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article imageThat top 1% yet again

By Alexander Baron     Sep 13, 2013 in Business
Last year the top 1% of American earners grew richer, and the wealth gap widened yet again. This is a never ending story. So what?
This story complete with the accompanying statistics is parroted year in, year out, including this one. Does it really matter though that the top 1% are doing so well? Yes and no. The unspoken subtext here is that because the top 1% are such big earners, the government should tax (steal) some of their money and give it to those at the bottom. The reality is that like every other government, the US Government already taxes incomes, taxes sales, taxes everything it can.
If you haven't heard of Thomas Sowell, he is one of America's most outstanding economic minds; what does he think about that top 1%? Here he is in a short video showing that figure in context.
Often attempts are made to racialise the wealth gap in America; here is an article about cars in the former Soviet Union. How would you like to wait a year for a permit to buy a car?
Way back in 1955, Chuck Berry recorded a song called No Money Down in which he described how he bought his first car for $10 down and $5 a month back in the 1940s.
Going back even earlier, the first black self-made millionaire in the United States was Sarah Breedlove, who almost single-handedly founded the nation's black cosmetic industry. Born on the plantation where her parents had been slaves, by the time of her premature death at the age of just 51, she was not simply one of America's leading businesswomen but a philanthropist and social activist.
Okay, not everyone can strike it rich like the future Madam CJ Walker, and times have changed a lot since then, but are people really better off under socialism when the government controls everything? What would have been the lot of Sarah Breedlove if she had not been able to build her business empire? What would have been the lot of the people whose livelihoods depended on her?
Sarah Breedlove (1867-1919) was the first self-made black millionaire and probably the first self-ma...
Sarah Breedlove (1867-1919) was the first self-made black millionaire and probably the first self-made millionairess in the United States. Not simply in the top 1% but among the very top of high earners, what would have become of the industry she created virtually single-handed if she had been subjected to confiscatory taxation?
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Does this mean everything in the capitalist garden is rosy? It most certainly does not. The principal cause of poverty today is not inequality (read envy) but the financial system as opposed to the tax system. By permitting private banks to create credit out of thin air and then sell it at interest, including to the state, the US and every other nation is transferring wealth from the have-nots to the haves (ie the banks). In addition to this, the no skilled and low skilled jobs that still exist no longer pay a living wage because of new technology.
There are two solutions: one is for governments to take control of their own credit; the second is really part and parcel of the first, that is to abolish the complex welfare system and replace it with a Basic Income that will at a stroke destroy the poverty trap into which the unemployed and the unemployable have fallen and make those starvation wages fast food jobs viable.
If instead of playing stupid games with Quantitative Easing, which benefits only the banks, the Federal Reserve were to direct this "free" money to those at the bottom of society, the cost of this restructuring would be minimal, and would be repaid many times over by such things as increased economic output and even lower crime rates.
The problem is not the 1%; one does not make the poor richer by making the rich poorer, however appealing may be that idea to those of us at the bottom.
More about wealth distribution, Inequality, Socialism, Thomas Sowell, sarah breedlove
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