Monday, November 14, 2011

Occupy Wall Street XI: An American Oligarchy?

America’s middle class is disappearing. The emergence of Occupy Wall Street highlights a growing oligarchy in American society. While many claim that this phenomenon—disappearing middle class and growing American oligarchy—is not happening, the reality augers otherwise. Wealth continues to grow in the United States in the hands of a very few, and with this, the middle-class is simply eroding. The bottom 80% of U.S. households receive less than half of total income paid out to Americans. An oligarchy is defined by Merriam-Webster as "a government in which a small group exercises control especially for corrupt and selfish purposes.”

Nobel laureate Paul Krugman of The New York Times opines that, even though the Occupy Wall Street movement is correctly portraying the wealth disparity in a 99% to 1% disparity, wealth concentration in the top 1% is misleading, it is more like the top thousandth (0.01%) of Americans who are seeing their income rise exponentially. From 1979 to 2005, this group, the 0.01%, which includes Wall Street executives, saw an income increase of more than 400 percent! With such a concentration of wealth in a tiny number of a select few, Krugman argues that democracy in America is becoming nothing more than a façade. The American oligarchy is growing more wealthy and influential, leaving behind most of America, and thus, threatening America’s real democracy.



Cross-posted on the Salt Law Blog

45 comments:

  1. "Krugman argues that democracy in America is becoming nothing more than a façade. The American oligarchy is growing more wealthy and influential, leaving behind most of America, and thus, threatening America’s real democracy." -- Dre Cummings


    First, an oligarchy suggests that those at the top exerting influence for "corrupt and selfish purposes" are a static group of people with common interests. In fact, there is a very high degree of mobility within the American economic system and those who find themselves in the 1 percent, or even the .01 percent, today may not be there tomorrow as Mark Perry, Professor of Economics at the University of Michigan, points out in this blog posting:

    In Table 4 of the IRS Bulletin "The 400 Individual Income Tax Returns, 1992-2008," they report the "Frequency of Appearing in the Top 400 Tax Returns for Tax Years 1992-2008." Over the 17 tax years between 1992 and 2008, there were a total of 6,800 tax returns analyzed (400 per year), and because some individuals appeared in the top 400 for more than one year, there were 3,672 unique taxpayers. Here is what the IRS found about the ever-changing group of the top 400 taxpayers:

    1. Almost three out of four of those individuals (2,676 or 72.88%) were in the top 400 taxpayer group for only a single year over the 17-year period.

    2. Only 439 individuals, or 11.96% of the total, remained in the top 400 for two years. Therefore, almost 85% (or 3,115 of the 3,672 total) were in the top 400 for only one or two years.

    3. Only 1% of the samplegroup (37 out of 3,672) stayed in the top 400 for 14 years or more, and only 4 taxpayers (or about 1/10 of 1 percent or 1 in a 1,000) stayed in the group for the entire 17-year period.

    This mobility is true of every income quintile with most people moving up, not down, according to the most recent U.S. Treasury report: Income Mobility in the U.S. from 1996 to 2005.

    And who are your supposed "oligarchs" plotting to destroy American democracy? Judging by their professions, they are a diverse group of people who work hard for their money:

    "Roughly 80 percent of millionaires in America are the first generation of their family to be rich. They didn't inherit their wealth; they earned it. How? According to a recent survey of the top 1 percent of American earners, slightly less than 14 percent were involved in banking or finance. Roughly a third were entrepreneurs or managers of nonfinancial businesses. Nearly 16 percent were doctors or other medical professionals. Lawyers made up slightly more than 8 percent, and engineers, scientists and computer professionals another 6.6 percent. Sports and entertainment figures — the folks flying in on their private jets to express solidarity with Occupy Wall Street — composed almost 2 percent. By and large, the wealthy have worked hard for their money. NYU sociologist Dalton Conley says that "higher-income folks work more hours than lower-wage earners do." -- -- CATO

    So, you can see that there is no "oligarchy" composed of a very wealthy, static group of people plotting to undermine our democracy, let alone the American middle class. There are only people reaching for the dreams and, judging by the evidence, managing to achieve them, if only fleetingly.

