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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsLarry Summers: The US is becoming a 'Downton Abbey' economy
The following is quoted from an editorial by Summers appearing in today's "Financial Times."
Inequality has emerged as a major issue in the US and beyond. A generation ago it could reasonably have been asserted that the overall growth rate of the economy was the main influence on the growth in middle-class incomes and progress in reducing poverty. This is no longer a plausible claim.
The share of income going to the top 1 per cent of earners has increased sharply. A rising share of output is going to profits. Real wages are stagnant. Family incomes have not risen as fast as productivity. The cumulative effect of all these developments is that the US may well be on the way to becoming a Downton Abbey economy. It is very likely that these issues will be with us long after the cyclical conditions have normalised and budget deficits have at last been addressed.
.......
It is not enough to identify policies that reduce inequality. To be effective they must also raise the incomes of the middle class and the poor. Tax reform has a major role to play. The current tax code is so badly designed that it is very likely to be having the effect of reducing economic growth. It also allows the rich to shield a far greater proportion of their income from taxation than the poor. For example, last years increase in the stock market represented an increase in wealth of about $6tn, of which the lions share went to the very wealthy.
It is unlikely that the government will collect as much as 10 per cent of this figure. That is because of a host of policies that favour the rich, such as the capital gains exemption, the ability to defer tax on unrealised capital gains, and the fact that gains on assets passed on at death are not taxed at all. Similarly, the corporate tax system allows value to flow through it like a sieve. The ratio of corporate tax collections to the market value of US corporations is near a record low. The estate tax can be more or less avoided with sophisticated planning.
http://m.ft.com/cms/s/2/875155ce-8f25-11e3-be85-00144feab7de.html
Turbineguy
(37,361 posts)used to be industrialists, people who created wealth and employed large numbers of people. Now the 1 percent are financial types who rig the system and loot wealth.
Enthusiast
(50,983 posts)And that Gramm-Leach-Bliley that Summers was a cheerleader for is the foundation for the mechanism used by the 1% to do the looting. Bring back Glass Steagal!
2banon
(7,321 posts)JDPriestly
(57,936 posts)Progressive dog
(6,917 posts)forced competitors out of business. They employed armed thugs to break strikes.
Many of them were not industrialists, they provided the money and expertise to organize the various trusts.
Squinch
(50,989 posts)It's easier to make a buck when you have a pile of money than it is to turn a pile of stuff into money.
Auntie Bush
(17,528 posts)That doesn't produce jobs...except maybe more Island Cayman bankers.
I personally think all money in the Islands should be accounted for and taxed as income. It isn't fair that the rich can hide so much money and workers get taxed on all their income. The rich should too.
shenmue
(38,506 posts)Enthusiast
(50,983 posts)which put tax payers on the hook for fraudulent behavior by your good buddies.
Asshole!
2banon
(7,321 posts)valerief
(53,235 posts)FreakinDJ
(17,644 posts)adirondacker
(2,921 posts)MannyGoldstein
(34,589 posts)he finds the *real* killer.
I love Larry.
KG
(28,752 posts)Demeter
(85,373 posts)You are the chief tool in the Robert Rubin drawer. If you want someone to blame, go look in a mirror.
Squinch
(50,989 posts)Volaris
(10,274 posts)And decided he would rather not be hanged for his particular brand of treason?
hatrack
(59,592 posts)Bite me, you pretentious bag of shit.
Oh, and how'd that "free-market miracle" known as Gramm-Leah-Bliley work out for you?
L0oniX
(31,493 posts)treestar
(82,383 posts)The rich there are having to adjust to a new economy. They are going to lose their estate if they don't get more business savvy.
maddiemom
(5,106 posts)Abbey," he'd be drawing a different lesson.
QC
(26,371 posts)to learn that there is gambling at Rick's.
4_TN_TITANS
(2,977 posts)Is it denial, or does this guy really not know how much of the problem he has been over his career?
