They’re Too Dumb To Read
…and most likely too busy on Facebook, but who gives a damn?
Class is also part of the conversation this year, especially in the Anglo-Saxon business world. There is a growing realisation that the pain is disproportionately hitting the bottom of society, an acknowledgement that it is not going to change soon—and, perhaps more selfishly, a worry that it will result in a backlash of some sort. Thus British businesspeople, especially those with consumer businesses, fret what will happen when governments cuts begin to bite in northern towns where many households depend on the state (either through benefits or as an employer). But the biggest worry is in America.
The two Americas
Take the views of two extremely rich Americans: a retailer and a banker. The retailer points out that his firm is now in effect dealing with two Americas. The first group are broadly upper-income and defined by a sense of mild optimism. They tend to work for the larger companies represented at Davos, which are doing well. Their mortgages cost less because of lower interest rates. They often own shares, so they are pleased by Wall Street’s recovery. They are not spending in the completely carefree way they did before the crunch, but, if they see something they want, they don’t pause before producing their credit card. The second, which he defines as middle- and lower-incomes, is defined by fear: they have either lost their jobs or they are worried about losing them. They spend money on essentials but not on discretionary items—and they are living from pay-packet to pay-packet. There is a clear monthly pay-cycle effect, with spending rising at the beginning of the month when they have cash in their pockets, but falling at the end.
The banker’s world is Wall Street—a long way from Middle America. But that is where he grew up, and he is deeply worried that well-paid middle-class manufacturing jobs are disappearing. He points to General Motors’ recent IPO prospectus, and the huge gain the carmaker has achieved by shedding UAW workers. “Frankly, I think those guys are never going to get jobs.” Wherever he looks in America he sees working-class males with little future.
Joyous is it not? There but for the grace of something greater go all of us – except you would only come to that with a decent amount of compassion for the common man. The fat cats are getting fatter, the haves are having seconds of whatever it is that made them haves. There’s a class war going on undeclared but prosecuted with great vigour by the wealthy – even Warren Buffett thinks so.
Put simply, the rich pay a lot of taxes as a total percentage of taxes collected, but they don’t pay a lot of taxes as a percentage of what they can afford to pay, or as a percentage of what the government needs to close the deficit gap.
Mr. Buffett compiled a data sheet of the men and women who work in his office. He had each of them make a fraction; the numerator was how much they paid in federal income tax and in payroll taxes for Social Security and Medicare, and the denominator was their taxable income. The people in his office were mostly secretaries and clerks, though not all.
It turned out that Mr. Buffett, with immense income from dividends and capital gains, paid far, far less as a fraction of his income than the secretaries or the clerks or anyone else in his office. Further, in conversation it came up that Mr. Buffett doesn’t use any tax planning at all. He just pays as the Internal Revenue Code requires. “How can this be fair?” he asked of how little he pays relative to his employees. “How can this be right?”
Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare.
“There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”
The one place you would think Marxism might take root is in the disenchanted and disenfranchised of the most industrialised nation – left behind in the stampede for wealth – but no. In a land where socialism is a dirty word, there’s no chance that Marx or Engels even get a fair hearing. So much historic fear and vilification has kept it as an impossibility.
Not that I’m advocating an armed revolution in America. Simply that if the poor and the disenfranchised needed some kind of philosophical framework to carry into their class war, then there’s no better than Marx and Engels. Still, it’s strange that communism got beaten back so hard in America that people have forgotten what it was that communism was all about – and yet if the lumpenproletariat (remember that one?) really wanted to put fear into those bankers on Wall Street, then all they have to do is collectivise and march on to Wall Street.
It would be a fair fight only when the lumpenproletariat come armed with ideology. Somehow I doubt that day is never going to come.