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  2. Zach H - Memphis LawNovember 15, 2011 at 1:59 PM

    While the treasury report indicates mobility is increasing, the broader report put out by the Fed Boston (http://www.bos.frb.org/economic/wp/wp2009/wp0907.pdf) indicates that income mobility has actually been decreasing over the past 40 years. A key factor the Treasury report doesn't include is what quintile you were raised in, it merely tracks changes in returns. The effect of children from upper and middle income families starting in entry level positions after college disguises the fact that real mobility for those born into families in the bottom quintile is extraordinarily low.

    Most people don't care that the 1% or .01% are getting richer. The problem is that the bottom 80% are getting poorer. Real wages in the bottom 80% have been stagnant since the '70s, yet the cost of essentials, particularly health care and transportation/energy have been increasing dramatically. This effect was mitigated to an extent by the drop in food costs, but it is getting to the point where people are realizing that the quality of life for most people is lower than it was 30 years ago, technological improvements aside.

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  3. "Oligarchy" became something of a buzzword last decade; employed by Western commentators to describe the socio-economic situation in post-Soviet Russia. As part of the transition to capitalism, the Russian government issued to each citizen a voucher worth roughly $10,000 to be used for entrepreneurial activities. Most citizens, however, ended up trading these vouchers to a handful of opportunists for food, plane tickets, emigration papers, etc... Those who had collected these vouchers quickly redeemed them for cheap, formerly public, property and natural resources. Thus independent Russia emerged as a highly polarized society, where a small number of "oligarchs" became the sole actors in government and business.

    It's odd though that the term hasn't been used as frequently to describe the situation in America. On a national level, our nation's wealthiest individuals and most powerful politicians are often the same people. For instance, the average Senator's net worth is roughly $14 million. (http://economix.blogs.nytimes.com/2009/11/25/your-senator-is-probably-a-millionaire). This is also a local phenomenon. It is extremely rare to find a mayor, or any other leader within a municipal government, who is not also amongst the most financially privileged of that community.

    This article cites Webster's definition of oligarchs as "a government in which a small group exercises control especially for corrupt and selfish purposes.” Politicians explain their business schemes as benefiting their constituencies or communities through some sort of trickle-down process. It is becoming more obvious, however, that this explanation is entirely fictional. Stories of wealthy politicians enhancing their personal wealth, by means of their position in government, are commonplace. In most cases this comes about at the expense of taxpayers and the working-poor (ie subsidization of development projects, privatization of public resources).

    Though the wealth gap is growing wider, this polarization of American society isn't a modern development. "Oligarchs" didn't recently spring up and commandeer politics and business--they've been around since the Declaration of Independence.

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  4. "Oligarchy" became something of a buzzword last decade; employed by Western commentators to describe the socio-economic situation in post-Soviet Russia." -- Cole W

    Ironic, considering that communist systems, supposedly exemplars of economic and social equality, are the perfect examples of governments "in which a small group exercises control especially for corrupt and selfish purposes.”

    The wealth disparity between the Soviet, North Korean, Cuban, etc., elite and the average citizen of these countries is orders of magnitude worse than under free market systems, like ours.

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  5. MelissaTillilie-MemphisLawNovember 16, 2011 at 2:41 PM

    What is most ironic is that even though most Americans are appauled when they hear for the first time of the inequality of our distribution of wealth, they are reluctant to support the remedy (i.e higher taxes). The moment the U.S. government mentions the word taxes, the people have an incredibly aversive reaction. Where this aversion to the word taxes comes from, I don't know but I do wish we'd just get over it.

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  6. A pure capitalist system is a better solution to extinguish a "growing" oligarchy in the United States than implementing higher taxes and greater governmental control. An obsession with constant statutory and regulatory control over the free market has led to the growing disparity between the classes. Intelligent people know how to work the system. Wealthy people know how to manipulate the system. People are generally self-interested. A true free market would allow individuals to succeed on the merits of their work and efforts rather than how well they manipulate or propagate the the sovereign authority. The focus should not be on a Congressional body that preaches on ideology out the front end and blow another out of the back.

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  7. "The wealth disparity between the Soviet, North Korean, Cuban, etc., elite and the average citizen of these countries is orders of magnitude worse than under free market systems, like ours."--Anonymous

    Yes, I agree. Those countries, that for whatever reason you listed off, suffer/suffered from serious income disparities.

    However, I wouldn't go so far as to say that the income disparity in the Soviet Union was "orders of magnitude worse than under free market systems"...but neither would economic data/the cold hard facts. My comment discussed the situation in Russia, so I'm not really sure what Cuba, much less North Korea, has to do with anything.

