Oct. 6 (Bloomberg) -- To most Americans, it looks as if there’s never been a better time to be rich. The top 1 percent takes in 24 percent of the national income and holds 40 percent of the national wealth.
Neither jobs nor housing prices have rebounded in the aftermath of the financial crisis, but corporate profits have generally been strong. The S&P 500, though volatile, has weathered the crisis relatively well, today standing roughly where it was at the beginning of October 2008.
Talk with some of those in the top 1 percent, though, and they make it sound as if there’s never been a worse time to be rich. At a medical-innovation conference in Cleveland this week, I heard chief executive officers complain about being treated like “criminals,” about profit being regarded as intrinsically suspicious, about the president saying unkind things about oil companies, about exemplars of hard work and success being viewed as greedy rather than productive. Like Rodney Dangerfield, the rich may be making money, but what they really want is respect.
Even worse, they said, was the fact that their every suggestion for getting the economy back on track was denounced as a self-serving grab for more profits. Shouldn’t it be obvious to everyone that it’s better to give corporate America a tax holiday for overseas income, because otherwise the money will never return home? Isn’t it clear that we need more high-skills visas for foreigners? Have we seen the airports in Asia? Doesn’t the U.S. realize that if Germany and China and South Korea roll out the red carpet for companies, giving them every tax advantage and regulatory break to locate there, that the U.S. must up the ante?
The CEOs have a point. Not on the tax holiday for overseas income -- that’s a scam. But the U.S. could make it easier to do business here. We do need more high-skills visas. We do need to reform our tax code, reduce our deficit, upgrade our education system and repair our infrastructure. We even need to compete with the incentives these companies receive to relocate their factories and research centers; it’s a fact of the modern economy, and we can’t pretend otherwise.
But the self-pitying, self-righteous tone of these complaints misses the big picture, and makes the underlying problem worse: The rest of America doesn’t trust corporate America right now. The rich have been getting fabulously richer, corporate America is sitting on trillions in cash reserves, and where has that gotten the rest of the country? A shabby, jobless recovery in the early Aughts, followed by a credit bubble, followed by a crash in which ordinary Americans had to bail out Wall Street, followed by the worst economy in generations.
We used to have a deal: A rising tide lifted all boats. These days, a few gleaming yachts power comfortably past the wreckage of smaller vessels. As my Washington Post colleague Peter Whoriskey reported this week, executive pay at the country’s largest companies has more than quadrupled since the 1970s. Median wages have stagnated through much of that time and declined since the crisis.
That’s why corporate America’s solutions are looked on with suspicion. Executives say corporate-tax reform and more immigration would be good for the economy? Well, they said that about the Bush tax cuts along with financial deregulation, the rise in housing prices and credit-default swaps, too. But that era ended with Main Street a shambles and Wall Street richer than ever. Fool me once, and all that.
Anyone interested in the capital-gains tax and the marginal rate on income over $250,000 should spend an hour or two paging through the stories at WeAreThe99Percent.tumblr.com. The blog, which posts pictures of people holding signs describing their situation, is a powerful primer on the very real sense of betrayal rippling through the country.
It’s about this point in the discussion that someone raises the “class warfare” flag. After all, isn’t that website associated with Occupy Wall Street, the vaguely anti-big-business protests spreading from New York to other cities? Come to think of it, Mitt Romney, the Republican presidential candidate whose campaign estimates he’s worth between $190 million and $250 million -- would that we all had such a margin of error -- called those protests “class warfare” just this week.
But that’s why the site deserves to be read. These people aren’t trying to start a class war. They’re just trying to figure out how to stop losing in today’s economy. They took out loans to go to college, they worked two jobs, they saved for a home, they did everything they were supposed to do to get ahead and now they’re buried in debt, making minimum wage while the Wall Street whiz kids who crashed the economy in the first place saw their firms nursed back to profitability with the aid of taxpayer bailouts.
There’s no easy way to make this right. Politicians sometimes exhort companies to stop sitting on capital, but corporations can’t spend without customers. They can’t hire without demand. Taxing millionaires won’t resolve the deficit (though it wouldn’t hurt). There’s no grand gesture that can make up for a decade of economic pain and broken promises.
But the problem isn’t that politicians are mean to corporate America and that no one listens to their great ideas. It’s that corporate America -- and, yes, the federal government -- has lost the trust of ordinary Americans. The theories, policies and rationales of the past decade have failed in the most profound and painful ways, yet the politicians and CEOs who made those decisions are doing better than ever. Have any congressmen ended up homeless? Have any ex-White House staff members had to fear for their child’s health insurance? Have any former Wall Street CEOs stood in line for bread?
Of course not. But those things have happened to many, many Americans, and they’re angry about it. If the folks in power want leeway to pursue their solutions, they’re going to need somehow to convince the public that the fortunes of the people and the powerful are once again intertwined. Respect isn’t something you get. It’s something you earn.
(Ezra Klein is a Bloomberg View columnist. The opinions expressed are his own.)
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