"What Mitt did and didn't build" The Economist (Great article)

[applegrove]

What Mitt did and didn't build

The Economist

http://www.economist.com/blogs/democracyinamerica/2012/07/tax-justice?fsrc=scn/tw/te/bl/whatmittdidanddidntbuild

"SNIP.....................................

What caused this tremendous increase in the share of wealth going to the top 0.01% of earners? To some extent, it was due to implacable changes in the nature of the global economy: the shift of manufacturing jobs to emerging markets holding wages down, increasing returns to education and information technology, financialisation, the superstar economy. To some extent, it was due to political changes: the collapse of labour unions, drastic cuts in top marginal income-tax rates, and so on.

One thing you can't reasonably say, though, is that it's because top managers in Mitt Romney's era are smarter or harder-working than those in his father George's were. Nor can you say that managers these days are generating more growth or jobs for the rest of us; they're generating less. For the most part, America's richest executives today are vastly richer than America's richest executives in 1968 for reasons that have nothing to do with their own merits or sins, or with their contributions to society. Mitt Romney may have built Bain Capital, but he didn't build the income distribution pattern of the US economy.

Or maybe he did, in part. There is an argument to be made that companies like Bain Capital did, in fact, contribute to the widening of income disparities, by extracting more and more of firms' value for private equity and other investors and for top management, and leaving less and less of it available for workers. But I don't think that's an argument you'll hear Mr Romney making.

Anyway, if America's richest are wondering why a majority of Americans favour taxing them more heavily, they may want to look at the above graph for an explanation. Americans see an elite class that seems to be reaping an ever-growing windfall from globalisation, while average workers are being squeezed ever tighter by unemployment and stagnant or falling wages. The income elite don't appear to have done anything to justify their ever-enlarging share of the pie. They seem to have lucked into it. Or rather, there are two theories. The first theory is that America's financial elites are in no way responsible for the forces that are awarding all the gains from economic growth to them, while tossing only occasional scraps to average workers. The second possibility is that America's financial elites are responsible for those forces. Neither of those theories is very politically helpful to Mitt Romney.

..........................................SNIP"