By MN Gordon
Disproportionate Rewards
The International Monetary Fund reported an unpleasant outlook for the U.S. economy on Wednesday. The IMF, as part of its annual review, believes the U.S. economic model isn’t working as well as it could to generate shared income growth.
Supping with the IMF (we recommend trying to avoid invitations to structurally adjusted suppers if possible. Their air of finality is reportedly unbearable). [PT]
On the same day, in an unrelated interview on PBS Newshour , billionaire investor Warren Buffett offered a similar outlook:
“The real problem, in my view, is — this has been — the prosperity has been unbelievable for the extremely rich people.
“If you go to 1982, when Forbes put on their first 400 list, those people had [a total of] $93 billion. They now have $2.4 trillion, [a multiple of] 25 for one. This has been a prosperity that’s been disproportionately rewarding to the people on top.”
No doubt, U.S. wealth has become exceedingly concentrated into a very small number of hands over the last 40 years. At the same time the middle class has been hollowed out into a shell of its former self. Wages have stagnated. Well-paying jobs that could support a family on a single income have disappeared.
On the other hand, asset prices, like stocks and real estate, have gone sky high. These increases in asset price have served to magnify wealth at the upper end of the wealth spectrum while pricing out everyone else, particularly millennials with entry level incomes and massive student loan debt.
Certainly, asset prices will crash again like in 2000-02 and 2007-09. But this won’t do anything to balance out middle class incomes. What to do about it? Both the IMF and Buffett offer several recommendations…
The homely sage is known for frequently complaining that he “doesn’t pay enough in taxes”. But nothing would be easier than to cut the IRS a check voluntarily. We’re sure they would gladly take his money. Funny enough, after realizing that he couldn’t take the loot with him to the grave, Buffett decided not to trust the State with his moolah after all – instead he gave it away to a private foundation. That is exactly how it should be. Zthroughout history many of America’s self-made rich – including the much bemoaned “robber barons” of the Gilded Age – were well-known for their generous philanthropy. Throwing money into the insatiable maw of the State so that politicians can waste it would be utterly insane, which is why Buffett has presumably avoided doing so to the best of his legal possibilities for his entire life (we have little doubt he and his company employ an army of accountants and tax consultants to make sure of that). So when he publicly complains that he doesn’t pay enough in taxes, he probably means to say that you don’t pay enough. [PT]
Photo credit: AP Images
Insider Claims to the Pie
The clever fellows at the IMF identified with careful detail and delicate precision how to go …read more
Source:: Acting Man
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