    The point of my comment was to say that American commentators who point one finger at contemporary Russia, labeling it as an oligarchy, are pointing four back at their own country.

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  8. Zach H - Memphis LawNovember 17, 2011 at 3:55 PM

    Pure free markets will always trend towards monopolies, and in turn oligarchies. The strongest will swim to the top, and use that position to prevent others from getting there.

    The problem is that you don't differentiate between laws or regulations. A law that increases costs to enter a market would encourage oligarchy. A law that restricts anti-competitive behaviors/anti-trust would prevent oligarchy. A public safety oriented regulation of business can go either way, and I'm guessing this is what Joshua is describing. If these laws disproportionately affect smaller business/start-ups, they will encourage concentration of power in large organizations. That doesn't mean their goals are invalid or that they should be eliminated, just means they need to be scaled to encourage growth of new businesses. Their effect on free trade agreements also must be taken into account.

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  9. Zach H - Memphis LawNovember 17, 2011 at 7:14 PM

    To address another point, higher taxes are not going to substantially change any of the problems with income inequality, at least not the higher taxes being floated (the Buffet Rule). The increase in inequality is largely driven by technological gains and liberalized trade agreements. People at the top are making more money because they can invest less of their capital and get higher returns, whether that be through third-world labor costs or technological gains.

    This has benefited consumers by bringing cheaper goods along with the benefit of advances in consumer technology. Work in most situations is also considerably less labor intensive. The problems are that other essential costs have risen dramatically, especially health care and real estate, while wages for most workers have barely kept up with inflation for the past 40 years.

    As for claims of oligarchy, reducing wealth isn't the issue. As I mentioned earlier, the problem is that politics right now are strongly influenced by money. If we could find ways to reduce that influence, then the supposed oligarchy would be diminished.

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  10. Assuming the agreed upon definition for said oligarchy in America is as it is stated here, the only real change that can offset the control of the few is to place power back into the hands of the many, such as promoting laws for business and politics that are based on a democratic socialist agenda. This is a country founded on revolution. Any time there is an offset in power, it should be the first course of action pursued. As the facts in the article showed, the majority of American wealth has remained in the top 1% or tighter group, and the only way to appease the masses at this point is to put an end to the accumulation of wealth. I agree with the earlier comment about the end to today's problems are to raise taxes, but we should be reasonable in the groups that we tax. Nothing is earned by taxing lower income families more as it doesn't help offset the issue of wealth accumulation in the 1%. In times of economic struggle this country has always turned to the ultra wealthy as a means of re-stabilizing the economy, such as in times of war when taxes on the wealthy were as high as 90%. In light of this fact, many commentators on our current situation have argued that we tax the wealthy enough as it is, but this couldn't be farther from the truth, as taxes on the rich are lower now than they have ever been.

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  11. Adam, you bring up an interesting point in your last statement. The tax rates on the rich are lower that they have ever been, but we have commentators that are saying that we tax the rich too much. We must examine who these commentators are, because therein lies the true danger of an oligarchy. The viewpoints of these top income owners seem to have been perpetutated in the voices of societal authority. If somehow these commentators have bought into the inccurate view that the rich have not been taxed enough, then that is the true sign of an oligarchy. The rich have perpetuated their political views onto our market and our government.

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  12. " ... the only real change that can offset the control of the few is to place power back into the hands of the many, such as promoting laws for business and politics that are based on a democratic socialist agenda .. Nothing is earned by taxing lower income families more as it doesn't help offset the issue of wealth accumulation in the 1%." -- Adam

    "Democracy must be something more than two wolves and a sheep voting on what to have for dinner." -- Benjamin Franklin

    Socialism is slavery.

    Claiming that you have a "right" to something like food, housing, education, etc. that you cannot, or will not, provide for yourself implies that someone else has a corresponding responsibility to provide it for you. In effect, you are claiming a "right" to the produce of another persons labor. Slavery.

    Just how does the wealth of someone like Bill Gates, Steve Jobs or Larry Ellison make you, or anyone else, poorer?

    All of these men had modest beginnings, and yet, they built huge multinational corporations - Microsoft, Apple and Oracle. Those corporations have provided tens of thousands of high paying jobs, many of which offered stock options that turned average employees into millionaires. Like the ripple created by throwing a stone in a pond, the holders of these jobs do business in their communities creating thousands of jobs.

