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People's Daily Online>>Opinion

Inconvenient truth: Reviled 1 percent are not all wicked

By Raghuram Rajan (Shanghai Daily)

15:23, November 23, 2011

Illustration by Zhou Tao

It is amazing how the "one percent" epithet, a reference to the top 1 percent of earners, has caught on in the United States and elsewhere in the developed world.

In the United States, this 1 percent includes all those with a 2006 household income of at least US$386,000. In the popular narrative, the 1 percent is thickly populated with unscrupulous corporate titans, greedy bankers, and insider-trading hedge-fund managers.

Reading some progressive economists, it might seem that the answer to all of America's current problems is to tax the 1 percent and redistribute to everyone else.

Of course, underlying this narrative is the view that this income is ill-gotten, made possible by Bush-era tax cuts, the broken corporate governance system, and the conflict-of-interest-ridden financial system. The 1 percent are not people who have earned money the hard way by making real things, so there is no harm in taking it away from them.

Clearly, this caricature is based on some truth. For instance, corporations, especially in the financial sector, reward too many executives richly despite mediocre performance. But apart from tarring too many with the same brush, there is something deeply troubling about this narrative's reductionism.

It ignores, for example, the fact that many of the truly rich are entrepreneurs. It likewise ignores the fact that many of the wealthy are sports stars and entertainers, and that their ranks include professionals such as doctors, lawyers, consultants, and even some of our favorite progressive economists. In other words, the rich today are more likely to be working than idle.

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Larrydu at 2011-11-2660.51.50.*
A garbage of an "essay." The big problem is a system that siphoned immense profits to the 1%, but left all losses for taxpayers to bail out. As a result of this and other actions, such as tax rates for rich at about 17% while middle-class and those in the lower rungs actually pay up to about a third of their income. As a result, for the last couple or so decades, the rich increased their income by over 400%, while the poor's income not only remained largely stagnant, but for some even retrogressed. Clearly the rich has conducted a class war on the poor, and it's time for the poor to strike back.
Canada at 2011-11-2570.36.49.*
There is a U.S. movie/documentary called "Inside Job" that looks at the Wall Street fraud leading to the financial crisis.
Canada at 2011-11-2370.36.49.*
This is a superficial response, glossing over a more complex issue. While some academics & professionals like doctors may be overpaid, the Occupy Wall Street protests "we"re the 99%" is not aimed at them. Bill Clinton, Democrats, left Bush a budget surplus. The U.S. is now trillions of dollars in debt, the biggest cause of which was Bush era tax cuts for the rich & corporations, deregulation, Wall Street financial fraud, & military spending. The Wall Street financial fraud debt was socialized - bank, insurance, & financial firm debt was transferred to the U.S. taxpayer. CEO"s & traders make millions/year in salaries, stock options,& bonuses. Neo-conservatives around the globe are transferring the surplus value in society to corporations & the rich - and the tax burden onto the backs of ordinary workers, including the cost of infrastructure & social programs. Education is & has been unaffordable for most Americans. Corporations are only interested in increasing profit so they move manufacturing to other countries where the cost of labour & material is lower. An education is not going to solve the problem. For a more detailed look, capitalism & the stock market needs to be examined.
  

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