Republican Wealth Redistribution

Michigan is looking down the barrel of a large shift over to Republicans this year. Republican Governor, Republican Senate, Republican House. And as usual the conservative footsoldiers are beating the drum of how we'll now see lower taxes.

Ahh...remember the last time Michigan had a Republican Senate and a Republican Governor? No? I'll take you back...

...good times. 1994. Kurt Cobain was still alive for a couple more months and grunge was the mainstream underground music of choice. That was also the year the tax cutting Republicans RAISED Michigan's sales tax from 4% to 6% so that everything we buy is now taxed more. Why did they do that? To finance a property tax cut for land owners.

For the poor and middle class land owners, it was a wash.

For the poor to middle class renters it was a massive tax HIKE.

Oh, but for the wealthiest land owners, it was a massive and regressive give-away.

That's right...in 1994, the Michigan Republican Governor and Senate financed a tax cut for the rich by taxing the poor and middle class. They TOOK that money from the middle class and handed it over to the DeVos family, and other Michigan millionaires and billionaires.

The Republicans. They taxed nearly everything we buy: diapers, toilet paper, deodorant, toothpaste, dog food, pots and pans, cooking utensils, towels, furnace filters, brooms, photographs...

The Republicans weren't just innocent bystanders. They weren't just complicit in this idea. They were the ones in control. They were the ones who passed the law. And Engler SIGNED it into law.

And now Michigan has among the most regressive state tax systems in America where the poor and middle class pay a HIGHER percentage of their income in taxes than the rich do. A flat tax would actually be a step UP.

Most of Michigan's income and local taxes come from the state's poorest residents, resulting in a regressive tax that "no one" would intentionally design, according to a report released Wednesday by the Institute on Taxation & Economic Policy.

While non-elderly residents who make less than $15,000 per year typically pay about 9 percent of their income toward taxes and those who make between $32,000 and $54,000 pay nearly 10 percent, the very rich pay about a third less, said the study, titled: Who Pays? A Distributional Analysis of the Tax Systems in All 50 States.

The rich, defined as those with average annual incomes of $1.1 million, typically pay about 6.4 percent toward taxes, the study said.

"No one would ever design an income tax with lower tax rates for the best-off taxpayers," said Matthew Gardner, executive director of the institute and the study's lead author. "But that is exactly what Michigan's tax system overall does: it allows the very wealthiest individuals to contribute less of their income, on average, than middle and lower-income families must pay. In other words, Michigan has an unfair, regressive tax system."

Billions of dollars sucked from middle class and poor households in 1994...and what happens when the Dems, years later, propose a 1 cent tax on sodapop to help raise funds to keep city services like schools and police going?

GAAAAHHHHHH! TAX HIKE TAX HIKE! TAX RAISING DEMOCRATS!!!! TAX AND SPEND! WE NEED FISCAL RESPONSIBILITY!!!!! AAAAAAAAAAHHHHHHHHHHRRRRRGH!

I'm very impressed with the Republican leadership. How they manage to smile and say they're cutting taxes while RAISING taxes is an impressive feat. Even more impressive that people believe them. Or that they can claim Obama raised taxes for the middle class when he actually CUT $300 billion in taxes for the middle class in America...when 2009 had one of the lowest middle class tax rates in decades...

Well, it's just impressive is all.

It's Comforting To Know Our Political Disagreements Go Back Centuries

I have set out to learn myself up on the history of American manufacturing...how did it develop? Why did it focus here or there? How important was it...how important is it? And stuff like that.

Right now I'm reading up on the Tariff Bill of 1816, which I actually remember "learning about" in elementary school. But at that time I had so very little of a clue what it all meant. I put "learning about" in quotes because the only reason I even remember it is it was my first encounter with the word "tariff" and the concept that "there was one" and "a long time ago."

What I'm saying here is, I didn't actually learn a thing.

But I'm correcting that.