    The stock of these companies has enriched the educational savings accounts and pension funds of millions of people.

    The products have created have made millions of businesses, small and large, more efficient and profitable making it possible for them to grow and hire more workers and to offer increased value to their shareholders.

    These men haven't taken wealth from anyone, they have created wealth for everyone.

    What have you contributed to society? How many jobs have you created? Products? How many others have you made wealthy?

    Yes, in the past tax rates were higher - for everyone, rich and poor - but almost no one paid taxes at those rates because there were myriad loopholes in the tax laws. The amount of taxes collected relative to GDP has remained fairly consistent for more than two generations. What has grown is government spending. Why is it that leftists who insist that we let the Bush tax cuts expire, and that we return to The Clinton era tax rates, never advocate going returning to the Clinton era level of government spending?

    You want a revolution? You want to change the world? Start with yourself.

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  13. Andrew H - Memphis LawNovember 20, 2011 at 7:39 PM

    Interesting concept / post; however, I must agree with Zach in that the problem is not the top 1% or .1% getting richer (they are), it's the majority getting poorer while costs for necessities continue to rise.

    The trend has been around long enough that the majority are feeling the effects of stagnant income, especially since the economic downtown. I don't know if there is a single solution to the "problem," but as long as it continues we will witness "democracy in action" through movements such as OWS.

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  14. While I recognize the widening gap between the rich and poor and evident erosion of the middle class, I must agree what some have said in that if you want to see a change, you have to start with yourself. Yes, blame can be placed on the government, on Wall Street, on the rich; but, the reality is- is all that blame going to lead to any positive change? No. Following the initiative of the OWS protesters, there are alternatives that the majority of Americans can undertake to effect a positive change that will be beneficial for all.

    As cliche as it may sound, American must put their differences behind them and come together in this crisis if anything good is going to come of it. I may not know a lot about taxes or how the budget deficit would be best resolved, but I do know that the division overtaking our country is the worst I have seen in MY lifetime. If our country's leaders can compromise, how can they expect us to?

    Although I realize it is on the brink of being unrealistic, I think it is time for us as Americans to set the example for our governmental leaders. We must come together and do what is best for OUR country. When we make decisions not for ourselves but for the betterment of the whole, all come out better in the end.

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  15. I often hear about the "erosion" of the middle class in political discussions, but I often wonder if the "market" really has a duty to the middle class in the first place? So what if the middle class is declining? I prefer to think in broader terms. Instead of focusing on the middle class, I think the focus should be on what market changes are necessary to benefit and protect the entire public. I see nothing wrong if a properly regulated market results in a stronger upper class as long as there is a balance. People often don't realize that by protecting the lower and middle classes, the entire economy benefits, which also benefits the upper class.

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  16. Jessica S - Memphis LawNovember 21, 2011 at 2:02 PM

    I think it is obvious that there is an oligarchy - we are all influenced by those more wealthy than us every day whether they are our political leaders or those whose products we buy, and their influence leads to continued control. I don't know enough about tax (I need to work on that before finals) to know if a tax increase would benefit or not, but Josh's argument makes complete sense to me, so until I know more I won't claim that tax increases are the answer.

    However, one change I can whole-heartedly get behind is the one referenced by Elizabeth. I think the best way that we can make the necessary changes to reduce the oligarchy is by those in the lower class changing our conduct and beginning to find a middle ground. Until we recognize that nothing can be accomplished until we learn to compromise, then no change will be made. We are not the ones in office, but we are the majority. Regarding the 99%, one thing we can recognize from the disparity in numbers is that there is power in numbers. If we can make clear to our political leaders that changes in the status quo are more important than our political differences, maybe we can move forward from the stalemate we seem to have been stuck in for years.

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  17. Why are we so concerned with the top 1%? While I do think we should be concerned with monitoring the means by which the 1% reach this end (and that it is a legal manner), we should not be so consumed with the fact that the rich stay rich. The rich stay rich because money and wealth is what makes them “happy.” I think the basis behind most Americans disgust over the 1% is jealousy; they want to be part of the 1% or at least have some form of enhancement in their wealth. Personally I do not despise the 1%, I am happy that I am part of the 99% and do not have to base my life’s work around keeping my wealth. Wealth does not equal happiness.

