Tax the Super Rich. Tax them now. Before the other 99% rise up, trigger a new American Revolution, a meltdown and the Great Depression 2. Revolutions build over long periods — to critical mass, a flash point. Then they ignite suddenly, unpredictably. Like Egypt, started on a young Google executive's Facebook page. Then it goes viral, raging uncontrollably. – MarketWatch
Dominant Social Theme: Whack them now, as we've been whacked. We'll feel better and maybe we won't demand substantive change.
Free-Market Analysis: Gee, this is a blunt piece that Paul B. Farrell has written for MarketWatch. It is part of a larger theme on which he's elaborated in several columns, apparently. His perception is that the Super Rich (whoever they are) and the GOP are laboring under what he calls the "Super Rich Delusion" that things are OK in America.
Once the economy turns positive again (and didn't the Obama administration just announce the recovery was finally underway?) America will return to normal. The backyard barbecues will fire up; GM will turn a profit and the vitriol increasingly affecting the national US conversation will diminish and perhaps even die off completely. It's happened that way before. But that's the Delusion. Farrell is convinced it won't happen this time, or not unless some fairly decisive, even radical steps, are taken. He's trying to save the world, or at least warn people of what's coming.
This is an increasingly evident sub-dominant social theme in the mainstream media: That Western society is going to rise or fall based on the actions of the Super Rich and how society treats them. We noted it in an article earlier this year in the US elite-oriented publication The Atlantic. "The Rise of the New Global Elite" by Chrystia Freeland argued that "today's super-rich are different from yesterday's: more hardworking and meritocratic, but less connected to the nations that granted them opportunity — and the countrymen they are leaving ever further behind …"
Freeland, just like Farrell, is most concerned about the attitudes of the Super Rich. Where Farrell sees deadly apathy and arrogance, Freeland sees a process at work: "They are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today's super-rich are increasingly a nation unto themselves." You can see our article on Ms. Farrell's treatise here: Necessity of the Plutocracy.
It is noteworthy to have MarketWatch and The Atlantic speaking with one voice. Obviously, the Super Rich have Become a Problem. Freeland is concerned; Farrell is positively apocalyptical. "We know the Super Rich don't care," he writes. "Not about you. Nor the American public. They can't see. Can't hear. Stay trapped in their Forbes-400 bubble. An echo chamber that isolates them. They see the public as faceless workers, customers, taxpayers. See GOP power on the ascent. Reaganomics is back. Unions on the run. Clueless masses are easily manipulated."
Farrell is not shy about widening culpability. He writes that the Obama administration is working "secretly" with the GOP and that the administration is not about to attack its Super Rich donor-base. Farrell even quotes a "savvy insider" who describes the lifestyle of the Super Rich and its larger Delusion:
Here's how one savvy insider who knows described this Super-Rich Delusion: "The top 1% live privileged lives, aren't worried about much. Families vacation at the best resorts. Their big concerns are finding the best Pilates teacher, best masseuse, best surgeons, best private schools. They aren't concerned with the underlying deterioration of America or the world, except in the abstract, because they aren't directly affected by it. That's not to say they aren't sympathetic, aware, or don't talk about the issues you bring up. They are largely concerned with protecting and enhancing their socio-economic positions, ensuring their families live well. And nothing you write about will change things."
Farrell writes that the Super Rich are insulated by their megabucks, by their gated compounds and even by their mercenaries. But this is nothing more than "delusion" pushing America and the world to the "edge of a great precipice." He even reminds us that the top economist of the day, Irving Fisher, maintained that stocks had "reached what looks like a permanently high plateau" right before the 1929 Crash itself. Fisher was blinded the same "delusion."