And the most interesting bit about it is how familiar it sounds. See if this rings a bell: Democrats and Republicans at each others' throats, and Republican congressmen threatening to ignore the Federal law completely in an event known as the "Nullification Crisis" in 1832:

Mr. Hayne of South Carolina, the opponent of Daniel Webster in the most famous oration of the latter, was an ardent advocate of this doctrine (ignoring Federal laws), and, while bitterly denouncing New England in that famous controversy, he openly urged on the floor of Congress the doctrine of "Nullification," claiming that any State when deeming itself oppressed by a law of Congress considered unconstitutional by the State legislature, had the right to declare this law null and void and to release its citizens from the duty of obedience.

Echoes of Health Care Reform, eh?

And more echoes of modern Republican insanity:

The opposition of South Carolina to the protective policy had been pushed to a point of excitement at which it was beyond the control of party leaders.

It's good to know this sort of rivalry has been going on for two centuries. It's a bit disconcerting that just 40 years after this little outburst America would be locked in bitter and bloody Civil War. I'm not sure what the takeaway lesson is here...maybe take the wild eyed rantings of the South more seriously. But dang, they're so adorable when they're furious.

Early Fall Night

What an incredibly beautiful night.

The summer is cooling, Fall is approaching, and the wind is whipping through the trees in a loud hushing sound. If you listen close enough, the waves from Lake Michigan make a sustained background of white noise.

When nature makes its mark known over the weird concoctions of man, there's a distinct calming effect. Over economics, over our funny little disputes, over bills unpaid. The mark of the world, and senses experienced by mankind for thousands of years, makes the day to day seem trivial.

Today I spoke with people house hunting in a well to do neighborhood for houses a third what they once were. Yesterday I spoke with a neighbor about her nephew, who mows lawns for a living and caddies, who bought a home and a half acre of land on a once upper middle class neighborhood for a mortgage payment of $300 a month. Today I drove to a home in Muskegon Township and passed half a dozen homes with foreclosure notices within a 1 mile stretch...homes on the outskirts that weren't terribly pricey to begin with. Moss growing on the rooftops. Mildew along the siding. Overgrown grass and a garage tilting and the door doesn't close anymore and the contents are open for all to see...broken appliances in limbo. Here the brief trek from the lakeshore and a couple miles inland shows the vast gulf between the rich and the middle class and poor. The mansions along the lake where a man works...a guy who once was a truck driver supporting his family, now a self employed picker-upper of dog poop from manicured lawns for a fraction of his original wage.

The night is clean. And the air is clean. And the sound of the waves is clean.

One For You, One For Me. Two For you, One, Two For Me.

If you're like most folks, and most folks are, you are currently among 80% of the the American people who are working their keister off to claim an ever shrinking portion of America's wealth. As it stands now, the bottom 80% of Americans, incomewise, share 16% of America's wealth.

That is a historic low.

Here's the latest study on the matter --> Here

That means that the top 20% of Americans, incomewise, share 86% of America's wealth.

That's a historic high.

Even more disturbing, the top 1% of Americans, incomewise, share about 50% of America's wealth.

Though, it should be noted that the top 1% of old ladies control about 90% of America's cats.

But you can't buy much with cats.

I've tried.

So I'm happy with the distribution of cats in America. Not so happy with the distribution of money.

Let's take a look at this wealth disparity in handy chart format, shall we?

ORANGE: 80% of Americans, probably including you.

ALL BLUE: 20% of Americans, probably not including you.

DARK BLUE: 1% of Americans, almost definitely not you.

Okay.

So what exactly does this mean?

Maybe the folks in the dark blue work harder than you do. Or they're smarter than you are. Or they're just crazy-lucky. Or all three. And everybody else, including you, has just gotten lazy.

You'd think that if the latter were true, that you have been sitting on your fat, pimply tush for the past decade doing nothing along with almost everybody else we'd see American productivity in a horrible decline.

But that's not what's happening.