    Also, I struggle to believe the numbers provided in the chart, that the lower 80% of households have an income of $31,000. This means that the lower 80% of households rely on a sole provider. This is alarming information to me. Why are married individuals unmotivated to have a dual income household? Whatever the basis for this decision, it is the bottom 80% that choose to forgo the monetary benefits of a dual income household. This looks to me like the middle class “erosion” is not due to the top 1%, but the middle class making an active choose to drop out of the middle class by relying on one income. Maybe if we want the middle class back we should be trying to motivate more Americans to work in order to achieve middle class status.

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  18. sorry in the second paragraph it is meant to say choice instead of choose!!!

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  19. I think most OWS protesters (and the Tea Party--difficult as it is for me to willingly sympathize with it) would agree that major corporations and big banks should not be bailed out by the taxpayer (especially when their executive officers are making millions upon millions of dollars.) You will have no argument from me on this point.


    But, I feel that OWS is missing an important channel for affecting change... They are protesting in the wrong location. They need to deliver their message to those who make our laws and regulations. While the nation is paying attention, please make some concrete political demands on Washington.

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  20. After the OWS eviction from Zuccotti Park, protesters have inundated Mayor Bloomberg’s home (well, street actually) with a “drum-in.” This means a 24-hour drum circle in front of the mayor’s town house on East 79th Street. But the protesters have been blocked at each corner by a line of police officers and metal barricades.

    Not surprisingly, some folks were rather irritated (some pedestrians and drivers were mad both at the drummers and at the closed off street, some protesters were mad at the NYPD.)

    Personally, I feel the most interesting statement (so short and sweet) was made by a young lawyer who lived in the area and was inconvenienced by the mess. She said, “This is a part of democracy. Go bother your leader.”

    Though her comment was aimed at those complaining about the drum-circle, I think it is good advice for OWS itself. Go bother your leader.

    While I agree with its political aims, I think OWS needs to focus on Washington and our political process. Who among us really thinks that Wall Street is going to change until it is forced to?

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  21. OK, now a little sympathy for Mayor Bloomberg here… Even if you are a 1st Amendment absolutist, doesn’t drumming at all hours of the day or night invoke time, place, and manner restrictions? And what about the continuous, physical occupation of a public space that is supposedly available to all?

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  22. Just an observation… Isn’t Mayor Bloomberg the 1% of the 1% (maybe even of the 1%?) Are the police officers who ejected the OWS protesters in the 1%?

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  23. Jessica S - Memphis LawNovember 23, 2011 at 11:59 AM

    I would say that concern with the 1% is not because of jealousy, it is because the disappearance of our middle class is an important issue. The middle class helps to drive the consumer market in the United States. The middle class proves that our economy is not a total failure; lack of a middle class and very drastic separations of the upper and lower classes shows that people are simply not getting paid what they deserve. Those in the 1% have been getting tax breaks for YEARS. Why? They said that if given tax breaks they would increase employment rates because they are the ones with the power to do so. They said if they weren't given tax breaks the percentage of unemployed citizens would rise. So, they got tax breaks and what happened? I don't think anyone can say that their tax breaks increased employment. This country's unemployment is at an all-time high. The lack of job opportunity is directly related to the disappearance of this middle class and the lowered economy. The vast majority of people in this country are struggling financially and they cannot spend money on anything but the necessities while a very small minority has more money than anyone could ever need.

    Another thing to consider is the fact that not all families have two parents and even those that do probably are not choosing to be unemployed. They are unemployed because the 1% has not kept their word that they would create jobs. I think that this is a big reason OWS supporters and even people who have no interest in OWS are concerned with the 1%. The job market has become so cheap for employers because there are so many people desperate for a job, so employees are forced to accept underpaid positions.

    So how about a 2 parent family where the dad has a full-time job and mom is looking for employment. They have 3 kids who will have to be in day care if both parents are working. Childcare has not gotten cheaper, but work has. So, if the only jobs the mom is being offered are at minimum wage (less than $8), she will make less than $300 per week before taxes are taken out. Then, for daycare it will be around $200 per week, just for one child - so for this family, daycare will cost more than what the mom would be making if she worked. So, is she supposed to pay to go to work and get a paycheck? That is probably not going to happen, so until the job market balances out and jobs become available that actually do pay above minimum wage, parents like this will probably continue to choose not to work. Really, is this a choice though? Wouldn't they rather go to work and make more than they would have to pay out for day care? I'm sure most would but they are being forced to make the most economical choice for their family they can.

