Imagine a country in which the very richest people get all the economic gains. They eventually accumulate so much of the nation’s total income and wealth that the middle class no longer has the purchasing power to keep the economy going full speed. Most of the middle class’s wages keep falling and their major asset – their home – keeps shrinking in value.
Imagine that the richest people in this country use some of their vast wealth to routinely bribe politicians. They get the politicians to cut their taxes so low there’s no money to finance important public investments that the middle class depends on – such as schools and roads, or safety nets such as health care for the elderly and poor.
Imagine further that among the richest of these rich are financiers. These financiers have so much power over the rest of the economy they get average taxpayers to bail them out when their bets in the casino called the stock market go bad. They have so much power they even shred regulations intended to limit their power.
These financiers have so much power they force businesses to lay off millions of workers and to reduce the wages and benefits of millions of others, in order to maximize profits and raise share prices – all of which make the financiers even richer, because they own so many of shares of stock and run the casino.
Now, imagine that among the richest of these financiers are people called private-equity managers who buy up companies in order to squeeze even more money out of them by loading them up with debt and firing even more of their employees, and then selling the companies for a fat profit.
Although these private-equity managers don’t even risk their own money – they round up investors to buy the target companies – they nonetheless pocket 20 percent of those fat profits.
And because of a loophole in the tax laws, which they created with their political bribes, these private equity managers are allowed to treat their whopping earnings as capital gains, taxed at only 15 percent – even though they themselves made no investment and didn’t risk a dime.
Finally, imagine there is a presidential election. One party, called the Republican Party, nominates as its candidate a private-equity manager who has raked in more than $20 million a year and paid only 13.9 percent in taxes – a lower tax rate than many in the middle class.
Yes, I know it sounds far-fetched. But bear with me because the fable gets even wilder. Imagine this candidate and his party come up with a plan to cut the taxes of the rich even more – so millionaires save another $150,000 a year. And their plan cuts everything else the middle class and the poor depend on – Medicare, Medicaid, education, job-training, food stamps, Pell grants, child nutrition, even law enforcement.
What happens next?
There are two endings to this fable. You have to decide which it’s to be.
In one ending the private-equity manager candidate gets all his friends and everyone in the Wall Street casino and everyone in every executive suite of big corporations to contribute the largest wad of campaign money ever assembled – beyond your imagination.
The candidate uses the money to run continuous advertisements telling the same big lies over and over, such as “don’t tax the wealthy because they create the jobs” and “don’t tax corporations or they’ll go abroad” and “government is your enemy” and “the other party wants to turn America into a socialist state.”
And because big lies told repeatedly start sounding like the truth, the citizens of the country begin to believe them, and they elect the private equity manager president. Then he and his friends turn the country into a plutocracy (which it was starting to become anyway).
But there’s another ending. In this one, the candidacy of the private equity manager (and all the money he and his friends use to try to sell their lies) has the opposite effect. It awakens the citizens of the country to what is happening to their economy and their democracy. It ignites a movement among the citizens to take it all back.
The citizens repudiate the private equity manager and everything he stands for, and the party that nominated him. And they begin to recreate an economy that works for everyone and a democracy that’s responsive to everyone.
Just a fable, of course. But the ending is up to you.
This post originally appeared at Robert Reich’s Blog and is posted with permission.
10 Responses to “The Fable of the Century”
"Catch-22 says they can do anything we can't stop them from doing". Well……
but doesn't all the money spent by the rich candidate count as economic stimulus?
You forgot a few parts of the fable.
The private equity manager running for president is running against someone who hired all the people who empowered the rich to rig the system. Thus, if the people vote for either one of those two men, the rich financiers win out anyways.
There may be a 3rd candidate, the former mayor of Salt Lake who declared his candidacy January 2012, Justice party and Working Families party. He's got a much better record or actual accomplishments then Obama or Romney. Name is Rocky Anderson. http://en.wikipedia.org/wiki/Rocky_Anderson
GOP started out as a third party. Maybe it's time for it to happen again, for 3rd party candidate to win.
Exactly who are "all of the people who empowered the rich to rig the system"? Last time I checked, Congress made the laws and the Judicial Branch enforced them. If the casino was rigged before Obama took office (e.g., the TARP bailout, the repeal of Glass-Steagall, Citizens United) I don't think it is accurate to say he "hired" all these people who came before him.
Granted, he could have appointed somebody other than Ben Bernanke, but exactly who should he have "hired" to fix the broken financial system, the broken tax system and the broken political system he inherited? These are political problems that are not solved by new hires in the Executive Branch. Ever since 2010, he has had no power to do anything at all because Republicans oppose anything he proposes, even when it's one of their own ideas.
I'm a Canadian–same fable here–governments no longer represent the best interests of the people. They're selling our country and us out to multinational interests and the promise that we too can participate in the bounty by investing in the stock market.
You forgot another part of the fable: Part of the massive wad the 1% assembles goes to buying security forces which crack the skulls of anyone who tries Option Two.
And imagine that by eliminating corporate pensions for all but the executives, by individualising retirement savings as 401s and IRAs, and by cutting social security, the financiers get the rest of us to boost their casino shares and trading profits while shouldering a bigger share of the risk!
Robert Reich’s trenchant critique of the sad state of affairs today in the USA is more than deficient due to the implicit assertion that the Democratic party does not also represent and work for the “one-tenth of one percent.” Did he not read that Goldman-Sach’s bankers donated mucho bucks to OB? Was not Glass-Steagall decimated during the Clinton administration–in which Reich served? What makes the situation so bad is precisely the fact–let Reich prove this wrong!–that both major parties have long joined hands in wreaking havoc on the majority of people in the USA.
Robert Reich’s trenchant critique of the sorry state today of the USA would be much more convincing if he showed that a popular movement to “take back the country” cannot have anything to do with the Democratic Party. Was not OB funded generously by Goldman-Sach’s bankers? Was not Glass-Steagall brought down by the Clinton administration, where the Treasury secretary was a former G-S bond trader. In contrast, it was Bush who at least had an industrialist–who publicly mocked Wall St. traders–as his Treasury secretary before letting G-S again run the Treasury. Really, are the Democrats no less “bribed” by the financial elite than the Republicans?