To address your gripe about the "very top" getting "ALL" the benefits of growth. They also shouldered the greatest burden. Remember who pays the lion's share of taxes...
"The top-earning 5 percent of taxpayers (AGI over $...159,619), however, still paid far more than the bottom 95 percent. The top 5 percent earned 34.7 percent of the nation's adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes."
http://www.taxfoundation.org/news/show/250.html
How much do you want the top 5% to pay? All of the federal individual income taxes? That, of course, would be absurd.
And remember the bugs in your data collection:
"Overall, these data on high-income tax returns appear to confirm that the recent recession had the same diminishing effect on income inequality that most recessions have, and that it occurred for the same reason, a sharp decline in income at the high end. This appears to contradict recent reports based upon Census data suggesting the opposite, that this recession had actually increased income inequality. This inconsistency between IRS data and Census data is explained by a number of factors such as: (1) Census doesn't break down data for the extremely high income tax returns (typically stops at the 5 percent threshold), (2) Census income measures do not account for capital gains realizations, and (3) Census data gathered from household surveys are less reliable for income information at the high end of the income spectrum than IRS data."
The assertion that this economic disaster was brought on by "the top 2%" is utter conspiracy-theory nonsense. Millions of middle-class homeowners took out loans, in many cases lying to get them, that far exceeded their ability to pay. They hoped to game the system, perhaps, or "not to miss out." Regardless, this was the core of the housing/leverage super-bubble. This was abetted by government policies allowing low-to-no down payments in an effort to "share the wealth" of homeownership with a broader population. And by an absolutely idiotic Federal Reserve policy of low interest rates (shame on Greenspan for calling himself an objectivist while weilding the club of market intervention). Securitization was a useful tool that became a deadly weapon--but only in the hands of people who deliberately ignored the instruction manual. Somebody very stupid bought that junk. Many of us knew it was unwise, because we are students of the system. We chose not to participate in those markets.
Leverage is your enemy, not "the top 2%". Eliminate or reduce leverage and many evils are defanged--no housing bubble, no hedge funds, no crazy private-equity buyouts. No populace enslaved to their credit cards. I imagine banks would be smaller; they would certainly be more conservative.
For the past decade I've been intimately involved in--and aware of--the workings of the financial system. A bubble is a bubble, and they've been happening for centuries. The enemy is irrational behavior by market participants. Unfortunately, that will probably never change. The best we could do would be limit people's ability to leverage their irrational behavior to the point of collapse.
Sadly, we're using a lot of leverage ourselves at the national level. Too much debt. The problem has moved, like a Whack-a-Mole, from individuals, to corporations, to states, and finally to the federal government.
I know many in the top 0.1% and they don't and didn't have some secret cabal to cause a crash. I wish they did; I'd probably get to have a hand in it. They know very well that the burden will fall on them to fix it (see tax burden, above). Nearly all of them have businesses--and incomes--that depend on good economic times and general prosperity. These people work 18 hours a day for decades to build their wealth, and employ thousands of people in the process--indeed, some of them make their employees or investors very rich. And all this is done not by stealing, but making something better, cheaper, and more appealing when they sell it to their customers. Most of the time, the role of government in that process is to be inefficient, absurd, conflicting, unweildly, and incomprehensible. I've seen it over and over. When I was a broker, I was regulated by FIVE different agencies. And you know what? Not one of them actually ensured any of us were acting ethically. None of them prevented the crash. So all five were a collosal waste. That's government, and "regulation."
Nobody wins in a crash, and the rich--more than anyone--know that very well.
With all the evidence emerging about wall street banks packaging of mortgage backed securities--the crap Goldman knew was crap--and the demand this created for ANY mortgage, however crappy, you still want to nail the blame on "millions of homeowners" who "lied" to get their houses? This is quite a revelation. I'd be interested to know how you have such insight into all these people's intentions and level of honesty. Survey? Ethnography? Any actual data? If you loan money to someone who shouldn't qualify for a loan simply because you know that you are going to be able to move that crap loan out the back door, where Goldman can polish the turd to sell to a state pension fund, the homeowner is a minor player in the drama. One that should be held responsible, sure, but pegging it on that player is far more scandalous.