    I'm pretty sure that the OWS participants are not protesting because they wish to be a part of the 1%, but because the issues they are bringing to light are very real and pressing. This country is in a financial crisis and while there can be blame on multiple sides of the issue, the ones who have the power to create jobs, have gotten tax breaks to do so, and have chosen not to are deserving of the heat they are getting right now.

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  24. While the rich may be getting richer faster than the rest of us, what the data fails to convey is improvements in quality of life. My parent's may have spent the same percentage of their income on music in the 1970s as I do today, but I'm receiving a much higher quality product and experience then they were. Similar advances in medicine, technology, and other areas mean that today we get better products for less than previous generations.

    Also the data does not relate after tax income. Considering most Americans pay little to no income tax, the disparities probably are less than that article suggests.

    Furthermore, it's interesting to note that the top 1%'s gain in wealth appears to track the stock market (note the huge decrease around the 2001 recession). Though the chart does not include data for the last recession, I would wager the 1% has lost a lot of wealth over the past few years.

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  25. Natasha__Memphis LawNovember 23, 2011 at 1:42 PM

    Although the middle class may be disappearing, and although wealthy individuals may lobby and endorse politicians, individuals in that same middle class still possess the power to vote in order to hold elected representatives accountable for their political choices. Squeezing the middle class out its fiscal holdings can be attributed to some fiscal policies that favor some segments of society over others. It is up to the individuals to be wary as to what is occurring and to use the power that they hold to collectively do something about it.

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  26. Here's an interesting article on a banking lobbyist's strategy to undermine the message of the Occupy Wall Street movement. It seems as if big business and banks foresee competing with Occupy Wall Street in a similar way they would with industry competitors.

    http://www.forbes.com/sites/kashmirhill/2011/11/21/lobbyists-offer-an-occupy-wall-street-smear-campaign-for-just-850000

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  27. Kenneth W (Memphis Law)November 25, 2011 at 4:21 PM

    This is shocking and yet again Mr. Cummings you have unveiled the truth of what is really going on behind the " Corrupt Wall Street Executive Movement." This is shocking and really sad to hear, while at the same time it is the inconvenient truth that we all should know. My question is how do you resolve this. While the truth is unveiling, what steps should be taken to correct this? How did it get this way? The only effort I see is Occupy Wall Street and the several other city focused groups that follow this movement making an effort to affect change.

    Above, Natasha states that the power lies in the middle class to vote on elected officials that will represent their interests and vote on policies that favor the middle class. However, I see the limitations on this method/resolution. You cannot discount the effect that lobbying has on elected officials and what they vote on. While the middle class has the power to vote and re-elect, politicians still hold the power to vote how they please and a lot of their voting is reflective of the interests of corporate lobbyists. I do agree that middle class members hold the power to elect officials to represent their interests, however where is the accountability once they get into office and how do you collectively hold them accountable?

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  28. I agree with Kenneth's point that congressional votes have a tendency to follow lobbyists' money. However, provided that there is adequate transparency showing the source of these types of monetary contributions, I don't see that this practice should be entirely condemned. The middle class is a powerful voting bloc with the ability to effect change and select representatives best able to advocate for their interests. I see the greater issue being a level of apathy among voters such that many people do not educate themselves properly on the candidates running for office and the platforms on which they run, or, abstain from the voting process altogether. I do agree that corporate lobbyists currently hold a great deal of power in the political process (probably too much), but I think that it is largely up to the middle class to take a more assertive role in countering the weight of corporate lobbyists by properly researching the candidates up for election and exercising their own votes.

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  29. A person who has more disposable income than that of his neighbor will on average see his wealth grow at a higher rate than that of his neighbor. His neighbor may try to catch up through injunity or through getting by with less, so that more of his money may be invested. This is just the way of the free market, and it is good because it spurs invention and increases efficiency. But the wealthier person should never be given the advantage of having a lower effective tax rate than that of his poorer and lower earning neighbor. Anyone who understands the American tax code can recognize the many ways which deductions and loopholes allow a person to keep more of their money sheltered as their wealth increases. The less disposable income a person has, the more his effective tax rate will be compared to his neighbor because he is not able to take advantage of the tax loopholes, deductions, and shelters. The result is that those who are in the top percent of wealthy individuals not only have more wealth to invest, compound, and leverage, but also pay less as a percentage of the wealth they build in a year as taxes than than do those who do not build as much wealth in that same year.

