Wealth Inequality, Healthcare and the Economy

A Washington Post article last week concluded that People have no idea what inequality actually looks like, and that caused me to respond and to enhance this article, which was published here two years ago. It features some disturbing videos that help us understand the corrupting influence of big money in politics and the direct relationships between:

  • Special interest lobbying and policies resulting in a widening of income & wealth gaps,
  • Between the widening wealth gaps and poverty,
  • Between Poverty and obesity,
  • Between obesity and diabetes and other chronic illness,
  • Between chronic illness and rising healthcare costs, and
  • Between rising healthcare costs and our economic problems.

Highlights from the video above

  • The Reality in this country is not at all what we think it is.
  • Our Perception of wealth distribution is far from our Ideal but not even close to Actual distribution.
  • The top 1% has more of the nation’s wealth than 90% of us think the top 20% Should have.
  • 1% has 40% of all of the nation’s wealth and takes home almost 25% of the annual income.
  • The top 1% own half the country’s stocks, bonds and mutual funds.
  • The bottom 50% own just 0.5% of stocks, meaning they live hand-to-mouth and don’t invest.
  • The bottom 80% of the nation has only 7% of the nation’s wealth between them.
  • Do CEOs really contribute 380 times more than the average worker (not lowest, but average)?
  • UPDATE: CEOs now make almost 1,000 times more, according to this billionaire.
  • The Average worker needs to work more than a Month to make what the CEO makes in one Hour.

Click on the Bitter Pill to visit the official website of Inequality for All.

After seeing the Washington Post article and browsing Netflix for a good movie, I noticed and watched Inequality for All. It’s a 2013 documentary featuring economist and former Labor Secretary Robert Reich, who served under three presidential administrations — Ford (R), Carter (D) and Clinton (D) — and offers important and expert insights. The film is described as “a game-changer” in our national discussion of income inequality, but only if people watch it. After watching the trailer below, I encourage you to watch the full version and even host a Watch Party, inviting your friends and discussing the issues raised. It’s a great way to better understand the impact that inequality has had on the nation’s poor and middle-class and the economy in general, or healthcare in particular, watch the full version that follows.

Reich starts with a discussion of just how wide the wealth gap has become and how the top 1% can’t even spend what they earn, even with lavish lifestyles. They can’t buy “that” many homes or cars or pillows or jeans. Such extreme wealth doesn’t really contribute much to the economy or jobs, he argues. He then describes some of the causes, including:

  • Globalization,
  • The accelerating pace of tech innovation, and
  • The growing influence of big money in politics.

His recommendations are hard for some people to swallow, a bitter pill if you will, including:

  • Get big money out of politics,
  • Fix the tax system,
  • Invest in education,
  • Raise the minimum wage,
  • Strengthen worker’s voices, and
  • Reform Wall Street.

Inequality for All — Trailer

The Rich Are Taxed Enough- Debate

This is a long debate showing both sides of the tax reform debate. In the end, 30% of the audience agreed that the rich are taxed enough, while 63% were convinced that the rich are NOT taxed enough compared to the rest of society.

Inequality for All — Bill Moyers interview

Inequality for All — Related Infographic

CEO Pensions are 1,200 times median workers, yet they want to cut social security

Raising the Minimum Wage?

If raising the minimum wage isn’t the best way to reduce inequality, what is? Here’s my response to Christos Makridis’ article.

The minimum wage issue is just one part of a much broader economic system and should not be discussed in a bubble. While a benefit of our capitalist form of government is to encourage risk-taking and investment and innovation among those with capital to do so, that same system seeks profit for owners and shareholders by almost any means. That includes replacing workers or augmenting their performance with skills training, automation, AI and robots. Over time, the accelerating pace of tech innovation has helped to dramatically increase worker productivity, but the benefits flow to the owners, not the hired workers. And developing new skills through lifelong learning to keep up with technology doesn’t necessarily result in higher wages.

The supply & demand of labor fits the traditional economic model. When supply of workers with a needed skill is low, wages rise; and when supply is high, wages fall or stagnate. That means training grape-pickers to become app developers both lowers the wages of developers and raises that of pickers. But that’s a simplistic way of looking at things, and I prefer to step back with a wider perspective that considers both economic growth and improved lifestyles.

To encourage economic growth, government has a role in developing a healthy, skilled, and productive workforce through public education, lifelong learning opportunities, and universal healthcare. But government also has a role in providing a safety net and a hand up for those impacted by illness, injury, or just being born into the wrong family – again with the objective of improving the productivity of our nation, and thus the profits of companies and our GDP and global competitiveness.

To do these things requires strategic investments in education, research, infrastructure, healthcare, and wellness & social programs, among others. But who pays for that? It makes no sense to put a heavy tax burden on workers when they don’t profit from the productivity increases that result from those public investments. No, most of the burden should come from those who profit the most, and that’s why I support adding new tax brackets for the top 1%, 0.1% and 0.01%.

The top tax rate today is 39.6% for income above $415,050, which includes many small businessmen; so rather than raise the rate for existing brackets, consider a 50% rate for income above $2M, a 70% rate for income above $20M, and a 90% rate for income above $200M. But also remove the tax loopholes and remove the cap on Social Security tax. And an alternative to raising the minimum wage might include incentives to doing that by lowering the tax burden of companies who keep a low ratio between the highest incomes and lowest, where income includes wages, stock options, and all other forms to make it more difficult to “game” the system.

4 thoughts on “Wealth Inequality, Healthcare and the Economy

    An easy tax reform solution is to add 2-3 new tax brackets at the top. Without raising taxes on the middle income earners, or even the top 1% making $1M/year, we could generate more tax revenue to fund government by adding a 60% bracket for the 0.1% and an 80% bracket for the 0.01%.

    — $1M, if taxed at 35%, would generate $350K, leaving behind $650K. (That’s the 1%)
    — $5M, if taxed at 60%, would generate $3M, leaving behind $2M. (That’s the 0.1%)
    — $30M, if taxed at 80%, would generate $24M, leaving behind $6M. (That’s the 0.01%)

    Of course it also makes sense to eliminate loopholes like the ultra-low rates for inheritance estate tax and carried interest, which is why hedge fund managers like Mitt Romney are only taxed at a 15% rate.

    Watch this TED Talk about Poverty, asking “What if our healthcare system kept us healthy?” https://www.youtube.com/watch?v=BoRUrWcdkQ4

    The Decline of the Middle Class: Stealth Governance and Income Inequality (Huffington Post – on policies that widened the wealth gap)

    Inequality Kills — But What Can Medical Providers Do About It? (Huffington Post – on the health impact of poverty)

    What Americans Think About Income Inequality (FASTCOMPANY, I commented)

    Why the shape of inequality matters (TheWeek)

    Was There Ever a Time When so Few People Controlled so Much Wealth?

Comments are closed.