Do the Rich Need the Rest of America? | Hacker News Reader

Do the Rich Need the Rest of America?

blogs.wsj.com

12 pointsmechanician22 comments

Why do people even pay attention to this drivel? Who is going to dream up their fancy meals, drive their fancy cars, clean their fancy housing, and manage their financial empire? This just touches the surface. Who's going to educate the middle class they depend on for execution, protect their property and legal rights? The rich have more to gain through society, law, and government than any other class.

The article's claim isn't that they don't need the middle and lower classes, just that they don't need the American middle and lower classes (instead, what they need from those classes can come from foreigners).

I would love to see an American (even a rich one) navigate (for example) China's business atmosphere and not end up stymied.

I'm often reminded, when someone claims to have the "secret" to some other country's vast "untapped" market, to an interview with Jack Welch when he was still at the helm of General Electric.

Much earlier on, he knew of China's burgeoning economy, and wanted GE to be at the forefront of it, marketing products bearing their service mark on all manner of product. They decided to start with light bulbs, and picked out a plot of land in an industrial area of Northern china and started making them. Within just a few years, China went from the typical 4-5 light bulb companies or factories (which Welch indicates is the norm for any market regardless of population) to 2,700. Every mayor of every town in the nearby area decided to poach one worker from GE's factory, replicate the manufacturing process, secured funding from Central Bank for machines to make bulbs from the US, and set to work competing directly against GE.

Somehow, I don't think China is any kind of market for anyone but the Chinese. Call me crazy.

"Some would argue this is a vast overstatement." - always nice when a link-bait-esque article has the counterpoint built right in.

Atlas is shrugging.

EDIT: I meant this only as a connection to the work of literature not at all indicating that the Mega-Wealthy Class actually makes the world go round and is "a good thing"(tm)

Which "Atlas" are you referring to? If you mean that the American people are tired of supporting a billionaire welfare class, then yeah, maybe.

While both remarks were somewhat snarky, I'd like to hear your evidence that "the American people" are supporting the "billionaire welfare class". It's the first time I've ever heard the table turned like that and would like to learn more.

America subsidizes its rich tremendously. I have absolutely no problem with the genuinely self-made rich. I have a big problem with billionaire welfare queens.

Direct subsidies:

- In 2008-2009, America bailed out its financial class to the tune of almost a trillion dollars. Some of this was paid back, but it still amounted to a zero-interest loan to people worth $1M+. A lot of it ended up in offshore accounts and bonuses.

- The Federal Reserve system is a crony network that provides zero (or negative!) interest loans to connected banks with which they can gamble in the markets. Their losses can be socialized through mechanisms like bailouts and the FDIC, while gains are privatized. Since this is newly created money, it amounts to a tax on the savings of the rest of the economy. Wouldn't you love to be lent money at 0% interest to gamble in a can't-lose casino?!?

- America's contracting process is hugely corrupt, and there's a huge number of pigs at the trough. Nothing irritates me more than rich people who got rich off government contracts whining about all those "parasites on welfare." (Ironically, the defense contractor crowd funds a lot of right-wing stuff like that.)

- The U.S. military is used partly to protect the politically risky offshore investments of America's moneyed classes. Shell Oil is not charged a fee for service when the U.S. foreign policy apparatus leans on a foreign government or deploys military force to guard its interests. The middle class pays (and sometimes dies) for that.

- The public funds scientific research, while private players get rich off marketing its applications. In some cases technologies are developed whole-cloth in public academic and military institutions and are then more or less handed over to private interests. Tycoons have been getting rich off publicly funded research for a century. Did AT&T have to pay for the development of TCP/IP? Nope, we did. In some cases, private entities even end up as the owners of publicly developed intellectual property. That means they can sue you for using what you paid to invent.

- As an extension of the above, military and scientific SBIR grants are used by many private companies to fund their R&D, which they then keep proprietary and market.

Regressive taxes:

- The tax code is filled with loopholes that require complex accounting to achieve, amounting to a huge regressive tax on those who do not have personal accountants.

- Complex regulations amount to a regressive tax on new entrants to an industry and on smaller players, since larger players can afford to employ armies of paper pushers to comply with the law.

There's more than that I'm sure.

Americans forget all this. They pay out the nose in taxes and government debt to subsidize the rich, and then the rich convince them that they're rugged self-made individualists. Sorry, but to be a rugged self-made individualist tycoon you must: pay for everything you need to set up your venture, pay for every service you use, pay for the development of the IP that you use, and pay everyone you employ. If any of that was subsidized, you fail at claiming to be a self-righteous "Atlas" and need to STFU.

