in and save our flailing economy.
What Senator McCain forgot to mention was that the richest 5% of our population received almost 50% of the Bush tax cuts, and, as Nobel Prize winning economist Paul Krugman wrote in 2006:
For the first time in our history, so much growth is being siphoned off to a small, wealthy minority that most Americans are failing to gain ground even during a time of economic growth -- and they know it.
Well, we're not in a time of economic growth any more, and that should come as no surprise to those who have been paying enough attention to realize that the bottom was falling out of our economy. Any system cannot sustain itself if it cannot generate enough of its own energy to create stability, as we have learned from Rikkity. Our economic system has been sustaining itself by siphoning the money (read energy) of the middle class off to the wealthy, who then, instead of creating real products, have been making enormously risky investments in what has already been produced (i.e., housing) and spreading the risk throughout the system to make it look like the risk was manageable. Not only was it not manageable, it was unsustainable because there was no there there.
To quote Paul Krugman again from that same article (please read it if you missed it back in 2006. It's brilliant.):
A generation ago the distribution of income in the United States didn't look all that different from that of other advanced countries. We had more poverty, largely because of the unresolved legacy of slavery. But the gap between the economic elite and the middle class was no larger in America than it was in Europe.Today, we're completely out of line with other advanced countries. The share of income received by the top 0.1 percent of Americans is twice the share received by the corresponding group in Britain, and three times the share in France. These days, to find societies as unequal as the United States you have to look beyond the advanced world, to Latin America. And if that comparison doesn't frighten you, it should.
I'm not advocating fear, of course. But perhaps spreading the wealth around a little more evenly through the use of progressive taxation isn't such a bad idea after all.
In America we used to have an idea called the social contract. Part of that social contract said that we all agree to work together for the common good (or the "general welfare"). And part of that idea is a higher tax rate for those who are wealthy and have been in a position to benefit from what the society has to offer, so that the society can help and support those who are not. In that way, our society and our economy are strengthened. At the times we have been most stable, there has been the least gap in wealth between rich and not rich.
An aversion to spreading the wealth is an aversion to the democratic idea of equality, and in the long run is dangerously destabilizing.