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  30. On another point, the author points out that "[t]he bottom 80% of U.S. households receive less than half of total income paid out to Americans" and that during the time frame from 1979 to 2005, the 1% (or .01%) "saw an income increase of more than 400 percent." While I agree that there is a large (and potentially problematic) disparity with the distribution of wealth between the 1% and the 99%, I agree with Aaron's previous comment that an important factor to keep in mind when examining all of this is standard of living. The 1% has certainly seen a significant increase in income, but that isn't to say that the 99% haven't seen increases as well. While the 1% may be getting a larger take of the figurative "pie" than they have in previous decades, the "pie" itself has grown substantially, making more available to everyone, not just the 1%. During that same time period, advances in many fields (including medical and technology) have become available to the general population that did not previously exists or were available only to the more wealthy populations. This overall growth and development results in an increased standard of living for everyone.

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  31. Extrememly wealthy individuals and companies spend billions on lobbying and campaign efforts to benefit their interest to the disadvantage of those who are not organized and massive in number. As most would say, just follow the money, but federal accounting doesn't make it easy to see where your tax dollars are being spent. Tax codes are not easy to understand. Special language in spending bills is above even most of the law makers heads. But trust me, massive donors understand it all and know exactly what the effect will be of the legislation they are lobbying for. If you think you are as important as the big money folks, I have a challenge for you. Pick up your phone and call your Congressman. See how long it takes him/her to get back to you. I guarantee you the likelihood of getting a personal response and the quickness of that response is directly proportionate to the amount of money you donated/raised to the campaign.

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  32. A major reason for the huge disparity in income and the disappearing middle class seems to be the scarcity of jobs. The top 1% or .01% are the owners of the companies. They cut spending and ship jobs overseas where they can spend less money and keep more for themselves. When a person is worried about losing their house or not having a next meal, it is hard to be inventive or creative. Then it is just a downward spiral. The middle class jobs disappear, they can't find another one; therefore they get poorer while the CEO gets richer because he is getting the same work for cheaper.

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  33. Gray N. Memphis LawNovember 28, 2011 at 3:22 PM

    I agree with Josh's comment that the owners of major companies have an incentive to ship jobs overseas and thus reduce the amount of jobs for working middle class Americans. The top 1% earners in America are generally the owners of the companies and are able to make important hiring decisions for their company. By shipping jobs overseas to workers who are able and willing to perform the job at a much lower cost than the average American worker, the top 1% are effectively eliminating the jobs and pay for the eroding middle class. Unless more incentives are given to the people in control (i.e. the 1%) to keep jobs in America, job opportunities available to the middle class will continue to shrink. 

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  34. Andrew F. (Memphis Law)November 28, 2011 at 6:58 PM

    I agree with Elizabeth F.

    Both sides of this issue need to come together and compromise. We can't accomplish anything when everyone insists that his or her viewpoint is completely right and those who disagree are completely wrong. Instead of pointing out so many flaws in our opponents' viewpoints we need to recognize the flaws in our own viewpoints. To quote Michael Jackson "[Start] with the man in the mirror."

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  35. Kirkland (Memphis Law)November 28, 2011 at 10:24 PM

    This is only slightly off-topic, but I've always thought that the figure of "the 1%" was a little too broad and I'm glad to see my opinion reinforced by Nobel Laureate Paul Krugman. I think that the OWS's movement would be so much more effective if they targeted "the 0.01%" and would exaggerate their point that wealth is concentrated in the hands of so few.

    I agree with Andrew F's enthusiasm for Michael Jackson.

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  36. "Both sides of this issue need to come together and compromise."

    I don't know if I agree with this statement. It seems like that line has been typically used by mainstream media in relation to Democrat-Republic infighting. The Occupy movement is seeking to hold corporations accountable for causing this economic recession. Democrats and Republicans meet in the isle all the time. The problem is that neither party stands up to corporate pillaging. Rather, each party caters to different corporate interests.

    There isn't a lot of compromise to be had here. Democrats and Republicans have sold out the American people to corporations for too long. Enough damage has been done, and folks are finally speaking up about it.