What's happening is, America's productivity has been skyrocketing. Most Americans have been working harder...have been incredibly productive.

One might imagine that an American's increase in productivity would mean he or she is earning more.

But that's not what's happening either.

At best, most Americans are earning, The Same. And in some cases, they're going backward and making LESS.

240,000,000 Americans, or 80% of them, are fighting for the same pool of money. Pit against one another to compete for that ever shrinking pie. Some political figures suggest that Americans be forced to compete with one another by slashing wages and the minimum wage on the grounds that it's just the new reality in America. But suggest the top 1% take a reduction and free up some of that 50% of America's wealth...and it's berated as unfair.

Scarier still the richest 400 Americans control 8% of the wealth in the US.

And Americans wonder why they don't have much power in the political process. When 400 Americans command the financial funding potential of 120,000,000 Americans it should start to be pretty clear...

You really don't have much power.

And as long as this type of wealth disparity nonsense continues to stay in place, you'll have less power next year. And less the year after that.

In New York, 300 workers in a Motts plant were being asked to take a $3000 a year cut to their wages, in addition to cuts in the health insurance. Simply the reality of the new economic climate, so says the CEO. Simply a way to keep the company competitive. The CEO himself would not take a cut to his own $8 million a year paycheck, of course. The economic "reality" of competition applies only to those in the lower 80%.

But the economic and social "reality" facing those taking home 84% of America's wealth is that this sort of hording of the fruit of America's productivity is not the type of society that is sustainable. And it doesn't lead to the sort of nation most Americans want: an aristocracy where money is pooled up into and held by dynastic families for centuries.

A better distribution of wealth in America means more equal power. A stronger middle class means that the average American has more say over the direction of this great nation of ours.

If it feels like each American's say over the national direction is less, that's because it is. Or that Americans are working harder for less. There's really only one way to address it, and that's to reverse the disparity of wealth in America.

Hot Global Economic Meltdown Action at the MAREC

I've been to multiple events and presentations at the Michigan Alternative and Renewable Energy Center in Muskegon. A hat tip to the director Arn Boezaart for making that place a hoppin' joint of self education on science, and bringing all the geeks out from the floorboards all the way from Holland in the South and Walkerville to the north. From information on wind power to presentations on invasive species and the St. Lawrence Seaway, that place is crazy well attended these days. Quite an achievement in a smallish town. And did I mention the MAREC building is energy self sufficient? Well...almost. There's a natural gas line to the fuel cell, but...still awesome.

A couple nights ago I went to a presentation at MAREC given by Ms. Stoneleigh from The Automatic Earth. It was an un-self consciously terrifying warning about an imminent and cataclysmic global economic collapse that's apparently just around the corner...

...the presentation was almost pure horror, doom, and disaster. So, naturally, the place was packed. The parking lot, overflowing...which kind of underscored the consistent theme of Peak Oil.

The presentation went something like this for two hours...and, I'm paraphrasing here:

"We're all fucked." Then, as an attempt to end on a positive note "But if you're nice to your neighbors, maybe they won't shoot you and take your stock pile of gold and organic, locally grown Mason jars of tomatoes."

I would classify it as "disaster porn." We just can't look away. We flock to it and stare.

We're out of cheap oil and coal, and the energy to get it is supposedly nearing a level where it won't sustain our civilization...

...or be available to process and transport food...

...and the price of essential goods will skyrocket...

...and the value of your house is going to crash...

Crime will reach a fever pitch as people try, in desperation to get what they need. Governments in the world will become destabilized and starting blasting the crap out of each other. Your dog will pee on you and find a new best friend.

Many graphs and charts with lines on them were presented as evidence to show how certain all of these things were to happen. How they've all happened before.

And you know what?

I actually enjoyed myself.

Though I admit I did make a stop at the grocery store and briefly considered stockpiling dried beans.

If these things do come to pass...folks have gotten through it before, and they'll get through it again. For example, my grandmother lived through the Great Depression. Sure, she had a lifelong habit of stealing and hording condiment packets and sporks from fast food restaurants...but she got through the Great Depression.