Farrell goes abroad for further examples of delusion. He reminds us that the recent "color revolutions" were unexpected. Dictators like Egypt's Hosni Mubarak lived in a bubble just as the Super Rich do today. Mubarak didn't see revolution coming until it was too late. Then Egypt's educated but hungry younger generations turned on him, as they are turning on power centers throughout the Middle East and Northern Africa. Some more from the article:
Still, you don't believe there's a depression ahead here in America? The third great market crash of the 21st century? A new economic revolution about to blow up in our faces? No, you don't believe, can't believe … you, me, we are all infected by the Super-Rich Delusion, just as Americans were in the Roaring Twenties. Check the stats folks: The last time America's wealth gap between the Super Rich and the other 99% was this big was just before the 1929 Crash and the Great Depression … Start preparing for the third meltdown of the 21st Century, and depression …
Wall Street, Farrell writes, lost 20% of savers' retirement money from 2000 to 2010 ($10 trillion). It's an "us versus them" mentality that Farrell is preaching. Unlike Freeland, he is not just posting a polite warning to the Super Wealthy. He is predicting class-warfare, especially if the Super Rich don't change their ways – and soon. The trends are unmistakable and don't bode well.
But the trouble with Freeland's polite warning and now Farrell's screed, we would suggest, is that it is aimed at entirely the wrong people. Farrell, like numerous others in the mainstream media is trying to convince readers that those with US$500 million or US$1 billion are the world's movers and shakers. These are the people, as well, who will need to be made an example of if class warfare in America (and perhaps in Europe) is to be averted. The trouble with this argument is twofold.
First of all, the real Super Rich in the world are not worth billions, apparently, but trillions. Second, the real Super Rich are trying to build a one-world order using the central banking structure that they have created over the past 100 years and that allows them to print money from nothing. Farrell says nothing about central banking. Neither does Freeland for that matter. Farrell is certainly eloquent, and we'll assume he's sincere, but his argument is just a variant of the one that has worked well for the REAL Super Rich – the Anglosphere's select group of top banking families located mostly in the one-square-mile of the City of London.
It is surely a dominant social theme – that the rich ought to be blamed for what's gone wrong along with Wall Street and politicians. Exempt from the blame game are those who created the problem via the easy money of central banks and those who control the central banks from behind the scenes. These are the REAL super-wealthy. Unfortunately, Farrell apparently has not turned his attention to them. Why not?
Farrell does have a point: Anger is building and chaos is increasing. But we would argue that the chaos is being induced by the same power elite that Farrell refuses to describe. Farrell uses the youth revolutions of the Middle East to buttress his thesis that unexpected change can affect the Super Rich at any moment. But there is plenty of evidence that the color revolutions were actually supported and even initiated by Western governments and intelligence agencies.
In the past, especially during the 1930s, the power elite's divide and conquer approach worked fairly well. The "blame the rich" approach to financial woes resulted in higher taxes and Wall Street convictions and massive financial reorganizations that were supposed to ensure that "greedy tycoons" could not take advantage of the system.
Of course, the system actually got worse rather than better, the more power was concentrated in fewer hands. This is part of power-elite methodology. The more the system is regulated and centralized, the more government levers are available. Mercantilism is the preferred way of building wealth. The REAL wealthy use the power of government for private gain.
Has the Internet changed the substance of the modern financial conservation? We argue regularly that it has. In fact, we have not seen, despite Farrell's angry text, a great deal of Western (or American) agitation for "higher taxes" on the rich. Nor have we seen large protests calling for increased Wall Street regulation. Maybe we're just not looking in the right places.
What we do see, especially in America, is a growing awareness that the fulcrum of the system – central banking's ability to print money from nothing – is an increasingly significant issue. Just last week, the news came out that 70 percent of the Federal Reserve's low cost and no cost loans and other kinds of liquidity had gone overseas. Congressman Ron Paul (R-Tex) is holding a hearing on it. Ben Bernanke's job just got appreciably tougher.
Unlike Farrell, we are not looking for ways to stave off civil unrest such as higher taxes on the wealthy. If the elites cannot ignite the kind of indignation at Wall Street and banks and the "wealthy" that they were able to create in the 20th century, then the system itself becomes a target (for civil, non-violent action; we do not advocate violence). If this is the case, there might be significant changes leading to freer markets and more monetary freedom as well.