Why the top 1% like things the way they are

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Is growing income inequality the logical end in the relentless quest for the highest return on capital? What are the implications of our current model of economic development?

In the United States, the top 1 per cent of Americans earn one quarter of the national income every year. And the top 1 per cent control 40 per cent of wealth.

This gulf has important implications, among which is the loss of community solidarity as individual self-interest trumps all. As Joseph Stiglitz observes in Vanity Fair:

The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don’t need to rely on government for parks or education or medical care or personal security — they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had. They also worry about strong government — one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good. The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes.

Yes, the top one per cent want lower taxes, which contribute to the inequality. They like it that way – because a large part of their income is derived from a reduction in tax rates on capital gains (which incidentally also contributes to speculation especially in property).

READ MORE:  The Goose and the Commons

Lower taxes lead to a loss in government revenue. No wonder government fiscal deficits are growing, and many governments are now cutting expenditure on essential services and subsidies.

Let’s face it, the top one per cent don’t really care much for the rest, especially the workers:

The rules of economic globalization are likewise designed to benefit the rich: they encourage competition among countries for business, which drives down taxes on corporations, weakens health and environmental protections, and undermines what used to be viewed as the “core” labor rights, which include the right to collective bargaining. Imagine what the world might look like if the rules were designed instead to encourage competition among countries for workers. Governments would compete in providing economic security, low taxes on ordinary wage earners, good education, and a clean environment—things workers care about. But the top 1 percent don’t need to care.

What about elected politicians? Surely they can do something to redress the situation. Don’t count on it.

Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office.

Is the situation much different in Malaysia? What do you think?

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Josh
Josh
16 Aug 2011 3.33pm

awaiting namewee’s nasi lemak 2.0 dvd if it is censored too much in cinemas.

my indian friend said “Singham” is still hot in India. The cheering peasants of Indians threw coins at the movie screen to show their aproval when the hero kicked the butt of the corrupted minister in the movie. so the 99.99% poor Indians are shwing their displeasure at the 0.01% who ignore their plight.

Anil
Have you seen Singham ?

Josh
Josh
16 Aug 2011 3.52pm
Reply to  Anil Netto

if it is good, let us know.

some say without english subtitles, we still can figure out the plot.

maniam
maniam
17 Aug 2011 10.55am
Reply to  Josh

don’t hesitate.
go n watch it.
my rating 4.5 stars.
those who like action will love it.
good soundtrack.
original dvd not out yet but will be out soon per my lotus chain info.

Aranda Del Rio
Aranda Del Rio
22 Aug 2011 2.11pm
Reply to  maniam

I still prefer Sivaji The Boss for its anti-corruption theme.

Good to see that the Indians are now going hunger strike to protest against the rampant corruption. Apparently it took a while for the Indians to understand the message of Sivaji. I hope MIC flers can watch the movie to appreciate the moral of the story.

WontonMasala
WontonMasala
15 Aug 2011 11.47am

Creative arts scenes in Malaysia should be mushrooming, if not now, with the advent of local talents in the industry shaped by the likes of LimKokWing University. I hope Anil can set up a forum for genuine and constructive discussion of creative arts such that we can witness the convergence of thoughts of various eras to move us forward in a transformed (to me reformed a better word) and developed nation. For a start I shall touch on movie industry since the present crop of younger generations have the privileges of watching movies state-of-the-art cineplexs throughout the country. I am… Read more »

Damien
Damien
15 Aug 2011 2.59pm
Reply to  WontonMasala

The movie trailer of ‘KL Gangster’ is shown repeatedly on Astro channels has given the impression to us that KL is a sin city, when TV2 has been selling the credibility of PDRM in Gerak Khas? Therefore ‘KL Gangsters vs Gerak Khas’ will be a great movie title for box-office hit if the Haslam father and son could exploit the potential, as David Teo has benefited this concept when he merged the movie concepts of ‘Jangan Pandang Belakang’ with ‘Congkak’ – giving double cheap thrills for the price of 1 ticket price. On the same note, we can have double… Read more »

Erwin
Erwin
16 Aug 2011 10.40am
Reply to  Damien

We have seen ‘Aliens vs Predators’, what about ‘Zombi Kampung Pisang vs Pontianak Harum Sundal Malam’?

