Salon.com > bankers

How rich “moochers” hurt America

Fri, 22 Mar 2013 11:45:00 +0000

In a previous column detailing the true "makers" and "takers" in America, I argued that the greatest threat to American capitalism today comes not from public taxation supporting public programs, but from “private taxation” in the form of excessive private “rents” that subsidize private sector parasites or “rentiers” (like landlords, lenders and providers of health insurance and healthcare). These excessive private taxes or rents are costs on productive enterprise that can be as crippling as excessive public taxation.

In American politics as in the American economy, power and wealth have shifted from the industrial capitalists of old to the “rent lords” of the early 21st century, based in the overgrown FIRE (finance, insurance, real estate) sector. The agenda of the new rentier oligarchy in the U.S. is quite different from that of traditional productive businesses. The Rentier Agenda consists of low taxes on rentiers, the privatization of infrastructure and social insurance, and a macroeconomic policy that favors creditors rather than debtors, including debtor businesses and debtor governments.

Private sector parasites

Thu, 21 Mar 2013 12:44:00 +0000

You don’t have to be a Tea Party conservative to believe that the economy is threatened when there are too many “takers” and not enough “makers.” The “takers” who threaten the dynamism and fairness of industrial capitalism the most in the 21st century are not the welfare-dependent poor — the villains of Tea Party propaganda — but the rent-extracting, unproductive rich.

The term “rent” in this context refers to more than payments to your landlords. As Mike Konczal and many others have argued, profits should be distinguished from rents. “Profits” from the sale of goods or services in a free market are different from “rents” extracted from the public by monopolists in various kinds. Unlike profits, rents tend to be based on recurrent fees rather than sales to ever-changing consumers. While productive capitalists -- “industrialists,” to use the old-fashioned term -- need to be active and entrepreneurial in order to keep ahead of the competition, “rentiers” (the term for people whose income comes from rents, rather than profits) can enjoy a perpetual stream of income even if they are completely passive.

How much is enough to make a banker happy?

Sun, 06 Jan 2013 13:00:00 +0000

Last winter, Bloomberg published a much-discussed account of belt-tightening in the brave new economy. Notable for featuring Wall Streeters, not Walmart greeters, the suffering depicted was sepia-toned. One poor soul described driving all the way to outer Brooklyn to buy discounted salmon, another the indignity of doing his own dishes, and a third dismissed his Porsche 911 Carrera 4S Cabriolet as “the Volkswagen of supercars.”

Among the lingering calamities of the financial crisis, the sorrows of young bankers don’t exactly cry out for remedy. This is not Les Miserables but the hardships of the haute bourgeoisie. Yet the afflictions of affluence are afflictions nonetheless, and this particular one can teach us an awkward but essential truth in the ongoing debate over income inequality—if we can only bear to listen.

Will Wall Street be punished?

Fri, 09 Nov 2012 12:45:00 +0000

Who is ready to shed a tear for Wall Street? The moguls bet big, and lost. Now, if we are to believe their whining, they are preparing to pay the piper.

“We played the old Beatles song ‘The Taxman,’ on our trading floor this morning,” bond fund uber-manager Bill Gross told Bloomberg on Thursday.

Oh lordy, hard times are coming!

Although, you know, those times might not be quite so hard as the days back in the mid-'60s when George Harrison felt himself compelled to complain about a 95 percent "super tax." If, during the negotiations to avoid the "fiscal cliff," President Obama plays a level of hardball that was in short supply for most of his first term, the wealthiest Wall Streeters might see a return to Clinton-era income tax rates on the rich. Anything more meaningful, like a hike in the tax rate on capital gains, or an end to the exemption for carried interest, will require a major breakthrough -- successfully bashing through the obstructionism of House Republicans who seem unlikely to accede to any elements of Obama's agenda, no matter how forcefully the president seeks them.