It doesn't have to be a "conspiracy" per se, either--though I think there are plenty of cases where this is exactly what it was (reporting by Matt Taibi, Nomi Prins and others over the past two years confirms this). The big cause is the set of capital friendly policies that are the centerpiece of neoliberalism as a bipartisan policy regime. But this was helped along by among other things, the assumption that home prices would never go down, the assumption that there would be a state mechanism to force people to pay, the assumption that the state would likely step in if it got messy, the assumption that they were going to be able to get away free and clear, etc. It was a convergence of factors, to be sure, with homeowners, the Fed and Greenspan (who, BTW, Taibbi calls the biggest asshole in the universe) having some responsibility for this, but the "irrational behavior" is not external to the profitable transaction: this is the central feature of all investments. And the only thing that can stem its most harmful effect is some form of rules that all the parties in the market have to follow, i.e. regulation. Since the order of the day--brought about by hefty lobbying by the financial players themselves--was deregulation, well it is no wonder there was no one interested in manning the store.
It is no accident that there are five different agencies regulating you, or that they are completely ineffectual at doing so. THis is by design and it is one of the flaws that Elizabeth Warren wanted to correct before she was ushered offstage for being to gung ho on actually regulating finance (instead of just creating a nuisance.) It is regulatory capture pure and simple and even if your fellow .1percenters are not at fault, much of their windfall over the past years has been due to the system being rigged in their favor. If they actually believe that they need customers and that other people in the bottom 99.9% matter, then it is hard to understand your reluctance to have a more progressive tax system.
Here's where my problem with Mr. Koch and your own little description of how the world works seems to run aground. The top tier are the titans and the Most Important People in Society (in so far as society exists) because you make money then use that money to employ others ("thousands" of others, by both your counts--which is no small potatoes in a country of 300 million. or...). On this count lowering the tax burden would be the best idea because then more of that money could be used productively, pumped back into the economy, more people go to work etc. Then the 95% of people who don't pay taxes would. The alternative, raising taxes, reduces economic activities, taxes, the power of these titans to lift all boats by trickle down economics, etc. Not to mention it is just plainly against the Objectivist ethic (all praise Ayn Rand).
This is such a blinkered understanding of how things work. For one thing, it takes the Laffer curve as an absolute sort of value--raising taxes ALWAYS reduces tax receipts. But the curve, in case you or Koch has forgotten *is a fucking curve.* There is a point where it actually makes more sense to tax the rich since they aren't really doing much with the money they've managed to squeeze out of the collective and aren't actually doing much productive with it. In other words, there are times when taxing makes some sense, as Reagan's own tax guru has recently said in response to this line of rhetoric:
http://motherjones.com/politics/2011/02/reagan-anniversary-david-stockman
All of this is compounded by the fact that much of this money does absolutely nothing productive except gather interest in offshore bank accounts. When the average worker's wages are stagnant--when the median wage is almost identical in inflation adjusted dollars from the late 1970s to today--yet we have seen healthy economic growth and rising worker productivity, it is not some crazy marxian observation to point out that, while productive work is being done by many people, some people are able to take more of the rewards for themselves. If the condition of your and Koch's employment solution--let the rich people and only the rich people hire you--is that your PRODUCTIVE labor is rewarded at less than those above you this is hardly fair. And it makes the argument that people with more wealth are automatically more productive a circular argument. People with money are able to take advantage of a structural inequality to capture more money from other productive workers who don't happen to have money. This is not a case of productive vs. unproductive workers, but people who claim they are productive because they have money and people who do a great deal of productive work but have not received much money.
Here your account of the tax burden problem really reverses the issue--as I've said several times before in our interchanges. The real issue is that, in the current economic distribution a relative handful receive the greatest share of the rewards for their labor--did you actually look at the graph I cited: ALL of the economic growth of the past 30 years has gone to the top 10%--and your complaint is that this means they pay proportionally more taxes! This is like robbing someone and then expecting them to sympathize with the burden you have to bear carting off their TV: "You may have been robbed, but man this thing is heavy! My back is killing me!"
Many many people in this country work very very hard and can barely scrape by. The problem in my mind isn't that 95% of people pay only 40% of the taxes, its that they only earn enough relative to the amount of money floating about out there to fall in the tax brackets in this way. So I'd much rather not have taxes be the primary means of redistribution. I'd much rather have a distribution of income and the benefits to labor that would alter the basic structure of society. I'd rather have 95% of the population pay 95% of the taxes because they make 95% of the money off 95% of the work. In the end it is only an illusion of the automatic superiority of the rich and a degradation and hate for working people that can allow objectivist fantasies to prevail. I don't believe you really believe this.
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