Re-redistribute wealth by rewarding work

by Shirley Kressel
contributing writer
Tuesday Jun 7, 2011

Progressives want to tax the rich as a way to stem the decimation of essential public services been deficit hawks. It is true that the tax structure (PDF) is eye-popping. The richest 400 Americans have a greater net worth than the bottom 50%, with the top 10% owning about 70% of our wealth.

Yet, most Americans don’t like the idea of redistribution of wealth - even the not-rich ones, who evidently aspire to become rich, and blame themselves if they don’t. "Voters approve of President Bush helping the kind of people they wish they were one of," quipped TV commentator Andy Rooney. They see progressive taxation as "class warfare," unfairly usurping money that people earned on their merit.

Are CEO’s who used to earn 25 times the average worker’s pay actually now 300 times more meritorious than that worker? Does anyone really need to keep all of $10 million a year, or $50 million, or a billion, when others are so needy? These questions seem antithetical to the American mind-set, which devolves to the consideration of the "deserving poor" and the substitution of charity for equity. However, the standard progressive leveling mechanisms -- public services and safety nets and private philanthropy -- are nowhere near keeping up with the government subsidies to the rich, largely in the form of various indulgences to corporations. Alexis deToqueville erred when he said, "A m e r i c a n s a r e s o e n a m o r e d o f e q u a l i ty t h a t t h ey w o u l d r a t h e r b e e q u a l i n s l a v e r y t h a n u n e q u a l i n f r e e d o m . " The narrative of equality as a possibility is simply used to justify inequality in fact.

Extreme inequality is harming social cohesion, distorting the competitive economy, and eroding democratic governance. Before a growing nothing-to-lose underclass resorts to revolution, we have to find a palatable way to re-redistribute our resources. Cycles of more or less progressive taxation will evidently not establish a sustainable prosperity pattern; the rich always find ways to accelerate their accumulation, until social unrest or economic crises push the temporary reset button. There’s a lot of undeserved opulence and unnecessary suffering built into this system of wealth mis-distribution.

Maybe the better strategy would be not to mis-distribute it in the first place.

How is it mis-distributed? One major way has been by under-paying for work. A short history of work in America: In the beginning, there was outright slavery, building huge family empires for the scant cost of workers’ room and board. Then came various forms of indentured servitude of blacks, immigrants, youngsters and women, who are still underpaid. The cheap-labor system that produced robber barons and their dynastic plutocracies was temporarily disrupted by the 1928 crash, World War II, union, civil rights and women’s movements, and the New Deal - perhaps the first time, but not the last, that socialism saved capitalism. Things went well until the mid-1970’s, when the corporations decided to take back the America they had owned. Union-busting, job exportation and financial and environmental deregulation were their weapons. They prevailed, with government complicity, and the fruit of the enormous productivity gains of the succeeding decades, created by the education (much of it publicly funded), technological innovation (ditto) and hard work of the great American work force have flowed almost entirely into the pockets of corporately enriched executives and investors. Wages have been kept in line by the maintenance of a national level of unemployment, about 6%, which has been considered normal and even necessary to avoid "wage inflation" (not to be confused with "price inflation," which is accepted as a way to grease the wheels of commerce).

For over 30 years, middle-class wages have stagnated, the minimum wage has declined in real dollars, and working wives and mountains of debt have propped up a false standard of living. It appears that a higher level of unemployment is becoming the market’s acceptable price for capitalistic freedom, and even this documented level is masked by the highest military and prison populations in the world. Millions of people are left in the mud of the business-cycle tsunamis, never to regain their former work status. It’s been dubbed "creative destruction" -- just part of the game of economic musical chairs that our society has become. What could sound more logical? Very Darwinian and self-justifying.

But if we think there’s another purpose to life and another value to society, we have to reward work: not just by the education of the worker, or the degree to which s/he contributes to other people’s making money, but just because everyone’s work combines to make the world go round, garbage collectors equally (arguably, more!) with CEO’s selling junk food or junk bonds. Farmers, miners, and workers that actually produce goods and services we need should be appropriately rewarded, and the financial industries that shuffle the paperwork on other people’s labor should go back to their old minor functionary role.

No one is asking for total and automatic equality; that’s a straw argument. But three decades of funneling the country’s productivity gains to a relative handful of corporate magnates, as if they could have done it all by themselves, is a root cause of today’s debt-ridden mess.


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