Other potential mash-up local movie hits:
– Anak Mami vs Anak Halal
– Cicakman lawan Keluang Man
– Gerak Khas di Bukit Kepong
(The elit polis travel back in time to correct the history)
– Sarjan Hassan vs Hang Tuah vs Hang Jebat
– Upin & Ipin Remp-it Menjerit
– Sinario Hati Malaya

Hooray
Hooray
16 Aug 2011 12.05pm
Reply to  WontonMasala

Last episode of Gerak Khas recycled past cast as Tiger Wong the mafia of under world – you can catch the sequel this week on RTM.

Our PDRM have so many colorful real stories to tell but Gerak Khas’s scriptwriters cannot offend the top 1% rich folks in Malaysia as the dubious activities may become big scandal under the carpet ?

krahmat
krahmat
24 Aug 2011 1.48pm
Reply to  Hooray

Lately we have witnessed cases of cops (allegedly) turning to criminal activities. This is a reality that should be featured in Gerak Khas or Roda Roda KL. However, the script of Gerak Khas is (allegedly) controled by Bukit Aman to portray the polic as good cops, and Haslam has got no choice but to conform to the guidelines to safeguard his ricebowl. That’s why creativity and reality can never take place in our film industry, as old formula is recycled repetedly to feed the ignorant/numb rural audience to hold PDRM in high regards. Let’s see if his son is brave… Read more »

Damien
Damien
15 Aug 2011 10.51am

The next time you see those super-rich fellows in Malaysia donating here and there in the name of charity, do not rejoice. They are merely exercising their tax management (i.e. tax avoidance) in the name of philantrophy. If they really care for the less fortunate, they should donate annoymously and directly to the poor and do not gain publicity and get tax credit.

DR AMIR
DR AMIR
15 Aug 2011 9.34am

Dear Sir, The industrious elite who has accumulated their wealth sincerely should enjoy their fruit of labour. The can pay lower tax as incentives to drive them to bigger success and contribute to the economy through job opportunities to the rakyat. There is nothing wrong with this. Many are known to donate generously to the community. Their believe is ‘the more I give away the more I get’. The question is with those who acquire wealth through dubious means. They are the one that is troubling the nation, a parasite and the least that give away to charity. Their believes… Read more »

moo_t
15 Aug 2011 3.48am

When one say “rich people against government tax”, what is the facts behind it? It is common sense that most government are pretty bad on maintaining efficiency. Increasing the government size DOES NOT increase the efficiency. Are you willing to pay more tax to bloated an inefficient government? Most claims come with many grays that need careful definition. Otherwise, you will falls into the simpleton traps. E.g. centralised control does not mean increase efficiency and productivity. Distributed control does not mean chaos. Monopoly price control doesn’t mean lower price to consumer, etc. Medical welfare doesn’t always end up with huge… Read more »

wandererAUS
wandererAUS
14 Aug 2011 10.51pm

Why allow 1% super rich selfish jerks to perpetually enjoy their wealth, rather, having half the population enjoy the middle income wealth…better still if the percentage reaches 70%. It can only be possible if we drive the corrupted UMNOputras out of Putrajaya (at the next GE) and replace them with a fairer administration with honorable leaders.

frags
14 Aug 2011 8.46pm

Capitalism capitalises(no pun intended) on human exploitation. That is a fact. People will be underpaid for the company to be profitable. Just how much of a profit margin is ethical? How much of exploitation is tolerated?

The key is of course the consumers and their right to influence profits of these companies but with the mass media these days that “inform” the opinion of the consumers, I wonder just how forceful consumers are these days.

Antares
14 Aug 2011 8.18pm

Just received this post in my inbox, thought I’d share it with your blog readers… 545 vs. 300,000,000 People By Charlie Reese Politicians are the only people in the world who create problems and then campaign against them. Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits? Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes? You and I don’t propose a federal budget. The President does. You and I don’t have the Constitutional authority to vote… Read more »

krahmat
krahmat
24 Aug 2011 1.40pm
Reply to  Antares

Your message is so long that it fail to make a point.

Remember KISS – keep it short and simple.

Just a feedback, no offence.

bigjoe
bigjoe
14 Aug 2011 6.19pm

Really? How do you explain Warren Buffett, Bill Gates, Mark Cuban and many others that have declared that they support paying more taxes? How do you explain they also donating all their wealth after they go?

