The wealthiest one percent of households in America have quietly secured their own New Deal over the past three decades. (More)
Worse, there is no end in sight to the extra benefits and unique protections their class enjoys. It has always been common knowledge that the rich in societies inherently have some advantages when it comes to access to resources, and that they enjoy the types of perks and privileges that come with being wealthy. Their excesses have always been on display either in the gossip rags at the checkout lines at your grocery store or on television were you can tune into a channel called Wealth TV. The media outlets that get their ratings by Idolizing the rich are widely available for those who are into living vicariously. But something has gone wrong with our culture and our understanding of fairness. How is it that so many find it acceptable to allow the rich to play by their own set of rules free from the social obligations or civic responsibilities that everyone else lives by.
Let’s take a close look at our financial system. Do you know what a preferred stock is? Have you ever been invited to purchase any preferred stocks? How are they different from the common stocks? Answer these questions and you will see clearly that preferred stocks are reserved for the very wealthy and well connected in society. The stock market works better for these stock holders. They have contracts with the company, guaranteeing them more rights and more payouts than what average stock holders are able to receive. They get preferential treatment in almost every way imaginable. The advantages to holding preferred stock are too numerous to list here. The bottom line is that the wealthy have access to better stock options than you and I have.
Do you have money in a hedge fund? Are you aware of the advantages of hedge funds? This is yet another wealth building tool with special privileges that are only available to the wealthy. Some of the methods used to create wealth in hedge funds have become headlines during the 2008 financial meltdown. Mortgaged backed securities, credit default swaps, collateralized debt obligations, and derivatives to name a few.
Then there is the use of new technologies in electronic trading and the use of super computers capable of running algorithms designed to find rare windows of opportunity on the stock exchanges that open and close within microseconds. This method of trading would not be cost effective for small time traders like you and I, but for a person with millions or billions to wager, even a very small change in stock price could mean a healthy profit. The purchasing of high bandwidth fiber optic connections at locations very near the exchanges to preform what is know as HFT or High Frequency Trading has also become popular. Add all these up and you have a financial system built by the rich for the rich. And no, your common stocks are not benefiting from these upgrades and tricky tools. Go ahead, call your guy down at ScottTrade and ask him if you can buy into a hedge fund or a preferred stock. Don’t be surprised if he laughs at you.
What about our tax laws. You and I pay income taxes, which means our labor is taxed when we work. The wealthy pay capital gains taxes, which is charged to them anytime they withdraw money from one of their many investment or savings accounts. The income tax that you and I pay is as high as 25% (was higher before the Obama tax cuts for 95% of working Americans). The highest tax for capital gains is 15% for the wealthy who make money by simply making withdrawals from accounts with insane amounts of interest or dividends accruing on them. The richest people in our country also fought for and got repeals and revisions in the estate tax. Conservatives were able to convince tax payers that it would be a good idea to raise the dollar limit on what could be taxed and give more breaks to millionaires and billionaires when they die by not taxing their estates when the rich transfer title to their children and other family members. Can you say oligarchy?
And finally there are the special loop holes that are only available to corporations and wealthy families. Almost three-quarters of U.S. corporations pay no income tax. You try to do that and see what happens. The wealthiest 400 families in America have a net worth of over $1.27 trillion, according to Forbes magazine. And many worlds richest people have been sheltering money in Swiss banks and using foreign banks as tax shelters. It will be interesting to see if the American people act as if they even care about the massive tax evasion by the richest people in our country during a time when our deficits are out of control and there are talks of states going bankrupt.
It is impossible for me to agree to cut backs in local government and austerity measures when I know that our budget could be brought under control by correcting the wrongs I’ve mentioned above and by ending the wars. America is still the richest country that has ever existed but you wouldn’t know that by listening to the news or government officials. Unfortunately, too much income in the United States is focused in too few hands. Republican talking heads often talk of repealing FDR’s New Deal, while they’ve been busily creating a New Deal for the wealthy.