Detroit

I've haven't spent nearly enough time in Detroit.

And I've never really, particularly felt a lot of love for the city, growing up here on the Western side of the state.

But something has changed for me lately. Especially in light of the recent fires that saw dozens of homes burned to the ground from a combination of a collapsing infrastructure and empty homes in Motown.

This is the city where the middle class in America was created, that pioneered how America would grow and what it would expect for the next century. And this is the city that will pioneer how we live after the middle class has been abandoned. It's a city already working to stand up...already working to re-invent itself, to re-create itself, to shake off the 50% population decline it's experienced and move forward, just like people who experience hardship do. What else is there to do?

Too many areas still feel impervious to such a fall

Too many large cities have yet to learn humility. Like teenagers, young men who feel they're immortal. The cities see their rise and assume it's going to be a constant upward trend from here. They haven't sensed their own mortality.

Many of the "rust-belt" cities have sensed their own mortality. They've experienced the period of massive growth, and the fame and the riches and the prosperity. And they've seen the contraction, as time and change rips the city apart.

I've not been to Detroit nearly enough. But I'm slowly starting to understand and appreciate the city's 300 year history...as a mature, storied and influential driver of American history

Coasting on this thing they called the "middle class"

Yessir, when I read articles about stagnant wages, while the upper 1% control a historically high and growing percentage of America's dough , it makes me get itchy. Historically, it's been bad news when that happens. Ain't pretty. Those types of stores make me want to start stocking up on canned goods and rations, and preparing for the coming apocalypse secure in the knowledge that at least I have beans and canned early girl tomatoes.

Even Ayn Rand acolyte Alan Greenspan thinks the wage disparity getting kind of ridiculous.

"This is not the type of thing which a democratic society—a capitalist democratic society—can really accept without addressing,"

I believe that our current middle class is largely supported by the momentum of the middle class before us. And as they pass on, we'll see an increasingly faster rise in wage disparity.

Here's a bit from the Slate article I just read:

It's generally understood that we live in a time of growing income inequality, but "the ordinary person is not really aware of how big it is," Krugman told me. During the late 1980s and the late 1990s, the United States experienced two unprecedentedly long periods of sustained economic growth—the "seven fat years" and the " long boom." Yet from 1980 to 2005, more than 80 percent of total increase in Americans' income went to the top 1 percent. Economic growth was more sluggish in the aughts, but the decade saw productivity increase by about 20 percent. Yet virtually none of the increase translated into wage growth at middle and lower incomes, an outcome that left many economists scratching their heads.

With the top 1% in America controlling 24% of the wealth, and knowing that many younger Americans just out of high school and college have been hit hard by this economic recession...

According to the Bureau of Labor Statistics, people 16 to 24 are experiencing the lowest level of employment -- that's EMPLOYMENT (not unemployment) -- ever recorded by the BLS: 48.9%.

I believe we're well within one generation, or twenty years, of seeing the full force of the growing income inequality. And that is because, I believe we're being carried by the spending momentum of the previous generation that actually had a strong middle class.

As soon as many of the older individuals start passing on, the contraction is going to be felt. There's got to be quite a bit of financial momentum in the older generation that won't be found in the generation behind them. Pensions are a relic of the past. Social Security is in question. Housing and investment values have been contracting or stagnating.

There's currently an income flowing into the older generation that they have been receiving even after they left the labor force. And that income is feeding the economy, possibly holding it up more than we're aware. When these dudes pass on...they're not going be leaving a job opening behind for another person to occupy. Their pension or social security income won't be re-directed to their next of kin as inheritance.

It will simply be money that is no longer in the community. Gone.

Without something dramatic taking place, there will be a net decrease in money held by the middle class and in our towns over the next 20 years. Between that and the effectively stagnant wages for American households for the past 30 years...

...let's just say I need to get canning.