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  37. Izabela M- Memphis LawNovember 28, 2011 at 10:32 PM

    I agree with Spencer. Instead of focusing on a specific group of people and only trying to help them we should focus on helping the public in general by focusing on fixing the market. This way eventually everything will balance itself out. In reality the upper class relies on the lower classes to become wealthy and because of that some of the wealth, in the form of jobs and other opportunities, ends up trickling down the ladder and thus everyone can profit.

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  38. Lindsey G (Memphis Law)November 28, 2011 at 11:40 PM

    I agree with Cole. Democrats and Republicans alike are in office and will continue to be elected to office because of campaign contributions from large corporations. They are funded by the 1% and therefore cater to and make decisions that benefit the 1%. Our leaders are supposed to be representatives of the American people but far too often they are only interested in issues that will get them re-elected; issues that concern their corporate backers. I agree that this problem is at the heart of the OWS movement.

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  39. I think the phrases - "disappearance of the middle class" and the "rich getting richer" - that are thrown around so often have become a bit too much of a scare tactic. While the fate of our economy does worry me it really only pushes me to work harder. I may be a bit naive but, personally, I am not seeing a disappearance of the middle class. Most people that I know fit squarely in that middle class and are surviving and even thriving. Yes, I am aware that unemployment is at an all time high and that the housing market is crashing but that encourages me to learn better financial policies for myself/my family and spend/invest money smarter. While I am not so optimistic as to think everyone can go from poverty to Bill Gates, I do believe that people must start taking responsibility for themselves instead of constantly blaming other. Your rise or fall in the class structure may greatly depend on yourself, what you choose to do with your life, and how you choose to spend your money. We must first hold ourselves accountable before pointing a finger at the person beside us.

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  40. Salwa (Memphis Law)November 29, 2011 at 3:21 AM

    I agree with Elizabeth F., in that Americans need to come together in a situation like this if we are going to want to see any improvement at all. Although the disparity is overwhelming, blaming the rich and resenting the wealth of others is not the way to go, otherwise there will be serious consequences for this country’s future.

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  41. I believe that the anger of OWS is misplaced. Their anger should be focused at those in charge of making the rules, not those responsible for taking advantage of them. While nobody can argue that there is a large disparity in wealth in this country, I don't think it is ever ok to demonize the successful. "Don't hate the player, hate the game."

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  42. Brigid W (Memphis Law)
    Unfortunately, it is the super wealthy that are to blame. The idea of free markets and deregulation that fit into the idea that America is a meritocracy is complete crap. The idea of "trickle down" economics or insinuating that the poor or unemployed need to pull themselves up by their boot straps simply is not realistic. Our society does not work that way. The super wealth have all the power, in the form of wealth, education, and political dominance. Holding up a few examples of middle and low class individuals who have made it doesn't change the fact that the rich keep getting richer because it is extremely easy under our current system for them to retain power, while the rest of the population is subject to their greed. America is increasingly becoming an oligarchy, much the way it was during the early days of industrialization before monopoly busting policies and unionization made a middle class existence possible.

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  43. Zach H brings up an excellent point in his first comment in which he highlights that mobility is extremely limmited for those in the lowest taz bracket and so saying that it is easier than ever for children raised in solid middle class or upper middle class households to move into the ranks of the super rich is not an indicator of the fact that America is moving towards an oligarchy, but rather seems to suggest that those in the shrinking middle class are being manipulated into continuing to support policies that broaden inequality by the promise that they might get to be included in the rarefied ranks of the super rich as opposed to meeting the much more statistically likely fate of falling into the ranks of the poor. There is nothing wrong with a society that affords opportunity to those that are relatively well off to become more well off, however it is disturbing that this function would be regarded as a statement of the ultimate fitness of our economic system.

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  44. I agree with Melissa Tillilie that higher taxes are essential to bridging the income gap as higher tax rates will lead to better funded school. In our service based economy education is essential to both financial and social mobility. crafting tax policies that address the importance of a well educated populace to continued prominence in the global marketplace will be essential to eradicating the scourge of inequality.

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  45. Just like I thought, the top 1%'s share of income dropped from 17.3% in 2007 to 11.3% in 2009. So Bush's last two years reduced inequality. Don't know about the rest of you but even though I'm not in the 1% I prefer the greater inequality of 2003-2007 to what we have now.

    http://online.wsj.com/article/SB10001424052970204630904577062661910819078.html?mod=WSJ_Opinion_LEADTop

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