As an engineer, a personal peeve of mine is technology businessmen who beat up on academia... as if they'd have anything to market without academic research. You will find a couple of those on HN from time to time arguing that academia is unnecessary, over-funded, etc. while they sit around plotting the next startup idea based on academic research from the 60s and 70s.

The tax code is filled with loopholes that require complex accounting to achieve, amounting to a huge regressive tax on those who do not have personal accountants.

As a person that broke the mark about 6 years ago, I have to agree. The first year that I "made it" was the first year that I could afford a real CPA. The loopholes where amazing. I ended up paying slightly less taxes than the year before and earned twice as much.

As much as I take advantage of the system (anyone in their right mind would). It is unfair, I feel that I pay enough, but it is ridiculous that we have to use loop holes in the first place.

The politicians raise taxes on the rich to win some points with the voting mass, they create some loopholes with a wink, wink to the rich who go along because in the end it is the same net. Meanwhile the taxes are not spread even, the rich and middle class end up bearing the brunt of taxation while it hurts the middle class far worse.

I've experienced this a little bit too.

The richer you are, the bigger the loopholes get. When you get really rich, you can do offshore accounting and all kinds of big-ticket tax-dodging that results in you paying less taxes as a percentage of your income than the person who makes your lattes.

I'm actually in favor of a flat tax (maybe trailing off to zero at the extreme low end of the scale) with absolutely no loopholes. Everyone pays X percent on all income, period. You might have a few deductions, but they would be for things like healthcare, child care, and education and would be strictly monitored.

That would actually raise taxes on the rich dramatically.

Thank you; I couldn't have asked for a more comprehensive and encyclopedic reply to the parent post!

I share your pet peeve about businesspeople who have deemed academia an unnecessary economic sink.

Um, I guess you were frozen in cryostasis pre-2007 and missed the entire financial "crisis" which involved something on the order of $14 trillion (i.e. 1 year's GDP or > the entire national debt) was funneled in the form of free money, loan guarantees, etc. into the pockets of Wall Street and the rich. Welcome, and prepare to be surprised at our new president's middle name and how crazy Mel Gibson really is.

America already totally forgot about that. All I read now is people blaming overpaid union workers (what few there are of those) for our government financial woes. Lobbyists? Bailouts? Corrupt contractors? Endless wars to make the world safe for international corporations? Nah, it's the unionists who are bankrupting us!

(I'm not necessarily that big of a fan of public sector unions... just saying there are much fatter pigs at the trough.)

Wars and defense contractor money comes out of a mysterious black pool of federal tax dollars. One can actually kinda measure how unionized county sheriffs making $600,000 a year in California are bankrupting the state.

I don't think that's typical. You're dealing with an outlier there, and a case of blatant flat-out corruption. Most union members do not make anything like that.

It's not that union workers are overpaid as a rule, but that a few unions manage to get unmaintainable benefits for their workers (particularly the more influential ones) in order to justify high union dues and bring more power to those union bosses. A lot of union workers I know don't really like their unions too much, but it doesn't matter — those unions have become hungry political entities that are no more the sum of their workers than the American government is the sum of its populace.

Are those benefits really "unmaintainable"? The FACT is that middle class wages have been stagnant or even declined in real terms since the 70s while executive compensation has absolutely exploded. Corporate profits have gone through the roof as well yet workers have not shared in the gains, and it is not an accident.

I maintain that 90% of the union whining we are subjected to is nothing more than propaganda for obvious peoples' benefit.

That's why I said only some specific unions are this way, not all of them. The GM workers are one example. Yes, their corporate masters were overly well-compensated as well, but that cost was at least limited to only a few people whose ranks weren't likely to grow.

At any rate, I think government employee unions are a bigger problem. Corporations are more capable of standing up for themselves (as you say, sometimes too capable) than a government hobbled by political machinery.

The billionaire welfare class would be the ones who:

1. have their liabilities capped by statute (see BP, GE, Peabody, etc. )

2. have their debts made whole by government action (see most financial companies in 2008)

3. have ownership of or share fractional ownership in a US Senator

4. Are the beneficial owner of a defense contractor.

5. from a long way off look like oligarchs

#3 made me LOL

Is there an exchange for senators? Do they have ticker symbols?

I forgot about liability caps. Those are huge.

> Is there an exchange for senators?

It's called K street, I believe. But, it's a strictly private equity game, capitalism at it's most unfettered; if you know what I mean.

Nit pick: actually, capitalism would be about succeeding without a government teat to suck on. :)

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