True most rich people are doing what you suggest. BUT that is NOT the problem. Worst, that the govt is the solution is ludricous. Its about ideas, its about technology and that is no non-technical mind can wrap around it..

Sathia
Sathia
15 Aug 2011 6.31pm
Reply to  Anil Netto

Those working in Walmart was migrants to US, usually without qualification, low skills and are willing to accept the low pay.

The situation is similar in Malaysia. Those migrants workers are here in large numbers, settle for low wages and being exploited by employers as no EPF is needed.
Blame the government for the lax in enforcement and fail to control our imigration points, and very prihatin to the ‘Immigration 8’. With 6P program, they will be ‘legalised’ to compete for jobs with locals.

tunglang
tunglang
14 Aug 2011 8.08pm
Reply to  bigjoe

Bigjoe, when greed creeps into the equation, all hell breaks loose in the corrupted minds of these super rich & famous, desperately playing the ‘good guys’ PR games while manipulating from behind serpentine speculators, lying media spin-masters and reaping obscene manifold profits from the sweat, tears and blood of ordinary workers. Don’t tell me abstract technological prowess of post-modern elitist ideas of high nose intellectuals beyond the understanding of the non-techs as being gods above all things, even lives. The corrupt evils and inhuman antics of modern, progressive men with riches-not-enough, unimaginable and unheard of 200 years ago will not… Read more »

rilakkuma
rilakkuma
14 Aug 2011 6.04pm

another perspective to increase general income is to strengten ringgit but our gomen prefers to keep it low as we are export oriented and claimed to make our products attractive to overseas market (reasons are open secret with our patronage policies ?). Same analogy here if we ask who benefit most from such approach ? The producers in Malaysia are selected certain small % of Msian population. They reap profits with depreciated ringgit meant for attractive export market gains; and should reward the masses (cari makan employees) with better salaries. However, majority chose to hire cheaper foreign labours causing wages… Read more »

rilakkuma
rilakkuma
14 Aug 2011 7.24pm
Reply to  Anil Netto

no offence intended, Anil….just to see your reaction 🙂

Damien
Damien
15 Aug 2011 2.46pm
Reply to  Anil Netto

Yes, feel free to speak our mind but please do not venture into the taboo words of socialism or communism that may trigger EO or ISA.

Speaking of words, ‘AKAUNTABILITI’ finally made it to Kamus Dewan, as NST reported today: http://www.nst.com.my/nst/articles/Newwordsgain__8216_akses__8217_intoKamusDewan/Article/

Umno flers can no longer claimed ignorant to be accountable now, now that they has AKSES to its meaning?

najib manaukau
najib manaukau
14 Aug 2011 5.10pm

No doubt the super rich in Malaysia consists mainly of Chinese and by the same token the very poor, the super poor in the country are also Chinese and the Indians. Yet the top not just 1% but top 20% of the rich in the country are the deceitful and corrupted Umnoputras. Just look around you who are mainly staying in big houses with foreign maids located in inevitable areas owning big imported chauffeur driven cars, wearing and carrying branded clothes, bags and accessories. Not to mention the huge ill-otten gains in foreign banks, getting ready to immigrate at a… Read more »

Harith
Harith
15 Aug 2011 3.49pm
Reply to  najib manaukau

While we are on this topic, it is good to review this classic video (superbly narrated by a famous celebrity voice) that could provide some answers, in the case of Malaysia:

Kia Meng
Kia Meng
14 Aug 2011 5.08pm

17 August 2011, 8:30pm – 10:30pm Venue: Dignity International, A-2-7 Pusat Perdagangan Seksyen 8,Jalan Sg Jernih 8/1, PETALING JAYA Organised by Collective Intelligence Malaysia as part of The Common In Conversation (Forum Series) Given the recent detention and release of our friends from PSM, the bogeyman of Communism is once again dangled before the minds of the Malaysian public. Many Malaysians intuitively feel that something is wrong with our system, but are there possible solutions or answers? This Forum seeks to provide a space for a fresh engagement with the following set of questions: Is socialism and communism the same… Read more »

Aranda Del Rio
Aranda Del Rio
22 Aug 2011 2.00pm
Reply to  Kia Meng

Kia Meng

Kindly provide a summary (not a long-winded one in the style of Ah Soon) of the Forum, particularly to the question of ‘Is socialism and communism the same thing?’.

Thank you.