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Monday, January 16, 2012

The One Percent in the NYTimes

The NY Times has published an article (Among the Wealthiest One Percent, Many Variations) that tends to show that there is diversity among the 1%.  So this could be the data that I was looking for with my earlier question (see November) about "Who are the 1%?  Unfortunately, it's more of a puff piece than anything else; it's not trying to be rigorous in any way -- the goal seems to show that the 1% are people too (see especially the last sentence of the piece, about a sign saying "we are the 100%").

For example:

"Though many of the wealthy lean toward the Republican Party, in interviews, 1 percenters expressed a broad range of views on how to fix the economy. They think that President Obama is ruining it, or that Republicans in Congress have gone off the deep end. They favor a flat tax, or they believe the rich should pay a higher marginal rate. Some cheered on Occupy Wall Street, saying it was about time, while others wished the protesters would just get a job or take a bath. Still others were philosophical — perhaps because they could afford to be — viewing the recession as something that would pass, like so many previous ups and downs.

"Of the 1 percenters interviewed for this article, almost all — conservatives and liberals alike — said the wealthy could and should shoulder more of the country’s financial burden, and almost all said they viewed the current system as unfair., and it makes no attempt "

Statements like "Though many of the wealthy lean toward the Republican Party . . . " just make me cringe.  It would be equally true, and equally vapid, to say "Though many of the wealthy lean toward the Democratic Party."  And then of course, the statements of those who agreed to be interviewed can't be taken as in any way representative of the 1%, especially given the fact that (as the author says), many refused to be interviewed.

The data is apparently census data, and it therefore (1) writes down the occupation that people give, and (2) tracks income by household.  I.e. teachers show up as in the 1% if they are married to someone who is.  There is also an interactive chart that lets you see what percent of any given occupation live in households that are in the 1%. 

What's missing is the answer to the question I have been asking -- where exactly do the 1% get their money from?  My answer, is, for the most part, from what I call "skimming" -- i.e. standing near a huge flow of cash (which ultimately comes from consumers, and sometimes taxpayers) and skimming of a small fraction of a percent (like the "golden crumbs" in Bonfire of the Vanities), usually in exchange for some effort that will help preserve or enhance that huge flow.  My point is that there is no way to judge the value to society of enhancing that particular cash flow -- often, e.g. when it reflects monopoly power, it comes at significant social cost.  While these people might believe that they are working hard for their money, and while their employers reward them because of what they do for the employers' bottom line, that does not necessarily mean that what they are doing is socially beneficial.  And if it isn't, then one way to correct the problem is to increase their taxes.  If that causes them to stop doing so much skimming, maybe that's not such a big deal.

Perhaps that's what's missing from the 1% debate.  I'm sure someone other than me is saying it, but it's not coming through loudly enough.  Let me try to rephrase it in one sentence:  "Taxing the rich is justified as a matter of economic policy, and not just because we need the money."  Specifically, the tax system can be used to encourage or discourage behavior that society likes or doesn't like.  If after analyzing the issue closely, society decides that it doesn't like "skimming," then there would be nothing wrong with imposing a special tax on skimmers.  Right now, the 1% is a pretty good proxy for who the skimmers are . . . .  Yes, this tax would HELP us in this time of financial need (which was caused primarily by skimmers), and we can even admit that that's one of the reasons we need to impose it.  But that's not the only justification for it.

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