What he describes is the end-game of everything he has advocated. Sheesh.
closeupready
(29,503 posts)our corrupt "money is speech!" political status quo prevents us getting a responsive Congress to improve our way of life.
magical thyme
(14,881 posts)So 'everyday people' he watches Downton Abby just like the rest of us ordinary schmoes.
And then there's this gem:
Presidents from Franklin Roosevelt to Harry Truman railed against the excesses of a privileged few in finance and business. Some have gone beyond rhetoric. Confronted with rising steel prices, John Kennedy sent the FBI storming into corporate offices and is widely thought to have ordered the authorities to audit executives personal tax returns. Richard Nixon used the same weapon in 1973, announcing tax investigations of the books of companies which raised their prices more than 1.5 per cent above the January ceiling.
http://www.ft.com/cms/s/2/875155ce-8f25-11e3-be85-00144feab7de.html#ixzz2tb25G1h3
Nice to imply that Roosevelt didn't get beyond rhetoric because, like, Glass-Steaghall had nothing to do with his success. And its repeal, tyvm Larry, didn't contribute greatly to our current nightmare scenario.
All leading us to his brilliant, and some how not terribly surprising, conclusion:
"Sooner or later inequality will have to be addressed. Much better that it be done by letting free markets operate and then working to improve the result."
Yup, just let those "free markets" continue the updraft until the 0.01% have it all.
Oilwellian
(12,647 posts)Summers is the definition of sleaze.
Locrian
(4,522 posts)Larry *fuc**ing** Summers? Are you kidding me? The free market leg humper is now surprised that this is happening? The Same Larry *fuc***ing** Summers that drove a lot of these policies?
Oh, wait.... I read it assuming he thinks this is a BAD thing. I get it, jokes on me :p
And *obviously* the best solution will be less regulation and more 'freedom' of the markets.
pa28
(6,145 posts)Tax reform that actually ends up lowering rates?
Nothing about reigning in monopoly banks or restoring a healthy labor market because "what would Goldman think".
Seriously I can't fathom why anybody at all listens to this person still. He's been part of the problem for over 20 years now.
jsr
(7,712 posts)progressoid
(49,992 posts)Um...fuck you.
Octafish
(55,745 posts)The Velveteen Ocelot
(115,806 posts)Sounds like a guy who murders his parents and then bemoans the fact that he's an orphan.
Guy Whitey Corngood
(26,501 posts)LittleBlue
(10,362 posts)Yeah no
MisterP
(23,730 posts)Armstead
(47,803 posts)merrily
(45,251 posts)colsohlibgal
(5,275 posts)Talk about tone deaf. Larry you're a huge reason for the burgeoning inequality and you got rich screwing all of us. You should be in the Big House.
jtuck004
(15,882 posts)by a pedophile.
TomClash
(11,344 posts)Bank bailouts, free trade and tax cuts for the wealthy all were approved by Lord Summers.
JDPriestly
(57,936 posts)fact.
Skittles
(153,174 posts)it's just that the results of his kind of policies are now too obvious for even him to keep pretending otherwise
IDemo
(16,926 posts)jsr
(7,712 posts)Roland99
(53,342 posts)Demeter
(85,373 posts)how's life treating you?
Roland99
(53,342 posts)To quote the evil magician from Frosty the Snowman, "Busy! Busy! Busy!"
Commuting (via Delta) to RIC from MCO every week (since the first of the year). A few more months of this.
fun stuff.
I still lurk in SMW a bit but haven't really had time to post any market news.
Hope all is well!
Demeter
(85,373 posts)Happy landings, every single one!
defacto7
(13,485 posts)but Larry Summers can't possibly have seen Downton Abbey or he would never have used it for his argument. It's a pretty bad analogy considering it's about a failing aristocratic system and how they cope with it. The 1% have absolutely nothing to do with their failing system. A better analogy would be about the rise of the Rockefellers, Vanderbilts or J.P. Morgan, or maybe the rise of Genghis Khan for that matter.
alp227
(32,046 posts)merrily
(45,251 posts)DiverDave
(4,886 posts)liar, criminal
Autumn
(45,120 posts)Fuck him.